Author Topic: CASE STUDY: absurdly high costs, a face-punching bonanza!  (Read 7826 times)

WageSlave

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CASE STUDY: absurdly high costs, a face-punching bonanza!
« on: February 21, 2014, 02:21:11 PM »
TLDR: this turned out to be ridiculously long, so: expenses high, income high, minimal free time.  Can I cut expenses without cutting into free time?

The recent "What are your annual expenses" poll shamed me into taking another look at my overall expenses, and reminded me that I have a long way to go.

Income: Primarily from my job, and is high enough that I can save substantially despite this astronomical level of spend.  Reaching FIRE won't be terribly hard for me, but I really don't want to live off the portfolio when I retire (at least not for a decade or so).  I want to have a "hobby job" (similar in spirit to MMM's construction business) that will cover my expenses.  But I doubt most hobby jobs pay enough to cover our current expenses.  And furthermore, I don't even know what my hobby-job will be: it will take some time to find out what I really like to do and enjoy, so until I find the groove, I expect income to be quite low.  And that's the whole point of a hobby-job anyway, is to emphasize the hobby part of it: the income is a nice perk, but not the end goal.  If I approach it with the attitude of, "this hobby-job has to pay $75k/year", I'm quite certain it will look a lot more like a job than a hobby.

Assets & Liabilities: The only debt we have is the mortgage on our house, which we bought less than a year ago.  It's a 7/1 ARM at 3.5% (for now).  We put about 50% down.  This rate is actually around 2.1% after the mortgage interest tax deduction is taken into consideration.  I have a typical Boglehead-style portfolio whose value is about 4x mortgage balance.  And that's why I went with the ARM: I intend to sell, pay-off, or possibly re-finance before the rate starts adjusting.

Specific Question(s): How can I get my absolute expenses down, from shameful to Mustachian?  I'll elaborate below, but right now, many of our expenses are blatant conveniences in the interest of saving time.  We have plenty of money, but consider ourselves "time poor".  I know there are a lot of things we can do to cut monetary costs---but at the expense of increasing time costs.

Expected ER expenses: The plan for our FIRE is to move out of the big city, and back home to small-town Midwest.  At this point, our kids will be older, and I intend to be at least "semi" retired, meaning, we'll hopefully be "time wealthy" or at least "time middle class".  And the cost of housing will be lower, so we'll buy our house outright.  (Although property taxes will remain high, unfortunately.)  We'll be close to both mine and my wife's extended families, so babysitting costs should go down dramatically.  Certainly no more "Professional Services" at this point.

Current expenses: These are basically the biggest expense categories, per-year, for 2012 and 2013.  There's a handful of smaller stuff that I left out, because they are effectively rounding errors relative to the heavyweights below.

My methodology: although I rounded the numbers here, in reality they are literally tracked down to the penny in GnuCash.

Code: [Select]
Entertainment           5,900    7,500
Automotive              5,200    1,900
Babysitting             1,000    5,000
Cell phone              2,300    1,700
Clothes                 1,000    1,300
Gifts                   2,000    3,300
Groceries               8,000    7,200
Household Goods         3,000    4,500
Pets                    1,900    1,800
Professional Services     400    4,000
Vacation                7,000    1,800
Utilities               5,000    4,500

I'll go through these, adding some prose in anticipation of the "obvious" responses I expect.  Fair warning, some (all) of this will border on complainypants whining, to which I'm sure MMM would reply with a facepunch and a mocking "waahhh waahhh" response.  :)

Entertainment: this one has actually averaged closer to $500/month for the last two years, but, yes, it's mostly pure indulgence.  No boats or country club memberships; I can't even remember the last time we've been to the movies.  We very rarely dine out now that we've got two kids.  But ordering in (e.g. pizza) on the weekends is commonplace.  No cable TV, but we do have Netflix with the DVDs (to get stuff that's not available via streaming).  Includes hobby supplies, craft-making stuff for my wife, and computer parts and audio equipment for me (although last year, I funded all my hobby purchases by selling something first).

Automotive: we became a one-car family last year, and I foolishly held on to the second car for far too long at that.  I take the train to work ($86/month, not shown in the table above).  We drove about 8000 miles total in 2012; that included two vacations of about 1000 miles of driving each.  2013 we didn't drive those vacations, so the total mileage will be much lower.  Most driving is short errand trips by my wife, typically once or twice a week.  We used to drive to our hometown every month or two (300 miles round trip), but have only done that once since the second kid was born.  The big cost in 2012 included $2500 worth of maintenance.  Paid-off, 10-year old vehicle (but lousy gas mileage).

Babysitting: huge for last year because it includes two days a week for our toddler to go to an in-home day care.  This started when our second was born.  For the first six months, she was ridiculously fussy (zero sleep all day, inconsolable every night from around five to midnight).  It started as a break for my wife.  We have no nearby family who can help out.  Our baby is much easier now, but our toddler has made friends at the day care, and we value the socialization aspect.

I suspect this is an area where people want to start face punching (if their arms aren't too sore from the Entertainment category).  When our first was born, my wife did try going to some Meetups, hoping to connect with moms in a similar situation.  It didn't happen.  Neither of us are particularly outgoing, so we struggle to make new friends.  Frankly, we're homebodies.

