So the steps you need to take
- Cut your expenses. I see a lot of possiblities. See the other list below
- Increase your savings so you can max out your 401k and you reach FI fast
- Ramp up your side income.
- You do not need life insurance for your kids. Life insurance is to help the survivors when an earning member passes
- Increase the deductible on the car from $100 to maybe $500/$1000. Check with your insurance company for the right deductible.
- Increase your 401k contributions to the max if you can swing it (pay off credit cards/bank loan and use this money)
- Get rid of the cancer policy
- Pay off the Kohls/credit card loan. The interest rate on these are usually very high
- Get rid of the motor home. How often do you use it?
-See notes below on life insurance.
-I will look into increasing the deductibles on the cars. Like I stated in the original post, the only reason they are that way at the moment is because we simply can't afford to pay a $500 deductible if we had to, and it would end up on a credit card, like it has in the past. We just don't have any cash. We have the emergency fund cash now, but we haven't always had that. Matter of fact, I'd say that we might have had it 10% of the time over the past 5 years or so, simply because I am always dipping into it to use it for "stuff".
-I will start increasing my 401k contributions when we start paying off this debt.
-I can definitely get rid of the cancer policy. I used to have a lot of stuff like that, but I found at the hard way that more often than not, it is harder than it's worth to get the funds from the insurance if you ever need them. I had an accident policy, and a short term disability policy..etc. I once tried to use one for an Emergency room visit, and it was a nightmare. I don't think I ever did get reimbursed. That left a bad taste in my mouth so I dropped it.
-Kohls card will be gone soon. Matter of fact, it may be the first thing that gets paid off. At the moment, I'm not sure if it would be better to pay this off first, or my credit card, which has a higher balance. Since MMM does not advocate keeping money in a savings account anyway, I may use the emergency fund to pay it off. $75 a week goes to that account (so $300 a month.) The initial plan was to pay off my credit card with the money I'll get back from income taxes plus this emergency fund money, but that won't be until the end of Jan or Early Feb '16. By then, I'll have close to the amount saved again, if I use the money there now to pay the kohls card off.
I recommend that you start tracking every penny spent right away. There's some money leaks that you don't have a handle on, and you don't have any extra room for that.
There's an older book called "Your Money or Your Life".
I'm confused about what you wrote about the phones...on the one side you say you are grandfathered in to unlimited data. Yet you won't use it as your main connection because they'll boot you off if you use too much. Why pay it, then?
Full coverage on autos: sad news. If someone hits you, then their insurance pays for your auto. If you are liable then your insurance pays. Either way, you're going to get adjusted blue book as a payout, not replacement value. That means you are paying a lot of money for little return. You will also still need to cough up for the difference to replace the auto.
Kohls, what is this? Are you financing the clothes on your family's back? Think it through, and commit to killing this and not doing it again.
Groceries, fuel, all these are high.
Life insurance on children? Not to be rude, but this is almost always uncalled for.
Welcome to the forum.
-Would you happen to have the author of this book? I looked but there seems to be several authors of similar titled books.
-I am grandfathered in on unlimited data. What I mean by this is those who still have it will understand why it is important. I don't know for sure, but I have heard rumors that Verizon will boot users when they see insanely high amounts of data usage. Right now, at about 30GB a month average, it is already high. I can't imagine what it would look like if we used our phones as hot spots for streaming TV. Even though I'm under contract (OUT of the stuck in the contract period of course), I'm still afraid they will find some loophole to knock us off. They are trying everything in their power to get people off of unlimited, which is why I think they don't even offer plans with that anymore. If they do, I'd imagine the cost is astronomical.
-I need to look into what the actual blue book value is on our vehicles. Again, along with the deductibles, the only reason we have full coverage is just so we can get something. If a collision is our fault, at least we will be reimbursed the value of the vehicle..which is more than we have on hand to pay outright. Also, even though in my state it is mandatory to have insurance, that doesn't mean everybody does. I've known several people that have been hit by people without it, and ended up being screwed. They may get some money out of court judgements, but the time and resources to get it is ridiculous. Not an excuse, but I'd say it is a worthy concern.
