Author Topic: Need ideas to cut down on costs!!  (Read 5273 times)

New Mom and Dad

  • 5 O'Clock Shadow
  • *
  • Posts: 25
Need ideas to cut down on costs!!
« on: February 04, 2016, 08:32:23 AM »
Hello Triple M forum!

This is my first time posting here, and i need some help!

I have been reading from MMM's first post and am now about halfway through 2012 and it has given me new motivation to get my finances on track and convert my wife to mustachism. Anyway, Here is a breakdown of our monthly income/expenses.

Income:

Me(24M)(Maintenance Technician)= 21.7/hr = 3472/month pretax. post tax ~$2200 (including 10% to my 401K and insurance) I used to get a ton of ot and this monthly amount was more around ~$$2,800 per month post tax. Overtime may be back later this year.

Wife(27F)(3rd Grade Teacher)= $36,000/yr salary $2283/month post tax

Total income: $4,480/month post tax

Expenses:

Mortgage/escrow=$900
Her car payment=$450
My truck payment=$200
Note: Im selling my truck and once it is gone, the money will be used to pay off the remainder of both loans. So these 2 payments will be gone in ~1-2 months.
Electric= ~$75-150 depending on time of year
Water~$75-100 *Every 2 months
Internet $49.99(cheapest plan offered by the only provider in our area)
Food=$500 (includes eating out)
Gas=~$120 (should go down once truck is gone
Cellphone=$104 (both total)
Wife Cellphone insurance=$12(I know this is bad but she is dead set on needing this)....
Car Ins=$94 (will go down once truck is gone)
Dog=$40(we pay the 8yr old neighbor girls $10/week to walk our dog before school each morning)+food every 2 months or so
Netflix=$8
Childs 529 plan=$100
Extras=$300(Home improvement, stuff for baby on the way, any non regular
expense that may come up.

Total for expenses adds up to: ~$3,050/month. After vehicles are gone, this will be ~ $2,300

Surplus= ~$1400. After vehicles are gone this will be around $2100.

I have ~$10,000 in my 401k and ~$10,000 in my Roth IRA
She has ~$5500 in her IRA no current retirement contributions.
We alkso have $10,000 in savings as an emergency fund.

Our immediate plan is get rid of my truck to pay off both loans. Then max IRAs each month and put whatever is left towards the mortgage. Our mortgage calculator figures the house can be paid off around 02/2024 by doing this.

We are really trying to get our finances in order, reduce wasteful spending, and ramp up to FI! Please give me any suggestions or let me know any other info i need to provide!

Thanks!




« Last Edit: February 04, 2016, 10:00:34 AM by New Mom and Dad »

AZDude

  • Handlebar Stache
  • *****
  • Posts: 1298
Re: Need ideas to cut down on costs!!
« Reply #1 on: February 04, 2016, 08:43:17 AM »
$2300 a month is relatively low, but I expect with a baby on the way it will go up.

This is the low hanging fruit. You should be able to lower that without suffering much in terms of service quality. My wife and I pay about $25 a month for two lines.
Cellphone=$104 (both total)
Wife Cellphone insurance=$12(I know this is bad but she is dead set on needing this)....

After that, the next things you can work on, although these are not outrageous would be here:
Food=$500 (includes eating out)
Dog=$40(we pay the 8yr old neighbor girls $10/week to walk our dog before school each morning)+food every 2 months or so

Depending on how many people are in the house, $500 could be good(3+ people) or it could be horrible(just the two of you). Either way its not a huge problem, but if you want to really optimize, you could start here and try to lower it to about $100 per month per person. As for the dog, that solution is obvious. Get up 30 minutes earlier and walk the dog yourself. Again, not exactly breaking your budget, but its something that could easily be eliminated if you wanted.

Other than that, things look good. Also check into the miscellaneous $300, and make sure nothing is wasted.

