Author Topic: Case study: High-earner/spender looking to take Mustachianism to the next level  (Read 10262 times)

emergencyfun

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I'm in the target demographic of MMM's audience: high-income, high-spending tech worker in a large city. MMM's article today really got me thinking about what I've optimized and where I still need to do some work.

I've been reading MMM for about a year, and I feel like my family (myself, wife, 3 kids) has made some mustachian changes for the better, but we've hit a plateau. And as youíll see, we're still spending a lot.

Just looking for some recommendations on how we can get to the next level of badassity. I think our income is pretty good, so Iím specifically looking for ways to trim the spending...

Income
Me: $120k salary + $40k stock bonus (give or take...depending on stock price)
My wife is starting a business so she works from home but isnít profitable yet (hopefully in a month or two)

Assets - approximate
$155k in retirement accounts (11% salary contribution to 401k + %2 company match; max out IRAs, until we make too much)
$85k in taxable investment accounts
$10k emergency fund

Spending (monthly) According to Mint (and my comments in parentheses)

Housing
We rent a 4bd that's 2 miles from my work. Very much on the "paying more to be close to work" side of the spectrum, but worth the extra time I can spend with the children in the morning and evening. My commute is only 15 minutes by bike, including taking my daughter to daycare in a bike trailer.
Rent: $1,775
Home supplies, gardening, furnishings, home improvement: $130 (this one seems high, as renters)
Pets (cat and chickens): $17
Renters insurance: $10 (shopped around to have this lowered. high deductible)

Children
We have 3 kids. Two are from a previous relationship and live with us 1/2 time.
Daycare: $900 (for our youngest)
Child support: $800 (file under "youthful indiscretions")
Kids activities, camps, babysitter, etc: $190 (this is a monthly average. it's more in the summer for camps. we only hire a babysitter on occasion. usually we do a co-op with other parents.)
Hebrew School: $80
Allowance: $10

Food
Groceries/entertaining: $850 (probably a good candidate for reducing? we buy a lot of organic and eat meat a few times a week, from a 1/4 cow we bought in bulk. we do periodic Costco runs with my parents' membership)
Restaurants, lunch at work (1x/week): $260 (trying to cut this back)

Bills
Synagogue dues: $165 (actually considering dropping this, we'll see if God strikes me down when I click "Post"...)
Utilities (natural gas, electricity, water/sewer, garbage): $155 (I think this is pretty good for a family of 5?)
Life insurance: $91 (my wife and I each have a policy. mine is ridiculously big but I'm afraid to cancel it and get a smaller one b/c I was tested into the A+ healthy category and I may not be able to get that low premium again.)
Mobile phones: $75 (just moved to Ting)
Internet: $45 (slowest connection available in my area. maybe i can call and have the price decreased?)

Transportation
we have a 11 year old volvo wagon. it gets 20 mpg :( we put about 10k miles on it each year
we also have a scooter that gets 85 mpg that I use whenever possible
Car/scooter parts/service, tabs, licensing: $117 (again, a monthly average. I don't do my own maintenance beyond checking tire pressure and fluids.)
Gas: $113
Car and scooter insurance: $70 (no comprehensive/collision, high deductible)
Bus/taxi/car2go/uber: $30 (for the rare occasions where we each need to be on opposite sides of town, hauling heavy loads and/or children)
Bike-related expenses: $22 (I commute by bike, but this still seems high?)
Parking: $10

Vacation/Travel $305 (monthly average. we usually do 1 "grownups only" trip + a few cheap family camping trips a year)

Shopping
Clothes: $140 (this was surprisingly high! we shop almost exclusively at thrift shops, and I'm known for having the same wardrobe for the past decade)
Tech/electronics/software/apps: $63 (this one also surprised me... not sure where this money is going)
Books: $25
Sports/hobbies: $12

Medical
Premium: $345 (I get health insurance through my work)
Prescriptions/Out-of-pocket-expenses: $593 (yikes! 2 of our 3 children are special-needs, but this was higher than I thought it would be)

Gifts/Donations: $220 (another shocker. we make a small monthly donation but the "gifts" portion of this budget is way out of hand)

Startup costs for wife's business: $200 (this will go away soon as her business becomes profitable)

Entertainment: $125 (We go to concerts or bars on occasions, but we're mostly homebodies)

Personal care: $57

Total: $8,000 or $96,000 per year. That puts our savings rate at 40%.