Cell phone: 2012 is high because we both got new smart phones.  Not the biggest line item, but I do intend to switch to a MVNO soon and hopefully lower the bill.  This is some "low hanging fruit" that hasn't yet been picked.

Gifts: Largely we're guilty of caving to implied peer expectations.

Groceries: One of the categories that actually went down last year!  We buy everything we can from Costco, and fill in the gaps from Jewel.  I recently finished Jacob Fisker's Early Retirement Extreme book, and for anyone else who's read it, you may remember his description of three "levels" of grocery shopping:

1. Go to the grocery store and buy whatever you feel like.
2. Go to the grocery store with a list and stick to it.
3. Really learn to cook and only buy loss leader groceries on sale.

We're at (2).  I admit, my gut reaction to (3) was that it's a sacrifice: what if the store puts the exact same thing on sale four weeks in a row?  But then I realized, the whole point of the book, being a Renaissance man, means you use your creative problem solving abilities to turn what superficially appears to be deprivation into a luxury.  So I agree with the premise.  But in the ERE world, "really learning to cook" doesn't simply mean following recipes: it means having the fundamental "food theory" knowledge to create your own recipes.  My wife and I actually enjoy recipe-based cooking, but I don't think either of us possess any real "food theory".  So being able to maintain the (hedonistic?) level of comfort we're used to while buying only on-sale foods requires an investment in time ("food theory tuition") that we don't feel we have at this point.

Furthermore, we try to buy mostly staples, but I'll admit there's more convenience foods in our basket than the truer Mustachians around here.  Part of my excuse is our picky toddler.  So we buy a fair amount of fish sticks, chicken nuggets, dried fruit, nut mixes, etc.  But we splurge on ourselves too---has anyone had those frozen mozzarella cheese sticks from Costco?  They are delicious!

This category doesn't include any restaurants or delivered food; those things would go in "Entertainment".  But it does include alcohol.  I'd say my wife and I each average three to five drinks per week.  Typically beer or wine.  We buy cheap wine (< $8 bottle), but do by micro brew beer.  Like the "Pets" category, this is something I'm happy to work longer for to pay for from my portfolio!

It also includes bottled drinking water delivery (the big 5 gal bottles that are re-used).  It was about $30/month, but has gone up to $50/month since the baby was born, as we use this water for her formula.  As a side note, the formula is actually 100% paid for by insurance, since it's by prescription.  The water is blatant hedonistic adaptation at it's finest, but we so love it!

Household Goods: As I said in the other thread, this does not include furniture.  This category for us has always been high relative to everyone on these forums.  It includes things like diapers, baby wipes, batteries, over-the-counter medications, cleaning supplies, feminine products, laundry detergent, toothbrushes, deodorant, toilet paper... I had hopes that this would go down when we joined Costco, as virtually all of this stuff is purchased there, but it didn't seem to have much of an effect.  Offhand, I'm guessing about half of that cost is for diapers and baby wipes.  And 2013 had an unusual bump due to buying a bunch of random stuff for our new house.

As someone in the other thread mentioned, there is potential for savings with DIY here.  Interesting side note (or maybe just indulgence on my part), I came to MMM via ERE, although I found ERE just as he was passing the torch to MMM.  I came across ERE by a comment on The Simple Dollar (TSD).  For anyone who's read TSD, DIY laundry detergent is one of his "classic" frugality tactics.  So I've read the description of how to make it.  Neither hard nor particularly time-consuming, but I do question the value to me personally.  I might save $200 a year or so on laundry detergent, but that's a rounding error in the numbers above.  That's why I phrased it as "death by 1000 cuts" in the other thread.  How many household goods do I have to DIY to see some significant reduction in costs?  I can see my wife and I happily enjoying each other's company after the kids go to bed, making homemade laundry detergent... but I do struggle with the vision of turning all of our already-lacking "adult time" into frugality DIY projects.  Maybe that attitude is part of my problem?

Pets: Two cats.  One is on medication.  Premium food.  We are animal lovers, and will always have pets, so this is a line item I'm happy to work more to support in FIRE.

Vacation: last year should have been zero... but one of our close friends had an out-of-state marriage, and I was in the wedding.  Airfare, hotel stay, the whole works.  IIRC, this was a six-figure wedding, so you can imagine the expectations that went along with it.  The previous year we took an indulgent resort vacation; it was when we had only one kid, and the grandparents were able to take her while my wife and I took a trip with friends.  That's certainly not a routine, and I don't expect to even be able to do that again for a few years.

Professional Services: driven by three big things: house cleaning, snow removal, tax preparation.  These I'm committed to doing away with in FIRE, hopefully sooner.  In fact, this year I bought TurboTax, but still intend to pay the accountant.  If I come up with the same result, it will give me the confidence to DIY in the future.  Before getting the snow removal service, I timed myself at over two hours to shovel our sidewalk and driveway.  Anyone who lives around Chicago knows we've had a ridiculous amount of snow this year.  This is time away from my wife and/or kids, pure and simple.  House cleaning is a similar story.  A long process, wife's high standards, time away from family.  I really expect to get away from outsourcing these things once the kids are both old enough to not require 100% adult supervision.

