The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: fruitfly on January 07, 2016, 04:53:50 PM
-
[removed for privacy]
-
Questions:
1) Why is he not contributing to a pre-tax plan?
2) What is the HELOC for?
3) What are your salaries?
-
You already realize there's ~$2,000 to cut from your food budget...when's the last time you've priced car insurance? $137/mo seems high.
-
You do not need to sell the house but the spending is crazy. You are focusing on cutting cable and TIVO and you have a $3000 grocery bill. That means you are spending $100 a day on food!!! I think you need to cut that to $1k... minimum.
Car insurance does sound a little high but I pay that much for a newish car in a major city... with two at fault accidents. Maybe you are in a similar situation.
You need to: start paying off the loans.
$264 a month is for ALL the student loans?
-
You need to break down misc too. $800 is really high especially with that food budget. As for the TIVO is it a Comcast box that has an antenna input? If so, I would actually tell you to spend a bit more money and pay for the lifetime service from TIVO and hook up an over the air antenna. Once you have it dialed in cut the cable cord.
-
The car insurance is higher than I'd like because of a driving record. But it has collision and comprehensive which I really don't need. I think that would drop it to $100 a month or so. I am also going to shop around.
I agree the food bill is insane. The most irritating part is I am great at sticking to a once a week grocery trip for dinners & breakfasts (and lunch leftovers). The eating out lunches and take out dinners are killing us. I need to delve deeper into that part of my bank statements (because there is no way I can be eating or even drinking that much) but in any case it is pretty much stupid money.
Yes, $264 is all the loans, basically paying the interest and making a slight dent in the principle. I know I need to put way more towards it.
-
$3000 a month for food is amazing. I would love to see a breakdown of that….like how many meals out and the average price, etc.
What the heck is a Craft3 and why does it require a huge loan?
-
You have so much low hanging fruit that with a few changes you will be saving a huge amount of money.
Your food spending is INSANE. And that's coming from someone who has spent more $ on food/booze than housing on a regular basis (with a lot of help from my husband). Just STOP eating out in order to break the habit. Cold turkey was my method-we instituted "Austerity August" and didn't eat out once (including convenience food like the hot bar at Whole Foods) for an entire month. It really helped break the mindless habit of spending $ on food.
We will never get to a $150/month food budget like some people here do, but there is plenty of room between $150/month and $2-3k. Try spending just $1000/month on food. That's $250/week at the grocery store if you just buy groceries, or you could do $200/week at the grocery store and save $200 for eating out/date nights/etc.
Figure out what the miscellaneous is, chances are you could cut a ton from that category.
Next up, your cable/internet/cell/etc. bills. There are a zillion threads about ways to cut that here, do a search. Do you even need a landline at all? If you have Netflix and Tivo and everything else, you could cut cable too. We have $55/month internet from Comcast plus we each have a cell phone.
$71 for trash-is this required, like a city tax or something? Can you just take the trash to the dump/recycling center yourself?
$39 alarm-do you live in a good neighborhood? Sounds like it from your post, so cut this out.
Power and gas also seem super high-look into your usage and see if you can get this lower. More insulation/lower the temps, etc.
You have a lot of debt and very little retirement money and you're both in your 40s-that's scary! You could EASILY start putting away $3000/month with a few changes.
-
The car insurance is higher than I'd like because of a driving record. But it has collision and comprehensive which I really don't need. I think that would drop it to $100 a month or so. I am also going to shop around.
How old is the car and what is it worth? You are still paying it off - I would assume, or hope, that it is a relatively new car - and cannot afford to replace the vehicle if it were totaled (your current finances seems as if you may not be able to but I may be wrong) then I would recommend keeping comprehensive/collision. Again, these are relatively small amounts compared to the larger expenses you have going on.
We might come off as critical or harsh but we want to help! You will get good advice from others. Hang in there.
-
Why is your HELOC interest rate so high? Is your credit marginal? See if you can refinance that at a much lower teaser rate and then pay it off with cash flow from your savings on the food bill and other categories. Like in a year, if you focus.
What is Craft 3?
Get MINT OR Personal Capital and track your spending. All of it. There an incredible amount of waste and you are drowning in it. Understand where the money is going, and create ways to avoid the unnecessary portion.
-
...there is no way I can be eating or even drinking that much
It is possible that you aren't spending as much on groceries and dining as you listed, because all the listed expenses total more than your income.
Of course, spending "only" $1500/mo on groceries and dining would still be appalling.
Completely agree with all the suggestions about using YNAB/Mint/Quicken/whatever to track your spending. You can download a spreadsheet at http://www.vertex42.com/Calculators/debt-reduction-calculator.html to help you analyze debt repayment options. The spreadsheet mentioned in the http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-%27case-study%27-topic/ can help you reconcile your income and expense estimations.
Given your combined income you have every chance to fund significant savings. Good luck!
-
I'm guessing that, with two professional careers abd two kids, you do great doing your weekly grocery shop and then too many nights you get home, see a fridge that has "no food, only ingredients" and pick up the phone. And then at the end of the week (proverbially) the groceries go in the trash.
We have no kids and we do that too much.
But when one of us has the strength to fight, we fish some frozen potstickers out of the freezer. Or make pasta.
But we try to avoid that, by meal planning, doing prep work (chopping, etc) in bulk, taking turns cooking, making extra for leftovers/lunches. Lunch tip: if I don't pack it in the evening, I won't pack it.
As far as motivation, two things: what if, God forbid, something happened to one of you (for the time being, let's call it job loss so the daycare bill goes away)? If you can live on one if your (totally decent!) incomes, you are SO much more secure. Second: the behaviors you model today are what your children will see as normal. Do you want them to be college students/young adults who see cooking as a normal part of life, or who think food comes from the place down the street?
-
From a pure $$$ standpoint - I would vote to sell the house, pocket the 200k and rent somewhere until the next housing dip happens (which it will in the next few years). Then buy another house.
As far as all of your other spending goes - I think the other posters have been driving home the points nicely. I am +1 for ditching comcast. Just pay for internet and stream things you want to watch.
I am honestly blown away by your monthly spending. I think cooking at home is the best place to start here. Once you get in the habit of cooking at home, lots of other spending goes away because you are not always on the move and spend more time just chilling. Also, wine is very cheap and if you like drinking - cooking and wine is the way to go. Around here I there is a 6/36$ deal on bottles of wine. I cook and drink like a champ for very cheap.
-
Do you actually have a $741.88 401k loan, or is the payment $741.88? Also, why does this exist?
Do you have credit card debt? I worry about MDM's point that your listed expenses are more than your income.
-
It looks like craft3 is a weird banking nonprofit that gives consumer loans for energy efficiency upgrades, as well as business loans.
-
Hello tikimama
Glad to see you posted a full case-study after your previous question re: where to put your holiday bonus.
I agree with the earlier responses here. In short, you've been spending more than you've been bringing in, and that's led you to the situation are you in. On a positive note, you are blessed with considerable income. The cold water; lifestyle inflation sucks to reverse, and it's going to take some constant vigilance to fill in the hole you've spent the last several years digging.
A few things to note:
Comcast "triple-play"- Time to cut this down to internet only. Remember, you're in hair-on-fire mode right now
Alarm: Cut. Many threads on this but alarm systems aren't worth the money - other actions (illuminated doorways) do as much good.
Daycare: research other options. This is a huge expense, it's worth it to see if you can get it down a few hundred$.
Tivo: cut. Debt emergency, remember?
Food: This absolutely needs to come down. $500 is a reasonable goal for a family of 4. No more restaurants. No more bars.
Car payment: Almost done, but what kind of vehicle is it? consider selling, buying cheaper and attacking one of your student loans with the proceeds.
Misc: You need to figure out where $800/mo is going to... that's almost $10k/year going... where?
Even if you just do some of these you're could free up $1500/mo for debt reduction. Once your car-loan is over that frees up another $363/mo. In debt-reduction that means your largest SL (D4) could be gone by this September. Your next largest (C3) could be gone by May 2017. Etc.
Bright side: With some serious (and I mean serious) commitment you could get yourself completely out of this debt trap in about 3 years.
Final thought: With your monthly expenses, your $3600 ER fund is too small to really be of much use. Either build it up to 3mo minimum expenses, or alternatively just throw it at your debt now. You could eliminate your 401(k) loan and car loan in one fail swoop, leaving you more money each month to put towards those 6.55% SL. A question to ask yourself is: How secure are our current jobs?
Final, final thought (i mean it this time); Not to scare you, but it looks like several of your SLs are variable rate A1, B2. If I'm correct they will change on July 1st. It's entirely possible those will go up to 3.x% this year, and who knows the following year (4.x%?). All the more motivation to get this taken care of pronto!
-
From a pure $$$ standpoint - I would vote to sell the house, pocket the 200k and rent somewhere until the next housing dip happens (which it will in the next few years). Then buy another house.
