Case Study - Need to get my spending down

[notmyhand]

Hello all!  The husband and I were doing well for a few years and then this year messed everything up.  We lost our jobs so I went back to school and started two small businesses, then my husband found a job across the state so we had to move but it is less money than usual.  Somehow with everything going on, we have let things slip so now our budget is huge!  Help me whittle it down, please!!!  I would love to live solely on his income (75k).

Life Situation: 2 adults, no children, MCOL area

Gross Salary/Wages: Changes greatly because I am self employed but he brings in 75k (after some months of non employment) and mine is ~80k

Pre-tax deductions: Max out 401ks, Roth IRAs, HSAs

Other Ordinary Income: Small amount of interest

Qualified Dividends & Long Term Capital Gains: Small amount, have about 30k in after tax at Vanguard, not paying interest on IBonds right now

Rental Income, Actual Expenses, and Depreciation: None


Current expenses:
Mortgage - 3500 ($2300 principal, $1200 extra principal)
Gas - 150 (sometimes less, sometimes more, self employed so I go see clients plus we are now across the state from family.  Husband's commute is 40 miles round trip)
Car Payment - 410 (2015 Subaru Forester, 11k left, 0.09% APR)
Health Insurance - 475 (HSA high deductible plans)
Roof saving - 1000 (need to replace roof next spring, two estimates have come in around 18k, 2800 sq ft ranch)
Animals - 600 (we have four dogs, 12 cats (8 foster cats), rabbits, exotic birds, and barn birds.  Lots of medical problems so special food and vet visits)
Food - 600 (I cannot cook and I hate reheated food.  I need to work on this)
Phone - 250 (in contract now, 4 phones, we pay for the in-laws, and is also our source of internet right now as no other provider is available.  I looked for other companies but most are around $50 a line which brings me to around the same thing?  Are there others?)
Electric - 200, only fuel source at the house and 6 outbuildings
Water - 55 (we lived on well water for years so this is new and it seems high to me but nothing seems to be leaking?)
Insurance - 800 (this is our savings account for all insurance and property taxes.  Insurance includes auto, home, disability, life)
Misc - 500 (I have lots of medical problems that comes from this but also gifts and other things


Assets: His solo 401k - 100k, my solo 401k - 90k, his roth - 20k, my roth - 20k, ibonds - 20k, HSAs - ~15k, cash - ~50k, taxable accounts - ~30k, house last appraised at 420k, honda civic with ~200k miles worth about 3k, 529 for future kids - 5k

Liabilities:
House - 312k 15 year loan at 3.75%.  Due to an office building, farm land, and other outbuildings we do not qualify for a conventional loan so this is the lowest rate I have seen.  We did buy too much house.

Car - 2015 Subaru Forester at 0.09%, 12k left

Specific Question(s):
I don't feel like we are living large and yet we are spending over 100k a year!  This is crazy!!  I can't go to the grocery store without spending at least 150 and then I still like to get takeout.  Help whittle down our budget!

Thank you in advance!

[ShoulderThingThatGoesUp]

Well, you have a ridiculous house, twelve pets, and nobody in your house cooks.  That stuff costs money.

[SpreadsheetMan]

The monthly outgoings add up to over $102kpa - there is a lot of work to get that into a single $75k salary (after taxes?).

Doesn't look possible without profound life changes e.g. ditch house & menagerie and learn to cook for starters. A bit of chipping away isn't going to make enough difference on those outgoings.

[ShoulderThingThatGoesUp]

Why are you paying extra principal on a 3.75% loan? That's $14,400 a year, which is a big part of your delta. (But, if you aren't growing and cooking any of your own food, why do you own a hobby farm?)

Also, the Subaru isn't an efficient car and it's probably worth a good deal more than you owe on it. That could be a savings.

[NoStacheOhio]

Have you compared a more traditional plan vs. your high-deductible? If you have ongoing medical problems where you know you're going to use the plan, HDHP may not be the best option.

[notmyhand]

Thanks everyone!  We used to make good enough money where the hobby farm was fun and not too bad of a percentage of our income.  When I was not in school, it used to pay for itself (at least the food and upkeep with egg and livestock sales) but I have let that falter since our predicament.  We aren't adding more animals but it is going to take me some time to be okay with getting rid of them.  Great points though and definitely something I need to really take to heart.

Low hanging fruit seems to be the food.  My husband is willing to cook but we cannot seem to get out of the grocery store without spending a ton of money either.  Lots of it is probably his love of soda which we need to work on.  What does everyone's weekly grocery shopping list look like and what do the meals look like? 

As for the HDHP, I just found out about my genetic condition this year so we are looking at switching next year.  Thank goodness we now live in a more reasonable area when it comes to that.  I looked at our old address on healthcare.gov and premiums almost doubled, ouch.

Keep the thoughts coming.  Thanks!

[Nick_Miller]

You list $600 for "food," and even say you spend at least $150 on each grocery trip, but then you say nobody cooks. So I assume: 1) a lot of food is wasted, and 2) you eat out a lot, and 3) that the eating out is not included in the $600. How much do you spend on eating out?