Utilities: I forgot to include this in the other thread.  This includes: Internet service ($50/month), water, gas, and electricity (seems like I'm forgetting something).  Gas and electricity dominate, though.  We keep the house at 67 in the winter and 78 in the summer.  I don't think that's too hedonistic.  A smart thermostat won't make a difference, since the house is virtually never empty.  It is zoned HVAC, but the kids' napping schedules leaves practically no room for scheduling upstairs' temps.  The house we were renting was poorly insulated, drafty and had an undersized HVAC system.  The new house is already showing considerably lower heating bills, despite a brutally cold winter here in Chicago.

In terms of DIY stuff, I wonder where people with young kids like us get the time?  During the week, we get up at 5:30 so we can work out (in our garage, no gym fees here).  I leave around 7:00 before the kids are up, and get home a little after 6:00.  Dinner and cleanup usually takes about an hour (the toddler is picky and eats dreadfully slow, baby is just learning to feed herself, so makes a huge mess, plus adult dishes, pots, pans, tupperware, etc).  We might have 15--30 minutes to play with the kids; their bedtime routine starts at 7:30 and ends at 8:30.  Need to be asleep by 9:30 to get eight hours of rest, so the wife and I usually get ready for bed right after we put the kids down, or sometimes hang out for 30 minutes or so.

On the weekends, we usually don't have any formal obligations, so we try to make this all about family time.  Simply preparing for and cleaning up after three meals a day for the kids alone takes up a surprising amount of time.

One way I look at it is this: I like to think I run our household finances like a business.  I think this is a natural result of learning accounting principles through the use of GnuCash, and also reading things like MMM and ERE.  So looking at our expenses from the lens of a business, we have a lot of "overhead", but it's offset by being a highly profitable business.

In other words, which business would you rather own and operate: the one with overhead x and profit 4x, or the one with overhead 3x and profit 12x?

I don't intend to stay any longer than I have to in the "12x" business.  I anticipate my future hobby job will be more like an "x" business, so I'd like my expenses to scale down accordingly as well, preferably before I leave the 12x business.

frugally

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #1 on: February 21, 2014, 02:31:42 PM »
Specific Question(s): How can I get my absolute expenses down, from shameful to Mustachian?  I'll elaborate below, but right now, many of our expenses are blatant conveniences in the interest of saving time.  We have plenty of money, but consider ourselves "time poor".  I know there are a lot of things we can do to cut monetary costs---but at the expense of increasing time costs.

Overall, it sounds like you're doing well if you're saving a lot more than you're earning.  I think the big question is where do you want to optimize?  What do you actually find yourself not needing?  I can sit here and tell you to get rid of your entertainment expenses by finding free hobbies, get your vacation expenses to zero by not going anywhere, etc.  What do you actually want in your life?  What kind of Mustachian do you want to be?  For many of us, saving money is actually considered one of our hobbies, so time is something we don't mind spending in order to save money.

Shor

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #2 on: February 21, 2014, 02:49:09 PM »
I'd like to punch in on the Entertainment section, but I don't know where to aim!
Even at $500 per month, unless you have a basement with a wooden boat, or a $10,000 super PC with lasers, where does this money go? Reconsider what you get out of these, and understand how happy it makes you. Or heck, maybe turn your side-hobby in to a side-gig to fund the next project?
Let's just say, Pizza and Netflix is not your problem here. :)

Good luck in paring down these expenses! It might take a lot more soul-searching and changing yourself first before getting to the actual actionable items, just a forewarning!

Noodle

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #3 on: February 21, 2014, 02:52:58 PM »
You will get lots of suggestions on the money front. In terms of time, since you brought it up specifically, you might think about whether your evening routine is working for you right now. When my friend's twins were little, they got fed a very simple dinner as soon as everyone arrived home from work/daycare. The kind of thing that took one parent about as long to prepare as it took the other to get both kids into clean diapers and strapped into high chairs--cut up chicken, plain veggies, yogurt, pasta, whatever. If they wanted them to try "grown-up food" it was usually leftovers. One parent would usually sit with them for mealtime supervision/companionship (both if it was turning out be a particularly challenging night). Family bonding time was really during the bedtime routine with stories, songs etc. and it was all wrapped up by 7-7:30 at which point the adults would make and sit down for a real meal and a chance to talk to each other. They experimented on the weekends with family dinners until it was clear the kids were ready for it. Until 3ish, trying to eat as a family was more work than it was rewarding. At least one child development expert I have read discourages trying to do family dinners until 4-5 because you spend all your time dealing with behavior and no time modeling the good things about family meals. I thought that was a little excessive myself but I saw the point...some days I still wish the 6-year-olds were eating separately a la the British nursery...


TLV

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #4 on: February 21, 2014, 03:16:16 PM »
In terms of DIY stuff, I wonder where people with young kids like us get the time?  During the week, we get up at 5:30 so we can work out (in our garage, no gym fees here).  I leave around 7:00 before the kids are up, and get home a little after 6:00.  Dinner and cleanup usually takes about an hour (the toddler is picky and eats dreadfully slow, baby is just learning to feed herself, so makes a huge mess, plus adult dishes, pots, pans, tupperware, etc).  We might have 15--30 minutes to play with the kids; their bedtime routine starts at 7:30 and ends at 8:30.  Need to be asleep by 9:30 to get eight hours of rest, so the wife and I usually get ready for bed right after we put the kids down, or sometimes hang out for 30 minutes or so.

