Author Topic: Brand-new lady mustache  (Read 21927 times)

tammyLav

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Brand-new lady mustache
« on: June 24, 2012, 11:01:48 PM »
I am 32, dh is 34, and we have to little ones (5 and 2). We have just come out of a really dismal financial chapter in our lives, where luck and some not great choices (i.e., grad school student loans! Starting a business that failed! Buying our house at the height of the market! With a HELOC!!! I know I know...) combined with the timing of having our kids JUST as the economy tanked and dh and I both suddenly found ourselves unemployed. He tried to start a company (iPad/mobile device development...) and we had some great success in the beginning that made us think we had a shot... but things tanked. We were scrambling to try to figure out what to do next, but that killed our entire (25k) retirement savings. Then our credit cards lowered their rates to just above what we owed, so now it looks like we are maxed out on all of them and our credit scores sank. I can't make this stuff up. ugh. Not proud of myself here, though I will add that we've been trying really hard to make good decisions. Neither of us are from families that knew what to do with money. I feel like we've had to figure this out as we go along, and all we've ever wanted were good jobs, a small house and a happy family.

Now, I'm in no pity party here, and would actually not take anything from our bumpy ride back, because 1) dh and I both ended up gaining some really valuable skills during these hard times that allowed us to command higher salaries now that we are gainfully employed again  2) We also gained some super-cute kids that I happen to love spending time with 3) While we stupidly got into a no $ down mortgage, on the upside we intentionally bought a small house. We are at a 2% interest rate that leaves our monthly payment comfortably at 19% of our current net income. (that figure includes the HELOC, which is something like 3.5%)

Ok, so are you ready to throw rotten tomatoes at me now? It sounds pretty bad now that I see it's all out there like dirty laundry flapping in the breeze. I might not have gotten it up to this point, but I'm ready to commit to a better financial path. I've seen the light!

Our debts (in order that we want them killed):
                  14k credit card (we have a plan in place so that they will be paid off within the year)
                  7k car hoping it'll be gone this year.
                   60k HELOC (3.5% variable interest... hate this thing and want it GONE)
                   52K student loans (3% interest)
                 200k mortgage (2%interest)

Pretty much I just went through all of that to put my own feet to the fire and own up to my mistakes. On the upside, dh and I make 150k net, plus another 5-20k freelance annually. I think if we start knocking out our debt, I'm sure we can get rid of the credit cards and car loan quickly. I'm just not sure what should be next on the hit list... the HELOC or the student loans? My gut says HELOC, because its variable.
                   

astadt

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Re: Brand-new lady mustache
« Reply #1 on: June 25, 2012, 12:38:16 AM »
If you make 150K and truly want to pursue FI through Mustashianism than you are just fine.

Focus on reducing your expenses and i promise you with all that cash youre bringing in you'll be happy you put this first.
     List these highest by amount to lowest. Than work out so you can cut down to living on 50% of your income. The rest can be used to reduce debt and invest.

List out your debts and their Interest rates (you didnt do that completely). Hit the debts over 5%. Most of your debt is under 3.5 % which is great. Theres a very good chance you will beat that rate if you invest in indexed mutual funds over a long period of time. Once you've freed up 50% of your income for savings/reducing debt, and then knocked off every debt over 5%, i would personally recommend investing everything past minimum balances into index funds.


If you want more specific advice you should list more information about your expenses, assets and debts.

velocistar237

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Re: Brand-new lady mustache
« Reply #2 on: June 25, 2012, 09:17:48 AM »
You made a bunch of mistakes without ruining yourself, and now you're very motivated to do things right. That sounds like a great place to be.

How are you doing as far as expenses and savings rate?

bdub

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Re: Brand-new lady mustache
« Reply #3 on: June 25, 2012, 12:15:07 PM »
Back of the envelope calculations say your debt payments are ~$2500/mo and you are taking home $12500 a month.  Even allowing for a lavish $2K budget per month on everything else, you should still have ~$8K per month + your freelance money to throw at your debt.   In 3 months, the car and CC bills should be gone.  In another 8 months, the HELOC should be gone. 

At that point, try to get into a fixed 30-yr mortgage on the house (may need to pay down some of the mortgage 1st to get to the 80% criteria).   I am assuming your mortgage is not really 2%, it is just 2% now and it will float with interest rates.

Once you are down to the 30-yr fixed mortgage at 4-4.5% and the SL's at 3%, make minimum payments and start investing the 8-9K/month you have liberated.  You should be FI in 9 years from that point (or, 10 years from TODAY!) assuming you can live on the same $36K/year.


« Last Edit: June 25, 2012, 12:33:34 PM by bdub »

tannybrown

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Re: Brand-new lady mustache
« Reply #4 on: June 25, 2012, 12:18:24 PM »
I'd stick with your plan as you laid it out.  As you probably already know, the degree to which you can live off a small portion of your income will have a bigger impact than the specific order you pay down debts.

Dedication > smart plan.

tammyLav

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Re: Brand-new lady mustache
« Reply #5 on: June 25, 2012, 04:08:13 PM »
:) ok wheww I am a little nervous about posting because I feel like an idiot for not having my finances a little more together. Nobody seems to get mean here, but you all know a lot more about this than I do and I'm a little embarrassed (insert red-faced emoticon here)

So I'm actually much better this month than last. We actually ran out of money last month and couldn't save anything. That's what prompted me to find this blog actually. It is unacceptable that we have an income at this level and we ran out of money AND I don't even have anything properly anti-mustachian (like a rolex watch or something) to show for it.

So in more agonizing detail:

Retirement and savings: not much. We're pretty much starting from scratch here. After my husband was laid off, he tried to start a company with his also-laid off colleague who bankrolled the startup. Things seemed like they were going to work, we had many successful meetings with some pretty big companies for various promotional apps... but then the projects started to fizzle as capital dried up. One 85k job just vanished one day during the kickoff meeting. That was a very bad day, because I think that we finally realized it wasn't going to work, but by then we had nothing to fall back on. We were victims of our own wishful thinking that we didn't throw in the towel sooner. Unfortunately, we ran out of money fast, ran out of retirement savings fast, and got ourselves in a big hole that I am just starting to peek out over the top of. We have not done well, and we can improve vastly, but I am eager and willing to own up to our mistakes. (at least we have the income to help that situation... and that is mostly because of the failed company. It gave dh more negoting power for salary because he had run his own business in the mobile app development industry, which is exploding now. It also helped me get a job in social media communications, which is also exploding, so we have many new options before us for income growth)

Debt I mentioned above. Our mortgage is actually fixed at 2%. We were upside down in it and qualified to get the interest rate modified for the life of the loan.. I'm not proud that we needed that, but it's what we have, and it does help us fix this mess.

150- eating out occasionally, renting movies here and there ( we spent $400 on this category last month, so I am getting better)

1200- babysitter (already reducing this one by changing to daycare which is 650/mo and partially tax deductable)

200- car payment (sort of antimustachian 2004 audi allroad wagon that get's 19 mpg.. owe 7,000 on it).... but this is more of a backup when we need more space. Main  car is a Pontiac Vibe that's paid off and gets more like 32 mpg

175 gas (down from 400 when the audi was the main car... we had just the vibe for the longest time, so I would rather not get rid of the Audi, I joke that it's Mommy's little helper cause it is so fun to drive... but I promise I'm going better :) It is reserved for special occasions now and just when we really need it, promise)

Groceries: $1,200 (this can obviously be worked on! There is a Whole Foods on my way to work, and I had made a bad habit of stopping for lunch. I looked up Trader Joes and found out that there is one not to far from where I work. I have started making my own lunches and bringing them every day. We also have a Costco nearish by, so I will explore that option. Found many good tips here for this category

1250- main mortgage (including 375 property tax) (2% fixed-30 year) good house, 1000 sq ft biking distance from a good school.