I don't think your husband's soda habit is the problem here. Huge mortgage and over $7k/ year on pets are the budget busters.

[NoStacheOhio]

Low hanging fruit seems to be the food.  My husband is willing to cook but we cannot seem to get out of the grocery store without spending a ton of money either.  Lots of it is probably his love of soda which we need to work on.  What does everyone's weekly grocery shopping list look like and what do the meals look like? 

As for the HDHP, I just found out about my genetic condition this year so we are looking at switching next year.  Thank goodness we now live in a more reasonable area when it comes to that.  I looked at our old address on healthcare.gov and premiums almost doubled, ouch.

Keep the thoughts coming.  Thanks!

We like to go through the weekly circular to see what's on sale before we head to the store. We also try to plan meals 1-2 weeks ahead, and make generous use of our freezer (would love a chest freezer, but we don't have the space).

My wife went back to working full time recently, and we started doing more cooking on the weekend, then reheating on weekdays.

Regarding the soda: have you tried club soda instead? It's not much cheaper, but it's much healthier. We also like to make (decaf) sweet tea using tea bags. Way cheaper than buying it, and nobody makes decaf iced tea.

[ShoulderThingThatGoesUp]

Wait, is the hobby farm across the state from where you're living now? It sounds like it might be if the income from it was good pre-job loss.

[csdreaming]

Aside from the house and the pets you are not that bad. How many pets do you own? 30+? 600 a month actually isn't that bad for your zoo. Charge admission for a petting zoo and deduct that 600 from your business revenue.

Joke: Or learn to cook the rabbits. Two birds with one stone.

Your health expenses, are you paying your deductibles and copays out of your HSA? If not you are missing out on a nice tax deduction.

[ZiziPB]

Here is what I suggest

Current expenses:
Mortgage - 3500 ($2300 principal, $1200 extra principal) Stop paying extra
Gas - 150 (sometimes less, sometimes more, self employed so I go see clients plus we are now across the state from family.  Husband's commute is 40 miles round trip) So you moved for husband's job and he still has a 40 mile commute?
Car Payment - 410 (2015 Subaru Forester, 11k left, 0.09% APR) Sell the car, pay off the loan and buy something cheaper for cash
Health Insurance - 475 (HSA high deductible plans)
Roof saving - 1000 (need to replace roof next spring, two estimates have come in around 18k, 2800 sq ft ranch)
Animals - 600 (we have four dogs, 12 cats (8 foster cats), rabbits, exotic birds, and barn birds.  Lots of medical problems so special food and vet visits) stop fostering and start thinking about how to reduce the number of animals you own.  DO NOT GET ANY NEW ANIMALS
Food - 600 (I cannot cook and I hate reheated food.  I need to work on this) learn to cook, it's really not that difficult to make basic stuff.  Learn to like reheated food.  I would aim for $400 per month food budget for 2 adults
Phone - 250 (in contract now, 4 phones, we pay for the in-laws, and is also our source of internet right now as no other provider is available.  I looked for other companies but most are around $50 a line which brings me to around the same thing?  Are there others?) stop paying for the in-laws.  Switch to another provider like Ting.  There are plenty of low cost options and there is a very good thread here with lots of advice http://forum.mrmoneymustache.com/share-your-badassity/communications-tech-discussion-thread-1/
Electric - 200, only fuel source at the house and 6 outbuildings turn off unnecessary lights and turn the thermostat down
Water - 55 (we lived on well water for years so this is new and it seems high to me but nothing seems to be leaking?)
Insurance - 800 (this is our savings account for all insurance and property taxes.  Insurance includes auto, home, disability, life) That's almost $10K per year for insurance?  Can you go into detail?  Do you need all that insurance?  Have you shopped around for cheaper coverage?
Misc - 500 (I have lots of medical problems that comes from this but also gifts and other things you need to figure out how much of this is necessary and how much is discretionary.  Then cut the discretionary spending

[radram]

Comments in bold per line item.  If you are serious, you need to make changes.  I am sure you know that already.  First the good, and there is a LOT of it.  You took a very traumatic experience of losing a job (times 2!) and really made some lemonade. You have good wages, a nice stache, and a home value that is INSANE in a MCOL area.  You have a lot to work with here.

I found about $32,000 in annual spending you could take another look at.

I also don't know if you realized it, but your car debt increased $1000 while you were writing your post (11k to 12k).  If that continues, just stop posting and you will save thousands! :)  :)


Keep us posted.

Hello all!  The husband and I were doing well for a few years and then this year messed everything up.  We lost our jobs so I went back to school and started two small businesses, then my husband found a job across the state so we had to move but it is less money than usual.  Somehow with everything going on, we have let things slip so now our budget is huge!  Help me whittle it down, please!!!  I would love to live solely on his income (75k).