Let's make some assumptions about life once my wife's business is off the ground:

Income should go up by about $2,000 a month, and we'll put it all in the 'stache. Let's leave spending at current levels (we'll be busier, which will cancel out the decrease in spending personal funds on business startup costs). So let's put our savings rate at 48%. Not bad, but I think we can do better.

Just looking at the sheer number of categories of spending, I feel like maybe we're nickle and diming ourselves to death by spending on so many different kinds of things. Maybe the solution is to simplify?

It's a little frustrating because on the surface we live pretty mustachian lives. (My wife is rather frugal by nature, but not 100% on board with the mustachian lifestyle, which I'm fine with.) We have no debt; we "insource" almost everything (except auto maintenance); my wife and I cook healthy family meals almost every night; I ride my bike to work and errands, or the scooter when unable to bike; we hang-dry our laundry; we jog and use the library in lieu of gym memberships and cable.

It's like we ticked off all the boxes for "Mustachian 101", yet our savings rate didn't follow suit. When you look at the bottom line, we're spending almost $100k a year! So I know there's something sub-optimal, and there must be more we can do to lower expenses.

Just looking at what I wrote, it seems like the best candidates for improvement are:
  • Groceries and restaurants
  • Car-related expenses (why are they so high if I drive to work and my wife mostly works from home?)
  • Home supplies/furnishings (it's not like we buy new couches every year).
  • Clothing/Tech/Gifts. Others?

Medical costs are the elephant in the room but it doesn't seem like there's much we can do here, other than play the cards that God dealt us.

So my question for the MMM community is what should I do to lower my expenses that would have the most bang for the buck?

Thank you in advance, everyone! I've been on online forums for decades and this is honestly one of the nicest and most helpful one I've ever been a part of.

BPA

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You probably have a good reason for it, but $900 for child care when your wife works at home at a business that hasn't yet seen a profit seems a bit illogical to me.  Would it be possible to cut down there where maybe she works while you are home and baby goes to daycare part-time? 

Also, it is small but the $25/month for books when you go to the library frequently seems like it could be saved instead.

Good on you for cycling to work!

BPA

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Oh, and I understand about added expenses for special needs children.  Outsourcing for a lot of those expenses is important.

Joet

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dont ask me, if you're saving 40% sounds like you're doing pretty well. I'm in a DINK household and we don't save anywhere near that much. We make around 2x tho, so perhaps my overall savings is slightly better. I modeled my spending to have averaged $10-$11k/month all-in, so I would love to be able to spend only $8k or so like you are. All that matters is that you're getting to where you want to be in the timeframe you hope for. I'm a little concerned that your networth appears to be only about 1.5x your income. Perhaps you've recently started working, I dont know.
« Last Edit: May 15, 2013, 03:03:31 PM by Joet »

Undecided

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Two questions about taxes: Is your 40% savings rate based on not paying any---I didn't see them factor, but you're spending 60% of your income on the things you listed. Are you able to take the child care tax credit if your wife is working but not making money at it?

Joet

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yea if income = 160k, total taxation [payroll, fed, state] is probably at least 25% aka 40k
so now we're at 120k
if spending is 8k/mo or about 100k per year, savings is close to 20k/yr

To me, 20/160 = 12.5% savings rate [not terribly different than the 401k contribs]
or 20/120 aka 16.66% savings rate, net after taxes. either way is fine

emergencyfun

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You probably have a good reason for it, but $900 for child care when your wife works at home at a business that hasn't yet seen a profit seems a bit illogical to me.  Would it be possible to cut down there where maybe she works while you are home and baby goes to daycare part-time? 

Also, it is small but the $25/month for books when you go to the library frequently seems like it could be saved instead.

Good on you for cycling to work!

Thanks!

That's a good idea. We're already down to 4 days a week, but maybe we could go down to 3 until the business really gets off the ground and it needs my wife's full-time attention.

You're right about the books. Usually it goes something like this: I borrow a book and can't finish it before I have to return it but I waited months for my hold and don't want to wait months again to check it out to finish it, so I buy it (used) on amazon. I'm gonna have a talk with my wife after getting all the ideas here and propose Books as an area we can cut down on spending. Like you say, it's small but it can be a symbol of our renewed dedication to saving.

emergencyfun

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dont ask me, if you're saving 40% sounds like you're doing pretty well. I'm in a DINK household and we don't save anywhere near that much. We make around 2x tho, so perhaps my overall savings is slightly better. I modeled my spending to have averaged $10-$11k/month all-in, so I would love to be able to spend only $8k or so like you are. All that matters is that you're getting to where you want to be in the timeframe you hope for. I'm a little concerned that your networth appears to be only about 1.5x your income. Perhaps you've recently started working, I dont know.

