Author Topic: Need Some Financial Advice  (Read 1103 times)

4n6

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Need Some Financial Advice
« on: March 18, 2017, 04:19:00 PM »
Hey everyone,

I feel like I am in a financial pickle and need some advice. This year marked the very first year that I was going to be able to fully max out one of my retirement accounts (a 403b). I did so based upon our financial situation at the beginning of the year. I just found out last week that my wife, who is also a  college teacher like I am but is technically part-time, did not receive any courses for the fall. We aren't sure why, but it looks like her teaching career at my university may be over.

She is currently looking for another job and I think things will work out, but I like to plan things out ahead of time. Currently, our take home pay is about $6650. She brings home about $2200. I bring home about $4450. If/when she has to go on unemployment for a few months she would earn about $2050 per month.

Our total bills EXCLUDING food and gas are about $4400.

You would think we would be fine right? However, there always seems to be something that has come up where we use that extra money. Part of that is because we spend about $250 per month on gas and about $1200 on food (yes I know that is high for just two people). So that leaves us only about $400-500 for any unexpected expense (e.g. my car just needed $600 worth of repairs).

I am wondering a couple of things:
1) Should I reduce/totally stop my retirement contributions to my 403(b) until she gets another job. I should note that this would NOT stop my retirement savings altogether. I am mandated by our contract to contribute 10% of my salary to a pension fund.

2) If so, should I shore up our emergency fund (currently at 10k) or try to pay down our car quicker. Once that is gone (payment is $625 I refinanced it to a much shorter time period so it made our payment almost double...interest rate is only 2.19%) it would give us even more financial cushion.

We also have some potential extra expenses coming up in the next few months. Specifically, my wife is on her 3rd round of IVF. Thankfully, we live in a state where insurance has to pay for it, but because of two previous miscarriages we are considering doing genetic testing on any embryos, which would cost about $2300 total.

Again, I am not sure what to do.

We are working on reducing expenses, particularly food, but most of that $4400 in bills are pretty much set in stone (e.g. mortgage, student loans, etc). I don't like the idea of reducing my retirement savings, but maybe freeing up some capital by paying off the car/saving more money would be the more prudent option in addition to trying to curb our food expenses, which I would like to cut by at least 1/3.

Advice?

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MisterTwoForty

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Re: Need Some Financial Advice
« Reply #1 on: March 18, 2017, 07:06:24 PM »
How are you spending $1200 on food?  I am also a family of two and we spend about $200 per month and we eat very well.  A really heavy month for us is $350 if we eat out too many times.  You will need to cut this back to a more manageable level and you'll be back in the black.

You will have to cut your lifestyle back to bare bones and you will weather the storm. 

Fire2025

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Re: Need Some Financial Advice
« Reply #2 on: March 18, 2017, 08:42:42 PM »
Don't waste this crisis as your opportunity to make some real headway on cutting that food budget.  The food is easily $600-$700 to high and more by a lot of Mustachian's standards.  So this is your chance to really get the cuts you want. 

Keep retirement saving at the current level and really attack the budget.  I think you will be glad you did.

SwordGuy

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Re: Need Some Financial Advice
« Reply #3 on: March 18, 2017, 09:00:36 PM »
So this is your chance to really get the cuts you want. 

Well, definitely not at the butcher counter...

Cut that food budget down to $400 a month - pronto!

Get some cookbooks from the library if you need to broaden your cooking skills.

Cut back all non-essentials now, as much as possible.    Keep your 401k contributions on track if you are making good progress.

If she keeps her job you'll have a bonus pile to invest.  If not, you'll have some savings and a sustainable budget.
« Last Edit: March 19, 2017, 08:47:16 AM by SwordGuy »

MDM

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Re: Need Some Financial Advice
« Reply #4 on: March 18, 2017, 10:04:18 PM »
We are working on reducing expenses, particularly food, but most of that $4400 in bills are pretty much set in stone (e.g. mortgage, student loans, etc). I don't like the idea of reducing my retirement savings, but maybe freeing up some capital by paying off the car/saving more money would be the more prudent option in addition to trying to curb our food expenses, which I would like to cut by at least 1/3.

Advice?
The food spending is the obvious place to start.

If you want other specific advice, consider How To: Write a "Case Study" Topic.  Even if you don't post, but only gather all the information that would make a complete post, the self-analysis could be worthwhile.

PizzaSteve

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Re: Need Some Financial Advice
« Reply #5 on: March 19, 2017, 08:32:39 AM »
I will pile on and add that the tone of your post appears to be asking for permission to cut investing vs cutting spending, when faced with an income gap.