350- HELOC (3.5% adjustable)

450- public transportation (my husband works in NYC... takes a mix of the bus for savings and ferry for sanity... the ferry makes almost a 1-2 hour reduction in commuting time each day... he tried to take the bus this whole month and he has been a miserable zombie, so this expense probably can't go down) ** he is trying to negotiate with his boss, who is receptive, to work from home 2 days per week. this should help. The ultimate goal is for him to consult from home almost entirely.

200- clothing, pet food, father's day, my mom's birthday etc (shopping)

125 cell phones (2 smart phones)

170 cable and internet and phone (comcast triple play)- I'm cutting cable and switching to Vonage for next month, so phone will be $10, $ 40 for internet

350 credit cards

400- student loans

70-100 electric

50 water

100 gas

200 car insurance

850 spent on home improvement supplies to fix a bathroom (ourselves).. this expense won't be recurring, but we are finishing up a shoestring home improvement to improve the flow of our house-- turning a 2br into a 3 br--and fix some things that fell into disrepair... I can foresee us spending about $300 next month on the supplies we need to stop living with plywood flooring, no doors and studs-for-"walls"

So that's it. We already enjoy free activities and have a bike path near our house that goes to the beach. We have improved vastly since I started religiously reading this blog. I 'stached $1,000 from our last pay period, so I'm hoping for at least an average of 2k/month to save in the beginning. We are expecting enough of a tax return in January to kill off the credit cards, so though they are an emergency, I'm not sure that's where I should throw money yet. Immediate needs are an emergency fund so we stop running out of money, and MOST IMPORTANTLY I (as the, ahem, self-professed "Eat dessert first" half of the spousal equation) think I need to commit myself to retraining my spending habits. I am by no means a lavish spender, but I think I haven't paid as much attention as I should. My husband ALSO doesn't pay attention, though he's not the spender, but that still means this bus hasn't had a driver and that's the biggest thing that needs to change.

{gulp} ok, commence with tomato throwing :)


mechanic baird

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Re: Brand-new lady mustache
« Reply #6 on: June 25, 2012, 04:18:04 PM »
In your situation when debt is obviously a major issue, you really have to cut down to bare bone expenses. Rice and beans, get your food cost including eating out(actually, no eating out) to $500 for two ppl. That's pretty generous figure..

No entertainment, no movies, no shopping, no gifts,  no nothing.. seriously. Nothing. Live off bare minimum and pay down the debt in a few years. your spending level is extravagant least to say, even for those who don't have debt but not yet achieved FI...

 
« Last Edit: June 25, 2012, 04:20:00 PM by mechanic baird »

$_gone_amok

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Re: Brand-new lady mustache
« Reply #7 on: June 25, 2012, 05:12:25 PM »
In your situation when debt is obviously a major issue, you really have to cut down to bare bone expenses. Rice and beans, get your food cost including eating out(actually, no eating out) to $500 for two ppl. That's pretty generous figure..

No entertainment, no movies, no shopping, no gifts,  no nothing.. seriously. Nothing. Live off bare minimum and pay down the debt in a few years. your spending level is extravagant least to say, even for those who don't have debt but not yet achieved FI...

This is a good point. However this is also considered hard core Mustachian practice that I'm not sure many people can attain in real life.

It is one thing to be debt free/FI/ER as soon as possible and another to have a balanced lifestyle while still on track to reach your financial goal as you defined it. 

TammyLav,
If I were you I'd set a goal on how soon you want to pay off your debts and stick to it. Also you didn't mention retirement savings in your previous post. I think with your combined income, you should be able to fully fund your 401K and IRA.

$_gone_amok

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Re: Brand-new lady mustache
« Reply #8 on: June 25, 2012, 05:15:32 PM »
Sorry for the back to back to post, but I really have to get this out of my chest: SELL THE FREAKING AUDI! It is a second car that you don't need but cost you to insure, maintain and pay interest on the loan.
« Last Edit: June 25, 2012, 05:18:27 PM by $_gone_amok »

tammyLav

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Re: Brand-new lady mustache
« Reply #9 on: June 25, 2012, 07:49:50 PM »
Lol amok :-) I'll be that was killing you to hold back. I'll possibly consider it as my journey continues. For now, there are many places that I can cut back. Driving that car is completely impractical, but then so is having kids in the first place, or pets for that matter. For the moment, I'm focusing on cutting out the fat. Things that bring real pleasure in my life should stay, though I might make adjustments to make them a little better (i.e., pay it off in the next month or two and eliminate all but the absolutely essential insurance on it and the Vibe and mostly just drive the more economical car) My dad died from brain cancer before he got to enjoy 1 minute of retirement. I want to dramatically change the course of our financial path, but balance is first and foremost for me. I want to make sure today is as enjoyable as FI day. That having been said, once I practice frugality a little more, I might grow out of the car and naturally get rid of it. We do have a concrete plan to pay off the car and the credit cards within the next 6 months, even without beans and rice (though I will be making many adjustments to my grocery trip, so we'll be moving closer to that, heck, I ate beans and spaghetti tonight for dinner!)
I really appreciate the practical tips for laying out the debt and taking it out. This is a new way of thinking for me, and I'm not a natural number cruncher. At 2%, should I just not worry about the mortgage and invest? We have a plan to take the HELOC and student loans out aggressively over the next 5 years (that's actually the conservative estimate, but if we get really good at slashing spending it could be as little as 3). That would leave us only the mortgage, which by that point would hopefully be 13% of our income. I would get a much better return on my investments by pouring all of the money into a Vanguard fund or something like that instead of paying the mortgage off, right?
« Last Edit: June 25, 2012, 08:11:32 PM by tammyLav »

gooki

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Re: Brand-new lady mustache
« Reply #10 on: June 25, 2012, 09:14:16 PM »
At 2%, should I just not worry about the mortgage and invest? We have a plan to take the HELOC and student loans out aggressively over the next 5 years (that's actually the conservative estimate, but if we get really good at slashing spending it could be as little as 3). That would leave us only the mortgage, which by that point would hopefully be 13% of our income. I would get a much better return on my investments by pouring all of the money into a Vanguard fund or something like that instead of paying the mortgage off, right?

Correct. At 2% I wouldn't pay down more than necessary on the mortgage.

What's the interest rate on your credit card(s)?
What's the interest rate on your vehicle loan?

The number crunching isn't difficult. Find out the interest rates of each of yout debts, and pay the highest one back first and as fast as possible.

If the interest rates on your credit cards are over 5% I'd consider drawing down more on your HELOC (if possible) and pay them off tomorrow.

You're in for a battle, but you'll get through with a bit of dedication. It appears your mind set is in the right place, and that's often the hardest part (accepting you have a problem).

twinge

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Re: Brand-new lady mustache
« Reply #11 on: June 26, 2012, 07:54:05 AM »
Given your fields, I would also consider the possibility that your income is not necessarily the foundation leading to higher things.  These are currently areas that are "hot," but there are a lot of young'uns with growing skills in this area (e.g., my 11 year old son and his friends are learning to make mobile apps) and with rapid technological change people don't necessarily value and pay out for experience.  I don't know anything about your exact skill sets, experiences, education, value to your employers and the like, just have a general experience that some tech skill sets lead to ongoing demand/growth and some fizzle out.  You should think about whether (and how to ensure) yours are the former.  If you have meaningful doubts, I would treat your current income as a bonus to clear up all debts so you'll have some freedom for intelligent action if and when you need to retool.  Having the side business is a great start, but it seems like all your current income is closely linked and subject to the same pressures.  Thinking like this, I would maybe take 6 months living in emergency mode and clear up the credit card/car debt (or Sell the Audi and do it right away :) ).  I wouldn't wait for the January tax return--use that to start investing.

