Beginning the Journey- What should we do first?

[FinallyWakingUp]

Ok Mustachians. Newbie here. I need some advise as to what to do first. Here's my situation. Married with 3 kids in CT. 100% commission sales person with an annual income of $110k-$150k depending on the year. I expect 2015 to be closer to $150k but the first qtr of the year is the slow season.
We started using YNAB in November and am thrilled with it. Although we're in debt we finally ran a month that's not in a deficit because it was a great month. We finally know where all our money is going and it has already made a big difference. Here's the financial situation ( I apologize for the length/detail in advance).

House: worth $300k 1st Mtg $230,000 and Equity LOC $11,400 ($14k available). I am not willing to move. 15 miles to work but I work from home 3 days per week.
Wife's 4 door Jeep: Worth $24k, owe $14k $440 mo payment- (No way wife will give it up plus the 3 kids need some room)
My car: worth $24k, owe $18k, $312 mo payment- I am trying to come to grips with selling and paying cash for Honda with the equity.
Credit Card 1 balance $6,917 at 0% until June 2016
Credit Card 2 balance $4300 at 0% until May 2015
Daughter's braces $4,370 balance at $115 mo pmnt. Paid through HSA so some tax benefit at least.
Hospital bill balance from 2014 medical issue $1,533 , $184 payment
Wife's credit card $1404 balance

Assets
Checking $4200. All assigned via YNAB. Some for rainy day items like upcoming car insurance, car taxes and the like.
Savings-liquid $600
IRA $72,000. Currently I am being robbed by Merrill Lynch and their very expenses Black Rock funds which all are roughly 1.25% expense ratio and 5.25% Loads. I will be transferring to Vanguard very soon.

Here's what I've done in the last month. Using YNAB religiously.
Shopped for cheaper electric rate reducing cost of electric from the floating 17.49 cent per kWh ( I wasn't watching this and it went variable) I had fallen into to now lock in 10.79 cent per kWh for the next 2 years. This should save $70 month
Laser focused on food budget overall and have reduced by couple hundred. I bring lunch 18 of 20 days per month.
Reviewed home and auto insurance and I am doing well there.
I will be cancelling cable and home phone and attempting an over the air antennae, Netflix, Hulu set up which will cut $130 per month there saving $1560 per yr.
Verizon is a big one. $230 per month. I managed to get down to $220. 4 lines in the family(all iPhones). Republic wireless would be awesome except Sprint is not great in CT and I'm in sales so great cell service is a MUST as I do a lot of cell work.

Yes we are a mess but I have a very good income with unlimited income potential (my goal is $150k this year and $200k in 2016). I am attacking the budget and debt aggressively with the goal of paying off the following this year in this order
Hospital bill $184 mo, $4,300 credit card since 0% expires in May, wife's Jeep to free up $440 mo, wife's CCard. I have a $5000 tax refund I am expecting and a likely $3000 windfall from another source that will all be used for debt reduction. We've also started Craiglisting stuff and used proceeds of $400 in last 2 weeks towards CC debt.

BIG QUESTION- should I take some money from my IRA to wipe out some of this debt so I can get ahead with the goal of paying most of it off this year and then making up for the retirement hit later? I figure if I can sell my car and pay cash for cheap one then eliminate all CC debt, wife's Jeep, Hospital bill and braces with Income, Windfall/Tax refund and some IRA money then I will have a lot of disposable income I can use to pump the IRA back up.

Any Mustachian Help is appreciated.

[fartface]

Age?

Pros: You are a high earner. My husband and I combined never made over 150K (maybe 145K at our peak). He FIRE'd by age 43 about 18 months ago.

Cons: several key phrases in your post including: "I won't"  "No way"  "need"  "not willing"

I don't recommend taking from your IRA. That's the last thing you should do...especially if you're over/near age 40 which I suspect you are.

Of course, you've already acknowledged you need to drastically cut spending and fast.  Is the wife on board with the 'plan'? If you work together as a team, your goals will be far more attainable.

