Facepunch or faceslap?

[yahui168]

Bought a house in Lafayette, CA in Sept 2011 for the public schools. Daughter starts kindergarten this Aug. Mortgage, property tax plus home insurance is $5400/mo.

[AccidentalMiser]

So, you're spending $65k per year to get a good public school?

I think I'd rethink living in California.

[Another Reader]

Completely out of context.  Please complete the story - income, expenditures, assets, liabilities, cost of house, amount down, mortgage terms, etc.  Are you close to work?  Independently wealthy?  What's the rest of your lifestyle?  Could be a face slap, face punch, or a pat on the back, depending on the context.

[yahui168]

In full context, facepunches for sure. Warning: your moustache may spontaneously combust if you read any further.

My spending is off the charts for the past 12 months. New car in 2012 paid in full replacing 20 year old Integra. All new furniture replacing 15 year old Ikea furniture.

Grew up in California. No plans to move out of state as all family and friends are within 30 mins drive. I'm 22 miles from work which I take public transit. Wife is 16 miles from work which she drives.

Income after taxes, 401k contribution, etc (12 mo average from Mint):
15,700/mo

Expenditure (12 mo average from Mint, category breakdown may set your hair on fire):
14,600/mo

Debts
mortgage: 900k, 30 year fixed (1,250k purchase / 1,479k trulia estimate / 1,719k zestimate)
car loan, credit card, etc: 0

Assets
non-retirement: 112k
529 plan: 53k
retirement: 446k
equity in home: 350k (down payment in 2011)
Total: 961k (networth increased 120k last 12 not counting home appreciation)

Semi-Assets:
2004 Subaru Forester
2012 Honda Fit

[Another Reader]

So, why are you here?  Are you looking to make some changes?

[bdub]

Based on the handy-dandy calculator at networthify.com, you will be able to retire in 28 years.   If that fits your needs, then you are in good shape.  If not, you probably should make some changes.

http://networthify.com/calculator/earlyretirement?income=188400&initialBalance=961000&expenses=177600&annualPct=5&withdrawalRate=4

[girly mustache]

What are spending $10k on per month when that doesn't include mortgage or cars? That's a bigger question in my mind....

[yahui168]

Thanks bdub, I haven't seen that calculator before. I'm looking to see how I'm doing and see what kind of changes I should make. I would like to retire by 55 with mortgage paid in full with monthly expenses of 3500/mo. Any suggestions are welcomed.

Girly mustache, here's a further breakdown. After doing all the math, the mortgage is 5522/mo for the last 12 months. Servicer lowered the payment some months ago from 6000 to 5400. They were withholding too much for tax & insurance.

Family of three with a dog. My goal is to decrease spending including mortgage to 9626/mo for the next 12 months.

The last 12 months not including mortgage
14600 - 5522= 9078/mo x 12 = 108936/yr

Removing one time costs from last 12 months
110400 - 18,500 (2012 Honda Fit) - 22,650 (furniture) = 67786/yr = 5648/mo

Of the 5648/mo

1125    daycare
1512    shopping
1075    food and household items
708      gas, public transit, parking, car maintenance & repairs, registration
475      gas & electric (100), water (105), trash (27), cable & internet (132), cell phones (86), netflix (25)
207      car insurance, life insurance, personal liability insurance
150      pet food (50), pet medicine (100)
135      kid classes and activities
124      prepaid hotel for Dec 2013 vacation (total cost $1489 for 9 days)
97        medical, doctor/dentist, medicine
40        gym for 2

Changes made for the next 12 months
1125 to 900     daycare, daughter starts kindergarten (-225)
708 to 658       Honda Fit more fuel efficient and less repairs  (-50)
132 to 82         cheaper cable plan (-50)
25 to 15           cheaper netflix plan (-10)
335 total

Changes planned for the next 12 months
1512  to 700   shopping (-812)
1075 to 800    food and household items (-275)
1087 total

335 + 1087 = 1422 expected savings per month for the next 12 month
4226 expected monthly spending for next 12 months (without mortgage)

5400 + 4226 = 9626 total expected monthly spending

[Rural]

What goes in that "shopping" category? It doesn't include any food or household items, so is it all clothes and toys? If you've been spending over $1500 a month on those things, surely you have enough to last a long time? I'd suggest trying to go a month spending nothing at all in the shopping category. A month is long enough to reset habits and really get you to think about what you value. There will be some things you'll want to add back after the month, but I think you'll find there were many things you don't miss at all. Those are found money in the long term, because then you'll know they were just habit, not a need or even really a want.

I don't see any eating out. Is that missing somewhere, or with a small child do you just eat at home?

[yahui168]

Yeah, definitely tackling the shopping category. The shopping category includes some household items. Mint categorizes things like Amazon and Target into shopping and we get things like diapers at Amazon and body wash from Target. Regardless, much of the 1500 is not necessary. The goal is 700/mo for shopping category over the next 12 months. Cold turkey is an option, I'll just need to figure out the monthly target after accounting for things like diapers and body wash.

We eat home often and dine out occasionally. The 1075 food cost includes dining out.

[Ashcons]

I'm not the most mustachian guy here (just found the site not too long ago), but I do have some questions because I bet you can cut down on a whole lot of spending and still be happy:

How much of your food is convenience food (& where are you shopping)? How much of your food goes to waste? Is your kitchen full of "stuff" you never use? What kind of medicine are you spending $100 on per month for your dogs? How often are you buying new clothes? Do you and your wife find yourselves running around int he cars on unplanned trips out to the store or whatever? How's that gym membership working out for you (do you have a park or jogging/biking trails nearby)?

I think your first step should be getting very specific on how you've been spending money the last 6 months to kick some bad habits (Amazon is an ongoing battle for me). When I was trying and failing for months/years to get our budget in working order, I had been lumping "misc." expenses together, which were blowing our budget, but I pretty much ignored them. When I really got specific, my budget came together and we were able to start getting things under control (and I feel much less stressed).

[MgoSam]

Just chiming in, but I think growing some of your food will be healthy, cheaper, and also a good opportunity to teach your kids.