 I totally "get" the slow journey/enjoy life mode, but I think when you have that kind of debt load, no retirement savings at your age, little income diversification, and the responsibility for 2 children... if you took 6 months in "emergency mode" you could clear up credit card and car, and then your more frugal than now but more luxurious than emergency-mode will seem like luxury AND you'll have the added cash flow from former debt payments.  And this jumpstart may help you see even more intensely which non-material things really feel like luxuries to you.

These would be my steps in your situation:

1) Be imaginative as possible about reducing expenses--both "fat" that I could live without indefinitely, and short-term reductions/sales that could wipe out big chunks even if they aren't reductions I thought I wanted to sustain in the long term.

2) Put that money to the credit card/car payment (though I still would need to know the interest rates on both of these to know HOW intensely to focus on them). Invest in tax-advantaged accounts to reduce the tax burden on the 155-170K income.  Run the numbers to figure out the balance on the efforts (i.e., if the interests rates on your debt promise a return  that would be hard to obtain in an index fund even given the tax advantages--put more there and vice versa). If I felt I was disciplined enough I would forego an emergency fund in this situation given that I had appropriate credit levels on hand/cash flow from my income to handle emergencies.

3) Focus on investing in tax advantaged ways (e.g., 401k, IRAs, 529 plans, investments in your side business) and paying down the variable HELOC (I would need more information on the terms of the variable rate to know how aggressively I would do this)  I would have an emergency fund strategy (probably a combination of some cash, a few credit cards I don't keep a balance on but use regularly, an open HELOC line, and an emergency budget ready to put into action).

4) I would drag out the mortgage as long as possible--I would see that low interest debt as an opportunity to max out all tax advantaged investment possibilities/build up side business with low-risk funds.












« Last Edit: June 26, 2012, 09:32:06 AM by twinge »

bdub

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Re: Brand-new lady mustache
« Reply #12 on: June 26, 2012, 09:20:46 AM »
I think a face-punch is in order :)

You claim a NET income of 150K/year (12.5K/mo) yet you only list about 7500 of expenses.  This leaves a unaccounted for 5K/mo (HOLY SHIT!!!).  If that is correct, then I think you need to find that money before you worry about tackling the debt.

Either way, it looks like my original assessment was spot on (2500/mo in debt payments vs. actual of 2550).  On top of the debt repayment, you are still spending another 5-10K/mo.  That should be closer to 2500 (I didn't account for child care originally).  Take that 2.5K-7.5K and tackle your debt!

I might not have gotten it up to this point, but I'm ready to commit to a better financial path. I've seen the light!

Pretty much I just went through all of that to put my own feet to the fire and own up to my mistakes.
                   

There are too many "I"s in there that should be "we"s.  If it is truly "I" instead of "we", then you are going to have a hell of a time achieving your goals.  My $0.02.

Devils Advocate

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Re: Brand-new lady mustache
« Reply #13 on: June 26, 2012, 10:06:32 AM »
in regards to your dad dying before he was able to enjoy retirement...

I know there is a balance one must achieve in life in saving/spending.  The Mustache Community advocates early FI by being frugal and advocates "bare bones" expenses. 

This is just one philosophy, one that I happen to agree with for the most part.  However this is NOT the ONLY way to do things...For someone who is concerned about mortality and not being able to enjoy the most frugal lifestyle you could adhere to another philosophy that many here would be disgusted by...

Consumption smoothing...http://en.wikipedia.org/wiki/Consumption_smoothing

To each their own...

DA

tammyLav

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Re: Brand-new lady mustache
« Reply #14 on: June 26, 2012, 12:51:43 PM »
A face punch? C'mon.. maybe a wet-noodle lashing? :) No, I get it, this is serious stuff, and I need to be serious about it. I promise though, I'm already on board! My husband is 101% on board, but I am the information sponge. So I will be getting some much-needed education from you, and using that to lay out the plans, but he is really the more frugal of us.

Our biggest problem to-date has been that we have been on a feast or famine cycle from freelance clients (well that, and our kids are little, so I have been working only part-time). Husband is actually quite high up in the company... an information architect (sort of a creative director for the digital user experience) and my job is an arm of marketing, with a great deal of interest from clients already (I'm just holding off so I can focus on our kis)...so we aren't fresh college grads in "hot" careers. All indications point to fast and steady income growth in the next few years. I am pretty confident that once I dedicate myself to income generation instead of diaper changing, I should be able to add at least another 2k/month which will go entirely toward paying of debt first and then retirement savings.

I should have stated that income is more like 140k BEFORE taxes/insurance are taken out (with 10-30k in freelance stuff that we no longer factor into our regular expenses because we never know how much will come in when) We actually bring home 8k every month as salary. Hope that paints a more clear picture. We should be able to easily take 2k off the top each month. I took 1k out of our last pay period checks without feeling too much of a pinch... just starting to use some of the tips I've learned here. The HELOC/student loans are 60k and 52k (each at roughly 3.5%). If I pay of credit cards, 14k (about 24% interest) and the car (or maybe sell it... will think on that one) by January 2013,  I am planning on flexing my new frugality muscles and getting rid of the rest (except the mortgage) in 3-4 years.  Paying credit cards/car will save me 500/mo, so I was thinking AT LEAST 2,500/month working up towards 50% savings. Will we get to mustachian frugality?  I'll be trying to add to my frugality skills, but marathons aren't run in a day. My "damn broke and stupid" years have been a valuable lesson, so you definitely have my attention!

I'm also just 2 weeks into this mustache, so there is no mustache... more like looking in the mirror and wondering what it would be like :)

grantmeaname

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Re: Brand-new lady mustache
« Reply #15 on: June 26, 2012, 12:53:10 PM »
Big picture face punch:
Driving that car is completely impractical, but then so is having kids in the first place, or pets for that matter.
Did you really just equate those things? Does your car actually bring as much joy into your life as your children? Of course not. Now, we want the best for you, and we want you to reach your goals. You're throwing a ton of money away on that car, and if that's really more important to you than having retirement savings or paying down your mortgage, HELOC, and credit card debt, that's fine and you should keep it around. But it's a whole hell of a lot of money for what you admit is a luxury toy to play with, and you shouldn't be even a little surprised we're punching you in the face for it.
If you're unwilling to change your lifestyle, and you just want to do the same things you're doing now for cheaper, that's your prerogative, but if you have actual financial goals (like staying at home with your children, or retiring in a decade, or paying off your mortgage), you can't keep an expensive European sports car that costs more than all of your money and drive it around for fun.
Quote
Things that bring real pleasure in my life should stay, though I might make adjustments to make them a little better (i.e., pay it off in the next month or two and eliminate all but the absolutely essential insurance on it and the Vibe and mostly just drive the more economical car) My dad died from brain cancer before he got to enjoy 1 minute of retirement. I want to dramatically change the course of our financial path, but balance is first and foremost for me. I want to make sure today is as enjoyable as FI day.
The whole point of this blog is that spending less money does not make people less happy. Like, literally the entire point. It is at least as big a part of Mustachianism as biking, insourcing, and being responsible for your own actions. Learning to fix your own car, cook your own dinner, and buy things that last instead of replacing everything every 2 years are not things that make people sad, but they're clearly things that save you money. There are a handful of very poor, very happy people on this forum, and the ERE forums are just crawling with thousands of them. (You don't have to be very poor to be very happy, to be clear, but neither do you have to drive an Audi.) I strongly reject your notion that spending less on your way to FI will make you miserable or even less happy, and hope you'll rethink it.  MMM has written a ton of great articles on this, such as What is Hedonic Adaptation, and How Can it Turn You Into a Sukka?