The fact that you're on the MMM forum is a good first step, and you're starting to ask the right questions. Face punch yourself a few more times and start reflecting on what you really NEED. Working on your mindset and that of your wife's and kids is going to be the most powerful change you can make.

Good luck and keep us updated!

[Catbert]

Don't take it from your IRA.  With your income you should be able to kill the consumer debt without raiding from your future self.  You can only put in 11K a year (you and spouse) so if you take money out of the IRA you can't make it up later.

If your hospital bill is at 0% interest I would move it lower down the payoff priority list.

[nereo]

though his username choice is questionable, fartface's advice is very good.

BIG QUESTION- should I take some money from my IRA to wipe out some of this debt so I can get ahead with the goal of paying most of it off this year and then making up for the retirement hit later? I figure if I can sell my car and pay cash for cheap one then eliminate all CC debt, wife's Jeep, Hospital bill and braces with Income, Windfall/Tax refund and some IRA money then I will have a lot of disposable income I can use to pump the IRA back up.

Any Mustachian Help is appreciated.

No.  I would NOT take money out of your IRA to wipe out debt.  Your credit cards currently are not earning interest and you should be able to eliminate those before they start charging interest. The cars can be tackled with your high income.
Using YNAB is a fine approach, but you seem resistant to make the changes which will really make a difference.  YNAB
helps track where money is going.  But until/unless you set high savings goals, all it does is let you know where everything is going.  With your income, the 'mustachian' thing to do is max out IRAs for both you and your wife, max out a 401(k), and then in addition to that save at least $1000/month.
You did not list the interest rates on the two cars, but the combined $752/month in car payment is a huge drag.  Factor in depreciation, insurance, etc and your fleet of cars is likely costing you in excess of $100,000 every decade.  That's nuts when you're trying to FI/RE.

you have an amazing ability with your income to be completely FI in a decade or less - but it all comes down to how much you are willing to save. 
g'luck, and keep giving us updates on your progress.

[FinallyWakingUp]

Thanks fartface
Age 43 and yes the wife is on board with the spending plan. I'm willing to do a lot but moving is not one of them. That and her Jeep are the only 2 things that are likely going to stay. We love our neighborhood and our home is modest for CT and family size plus with 3 kids that play lots of sports we need a reliable family vehicle and the Jeep is that plus it holds it's value better than any other car (look it up).
I am certainly willing to sell my 2011 Infinity which I LOVE and go back to a $6000 Honda pd with cash.

We are both on board although I am the numbers guy but she's willing as well. In fact, by nature, she's more frugal than I to begin with. the fact that I've come around to the mustachian way is the key. She may actually get some part time work for a couple hundred dollars per week which we'd apply directly to debt as well.

MaryW...as for the hospital bill I will have to check. My thought on attacking that soon is that it will free up $184 in the budget for only paying off $1800. I need some relief in the budget to make greater strides. I say that now because these are the slower months. Net income likely $5000 mo until March then it starts increasing with June/July upwards of $12-17k take home net.

nereo
The Jeep is 1.9% and my car is 3.99% rates.
Great advice from all on not touching the IRA. I will leave that alone and continue to find ways to cut spending and further. I'm almost mentally resigned to selling my car. I just needed some more time to get there emotionally. It's a really nice car and the only I've ever owned so I had to mentally get over the fear of selling it.

[FinallyWakingUp]

though his username choice is questionable, fartface's advice is very good.

BIG QUESTION- should I take some money from my IRA to wipe out some of this debt so I can get ahead with the goal of paying most of it off this year and then making up for the retirement hit later? I figure if I can sell my car and pay cash for cheap one then eliminate all CC debt, wife's Jeep, Hospital bill and braces with Income, Windfall/Tax refund and some IRA money then I will have a lot of disposable income I can use to pump the IRA back up.

Any Mustachian Help is appreciated.