We have a 2 year old and a 4-month old. DIY is certainly more challenging than it would be otherwise. One big thing is that my job/commute just requires less time than yours - I typically leave home around 8:30 and get back a little after 5 (10 minute bike commute). Not saying you could do the same, but those extra hours provide a good chunk of my DIY time (particularly as sleeping later in the morning allows me to stay up later at night, after the kids are asleep).

The other big thing I do to get time for DIY/hobbies is whenever possible include the toddler. Working out? She has a little dumbbell that she mimics me with. Working in the garden? She has a trowel. Anything with tools? She loves to hand me the (non-sharp) tools as I need them. Cooking? Sometimes she'll help measure things (with help), but mostly she just plays with spare utensils and measuring cups.

PindyStache

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #5 on: February 21, 2014, 03:27:21 PM »
Thanks for posting and overall sounds like you are doing very well and have a wonderful, loving family, congrats!

It also includes bottled drinking water delivery (the big 5 gal bottles that are re-used).  It was about $30/month, but has gone up to $50/month since the baby was born, as we use this water for her formula.  As a side note, the formula is actually 100% paid for by insurance, since it's by prescription.  The water is blatant hedonistic adaptation at it's finest, but we so love it!

WTF! This is an pet peeve of mine. How ridiculous is this! You have the privilege of living in a country with nearly unlimited, inexpensive, safe, totally clean, and health-promoting drinking water. Yet you are paying someone to draw water from some remote place of wilderness or run it through some silly filter with made-up names, then get in a ginormous truck that gets gallons-per-mile and sits idling while they break their back unloading giant drums of H2O--all for the sake of having something fancypants that is probably actually worse for your health than municipal water! I just hope that poor soul doing that schlepping is laughing at you after he leaves!

Other random things to consider:
-We are also anti-mustachian disposable diaper clowns (did cloth until daycare, but they wouldn't and it didn't work to do 1/2 and 1/2). We find diapers are a bit cheaper on Amazon than at Costco. Also just don't change the kid very much. Obviously YMMV, but with the newfangled diapers these days a bit of wetness doesn't really matter.
-Also have no idea how entertainment adds up to your sums
-You seem to know this already, but you are paying for silly professional services. Get out that shovel man and remember, muscle over machine! Enjoy the hour or two of zen after a big storm.
-Do you turn the temp down at night? We also just turn it down during naps--they're just sleeping under blankets right? Our little one has been fine with this

I agree that time is in short supply at this stage of life. My own schedule is similar to yours (though only 1 kid at this point and both wife & I work--she more than I). DIY is usually during naps on weekends, or some projects where kid (2yo) can be entertained enough to help. Last weekend I gave him a brush and he mimic'ed me by cleaning his bike as I did mine for ~20 min at least. One strategy that aligns with Noodle's is to focus a few hours on the weekend to prep food for the week, ideally making 2-3 dinners that can just be pulled out and warmed up in short order then leave leftovers for lunch/other dinners.

Best of luck, though you have a way to go until "Mustachian" (as do I...)

mollyjade

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #6 on: February 21, 2014, 03:35:07 PM »
The time crunch and diaper expenses are temporary unless you're planning on more kids.

But something is downright fishy about that entertainment category. Unless you're eating pizza every night, it's hard to spend $500/month on pizza, Netflix, and yarn (or whatever craft supplies your wife is using). Take a look at that category. Where is the money actually going?

yogagirl95

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #7 on: February 21, 2014, 03:40:59 PM »
On the days you have to shovel or mow, you skip your workout. It IS a workout. Paying someone to do it for you when your kids are young is just plain stupid, sorry.

lhamo

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #8 on: February 21, 2014, 03:50:53 PM »
First of all, take a deep breath and relax a bit.  It is hard putting your details out there, but now you've done it and we're here to help -- in that slap upside the head, MMM tough love kind of way.

You are at the stage in adult life when it is probably the absolute hardest to optimize.  Two kids under 5 means both time and energy are extremely limited -- even with a SAHP.  A lot of people HAVE to optimize at this point, because the single salary means there isn't a lot to go around.  You have the "problem" of a good income, which takes the pressure off a bit.  That is both a good and a bad thing.  Bad in that unless you and your spouse have a common ethos and a common goal, trying to optimize while she is caring for a toddler and a baby is going to be challenging and most likely a point of tension.  Good in that when you feel that tension developing you can ease back a bit, talk about goals and do a cost/benefit analysis on whatever you are doing, and then recalibrate and try again.

Entertainment is obviously the first place to look at cuts.  If you really want help, dig into those spending records a bit more and post a breakout of where that money went.  I bet you can easily find 300-400 of "fluff" to cut there.  If you are short on time, maybe your spouse needs to put the crafting on hold for awhile, or else make things that she can sell on Etsy -- suggest you offer to give up a costly hobby, or shift it to an income-generating one, at the same time to keep things even. 