mechanic baird

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Re: Brand-new lady mustache
« Reply #16 on: June 26, 2012, 12:58:29 PM »
I strongly reject your notion that spending less on your way to FI will make you miserable or even less happy, and hope you'll rethink it.
+1
I am still strongly holding the position that with your debt situation, $133K debt without mortgage, you don't have rights to spend anything that is unnecessary until you get your financial house in order. This is a state of emergency you are in. A whopping 6 figure debt not even counting mortgage. And you think it's OK to spend on pleasure?  That's being irresponsible in my book. You think 3% interest is low? Do the math and see how much you are gonna waste on interest payment just because you enjoy your audi and eating out. What if you invest that money which earns you 3%? Isn't that a much better place to be?
« Last Edit: June 26, 2012, 01:01:15 PM by mechanic baird »

gooki

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Re: Brand-new lady mustache
« Reply #17 on: June 26, 2012, 01:17:38 PM »
At 24% interest on your credit cards, it has to go tomorrow.

Do what ever it takes, extend the HELOC, balance transfer to another CC with 0% for 6 to 12 months, then cut up your old cards, eat rice and beans for two month, or sell the Audi and repay car and CC debt. Either way the CC are the first emergency to tackle, and don't warrant waiting a year to pay down.

Hell I'd even go as far as taking money out of retirement accounts to clear that CC balance, but one of the above solutions would be preferable.

grantmeaname

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Re: Brand-new lady mustache
« Reply #18 on: June 26, 2012, 01:25:46 PM »
Little picture comments (not face-punchy):
the [debt] hit list
Other have mentioned that your mortgage interest rate is low enough that it's better to leave it around than pay it off, and idea which you seem pretty receptive to. Your student loans are more or less free money, so if you're not too debt-averse, it would be better to keep them around and invest the difference as well. That said, if you'd rather get rid of them, it's a little worse mathematically than investing, but it also frees up some cashflow and would help you sleep at night. Your HELOC should be gotten rid of. The rate is pretty low, but as you note it could increase at any time. Moreover, if you can pay it down, you'll have enough home equity that you can afford to use it as a cash cushion, and then you won't need to keep an emergency fund in cash (though you may want to keep some money in cash nonetheless to help smooth out your jerky freelance income). That way, you'll have more employees working for you.

If I were you, I would throw every penny you make at your credit card debt and not worry about any other savings vehicles until then. It's the same as an investment that'll earn a guaranteed 24%! What could be better? (As gooki notes, you can also see about a balance transfer or other financial instrument to help with that problem.)

I feel like an idiot for not having my finances a little more together. Nobody seems to get mean here, but you all know a lot more about this than I do and I'm a little embarrassed (insert red-faced emoticon here)
A big mantra of Your Money or Your Life, the great granddaddy of all financial independence writers, is "No Shame, No Blame". You seem to have an okay grasp of that. Yes, you made some mistakes. You can't unmake those choices, and you can't unbuy your house at the top of the bubble. You're here and hopefully learning a lot, and that's what matters. No need to be embarassed.

Now, let's look at the budget.
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150- eating out occasionally, renting movies here and there ( we spent $400 on this category last month, so I am getting better)
If you'd like to cut this number, there are a few ways to do it. Do all your movie watching on Netflix, and supplement with movies from Redbox and Blockbuster Express that you return promptly. That'll get it under $20 a month. Challenge yourself to eat out only once a week, or even less. If you like being waited on, become regulars at the corner burger or pizza joint (one of the best tips I've seen around here). If you like the food itself, learn how to cook a dead-on clone of Applebees, Cinnabon, or Mall-food Chinese. If you like meeting friends, have them over for dinner (bonus cheapness if it's a potluck!).
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Groceries: $1,200
Holy god that's a lot of money. Start a price book. Read MMM's articles 1 and 2, and hang out in this thread for tips about stocking up, cooking cheaply, and rotating between stores. You can really save a ton in this category.
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200- clothing, pet food, father's day, my mom's birthday etc (shopping)
Knowledge will set you free. This is a pretty broad category, so if you want to cut it I'd argue you should track it. If you use cash, try the envelope system. If you like plastic, sign up for Mint. The little leaks from your budget disappear when you zero in on them.
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125 cell phones (2 smart phones)
You can pay less for the same service you're getting now.
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200 car insurance
$2400 a year for car insurance when only one of you drives much? I would shop around and see if you can do better elsewhere with the coverage you're getting now, or if that's good for your area. You may also have coverage you don't need... as you start driving less and owning less vehicle inventory (concept explained here), you'll be able to cut this further.

tammyLav

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Re: Brand-new lady mustache
« Reply #19 on: June 26, 2012, 03:41:58 PM »
Love it! Great ideas, and I couldn't be more on board. Student loans are free money? Can someone expand on that a little? Is that because they (they're with Sallie Mae) are only 3.5% and I'm better off investing? This is definitely new news and I'd like to hear more on this topic..I like the red box idea and hadn't thought of it before. I agree that credit cards are an emergency. I knew I wanted them gone, but had never thought of them in the light I've learned to on this blog, which sounds terrible, but at least I'm realizing this now! Right now, the current plan is  to throw everything at the credit cards one at a time (we have a chase and an amex), and then take out the balance of them with our entire tax return. I have made some serious progress just in the short time since starting to follow this blog. If student loans aren't a priority to pay off, then we could have all of the other  bad debt out of our hair in less than 2 years. Wow! You just blew my mind a little grant! We could always get ourselves in a better place with investments and then revisit the student loans in a few years.

Our car purchase was not intentionally frivolous. We only had one car up until March, but I was getting tired of dragging the sleeping babies out of bed at the crack of dawn to drop dh off at his ferry (by the way, it is only a mile away... down a flat, former railroad bed PAVED BIKE PATH). We certainly didn't set out to purchase a luxury car. The Audi was actually not that much more than the other cars we looked at (it is several years old, high mileage) and it was just so beautiful and fast! I grew up a poor farm kid, and it is the nicest car I'd ever ridden in or driven, even counting brand-new cars I've been in. I think we made that decision with our hearts instead of our heads. Still, I do see my errant ways of looking at the situation. We were focused on how much we were getting for the price, not how much we are SPENDING due to the purchase. In any case, now he's taking the bus in the morning and it is literally a block away... a 5 minute walk. (and he is driving the Audi... I think it's it's pretty silly too and I'm not even a trained mustachian) I see a spousal discussion looming...

-Ok so I think you have convinced me to sell my beloved beautiful car. It is like a sports illustrated swimsuit model with a bad shopping habit. So beautiful! So unnecessary! Kind of expensive! Now I have to work on punching my husband around a little so he rides his bike to the bus. I will even let him drive the Vibe and I'll ride the damn bike over to get the Vibe (I hadn't thought of that option before). That might be a better place to start. 7000 down (sniff sniff, still love you baby!)
* it helps if I imagine $7,000 cash sitting in the driveway next to the car (actually, I suppose it's much more than that when you count interest). It does seem less beautiful when compared to ALL THAT MONEY :)

-credit cards will be paid off aggressively starting now. Looking to wipe them out no later than January (hopefully much sooner). Freelance projects come in and will be put entirely towards that goal, which could take them out within a month or two... 14,000 down

-HELOC is next. Tax returns and all $ turned towards this for payoff within 2 years. 60,000 down. Equity built into house (we are also doing diy  improvements to add to that). Already have an ING savings but will open a HELOC there instead? (we use bank of america)

Mortgage and student loans will sit for at least a little while, and I will work on cutting our spending with better shopping habits (bye bye Whole Foods, hello Trader Joe's and Costco... going this weekend for a membership!) and will pour at least 2k/month into investments, though hopefully more like 3k. 50% savings rate would be great! But I'll have to work at that. Still not mustachian,  but a vast improvement. Wow thanks for the advice you guys are AWESOME!!

last question... do mustachians save for kids' college funds?