No.  I would NOT take money out of your IRA to wipe out debt.  Your credit cards currently are not earning interest and you should be able to eliminate those before they start charging interest. The cars can be tackled with your high income.
Using YNAB is a fine approach, but you seem resistant to make the changes which will really make a difference.  YNAB
helps track where money is going.  But until/unless you set high savings goals, all it does is let you know where everything is going.  With your income, the 'mustachian' thing to do is max out IRAs for both you and your wife, max out a 401(k), and then in addition to that save at least $1000/month.
You did not list the interest rates on the two cars, but the combined $752/month in car payment is a huge drag.  Factor in depreciation, insurance, etc and your fleet of cars is likely costing you in excess of $100,000 every decade.  That's nuts when you're trying to FI/RE.

you have an amazing ability with your income to be completely FI in a decade or less - but it all comes down to how much you are willing to save. 
g'luck, and keep giving us updates on your progress.

Of course you mean after wiping out the consumer debt I should take on these savings goals like maxing retirement accts etc, right?

[nereo]

Of course you mean after wiping out the consumer debt I should take on these savings goals like maxing retirement accts etc, right?

Thanks for providing your interest rates on your cars.
What I would suggest is wiping out all consumer debt on loans >4%. There's no need IMO to pay off a car loan at 1.9% since you are much more likely to earn more than this in an IRA/401(k) (especially considering tax savings).  There IS a point in selling that car for one without a car payment, but... baby steps for now.  Since you are contemplating selling your car (@3.99%) I wouldn't worry much about paying this off.  Then make it your goal to maximize your savings every month.  It's a good idea to gradually ramp it up so that the changes aren't too painful and cause you to just give up. 

[FinallyWakingUp]

Of course you mean after wiping out the consumer debt I should take on these savings goals like maxing retirement accts etc, right?

Thanks for providing your interest rates on your cars.
What I would suggest is wiping out all consumer debt on loans >4%. There's no need IMO to pay off a car loan at 1.9% since you are much more likely to earn more than this in an IRA/401(k) (especially considering tax savings).  There IS a point in selling that car for one without a car payment, but... baby steps for now.  Since you are contemplating selling your car (@3.99%) I wouldn't worry much about paying this off.  Then make it your goal to maximize your savings every month.  It's a good idea to gradually ramp it up so that the changes aren't too painful and cause you to just give up.

Thanks for the additional input nereo.
Basically NONE of my debt is nor at a rate of >4% but based on the past year we are having cash flow issues. I'm sure YNAB will help with that as will the family spending reductions we are making. My thought on some of this is that I can knock out the credit cards in 2015 even though they're at 0% because, well they're evil credit cards ;) and the hospital bill because it's $184 mo and less than 2k makes that go away. The Jeep because it's such a large payment.

My goal is to sell my car -$312 mo, pay off all credit cards -$350 mo est, the hospital bill -$184 and the Jeep -$440mo. Will cost about $29,000(ambitious but I will try) That eliminates about $1,286 in payments per month that can now be sent to savings.
That's the plan for now.

The kids college funds aren't receiving much these days as you can imagine. Once I eliminate this consumer debt do you recommend funding the retirement first by maxing 401k and IRA's and then worry about college for the kids? A good friend, who happens to have no debt and rich (go figure) said you can always finance colleg if you had to but you can't finance your retirement.

[nereo]

it sounds like you might benefit from posting a more detailed case-study, when you are ready (beware - there will certainly be some face-punches from other members).  Even with a highly variable income, if you are bringing in $150k pre-tax there has to be a lot of ways you can free up cash and cut back.

The kids college funds aren't receiving much these days as you can imagine. Once I eliminate this consumer debt do you recommend funding the retirement first by maxing 401k and IRA's and then worry about college for the kids? A good friend, who happens to have no debt and rich (go figure) said you can always finance colleg if you had to but you can't finance your retirement.

Absolutely fund your 401(k) and IRAs first.  You will get a tax benefit and secure your current situation - figuring out college payments can come later.  There are lots of ways of getting a quality education for a fraction of the 'traditional' cost too.