Thank you for the praise, I know we're doing pretty well when you look at savings rate (or maybe not so much, I just saw your follow up post about taxes).

Net worth as a factor of income is low partly because I'm only a recent convert to mustachianism and also because I haven't always made as much as I do now. I've been working for 10 years, and my net worth is about 3-4x my average income over that period.

I think a more important metric is net worth as a factor of spending, since that's the magic number to FI, right? Either way, I'm only doing so-so, which is why I'm here.
« Last Edit: May 15, 2013, 03:47:43 PM by emergencyfun »

emergencyfun

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Two questions about taxes: Is your 40% savings rate based on not paying any---I didn't see them factor, but you're spending 60% of your income on the things you listed. Are you able to take the child care tax credit if your wife is working but not making money at it?

yea if income = 160k, total taxation [payroll, fed, state] is probably at least 25% aka 40k
so now we're at 120k
if spending is 8k/mo or about 100k per year, savings is close to 20k/yr

To me, 20/160 = 12.5% savings rate [not terribly different than the 401k contribs]
or 20/120 aka 16.66% savings rate, net after taxes. either way is fine

Yikes, you two are right! Had to look up my taxes. This was a huge omission on my part, and I apologize for being so sloppy.

Turns out our taxes are low but not insignificant. Our state has no income tax (just a huge-ass sales tax). In addition to the 401k, we also get tax-savings by having medical insurance premiums paid with before-tax money, and I shelter some income in both a Health FSA and Dependent-care FSA.

Taxes were just shy of $20,000, so a 12% effective tax rate?

So now we're at $140k take-home income, with $100k spending and $40k savings, or about a 29% savings rate? (I hope I'm doing this right)

When my wife's business begins to earn money, it'll look something like this (assuming our spending and tax situations stay constant. We're gonna put all her income into whatever tax-advantaged account a small business owner can invest in):

$164k take-home income, with $100k spending and $64k savings, or a 39% savings rate?

(The Childcare tax credit doesn't depend on actually having income since it can also be used for paying for child care while "looking for work")



Joet

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64k savings on 144k after-tax is a 44.x % rate :)

I would say you're doing awesome and enjoy life!

emergencyfun

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64k savings on 144k after-tax is a 44.x % rate :)

I would say you're doing awesome and enjoy life!

Wouldn't it be $64k savings on $164k after-tax ($140 currently, plus $24k from wife's business)? Well, no matter if it's 39% or 44% I guess you're right! The thing that was bugging me is that we're "doing everything right" (no debt, biking to work, no cable) yet still not seeing the 50 - 60% savings rate that other MMM followers get. I guess it's time to stop keeping up with the Joneses, even if the Jonses are mustachians!

Joet

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probably you're looking for some face-punches instead haha


there you go! stop spending so much!

smalllife

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Things that jumped out at me:

As a general, you have a grip on average monthly costs but not where that money *actually goes  (see your comments on clothes, home, tech, and gifts.  Together these categories add up to around $400/month!).  I would suggest tracking to the penny for two months - awareness of spending has been shown to lower spending just through the act of conscious decision making. 

You do 11% to the 401k, does this hit the max?  I would increase it if not.

With five people (albeit two part time), $140 on clothes doesn't seem that bad to me.  In a high cost of living area upkeep (cobbler visits, etc.) probably cost more than average.

-Books = library $25
-Personally I'm all for cancelling the synagogue dues.  You posted after the OP, so your god did not smite you. $165
-You spend over a thousand dollars a month on food!!  To put that in perspective, that's about the take home pay of someone working minimum wage.  I think you could cut that in half with little to no sacrifice on the organic aspects with some planning and substitutions.

Add up the above and you are saving an extra 12k a year, or a 10% increase in your savings rate!  And that's just flexing the conscious spending muscles :-)

Danny AZ

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It looks like you have some very high but unavoidable spending categories that many others who can get their spending below $30k do not have.  That includes your child support, daycare costs, and health care costs.  Those three categries alone get you to $30k!