So, I listen to Dave Ramsey sometimes, because I enjoy all the stories people come in with, and although he and I have a lot of points of disagreement, I think he makes a really good point that in a situation where someone has out-of-control spending that is responsible for debt and either a lump sum or a possibility of a lump sum of money, paying off the debt with the lump sum is not a good idea because the underlying habits don't change and the person is likely to end up right where they started, poorer one lump sum, or in this case, a well-loved house. Changing the habits is far more critical to long-term success than when the debt is paid off. Particularly in this case, where the incomes are quite high, it seems like they'll get quite far if they can fix the grocery situation.
-
Many case studies involve strategizing about investments or debt pay off approaches, or looking for small things that can be tweaked. In your case, it really seems like you don't need advice. You need to either decide you are going to do this, or not. You have identified the major areas where you can save. So do it. Now. Literally, right now (or as soon as these places open) pick up the phone can cancel the Tivo and the alarm, and cut the cable. Them commit to $600/mo on groceries, and $75 on eating out. That's it, and really, that's a fairly large budget. After a couple months, try to cut even further.
Consider spending a couple hours every other weekend on batch cooking. You can get 2 weeks worth of meals cooked in about 2 hours. Even the 7yo can get involved with things like stirring, opening cans, etc., so it can be family time as well. Research OAMC (once a month cooking) and similar terms, and maybe find a cookbook at the library. It's pretty efficient, as you chop onions for 5 dishes all at once (for example), and you can make several of the same meal in nearly the same amount of time it takes to make one. If you have the freezer space, you can even do meals for a full month, rather than 2 weeks. It's a few hours of your time, and then all you have to do is take something out of the freezer the night before and then usually pop it in the oven or crock pot on meal day.
It might not sound fun, but does working until you are 70 sound fun?
-
Yeah, I think it sounds like you already know what you need to do. So I will chime in on how you could achieve it.
If you eat out so much because it is convenient, then Villanelle's advice hits home: Find ways to make cooking your own meals convenient. Find ways to make meals in bulk that you can take with you, either with or without microwave. Sandwiches, burritos, salads, curries, stews, chili, noodles, etc etc. Go out and buy some nice glass/silicone tupperwares if that's what it takes to get you to bring food from home.
If you eat out so much because you like the food, then learn how to reproduce it at home. Go online and watch some good cooking shows for inspiration, Alton Brown's Good Eats (netflix) is one of my favourites, if you can get past how meticulous and perfectionist he is. No matter what style of food you enjoy, you can learn to create it at home. If you can't find a good recipe from the pros, just check out youtube. I swear there is a cooking video for everything, some very informative and fun, some not so much.
Take a look at your kitchen. If I had to guess, I would assume that it feel small in there, it is cluttered, and does not stay clean. In my opinion you cant have a cooking culture in your home without a utilitarian kitchen. So clear out all the non-kitchen stuff that is in the kitchen and get to work.
To institute a cooking culture, you will be doing the dishes, eviscerating your fridge, throwing out or mothballing your single use kitchen gadgets, making space for your food in your home so that it does not clutter your kitchen, and maybe investing in cheap but big new tools that will allow you to cook like a pro. Expansive cutting boards, 8" chef's knives, a whetstone, a huge stainless steel stock pot, steel/silicone implements, baking trays, and a cast iron if you don't already have those. Then, of course, the last step. COOK! Start easy, then get creative. You could get take and bake pizzas from Aldi for $2 a serving. Embellish them with some chopped onions, kalamata olives, and kale. Once you have a clean kitchen and some successful baby steps under your belt, get creative!! Don't be afraid to slice open those huge squash and that whole bag of onions. Learn how to dice at high speed without risking your finger tips, and how to peel a whole head of garlic in under a minute. Get a pressure cooker and make fresh beans or rice in 20 minutes. Get a jug of peanut oil and deep fry something.
If your family has a cooking culture, then you will be able to reproduce both the benefits of eating out: delicious and diverse food, and the convenience of meals ready to eat when you are. When you know how to cook good meals that don't wilt in the fridge, leftovers isn't a bad word. It becomes oh so good :)
-
you chop onions for 5 dishes all at once
I'm totally on board with the rest of what you said (well, conceptually) HOWEVER, chopping onions is one thing that I find is better in small doses! During holiday cooking I would make it through 1/2-3/4 of one just fine and then by the end I'd look like I was SOBBING lol. I wasn't really but it STUNG. I hate to imagine what 5 in a row are like, at least by hand! (Of course, at that rate the mandolin or food processor makes a lot of sense...) Anyway, don't mean anything by it, your choice of example just amused me. Maybe it's too late at night.
-
It's fascinating how a case study can reveal so much. I'm seeing a trend of carelessness here - carelessness about driving and carelessness about eating and drinking as well as carelessness about money. And how on earth can you rack up expenses on restaurants and bars when you have children of 7 and 4? Who wants to take children that age to restaurants and bars?
I think just looking at what you can cut down here and there hasn't worked in the past and probably isn't going to work for you now. You and your spouse need to have an attitude change to the whole of your lives - you need to live considered lives as responsible adults who are focused on eating regular planned and healthy meals with at least 5 fruit and veg a day for each of you, getting appropriate (cheap) exercise individually and as a family - walking, jogging, swimming, etc., improving your driving skills and driving responsibly (no parking tickets, no speeding tickets), giving your children regular healthy meals, regular exercise and a regular sleep schedule. You should try to do all this without trashing the planet any more than you need to. Look for free entertainment to replace whatever it is you are currently doing with the food and drink. You are in Portland, so tune into some of the local culture to do this.
Start with a slow cooker and a "no restaurants, take-outs or booze January". Also, look at what needs to be done to improve that driving record: there may well be a local organisation (police? local authority) which gives free help with improving driving skills. Then, given that you are spending so much on food and booze and nothing on fitness, I would guess that fitness is your next task - get the family out and moving at least one day on the weekends.
Good luck.
-
....wow
You came to the right place if you seriously want to make some positive changes in your financial life. I applaud that!!
You have the type of income where just some little changes will make a huge difference, and for your personality, "I can't stop spending money" type, your best bet is to have a big chunk of your paycheck into savings before you have a chance to spend it.
You have great potential, but you are not is a good place financially.
-
you chop onions for 5 dishes all at once
I'm totally on board with the rest of what you said (well, conceptually) HOWEVER, chopping onions is one thing that I find is better in small doses! During holiday cooking I would make it through 1/2-3/4 of one just fine and then by the end I'd look like I was SOBBING lol. I wasn't really but it STUNG. I hate to imagine what 5 in a row are like, at least by hand! (Of course, at that rate the mandolin or food processor makes a lot of sense...) Anyway, don't mean anything by it, your choice of example just amused me. Maybe it's too late at night.
I am generally anti-kitchen gadget (and really not much of a cook), but I use one of those chopper devices for dicing anything. I just don't have the knife skills to do it efficiently, and it takes the pain out of onions. It's the kind that you press/pound down on and a bunch of blades come down and chop everything, and I can dice 5 whole onions in about 2 minutes, and much of the odor seems to get contained in the chopper compartment, so it's better than 2 minutes of regular dicing.
-
That food bill...just wow. Upwards of $100 a day just boggles my mind. I have seen a lot of case studies, and I honestly think that might be the highest food "budget" I've seen yet. Honestly, you're up to your neck in shit, but you make a good income that can take care of this if you actually let it.
Unless you are actually willing to just go nuts on your finances, slash and burn style, just start with the food bill. For now, keep your cable, keep your security system, keep your cars, whatever....just put all your energy into getting your food bill down to $1000 a month, which by the way, is still really high. Where you are you shopping, too? If I had to guess, I'd say you are shopping 100% organic at Whole Foods or a Co-Op, and I assume also buying prepared foods there too; If that is the case, you need to stop. We were doing that too, and we hope to one day return to a more organic lifestyle, but until we're out of debt, we can't justify it. The stress of money and debt and fear of losing your job and being unable to maintain your house of cards will kill you way faster than the pesticides in the food at Aldi.
Get your shit together with that food budget! Think of how far all that savings on food will go towards your other debts!
-
you chop onions for 5 dishes all at once
I'm totally on board with the rest of what you said (well, conceptually) HOWEVER, chopping onions is one thing that I find is better in small doses! During holiday cooking I would make it through 1/2-3/4 of one just fine and then by the end I'd look like I was SOBBING lol. I wasn't really but it STUNG. I hate to imagine what 5 in a row are like, at least by hand! (Of course, at that rate the mandolin or food processor makes a lot of sense...) Anyway, don't mean anything by it, your choice of example just amused me. Maybe it's too late at night.
I am generally anti-kitchen gadget (and really not much of a cook), but I use one of those chopper devices for dicing anything. I just don't have the knife skills to do it efficiently, and it takes the pain out of onions. It's the kind that you press/pound down on and a bunch of blades come down and chop everything, and I can dice 5 whole onions in about 2 minutes, and much of the odor seems to get contained in the chopper compartment, so it's better than 2 minutes of regular dicing.