PhysicianOnFIRE

  • Bristles
  • ***
  • Posts: 452
  • Location: Up North
    • Physician On FIRE
Re: Need ideas to cut down on costs!!
« Reply #2 on: February 04, 2016, 08:45:06 AM »
You've got some good plans and you've come to the right spot for advice.

That water bill is surprising.  I don't know if you can do anything about it, but $900 / year is nuts.

The cell phone insurance equals my monthly cell phone bill when I don't use data.  I'm usually at $12.50 a month with the Republic Wireless $10 plan. Maybe another $5 if I use a fair amount of data.  With WiFi at home and at work, I don't use much data.

You might get further ahead with a side hustle / additional income compared to cost cutting, but you do have a bit of low hanging fruit to pluck.

New Mom and Dad

  • 5 O'Clock Shadow
  • *
  • Posts: 25
Re: Need ideas to cut down on costs!!
« Reply #3 on: February 04, 2016, 09:00:42 AM »
Thanks for the responses guys, First AZDude. The food budget is currently for the 2 of us(It also includes trash bags laundry detergent, soap, etc.). We spend on average $80-150 a week on groceries. We feel like we do okay on shopping and rarely go out to eat(now) but i will look into cutting this. I like paying the neighborhood kids for the dog walking, its a good lesson for them on money management and work etc.. The miscellaneous will be tough to keep under $300 due to me renovating the house. I am going room by room painting new trim etc. This is also money for her maternity clothes and other baby items we are still getting prepared with. AZDude who do you use for cell service?

PhysicianOnFIRE

The water bill sucks because of paying town/county water and sewage. Not much i can do about that besides move. However moving is out of the question for now at least. We just bought the house last April and will be getting free daycare from our families that live within 1 mile. Woot!

I will look into republic wireless thanks!

I have thought about side gigs but I am just not sure of what i could do for extra money especially being kind of cramped time wise especially with the baby coming in may.
« Last Edit: February 04, 2016, 09:02:21 AM by New Mom and Dad »

AZDude

  • Handlebar Stache
  • *****
  • Posts: 1298
Re: Need ideas to cut down on costs!!
« Reply #4 on: February 04, 2016, 09:28:50 AM »
We use republic wireless, but that might not be the best choice for you. You can check out the guide created by another member of the forum:

http://forum.mrmoneymustache.com/share-your-badassity/communications-tech-son-of-the-superguide!/

ohana

  • Stubble
  • **
  • Posts: 172
    • An Ocean Lover in Maine
Re: Need ideas to cut down on costs!!
« Reply #5 on: February 04, 2016, 09:52:55 AM »
That water bill is surprising.  I don't know if you can do anything about it, but $900 / year is nuts.

This depends on where you live.  OP, where are you?  (In Boston, this wouldn't surprise me at all.)

New Mom and Dad

  • 5 O'Clock Shadow
  • *
  • Posts: 25
Re: Need ideas to cut down on costs!!
« Reply #6 on: February 04, 2016, 09:57:37 AM »
Ohana i live in Southwest Virginia. Sorry i forgot that the ~$75ish is every 2 months. My bad!
« Last Edit: February 04, 2016, 10:01:07 AM by New Mom and Dad »

PhysicianOnFIRE

  • Bristles
  • ***
  • Posts: 452
  • Location: Up North
    • Physician On FIRE
Re: Need ideas to cut down on costs!!
« Reply #7 on: February 04, 2016, 09:30:15 PM »
Ohana i live in Southwest Virginia. Sorry i forgot that the ~$75ish is every 2 months. My bad!

Ok, the water bill isn't as bad as I thought.  The fact that you know your expenses and have the desire to cut back is a great start.  That may be common on this forum, but it's not the norm in the real world.  Best of luck with the baby coming, exciting times!


APowers

  • Handlebar Stache
  • *****
  • Posts: 1123
  • Location: Colorado
Re: Need ideas to cut down on costs!!
« Reply #8 on: February 07, 2016, 01:40:07 PM »
Cellphone=$104 (both total)
Wife Cellphone insurance=$12(I know this is bad but she is dead set on needing this)....

