Author Topic: Case study - Here we go..  (Read 15208 times)

taking fire

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Case study - Here we go..
« on: November 11, 2015, 06:46:50 AM »
I've been reading mainly the blog articles here for about a month, and I am amazed at the info here. It's almost like common sense, but I, along with I'm sure many others, have been predisposed to think a different way when it comes to money. I'm finally starting to wake up. Not only out of desperation, but also to get my financial life back on track. This is my case study. I copied and pasted the template from the how to write a case study thread.

Topic Title: Reader Case Study - I need help with getting back on track from here.

Life Situation: IRS filing status = Married with two kids ages 6 and 2 (I actually file married and 4 on my federal income tax with holding. I did a W4 worksheet a few years ago, and this is what it came out to.) State income tax is at Single and 0. The goal with filing married and 4 on my federal income tax was to try to break even at tax time. For years I had this set at single and zero, and was getting back a huge refund. when I finally started getting all this stuff figured out a few years ago, I realized I could be using this money throughout the year to help pay bills, so I changed it. Initially, it worked out pretty good. we owed about $100 at tax time, the first year we had it set like that. Now, we are getting back anywhere from $1k to $2k it seems. I think it has something to do with a child credit or something, since our second child was born after we made this change.

Gross Salary/Wages: My gross salary varies, but it is usually between $52k-$57k a year. See notes below on why my income varies. My wife's pay is pretty consistent, at about $23,920. So combined, we earn at least 75,920.00 gross.

Pre-tax deductions:
1. 401k. I contribute 4% w/ that being the max employer match. It takes seven years to become fully vested (I still do not understand what this means, but I'm fully vested). $49.26 out of my check each week. I currently have around $35k in the account.
2. BCBS Medical Insurance for family (still a PPO plan through my employer): $130 per week
3. Dental Insurance: $14.22 per week
4. Work Credit union (my savings): $75 per week
5. Something I'm not sure of exactly what it is (may be some type of cancer policy insurance): $2.80 per week

Other Ordinary Income: I have a side business that I have not yet fully established, but once up and running in a few months, the items I make should bring around $200-500 each. I may be able to make a few a month or more, once I get finished with setting everything up (in the process of that now). If you want details on this, please send me a pm, as I don't want to give too much information that may give up my identity.

Qualified Dividends & Long Term Capital Gains: I don't think I have any of these.

Rental Income, Actual Expenses, and Depreciation: I don't think I have any of this either.

Adjusted Gross Income: This should equal the additions and subtractions above. I'm not sure if this is the same as our combined net incomes, but if so, we bring home about 58,240.00. This is my net @ $39,780, and my wife's @ $18,460 combined.

Taxes: Federal, state/local, and FICA.  These should be consistent with your AGI and Life Situation. I'm not sure exactly how to list these. Quite frankly I don't know much about this stuff. For my pay, this past week:
I made $1231.40 gross.
Federal income tax - $66.99
Federal SS - $67.41
Federal medicare - $15.77
state income tax - $45.85.

For the wife, she gets paid biweekly. Her deductions are:
-Unavailable at the time of this post. I will update later if requested.-

Current expenses: Provide breakdown and relevant details. A breakdown of our expenses are as follows: On an annual basis, I bring home $39,780 net. This is if my hours stay up. See notes below about my hours. My wife's pay is pretty consistent at $18,460 net. Combined, that leaves us with an annual net income of: $58,240

Annual expenses are as follows:

House - $15,120
My wife's life insurance - $376
Both of my children's life insurance - $240
Power - $2,400
Personal loan at the bank - $2,880
My life insurance - $540
Wife's Kohls Shopping card -$300 (this is $25 minimum monthly payments)
Cable Internet - $936
Water - $600
My cell phone and my wife's - $2,400 (See notes on phones)
Car insurance through Allstate. - $1,620
Trash disposal service - $192
My credit card - #1,200 (making a tad more than minimum payments - $100 a month)
Groceries - $4,800
Fuel - $2,640
Daycare - $6,960
My Medicine - $540 (I'm on Rx blood pressure and acid reflux meds)

Extra curricular activities for the kids
Gymnastics for our oldest kid - $480

Total expenses: $44,224

So after all these expenses, that still leaves us with: $14,016


Expected ER expenses: I'm not sure if these are relevant to me.

Assets: The only Assets I can think of that we have are as follows: House and land - worth maybe $215k, My Savings, currently about $1,200, My 401K - About $35k, My truck, $3k, my wife's car - $5k, and our small motorhome - maybe $8k. So about $267,200.

Liabilities:

House Mortgage. The mortgage is actually two separate notes, with the first note being the Mortgage itself. This originated in April of last year w/ original amount of 206,610.00 and an APR of 4.75%. It is a 30 year loan. That payment is $1190.75. It is broken down as $1,077.78 for the principle and interest, $46.88 in property taxes, and $66.09 in insurance. Altogether, that payment is $1,190.75. The second note was a financed down payment (since we had none) with an original amount of $6,390 and an APR of 4.75%. It is a ten year loan. The remaining balance on it is $5,613. That payment is around $67.00, which makes the total combined mortgage payment for both loans $1257.75. The mortgage has No PMI (not sure how exactly we scored that, but I'm not asking any questions.)

Wife's Kohls Shopping card: balance is $930 @ 21.9%. Minimum payment is around $25.

My credit card: $4,155.18 balance w/ $94 minimum payment. 16.9% variable purchase rate, 24.9% variable cash advance rate.

Bank Loan for a machine needed for my side business: Original loan amount - $9,928.25 @ 6.5%APR for 4 years, originating in March of this year. Payment around $240/month with a remaining balance of $8653.19.


}Specific Question(s):

The problem is that we still come up short and have just enough money to get by. We cannot tell you where that $14k extra is. This is why I'm trying to get a zero based budget working. The following are notes about bills, and also some "complainypants" reading. You choose wether or not you want to read. There is some relevant info.

Power is sometimes as low as $100 a month during the times of the year like spring and fall, but we always figure high at $200 a month for budget purposes. We have thought about budget billing, but as I see it, we will still be paying the same amount each year, regardless if it is budget or not.

We do not have cable TV. We dropped it earlier this year and saved $100 a month! We now only have cable internet. We use it for things like Netflix and Amazon Prime, and that's how we watch most of our TV now. We have a Netflix membership, but not Amazon Prime. Occasionally we will buy a TV show and might spend $15 a month doing that.

Our cell phones probably seem ridiculous. I agree, they are. However, we do not have a landline phone. We are grandfathered in on Verizon's unlimited data plan. I pay about $105 a month for mine, and $85 a month for hers including a discount from my employer. I use around 30GB of data a month for tethering to my pc with foxfi. My wife does not use foxfi for pc internet or anything and therefore does not use much data, but I have figured we better hang on to unlimited data for as long as possible. Call and text minutes are decent and we never go over. I have contemplated using one of our phones for setting up a hotpsot with foxfi and just using it as our home internet so we can get rid of cable internet, but I have heard that verizon will pick up on the fact that you are using insane amounts of data and find some way to boot you. I have also heard that their unlimited data plans are going up $20 a month starting this month, but not sure yet. I guess we will see when the bill gets here. We stopped buying new phones about four years ago. Since then, I just buy used phones off of ebay or Amazon, that way I avoid the re-signing of contracts or any changes to my plan..since I don't want to lose our unlimited data.

Car insurance broken Down - My wife's car is a 2006 model, full coverage w/ $100 deductible. My truck is a '95 model, full coverage w/ $100 deductible. We also have a 2000 model small motorhome that was a gift from my grandparents. Coverage is $30 a month and I believe full coverage, but I don't know the deductible right off hand. That $30 is included in the yearly amount listed above. We carry full coverage on our vehicles because we don't have enough money in savings to replace them if something happens and they end up totaled. At this point, I just hope that the insurance would pay a decent amount so that we can at least put a down payment on something or buy something used. If we were only carrying liability and something happened, we would be screwed. Also, the deductibles are low because we have had to use the insurance several times in the past, back before we owned the cars outright. At that point, it was required that we have full coverage by the lending institution. Now that we own them it is not required, but I keep it anyway because we cant afford to replace them outright. The deductibles were originally $500, and not one time did we have the money saved for that. We put it on a credit card every time..