Hm. I've found those to smush things as much as cut them. And the things the choppers cut best seem to be easy to cut things, like eggs. For 5 onions I'd probably get out the Ninja. Vroom!
-
... by the end I'd look like I was SOBBING lol. I wasn't really but it STUNG. I hate to imagine what 5 in a row are like, at least by hand!
The stinging pungent gas from onions (and garlic) is released when the cell walls break. If your knife is dull then this will happen since you are doing more crushing than slicing. If your knife is sharp, it is much less likely to happen. But yeah, also you can just chuck them in the blender. Works well for making indian food where the recipe calls for lots of heavily cooked onion.
-
Thank you everyone for pitching in. Too many of you to thank individually but I do appreciate your input. I need to have a real hard core talk with my spouse about all this.
The food thing is funny! I was rushing to get the case study posted and I looked at a few months of my bank category and noticed "food" was around from $1500-3000. But it did seem insane! Seriously, we make dinner every night (as someone said, going out to eat with children is miserable). The most prepared food I buy is fish sticks. I shop at Grocery Outlet! I don't even do organic or anything. Though there is a very pricey organic place by me which I ended up popping into to get "one thing" (5 things) during the week. We get take out like 1-2x a week, and usually cheap, burritos or take n bake pizza.
I looked at my November "food" category and seriously, I need to stop going to Walgreen's (next to my house). Here is the breakdown:
Bar $86
Drugstore $225 (Walgreen's - probably mostly beer and whatever dumb toys the kids sucker me into buying)
Groceries $845
Liquor $205
Lunch $317
Restaurants $186
Other $37 (this was airport snacks, since I was traveling in November).
So that's $1900 which is still way too much. I know, liquor. Since we don't generally go to bars anymore we drink at home. And we both need to take lunch to work.
Daycare is about as good as I can make it, unfortunately. It used to be $2100 when I had two kids in full time care! It will go down to $800 in September.
Will address more when I have time.
-
I can see how some $10 crowns add up on a couple nights with some friends, but if that Walgreens budget is really beer, and that liquor is from a liquor store, then one or both of you honestly has a drinking problem. $200 buys a good chunk of liquor, and another $200 buys a lot of beer. All that in a month is more than a bad habit..
I'd honestly be less concerned if that $200 liquor budget was from an expensive night club.
-
I can see how some $10 crowns add up on a couple nights with some friends, but if that Walgreens budget is really beer, and that liquor is from a liquor store, then one or both of you honestly has a drinking problem. $200 buys a good chunk of liquor, and another $200 buys a lot of beer. All that in a month is more than a bad habit..
I'd honestly be less concerned if that $200 liquor budget was from an expensive night club.
Or find cheaper options, anyway - my preferred scotch is $70 out of state..about $100 locally for a 750ml bottle (15 50ml drinks). One drink per person every other day would be ~$200/mo.
So.., I don't drink it often at all. :P
-
I don't understand why "lunch" isn't included in groceries or in restaurants. You pack lunch? You buy it out? What's going on there?
-
Thank you for sharing your case study!
Wow, that is an interesting look at food expenditures, so I'll focus on that. Just the groceries $$$ alone feeds me and two very physically large teenagers for two months and that includes our eating out money. And we have been know to eat a family pack of chicken thighs (think 8-12 thighs) in one dinner, so it's not like we're dainty little people.
I do sort of get it, though, as it was harder when my children were small because I was so tired all of the time. I ended up going to a place like Dinner Saavy or Dream Dinners sometimes to have meals ready that could just be popped in the oven. Not the most cost effective, but it was good for my sanity and I don't think it will cost more than you are spending now. It might cost less.
Another thing that could help you, believe it or not, is grocery shopping online and then doing the drive through pick up. Many stores have this for a $5 fee. They highlight loss leaders on their online shopping website, so you end up buying mostly what is on sale just naturally and skipping the impulse purchases and toys. They also keep a list of things you buy frequently and that makes it much easier to shop as time goes by as you can now just click those off the page and not have to search for each thing.
Finally, a crock pot and rice cooker and/or pressure could really help you I think. Get the family sized one, find 5-6 super easy meals you like, and use it a couple of times a week. You can just google recipes for whatever you like to eat. We love cranberry chicken, Ms. Skinny french dips, spicy leftover turkey stew, all types of chilis and soups, etc. Pretty much you can google anything you like and slow cooker and see what the recipes have in common. We buy the giant bag of rice and toss a cup or two in the rice cooker with veggies in the top basket for steaming. The leftovers can go to work for lunch. I learned this from my SIL, who has 6 kids and is adopting 2 more. Large amounts of food, bought in bulk to save money, cooked with zero skill involved while you are at work and it makes the house smell great when you walk in the door.
I hear you on the beer and booze. My other half likes those double-sized craft beers that are $9 each. I don't feel like ~2 beers per day for a man makes him an alcoholic, but if he did that every night it would be $270 a month just on . . . his dinner beer. Thankfully that is mostly a special treat. And we have no problem putting away a $12 bottle of wine for dinner at home one or two nights a week as a sort of date night. It adds up really fast and you and I both probably need to take another look at it.
-
I am generally anti-kitchen gadget (and really not much of a cook), but I use one of those chopper devices for dicing anything. I just don't have the knife skills to do it efficiently, and it takes the pain out of onions. It's the kind that you press/pound down on and a bunch of blades come down and chop everything, and I can dice 5 whole onions in about 2 minutes, and much of the odor seems to get contained in the chopper compartment, so it's better than 2 minutes of regular dicing.
My mom has one of those. We all refer to it as "The Blammer". Of course, she seems to wield it like a weapon. Oh, you guys stayed up late last night watching college football? I suddenly feel the need to chop all the vegetables in the fridge at 7:30 AM on Sunday. BLAM. BLAM. BLAM BLAM BLAM BLAM BLAM.
-
Talking through this really made me realize that we are subsidizing a lot of our friends' drinking in our bar. Because honestly, I can drink a bottle of $12 bourbon in a month fine, but not $200 worth of fancy rums, etc. We do socialize and host a lot, because we don't really go out anymore. Which is fine, but it needs to be a budgeted amount. Because that isn't really going to change without killing my quality of life. Or maybe I should start charging a cover charge!
Jakejake, lunch is lunch bought out at a restaurant during the workday. I started separating it out since I wanted to find out what the real cost of not packing lunch was! Unfortunately we both work in a city and in neighborhoods that have great food. So tempting, especially when work is getting to be a pain.
Zamboni, the fancy beers and ciders are a killer! It isn't much in volume for $9-12 each.
-
Jakejake, lunch is lunch bought out at a restaurant during the workday. I started separating it out since I wanted to find out what the real cost of not packing lunch was! Unfortunately we both work in a city and in neighborhoods that have great food decided we care more about eating nice lunches than paying for our kids' college.
Fixed that for you. :)
Edit: Eh, I was overly blunt there, but hopefully you'll see past my tactlessness - and get that it's not "we can sort of afford the nice food and it's a luxury that we have access to it" but more a matter of whether as a parent there are more important things that money should be earmarked for.
You guys can each easily pack a lunch for 1.50 a day ($3 a day combined). Times that by 22 working days in a month, you could spend $66 for lunches, or save $251 a month, or $3000 a year. But really it's more if you figure what that money would save if you put it toward your most expensive loan, and figured in compounded interest that it would save you. I put it into a compound interest calculator at 6.55%, and after 10 years it grows to over $41,000. That's enough to cover one child's college at a cheap school, or a year at a pricey school. And that's not even beginning to address your dinner costs.
Just for fun I compared how much you would save if you spent what I spent on groceries for all meals. I doubled my costs because we are only two people, I used $2500 per month for your expenses, and I used that 6.55% interest rate. Over ten years the difference is $361,241. Over 20 years, it's $1,038,383.
-
Obviously the biggest issues here are food and misc., but I agree with someone above about dropping the security system. That would be a painless and immediate win, whereas fixing the food/booze/whatever else you are buying situation is going to take a lot more time. If you drop the security system, immediately accelerate payment on one of your loans by $40/month. Small accelerations like that will make a difference over time. Plus there's the sense of taking control. I know when I adjust my monthly automatic investment amounts even by a minor amount, it feels really, really good. The same will occur for you when you do so for a loan.
And I still think you should snowball your bonus. You need less debts on your plate, even though I know others will likely chime in and say you should throw it all at the highest interest loan.
-
When you invite people over, ask them to bring something. It's pretty simple. "Can you bring a main dish/appetizer/couple bottles of wine/bottle of bourbon please? We'll supply most things, but I'm asking everyone to pitch in."
Honestly though, even if your friends are drinking your bourbon and that bottle lasts a week instead of a month, it is still crazy what you are spending. if those numbers are correct, I think you really need to start tracking, and start being brutally honest with yourself. Because even at $200 in rum (and a whole bottle of rum is a lot to go through even in a month, and you certainly can just start buying the $30 bottle instead), your numbers are still really high. Time to write down now only every expense, but an itemized version of grocery bills so you know you spent $200 on rum, $50 on wine, $10 on pre-shredded cheese, etc. so you know exactly where it is going.
