Case Study: Feeling Poor and Overwhelmed--how are we doing?

[LadyStache in Baja]

Life Situation: I am an American living in Mexico, filing taxes single, but living with my long-term partner husband.  Most of our income is in my husband’s (Mexican) name, so I fall way under the minimum to even have to pay taxes.  My husband doesn’t have to pay Mexican taxes either, so we can pretty much disregard that.  We have four kids under 4.  Currency used is US dollars.

We are have our own business and my husband is a contractor, so our income can vary, the following numbers are averages.

Gross Salary/Wages: We make about $1200/month = $500 (family business) + $700/month (husband’s construction business).

Rental Income: We just finished our rental apartment, so hard to say how much we will actually earn in the high season (winter).  I’m estimating this at $500/month.

Rental Expenses: $50/month for gas and electric.

Adjusted Gross Income: $1650 US/month

Taxes: 0.  (We will likely pay something for the rental, since that’s in my name, in my US account, but I’d say it’s going to be pretty minimal since my income is so low).

Current expenses: $1300
Nanny:$400/month. (6 days a week, 5-7 hours/day, for my three toddlers.  Total cost, not per child) 
Groceries: $400/month
Gasoline: $173/month
Household $133/month
Gas: $15/month
Electric: $12/month
Lunch out: $80/month
Cell phone: $26
Home internet: $23
Fun stuff (new computer, kindle books, random toys for me): $33/month averaged
Misc. Hm, this suggests we save about $500/month, but I’m not sure that’s entirely accurate.  Some unrecorded expenses are money that has gone into our house because we’re still working on it.  I consider that “saving” rather than “spending”. 



Assets: About $5000 invested.  Some with Waddell & Reed which I want to switch to Vanguard, and some through Etrade in stocks. 
   $200,000 estimated value of the house (our house which includes a 2nd story rental).
   5 cows (each worth $1000, and consider also that each female has one calf each year.  If the calf is female it will eventually have calves, and if it’s male, it can be sold.  We are not selling these right now, we are letting them grow and multiply.  Free-range, so no expenses). 

Liabilities: House--$30,000 in debt, but a zero-interest loan from a family member.  So 0/month (I expect to pay it off but maybe after selling the house or after we are in a better financial position.  It just seems better to invest any extra money, let it grow, and then pay it off.  Although I do think a symbolic minimum monthly payment might be good.)

2 cars, which I hate because they are both gas-guzzling monsters.  Trying to sell one and get a better one, and then sell the other and just have one.  Each worth about $2000 and obviously paid off.  Also, I just bought a bike (yay), but am looking for an infant bike seat since my baby comes to work with me.

Specific Question(s): I spend a lot of time calculating and re-calculating and generally worrying about how we simply don’t make enough to save “enough”.  I worry that I wasted my twenties not earning compound interest (actually I did invest all through my twenties, and I used that money to set my life up down here). 

So now I’m worried I’m missing the whole point, which is to enjoy life.  After all, that’s why I moved to Mexico and chose to start a business I love rather than working a high-income job.  So how are we doing?  Should I just be more patient?  Any obvious changes I can make to speed it up?

[swick]

It looks like in general, you are doing pretty good.

What do you actually do, and is there a chance that you can pick up extra work virtually? It seems like 500 a month might be a good wage in Mexico, but not if you necessarily want to save a bunch?

Also, the 400 a month in babysitting is very steep, is there any chance you can get family to help out or could you organize a babysitting co-op?

[LadyStache in Baja]

Thanks for your reply! 

It looks like in general, you are doing pretty good.

What do you actually do, and is there a chance that you can pick up extra work virtually? It seems like 500 a month might be a good wage in Mexico, but not if you necessarily want to save a bunch?

Also, the 400 a month in babysitting is very steep, is there any chance you can get family to help out or could you organize a babysitting co-op?

We run a small farm.  The 400/month for babysitting I consider to be cheap.  It's for all-day daycare, 6 days/week, for my three toddlers.  Without that, I couldn't work at all.  It is half of what I make anyway, but something is better than nothing.  Once they are in school, this will go away.  But hey, you're right, I could think about a co-op at least!  I've always been scared to ask because most people have smaller families, so it wouldn't be an "even" trade.

I've thought about working virtually, but I already am away from my kids 6 days/week (It's typical to work 6 days in Mexico) and couldn't stand to be away any more than that.

[LadyStache in Baja]

Any other advice?  I think I was in a rather negative mood when I wrote up my case study, and that I need to enjoy the fact that I'm already living a great life, with a great family, and a business that is our own! 

Hopefully in a year or two we'll have more momentum built up and it'll be more obvious that things are gonna be ok.  Going into the next year there are two major changes that I'm hoping will improve things: 1. we've started advertising for my husband's construction business, and since doing so we've had great success.  (the numbers in the case study above include what I hope we'll make from his side.  the reality of the past year was almost zero.)  2. we've finished our rental and our pimping it out on airbnb.

We also have plans to slowly build a little house on our property that we can move into so we can rent out the first floor as well.  Sound good?

[justajane]

The lunch out - how many times a month is that? Since I don't know that much about what food costs in Mexico, I'm trying to figure out if there is some wiggle room there. That's a monthly expense that, if you reduce it by even $50 or so, could translate into lots of savings over the years. Presumably you get milk from your cows?

Otherwise your expenses are pretty good. The childcare for four is a steal, especially since it enables you to work and do what you love.

[ShoulderThingThatGoesUp]

I'm curious if Mexico is really the best option for you. You're an American, so you can bring your husband and kids to the US no problem, and your husband could work here and make a lot more money someplace with a low cost of living and relatively familiar culture like south Texas. Just seems odd that so many Mexican men risk their lives to build houses in the USA and your husband could do it totally legally but you stay in Mexico.

[Thegoblinchief]

With a farm, and what I've read about food prices in Mexico, you should be able to do a lot better than $400/mo on groceries.

On the cows, you should have at least some expenses, if nothing else minerals or kelp. "Free range" is also a really bad way to run a herd. They should be rotationally grazed.

[LadyStache in Baja]

Thanks for taking the time to write responses, everyone! 

justajane--Yes you're totally right on lunch!  That is just a lazy move.  I've been doing better at packing a lunch, still not all the time though.

thegoblinchief: we live in baja california sur, so most staples are actually kind of expensive (the peninsula effect).  And the cows have been sustainably grazed in the same area for generations.  The land can handle the number of cows that are there.  If you wanted to maximize the number than yes rotationally grazed would be best.

ShoulderThingThatGoesUp: Ha! The men that risk their lives to go North are from a totally different area of Mexico.  Kind of like people from Illinois move to California and not vice versa?  People from my state rarely go north, and if they do, then it's to be an actual tourist.  I think we can actually make a better life here than up north, taking into account quality of life.  But yeah, it's worth thinking about!  I'd definitely like to grab some farm work in the summer up north, so we could visit my family and get paid at the same time.

And hey, UPDATE:  my kids are going to preschool next year, which will cost $180/month for all three of them, eliminating the expensive babysitter cost!  I'm really looking forward to that!

[mskyle]

The nanny does indeed seem like a good deal for three kids, so many days a week, but given that your family business is only making $500 a month... would it be cheaper to hire someone to do more work on the farm and free up more time for you and/or your husband to take care of the kids?