I know I need to get some of this debt paid down. I have been in the position a few times within the last few years where it has only been the mortgage payment as far as debt, but somehow we always get it back up. I can't seem to get away from a credit card. I know that sounds terrible. The main way the card gets used is if we run of money and we need something, we just stick it on the card. Then, all the little small purchases here and there add up. Right now, the only light at the end of the tunnel for my card is paying it off at tax time next year, with the little bit of refund I may get back plus my emergency fund savings. To note, my emergency fund and savings are pretty much the same thing. The only reason I keep my CC is because it has a $8K limit, and my wife's (which is paid off) has a $5k limit. I look at them as sort of an emergency fund source so that we have a safety net. In the last few months, my CC has been the safety net when my debit card comes back "insufficient funds." I can't even begin to describe how embarrassing that is. Especially when I try to make excuses like telling the cashier that there is plenty of money in the bank or that maybe the bank is having issues. Deep down I know I'm just freaking broke.

My work situation is complicated. My employer seems to think that paying low wages and giving lots of overtime is the way to go. I am not sure what the reasoning / benefit behind it is, but that's what they do. A regular work week for me is about 55 hours. Right now I'm working about 58. Ten or eleven hours a day is normal, and Saturdays are mandatory. When I first started eleven years ago, I didn't mind it much. Now that I'm married and have little kids at home, I hate it. For what I do in a technical / maintenance type position, pretty much everywhere will have long hours. The reason is because my trade supports production and if something breaks, we have to fix it. There is never any shortage of maintenance work, and all jobs in the trade are pretty much long hours. My skill set is kind of specialized, so I can't just go down the road and get another job. There are other jobs out there, and they may pay better and have a little shorter hours, but I will be commuting. That takes away time out of my day  and pretty much just adds up to about the same situation I'm in now, so I have just remained where I am. With low pay and guaranteed OT, the employer has me hooked. If I ever leave early to go take care of something, or even take a vacation day, I lose those OT hours and it kills me on my paycheck. I absolutely hate it because it pretty much means I am a slave to my job for many hours every week. When I get up in the morning to leave for work, it is dark outside and my family is asleep. When I come home, I might have two hours to spend with them. Any activities that normal people do on Friday nights are kind of off limits to me, because usually I have to get in bed because I have to get up. Same for Saturday activities - I have to work, so I can rarely participate. So that's the deal. In order to bring home the required amount of money to get by, I am stuck at work for 55+ hours a week.

My side business is something I have been doing for almost ten years. I have been slow about developing the business because I have not had a dedicated place to do it. Now that we have recently moved to our new -and hopefully permanent- home, I have finally gotten to the point where I hope to be up and running by the first of the year. I will have everything set up and I can start producing, using the machine mentioned above, and making some side income. The major problem thus far as been not being able to get to it because of so much time spent at my regular job. If I had a normal 40 hour work week like most, This thing would have been off the ground a long time ago.

I've gotten to the point that I resent my job and work situation so much it makes me miserable. I stay stressed out. I can't get anything done or have much of any time to myself, because I'm always stuck at work. I can't spend the time with my kids that I really want. The truth is, I have grown tired of working for someone else. It may sound bad, but that is just the point I've gotten to. I don't know that my side business could make enough money to support our current standard of living, but I do know that I could make something and would be much happier if I could do that and work for myself vs. having to be on somebody else's time, away from my family and everything I truly want. The only part of my day that I actually enjoy is leaving my job so that I can go home and get my day started..doing what I want to do and spending time with my kids and wife. It is sad that it has come to that, but I created this situation for myself. No one else did it. If it sounds like I am mentally in bad shape, I am.

The crazy thing is that everyone around me is in the same boat. Everybody has to have OT hours to survive. It is really a sight to behold to see people begging for work hours. I grew disgusted with this a few years back, and have made it my mission to get out of the situation. I just have not been disciplined enough yet to follow through with it.

Now, all that said, what I am really asking for is guidance on how to straighten this mess out. I really want to get to the point where I don't have to live week to week. I want to get to the point where if I need to run to the hardware store to get a piece of pipe to fix a plumbing problem, there is money to do it. I'm sick of running up credit cards and having to use any available extra cash or any windfalls that may come along to pay them off. The first thing I absolutely must do is develop a budget. This is very complicated to me because I am a very detailed person and I cannot see to grasp it. Some of our bills are a week or two behind, so it could be a few months before I can even start implementing the budget and making it work. I have to be able to pay the bills on time to make the budget work, and that isn't an option at the moment, because we don't have any extra cash, except for emergency fund (savings).

I've tried to come up with a working budget on several occasions, but I never can get a 100% understanding of it. I have some reasons why, but I'll wait until I get a few replies to list those.

Any advice on getting started in the right direction, once and for all, would be greatly appreciated. If other info is needed, please ask.

CowboyAndIndian

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Re: Case study - Here we go..
« Reply #1 on: November 11, 2015, 07:18:12 AM »
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.


Some things which really jump out.
  • 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?
« Last Edit: November 11, 2015, 07:23:30 AM by CowboyAndIndian »

Rezdent

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Re: Case study - Here we go..
« Reply #2 on: November 11, 2015, 07:20:18 AM »
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".  The steps in that book are amazing if you are trying to sort out your personal finances, and I'm seeing that you echo some of the things that the book helps you sort out.  You can search out their website, or see if you can borrow the book from the library.  The investing advice is outdated, but getting yourself out of debt and establishing a healthy relationship with money advice is great.  Spoiler: they don't advocate a "budget" because you don't need one if you truly follow the steps.

There's lots of places to trim back here, you could easily pay off the cards and notes if you examine these closely...

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.

ShoulderThingThatGoesUp

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Re: Case study - Here we go..
« Reply #3 on: November 11, 2015, 07:28:59 AM »
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.

argonaut_astronaut

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Re: Case study - Here we go..
« Reply #4 on: November 11, 2015, 07:40:03 AM »
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.

Dee18

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Re: Case study - Here we go..
« Reply #5 on: November 11, 2015, 08:12:31 AM »
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 to admit 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.
« Last Edit: November 11, 2015, 11:37:43 AM by Dee18 »

Runrooster

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Re: Case study - Here we go..
« Reply #6 on: November 11, 2015, 08:55:16 AM »
+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?

taking fire

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Re: Case study - Here we go..
« Reply #7 on: November 11, 2015, 09:35:45 AM »
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.

*********

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).
« Last Edit: November 11, 2015, 09:38:36 AM by taking fire »

pompera_firpa

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Re: Case study - Here we go..
« Reply #8 on: November 11, 2015, 09:39:34 AM »
Oh, honey, BREATHE.  It's going to be okay. Believe me, it helps a LOT to have a plan in place.

I'm curious about what methods you've used to try to get a working budget in place before. I think what ends up working is slightly different for everyone, but the long and short of it is that you have to track things for at least a month to figure out what the hell is going on, THEN make the budget, and then accept that you'll have a few months of tweaking the budget to fit.

I had a budget before that had line-items for EVERYTHING. This ended up causing way too much confusion and led my husband to just leave the whole budget to me, which caused further problems. Tracking every penny is good, but basically you just need to start by putting every cent you spend this month into one of four categories:

1) Bills
2) Debt
3) Necessary Life Stuff (groceries and such)
4) Random Stuff That Could Probably Be Put Off Or Avoided

Start there. You can break each category down into sub-sections if you want, later, but right now just put every transaction into one of those four categories.

Something I've found that helps is to have a daily spouse-involved check-in on what we've spent so far this pay period in each category. For me and my husband, that means that I do the math first thing in the morning, and I text him (even if he's in the same room-- it just helps to have it written down somewhere) with the amounts in each category.

Beyond that: seconding everything re: insurance, credit cards, and phones.

Breathe. Talk to your wife. Imagine how much less stress you will be carrying once you get the debt unloaded. Imagine how much less overtime you could take once you get that side business running. You can do this.

taking fire

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Re: Case study - Here we go..
« Reply #9 on: November 11, 2015, 11:08:52 AM »
Oh, honey, BREATHE.  It's going to be okay. Believe me, it helps a LOT to have a plan in place.

