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 you’ll 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 I’m specifically looking for ways to trim the spending...
IncomeMe: $120k salary + $40k stock bonus (give or take...depending on stock price)
My wife is starting a business so she works from home but isn’t 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)
HousingWe 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)
ChildrenWe 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
FoodGroceries/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)
BillsSynagogue 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?)
Transportationwe 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)
ShoppingClothes: $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
MedicalPremium: $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.