-
We love craft beer and cider...and we realized we kept just restocking whenever we were out. So, a few months ago we started buying two cases at the beginning of the month, still of our favorite craft beers and ciders. Every weekend after our grocery trip we pull six bottles out of the cases and put them in the fridge and that's our allotment for the week (so, three beers each). We get to keep enjoying good brews at like, $35 a month, and because we buy mixed cases there's a lot of variety. Maybe a similar system will work for you?
Honestly, we now do a lot of our shopping this way. The first weekend of the month is bulk weekend, when we run through our Costco list (meats, cheese, oils, spices, paper goods, etc.) and get whatever we're out of. The rest of the month we shop at our local grocery, mostly for fresh produce and dairy, depending on our meal plan for the week. It really helps cut down on impulse shopping, and we always have food in the freezer that we can quickly cook up if we're having a hangry moment.
We live in one of the foodiest cities in America, and we personally know the owners of several of our favorite restaurants, so I hear you about temptation to eat out. But, we've found that when we limit eating out to once a week or less we enjoy it more because it's more of a special occasion. Plus, bringing lunch to work means I can take a shorter lunch break and come home earlier! :)
-
This is a harsh post because frankly your case study is a dumpster fire and you don't seem to realize it. I know that you love your kids and want to do right by your family. I think you can do better.
We get take out like 1-2x a week, and usually cheap, burritos or take n bake pizza.
These are cheap for the restaurant, and they're cheap when you buy the ingredients at the grocery store. They are not cheap when you get them from a restaurant.
Making a burrito is the easiest thing in the world. It takes like 90 seconds. Your 7-year-old could make his/her own. Why are you paying somebody else to do this?
I looked at my November "food" category and seriously, I need to stop going to Walgreen's (next to my house). Here is the breakdown:
Bar $86
Drugstore $225 (Walgreen's - probably mostly beer and whatever dumb toys the kids sucker me into buying)
Groceries $845
Liquor $205
Lunch $317
Restaurants $186
Other $37 (this was airport snacks, since I was traveling in November).
You don't have a money problem. You have a self-control problem. And if you're spending $112 a month on toys for your kids at Walgreen's, you're teaching your self-control problem to your kids. (Also, your house must be filled to the brim with garbage.)
If we split the $225/month at Walgreen's in half for beer and bad toys, that means you're spending $86 + 112 + 205 = $403 a month on booze. And you're probably buying wine at the grocery store, too. Questions:
1. What are your kids up to when you and your friends are drinking that much alcohol?
2. Is one of you safe to drive every night? Kids run into things and hurt themselves, and they get sicker than we do, faster. An ER trip would be much more frightening for your child in an ambulance than in your car.
3. How many hours do you get to spend with your kids on weekdays? Are you making good use of them? Are they in daycare so you and your husband can provide a better life for them? Are you holding up your end of the bargain?
4. Will you be proud when your children adopt your lifestyle as adults?
(I am a parent and I'm not a teetotaler.)
-
+1 to separating out categories, including a line item for alcohol. A lot is being consumed and getting that under control will help. Subsidizing a lot of other folks lifestyles is not a way to get ahead financially.
DH and I used to have high "food" spending that was eating out, take out desserts and alcohol of various types. I tracked each item separately and was absolutely appalled by the spending in those categories. Due to extreme budget changes, we now are allowing ourselves 4 bottles of wine per year. I'm not advocating dropping down to that level but we have a hard and fast upper limit. And no restaurants, take out, or other luxuries until the debt is paid off. After a few months, we got a restaurant gift card and used it but didn't even enjoy the food (too salty and greasy compared to what we make at home).
Drugstore $225 (Walgreen's - probably mostly beer and whatever dumb toys the kids sucker me into buying)
You are not doing your kids any favors by teaching them impulse buying and instant gratification. Any tantrums from cutting this off will fade as they get used to the word "no". Telling yourself and the kids "no" a lot more will help all of you and your budget.
I hope to see you come back and post that you slashed your budget and are throwing everything at that debt! 😃
-
Thanks all. I accept that my spending is a dumpster fire, but I want to be crystal clear on one thing: I don't drink wine. I can't have that kind of slander out there. :)
If I have a cocktail on a weeknight, it is generally after the kids go to sleep. And I've done the midnight ER trip already, I've been scared straight on that one.
I'm not sure what "Will you be proud when your children adopt your lifestyle as adults?" means, but yes? I mean, I'm not perfect but I think my life is great in general. I'd like it to be more great hence my trying to work this out.
-
Your power and gas seem high. If you've already changed your heating/ cooling habits as recommended on MMM, I'd recommend asking the power company to do a FREE energy audit. Ours helped to find a couple of leaks through doors. Simply moving strike plates, adding weather stripping and a little insulation is now saving us $27/ month.
-
Thanks all. I accept that my spending is a dumpster fire, but I want to be crystal clear on one thing: I don't drink wine. I can't have that kind of slander out there. :)
If I have a cocktail on a weeknight, it is generally after the kids go to sleep. And I've done the midnight ER trip already, I've been scared straight on that one.
I'm not sure what "Will you be proud when your children adopt your lifestyle as adults?" means, but yes? I mean, I'm not perfect but I think my life is great in general. I'd like it to be more great hence my trying to work this out.
Glad you're still here tikimama. Facepunches can be brutal on the ego, and can often wander into completely different segments of your life than you anticipated.
I think you have some good advice here about how to lower your expenses and tackle your debt. Now you need to take some or all of these suggestions and put them into action. You might consider starting a journal here to track your progress.
You have the resources to turn the ship around relatively quickly, but it's going to take constant effort until your new decisions about how to spend your money become productive habits. Good luck!
-
You should probably (re)read this:
http://www.mrmoneymustache.com/2012/04/18/news-flash-your-debt-is-an-emergency/
You have like $90K worth of non-mortgage debt and you are eating out and spending like an NBA player.
-
I get the impression that you really don't know where your money is going. You list out expenses that are easy to track based on monthly bills but the rest ends up in two categories: groceries and miscellaneous. I see whole categories missing: clothing, activities for kids, vacations, entertainment...
I would suggest that you track your spending to the penny for a month or two in order to see what really is going on. That means breaking down each receipt from Walgreens, the grocery store and any other store into appropriate categories and calculating each category separately.
-
I always keep some easy meals that are ready to be popped in the oven for when we are tired, etc. Some are homemade and some are just convenience foods but much cheaper then eating out. OUr kids got gifts on xmas and b-day only. I agree that you are mssing whole categories. We like to entertain but people always ask what they can bring so I say a bottle of wine, or salad, or desert, etc. If each couple brings 1 thing it really makes a difference. We bring something always when we go to someone's house.
-
Well I had a major "WTF?" when I read your expenses.
They are so bad I would say its almost impoosible NOT to save money with that amount going out.. How do you manage that?
Firstly as others have said, the food.. Holy S!... Stop eating out and STOP buying pre-prepared food. Make all your own including taking sandwiches to work. I think you have to do this in order to realise that it is in fact easy to do and will save you HUNDREDs of dollars a month.
So you have a house phone/cable internet ($141) AND cell phones ($75?).. Ok right there!.. WHY do you have a house phone AND a cell?... My Wife had this habit going finally I had to cut her off.. it was a House phone OR a cell phone.. but NOT BOTH!
Cable.. Get real.. Kill it... Down here in little old Corvallis I found a local provider to sell me internet for $29.99 a month. My Wife has republic wireless ($10 a month unlimited talk and text) and I have Ptel on my flip phone that I bought for $20 and it costs me $5 to $10 a month depending on usage.
You don't need data, 5 years ago we didn't know what data was and TV can be had for free with rabbit ears.. OPB is only thing worth watching anyway and comes in perfectly in Portland.
So our ENTIRE communications bill is $45 to $50.. yours is $216 or so.
If you get really serious you can save a boatload of money, but it takes thinking outside of the box.. For example, letting go of the rediculous notions.. such as "I can't live without cable TV and a data plan on my cell".. Boo hoo first world problems..
-
What size is your house?.. Why are your gas and electricity bills so high?
We have a 1400sqft house and gas in the Winter is $50 and in the Summer more like $12. Power is about $50 from memory. You have some major energy suckers somewhere, or a huge house, are you heating the whole house or just the rooms you are using? Of course you have two kids as well which we don't.
Do you heat ALL of the house. What temperature do you run it at?.. 68F should be adequate. Are you sure your not running the heat when you are not there?
What is this thing called a "car payment"?.. Personally I have never had one.... Can you sell it and buy something older with cash?
Do you do your own car repairs/ maintenance?
There is a lot of scope to save here.
Heck if you have way more house than you need you could sell it and downsize.. Lots of options.
-
Ok I understand your love of the house, But you haven't listed how much it is costing you either.
We know gas and electric, what about RE taxes?.. What about house insurance?.. Maybe I missed these.