I'm curious about what methods you've used to try to get a working budget in place before. I think what ends up working is slightly different for everyone, but the long and short of it is that you have to track things for at least a month to figure out what the hell is going on, THEN make the budget, and then accept that you'll have a few months of tweaking the budget to fit.

I had a budget before that had line-items for EVERYTHING. This ended up causing way too much confusion and led my husband to just leave the whole budget to me, which caused further problems. Tracking every penny is good, but basically you just need to start by putting every cent you spend this month into one of four categories:

1) Bills
2) Debt
3) Necessary Life Stuff (groceries and such)
4) Random Stuff That Could Probably Be Put Off Or Avoided

Start there. You can break each category down into sub-sections if you want, later, but right now just put every transaction into one of those four categories.

Something I've found that helps is to have a daily spouse-involved check-in on what we've spent so far this pay period in each category. For me and my husband, that means that I do the math first thing in the morning, and I text him (even if he's in the same room-- it just helps to have it written down somewhere) with the amounts in each category.

Beyond that: seconding everything re: insurance, credit cards, and phones.

Breathe. Talk to your wife. Imagine how much less stress you will be carrying once you get the debt unloaded. Imagine how much less overtime you could take once you get that side business running. You can do this.

Tracking spending is not hard. We know this is the first step. I think I have a problem with being impatient, and it seems like a lifetime waiting for a month, or maybe two, to go by while we track spending.

We have an excel budget I created based on a bunch of different example budgets. It was originally broken down into so many line items or categories, my wife could never understand it from the start, but even I didn't fully grasp it.  I can't figure out how to break it down. I end up making it too complicated, which then causes me to lose interest in it. I like for everything to have a place though, so when I try to generalize, I lose track of things and feel like I don't have a handle on it. There are other underlying things that I don't understand though.

1. With a varying overtime pay, I'm stuck with putting average or "expected pay" into my budget for myself. This frustrates me because I feel like for it to work, I need an exact amount. I guess the only way to look at it is to say that the averaged amount is the definite number, and anything extra gets kicked towards savings. My pay can vary pretty drastically though, sometimes as much as a few hundred dollars a week, especially if take a few vacation days through the week and don't work the following Saturday. I am not kidding when I say a few hundred. If I were to take a whole week of vacation, I would be paid my base hourly rate for 40 hours. The final bring home amount would be less than half what I make in a regular 55+ hour work week. Losing that kind of money is devastating. It makes me wish I was on salary sometimes.

2. My pay being weekly and my wife's being biweekly messes me up. I don't have a 'close to the same amount' of money going in every week. It is always much more every other week because of my wife's pay. It may seem elementary, but that throws me off.

3.Different due dates for bills. Ideally, the easy thing to do would be to make everything due on the first, but then, I wouldn't be able to pay everything. I'd have to save the money throughout the month and pay all of everything at the first. This is doable, but I guess I would have to move the due date on bills one at a time, to be sure I could get them all there. Hard to explain, but difficult to do with all the bills coming due throughout the month. I can't afford to make this happen all at once.

So, if bills are left where they are - kind of dispersed evenly throughout the month - I still have trouble. The reason is because since each month is different in length, the due dates fall on different days. Since I look at bills on a monthly or weekly basis, this messes me up sometimes. If a certain due date falls earlier in the week than it did the month before, I may not have the available cash yet to pay that bill this month, because I'm waiting on my payday. In the past, this has caused us to start abusing grace periods, and before we know it, we are two weeks behind, because "we will just have to wait until next week to pay such and such""

For what it's worth, The Mrs. is completely on board. We are both tired of being broke..living week to week, and struggling. We are determined to get this situation right.

pompera_firpa

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Re: Case study - Here we go..
« Reply #10 on: November 11, 2015, 11:21:15 AM »
I kinda want to give you a hug. I'm from a rural town in a flyover state, and oh, man, I know, I know. I really do. I gotta say, you've done a fabulous job with the hand you were dealt. Be proud. My husband and I have some higher ed under our belts and we're dealing with a very similar situation, both in terms of income and debt. You guys have kicked ass, and I am seriously impressed.

My point here is that IT CAN BE DONE.

I'm seeing a theme of fear in all of your responses, and a) I DO NOT BLAME YOU, oh hell no, these are all valid reasons, and b) OKAY, let's see what we can do about them.

First: THE BUDGET. I'll get to that in a follow-up, since I think I can help you out with your questions.

Second: yes, I would assume that Verizon is going to find a way at some point to get you off the grandfathered unlimited plan. Current Verizon rates would indicate that 30g/month would run $225. You need an alternate plan in place, and again, that means that you need to know what's going on, so you will be able to trim that as necessary.

Do NOT drop cable internet. That would only increase your stress level, since you would be even more nervous about the Verizon issue.

Also, I don't think you said-- why on earth is your PC hooked up to Verizon while you already have cable internet at home? Is this a laptop that you use elsewhere for work purposes? If it's a work issue, it'll be their responsibility for finding that alternative for the unlimited plan; if not, explain further and we'll see what the options are.

Third, I totally get where you're coming from on the life insurance policies. I would say the plan should be to drop the kids' policies when you have enough stashed away to pay for any possible funeral expenses-- OR if you have the credit cards zeroed out, which is basically the same thing but with a better return rate.

I would wait until after tracking expenses for a month/being able to stick to budget before using the emergency fund to kill the Kohls' card; you need to know the beast you're dealing with before taking away your options.

Fourth: I don't think you should plan to take away your daughter's gymnastic classes. However, keep it in mind that this is the thing you're doing for her; as a result, other stuff that comes up for her will need to take a back seat.

Fifth: I also don't think your wife should quit her job. Honestly, once you guys get your spending figured out, you ought to be able to find the money to kill the credit card debt, then the personal loan, and then put together something that would make you feel okay about not having quite so much insurance (i.e. if you have $5K available, even in the worst-case scenario of one of the vehicles spontaneously exploding, you can just buy a new-to-you used one, voila! and, similarly, you'll know you have money to pay for a funeral if it comes to it, so the kids' life insurance policies can go away).

Your huge daycare bills will be gone in a few years when the kids are both in school. If I'm getting this right-- feel free to tell me I'm talking out my ass on this-- that will be $6K less per year you need to do in terms of overtime, which would mean more time at home with the kids, and more time to spend developing your side business-- which is HUGE in terms of improving your quality of life and may well end up getting you out of your awful job at some point, so yay!

-Would you happen to have the author of this book? I looked but there seems to be several authors of similar titled books.

Joe Dominguez and Vicki Robin. http://www.mrmoneymustache.com/2012/12/18/your-money-or-your-life/


-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.

I think you misread that a bit; the point was to keep the thermostat high in the summer and low in the winter. Do whatever it is that makes your heating/cooling run the very least.


-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).

Yeah, Ramsey is, at heart, still a used car salesman hustling for every dime. I kind of admire that about him, but I'd prefer he wasn't doing so on the backs of people who can't afford that kind of thing.

sisto

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Re: Case study - Here we go..
« Reply #11 on: November 11, 2015, 11:29:54 AM »
I like everything others have already said about the life insurance and car insurance. I also think you need Mint to find out where your money is going. Next, you need to cut the cable or the cell phone plan. How did you use 30GB of data, if you are streaming that much data you can't be using your internet much and may as well make your phone a hot spot. Otherwise get a cheaper phone plan and take advantage of WiFi instead of data. We have 4 phones on our plan and only use 1GB/month total. We are all very good about using the WiFi instead.