-See notes on first reply about kohls.
-Groceries are figured at $100 a week. This is to feed a family of four. To be honest, we have trouble staying within this amount. We do pretty good, but we do go over some weeks. If this is high, what is average around here in the forums for someone with the same family of four?
-Fuel is pretty much what we spend. My wife's car is a newer efficient four cylinder that gets maybe 25 mpg. My truck is an older 8 cyl that doesn't get that great, maybe 13MPG at best. The thing is, I don't drive that far. I have a 4 mile round trip commute each day. I do occasionally ride about 5 miles into town, but rarely do I use it to go out of town anymore. We usually take the wife's car for anything like that. I know the short work commute is no excuse to have a gas guzzler truck, but that's been my reasoning. I also do use my truck fairly often. I carry stuff a lot. I also use it to pull trailers and other stuff. I know I could do this with a minivan. I've been reading the blogs. haha.
-See final note below about life insurance.
Has your wife looked for a better job? $24,000 a year seems to work out to $11.54 an hour. Not horrible, but it seems like it would be worth looking.
-No, she has not looked for a better job. We do not come from one of the families or areas where everybody is well educated and lands the high paying jobs. I was fortunate enough to have very good grades and get a full paid scholarship to a state technical college, and I earned an associates degree. I almost dropped out because I could not afford the fuel cost of driving about 60 miles a day to get there and back, even though I was working three jobs and everything was paid at school. I'm glad I stuck it out though, because it enabled me to make the kind of money that I do. Otherwise I don't know I'd make what I do. My wife has only a high school diploma. She never went to college or anything because her family could not afford it. She initially worked for the same employer I do, but after we had our first kid we were in a bad spot because as I said, Saturdays are mandatory. We had no baby sitter and she just had to change jobs. She took a pay cut to go into finance, and she has been in that for four or five years. unfortunately, there is not a lot of room for advancement in a small town. There are other higher paying positions at her place of employment, but she likely won't get them anytime soon because of others in those positions that know they have it good and don't plan on leaving, to put it nicely. She has hit her ceiling. While she may get small raises every year or so, that's about it.
Her only options are to move to a different branch (same company), but then there will be commute time and costs. One thing she has going for her is experience, and she is very good at what she does.
You have an insurance problem. The nice man/woman talking you into these plans is robbing you blind. Your wife doesn't need life insurance, you can make it on your salary alone if she passes, your children passing should have little to no bearing on your financials either. Full coverage on your vehicles is silly as well. Your truck isn't worth much more than the added cost to have full coverage on all your vehicles.
Another path you might pursue is to calculate the actual cost of your wife working since her income is fairly low. Look at fuel cost, maybe that kohl's debt is related to her work wardrobe, and daycare is an obvious expense. Maybe you could make it work with a single car if she doesn't work. Maybe she could use a non-smart phone if she is home most of the time and can use the cable internet.
-See notes below about life insurance.
-Yes, daycare costs are astronomical. WE BOTH HATE THEM. Fortunately, we do get some back on our taxes because we can claim that daycare cost. It is almost as bad as mortgage interest. We've thought about the possibility of her staying home, but she wants to work. that is her choice. I'm sure this would merit further discussion and investigation though.
Your car insurance is crazy. Mine is hundreds of dollars a year less than yours (with $1 M coverage) with a teen driver. Raise deductibles as suggested above.
Check out AT&T DSL internet, currently about $35/ mo and fast enough for watching Hulu, movies etc. For phones I have TMobile unlimited with no contract for two for about half what you are paying (and I'm embarrassed told it I pay that much on MMM! )
Drop the gymnastics class. That money needs to be spent paying off debt. Buy a good tumbling mat, a one time expense, as her Holiday gift. And if you want get a 6 foot long 6 x 6 to be a balance beam, sitting on the ground.
Cut up that Kohl's card! Someone is buying a lot if clothing, accessories, etc since Kohls doesn't even sell major items like appliances.