While moving to something smaller/cheaper might not be your fav thing, it may well be hurting your financial future too.
Your total net worth is about $130k or so, your in your early 40's. You don't have much for a family with your muscular income.
If being FI is your goal (and it isn't for everybody) you could get there in roughly by your mid 50's if you can save 50% of your take home pay, and this is doable.
-
That's awesome that you are doing so much cooking at home! It does make it a bit more perplexing though that you're spending so much on groceries while eating out for lunches daily! A couple quick and easy things I do to keep my grocery budget under control are:
-Try and have one "free" dinner each week- so basically something where I already have all the ingredients. Veggie fried rice using all my random veggies in the produce drawer of the fridge, Fried egg and cheese sandwiches, Pancakes, Spaghetti made from scratch, etc.
-Eat leftovers for lunch
-Make a weekly menu and shop once!!! I love to cook so I generally choose 2 meals that I'm excited about making, at least 2 that are meatless, and my free meal. The rest I just dig around in my freezer or pantry and look for inspiration on what I already have.
-In regards to eating out for lunch, try and make lunches at home that you are really excited about. I came to the realization that I actually don't really like salad and when I had a salad in my work fridge I was much more temped to eat out.
You have a great income, which is awesome. You just need to make the decision to change now!
-
Thanks all. I accept that my spending is a dumpster fire, but I want to be crystal clear on one thing: I don't drink wine. I can't have that kind of slander out there. :)
If I have a cocktail on a weeknight, it is generally after the kids go to sleep. And I've done the midnight ER trip already, I've been scared straight on that one.
I'm not sure what "Will you be proud when your children adopt your lifestyle as adults?" means, but yes? I mean, I'm not perfect but I think my life is great in general. I'd like it to be more great hence my trying to work this out.
Most of your responses don't seem to match with the numbers you posted. Either your numbers are wrong, or you are lying to yourself. One cocktail on *some* weeknights (times 2 people?) is roughly 8 drinks a week or 30-35 drinks a month. That's not an inconsequental amount. If you are drinking that much, stop. You are in an emergency. Allow yourself 2 drinks a week. Period. But even if you are drinking that much, there's no way you are getting the the numbers in your OP with that (and from a $12 bottle of bourbon you mentioned earlier) and some prepared pizzas at the grocery store.
I think the question about being proud or pleased of your kids adopted your lifestyle was referring to finances? IOW, do you want them to learn to spend every penny they have (and some they don't) because they see something shiny that catches their attention? Do you want them to be broke and stressed about it and working until they die? No? Then do the painful work of teaching them differently.
Also, what have you changed since you started this thread? Do you actually want this to be different, or do you simply want to feel like you are doing something by posting threads and crunching numbers, without having to actually do something uncomfortable? Is you cable still on? Your security system? Have you turned your thermostat down 3*? No? Then you don't mean it. Do those things. Right now. If you aren't willing to do them literally right now (or before the day's end), then you clearly aren't actually interested in fixing this.
-
I apologize for not responding to everyone individually, but often the assumptions are incorrect. But I don't want to come across as defensive (I'm not really, more baffled in general because I think the real issue (as many of you have said!)) is that I don't really know where the money goes. I have a general idea and our spending has risen to the money available. But it's risen $40 at a time, not in big ticket items so I guess that's why I feel like I'm not living the high life. But of course I am, it would be better to save the $40 a day and blow it all on coke or something.
Today, I paid off my 401k loan and ate the lunch leftovers from last week I had in the work fridge. So if I get food poisoning I am blaming all y'all. :) I also dropped the cell phones to $38 a month.
The liquor: I will confess right now to having a liquor collecting hoarding issue. So you know, there are a lot of bottles in the bar, we aren't drinking them all every month. I promise. That doesn't excuse the amount spent but hopefully it explains it better.
-
It sounds like you would benefit from using food, liquor up, etc before buying new. I sometimes do this with my freezer and pantry. I quit buying and eat what we have. I won't eat leftovers that are older then 3 days-bad idea. You really are not going to get anywhere until you figure out where your $ is going. Print out your bank statements and see what you are spending your $ on. It can be eye opening.
-
There are lots of Gauntlet Challenges on the forums that might help you, like "Use up all the food in your pantry". You could start a "Use up your whole bar" challenge! I bet many would join in.
It'll result in some awesomely creative drinks I bet you!
And welcome to case studies. You don't always get the feedback you expect! I got some face punches too, but trust me- staying openminded about it all really does help your outcomes. =)
-
I apologize for not responding to everyone individually, but often the assumptions are incorrect. But I don't want to come across as defensive (I'm not really, more baffled in general because I think the real issue (as many of you have said!)) is that I don't really know where the money goes. I have a general idea and our spending has risen to the money available. But it's risen $40 at a time, not in big ticket items so I guess that's why I feel like I'm not living the high life. But of course I am, it would be better to save the $40 a day and blow it all on coke or something.
Today, I paid off my 401k loan and ate the lunch leftovers from last week I had in the work fridge. So if I get food poisoning I am blaming all y'all. :) I also dropped the cell phones to $38 a month.
The liquor: I will confess right now to having a liquor collecting hoarding issue. So you know, there are a lot of bottles in the bar, we aren't drinking them all every month. I promise. That doesn't excuse the amount spent but hopefully it explains it better.
How many cell phones does that $38 a month cover?.. It should cover almost 4 cellphones!!!.. If its only covering a single phone thats almost 4 times too high.
Making the assumption that you really want to get a grip and start saving/investing blah blah
-
I apologize for not responding to everyone individually, but often the assumptions are incorrect. But I don't want to come across as defensive (I'm not really, more baffled in general because I think the real issue (as many of you have said!)) is that I don't really know where the money goes. I have a general idea and our spending has risen to the money available. But it's risen $40 at a time, not in big ticket items so I guess that's why I feel like I'm not living the high life. But of course I am, it would be better to save the $40 a day and blow it all on coke or something.
Today, I paid off my 401k loan and ate the lunch leftovers from last week I had in the work fridge. So if I get food poisoning I am blaming all y'all. :) I also dropped the cell phones to $38 a month.
The liquor: I will confess right now to having a liquor collecting hoarding issue. So you know, there are a lot of bottles in the bar, we aren't drinking them all every month. I promise. That doesn't excuse the amount spent but hopefully it explains it better.
Great. You have a supply, so that means you can set a rule for yourself of absolutely $0 on alcohol for the until July 1. If you drink it all before then, you go without. Depending on the size of the stash, perhaps you even push that out until December 1. Ration it, and drink what you have.
Have you canceled your monitored security system yet? ;)
-
You're getting some harsh facepunches and taking them like a champ! Just wanted to chime in again because I'm nowhere near a hardcore Mustachian (we probably have a lot more in common than other people posting re: spending on food :P ) and we make similar salaries. But we have made a lot of changes for the better based on what I've learned here, even if I'm not gunning to retire early.
1. FOOD: again, HUGE challenge for my husband and I. I had to get used to the fact that not every meal has to be gourmet or even taste great-just okay is perfectly acceptable. Sounds dumb but when you get used to delicious restaurant food it's hard to remember that.
A major and relatively easy savings is to stop getting breakfast/lunch out at work. I realized we were spending plus $10-15/day on coffee/breakfast and $30/day on lunches that were also making us fat, so we stopped. I bring breakfast stuff (big thing of yogurt, frozen berries, cold brew coffee concentrate) to work and eat it every morning.
For lunch I bring a couple of "healthy" frozen dinners or a thing of salad greens and put tuna fish/salad dressing on top. I keep tuna, sunflower seeds and salad dressing in my office (Bragg's which doesn't require refrigeration).
2. BOOZE: Our friend group loves to eat out/get fancy cocktails. Lucky for us, a lot of our friends have or are having babies, so our friend group has switched from dinners and drinks out to "chill at someone's house while the kids sleep upstairs." We do it BYOB style (we share what we bring) and we'll occasionally bring snacks too. Honestly your friends sound like scrubs if they don't do the same!
I'm not assuming you and your husbands are raging alcoholics, but not drinking during the week is a great way to save money and calories. If you cut out weeknight drinks entirely and stopped buying liquor the booze spending would drop considerably. (And if you find it is hard to quit the weeknight drinks, then maybe reevaluate things.)
-
" STOP buying pre-prepared food."
I'm going to be slightly contrarian, and allow some while you're trying to move into Good Habits. Some microwave meals/pre-packaged rice and so on to keep at the office, to help wean yourself off the restaurants and... well, whatever the other stuff you spend money on in the grocery store. (People have mentioned that it's really high, right? :-) )
I suggest trying to be SNAP - conscious. SNAP is ~$4.50/person/day, which means when you are shopping, figure out how to feed the family based on that number. Rice or flour for the super-cheap calories - rice is trivial to make in a rice cooker, but using of flour requires either some skill in baking, or a lot of pancakes & waffles. Usually spaghetti is the cheapest pasta by weight. Milk and eggs for protein. Judiciously buy chicken pieces for $1.25/lb or less; stew, soup or roast. Beef is pricey, as is pork. I'd view fish as similarly a special treat, but while you're weaning yourself away from fancy restaurants (or preprep microwave) lunch, canned tuna/kippers/oysters/whatever are probably a judicious spend of a few bucks. Mix them up with leftover rice/noodles from last night's dinner.