That's my $.02 worth anyway
GOOD LUCK!

argonaut_astronaut

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Re: Case study - Here we go..
« Reply #12 on: November 11, 2015, 11:31:12 AM »
For what it's worth, The Mrs. is completely on board. We are both tired of being broke..living week to week, and struggling. We are determined to get this situation right.
Do you ever think about what you would do if you lost your job? What changes would you make to your spending to avoid starving/sleeping under the stars? Instead of waiting for that, make the emergency be NOW!!! If you are really serious:
  • Sell house, live in RV as close to work as possible
  • Food budget is decent at $100/wk but see what can come down
  • Acquire bike and use for everything (maybe the blood pressure/reflux is weight related, fix that via this?)
  • Sell side work equipment to get rid of loan
  • Ditch fancy phones, use prepaid stupid phone and internet at the library
  • Sell Truck, keep small car.
  • Drop full coverage on small car, drive little
  • Drop life insurances. Use CC if necessary to cover funeral expenses (see Safety is an expensive illusion article from blog)
  • Sell all the stuff that won't fit in the RV, no storage facility, no store it at grandma's house, nada.
  • Keep gymnastics for kiddo, because kids.
  • Spend your time with the kids instead of using that 30GB on your phone
If you want to make big changes in your debt, make big changes in your spending.
« Last Edit: November 11, 2015, 11:34:48 AM by argonaut_astronaut »

Runrooster

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Re: Case study - Here we go..
« Reply #13 on: November 11, 2015, 11:53:14 AM »
Sorry I dont understand those who support the cult of gymnastics classes from having seen it up close. Obviously that could apply to any sport, but does $500 a year turn into $5000 by age 13, with adult providing rides 4 days a week?  I would understand spending $500 once so a kid learns how to swim or ice skate or play tennis and is then self sufficient at it, but this never ending expense is just not in their budget.  Where I live, there are a lot of parent who say their kid loves horses and so they buy them one, plus the house that can house one.  I mean, really?  Why is the six year old driving the bus?  I suspect they like playing with other kids and having adult attention.  Camp fire girls plus bike riding with dad would accomplish both.

taking fire

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Re: Case study - Here we go..
« Reply #14 on: November 11, 2015, 12:52:52 PM »
For what it's worth, The Mrs. is completely on board. We are both tired of being broke..living week to week, and struggling. We are determined to get this situation right.
Do you ever think about what you would do if you lost your job? What changes would you make to your spending to avoid starving/sleeping under the stars? Instead of waiting for that, make the emergency be NOW!!! If you are really serious:
  • Sell house, live in RV as close to work as possible
  • Food budget is decent at $100/wk but see what can come down
  • Acquire bike and use for everything (maybe the blood pressure/reflux is weight related, fix that via this?)
  • Sell side work equipment to get rid of loan
  • Ditch fancy phones, use prepaid stupid phone and internet at the library
  • Sell Truck, keep small car.
  • Drop full coverage on small car, drive little
  • Drop life insurances. Use CC if necessary to cover funeral expenses (see Safety is an expensive illusion article from blog)
  • Sell all the stuff that won't fit in the RV, no storage facility, no store it at grandma's house, nada.
  • Keep gymnastics for kiddo, because kids.
  • Spend your time with the kids instead of using that 30GB on your phone
If you want to make big changes in your debt, make big changes in your spending.

At this point, the only saving grace I have if I were to lose my job is knowing that I can make some money by devoting all of the time that I don't have now to my side business. Like I stated previously, I don't know if I could make enough to support our current rate of spending and needs. But, you have a very valid point in saying that NOW is the emergency.

taking fire

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Re: Case study - Here we go..
« Reply #15 on: November 11, 2015, 12:53:26 PM »
Sorry I dont understand those who support the cult of gymnastics classes from having seen it up close. Obviously that could apply to any sport, but does $500 a year turn into $5000 by age 13, with adult providing rides 4 days a week?  I would understand spending $500 once so a kid learns how to swim or ice skate or play tennis and is then self sufficient at it, but this never ending expense is just not in their budget.  Where I live, there are a lot of parent who say their kid loves horses and so they buy them one, plus the house that can house one.  I mean, really?  Why is the six year old driving the bus?  I suspect they like playing with other kids and having adult attention.  Camp fire girls plus bike riding with dad would accomplish both.

I can see your views on Gymnastics. I also think it is very intersting how you say that by age 13, that could be $5,000 saved up. That is worth thinking about.

taking fire

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Re: Case study - Here we go..
« Reply #16 on: November 11, 2015, 12:56:29 PM »
So how secure is mint.com? I have heard of it before, but I never knew exactly what it did. It looks like that could be a very useful tool for us. It may solve our budget issues completely.

Also, to get the ball rolling, I am contemplating paying off the Kohls account with the emergency fund money. It will not take all of what I have, so there will still be some left. This would be a start, and that $25 a month could go towards my credit card, which is the next thing on the list with ridiculous interest.

ooeei

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Re: Case study - Here we go..
« Reply #17 on: November 11, 2015, 01:02:20 PM »
So how secure is mint.com? I have heard of it before, but I never knew exactly what it did. It looks like that could be a very useful tool for us. It may solve our budget issues completely.

Also, to get the ball rolling, I am contemplating paying off the Kohls account with the emergency fund money. It will not take all of what I have, so there will still be some left. This would be a start, and that $25 a month could go towards my credit card, which is the next thing on the list with ridiculous interest.

It's run by the same people who do TurboTax.  I think logins are even the same now (Mint and TurboTax).  There's always a risk, but I do my taxes through TurboTax anyway so I'm already at "risk" in their system.

Lucky Girl

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Re: Case study - Here we go..
« Reply #18 on: November 11, 2015, 01:04:56 PM »
Sorry I dont understand those who support the cult of gymnastics classes from having seen it up close. Obviously that could apply to any sport, but does $500 a year turn into $5000 by age 13, with adult providing rides 4 days a week?  I would understand spending $500 once so a kid learns how to swim or ice skate or play tennis and is then self sufficient at it, but this never ending expense is just not in their budget.  Where I live, there are a lot of parent who say their kid loves horses and so they buy them one, plus the house that can house one.  I mean, really?  Why is the six year old driving the bus?  I suspect they like playing with other kids and having adult attention.  Camp fire girls plus bike riding with dad would accomplish both.

I can see your views on Gymnastics. I also think it is very intersting how you say that by age 13, that could be $5,000 saved up. That is worth thinking about.

taking fire, I believe you misread runrooster here.  His point was that the cost of sending your daughter to gymnastics may only be $500 now, but costs will increase if she continues, and may be as much as $5,000 per year by the time she is 13.  But your point is also a good one--every year you can save that $500 instead of spending it will make life better for you and your family, including your daughter. 

You may not think they notice, but your kids can sense the stress of living paycheck to paycheck.  If you can get ahead by starting to save, you will become more relaxed and better able to identify other areas of optimization.  Your kids will be less stressed, and as they get to school age, will actually perform better in school. 

I do think you should drop the gymnastics.  I would also recommend that you try a "no spending" month.  See how long you can go without spending anything, except possibly gas to go in the cars, and of course paying mortgage and required bills.  I would suspect that you are spending more than you think on things that are not truly necessary. 

Good luck! 

seemsright

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Re: Case study - Here we go..
« Reply #19 on: November 11, 2015, 01:30:32 PM »
The one thing that stood out to me during this post is your excuse of I/wife came from a family who could not afford college. I call BS!

I came from a family who could not afford to put food on the table, and would skip the apartment/house in the middle of the night every 6 months. My hubby had a similar childhood where he lived in a tent for a bit. And we both managed to get our 4 year degrees. It is called student loans, hard work and focus. We are 10-15 years away from FIRE on one income. Our daughter will still be in high school if we hit the 10 year mark. We are completely debt free including our house. It took us 13 years to get to this point.

Your budget is all over the place. Gymnastics is awesome for little kids my daughter did it. But you cannot afford it!

Call every one of the people who you have bills with, your insurance, your cell, everything and see if you can improve you rates.

Start keeping track of everything. Eat the food in your house, and when you do buy some food make it rice, beans, veggies and not much else. Use what you have before you buy anything to try to get those credit cards paid off.

And start working as hard as you can on that side gig. And that side gig needs to be paying for that loan on the equipment.

I also think you need to sell everything you can to get out from under the debt.



pompera_firpa

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Re: Case study - Here we go..
« Reply #20 on: November 11, 2015, 02:54:47 PM »
Tracking spending is not hard. We know this is the first step. I think I have a problem with being impatient, and it seems like a lifetime waiting for a month, or maybe two, to go by while we track spending.

