Case Study
Life Situation: IRS filing status - Married filing Joint; : 4 minor children, ages 7, 5, 4, and 3. Mom (that's me!) and kids live in SW Oregon, 37yo husband is the wage-earner working at other end of state, coming home on weekends; I'm 44yo and a homeschooling mom. We're actually just moving this weekend, leave in 2 days!
We are just transitioning to this living situation, so some of my expenses are just guesses right now. I'll have better figures for utilities in a couple of months. I am committed to making them as low as possible. Starting while I was pregnant with our youngest child, I had about 3 years of health nightmare. Adrenal system collapse, 2 strokes, atrial fibrillation heart condition, extreme anemia with a transfusion. I was basically bedridden or at best, super slow, for most of that time. I have been on the serious upswing starting 11 months ago, and really accelerating since last spring, off almost all the meds now. But for all that time, we had to have pretty much round-the-clock care for me, and Jeff lost absurd amounts of work time with my hospitalizations and appointments and such. To say the least, it sucked, and we accumulated a boatload of debt.
Gross Salary/Wages: About $100k this year. Weekly take-home paycheck is usually $1370, unless he misses days or gets overtime.
Pre-tax deductions: Davis-Bacon Pension about $400/mo. This is retirement fund that can't be accessed unless laid off from job, and then it's a big penalty. AFLAC $160/mo.
Adjusted Gross Income: $72,500.
Taxes: Carpenter's Training Fund (not voluntary): $85/mo. Federal WH $750/mo. SS $500/mo. Med $116. Oregon WH $520. AFter-tax AFLAC Disability $52 (not taxes, but deducted after tax before net).
AFTER TAX 401K: Roth 401K about $160/mo. THis is something he recently started. He thinks we can borrow against it if needed. Employer does some sort of profit-sharing/partial match thing on the 401K.
Current expenses:
Mortgage: $480
Property Taxes: $150 (monthly, about $1800/yr)
Rent for husband: $200
Electric: $50
Propane: $50
Firewood: $100 (wild guess, so far we've always cut it ourselves, which we will again if there's time before the rain comes)
Internet: $40
Husband Cell $45
Wife Cell $15-60 (depending on if Republic Wireless can get cell towers in our backwoods-valley)
Groceries: $400 (we have a lot of food storage at home plus raise our own livestock for meat, garden, etc. I may even get this lower.)
Household Items: $150
Car Insurance: $150
Life Insurance: $90
Health Insurance Husband: $320
Health Insurance Wife: $370
Kids health insurance via state $0
Mini Storage: $80
Jeff Expenses (gas, misc): $400
Jeff Allowance: $120
Tracey Allowance (includes livestock feed and home repairs): $240
TOTAL: $3450
THat is the "paper budget". The past few years reality has been much uglier, including lots of drive-through eating, baby-sitters and "helpers" for me, discretionary spending for both the hubby and I, tons of medical costs and meds. One of the results of kids and I going home will be a drastic reduction in all spending. We come out better by us being home, even after his higher commuting costs.
We're shooting to sell a bunch of the stuff in the storage unit, and then will figure out what to do with the remainder. It's his deceased-father's library of books and very large bookcases. Our home isn't big enough to have them in there, although husband plans to add-on in the future. He wants to build a shed on the property for the storage stuff, but we have agreed to hold off for now and slam on the debt.
Each of us having a separate "allowance" account that is not tied to the bill account is something we are hoping will help us to curb our impulse spending. With my health improved, I can handle things at our ranch back home, and drastically lower our food costs, and eliminate the high expense of renting in the Portland, OR area, too. He got a little saturn car for $600 that is getting 38mpg, so that is really improving the gas expenses, and with me alone with 4 kids at home, my trips anywhere will be practically non-existent, LOL. (I'm a homebody anyways.) We'll be doing at most, once a month shopping in the town 30 miles away, but more likely it'll be once every 3 or 6 months.
Expected ER expenses: not sure what this is?
Assets: Amount & description - include current asset allocation plan if you have one
Not sure that the vehicles are assets anymore. 96 Suburban, value $1500, maybe. 97 Suburban, value $800 very maybe, on it's last legs and soon to become parts for the 96, LOL. 1999 Saturn (or thereabouts) value $1200, but just paid $600 for it.
Home: 6-1/2 acres, owe about $45k, private mortgage at 10% interest, $480/mo. Not able to qualify for conventional financing on home. Value about $80-$100k? (We are figuring out what it will take to build a structure that will snag us a Certificate of Occupancy from the county, aka be considered a home, and then re-fi the property with conventional financing. We both think it'll be a 400sf structure with a few requirements inside. THat will help a lot on the long-term payoff of the mortgage. It will be slapped together with the intention of being a shop later on.)
Davis Bacon Pension - about $5k
401K - about $1500
Liabilities:
Loan #1 - $14k, 22.48% interest, 5 year term, $570/mo. Balance: $13,474.
LOC - $3000, 10.75% interest, open, $50/mo, Balance: $1543.
CC#1 - $5000, unknown, $150/mo, Balance: $5000
CC#2 - $1308, 18.18% interest, $50/mo, Balance: 1308
CC#3 - $1378, 12.90% interest, $35/mo.
CC#4 - $1790, uknown interest, $50/mo.
CC#5 - $768, 14.74% interest, $25/mo.
CC#6 - $1746, 22.99% interest, $52/mo.
CC#7 - $1754, unknown interest, $50/mo.
CC#8 - $1187, 19.99% interest, $35/mo.
TOTAL: $1037
SUMMARY: TAKE-HOME INCOME: $5480
MORTGAGE & TAXES: $480 & $150
RENT: $200
UTILITIES: $300
INSURANCES: $940 ($690 of that is health insurance)
LIVING EXPENSES: $1390
DEBT PAYMENTS: $1037
AVAILABLE: $983
So, our plan is to have all bills get paid automatically out of the direct deposit checking account. Allowances, Jeff expenses, and food and household funds will transfer automatically to a separate debit card for him and a separate account/card for me. That way we each have our own little spending account, and we don't have to track everything, plus less temptation for either of us to dip into the bill money.
We have been on this treadmill a lot of years. I am really hopeful that these changes will produce some results.
Would love to get some feedback and ideas. I have been brainstorming all day on ways to cut things, and reading back threads and through the blog posts. I'm ready for this, and I think the husband is too. Having to split the family up like this to get control of our finances is a HUGE face-punch for us both.
MouseBandit