« Last Edit: June 26, 2012, 04:14:09 PM by tammyLav »

mechanic baird

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Re: Brand-new lady mustache
« Reply #20 on: June 26, 2012, 04:05:55 PM »

last question... do mustachians save for kids' college funds?

I do. $275 a month per kid since birth.. Grandparents gave $3000 per kid to jump start.
 Retirement is still the main goal here. Since kids can try to get a merit scholarship. Nobody ain't gonna give me a penny for my retirement just cuz I can do math.

« Last Edit: June 26, 2012, 04:11:00 PM by mechanic baird »

grantmeaname

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Re: Brand-new lady mustache
« Reply #21 on: June 26, 2012, 04:15:07 PM »
Love it! Great ideas, and I couldn't be more on board. Student loans are free money? Can someone expand on that a little? Is that because they (they're with Sallie Mae) are only 3.5% and I'm better off investing? This is definitely new news and I'd like to hear more on this topic
If you're in the 28% bracket and you itemize your taxes, after you deduct the interest you're paying (1-.28)*3.5%=2.52% interest. Since inflation is in the ballpark of 3% a year, that means the money you owe is losing real value just a tiny bit faster than it's accruing interest. That makes borrowing it "better than free". And yes, you could do much better by investing.
(Even if the HELOC were fixed, for comparison, you'd accrue interest on it just slightly faster than the money owed would lose value, because interest is accruing at 3.5% and inflation is decreasing the real value by 3%. Make sense?)

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last question... do mustachians save for kids' college funds?
Some of us believe that paying for college yourself makes it mean more, and that if you make careful spending decisions you can get through school for way cheaper than most. Others of us believe that our kids deserve only the best and they should go to Cambridge or MIT no matter the cost. In between, there are all sorts of opinions... many parents are offering to pay enough for a state school, or the equivalent amount to a private school with the rest covered by the kid, for example. This thread has most of the discussion so far, but little bits and pieces have been scattered elsewhere throughout the forums. Like the public vs. private school debate, it seems most people want their kids to experience what they experienced going to school.

gooki

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Re: Brand-new lady mustache
« Reply #22 on: June 27, 2012, 04:01:28 AM »
last question... do mustachians save for kids' college funds?

My wife and I simply invest all the cash gifts our child receives, will keep doing this until they're around 8 years old.

bdub

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Re: Brand-new lady mustache
« Reply #23 on: June 27, 2012, 09:48:05 AM »
I should have stated that income is more like 140k BEFORE taxes/insurance are taken out

OK, that makes sense

All indications point to fast and steady income growth in the next few years.

I don't mean to be a dick, but isn't that exactly what you thought when you first started your business a few years back?  I believe you even said something very similar in your 1st post.  I'm not saying you are wrong, but this shouldn't be used as an excuse to NOT tackle your debt now.  You aren't using it as an excuse in your post, but it may be something you want to remember when you have the Audi "discussion"

...but marathons aren't run in a day.

Unless you are really frickin' slow, they actually are run in a day.  You have what MMM calls a debt emergency; you need to treat it that way.

last question... do mustachians save for kids' college funds?

We don't have specific funds set aside but we do plan on paying about 2/3 of our girls' college education.  All savings now go directly into investments accounts, about 1/2 is used to max out retirement accounts, remainder goes into normal taxable investment accounts which could be accessed for college.

mm1970

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Re: Brand-new lady mustache
« Reply #24 on: June 27, 2012, 10:13:33 AM »
I think you are doing great to be here and try and make some changes.  You've gotten great advice already, so I'm going to focus on the food one.  It's my thing.

One of the earlier comments directed you to some posts on MMM on how to decrease your grocery budget.  I'll add:

The Complete Tightwad Gazette by Amy Dacyczyn

Cook for Good: This woman started off by trying a food stamp challenge, turned it into a few E-books (that I bought), and then turned it into a book (Wildly Affordable Organic), that I also bought.  It's a great book with great recipes, and she even gives grocery lists and daily chores on what to cook and when for each season.  That's useful if you want someone to tell you exactly what to do.  I don't, but I use the recipes a lot.
http://www.cookforgood.com/index.html

The Grocery Shrink:  Another E-book that I found really helpful to shrink my grocery bills.
http://groceryshrink.com/

I think if you focus on smashing your debt, you'll be in good shape.  You talk about eventually earning more money in exchange for diaper changing, but I'd say enjoy the diaper changing phase too.  I have a 6 year old and am due just about any day with #2.  The absolute best time of my life thus far was when I was working part time instead of full time.  I love my career, but it can leave you exhausted and my kid deserves better than that.

Chris

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Re: Brand-new lady mustache
« Reply #25 on: June 27, 2012, 11:54:57 AM »
If you're in the 28% bracket and you itemize your taxes, after you deduct the interest you're paying (1-.28)*3.5%=2.52% interest.

Even better than that: student loan interest is an above-the-line deduction, so you can deduct it regardless of whether you itemize.

Caveats:
  • Can't file taxes separately from your husband
  • Modified adjusted gross income must be less than $150k (filing jointly)
  • $2500 maximum annual deduction for interest

tammyLav

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Re: Brand-new lady mustache
« Reply #26 on: June 27, 2012, 12:05:33 PM »
No worries bdub, you are blunt here, which is good, and I understand. When I say good income growth, I mean because both my husband and I have settled into new jobs that are paying well. I am only working part-time, but plan on increasing that (just talked to my director today about that in fact), which should increase income, all going towards savings/investment. Mm is totally in line with my way of thinking though, that my kids come first right now, and we must find other ways to work the credit cards out FAST.

By the way, we aren't ready to go back down the road of running our own business. That was a huge dream (still is!) and a big risk. It didn't pan out, and hurt us financially, but it enriched our lives in many other ways, so though we are dissapointed, and I wished it had worked out, we don't look back at extra the time we spent together and with the babies with any regrets (except not finding this blog sooner, perhaps :) Our biggest "punch in the face" mistake was that, even without a 'stache,  dh didn't want to work in the city 12 hours a day away from his kids, and we tried to make it work, but it just didn't. It was probably financially stupid, but we had a great (if broke) two years.