The cell phone bill seems awfully high. figure out your usage (minutes/texts/data), check out the Superguide, shop around, and you can likely save yourself at least half.

With regard to the cell phone insurance-- I would see if I could negotiate a plan for self-insurance. First, see what you can save on the cell phone bill. Then, take those savings and set them aside until you have a whole cell phone's worth, then be like "Hey, New Mom, if you ever need to fix or replace your phone, we can do it with what we saved by switching plans. Now we can save even more by getting rid of the phone insurance!"

I don't know how much of a must-have-a-cool-new-phone your wife is, but you might even suggest that instead of paying for insurance, she could put the $12/mo into a "phone upgrade" savings account, and then she could upgrade periodically without guilt. This wouldn't cut the amount out of your budget, but it would let you expand your standard of living without increasing your spending. "Frugality without sacrifice."

lhamo

  • Walrus Stache
  • *******
  • Posts: 9811
  • Location: Seattle
Re: Need ideas to cut down on costs!!
« Reply #9 on: February 07, 2016, 02:43:52 PM »
You wife's take home seems awfully low given that she isn't contributing to a retirement account.  Is there a mandatory pension withdrawal included or something?  If she has a 403b she can contribute to you should look into that to bring down your taxable income further.  Also be sure you both adjust withholdings to account for the fact that you will have a dependent to deduct (and possibly the child tax credit and other related credits) on your 2016 taxes.

Changing the water bill to reflect the actual MONTHLY cost (I would go with $50) will give you a better estimate of what you have to work with for investing.

The phones are the only obvious area of extravagance.  I'll let you keep netflix since you have a surplus to work with :)

If you have a Re:store or other salvage type place, try to take advantage of those when looking for supplies for the home reno projects.  Sometimes you can also find good salvage stuff on Craigslist.

Good luck selling the truck.   

Villanelle

  • Magnum Stache
  • ******
  • Posts: 2950
Re: Need ideas to cut down on costs!!
« Reply #10 on: February 08, 2016, 12:47:32 AM »
Given that the payment on your wife's car is $450, I am guessing it is a newer, somewhat higher end car.  Can you consider selling it and downgrading to something more bare bones and a bit older?  That would allow you to bank the difference, and would cut the insurance and probably the gas bill even more. 

New Mom and Dad

  • 5 O'Clock Shadow
  • *
  • Posts: 25
Re: Need ideas to cut down on costs!!
« Reply #11 on: February 08, 2016, 04:22:42 AM »
IHamo,

Yes she automatically contributes to a state teachers pension. We have looked into her 403B offering, but the fees were enormous!! We do have a restore that recently opened up, but we have not got off our lazy butts to check it out yet!

P.S. Thanks for letting me keep Netflix :)

Villanelle,

Yeah its a 2011 toyota rav4. MY wife bought it before we were married and has truly regretted it due to that $450 a month.. However its our most reliable, safest vehicle, and has the most room for a family. I wouldnt mind to downgrade that, however i dont think she would ever actually sell it. She is not super on board with this money saving and hopefully retiring early deal.. yet..

Dee18

  • Handlebar Stache
  • *****
  • Posts: 1620
Re: Need ideas to cut down on costs!!
« Reply #12 on: February 08, 2016, 07:03:13 AM »
You and your wife might enjoy some tips from the frugalswoods.  Just google it and you'll find their blog.  They are a couple who just had their first child.  They live a great lifestyle, but demonstrate you can be pregnant and have a new baby without buying much at all.

New Mom and Dad

  • 5 O'Clock Shadow
  • *
  • Posts: 25
Re: Need ideas to cut down on costs!!
« Reply #13 on: February 09, 2016, 04:54:13 AM »
Thanks Dee18 il check them out!

teen persuasion

  • Handlebar Stache
  • *****
  • Posts: 1060
Re: Need ideas to cut down on costs!!
« Reply #14 on: February 09, 2016, 06:58:42 AM »
What is the rate on your mortgage?

