Because ours is nonexistent.....
Hey there! My husband and I have recently become obsessed (too strong? Intrigued) by this blog and the ideas in it. We are in a major DEBT EMERGENCY and want to be little Mustachians, but suck pretty badly at it. No, really.
And so lately, we've been asking ourselves: WWMMMD? (What Would Mr. Money Mustache Do?) And as we formulate a game plan to annihilate our debt and retire in the next 40 years (kidding), we also question ourselves and our decision making.
Would you be willing, as your leisure time permits, to tell us what the hell you would do if you were us?
Us: married couple in their late 20s, both with master's degrees in their fields, a 2 year old and another bambino due January 8th, living in one of the cheapest cost of living cities in the country. My husband is a Speech Pathologist at a hospital in the ghetto of our city (read: 20 minute car commute from house through some unsafe areas.) He makes $27.50/hour, which after all the crap they take from the check, leaves us about $3200-3400/month take-home pay. For the sheer fun of it (OK, lying here), he also does home health contract work several nights a week for $60-65/hour plus mileage. It is not consistent work and sometimes he'll go 6 weeks or more without patients. I stay at home with our daughter (no childcare costs) and moonlight as a humanities professor at our local university two nights a week during the school year. 8 months of the year I bring home $1360 after taxes, but will be increasing that as I switch to teaching online only (maximum income: $2200/mo after taxes with the summer months being lower in pay due to less classes to teach.)
Total income: anywhere from $3200 (not enough to cover monthly expenses) in our bad months to $5300 when we're rocking it.
Monthly expenses:
$925 mortgage & insurance
$200 utilities (avg)
$103 car & personal item insurance
$42 life insurance
$600 food
$400 gas
$1108 debt payments (student loans, credit cards)
$160 childcare
$80 internet and security system package (no cable)
$100-400 Misc variable expenses (dog medication, people medication, medical bills, professional dues, toiletries, gifts, etc.)
Assets: a $136k house with little to no equity, (bought Dec 2012 at 3.25% interest rate) but a lower than rent payment of $925/mo which includes property taxes. Live in the heart of the city with grocery stores, library, shops, parks, etc, within walking/biking distance. Two paid for 10 year old+ cars (1999 Jeep Cherokee and 2000 Toyota Avalon), valued at around $7k total. Belongings are mostly hand-me downs, and we've already sold all the stuff worth anything. A sad little $1000 in savings and a couple thousand in retirement accounts.
Liabilities: Nearly $117k in debt, between student loans ($100K of that), credit cards, and a family loan....not including our mortgage. Yep, we were idiots in our early 20s and are still recovering from it. Debt payments total around $1100/mo for the minimums.
Lifestyle: Nonexistent. We buy all our clothes used, rarely go out to eat, enjoy free activities, etc. The occasional travel to see family in Chicago and CA. Mostly free childcare (me!) We eat healthy, try to exercise by running or walking outside, and take good care of ourselves, but our work schedules make some of that difficult.
Question(s) for you Mustachians out there: How would you propose getting out of this debt emergency? We used debt snowball software to calculate that an extra $1000/mo (on top of minimums) toward debt would pay off everything in 5 years. If we can get crazy, balls to the wall (excuse the expression) and pay an extra $2000/mo, we're looking at 3 measly years! But we also are expecting baby# 2, which means a slight reduction in income (mine and husband's contract work) for the month or two at the first of the year and medical bills (guessing $1500-2000) because our hospital provided insurance is terrible. And since one of us works every single night of the weekend, we're exhausted, stressed, and chronically sick. Much our extra income the last month or so has gone to paying medical bills from being sick. We worry that we cannot keep up this pace for 3-5 years.
Surely there must be something else we're not thinking of, income-wise or otherwise, that would allow us to get our debt down and not be working 5 nights a week and a full-time job? Or wishful thinking?
Some of our ideas: sell 1 car (profit $2.5k) and cut insurance/gas costs ($100-150/mo); hubby switching careers or doing full-time contract work (potentially lucrative at $60/hr, but not consistent and no health insurance/benefits.) Hubby switch to sister hospital 1.2 miles from house IF a position ever opens up. Then he could bike to work. I need to be home to take care of the two kiddos, but am actively trying to increase my pay at the university and hope to have it up to $2200/mo by next fall.
So if you happened to actually read this far and want to further waste some of your brain power helping some Mustachian wannabe's, let me know how we can change our path and kick the debt-bitch to the curb!
Many thanks!
And as a plea: please be nice. We know we got ourselves in this stupid place, but are trying REALLY hard to change. I've posted to other financial boards before (not mentioning names) and people are just nasty mean! Let's be friends, OK? :)