OH BOY DO I KNOW THIS ONE. It's the worst, isn't it? The thing that kept me on track this last time (after utterly failing for like four years) was the fact that tracking spending is ALREADY a cost-cutting measure, simply because observing something and being mindful of it automatically improves the situation.

There's also the other option of spending way too damn much of your free time going through everything from the past few months in order to build that database by hand before going forward. I have done that, back when I was single and childless and had a ton of spare time. These days, NOPE. Your mileage may vary on that one.

We have an excel budget I created based on a bunch of different example budgets. It was originally broken down into so many line items or categories, my wife could never understand it from the start, but even I didn't fully grasp it.  I can't figure out how to break it down. I end up making it too complicated, which then causes me to lose interest in it. I like for everything to have a place though, so when I try to generalize, I lose track of things and feel like I don't have a handle on it.

I know this feeling, too. Like I said, I have done damn near the exact same thing, and this was the reason that my husband lived in fear of even TALKING about the budget for most of our marriage. It wasn't until I realized that we were completely doomed unless I forced myself to generalize, that I simplified the damn thing and then, magically, we were on the same page.

If at all possible-- I'm hoping your bank does online banking?-- I would say that you need to use a different tool than Excel to do your tracking. Mint.com and Personal Capital are favorites around here; I personally use Mvelopes (although I think it may have a higher learning curve) and I believe there's a free version of it available. The basic take-away is that it's easier to have the transactions come in on their own, if for some reason you aren't paying attention for a few days, than to have to go track it down yourself.

(Also: I know both Mint and Mvelopes let you tag transactions-- that way you wouldn't have to have categories for every single tiny thing, but when needed you could pull up a list.)

I will say that Mint.com does not appear the ability to handle weekly or bi-weekly paychecks, at least not from the comments I'm seeing in their community; Mvelopes does handle weekly and bi-weekly paychecks. And Personal Capital doesn't seem to have a budgeting tool.

There are other underlying things that I don't understand though.

Okay, I'm taking a look at this stuff because I had an idea and I'm trying to see if I can make it shake out. Knock on wood.

taking fire

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Re: Case study - Here we go..
« Reply #21 on: November 11, 2015, 03:03:11 PM »
taking fire, I believe you misread runrooster here.  His point was that the cost of sending your daughter to gymnastics may only be $500 now, but costs will increase if she continues, and may be as much as $5,000 per year by the time she is 13.  But your point is also a good one--every year you can save that $500 instead of spending it will make life better for you and your family, including your daughter. 

You may not think they notice, but your kids can sense the stress of living paycheck to paycheck.  If you can get ahead by starting to save, you will become more relaxed and better able to identify other areas of optimization.  Your kids will be less stressed, and as they get to school age, will actually perform better in school. 

I do think you should drop the gymnastics.  I would also recommend that you try a "no spending" month.  See how long you can go without spending anything, except possibly gas to go in the cars, and of course paying mortgage and required bills.  I would suspect that you are spending more than you think on things that are not truly necessary. 

Good luck!

I understand about runrooster's comment now. That does make sense.

Your comment here really hit home. I never really thought about the effect that pur stress level about living week to week has on our kids. I suspect you are probably right, and it is a problem. That makes this all the more reason to put on the fast track, and start getting straightened out.

The 'no spending month' seems intriguing as well. We might have to try that.

The one thing that stood out to me during this post is your excuse of I/wife came from a family who could not afford college. I call BS!

I came from a family who could not afford to put food on the table, and would skip the apartment/house in the middle of the night every 6 months. My hubby had a similar childhood where he lived in a tent for a bit. And we both managed to get our 4 year degrees. It is called student loans, hard work and focus. We are 10-15 years away from FIRE on one income. Our daughter will still be in high school if we hit the 10 year mark. We are completely debt free including our house. It took us 13 years to get to this point.

Your budget is all over the place. Gymnastics is awesome for little kids my daughter did it. But you cannot afford it!

Call every one of the people who you have bills with, your insurance, your cell, everything and see if you can improve you rates.

Start keeping track of everything. Eat the food in your house, and when you do buy some food make it rice, beans, veggies and not much else. Use what you have before you buy anything to try to get those credit cards paid off. I

And start working as hard as you can on that side gig. And that side gig needs to be paying for that loan on the equipment.

I also think you need to sell everything you can to get out from under the debt.

I will say this. I would have never gone to college had I not had a scholarship. I cannot speak for my wife, but I assume that is pretty much the case with her as well. Now, the only other thing I will say about it is that it is not an excuse. I am proud of the fact that my liabilities listed above and total debt do not include student loan debt. I understand investing in education, but I'm not necessarily convinced that the cost of university education is justified nowdays. It is a known fact that many college educations put young men and women out into the working world only to find flooded job markets and lower than expected salaries. However, I realize the power of a 4 year degree and there are many people who have used them to get very successful jobs and careers.

I'm not telling a bs story. I was on my own from the time I was 18, and did not have much help from anybody. Today, I am thankful for that. The good part of it is that I would probably still be mooching of my parents, or would have done so for a lot longer, had  not been put in a situation where I had no choice. It is obvious that I have not made the best financial decisions, but I do have sense enough to try and straighten them out. That's why I'm here.

As far as eating what we have, we are pretty good about that. We have gotten to the point where we run short on grocery money, so we are eating leftover fried onions that were used 4 months ago to make green bean casserole. We have literally cleaned out the cabinets at certain points. lol

I will focus more on the side gig. It is finally going to start becoming a reality due to some long awaited things to be in place. (None of these things are financial). The plan was for the side gig to make money to pay on the loan for the machine, so that's where I'm headed with that.

We don't have much to sell. Seriously. We have done alot of that in the past five years or so. I will double check for anything that may be laying around though.

seemsright

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Re: Case study - Here we go..
« Reply #22 on: November 11, 2015, 03:37:08 PM »
I know my reality from a statistical point of view is rare...very rare. I also walked out of my parents house at 18 and never looked back...I also got married at 19.

You are in a horrible cycle. That unfortunately most are in. Spend too much on what they think they need and have no savings so when something happens it goes on the credit card.

A 4 year degree is not for everyone I know this. But the one thing a 4 year degree gives is options and power. Having a 4 year degree opens more doors. The trick to making this work is knowing how to interview and deal with people.

Having a goal and knowing the steps you need to get to that goal is what you are figuring out. What works for one might or might not working for you.

What is important to you may not be important to someone else.

The hard work and sacrifices that you and your family are about to start will be worth it at the end of the debt cycle you are in. I wish you luck.

Try to take some of the tips and see what works. Ditch what does not.




Runrooster

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Re: Case study - Here we go..
« Reply #23 on: November 11, 2015, 03:47:10 PM »
As I said, im quoting gymnastics numbers fom having seen them, $5000 per year is just the gym fees.  The real issue is the hidden costs, which is that there is usually an adult, possibly also the younger child, tagging along for the trips, since its not a school activity.  Since it didn't make sense to drive home during the class, parents tried to go grocery shopping or hang out at a coffee shop in between.  The grandparents were usually called in about 25% of the time. My sibling can afford it in theory, but its been a social drain because every birthday holiday get together revolves around the gymnastics schedule because so much money goes into it and the coaches are aggressive.  Yes they have the occasional Olympic athlete, but that wasn't where my niece was.  The niece has done well in school but is spread thin and complains about basic household chores.  I got very bored with it: you only have half an hour to celebrate my birthday, and not when I've invited you?  Have a nice time, see you next year maybe.  The other issue was that she'd complain when we suggested she get involved in other, academic after school activities.  Robotics, math team, its academic, these were sen as too geeky compared to her gymnastics friends.

I grew up wanting ballet classes and piano, perhaps oblivious to the cost.  I did branch out in both of these as an adult, when I can drive myself.  Maybe older than 6 you can offer the kid ways to earn fancy classes, like doing enough chores to give parents time, going to a gym in biking distance, or maybe just learning tumbling routines on YouTube.

SKL-HOU

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Re: Case study - Here we go..
« Reply #24 on: November 11, 2015, 03:56:09 PM »
College is not for everyone and not everyone can afford to or have the motivation to go to college. However, your wife can look into other jobs (if available) for high school graduates.