Oranges/pears/apples/carrots - all remarkably cheap per lb and take a while to go bad if you're storing them properly. (Bananas are even cheaper, but you have to pay attention to them.)
-
" STOP buying pre-prepared food."
I'm going to be slightly contrarian, and allow some while you're trying to move into Good Habits. Some microwave meals/pre-packaged rice and so on to keep at the office, to help wean yourself off the restaurants and... well, whatever the other stuff you spend money on in the grocery store. (People have mentioned that it's really high, right? :-) )
I suggest trying to be SNAP - conscious. SNAP is ~$4.50/person/day, which means when you are shopping, figure out how to feed the family based on that number. Rice or flour for the super-cheap calories - rice is trivial to make in a rice cooker, but using of flour requires either some skill in baking, or a lot of pancakes & waffles. Usually spaghetti is the cheapest pasta by weight. Milk and eggs for protein. Judiciously buy chicken pieces for $1.25/lb or less; stew, soup or roast. Beef is pricey, as is pork. I'd view fish as similarly a special treat, but while you're weaning yourself away from fancy restaurants (or preprep microwave) lunch, canned tuna/kippers/oysters/whatever are probably a judicious spend of a few bucks. Mix them up with leftover rice/noodles from last night's dinner.
Oranges/pears/apples/carrots - all remarkably cheap per lb and take a while to go bad if you're storing them properly. (Bananas are even cheaper, but you have to pay attention to them.)
Agree with all of this. Like others have said, sometimes at the end of the day you just don't want to cook anything - and even reheating leftovers seems unappealing. I keep a few frozen pizzas etc on hand so I don't go to Pizza Hut or something.
I often find chicken for DIRT CHEAP at the grocery store on weekdays, it's like 50% off and I get like 14 drumsticks for $3.50 or something outrageous.
-
... is that I don't really know where the money goes. ...
My first recommendation would be to start tracking everything you spend. Either in a paper notebook or in an spreadsheet (Excel or its cousins). Not only will this give you better control of where the money goes, but just the fact that you have to write down each purchase manually will give you "greif" upon entering unplanned ur unnecessary purchases thereby perhaps avoiding that kind of purchase in the future. Sometimes just knowing that you'll have to write it down will cause you to reconsider the purchase.
-
I agree with tracking! Have you signed up for mint yet? It's free and when I signed up it automatically put in my expenses for the 2 months prior to the month I was in. At that point it only took me 10 minutes to go through and categorize a few things. It was completely shocking to me what I was spending and where I was spending it. I felt frugal but then I saw the numbers...
-
just the fact that you have to write down each purchase manually will give you "greif" upon entering unplanned ur unnecessary purchases thereby perhaps avoiding that kind of purchase in the future. Sometimes just knowing that you'll have to write it down will cause you to reconsider the purchase.
This is great advice. When I was dropping extra weight a few years back, I logged my food on a fitness website, and just the act of logging it made me change my habits. I didn't want to have to type out that I ate a half block of cheese or a bag of chips. Something about knowing you will have to see it in print (online, whatever) changes our perception of whether it's a fleeting inconsequential blip or a concrete decision with permanent consequences.
-
I apologize for not responding to everyone individually, but often the assumptions are incorrect. But I don't want to come across as defensive (I'm not really, more baffled in general because I think the real issue (as many of you have said!)) is that I don't really know where the money goes. I have a general idea and our spending has risen to the money available. But it's risen $40 at a time, not in big ticket items so I guess that's why I feel like I'm not living the high life. But of course I am, it would be better to save the $40 a day and blow it all on coke or something.
These $40 or even $4 purchases add up so quickly! Before you even know it, your CC bill for the month is $2000 and you have no idea where the money went. It's a couple of lattes at Starbucks and snacks for the kids, and a quick lunch for the family when you are out and about on a Saturday.... Then you stop at Target to get some needed clothes for the kids and some house supplies while you're at it. Of course the kids see toys and start whining... Then everyone is tired so you just order take out for dinner and get some beer. Once you're done - $500 gone in a day with nothing much to show for it...
You really need to track your expenses religiously for a month or two.
-
... is that I don't really know where the money goes. ...
My first recommendation would be to start tracking everything you spend. Either in a paper notebook or in an spreadsheet (Excel or its cousins). Not only will this give you better control of where the money goes, but just the fact that you have to write down each purchase manually will give you "greif" upon entering unplanned ur unnecessary purchases thereby perhaps avoiding that kind of purchase in the future. Sometimes just knowing that you'll have to write it down will cause you to reconsider the purchase.
I want to piggy back on this. Prior to the start of 2015 I kind of knew my budget similar to you--I knew I was spending a certain amount but I couldn't point to exactly where the money was going.
Last year I decided to purchase a day planner and write down every purchase. That not only helped me track my expenses, but it helped my visualize exactly when I was spending.
Turns out I eventually hated having to write in this planner so I just stopped buying things during the week.
I don't log my expenses anymore because I have a really good understanding of where my money goes. And maybe more importantly, I have pretty much adopted a habit that I don't spend any money Monday through Thursday (with limited exceptions, e.g., when I need gas or a partner invites me to lunch to talk about a case).
And on that note of habit, I recommend looking into "The Power of Habit," which is a great book that helps you recognize your habits and how powerful they are. And it also teaches you how to change your habits, which is what you might ultimately need more than any individual "facepunch."
-
Hi tikimama! I recognize you from elsewhere on the web, so I kind of feel like I know you (in that weird internet-y way). I do recall your in-home tiki bar, and I can see how it would be easy to subsidize friends' drinking.
I think you have the opportunity to make a lot of really big improvements without changing too much. Definitely changes, don't get me wrong, but I think you have some real low hanging fruit.
So. Were I you, I would:
1. Cancel/reduce everything you can. Tivo, cable, internet, alarm, all that stuff. Add it all together, and then set up automatic savings in that amount. You can do an automatic deposit from your paycheck or an automated savings transfer. You know you can get by without that money - you're already spending it.
2. Stop going to Walgreens if that amount is pretty common. I have the same issue with Target - my money just disappears there, somehow. When I don't go, I don't miss anything, but if I do, suddenly I'm out several hundred dollars a month (on things we ostensibly "need").
3. Lunches. So much money. I know how easy it is to let that slide, but I found that seriously packing my lunch after dinner every night (leftovers) and having it completely ready to go in the morning really helped. I had to get more tupperware to make that happen. But if I think I'm going to put something together in the morning, I may as well just resign myself to a lunch out. I won't do it.
4. There are tons of threads about cutting your food bill, so I won't get too much into that. Know that you can do it, especially if you're already cooking so much at home. I was the same way - I cooked a lot, but somehow that didn't translate into a lower overall food bill. I was really just making a meal plan and buying whatever I wanted/needed. I got our bill down a significant amount by really thinking about what we were going to have for meals, and what that meant cost-wise. We still eat really really well (if I do say so myself), but we're having the more expensive stuff less frequently. No one's complaining.
5. Budgeting software. I'm a fan of YNAB, although I haven't tried their new version. Having to enter every single purchase on my phone makes me pay attention to my spending. And I really like YNAB specifically for how it has you think about your expenses.
6. Set a goal. Pick a debt and pay it off, then roll that into your next debt. Many people will dither about what to pay down first, but honestly, I don't think it matters that much, as long as you start working towards one. Keep that money from #1 going into savings for your emergency fund. And set a non-debt goal. Save for something a bit bigger - something for the bar? The house?
7. Talk to your friends about the bar. Explain that you love having them over, but that it's getting really expensive. Can they bring a 6 pack each time? Or a bottle of something to contribute to the bar? Or even just $5-10? I know I wouldn't begrudge a friend that, especially because it means I get to hang out with friends, not at an expensive bar, and I don't have to clean up my house.
That was kind of a lot. Maybe don't tackle every single thing at once, but pick a couple. I know that so much of your spending feels fixed, with the mortgage and daycare, but you have so much room to maneuver with everything else. You can do it!
-
You definitely have a lot you can change, and you have a nice income to work with, so that is all good news. You also have a lot of debt you need to clear.
I would definitely start with income tracking for a month or two before doing much else. You need to see where the leaks are first.
After that, focus on paying one debt at a time and reducing one expense at a time, starting with food. I understand how hard that can be with two working parents but it can be done. Personally, I am not much of a cook, and I tend use a lot of shortcuts and hacks, like frozen meatballs to make a quick hearty spaghetti. Or making tacos by throwing a jar of salsa and chicken into a crockpot. You don't have to cook from scratch or eat boring bland meals just because you are trying to save money. Just experiment until you find stuff you like.