[Calvawt]

Just want to pile on to NOT touch the retirement funds.  You should be able to get rid of the hospital and CC debt with the extra cash flow you free up from reducing spending.  Also apply any windfalls to those debts. 

Then start working on maxing your company 401k!  Good luck


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[former player]

What you've told us about is pretty good, stupid clown-car anti-mustachian jeep excepted (sell it, locking in the limited depreciation on it so far, and get something that does the same job better and for less gas).

What I'm concerned about is what you haven't told us about.  You have a shit-ton (technical use there) of money coming in.  It has obviously been going out to all sorts of places you haven't said anything about, and those are probably the gaps in your budget that you haven't yet acknowledged and done anything about.  When you do that, you will start to be in great shape.

PS I hope you have some insurance to protect your family with if you die or get ill and can no longer earn that income.

[marty998]

BIG QUESTION- should I take some money from my IRA to wipe out some of this debt so I can get ahead with the goal of paying most of it off this year and then making up for the retirement hit later?

This is like saying "should I shoot holes in my leg so that there will be less air resistance when I run".

Mate, stupid idea as others have said. Transfer it all to Vanguard now (yes now as you read this go open a new tab and download the forms).

My goal is to sell my car -$312 mo, pay off all credit cards -$350 mo est, the hospital bill -$184 and the Jeep -$440mo. Will cost about $29,000(ambitious but I will try) That eliminates about $1,286 in payments per month that can now be sent to savings.
That's the plan for now.

For the card that is 0% to June 2016 I would put aside enough cash into your HELOC and then pay off the card on 31 May 2016 using funds from there. No use paying extra interest on a HELOC when you've got an interest free loan on the CC.

You need to expand your horizons as to what is ambitious (sorry but we're not going to baby you, you're a big kid, you can handle it). $29,000 is what, 3 months income for you?

Where is the rest of your money going?

[lakemom]

Based on the limited info you've posted I would strongly recommend that you build a budget based on 5k per month TOPS.  Then on the better months you can take all the additional income and bank it.  As you've been struggling to live on 5k per month (in the lean months) there must be PLENTY of budget bloat that can be cut.  Although we live in the Midwest in a paid for house be bank 2k of our 5k income per month ad we DO have plenty of budget bloat that we could cut further if we felt the need.  Look at things like kids activities, family activities, dining out, entertainment, have you cut the cable tv, phone plans, vacations (in the past or things you may be planning for the upcoming year).  Hang tough and keep the budget at the forefront of your mind and keep rethinking the dollar amounts in every category until you've gotten it down to the rock bottom.  Then once the savings starts to build you can rethink items you cut to see if you miss them or not.  But I've got to say that 750 a month in car payment IS NOT SUSTAINABLE on a 5k per month budget since you also still have a house payment.  That alone is ensuring that you can't live on your income in the lean months thus building up credit card debt that then saps your income in the good months. 

[teen persuasion]

My DH had uneven income when he was a teacher (no pay for the ten weeks of summer vacation), and our expenses are very lumpy as well (big, once annual bills like property taxes, school taxes, oil prebuy, car insurance, etc. added up to half our annual budget).  I always figured out in advance what our expected spending would be over a year for ALL the basics, and made sure our expected income would cover it.  We did not just spend "leftover" money in the checking account, I knew we'd need it later for X.  I experimented with moving a proportion of DH's regular paychecks to savings to cover the summer period with no paychecks, but found that the lumpy nature of our bills meant I was moving money back and forth ridiculously often.  As long as no one raided the build-up in the checking, it was fine for us to leave it there until the next big bill came along. YMMV.  That left the savings as our EF.

That is what I noticed you need - an Emergency Fund.  Everyone needs one, but especially with uneven income, to help you cover unexpected things like trips to the ER.  A CC can be used for emergencies, but if you don't pay it right off, it just becomes a new ongoing bill, as you have found.

You've freed up about $500 a month, and mentioned about $1500 that I've seen in payments, plus whatever your mortgage payment is.  Where is the rest going?  Food, utilities, insurance, ???  Figure out your baseline.