It looks like there are plenty of areas for improvement though.  To stick with the spirit of this forum, you need some mustachian tough love.  The way you are describing your spending sounds right, but the amounts tell the whole truth.  I still feel like I'm a ways off, but a quick comparison to my own spending in a family of 5 showed some big differences in a few key categories.

You spend $850 a month on groceries.  My family of 5 spends $480 per month on average, which includes all other household items (paper goods, detergent, toiletries, etc.)  If you could meet my wife you would quickly find out out we eat a very healthy diet and she purchases high quality food.  I don't see how you're spending that much unless you're storing excess food each month.

$260 on restaurants eating out + $125 on couples entertainment + $190 on kids activities which includes babysitting.  I've lumped these together because we have a babysitting fund that is separate as well as an eating out date night fund.  Total is $200 per month.

You have spending on clothes, tech, books, and personal care totaling $285.  That's a lot.

The bottom line is that you are at the point where you are tracking spending but you do not have a budget.  You are watching where your money is going but not stopping it from going there.  If you want all the luxuries you have, you probably can't change your situation.  But I see an easy $10,000 savings per year if you tightened things up, set a budget, and stick to it.

MorningCoffee

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What jumped out at me was the travel expenses. You're spending about $3660 per year on vacations. By itself, not the end of the world, but...
Add to that all other leisure and entertainment expenses:
$2280 per year for kids activities
$3120 for eating out
$1500 entertainment
$1200 books/tech/sports

It comes to $11,760 for leisure every year - and that doesn't include any shopping (clothes, home) or extra costs in groceries.
Calculate all of your shopping costs for the year and you'll get a much higher total.

It may help to group categories together, and calculate yearly costs, when looking to determine an appropriate (for you) budget. By separating everything out, it's easy to get stuck in the "it's only 20 bucks/100 bucks/ 300 bucks a month" mindset.

27Jennifer

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Have you considered buying instead of renting? That may make you feel more "invested" if that is your goal. My numbers are in the same general range as yours but I definitely feel a sense of a target goal by paying down a mortgage that I'm sure renting would not provide.

mpbaker22

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Depending on what the 'special needs' are you might be able to lower healthcare costs.  A lot of 'special needs' aren't really special needs.  Unfortunately, that makes me sound like an asshole if your kids are actually special needs.  Blame the system, not me ;)
I wanted to touch on that because I felt others might not mention it.

More typical areas for improvement -
Cut your rent expenditure either by buying or by finding some place cheaper.  I'm not sure if you listed the city, so maybe this isn't possible but it's always worth a look around.
Cut food - $850+260 = $1110 = $220 per person.  I spend about that for myself so it's hard to critique others, but I hope my wants change when I have a family.

I think you should keep gifts, synagogue dues, etc. as long as their meaningful and provide actual value as opposed to most Christmas type junk gifts.


emergencyfun

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Thank you for the advice, everybody!

I have a budget proposal that I'm going to run by my wife, that will cut about $10-12k a year from our spending. I think of it as step 1 :)  Don't want to change things too drastically or the odds of us sticking with it will decrease. She's a little freaking out about money since her business isn't doing as well as she'd like, so I'll time my "meeting" with her for when the time is right.

I plan to make modest cuts in many areas, so hopefully we won't feel like we're "sacrificing" anything (since the goal of mustachinism is to feel freed from the constraints of consumerism, as opposed to constrained by a "sacrifice" of less spending):
  • Restaurants/Groceries
  • Clothing (ramp up the hand-me-down game. and hopefully as the children age, they'll need bigger clothes less often)
  • Auto (less driving)
  • Some ways to cut medical costs without sacrificing care for the children (I won't bore you with details)
  • Books (borrowing a book 2x instead of borrowing/not finishing/buying)
  • Tech/Gifts/Etc (more hand-made stuff, more time outside)
  • Home improvement/supplies

Someone asked about housing expenses. We live in an area with terrible rent-to-own ratios, so I know that renting is a smart move for us now. We've kept our eye on the housing market and will continue to do so, buying when it makes sense. We have a pretty good deal in our rental right now. I've checked out comps and they're usually a few hundred dollars more per month.

As for the other categories, we'll just spend more consciously, and I feel confident that spending levels will go down due to that. Maybe we'll try that monthly charting thing that's recommended in Your Money Or Your Life.

Thanks again, everybody!