-
Thanks ReadySetMillionaire ! I downloaded the Power of Habit for bus reading.
Hi laka! I am not so anonymous. :) Thanks for the encouragement.
I brought my lunch and breakfast today. Weeee. I also realized last night while throwing away food how much waste we have in our meals (which I knew, but not in a $$$ way).
-
This is a harsh post because frankly your case study is a dumpster fire and you don't seem to realize it. I know that you love your kids and want to do right by your family. I think you can do better.
We get take out like 1-2x a week, and usually cheap, burritos or take n bake pizza.
These are cheap for the restaurant, and they're cheap when you buy the ingredients at the grocery store. They are not cheap when you get them from a restaurant.
Making a burrito is the easiest thing in the world. It takes like 90 seconds. Your 7-year-old could make his/her own. Why are you paying somebody else to do this?
I will agree with this one. We have some insane spending habits on time-saving services by the standards of this board (two workaholic parents), but even with that, I make a dozen burritos every weekend or three and throw 'em in the freezer for quick lunches. It's a fun 30 minutes of cooking -- when you factor in the prep time and cleanup, it's not much more work to make a dozen than to make two, and then everyone gets some nice hot burritos for lunch that day, and later in the week, there's emergency food. :)
There've been a few food related suggestions on here -- you might pick one and try to implement it for two weeks until the habit settles in, such as the saturday-make-a-batch-of-burritos habit, or the pack-leftovers-for-lunch habit. (We do the latter as well -- as I'm cleaning up, I'll pack some leftovers for lunches the next day. It's pretty effortless. My wife forgets to take hers at least twice a week and I end up grumbling about the extra expense, but life is too short to let $#* like that cause a family conflict. :-) I'm just glad for the three days where she does take lunch from home.)
Good luck!
-
Work on your impulse control and build some discipline. Apparently it is a muscle, the more you practice, the stronger it is.practice saying no to yourself and kids.
Food
Give yourself a food budget, say 200 a week. Write a list of the dishes your family eats( breakfast, lunch, dinner and snacks) and cost them. Have a few 5$ dinners,10$dinners, 15$ etc. write a weekly menu and buy the ingredients only. Stocking up and batch cooking saves a lot, but it is not for everybody. Have a leftover night and a cupboard/ freezer dinner once a week if you can organise it. Try to do it for February, it's a short month :)
Parties: I love hosting (and offer all the food and drink), but do it 3-4 times a year only. I consider it an investment into our social capital, as we are usually invited back to other people's parties. I am quite realistic at Evaluating the guest list: do we get invited back? Are we asked to bring our food and drinks to their parties? Do they often mention their successful parties we are not invited to? If some people seem to be taking advantage of our generosity, I'll reconsider the guest list next time. I personally hate potluck parties, it might be cultural, but when I'm asked to bring my own pizza toppings, I cringe. Do whatever you are confortble with, but reduce the partying and hosting until you pay off your debt. You can't afford it right now.
-
Thanks ReadySetMillionaire ! I downloaded the Power of Habit for bus reading.
Hi laka! I am not so anonymous. :) Thanks for the encouragement.
I brought my lunch and breakfast today. Weeee. I also realized last night while throwing away food how much waste we have in our meals (which I knew, but not in a $$$ way).
Do you just...throw away leftovers, instead of taking them for lunch the next day?
-
(We do the latter as well -- as I'm cleaning up, I'll pack some leftovers for lunches the next day. It's pretty effortless. My wife forgets to take hers at least twice a week and I end up grumbling about the extra expense, but life is too short to let $#* like that cause a family conflict. :-) I'm just glad for the three days where she does take lunch from home.)
Thanks for this. I honestly pack lunches from leftovers all the time and someone in my house WHO IS NOT ME forgets and/or ignores and goes out. I'm trying to let it go.
-
Can you reserve the leftovers as side dishes for the next dinner, then? Or freeze and reserve as a main course if there is enough for that? Or repurpose? In my house, leftover pulled pork might be on rice or buns one night and will reappear as taco filling another night.
-
I brought my lunch and breakfast today. Weeee. I also realized last night while throwing away food how much waste we have in our meals (which I knew, but not in a $$$ way).
Do you just...throw away leftovers, instead of taking them for lunch the next day?
No, I mean throwing away food that has gone too long in the fridge and has to be tossed. Because there are too many leftovers or leftovers that are ignored, or I didn't plan and a produce impulse buy spoiled. I just sometimes forget there is a money element there - I get caught up in the tragedy of wasted food.
The irritating part is I'm actually fairly skilled in using up food. I save my vegetable trimmings and make stock for god's sake. So I capable but disorganized.
Today the kids finished a giant batch of sweet potato pancakes I'd made and frozen from some getting questionable sweet potatoes. I sold them initially as pumpkin pancakes.
ANYWAY, today's money challenge is that our sole shower is broken. We tried to DIY it but probably made it worse. Man, I really appreciate running water now that I don't have it.
-
ANYWAY, today's money challenge is that our sole shower is broken. We tried to DIY it but probably made it worse. Man, I really appreciate running water now that I don't have it.
Can you describe what exactly the problem is? Perhaps we can help.
-
I brought my lunch and breakfast today. Weeee. I also realized last night while throwing away food how much waste we have in our meals (which I knew, but not in a $$$ way).
Do you just...throw away leftovers, instead of taking them for lunch the next day?
No, I mean throwing away food that has gone too long in the fridge and has to be tossed. Because there are too many leftovers or leftovers that are ignored, or I didn't plan and a produce impulse buy spoiled. I just sometimes forget there is a money element there - I get caught up in the tragedy of wasted food.
The irritating part is I'm actually fairly skilled in using up food. I save my vegetable trimmings and make stock for god's sake. So I capable but disorganized.
Today the kids finished a giant batch of sweet potato pancakes I'd made and frozen from some getting questionable sweet potatoes. I sold them initially as pumpkin pancakes.
ANYWAY, today's money challenge is that our sole shower is broken. We tried to DIY it but probably made it worse. Man, I really appreciate running water now that I don't have it.
That's terrible. I'm sorry to hear that. There are some real knowledgeable badasses on the DIY section of the forum who might be able to help.
-
For full disclousure, I am not a MMM, but I am definitely a debt averse person now after reading the forums and have my face punched in and embarassed from the responses. My wife and I make the choice to live how we want to live. I like to play in the middle between a MMM and a fancy pants.
First of all, congrats on taking the first step to come on here. These people will slap you around and cut into your life in ways you never wanted them too, take what you want and leave the rest.
I am most concerned about the fact that you are your early 40's and have such a light retirement account. $68k, however, you have this home appreciation of $200k (probably 10% overstated because of the fees it would take to sell and buy or rent).
With that said, you love your home and you are not going to sell. I am okay with that as I am a home lover and the vast majority of MMM insights you get will absolutely slaughter you because you live in a nice home. You will receive highly subjective feedback. Seems like this is your last resort in case the floor collapses.
You need to start, as others have said, and cut the food from $2,000 to $3,000 a month. That is just insane. Get that down in half and start snowballing your debt aka pay the small amounts off first. We all took our lashings but we have adjusted and are down the road to recover and living a debt free life.
After that, I would be in a hurry to maxing out 401k and ROTH accounts. On top of that, saving for college for your children.
Good luck.
-
Thanks Easye418! The house is actually that fancy, but I have a lot of impractical feelings about it. We've been working to improve it (which is a lot of the debt!). We didn't have any insulation before a couple of years ago, so the heating bill was way worse. So I got compliant about keeping on the improvement.
The shower thing has been sort of half broken for a while and my trying to DIY it broke it worse. So now I'm gun shy!
-
Have you posted the shower problem in the DIY sections?
A broken shower is a tiny DIY issue, the only reason you didn't manage to fix it was because you have probably done very little DIY before. If you are passionate about saving money (and not everybody is) then you will earn DIY.
Houses are very simple, there is nothing in them that is complicated.. Nothing!.. But unless you have done significant work you won't know this of course.
-
Have you posted the shower problem in the DIY sections?
A broken shower is a tiny DIY issue, the only reason you didn't manage to fix it was because you have probably done very little DIY before. If you are passionate about saving money (and not everybody is) then you will earn DIY.
Houses are very simple, there is nothing in them that is complicated.. Nothing!.. But unless you have done significant work you won't know this of course.
I'm actually pretty handy and DIY, I assure you! I'm a spendthrift but I'm not an idiot. Your tone is really moving into being patronizing.
Thanks for your suggestion. I will see what the DIYers have to say.
-
Misc: $800
Miscellaneous is not a category. That money had to be spent on food, auto, entertainment, personal care, or something. All the offices I've ever worked in, I will not let someone create a "Misc" folder under my watch. ...Because they'll eventually just start sticking everything in that instead of doing it properly. My advice--track that stuff better. It's almost $10K a year.