Food -- another easy place to cut, even with your weekly beer/wine habit intact.  I think you are imagining the challenge of developing that "food theory" to be larger than it really is.  All you really need is a set of 10-20 recipes that are kind of mix and match that you can rotate through every 2-3 weeks.  Variations on pasta, different types of stir fry with rice or noodles, grilled or roasted meats with side veg or salad, hot and cold sandwiches, fritattas, something in a wrap or tortilla, and some soups and stews are all good things to start with.  It is kind of dated now, but the Tightwad Gazette has some great basic recipes that you can use as the base for experimentation, mixing and matching different components within a core framework -- I've been using the muffin recipe for over 15 years now and my spouse/kids STILL love my muffins!  You might want to consider investing in a crock pot (preferably purchased from a thrift store or garage sale) so that your wife can start dinner early in the day and then have time to do other stuff.  It is hard but dealing with your toddler's picky eating now will serve you well in the long-run, as well.  It is ridiculously easy to make things like chicken fingers/nuggets yourself, as well.  One thing to be careful with when using Costco as a main source of food is wastage - it is very easy to overbuy there, and end up throwing food out.  This is also where the food theory thing comes in, but again, it isn't really that hard -- notice that some of the veggies you bought last week are getting a bit past their prime?  It's soup night, stir fry or frittata time!

Gifts.  Practice controlling your reaction to the social expectations.  Don't spend large amounts of money on your own kids or each other -- that is actually a great way to start.  With close family and friends, have an honest conversation about expectations, maybe framing it in terms of wanting to reduce consumption/limit your kids focus on getting new stuff as a source of pleasure or entertainment. 

Babysitting.  Can see the utility of this, especially when your kids are small, but you and your spouse should be talking now about what the long-term plan for this is.  Is she planning to go back to work at any point?  Are there skills she can be developing over the next few years so that once both kids are back in school she has better income-generating potential.  These can be tricky conversations to have, but it is a really important part of aligning expectations and making sure you both are working toward the same goals.  For now it is probably a good investment in your wife's mental health and in your marriage, but what you don't want to end up with is two kids in full-time daycare or school and a partner that is not making a contribution in some way toward your joint financial goals.  See the recent thread on divorce as a financial weapon of mass destruction for some horror stories about how that whole pattern can play out.  Also, I understand the whole homebody/introvert thing, but your wife needs to make more of an effort here.  If she can find another SAHP she gets along with who has kids similar in age to yours, that could easily be worked into a "I'll watch your kids two mornings a week if you do the same for me" kind of trade off.  Starting with the older one, obviously.  As kids get to the age where they can play together for longer periods of time (some at 3, most by 4), it is actually often EASIER to watch two of them than deal with the "mommy, play with me!" cries of just one.  They entertain each other.  Think seriously about what you are going to do with this.  Right now it looks like you are spending about $400-500/month for very part-time care for one child.  That will double if your wife expects to put the second child in a similar arrangement in a year or two.  Be sure you are on the same page about the plan here.

Household goods:  Probably a bit late here, considering your oldest is a toddler already, but have you considered cloth diapering at all?  the initial investment can be a bit high, depending on what system you go with, but the long-term savings are huge.  Since your wife is a SAHP, there may be ways to bring this down considerably by watching for good sales/rebates and using coupons.  Household goods and toiletries are a place you can save tons of money if you shop in a smarter way -- it does take time, but it is something she can gradually get the kids involved in (coupon cutting is fun for kids!)

Automotive:  Though you are not driving much, it might be a good time to swap your older car out for one with better gas mileage.  Repair and maintenance costs will be less, and you'll increase the reliability factor as well as reduce spending on gas. 

Services:  DO NOT CONTINUE TO PAY AN ACCOUNTANT!!!!  I really don't get why people do this.  We have ridiculously complicated taxes due to the foreign earned income tax credit but I do them myself every year.  And I can't even use a software package -- I do them by hand.  In less you are a gazillionaire day trader or something it isn't that hard to learn to do your taxes.  Housecleaning -- don't get the correspondence between your wife's high standards and the need to hire this out.  If she has high standards, why can't she meet them herself?  Housecleaning is something you can do as a team and involve your kids in as they get older.  Some of her stuff annoys me (I will NEVER wear my shoes in the house), but I have found a lot of the Flylady systems to be helpful.  Again, really important to discuss and align expectations here -- maybe the cost/benefit analysis shows this is worth it while you have two small kids, but there needs to be a long-term plan so that this stops at some point, at least as long as one of you is a SAHP.

Time management:  How long are you working out every morning?  Look into HIIT or similar approaches to optimize here might get yourself a bit more sleep and/or time with each other and the kids.  Agree with the suggestion that it might be better to feed the kids earlier.  Bedtime routine seems a bit long -- what is included there?  If a daily bath is part of it, you might want to reexamine that -- kids don't really need a bath every day, and it isn't good for their skin anyway.  Sounds like you have an hour commute -- any way to reduce that?  I;m guessing not as you just bought the house, but maybe you can work from home one day a week (hard with little kids in the house, I realize).  You can cut the dinner prep time but doing batch cooking on the weekends.  If you can stand it, consider leaving the dinner dishes in the sink to soak overnight, and wash them with the breakfast dishes in the morning.

Bottled water -- ditch this NOW!!!!  If Chicago water tastes awful, get yourself a Brita filter or something similar.  This is just a silly, silly expense that you definitely can get rid of.  Bam -- $600/year back in your pocket.

OK, I'll stop now.  Hope some of these suggestions are helpful.