I understand why you want to keep your grandfathered data plan. I wish I had when I had the chance. Now I have a 6 GB plan from ATT that I pay more than I did for unlimited :( So what do you use your phone for that you need 30 GB, especially when you are working so much? At home, you should be using Wi-Fi. So I would look at what is eating up your data and then see if you can reduce usage.

If you are having to go as far as cleaning out everything you have in the house to have something to eat, I would reconsider cutting some of your expenses.

1. Life insurance for the kids. Get rid of it and save that money. If something were to happen, God forbid, then you can use the CCs. You should not be throwing away money for that. Same for your wife. Unless your kids or your wife has some terminal illness, it is not something you should plan for at those costs.
2. Same with your car insurance. Increase the deductible to a little higher amount and save the difference. If something happens and you haven't saved up the deductible yet, then you still have the option to put on the CC. I know using the CC is not good advice but in order not to potentially use the CC, you are throwing money away. You cannot afford to do that.
3. Your 1st priority should be to save up 1k for the things you would potentially use CC for. Sell extra things, do your side job, have your wife babysit, etc.
4. I would not touch gymnastics. I completely understand. But if you want to be able to keep her in there, you and your wife will need to sacrifice (maybe the phones or wherever else your unaccounted money is going to).
5. I would start budgeting for only regular pay. It will not be enough at first but try to fit your budget and spending into your guaranteed paycheck, not OT.

I am all for insurance and the need for it but only for likely situations.

Sailor Sam

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Re: Case study - Here we go..
« Reply #25 on: November 11, 2015, 04:02:26 PM »
Hi taking fire, welcome to the forum. The really awesome thing is that you don't have much debt compared to your income. You deserve some recognition for that.

As for the rest, see the inline responses for my take on your case study. I've regrouped your annual expenses for my convenience ;)

Annual expenses are as follows:

House - $15,120
Daycare - $6,960
My Medicine - $540 (I'm on Rx blood pressure and acid reflux meds)
Power - $2,400
Trash disposal service - $192
My life insurance - $540
Water - $600
Changing these expenses will take the highest effort. I'd leave them for now, in favour of the lower hanging fruit. Once your frugality muscles are well trained, you can re-visit. Since you wife is fairly low-income, you need to keep your life insurance in place, but it's definitely something you should revist.


My wife's life insurance - $376
Both of my children's life insurance - $240
Car insurance through Allstate. - $1,620
You need to build an emergency fund. Once that's in place, drop the insurance on your wife and kids.


Personal loan at the bank - $2,880
Wife's Kohls Shopping card -$300 (this is $25 minimum monthly payments)
My credit card - $1,200 (making a tad more than minimum payments - $100 a month)
Pay these off. Then cut up the Kohls card. None of these are reasonable debts.

Cable Internet - $936
My cell phone and my wife's - $2,400 (See notes on phones)
Your cell phone is crazy. C.R.A.Z.Y. First, what the heck are you doing that chews through 30GB(!!) of data? Especially considering you have cable internet at home? I'm desperate for you to correct this hemorrhaging. You don't have to find the lowest cost solution, or go with second tier carriers. Even minimal research and effort will have great return on investment.


Groceries - $4,800
There are many, many, oh so many threads on how to reduce food costs kicking around the thread. Though your grocery costs translate to $3.28/person/day, assuming a 4 person household. That's not fabulous, but it's far from horrific.

Fuel - $2,640
You didn't say what you do for work, or what you commute is like, so I can't make much comment on this.


Gymnastics for our oldest kid - $480
Drop this, or find a way to make it free. You can always bring it back later, once you find your missing $14k.

Total expenses: $44,224

So after all these expenses, that still leaves us with: $14,016

You need to track your expense. Do it. Just do it.  Doesn't matter what way, and doesn't matter if you still lose some money. Don't let perfect be the enemy of progress here. You are basically losing track of your wife's entire salary, and that's not fair to anyone. Once you have a better idea of where your money is going, you can return with more specific questions.

Imonaboat

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Re: Case study - Here we go..
« Reply #26 on: November 11, 2015, 04:24:52 PM »
Instead of having so many insurance policies, pay off your debt and start saving money. This way you will get the security for your family even if you don't die. These insurance policies are only hurting you in the long run.

As a compromise until you are in a better position you could keep only your life insurance for a year or two until the family finances improve.
« Last Edit: November 11, 2015, 04:29:53 PM by Imonaboat »

justajane

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Re: Case study - Here we go..
« Reply #27 on: November 11, 2015, 04:28:14 PM »
I don't think you have an income problem, so I wouldn't focus on your wife finding higher paying employment. I don't know why people are harping on this, when even people in HCOL urban areas live on less. I thought that was the whole point of this place - finding ways to live on less so that you don't have to have the 150K job or whatever. I guess what I'm saying is, don't bust your wife's chops for only making 20K or think that the solution here is for her to find a higher paying job. There are much easier solutions here that will put much less of a strain on your life and your marriage.

You clearly have a spending problem. If you can get this part under control, you won't have to find ways to earn more. I will reiterate what others have said. Your cell phone bills are crazy. It seems weird to harp on a $40 a month gymnastics charge for a kid when you pay a shit ton for phones, which are far less important than the physical and emotional well being of your child. Cut your own toys before you cut something that your child loves.

I'm wondering about the dental. $15 a week sounds high to me. I'll have to ask my husband what we spend for our family of five, but I don't think it's anything close to that. Are there other cheaper options? Is it still open enrollment? Does one of you have terrible teeth or something?

Seriously cut up that Kohls card and don't ever go there again. I take that back. If they send your wife a $10 gift certificate, she can go in and buy a $15 piece of clothing for the kids. But otherwise? It's too much of a temptation clearly. I don't mean to sound harsh, but you are paying a ridiculous amount in interest for something that you can buy at Goodwill for $2-$5.

I agree with others that you are on the long path here and need to be patient. You will find the holes and stop the flow of money where ever it is going. It just takes some time.

lauren214

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Re: Case study - Here we go..
« Reply #28 on: November 11, 2015, 07:16:27 PM »
My $.02 on the gymnastics issue... The $500 per year for gymnastics seems pretty reasonable - most hobbies/sports that kids will do will cost about this much, and if the kid really enjoys it I think it would be more worthwhile to find other ways to cut spending (eg clothes, etc) that have a smaller happiness bang for your buck. That being said, I would advise the op to think about and discuss with the family the fact that gymnastics gets expensive really, really fast as the kid gets older/ joins a team/ etc, and to set reasonable expectations for how far the kiddo will be able to pursue the sport. i had a friend in middle school that was heavy into gymnastics and her parents said that it averaged about $1200/ month all in, though that was in a very hcol area.

SKL-HOU

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Re: Case study - Here we go..
« Reply #29 on: November 11, 2015, 07:40:02 PM »
You can find clothes on sale at kohls, macys, dillards for a few bucks. I bought a complete outfit for my son (shirt, jeans and a thick jacket) for $1.50 at macys more than once. So if you are like me and dont want second hand clothing (unless from very close family), then there are options.

Heckler

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Re: Case study - Here we go..
« Reply #30 on: November 11, 2015, 08:10:42 PM »
Quote
So, if bills are left where they are - kind of dispersed evenly throughout the month - I still have trouble. The reason is because since each month is different in length, the due dates fall on different days. Since I look at bills on a monthly or weekly basis, this messes me up sometimes. If a certain due date falls earlier in the week than it did the month before, I may not have the available cash yet to pay that bill this month, because I'm waiting on my payday. In the past, this has caused us to start abusing grace periods, and before we know it, we are two weeks behind, because "we will just have to wait until next week to pay such and such""


You may be able to plan and adjust your due dates on major bills until after you get paid.  My credit card was due the 13th but I didn't get paid till the 15th. I simply called them up and asked to change it to the 16th. Problem solved. 

justajane

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Re: Case study - Here we go..
« Reply #31 on: November 12, 2015, 06:44:28 AM »
You can find clothes on sale at kohls, macys, dillards for a few bucks. I bought a complete outfit for my son (shirt, jeans and a thick jacket) for $1.50 at macys more than once. So if you are like me and dont want second hand clothing (unless from very close family), then there are options.