PS: Thank you to joet for the cherub face punch!

nofool

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You're right about the books. Usually it goes something like this: I borrow a book and can't finish it before I have to return it but I waited months for my hold and don't want to wait months again to check it out to finish it, so I buy it (used) on amazon. I'm gonna have a talk with my wife after getting all the ideas here and propose Books as an area we can cut down on spending. Like you say, it's small but it can be a symbol of our renewed dedication to saving.

Buy a Kindle. Most libraries now have Kindle books you can check out, and the best part is, you can take your sweet time with reading it - just turn off the wifi on the Kindle after you download your copy!

Joet

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really? the ones I've tried [regardless of reader type/tech] utilize DRM and expire just like a normal book reservation [yes, can normally be extended once---just like the physical library experience]

unless I'm missing something..

smalllife

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really? the ones I've tried [regardless of reader type/tech] utilize DRM and expire just like a normal book reservation [yes, can normally be extended once---just like the physical library experience]

unless I'm missing something..

They expire like any other reservation, but they can only wipe the book off your Kindle if the wireless is turned on. 

nofool

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Yup, what smalllife said. And it doesn't prevent the next person in line (in case there's a hold on the kindle copy after you) from being able to download it after your three weeks are up.

27Jennifer

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Also, re the kid clothes, I consign after they grow out of clothes.  So I get money to then spend back at that same shop on someone else's larger-sized consigned clothes (and toys too). In addition to being so grateful to those who give my kids hand-me-downs, the consignment cycle of life has meant that I've spent ~$50 in the past year on kid clothes, and that was socks and shoes.

27Jennifer

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Also, re buying vs renting, as an FYI I will steer you to the NYT buy vs rent calculator in case it helps to give you a clearer picture in either direction: http://www.nytimes.com/interactive/business/buy-rent-calculator.html


Abe

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Regarding medical expenses: do you have a high-deductible plan? If not, and one is available, I would see what your family's co-pays will be on that vs. your current one. You may then qualify for a health savings account with associated tax benefits. For your prescriptions, ask your physician about switching to generics. The vast majority of medications have a generic version that is significantly cheaper and equally effective (otherwise they would not be approved). There are some exceptions that your physician should know about. Also, ask for 90-day prescriptions and a recommendation on a mail order pharmacy.

The $260/week on eating out seems a bit much. I'd try to cook a little extra and take that for lunch the next day. It is hard to remember to do so initially, but I trained myself by just not eating lunch if I left it at home (my wife helped remind me too). You will eventually tire of the cafeteria or restaurant food and like your own better.

happy

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Superficially you don't have any completely outrageous expenditures but are still blowing through the money. So you need become more aware of just how much and what you are spending on and evaluate whether you could spend less without too much pain. Apart from  the suggestions above try some tricks like:

What if you tried to spend half as much on everything? There will be some things you can't do that on, but a lot you can.

Ask you self every time you spend money on something...can I do this cheaper or do without?

Try "no spend" challenges..turn it into a game.  Even a week/month of "no spend on X", has long reaching benefits apart from saving that amount of money: it shows you what you really need to spend, what you can do without and how to improvise. If you have been spending so much on clothing, then I'm sure you could "clothes-fast" for quite a while.

Try decluttering and minimalist challenges: you can earn money by selling stuff, and feel better when you have less stuff.  Its hard work but once you have pared down, life becomes easier. Its quite difficult to minimalist, so this should be held onto as an incentive to not buy more stuff.






emergencyfun

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Regarding medical expenses: do you have a high-deductible plan? If not, and one is available, I would see what your family's co-pays will be on that vs. your current one. You may then qualify for a health savings account with associated tax benefits. For your prescriptions, ask your physician about switching to generics. The vast majority of medications have a generic version that is significantly cheaper and equally effective (otherwise they would not be approved). There are some exceptions that your physician should know about. Also, ask for 90-day prescriptions and a recommendation on a mail order pharmacy.

The $260/week on eating out seems a bit much. I'd try to cook a little extra and take that for lunch the next day. It is hard to remember to do so initially, but I trained myself by just not eating lunch if I left it at home (my wife helped remind me too). You will eventually tire of the cafeteria or restaurant food and like your own better.

My children take medications that don't have generic equivalents yet :( Also, they're controlled drugs so I can only get 30 days at a time :(

Our health plan has a $900 family deductible. We blew through it in the first month (not a typical month, it involved an ER visit). My employer does offer a high-deductible plan with an HSA, but I thought that families with high medical needs wouldn't benefit from HDHP's. Maybe I'm thinking about it wrong? I don't see how the tax shelter of the HSA would outweigh the extra out-of-pocket expenses of a higher deductible.