 




mollyjade

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #9 on: February 21, 2014, 04:03:41 PM »
An easy way to get the grocery costs down might be to just keep your receipts for a few weeks. Then sit down with them one weekend, and figure out what your favorite meals cost you. If you're like most people, you probably have a few meals that you repeat fairly often. Likely some of them are cheaper than others, and you can favor those. That's an easy way to save money without actually changing what you cook or where you shop.

happy

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #10 on: February 21, 2014, 04:42:52 PM »
Waaah, Waaah, Waaah!
Look there's tons of things to do and you actually know it. You just need to keep challenging yourself.
suggestions:
-Pick one thing of your list of mustachian shames, the one you feel most confident of changing and do it. Just do them one at a time. Keep thinking about how you could manage without x or y in the meantime.
- Do a "no-spend challenge"…you could pretend you have no income for a month and cut everything!, or you could do a specific challenge e.g. no spend on silly water.  The point is that you do it long enough that you are forced to adapt to something else, and realise that you can do without said item.  A no spend period is a game for a short period, so you can try out various no spends without committing to them forever. Invariably it leads to some lasting change if you are open to it.
- In my experience the grocery chains do rotate their specials regularly…go try it.
- If you can't bear to stop something, try spending half, either use half as much or do x or y half as often.
- Try not to buy anything until you've used up what you've got e.g. soap, cosmetics, clothes, food etc.

We think spending = convenience, but actually it costs time and energy also.  The fewer lines on the budget the quicker and simpler things get.



ZMonet

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #11 on: February 21, 2014, 05:11:45 PM »
Regarding the water, get a reverse osmosis system.  You can install the system yourself, they aren't pricey and filter changes will be less than a Brita.  On demand water...You'll love it.

MayDay

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #12 on: February 21, 2014, 06:17:08 PM »
As someone with young kids, I can relate to a lot of your dilemmas. 

We lived in MN until recently and it definitely sucks to shovel snow with littles.  But in another winter or three, they can be right out there with you while you shovel, "helping" and having fun and getting their own fresh air and exercise. 

I would keep the daycare as a last thing to cut.  Well worth the socialization and having a little time with just the baby.

One of the things that helps me the most is keeping easy to cook stuff on hand.  This is a combo of simple meals that we always have ingredients for (pasta and jarred tomato sauce, or fried rice made with rice and frozen veggies and an egg, for example) having a list of easy crock pot meals (perhaps you can throw one together in the morning for your wife before work, if she is predicting a busy or tough day) and things in the freezer that can be heated up in a hurry, but aren't expensive convenience items (make a triple batch of a soup or stew and freeze in smaller portions, same with sloppy joe meat, meatloaf, lasagna, etc).   I don't know why you feed your toddler so many "toddler foods"-I know some kids are ungodly picky and you have to keep weight in them somehow.  But if you are doing it mainly out of habit, consider ditching the habit and feeding him regular food. 


Cassie

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #13 on: February 21, 2014, 11:11:26 PM »
Since your wife is a SAHP like I was for a number of years she should be handling the home front. She can use cloth diapers, etc and have dinner ready when you get home.  Then if the 2 of you put the kids to bed at 7pm you could have a few hours of adult time before bed.  This may sound old fashioned but if one parent is at home that is their job. She could decide to do the evening dishes in the am.  I agree that the daycare is great for socialization purposes a few times a week-in the old days there was old fashioned nursery school -2-3 x's a week for 2 hours with the same purpose. 

Gray Matter

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #14 on: February 22, 2014, 06:18:30 AM »
You've gotten plenty of advice and a few face punches, so I won't go into that much, but just wanted to pipe up and say that I could have written your post a few years ago.  It is extremely difficult with young kids to feel like you have enough time in the day to do your job, raise your family, and get household/yard stuff done.  We were real DIY people until we had little kids, and then we felt like we were drowning and every day was a struggle, so we outsourced as much as we could. 

One key difference is that both DH and I worked full-time.  When it got to the point where we really felt like we couldn't keep doing it all, I decided to keep doing a job I enjoyed in order to pay people to do things I don't particularly enjoy doing, rather than quitting my job in order to do them myself (at the time, those honestly felt like the only two options).  When you have a SAHP, you lose a bit of the "we have more money than time" justification.  I am not minimizing the amount of work two young children are, and I know how difficult it is to get anything else done, but I think both you and your wife need to try a little harder than you are.

Don't view snowshoveling as time away from your family, but rather as exercise.  Do more tag-team parenting--the few months I was a stay at home parent, tossing the baby at DH the moment he walked in the door and going outside to shovel felt like blessed relief.  Challenge yourself to question how much pleasure something is really bringing you, or how much stress it is really reducing, before assuming you need to keep it.  There is a good chance you have simply adapted to having it and it's not really bringing you much benefit.  If it is beneficial, look for less expensive ways to get the same thing.  Perhaps a co-op preschool?  Don't look at home-made laundry detergent or cooking as a chore, but as something fun and interesting that you and your wife can do together--it doesn't have to take away from quality time, it can BE quality time.