This is not the right forum for that.  You asked for financial advice and are getting mostly budget cutting advice.  One other alternative is to really crank up the 'find a new job effort'.  It seems that your wife is being pretty passive about considering other work, since unemployment is the alternative i am reading about. Perhaps findjng a better paying career is just waiting to be discovered.  That would justify the car and maybe flip the scenario on your student debt, etc.  lf jot, then a second car does not seem to be required.  I might really reexamine that assumption carefulky, as some simple changes might make 1 car plus bikes work.
« Last Edit: March 19, 2017, 08:37:29 AM by PizzaSteve »
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snacky

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Re: Need Some Financial Advice
« Reply #6 on: March 19, 2017, 08:38:40 AM »
What were you going to do when the baby came? Stop investing for 18 years? You need to be able to adapt your spending to your circumstances. Adaptation for survival!
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Dicey

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Re: Need Some Financial Advice
« Reply #7 on: March 19, 2017, 12:10:22 PM »
There are several threads here about eating for less. Find them and devour them.

Even if it costs you a point, recast the car loan to lower the payment until your wife finds a new job. When she does, throw your food savings at the car loan until it's gone. Alternative: sell it and get a cheaper car (while still slashing the food budget).

Most important us to squeeze the outflow down to a trickle. Throwing your reserves at paying off the car would be a very imprudent move.

Shutting off retirement savings is a bone-headed move that will cost you years of your life, particularly when there is so much fat in your budget.

Lastly, and I am sure most controversially, consider holding off on the next round of IVF until the job situation sorts itself out.
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Bracken_Joy

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Re: Need Some Financial Advice
« Reply #8 on: March 19, 2017, 12:16:18 PM »
Re: the groceries. Here are some good links for that:
http://forum.mrmoneymustache.com/welcome-to-the-forum/i-need-help-from-fellow-frugal-healthy-eaters-groceries-are-killing-us!/
http://forum.mrmoneymustache.com/off-topic/the-ultimate-mustachian-food-guide/
http://www.budgetbytes.com/
http://www.mrmoneymustache.com/2012/03/29/killing-your-1000-grocery-bill/
http://www.mrmoneymustache.com/2011/08/23/grocery-shopping-with-your-middle-finger/
http://www.frugalwoods.com/2014/04/26/frugalize-your-groceries/
http://www.frugalwoods.com/2015/07/20/six-things-we-never-buy-at-the-grocery-store/
http://www.frugalwoods.com/2017/01/18/our-complete-guide-to-frugal-healthy-eating/

I will pile on and add that the tone of your post appears to be asking for permission to cut investing vs cutting spending, when faced with an income gap.

+1. Not gonna find 'permission' here =) Just gentle (and sometimes very aggressive) encouragement to reduce your spending and change your circumstances!

If you want other specific advice, consider How To: Write a "Case Study" Topic.  Even if you don't post, but only gather all the information that would make a complete post, the self-analysis could be worthwhile.

I would love to see a full case study on this. Even putting it together and asking specific questions on there should help! Be sure to put a link here if you make one.
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former player

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Re: Need Some Financial Advice
« Reply #9 on: March 19, 2017, 01:02:31 PM »
Total bills excluding food and gas $4,400 per month?  That's $52,800 a year out of taxed income.  Then add $14,400 a year on food and $3,000 a year on gas.  You are spending nearly $70,000 a year.  Out of a total annual income of $79,300.  Which is soon to be an annual income of just under $53,000.

Reducing your retirement contributions is not going to be enough to get you out of that pickle, particularly since it means that your taxes will go up.

If your wife really doesn't know why she has lost her job, she needs to ask, particularly given that she will need references from her employer and needs to know what they might say.  Sadly, I suspect that the IVF and miscarriages might well have contributed to her losing her job, but her employer is unlikely to admit it.

I'm also not sure that you should treat this reduction in family income as temporary: if you and your wife do have a child then either one of you will be working less or not at all or a lot of the income earned by one of you will be spent on childcare.  So this is the moment for you to adjust your budget so that your expenses are no more than one income.  You are pretty much stuck with the student loans (subject to refinancing them, or finding a public sector job and hoping for PSLF), so the big items for you to look at are selling the car(s) and selling the house.

Also, can I just say that a car needing repairs is not an unexpected expense - particularly if you are driving enough miles to spend $3,000 a year on gas.  You need to include a monthly sum for car repairs and put it into the sinking fund that you contribute to monthly and pay all your annual/irregular expenses from.
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