Back of envelope math:

Our current plan: $900 deductible - no tax savings = $900 spent (plus co-pays)

vs

HDHP: $3000 deductible - $1612 tax savings (25% of $6450* HSA contribution) = $1388 spent (plus co-pays)

Am I doing the math wrong?

PS: Our restaurant budget is $260/month not $260/week. Still too much, but not as bad! That "1x week" means I go out for lunch at work 1x a week. Sorry for the confusion.

* 2013 contribution limit. Also, assuming I'm in the 25% tax bracket for 2013.

emergencyfun

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Hi Everyone,

I haven't forgotten about you and your helpful advice! It's been 2 months since my post here. I went back to lurking but I've been busy trying to get my spending down.

I had "the talk" with my wife back in May, and we identified 9 categories in which we agreed to cut our spending. You'll see there's nothing drastic going on here. Just a small decrease in each category. Baby steps.

CategoryOld spending - monthlyTarget spending - monthly
Groceries$850$800
Healthcare$593$300
Auto/Transport$362$300
Restaurants$260$200
Donations/Gifts$220$100
Entertainment$150$100
Clothing$140$125
Books$25$15
Wife's business$200$0

That represents a $860 decrease in monthly spending, or about 10% of our budget. If I'm doing the math right, it would increase our savings rate from about 30% to about 36%. Now we're getting into "entry level mustachian" range.

Let's see how we actually did:

CategoryOld spending - monthlyTarget spending - monthlyActual spending - MayActual spending - June
Groceries$850$800$1,084$804
Healthcare$593$300$318$16*
Auto/Transport$362$300$996$221
Restaurants$260$200$82$178
Donations/Gifts$220$100$77$116
Entertainment$150$100$168$50
Clothing$140$125$0$35
Books$25$15$0$0
Wife's business$200$0$443$113

Keeping in mind that May was more than 1/2 way over when we started our budget, I think we did pretty good. Also, my wife broke her leg since I last posted, so that drove up costs such as transportation (she has to drive everywhere for the time being). In June, we spent even less than budgeted and had a 40% savings rate!

So thanks again for the suggestions and encouragement. We have a long way to go, but at least my wife and I are on the same page and I know we can have "the talk" again once our current level of spending becomes second nature. We'll just keep ratcheting it down until... well, I'm not sure!

I can do another follow-up in a couple months if y'all are interested.

* This is so low because I joined my employer's FSA program. I'm not sure how to track this in my budget, since I never see the FSA money (it's automatically deducted from my paycheck pre-tax). Anyone participate in an FSA and want to weigh in?

emergencyfun

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PS: I called my DSL provider about a sneaky new $1 fee on my bill and asked them to drop it. They said they couldn't drop it, but they'd give me $10 off per month for a year, no strings attached. So DSL is down to $36 a month.

TLV

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For my FSA, I pay for the expenses out of pocket and get reimbursed from the plan, so I can still track the expenses as they happen.

Also, looking back at your older posts about the high-deductible plan/HSA: That looks correct as far as it goes, but a high-deductible plan will usually have lower premiums as well. If your employer charges you the same premium for the high-deductible plan as the regular one, then you're right that the tax savings don't offset the deductible when you're sure to meet it.

happy

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Great progress!  Just keep at it, shaving away. Ideas of what you can save on will keep popping into your head, if you let them. 

emergencyfun

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For my FSA, I pay for the expenses out of pocket and get reimbursed from the plan, so I can still track the expenses as they happen.

Also, looking back at your older posts about the high-deductible plan/HSA: That looks correct as far as it goes, but a high-deductible plan will usually have lower premiums as well. If your employer charges you the same premium for the high-deductible plan as the regular one, then you're right that the tax savings don't offset the deductible when you're sure to meet it.

You're right about the lower premiums. So a more accurate back-of-envelope math would look like:

Our current plan: $900 deductible + $3432 premiums for a year - no tax savings = $4332 spent (plus co-pays)

vs

HDHP: $3000 deductible + $2784 premiums for a year - $1612 tax savings (25% of $6450 HSA contribution) = $4172 spent (plus co-pays)

So the HDHP $160 cheaper per year, as long as I contribute the max into the HSA and fall into the 25% tax bracket. I'll have to think about that!