Now, we just have to move forward (upward! out of debt). Dh took a job with big pharma marketing, which should be called big money marketing with all the $$ they have sloshing around, but I digress :) Point taken bdub, bird in the hand and all of that. I'm not going to run some sort of budget surpluss projections based on where I think we are going... I'm working with what we have. We just don't want him to have to work there forever in any case because the commute is killing him. That is the main reason this debt is an emergency. Life is great for me and the kids, but he is missing out, and that's not fair. I want to do whatever it takes to get him into a situation that allows him to breathe, and I miss him :)

Looked into Audi's on Craigslist and it looks like I might be able to sell our darling for a small profit, which would be a great way to end a not-smart purchase. You guys helped me do a 180 on that, and I thank you. What I mean about the marathon is that I am so new to this, it is A LOT to digest all at once (I practiced hypermiling on my way to work today!) My husband is also miserable at his job right now, so I have to cut back, but if I try going to bare bones on food, it causes major arguments. I need to figure out how to make beans and rice taste good (thanks for the links mm!) I am trying to see the credit cards as a sinking ship emergency, but I don't like the fights my cheap meals have spawned over the last few days either (as dh has switched to the bus to have more money for credit cards, but that adds an extra hour EACH WAY for him from the rediculously expensive ferry commute. His point is that he's been eating pb & j every day for work, coming home after missing his kids all day to see them for 30 minutes and eat a beans and rice dish that leaves him hungry. I know the response already will be "no whining" so I'm not whining, but there has to be a way I can make the food budget cheaper without sacrificing taste and without driving my poor husband off the deep end! Will definitely go through all of mm's links. Thanks for going into that detail for me, that will help a lot! Also, this weekend I'll be headed to Costco with a careful plan. My birthday is this week too, so we will be practicing the art of a "no money birthday" as well. Thanks for your advice... you guys are tough but I know you mean well.

tammyLav

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Re: Brand-new lady mustache
« Reply #27 on: June 27, 2012, 12:06:42 PM »
If you're in the 28% bracket and you itemize your taxes, after you deduct the interest you're paying (1-.28)*3.5%=2.52% interest.

Even better than that: student loan interest is an above-the-line deduction, so you can deduct it regardless of whether you itemize.

Caveats:
  • Can't file taxes separately from your husband
  • Modified adjusted gross income must be less than $150k (filing jointly)
  • $2500 maximum annual deduction for interest

So far we fit all of these.... good points!

mm1970

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Re: Brand-new lady mustache
« Reply #28 on: June 27, 2012, 12:19:09 PM »
You don't have to eat beans and rice every night.

You can flavor your beans and rice with meats to make them taste good.

You just make small steps on the food front.  I still eat meat, shrimp, salmon, lots of fresh fruits and organic vegetables, and good cheese too.

I didn't go from spending $850/month on food (in 2002) to $500 (now) overnight.  It took awhile.

$_gone_amok

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Re: Brand-new lady mustache
« Reply #29 on: June 27, 2012, 01:15:40 PM »
Good decision on selling the Audi.  My wife and I are in our 30's with 2 kids. We drive a prius and a 13 year old honda CRV. I like you, have a need for speed. So on my 30th birthday my wife rented a Tesla roadster for me. After driving it and returning it at the end of the day I don't miss it all.

Life is meant to be experienced. Your possessions should matter little on how miserable or happy you are.

tammyLav

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Re: Brand-new lady mustache
« Reply #30 on: June 27, 2012, 01:37:34 PM »
Good decision on selling the Audi.  My wife and I are in our 30's with 2 kids. We drive a prius and a 13 year old honda CRV. I like you, have a need for speed. So on my 30th birthday my wife rented a Tesla roadster for me. After driving it and returning it at the end of the day I don't miss it all.

Life is meant to be experienced. Your possessions should matter little on how miserable or happy you are.

haha! That is a GREAT idea :) We won't be doing that any time soon, but I applaud your wife's creativity!

kolorado

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Re: Brand-new lady mustache
« Reply #31 on: June 27, 2012, 01:38:52 PM »
I spend less than 1/5th of what you do on food for my family of 5 and we rarely have beans and rice. In fact, even when I do serve those items, the baby and I are pretty much the only ones who eat them. You do not have to eat bare bones to spend less on food. The biggest savings are good planning, cheaper food sources and spending more time in the kitchen.
I lived in NJ all my life until a couple of months ago. I found that Shoprite was the best grocery with the best loss leaders. Also check if you have an Aldi or Save-a-Lot near you.

crunchy_mama

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Re: Brand-new lady mustache
« Reply #32 on: June 27, 2012, 01:52:14 PM »
I agree about the food, your food budget has  a ton of room to cut before you even have to worry about beans and rice.  Shopping TJs and Costco alone would save alone.  Stop the snacks, drink water, buy produce in season.  Buy cheaper cuts of meat, legs and thighs instead of breasts, ground beef instead of steak.  Cut out the processed food.  Shop from a list, once a week at most. 

tammyLav

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Re: Brand-new lady mustache
« Reply #33 on: June 27, 2012, 03:00:01 PM »
I spend less than 1/5th of what you do on food for my family of 5 and we rarely have beans and rice. In fact, even when I do serve those items, the baby and I are pretty much the only ones who eat them. You do not have to eat bare bones to spend less on food. The biggest savings are good planning, cheaper food sources and spending more time in the kitchen.
I lived in NJ all my life until a couple of months ago. I found that Shoprite was the best grocery with the best loss leaders. Also check if you have an Aldi or Save-a-Lot near you.

We do have an Aldi. Not super close, but it is nearish to work (as is Trader Joes) Aldi, Trader Joes and Costco are all about a 20 minute drive, so maybe I could try that once a month or every two weeks. I use Shop Rite (10 minute drive... would be a heck of a bike ride but possible )as my main store. There is a little grocery closer, but not as fresh and more expensive than Shop Rite. I think planning is the issue with us, because it always seemed like we ran out of food mid-week, so I ended back at the store.  I rarely stop at Whole Foods, but I had gotten into the habit of picking up lunch there on my way to work (that by itself was about $30/week).That has stopped, of course. We have also switched from juice to water with a little lemon juice splashed in. Can I get some advice on good cheap snacks that kids like? We switched to store brand cheerios and popcorn... animal crackers, saltines, etc.. There is probably a thread for this so apologies if I am repeating myself. I have a bike trailer that I'm going to start using. Easily accessible by bike: library, 3 playgrounds, 2 beaches, scenic bike path, grandparents' house (with dinner and babysittin!). aunt's house with a pool, 1 grocery store, daughter's school. I am going to consciously stay home or just use the bike more (we had made a habit of driving to various playgrounds around us, some quite a distance... so this will be just occasionally) I'm already using our window air conditioners sparingly and experimenting with hypermiling in the car. Anything other than essential shopping trips will be out. Canceled cable, selling second car,changed house phone to a cheaper carrier.... think I'm actually getting excited about this :)  edited to add: And a thrift shop... actually 2 of them, 10 minute easy bike at most!
« Last Edit: June 27, 2012, 03:20:24 PM by tammyLav »

bdub

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Re: Brand-new lady mustache
« Reply #34 on: June 27, 2012, 03:12:34 PM »
No worries bdub, you are blunt here, which is good, and I understand.

I am glad you are taking it that way and without offense.  Honestly, I am not trying to appear as someone who thinks he has it all figured because my wife and I have a discussion almost weekly that goes similar to this quote:

We just don't want him to have to work there forever in any case because the commute is killing him. That is the main reason this debt is an emergency. Life is great for me and the kids, but he is missing out, and that's not fair. I want to do whatever it takes to get him into a situation that allows him to breathe, and I miss him :)

Although my commute is quite bearable, I have a different problem:  I am having an affair with my shitty job.  I cheat on my family by spending too much time with my shitty job.  I steal time away from my family on evenings, weekends and vacations with my shitty job by working, or at least stressing about, my shitty job.  Although we don't aspire for near-term FI, we do use the MMM principles to accelerate the achievement of a very worthwhile goal: FU money.

Good luck to you!

mm1970

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Re: Brand-new lady mustache
« Reply #35 on: June 27, 2012, 04:38:22 PM »
I tend to go with the homemade snacks instead of buying snacks.  That's one area where food costs can go up really easily. 

#1 don't buy water (in other words, cook your own beans instead of canned, cook your own rice)
#2 make your own snacks

Pop your own popcorn, if you aren't already.
Instead of buying crackers, eat something else.  If you like crackers and hummus, try carrots instead (you know, buy them, peel them, cut them, make your own hummus).  Instead of animal crackers, have fruit.  If you eat more real food and less processed food, that will definitely help.
Don't buy those little cups of  yogurt or applesauce for the kids (totally guilty here), buy it in the large jars or make  your own.