Be sure you have low energy bulbs in all the fixtures and keep the house at 78 in the summer and cool in the winter. A little seasonal variation is a good thing.
Sell the motor home and pay off your credit cards...you are paying huge interest. You can buy a used motor home when you have cash saved up for it.
-I will look into AT&T DSL, but I don't think they come out to where we are. The cable company kind of has a monoply. There is another cable company, but the service is not as good and the cost is about the same. As far as T-Mobile..same deal with service here. They still offer unlimited, but that is easy to do when you don't provide good service (reception). Where we are, Verizon is king. T-Mobile has terrible service. That may change in the future, but most people around here hate T-Mobile and stay far away from it. We are in a rural area.
-I don't think dropping the gymnastics class is an option. That is the one thing my oldest kid does and absolutely loves it. My wife or I don't know how to teach that kind of stuff, and the kid would be crushed if we told them they could no longer go. The kid lives for that. I can build a balance beam, and matter of fact, that is already on the list for Christmas, along with a mat to go under it. Thankfully I won't have to buy a balance beam, but I will have to get the mat.
-Kohls card will be gone soon.
-Working on getting everything converted to LED. Major hog of power in the house is the central AC and HEAT. We keep our temp at about 72. Maybe we could get used to running the thermostat up a bit. Although in the winter, even in my state, 78 would make the heat strips run non stop in the heater.
+1 on insurance, cell phone.
Also on wife's employment. If you don't see job growth for her, your family might get a lot happier by cutting expenses and letting her stay home. It sounds like you're already working 70 hrs with the side job, if she can take over the childcare, household, and drop the extra car and phone, then at least you can spend some time with each other and playing with the kids. Did you say you're spending $500 for a six year old to take gymnastics? Exercise with your kid! Shop at Goodwill, never eat out, start a garden. Lose the credit cards.
I'm also confused as to how you "lose" 14k. Is it cash that gets withdrawn and not accounted for? Is that pizza and fast food, work lunches, gifts?
-See response above on wife's employment.
-I never thought $40 a month was that bad for gymnastics, but you guys make it sound like it is a sin. lol.
-We are trying to figure out this $14k issue right now. As I said, I have been actively looking into a budget and trying to get it going. There are things I don't understand about it. Yes, we eat out occasionally, but not as much as we used to. We can't afford to anymore! lol. I know that money is leaking out somewhere, but we haven't caught it yet. I'm still working in it. $14k works out to about $1,150 a month. this doesn't make sense, because we are running out of money. Even if I figure it at half that - $7k a year, that's still $583 a month we should have. I assure you though, we don't.
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As far as insurance, this is another excuse, but here it is. My father passed about ten years ago, and he had a small insurance policy. My stepmother got that, and paid most of the funeral costs. I never saw a dime of it, but didn't really want to. She did not spend the money to put his headstone in place and that really bothered me because I didn't have the money to do it. Second, My mother passed unexpectedly a few years ago and she had no insurance. I had her cremated, and even that cost $1600. At this point, I was just about irate of the costs associated with someone passing. Knowing I had nothing and my wife had nothing, I chose to get us each insurance policies. this way, if anything happened to either of us, the kids and everything would be taken care of. I simply don't want either of us to have that financial burden. As far as the kids, that situation is related to just having funds. We would not have the money to pay for anything if something were to happen, and those policies would help. I can understand how all of these things are a financial drain, but I don't see the feasibility in dropping them until enough money is saved to cover the costs of any of the possibilities.
A note about the motorhome Like I said, it was a gift from my grandparents. I'm kind of stuck between a rock and a hard spot. They did sign the title over to me, and it is technically mine, but I don't think they would appreciate it if i just sold it. They gave it to me for a reason - to take the kids and have fun and make some memories. I tend to agree with everyone here..I kind of want to sell it to help pay off debt, but I'm not sure what they would think about that.
-For the last poster, I have read several Dave Ramsey books, and that is where I first got the idea of doing a budget in 2011. I probably would have had this information on his site and forums, had I not had to be a paying member. That's one of the things I respect about MMM. This info here is mostly free (if not all free).