-
Have you had a chance to check the "use all the food in your house" posts in the gauntlet section? Seriously some great ideas over there. I bet you could eat out of your pantry/freezer for a month, just buying the most basic of produce to get you through. And then this would inspire you to keep going.
I'm typically a high grocery spender but have really buckled down in January and doing so has really opened my eyes to the waste we've had. I'm also doing theme day cooking and am finding this simplifies the shopping and unique ingredients needed. Monday is crock pot, Tuesday is Mexican, Wed is breakfast for dinner, Thursday is soup and salad, Friday is Italian, Sat. is cooks choice, Sunday is fast food at home (i.e. homemade nuggets or burgers and fries). I have some pretty picky eaters in my house and so far so good.
-
I'm typically a high grocery spender but have really buckled down in January and doing so has really opened my eyes to the waste we've had. I'm also doing theme day cooking and am finding this simplifies the shopping and unique ingredients needed. Monday is crock pot, Tuesday is Mexican, Wed is breakfast for dinner, Thursday is soup and salad, Friday is Italian, Sat. is cooks choice, Sunday is fast food at home (i.e. homemade nuggets or burgers and fries). I have some pretty picky eaters in my house and so far so good.
That's a terrific idea. We may be stealing that for our house. Thanks!!
-
Jakejake, lunch is lunch bought out at a restaurant during the workday. I started separating it out since I wanted to find out what the real cost of not packing lunch was! Unfortunately we both work in a city and in neighborhoods that have great food decided we care more about eating nice lunches than paying for our kids' college.
Fixed that for you. :)
Edit: Eh, I was overly blunt there, but hopefully you'll see past my tactlessness - and get that it's not "we can sort of afford the nice food and it's a luxury that we have access to it" but more a matter of whether as a parent there are more important things that money should be earmarked for.
You guys can each easily pack a lunch for 1.50 a day ($3 a day combined). Times that by 22 working days in a month, you could spend $66 for lunches, or save $251 a month, or $3000 a year. But really it's more if you figure what that money would save if you put it toward your most expensive loan, and figured in compounded interest that it would save you. I put it into a compound interest calculator at 6.55%, and after 10 years it grows to over $41,000. That's enough to cover one child's college at a cheap school, or a year at a pricey school. And that's not even beginning to address your dinner costs.
Just for fun I compared how much you would save if you spent what I spent on groceries for all meals. I doubled my costs because we are only two people, I used $2500 per month for your expenses, and I used that 6.55% interest rate. Over ten years the difference is $361,241. Over 20 years, it's $1,038,383.
I did the math once for my husband and I, and I came up with $3500 a year, or $16,500 in 5 years. When someone asked me why I brought lunch every day, I mentioned the math. They teased me. I said "you see my shiny new Civic out there? Because my prior car was totaled? Yeah, paid for it in cash. Because I bring my lunch."
To the OP: You have student loan debt. And in 11 years, first kid going to college. You have WAY better things to spend your money on than "yummy food".
Firstly, we used to eat out lunch a lot. (I got fat, had to stop that.) So first, I cut back to Fridays only with friends. Then I dropped Fridays. Then I cut my husband down to Fridays. Then I cut him down to every other Friday.
In part, I learned to cook. I learned to cook "yummy food", so that we weren't feeling like we were missing out by eating PB&J when we could be eating curry, burgers, burritos, thai food.
-
I apologize for not responding to everyone individually, but often the assumptions are incorrect. But I don't want to come across as defensive (I'm not really, more baffled in general because I think the real issue (as many of you have said!)) is that I don't really know where the money goes. I have a general idea and our spending has risen to the money available. But it's risen $40 at a time, not in big ticket items so I guess that's why I feel like I'm not living the high life. But of course I am, it would be better to save the $40 a day and blow it all on coke or something.
Today, I paid off my 401k loan and ate the lunch leftovers from last week I had in the work fridge. So if I get food poisoning I am blaming all y'all. :) I also dropped the cell phones to $38 a month.
The liquor: I will confess right now to having a liquor collecting hoarding issue. So you know, there are a lot of bottles in the bar, we aren't drinking them all every month. I promise. That doesn't excuse the amount spent but hopefully it explains it better.
I'm a wine drinker myself. My mother was an alcoholic, and it killed her, so I have to be very careful.
I make smart and/or silly "rules" for myself, to cut these costs.
First, it's good that you are socializing with friends, but have them bring something.
Some of the rules that I've used now or in the past:
Only can drink on Fridays and Saturdays. Or: only can open a bottle of wine on those days.
Only can drink socially. So, no drinking wine at home with my family. My neighborhood has a weekly potluck at the park every Sunday night from spring till fall. So that means, the majority of my wine drinking is Sunday night only. I take a bottle every other week or so - generally have 2 glasses. And that's it.
I also meet friends once every month or two (I am a wine club member, and the membership includes a free glass of wine for you and a friend EVERY DAY. But since I have kids, I can't go every day.)
I go dry in November. Have done that the last 2 years. I have a friend who goes dry in February
I most certainly avoid drinking when my husband is traveling - that whole ER trip thing
This year, I set an annual budget of $100. This includes socializing (note: I currently have 4 bottles of wine, and over the year my wine club memberships - 2 of them - will provide me with 20 more). So that's 24 bottles of wine, and $100 on "whatever else" - aka beer if we have friends over - for the year. Two bottles of wine a month.
Like I said, some of the rules are silly, but they seem to work. I'm 45 and had a baby at 42. I lost a bunch of weight in 2014, but hit a plateau like crazy. Limiting alcohol really helped - I dropped 6-7 lbs both dry Novembers.
-
You guys will be pleased to know we fixed the shower ourselves for under $20. Whew. I will never take running water for granted again.
thanks mm1970! My father was an alcoholic and I worked with addicts for a time, so I'm pretty versed in the way of things. I do watch my own drinking because I like drinking and I don't want to HAVE to stop because it is a problem. For a while there I quit drinking every 2 years but I guess I can done with kids so I might have to reinstitute a dry period!
I started writing down all my purchases as per a suggestion here. It reminded me of journaling for weight watchers. You're so right that you don't want to write down "ate a block of cheese/spend $45 on fancy cheese."
Ok, this is basically a journal now so I'm heading over there.
-
You guys will be pleased to know we fixed the shower ourselves for under $20. Whew. I will never take running water for granted again.
thanks mm1970! My father was an alcoholic and I worked with addicts for a time, so I'm pretty versed in the way of things. I do watch my own drinking because I like drinking and I don't want to HAVE to stop because it is a problem. For a while there I quit drinking every 2 years but I guess I can done with kids so I might have to reinstitute a dry period!
I started writing down all my purchases as per a suggestion here. It reminded me of journaling for weight watchers. You're so right that you don't want to write down "ate a block of cheese/spend $45 on fancy cheese."
Ok, this is basically a journal now so I'm heading over there.
Great soon you will have no problem dealing with any issue that can happen on a house (except maybe an earthquake)..:)
-
You guys will be pleased to know we fixed the shower ourselves for under $20. Whew. I will never take running water for granted again.
thanks mm1970! My father was an alcoholic and I worked with addicts for a time, so I'm pretty versed in the way of things. I do watch my own drinking because I like drinking and I don't want to HAVE to stop because it is a problem. For a while there I quit drinking every 2 years but I guess I can done with kids so I might have to reinstitute a dry period!
I started writing down all my purchases as per a suggestion here. It reminded me of journaling for weight watchers. You're so right that you don't want to write down "ate a block of cheese/spend $45 on fancy cheese."
Ok, this is basically a journal now so I'm heading over there.
Looked in your post history and didn't see a journal yet- be sure to come and post the link on here once you have one up! =)
-
Some of the rules that I've used now or in the past:
Only can drink on Fridays and Saturdays. Or: only can open a bottle of wine on those days.
Only can drink socially. So, no drinking wine at home with my family. My neighborhood has a weekly potluck at the park every Sunday night from spring till fall. So that means, the majority of my wine drinking is Sunday night only. I take a bottle every other week or so - generally have 2 glasses. And that's it.
I also meet friends once every month or two (I am a wine club member, and the membership includes a free glass of wine for you and a friend EVERY DAY. But since I have kids, I can't go every day.)
I go dry in November. Have done that the last 2 years. I have a friend who goes dry in February
I most certainly avoid drinking when my husband is traveling - that whole ER trip thing
This year, I set an annual budget of $100. This includes socializing (note: I currently have 4 bottles of wine, and over the year my wine club memberships - 2 of them - will provide me with 20 more). So that's 24 bottles of wine, and $100 on "whatever else" - aka beer if we have friends over - for the year. Two bottles of wine a month.
The convenient thing about lowering your alcohol intake is that when you're used to less, you truly don't want more. On Friday night I had a beer as I sometimes do, and a little later my wife, who isn't a drinker, said "These beers nobody else likes are taking up a lot of room in the fridge. You want another?" Well, sure.
I felt like shit! I have adjusted my body way, way, down from certain times in college. Sort of a reverse hedonic adaptation - I have one beer now and I'm pleasantly buzzed.