I know that when my grocery bill creeps up (and it definitely has lately, in the latter stage of pregnancy), it's almost always the snacks.  It's easier to buy crackers than slice a melon.

Save your receipts for a few weeks and look and see where you are spending.  It helps to not look at everything bought at the grocery store in the budget.  My grocery budget is food only...not wine, not toilet paper, no medications...only food.

nolajo

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Re: Brand-new lady mustache
« Reply #36 on: June 27, 2012, 05:20:17 PM »
I'm really pleased to see the 180 you've done over the course of this thread! The only thing I would add is to remember that the library has a lot of free resources. You don't even need to hit up a Redbox for a lot of movies and I'm sure you're well acquainted with your library's offerings for children. Another advantage is that libraries are usually ludicrously air-conditioned, so I often go take advantage of theirs and turn mine off at home. It also scratches the shopping itch for me, since I browse through, make a selection, and even swipe some plastic before I get to take something new to me home!

I say all this because many of us will hit a slump after the initial burst of good behavior and it's important to have some tricks up your sleeve for those days when you may get discouraged. You're right - it is a marathon, and you've got some fairly serious debt that's going to take more than a quick fix.

One last thing - I think that bdub's comment about your optimism regarding you and DH's jobs was due to the inherently volatile world of bleeding-edge technology. Given that, even though it sounds like you and DH are now more on the managing the young hot-shots side of the equation, I think you need to have some funds at your disposal. A bit of an emergency fund to smooth things out and upping your home equity (by paying off that HELOC, etc) so that you have that as a back up, seems to me to be a wise decision. I would recommend reading one of the fora about emergency funds to get an idea of how various people in the community have approached the issue of being prepared. (Full disclosure, I'm a bit more conservative about having an e-fund of some sort than many here. I strongly believe it's a necessity for most people who are early on the road to FI/RE, but it's been exhaustively covered elsewhere.)

crunchy_mama

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Re: Brand-new lady mustache
« Reply #37 on: June 27, 2012, 05:51:18 PM »
Snacks here are very basic; fruits, veggies, nuts, pickles, seeds, homemade cookies/candy/treats 1 or 2 x a week.

sideways8

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Re: Brand-new lady mustache
« Reply #38 on: June 27, 2012, 06:48:39 PM »
Wow this thread was a lot cooler than I thought it would be! Tammy, I think this is going to do so much good for your family. You and your husband are setting a great example for your kids by doing this. My parents were very high earners but they very consciously lived way below their means and were very open about money. When your kids get older, they will really appreciate what you're doing right now. They really, really will... which reminds me that I should tell that to my parents! :)

tammyLav

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Re: Brand-new lady mustache
« Reply #39 on: June 27, 2012, 08:20:54 PM »
I think that bdub's comment about your optimism regarding you and DH's jobs was due to the inherently volatile world of bleeding-edge technology. Given that, even though it sounds like you and DH are now more on the managing the young hot-shots side of the equation, I think you need to have some funds at your disposal. A bit of an emergency fund to smooth things out and upping your home equity (by paying off that HELOC, etc) so that you have that as a back up,

I hadn't thought of it that way, but you are correct. Part of our troubles stemmed from three separate layoffs. (one mine, two his) that caused major hiccups in finances (which led to the credit card debt... we haven't seriously used the stupid things in years) so your words ring very true. We are extremely fortunate that my husband ended up where he is now, but we will work on being resourceful with the tips everyone has kindly provided, getting the cards paid off, at least 1 month in ready money (ING acct) and then pay that HELOC off asap. It sure would be nice, because we haven't had that kind of secure feeling since dh was laid off from his last job (with me 6 months pregnant and at home with our daughter at the time... we had 20k in retirement funds and 10k in savings back then). I don't know if we will be going all the way to FI with this (well we will, just don't have a timeframe yet), but my poor husband (who kissed the babies goodbye this morning while they were still asleep... and is STILL NOT HOME, so he won't get to see them at all tonight) deserves some FU money and financial flexibility.

What I find fascinating about the MMM philosophy is that I had never considered myself an over consumer. Those were the people with 50k escalades and McMansions... not me, with 2 used cars and a 1000 sq ft house! American culture builds consumption and entitlement into our lives in so many sneaky ways that I hadn't even realized all of the ways I had been wasting our money. I think the Audi represented a twisted form of entitlement to me. It made me feel more stable, proud and "grown up" to have a "real car" as opposed to a compact... when in fact the car in actuality is completely the opposite of that! I think what made me so happy about it (besides it being damn fast, but that's beside the point) was the yearning to actually BE stable and "grown up" instead of the financial roller coaster (though roller coasters do go up I hear, so maybe more of a financial cliff-dive?) LOL so nobody's gonna charge me for this therapy session, right?

Thanks for the snack tips. Will give that a whirl this week. Headed to Costco tomorrow, and going through some of the links in here to plan out a 2 week grocery list.

And sideways8, glad to provide some inspirational reading material for others :) Now go give your parents a big hug! My parents were just the opposite, god bless-em. Poor, clueless about money, bankrupt when I was in high school. Paycheck to paycheck but working their asses off the whole time. They gave me about 100 bucks for college. I actually had to give my dad gas money to visit me once. All I knew I wanted was to get OUT of that lifestyle. To me, not really knowing there was any other way to do it, the student loans, and then later credit cards etc etc were the only way to get myself ahead. I do want better for my kids, and my family

Zoot Allures

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Re: Brand-new lady mustache
« Reply #40 on: June 27, 2012, 11:25:04 PM »
What I find fascinating about the MMM philosophy is that I had never considered myself an over consumer. Those were the people with 50k escalades and McMansions... not me, with 2 used cars and a 1000 sq ft house! American culture builds consumption and entitlement into our lives in so many sneaky ways that I hadn't even realized all of the ways I had been wasting our money. I think the Audi represented a twisted form of entitlement to me. It made me feel more stable, proud and "grown up" to have a "real car" as opposed to a compact... when in fact the car in actuality is completely the opposite of that! I think what made me so happy about it (besides it being damn fast, but that's beside the point) was the yearning to actually BE stable and "grown up" instead of the financial roller coaster (though roller coasters do go up I hear, so maybe more of a financial cliff-dive?) LOL so nobody's gonna charge me for this therapy session, right?

No, but someone might give you a book deal! That's some very well articulated introspection you threw down right there.

I totally agree with your point about consumerism and entitlement, and would add debt to the list of things that are somehow supposed to make us feel more grown up. Car loans are perhaps the perfect example. A high school classmate of mine just posted a photo on her Facebook wall of herself posing with a Hyundai sales rep in front of a cherry-red 2012 sedan before she drove it off the lot. Like it's a rite of passage: congratulations, you've worked hard, and now you have a monthly debt payment to show that you're serious about this business of adulthood. I think the photo stuck with me because it really looked like the kind of car that loses half of its value within the first year. But people will do what they will, and it's not for me to judge...unless I'm the one doing it!

moneymohawk

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Re: Brand-new lady mustache
« Reply #41 on: June 28, 2012, 12:22:30 PM »
My fiancee packs me great, cheap lunches every day.  Our grocery bill still isn't where we want it to be, but the lunches definitely aren't part of the problem!

All the snacks suggested above are great.  In fact, a good supply of healthy snacks helps me get through a long day.  But it sounds like maybe it's time to drop PB&J and change up your husband's main lunch dish?

Some things my fiancee packs in my lunch that are fairly cheap...