And if all else fails, know that it'll all start to feel different in a few years.  When my youngest turned three, all of a sudden I had room to breath again.  And a few years beyond that, they can help more than they hinder.

lizzigee

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #15 on: February 22, 2014, 02:59:18 PM »
Definitely NOT wife bashing (I have been a working mother of two so know that every day throws up unexpected challenges) but are you both sure that you need a cleaner? Your wife is home all day by the sounds of it,and two days a week has only one child at home.  Just do a bit where either of you have a minute. It doesn't take long to chuck on a load of washing, or prep veges for tea, even if it is 10 in the morning, or 1 in the afternoon. Have a container handy for your toddler's toys, and make it a game for them to put their stuff in there. Tuck it away, quick swoop with the vacuum and room tidy!  I realise this is oversimplification and I don't know your personal situation, but don't over think things like cleaning schedules when your kids are little. Decide what is important to yourselves as a family, and go with the flow. I wouldn't stress out trying  to be super-mum or dad and have the perfect house, routine etc.   As an earlier poster pointed out, bedtime routine can be family time, not just another job to try and fit into an already busy day.  When your children grow they will remember having fun in the snow with Dad or playing hide and seek with Mum rather than remembering that the dishes were done and put away by 7.01 pm each night.  Good luck with your plans, best wishes for your family.

WageSlave

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #16 on: February 24, 2014, 10:24:13 AM »
Thanks everyone for all the helpful feedback and facepunches.  Some general remarks:
  • My commute is about 30 minutes door-to-door (one way).  That's walk-train-walk, with about 15 minutes on the train.  I'm about seven miles from the office.  We literally just bought a house, so moving is out of the question.  A 30ish minute commute to downtown Chicago seems pretty typical, unless you actually live downtown.
  • The evening routine with the kids is family time that we are pretty happy with.  Despite how young our kids are, dinner does feel like a true "family meal", and at this point, it's fairly smooth, albeit lengthy.  The toddler eats so slowly, so she gets served first.  While she eats, we have time to feed the baby and ourselves.  We do all cleanup while the toddler continues to eat.  This is about an hour from when the toddler starts eating to when she's done.
  • The kids' bedtime routine is actually more like 45 minutes, although it is an hour on bath nights, but that is every third day.  About 15 minutes to do potty and brush teeth, then about 30 minutes of reading.  Add another 15 minutes for bath.  Kids are done in parallel, and the baby takes much less time.
  • When I get home from work, I could take over as "Mr Mom" and let the wife do cleaning or shoveling or whatever.  But neither of us want this.  This is seen as family time, and it's important to us.
  • As far as the morning exercise routine, we spend about an hour, and actually alternate who works out.  This is done first thing in the morning while the kids are still sleeping.  We are doing strength training, and at least for now, the priority and focus is on getting stronger.  My wife just started, so I am acting as her coach.  I know everyone has their opinion on the best/most efficient workout or whatever.  But the rationale that I'm going with is getting stronger is to the body what saving money is to finances.  I don't need to be able to squat 400 pounds right now in the same way I don't need a huge FIRE portfolio.  However, both the strength and monetary reserves will improve our quality of life in the future.
  • I tried to convey this in my original post, but the "Professional Services" category is something we're simply willing to live with for now, but recognize these will go away when the kids are older.  Lots of loving facepunches for the snow removal service.  But, it snowed almost every other day in Chicago in December/January, and manual, one-person shoveling requires a hard two hours.  We have a driveway that slopes downward from the street into an attached basement garage.  We have to stay on top of the snow removal or we run the risk of getting snowed in, as well as overwhelming the sump pump if it were to melt suddenly (and weather around here is unpredictable enough for this to be a reality).  Were we to do this ourselves---which I admit, we could---it would mean giving up about half our workouts and/or giving up our evening family time.  As for the cleaning, my wife and I are already discussing changes to this.  We're thinking of giving up some weekend family time to be dedicated house-cleaning time.  One person would watch the kids and the other would clean.  And yes, I fully intend for this year to be the last we pay someone to prepare our taxes.  We spent about 2.5 hours this weekend getting started in TurboTax, and we're maybe half-way done.  But I recognize much of that time is the "tuition" cost which should go down next year.
  • I meant to do a breakout of the Entertainment expenses this weekend, but didn't get a chance.  What I posted is a rolled-up number, comprised of three sub-categories: dining-out, hobbies, and miscellaneous.  So the detailed numbers are already there, it's just a matter of pulling them.  But I agree, it's out of control.  I think this is going to be our first priority to dismantle.
  • Easing up on the HVAC at night is a no-brainer, falls into the "why didn't I think of that" category.  Duh!

I think the big question is where do you want to optimize?  What do you actually find yourself not needing?  [...]  What do you actually want in your life?  What kind of Mustachian do you want to be?  For many of us, saving money is actually considered one of our hobbies, so time is something we don't mind spending in order to save money.

Good questions... The two things we want most are family time and to be free from financial worry.  Being FIRE'ed clearly supports the more family time goal.  But in getting there, there's a balance: how much of that time are we willing to give up now, in exchange for more in the future?  I mean, take it to the extreme: I'm sure my wife could find a job that pays more than the cost of full-time child care, and one or both of us could give up our evening/weekend time for side gigs that still bring in more money.  IOW, completely give up family time now in exchange for "full FIRE family time" to get here sooner.

Regarding saving money being a hobby in and of itself.  This takes me back to the luxury vacation we took with our friends a couple years ago.  I distinctly remember a moment where I found myself thinking, "This vacation is great and awesome and fun... but it's also costing a fortune.  What would the MMM community say?"  And I remember wrestling in my mind, do I want to be someone who puts saving money as first and foremost in my life?  Do I want that to always be my first consideration?  Sometimes, I'm not sure.  I certainly don't want to forget about it or never consider it!  But I guess I still haven't found the balance I'm looking for.