Sure, but if you are financing that clothing, over the long term the cost of them are going to add up considerably, regardless of what you originally paid. Clearly the OP and his wife are not paying $1.50 for an outfit, else why would there be that much on a charge card?

I buy most of my kids' clothing new on clearance as well. But I'm not opposed to used clothing. It's just easier to buy on clearance at Target and elsewhere when I am doing other shopping.

I don't really get the aversion to used, though. That's what washing machines are for. As a general rule, the more aversions one has to used items, the more money that one has to part with.

ShoulderThingThatGoesUp

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Re: Case study - Here we go..
« Reply #32 on: November 12, 2015, 08:23:31 AM »
I don't think you have an income problem, so I wouldn't focus on your wife finding higher paying employment.

Certainly they have a good household income, but more money would get them out of debt faster (if they could solve their underlying spending problem - no amount of money will help them otherwise). They're in an emergency and all possible improvements need to be considered.

taking fire

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Re: Case study - Here we go..
« Reply #33 on: November 12, 2015, 09:29:24 AM »

Life insurance...

Why do you have life insurance on your kids?  Some salesman sold you something you dont need.  Having life insurance on your kids does not make you a good or bad parents its just another way for the insurance company to take your money.
How much insurance do you have on your children?  Do you have any add on's on the insurance?  Critical illness etc?  Dump it...
Wifes insurance - Why is she insured?  What is the dollar amount for?  What type of insurance does she have?  Term? Whole? Whole Par? IRP?
Your the bread winner of the house if you want to insure yourself to protect your family that is up to you.  However make sure it is the right type of insurance - What type of insurance do you have?

Also do you have any benefits at work?  Do you already have some sort of insurance through them?

You have a 1995 Gas guzzler vehicle, you pay extra insurance to get a 100$ deductible...  Its over 20 Years old... Any type of accident is most likely going to write it off so why do you care about your deductible get rid of that.

Your cell phone bills... Thats crazy!  You said your bills are high because you dont have a landline and use your cell phones for everything... Well get a land line then cut your bills big time...
Again on the cell phones - you said you own your phones and dont have any contracts, that gives you bargaining power.  I live in Canada and are cell phone bills are through the roof compared to the rest of the developed world, and I pay 20 Bucks a month... Yes unlimited Text / Picture video/ a decent amount of minutes I never go over and a small amount of data... You own your phone that gives you the power...

Your kid enjoys gymnastics, thats great!  Some people have suggested you stop the gymnastics - I disagree - the 500 a year for gymnastics is money well spent, lets focus on areas where your money is not so well spent...

Electricity - So I pieced together that your heat in the winter is electric...  Not much you can do about that one...  However I dont know if you can afford the luxury of running AC in the summer right now...

Your wifes job,  She needs to keep her eyes open for a better job, or talk to her current boss and ask what she needs to do to get a promotion / raise.

How far do you commute for work?  is a bike / public transportation an option?

The motor home, go sit down with your grand parents tell them you are having trouble making ends meet, and would like to know if they would be upset if you sold the motor home.

What is this mysterious side job of yours,  I cant find the original post but I believe you said you spent 10,000 grand on a machine?  Which in all reality is incorrect...  If you bought the machine with 10,000 Cash then I would agree with your statement, but you are paying interest on this machine... So what is the true cost?  Again I apologize I dont have time to flip through all the posts again... But find out how long its going to take you to pay it off, and at the current interest rate the true cost will be ????  What are you making anyways???  What is the cost to make per unit?  How much time does it take of yours because it sounds like your time is already in high demand.  What is the cost of running this "machine"  Does it need oil changes? annual maintenance? large amounts of energy?  Find out the true cost.

Where is this money going!?  are you buying lunch?  are you buying coffee?

You need to set up a money management system...

Get some envelopes or get some jars and make a weekly budget, every sunday you put money in the jars that matches up with your budget, and you only use that money in the jars, when you buy something you write it down.  Do NOT use your plastic... that will show you pretty quick where your extra money was going but no longer is... There is a show "till debt do us part" watch an episode it will point out the money jar system.

When you cancel your insurance, depending on how long you have had it, the salesman is most likley not going to be happy.  If the policy is less then two years old he is most likley going to get some of his commission pulled back, so fully expect him to disagree with you.

Good luck...



Thanks for the reply. The life insurance on my kids is something like $20k each - it may be $25k. Again, this is in place for reasons I have previously stated - Simply not being able to afford the costs if something were to happen. Mine and My wife's insurance are higher amounts, which I'd rather not state here, but they would each take care of everything if something were to happen to either of us. I am pretty sure that these policies are term, which is the better of the options. I cannot rememeber right off the bat, but I remember reading about the difference among options and Dave Ramsey's take on them. I did do a bunch of research before signing up. As far as benefits at work, I do believe I have some sort of insurance policy just for being employed, but it would only pay for funeral costs. It is something like $20-25k. I'll have to check and be sure.

Yes, I know the truck is old and a gas guzler. I have said I will look into deductible amounts and other options here.

Cell phone bills. - i know everyone is truly stumped over this, but there is a reason I use 30GB of data a month. I do not want to list that reason on a public forum, but I'd be happy to tell anyone in pm. If you really absolutely have to know, I'd be happy to explain there, but not here. I know it sounds crazy, but there is a good reason.

We talked about Electricity last night. I can see areas to cut back, such as not running the heat so much in the winter and not running the AC so much in the summer. I'm sure we can get used to that. Also turning off unused lights and stuff like that. I've always been good about that but my oldest kid needs training. We will work on that. I can remember my mother telling me when I was young, "Turn the lights off, I am not patronizing the power company"

The wife's job is a situation we are very aware of. She is looking into what can be done.

I live about two miles from my job. I actually could commute on a bicycle, but there is a very good reason that I can't. I also don't want to list that openly on the forum. If you really must no why, I'd be glad to explain that situation in a pm as well. Trust me I wish I could, because I actually have two bikes..a road bike and a mountain bike. I am active on both. I have not ridden as much in the last few years since my kids were born, but I love it as a hobby and it is great exercise.

Going to see what can be done about the motorhome.

The mysterious side job of mine is not mysterious. I would just rather not list it openly on this public forum. Again, I'd like to keep my identity as under the table as possible - ther eis a lot of personal info here. I got a bank loan for the machine to help get the business off the ground. All that is in the works. The machine actually does things on its own, so it will save me time. If you would like to know more about what I make, please ask. I'd be happy to pm and talk about it.

We are actively searching for the money leaks. The money does not disappear. The truth is, The figures I gave are if my hours stay up. They don't always do that, so my annual bring home could be a little less from year to year. It isn't that much less, but there is still money unaccounted for. We do occasionally eat out, and buy things here and there. I believe the money is not really disappearing, it is just unaccounted for. We will find it.

As far as getting a money management system going, I have gotten set up on mint. I really like the site and it looks like it will be very useful. Part of this process is going through and resetting passwords and remembering usernames for all of these online sites where my accounts are. I'm slowly getting everything set back up, so it can be added into mint.

That in itself is one of my worst faults. I'll openly admit that I don't keep an eye on my money much at all, simply because I feel like I should have some based on the hours I work. I know this is a very ignornat way of thinking, but emotionally, that's how I feel. However, I know this is not reality, and the only way to keep up with this is to KEEP UP WITH IT.

sisto

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Re: Case study - Here we go..
« Reply #34 on: November 12, 2015, 11:55:52 AM »
Since you seem to really have a need for the unlimited data, I'm thinking you should drop the cable internet and just use the phone as a hot spot for any data needs. You can watch TV via antenna and many shows are available to watch for free online.

I'm so glad to hear you got Mint installed, I think this will really help you see where your money is going unless you use a lot of cash and don't account for it you should be on track with Mint in no time.

I agree with what other said that you are making an effort to find out where your money is going and that right there will help you take more interest in not spending it poorly.

Good luck and keep us posted on your progress!