Unless you have a really high rate, you might be better funneling extra money to tax advantaged retirement accounts.  You said you are funding IRAs, and 10% to your 401k, and mandatory contributions to DW's pension plan, but her 403b has high fees.  What about maxing your 401k?

As lhamo mentioned, look into how your taxes will change with the addition to your family, and see how you can optimize your tax situation thru retirement contributions (lower taxable income, retirement savers credit, child tax credit, EITC, etc.). 


DebtFreeBy25

  • Stubble
  • **
  • Posts: 239
  • Age: 32
  • Location: Appalachian and...tolerating it
Re: Need ideas to cut down on costs!!
« Reply #15 on: February 09, 2016, 05:42:18 PM »
Your projected post-truck budget looks good. Just a few questions:

1. Which cell phone carrier are you currently using? $104/month seems high for two lines. I have Verizon, which is notoriously expensive but one of the only reliable carriers in my area, and only pay $86/month for two lines.
2. Seconding, teen persuasion on the mortgage question? I'm guessing that your mortgage rate is under 5%. If so, it would make more sense to put your money into investments (assuming they're returning more than 5%) than to pay down your mortgage.
3. Do either of you have a side hustle? If not are you interested in trying to make extra money on the side? If you aren't looking to freelance as a handy man, you may be able to barter your skills with family or friends for babysitting, house cleaning or some other valuable service.

New Mom and Dad

  • 5 O'Clock Shadow
  • *
  • Posts: 25
Re: Need ideas to cut down on costs!!
« Reply #16 on: February 16, 2016, 09:15:44 AM »
teen persuasion and debtfreeby25,

We have verizon, we are doing the family share plan with 5 people unlimited text/talk + 15GB.

Our mortgage interest rate is 4%.

Neither of us have a side hustle. I have been trying to look into ways we could make extra money on the side without compromising too much of our free time (especially with baby due in a few months), but haven't come up with anything really worth my time yet.



Kaspian

  • Handlebar Stache
  • *****
  • Posts: 1536
  • Location: Canada
    • My Necronomicon of Badassity
Re: Need ideas to cut down on costs!!
« Reply #17 on: February 16, 2016, 09:30:54 AM »
Wow, I didn't even know there was such a thing as cellphone insurance.  It's sort of funny how one person can see something as a "necessity" but others don't even know it exists.  Sort of like saying, "I have showerhead insurance.  Also, clock radio and frying pan insurance.  Because I use those items every day, if any of them broke down it'd really temporarily screw up my life." 

New Mom and Dad

  • 5 O'Clock Shadow
  • *
  • Posts: 25
Re: Need ideas to cut down on costs!!
« Reply #18 on: February 16, 2016, 09:34:44 AM »
Kaspian,

I 100% agree. Basically it does nothing except if her phone breaks it will cost $160 to replace it instead of 500-600. I think it's a waste whe thinks its important. Pick your battles kind of thing I guess.

Villanelle

  • Magnum Stache
  • ******
  • Posts: 2950
Re: Need ideas to cut down on costs!!
« Reply #19 on: February 16, 2016, 11:46:47 AM »
Since it seems your wife is not on board, perhaps you could show her the budget numbers you have and ask *her* if she thinks she can find $40 a month in savings, and show her what cuts you plan on making (> than that $40, or whatever number you settle on).  You could include some suggestions, like the phone insurance, couponing (especially if she the one who does the grocery shopping) or just pushign the grocery budget down via things like meatless Mondays or adding other cheap meals into the rotation, cloth diapering (if done sensibly at start up, rather than collecting 100 expensive diapers with adorable prints), selling the car and downgrading (you could pro-rate the total savings over maybe 3-4 years for a monthly amount), etc.