Anyway, thanks again everyone.  Only on the MMM forums do you find people being thankful for being punched in the face.  :)

Cassie

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #17 on: February 24, 2014, 12:35:32 PM »
Sorry but cleaning on weekends is ridiculous! Your wife is home -that is her job.  I stayed home with 3 little boys & handled everything because my hubby worked to support us.  The only thing I did not handle is maintenance of the home.   Once the kids went to school I went to work & then we split chores.

Villanelle

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #18 on: February 24, 2014, 01:15:08 PM »
Could you buy a snowblower to cut that 2 hours way down?  In the long run, it would save money, especially if you can find one used on Craigslist. 

Drew

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #19 on: February 24, 2014, 02:01:09 PM »
I don't have much to add, but if you want more free time I would recommend sleeping less.  Sleeping 8 hours a night doesn't leave much free time during the week when you add up time at work, commuting, meals, etc.  You CAN get by just fine on 6 hours of sleep.  It takes some getting used to, but your body will adjust and eventually you won't even be able to sleep 8 hours on the weekends.  It sucks at first, but I'm glad I was forced to cut back on sleep because now my days feel much longer.

MicroRN

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #20 on: February 24, 2014, 02:47:47 PM »
The bottled water is a problem.  A Brita filter would be a cheap and easy replacement, but you do have to keep refilling the jug.  A reverse osmosis system works beautifully, and my husband installed ours in about an hour and a half.  The system cost us around $175.  Where we live now we just drink tap water, but that house had really awful tasting city water and the filtration system made it taste like bottled.   

Cleaning time can be dramatically reduced by embracing minimalism, especially when it comes to children's toys.  We're pretty ruthless about getting rid of toys that aren't played with regularly.  Similarly, fewer clothes actually tend to mean less laundry and time spent folding.  DH and I work hard to streamline our lives so we spend less time cleaning and more time having fun.   

I agree with the importance of family dinner time.  It's how I was raised, and we've done that since the babies were tiny.  We can now take our 1 year old and 2.5 year old to a restaurant and get compliments about how patient and well behaved they are, because they're used to sitting still for a family meal.  I also think the daycare can be worth is for socialization, but that should give more at-home time to clean and do other household chores and maintenance.  Days that I'm at home, I tend to let my toddler indulge in 30 minutes of Thomas the Train while the baby is napping.  That gives me a quiet 30 minutes to clean and prep food.  I throw laundry in and get it clean throughout the day, then DH and I will fold it after the kids are asleep while chatting or watching a movie.

Diapers - Look for the best deal on disposables.  For size 4 in big boxes, Costco is ok - 21.6 cents/diaper.  Target is better - 17.2 cents per diaper.  Target wipes are 1.8 cents/wipe, while Costco are 3 cents.

Even with a household employee (nanny), I do our own taxes.  It's not difficult, it just takes a little time.  I use Taxslayer online since DH is active duty military and we get it for free.  The tax programs are pretty robust.  They ask you questions, and even run comparative calculations for you.

frugally

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #21 on: February 24, 2014, 03:13:34 PM »
My recommendation would be to start trying each item you want to cut back on one at a time.  For example, you could cut out a cleaning person for one month and see what happens.  Was that worth it?  Cut your restaurants in half for one month, same question.  Don't tackle everything at once or you're going to get frugal-fried.  It's a slow process, especially when you have kids and an established lifestyle.

MayDay

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #22 on: February 24, 2014, 06:54:56 PM »
I stay at home with a now 4 and 6, and when they were baby and toddler aged, LOL to cleaning during the day.  I could pick stuff up, but I couldn't actually scrub stuff.  My goal was to keep all the stuff generally picked up during the day, and do the serious cleaning when my h was home to distract them. 

If you aren't willing to give up evening family time, then cleaning on the weekends makes sense.  When one of you works out in the morning, is the other person sleeping, or taking care of the awake kids, or what?  Would it be easier to divide the weekly cleaning into ten minute chunks each day, and tackle them either as part of the dinner clean-up routine, or in the morning before the kids are up? 


Noodle

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #23 on: February 26, 2014, 07:28:06 AM »
Although there are some places where you can just cut costs (for instance people who change insurance or cell phone plans), an awful lot of Mustachianism involves trading time for money, especially at first when you are learning new skills. At this point, during the week, you want to sleep eight hours, and you are away from home eleven hours. So the five hours you are home and awake are pretty precious and you seem pretty dedicated to spending an hour on the workout and 2.5 hours on the dinner/play/bedtime ritual with the kids. Then at some point you need to do things like take a shower (please!) etc and you are more or less out of time. So yes, if this particular division of time is really important to you, there's a limit to how far you can get. You do have 32 waking hours on the weekends to work with, but again, it will depend on how much time you and your wife want to put into family time vs. other activities.

Your wife is the one with a bit more flexibility (not more time, I know caring for two very young kids is a full-time job right there). You haven't said as much about her perspective and activities, but if this isn't a place she's at right now, again, the money for time tradeoff may have to wait until the family situation changes.

Good luck with it all!

greenmimama

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Re: CASE STUDY: absurdly high costs, a face-punching bonanza!
« Reply #24 on: February 26, 2014, 11:30:45 AM »
As far as DIY stuff, it is much harder with little children, but we just either do some on Saturdays when one of us keeps an eye on them and the other does the work, or most of the work gets done at night after they go to bed and before we do.