Argyle

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Re: Case study - Here we go..
« Reply #35 on: November 12, 2015, 03:01:48 PM »
So if I understand correctly you have ~$14,000 per year in income/expenses that is unaccounted for.

Getting to the heart of that is the key.

In my experience, keeping track of every penny of spending is essential to get to the bottom of things like this.  We all think we're spending this amount or that amount on X or Y.  Almost always we underestimate.  But when we come to track it, the reality turns out to be different.  And there are expenses that are probably not making it onto the list in the first place.  Probably irregular expenses, things that come up only once or twice a year.  If you can eliminate even half of these, you'll have $7000 more per year, which can do a lot of things towards ensuring your financial prosperity.

About the children's insurance policies.  The first thing you should do is go back and check whether those are term or whole.  Call up the insurance agent, or the insurance company, and ask today.  When you're new at these things, it's easy to get sucked into thinking that establishing a whole life policy for a kid is an advantageous thing to do.  They have all kinds of enticements about setting up the kid's future right and investing now for wealth later.  I was nearly sucked into it myself.  A canny insurance agent, seeing you wanting to buy a life insurance policy for a child, would immediately try to sell you on a whole life policy.  Because that's what most people buy for kids — as there's little point otherwise.

The chances of one of your children dying in the next few years, before you have established more financial security (or dying after you have), are vanishingly small.  But I see you're worried about funeral costs just in case.  $25,000 is sky high for a funeral.  Just like insurance agents, funeral homes are eager to sell you the most expensive option, and position it as "showing your love for your family member."  That's nonsense; the extra fancy finish for a coffin people will look at for a couple of hours is not worth an extra $10,000, especially a $10,000 that could go towards another child's future.  You could have a good and respectful funeral and burial for $4000, and for $10,000 at the very most.  I know you're new to this.  But if you're going to think about these things, don't be swayed by people eager to upsell you on insurance and funerals and all those ways they try to get us coming and going.  Your real job is to provide for your family, which means saving that money instead of spending it.

Miss Prim

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Re: Case study - Here we go..
« Reply #36 on: November 12, 2015, 05:33:50 PM »
Glad you signed up for Mint.  Now categorize every expense you have and see where the leaks are.  Do you buy coffee out, lunch out, etc.  All so called little expenditures add up over a month's time.

Also, I am assuming your wife needs clothes for work.  Kohl's is a great place to stock up your wardrobe for not a lot of money if you only go with the 30% coupons (I think it is 4 times a year, maybe more) and shop the 60-80% off sales racks usually for off season deals.  That is how I buy my clothes and I set a limit of less than $10.00 a top and less than $20.00 for pants before the 30% is taken off.  I buy off season for the next year.  Usually I get tops for around $5.00.  Otherwise, your wife should be shopping at thrift stores or consignment shops.  My daughter has an office job and this is how she shops too and she always looks nice.  Your wife should not be spending anymore at Kohl's than you can afford to pay off in a month.  Kids clothes should come from thrift stores period.  They do not see that much use.  My daughter also buys all of her kids clothes from thrift stores of garage sales and they always look well groomed.

Again, as far as Kohl's goes, nothing else should be bought there but sales rack clothes with the 30% off coupons.  Everything else is too expensive and can be bought cheaper elsewhere.

The most important part is to get your credit cards paid off and only charge what you can afford to pay at the end of the grace period. 

And really ,sell the motorhome.  You relative shouldn't be forcing you to keep something that is costing you money to insure every month.  Get a used or cheap tent for camping.  Your kids will love it!  We tent camped for years before my husband and I got older, then we bought a used pick-up camper.

Living from paycheck to paycheck would be exhausting!  My parents lived like that and I vowed at a young age to never live like that.  My husband and I never made a lot of money, but we were extremely frugal and we always had money left over after all the bills were paid.  You just have to live under your means.

                                                                                Miss Prim

gecko10x

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Re: Case study - Here we go..
« Reply #37 on: November 13, 2015, 04:50:18 AM »
I think there are some important things getting lost in all these long posts, so I'll make this short.
You need to do the following, in this order:

1. Track expenses for 2 months (mint)
   i. Write down any irregular expenses you can think of
2. Save 1 month's income as an EF
3. Pay off some of those cards

While you're doing 1, you can work on reducing some of the expenses as others have mentioned.
If you can do 2, it will greatly help your irregular cash flow issue. To go with this, download the trial of YNAB, take some classes, and read about living on last month's income.

That's my 2 cents.

argonaut_astronaut

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Re: Case study - Here we go..
« Reply #38 on: November 13, 2015, 09:52:37 AM »
PMmed about the mysterious bike preclusion and side business details. Here is my take:

OP needs to haul more than can be carried on a bike, but could certainly use a smaller more efficient car. I will throw in also that this preclusion is still a choice within his control, and is one which OP will have to think long and hard about whether it is worth it.

The side business is legitimate (not a pyramid scheme or anything odd) and has proven potential. It sounds like it is just getting to a point that more work can be produced, but time is in limited supply. OP still needs to take a long hard look at whether the side business is actually worth it given the time/capital already spent. Also, the side business isn't, as far as I can tell, entirely dependent on the machine/loan in question.

Unkempt Stash

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Re: Case study - Here we go..
« Reply #39 on: November 14, 2015, 03:10:07 AM »
I agree with gecko10x: lots of good long posts. Time for a short one.

This screams "small leak" to me, because it was in my case. If recommend putting everything on the credit card and using Mint to sort it out. You would be amazed how irregular haircuts, thrift stores, xmas, and 5$ fast food will add up.

After I got divorced I found that a lot of spending I was just ignoring (wife bought a new thrift store dress and a used candlestick!) was actually costing me MORE than my house payment a month.

Also, make a budget without your OT. You don't have to be making extra payments on things, but you need to make sure you can afford to live if this goes away or you hit the breaking point and need more time with your family.

Good luck

hoping2retire35

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Re: Case study - Here we go..
« Reply #40 on: October 26, 2016, 07:57:43 AM »
update!

what have you changed? I see you are worried about your new job. I am about your age, three kids, LCOL area, medium pay for the region, still paying off debt. your take home is very close to mine once you factor in the mortgage(I have to pay taxes and insurance just not the bank) so our expenses in a lot of way seem very similar.

a couple of things
 
Try to casually get your grandparents to let you off the hook for the motorhome. start complaining about the property taxes on it or something if you can sell this and pay off those debts.

Your wife needs to figure out what she is doing. If she needs to work for her sanity thats fine. But I do not think the financials are really in her favor unless she can get a raise. she makes <$12 if you factor in childcare(which seems low for full time plus after school, unless a grandma is volunteering or something) so her real pay is <8.5 per hour. Based on your pay do you recieve EITC/child tax credits, refundable? you should and if not it could be due to the total AGI. This should be $4-5k per tax refund. If you are not getting this then we are down to $6.5 per hour, We haven't counted the commuting costs to work and daycare, nevermind the additional stress. Figure this out, look at the numbers; I vote pay raise or quit.

I have an old van I bought I have run the numbers a lot, and it costs me about $.30 per mile to drive, I am guessing your gas hog is similar. If your commute is 8mi a day 250 days a year thats $500 a year, take a bike except hot/humid or rainy days.

Sounds like you are in a LCOL area with a decent income. Me too. Your house is pretty expensive for what you make and for what I am guessing is the region, you live in the big house on the block. I would consider moving. Look for the $80k 40 yo mill house or $100k 10 yo starter home. you mentioned 'land' was that land family land given to you? If there is some situation like this I can understand not wanting to sell, but a 200k mortgage is really high for your income...

trash-from now on the bed of your pickup is the weekly garbage collector, weekends you go the dumb then grocery store no more $192

Child insurance-no

Term life insurance-this should be cut in half.

I don't know why you cant get straight talk or whatever, I would get that down somehow, don't cleave to that unlimited plan, I wouldn't sweat the internet. we have a local monopoly so its either $70 a month is awful dsl for us too.

Keep checking cc and bank statements figure out where you are losing $1000+ a month, track over several months see what patterns develop.
« Last Edit: October 26, 2016, 08:01:28 AM by hoping2retire35 »