- Spinach salad with carrots and cucumbers often with baked chicken we cook in bulk on Sunday night.
- Mexican salad with spicy whole beans and corn, occasionally with spicy ground turkey
- Hearty soups like chili or tomato rice. Beans make them even more filling!
- Bulk cooked leftovers like veggie lasagna, pasta w/ tomato sauce, tuna pasta salad w/ beans made in a huge pot

The key to all of these is not to overdo it.  They'll all taste great with just a few ingredients, none of which require hours of prep, chopping, sauteing.  When I cook, I typically just skip any ingredients that sound like too much work.

As for your husband feeling hungry after beans and rice, that has me wondering...

Is that code for "there's no meat", "I don't like this meal", or "I'm sick of this again" perhaps? Because the obvious answer to still being hungry is to just eat more beans and rice. =)

tammyLav

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Re: Brand-new lady mustache
« Reply #42 on: June 28, 2012, 01:07:31 PM »
LOL mohawk... think you nailed it. I'm a pretty good chef, if I do say so myself, but I don't have a good arsenal of cheap, quick and easy recipes... so we end up eating leftovers from the night before. Nothing wrong with that, but I think I've fallen into too much repetition. I think we absolutely have to work meat into the menu at least 2-3x per week, though I can use it more for flavoring. My husband is blessed/cursed with a metabolism like a squirrel or some such active small woodland creature... I can plan a meal that I think has  8 servings easily and watch him down half of it. Seriously, if anyone could stand to have more rice/fiber filler in their diet it's him! haha. I think I need a new system for planning our food. Those are some great ideas. Anything we can just grab and go. That and getting rid of small portion snacks should help our budget. My goal for this month is to slash it in half... I'm going for $600.

I also just had a freelance project come in for 4k... the exact amount to pay of one of our two cards THIS MONTH! woo hoo! :) 4k down, 10 to go and the cards are toast!

grantmeaname

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Re: Brand-new lady mustache
« Reply #43 on: June 28, 2012, 01:17:20 PM »
Congratulations! That's great news!

That's quite an ambitious goal with your food budget. I'd love updates to hear how it's coming along-- I bet you'll do great things, and even if you fall a little short, you'll end up with a totally badass reduction!

Stacey

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Re: Brand-new lady mustache
« Reply #44 on: June 28, 2012, 02:45:42 PM »
This is seriously one of the best and most motivating posts and series of responses on the blog!  And there are a lot of good ones.    Congratulations on making such strides already.  I'm looking forward to hearing about your progress - and to toasting you once those dreaded credit cards are paid off. 

Dicey

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Re: Brand-new lady mustache
« Reply #45 on: June 29, 2012, 12:32:49 PM »
I'm loving this thread. Great detail and wonderful input from a variety of perspectives. Most of all, it's awesome to see tammyLav being so responsive and open to change. I have scanned all of the replies and haven't seen this mentioned, so apologies if someone's already floated this suggestion:

Instead of waiting for your tax return, why not adjust your withholdings right now to improve your cash flow?

Your tax deductions must be equal to what you owed the previous year. Not what you had taken out of your paycheck, but what you owed. Technically, I think it's only 90 or 95% of what you owed the previous year, but I wouldn't cut it that close. Get out your tax return, look at your pay stubs and see if you can make some adjustments. Don't worry if your HR department is not supportive initially, I always have to refer mine to the IRS website when they tell me in June that I can't claim exempt for the rest of the year 8=). Make sure you review the numbers around Thanksgiving. If need be, you can adjust your withholding for December so you come out even. Between now and December, throw every penny of the savings at your credit cards.

Once you get your CC balances down a bit, start looking for lower interest rate offers and transfer the balances. Don't forget that most balance transfer offers charge a (hidden in the tiny print) transfer fee, usually 3%. With what you're paying now, you could still come out way ahead.

I believe you can do this in less time than you think. Even the folks who are threatening to punch you in the face (for your own good, of course) are rooting for your success. Go Tammy!

tammyLav

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Re: Brand-new lady mustache
« Reply #46 on: June 29, 2012, 03:54:33 PM »
Instead of waiting for your tax return, why not adjust your withholdings right now to improve your cash flow?

That's a great idea!  I could get that fat tax return in smaller bits now rather than later for a quicker benefit. I will take a look into that right away. We've been wanting to pay off the cards for so long... and the HELOC too. Just the idea of being able to do it sooner rather than later is amazing, and something I really had resigned myself not to be able to do. I know this information has always been out there for me, but something about the way MMM frames it makes it more motivating and accessible. Something about the twist here just fits where I'm at in life (or more like where I'd like to be). The MM family lives in the way I aspire too...still surrounded by and appreciating beauty and life's riches, and this community is incredible... all tough and "punch in the face," but really a super caring bunch of good people. Absolutely stellar and REAL tips I can start applying right now. Great stuff!

I do have another question, if you aren't all sick of this thread by now... Once cc are paid off, I do not plan on paying off student loans or mortgage due to the interest rate (I will pour it all into investments). I want to tackle the last remaining emergency debt.. the HELOC (60k) but am trying to decide how aggresively to do that, because we have no retirement savings now (as in big old goose egg "0!!") due to drawing on that during the "damn broke and stupid" (dbs) years. With the HELOC at only 3.5% variable now, it could easily go up, but with the economy still wobbly, I'm hoping not just yet... Should I split our efforts between HELOC and 401k so we can take advantage of the max employer matching? or should I throw everything at the HELOC and pick up afterwards. It seems like skipping employer matching is wouldn't be a good idea...  though even now I know the cc take priority so I'm not going to do that. I guess I'm asking how much urgent weight to assign the HELOC, because it seems that getting that max employer matching would be important. Forgive me if this is obvious and dumb, lol. I promise I can do math, but I am an artist... the right side of my brain gets a lot more exercise than the left. Math is just not my native tongue... :-p

Chris

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Re: Brand-new lady mustache
« Reply #47 on: June 29, 2012, 04:07:58 PM »
Should I split our efforts between HELOC and 401k so we can take advantage of the max employer matching?

You should prioritize getting your 401k match. The reason is twofold:

  • You get instant return on investment (100%, 50%.... whatever the match is)
  • Retirement accounts have annual limits. If all goes well for you, you'll be hitting the limit in future years. Stuff money in there now while you can.

grantmeaname

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Re: Brand-new lady mustache
« Reply #48 on: July 02, 2012, 06:33:35 AM »
Chris is exactly right, in my opinion.

As another note, you can make your 2012 IRA contributions up until you file your 2012 taxes. That means you can wait all the way until the second week of April to earn that money. If I've got your timetable right in my head (paying off CC debt right around the end of the year), that could help you: you'd have another four months to earn the $5k each that you can contribute to IRAs, instead of having to earn it by December 31st.

bogart

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Re: Brand-new lady mustache
« Reply #49 on: July 02, 2012, 11:03:34 AM »
I'm a big fan of tax-sheltered savings and would favor contributing to retirement accounts so situated (401ks and IRAs) even at the expense of maintaining debt, provided that the debt is below about 5% (so in your case -- mortgage, HELOC, and student loans, yes.  Credit card, no).

Truthfully it doesn't matter tremendously.  Both paying down the debt and saving for retirement are good.  One may be better than the other (you can see which I think and under what circumstances), but picking one good thing over another is way better than picking a bad thing (e.g. Audi, $1.2K/month on groceries, snorting coke) in lieu of a good thing.

Quick cautionary musing:  mortgage rates are currently absurdly low, but they're not 2% low unless you've got an ARM or something with a balloon payment (or an uncle Vinnie).  How long does that 2% last?