Life Situation: 2 adults, no children, MCOL area

Gross Salary/Wages: Changes greatly because I am self employed but he brings in 75k (after some months of non employment) and mine is ~80k

Pre-tax deductions: Max out 401ks, Roth IRAs, HSAs

Other Ordinary Income: Small amount of interest

Qualified Dividends & Long Term Capital Gains: Small amount, have about 30k in after tax at Vanguard, not paying interest on IBonds right now

Rental Income, Actual Expenses, and Depreciation: None


Current expenses:
Mortgage - 3500 ($2300 principal, $1200 extra principal)
A farmette life is a wonderful lifestyle, but you MUST use the property to make it pay for itself.  The amount of money you have invested in your home needs to either provide a line item of income to offset its costs, or you need a stache that is maybe upwards of 2-3 times what you would otherwise need to live.  A primary residence is a liability, not an asset. You can turn it into  an asset with rewarding work, but by far your largest issue is this home, and the amount of your stache it is consuming. It will never end.  Farmette life isn't for everyone.  You need to decide if it is for you. This will take time.

Half the house, half the mortgage plus less operating costs. $1200 monthly savings.




Gas - 150 (sometimes less, sometimes more, self employed so I go see clients plus we are now across the state from family.  Husband's commute is 40 miles round trip)
If you do sell the farmette, you would move closer to his work or your family, no?

Car Payment - 410 (2015 Subaru Forester, 11k left, 0.09% APR)
You have been around this site.  You know what to do.  Sell it, pay off the loan, and buy another old honda(maybe not quite as old as you have now).
$400 monthly savings.


Health Insurance - 475 (HSA high deductible plans)
Need more info here.  You have another $500 listed below for healthcare.  I think you could do better than $1000 a month for 2 people. No listed savings, YET.


Roof saving - 1000 (need to replace roof next spring, two estimates have come in around 18k, 2800 sq ft ranch)
This is a perfect example of farmette living.  Bigger house, bigger costs. In my opinion, know one should enter into farmette living without the understanding that much of what goes wrong must be fixed yourself in order to keep costs down. If the ranch is a 1 story, I think either you should put on the roof yourself with friends, or you need to again rethink the idea of farmette living.  DIY should come in around $7,000.  $11,000 savings


Animals - 600 (we have four dogs, 12 cats (8 foster cats), rabbits, exotic birds, and barn birds.  Lots of medical problems so special food and vet visits)
I can not say much here. I have never really had the love of animals for animals sake like you do.  I have 1 dog, but it drives me crazy to pay more for someone to care for him for 5 days that the dog cost. It does sound like you are willing to eventually decrease this.  Lets say you cut it in half.  $300 a month savings.


Food - 600 (I cannot cook and I hate reheated food.  I need to work on this)
I LOVE leftovers.  That said, you spend twice as much on food as I do for my family of 4.  We cook ourselves and eat like royalty.  $300 a month savings

Phone - 250 (in contract now, 4 phones, we pay for the in-laws, and is also our source of internet right now as no other provider is available.  I looked for other companies but most are around $50 a line which brings me to around the same thing?  Are there others?)
I pay $0 per month for 4 freedompop phones.  Coverage is ok, not great. Texting is good, but phone calls are just so-so at best(phone calls are VOIP so on Wifi they work well).  Not really an option as a business phone.  I get 200 phone minutes, 500 texts, and 500mb of data free per month for each phone.  Phones start at around $50, and go up from there. I paid $40 each for 2 Samsung victory phones and $99 each for 2 S3's.  That was 2 years ago.  $280 for 4 phones for over 2 years all in.  I know this would not be feasible for home internet, but they also have pay plans for less than $50 per month.  Perhaps these will suit the needs of the in-laws?  They use the sprint network.  Possible savings of $125 per month (in-laws switch).


Electric - 200, only fuel source at the house and 6 outbuildings
Not gonna lie.  This is badass.  Nothing I can do here.

Water - 55 (we lived on well water for years so this is new and it seems high to me but nothing seems to be leaking?)
Water service to a farmette.  That is unheard of where I live.  How is it that you have water service, but there is no internet options for home?

Insurance - 800 (this is our savings account for all insurance and property taxes.  Insurance includes auto, home, disability, life)
Another farmette expense. With property taxes included, it actually is not bad.   It should be offset with income made from the farmette.  $400 a month savings.

Misc - 500 (I have lots of medical problems that comes from this but also gifts and other things
Sorry to hear of your medical issues. See above.  No savings YET.


Assets: His solo 401k - 100k, my solo 401k - 90k, his roth - 20k, my roth - 20k, ibonds - 20k, HSAs - ~15k, cash - ~50k, taxable accounts - ~30k, house last appraised at 420k, honda civic with ~200k miles worth about 3k, 529 for future kids - 5k

Liabilities:
House - 312k 15 year loan at 3.75%.  Due to an office building, farm land, and other outbuildings we do not qualify for a conventional loan so this is the lowest rate I have seen.  We did buy too much house.

Car - 2015 Subaru Forester at 0.09%, 12k left

Specific Question(s):
I don't feel like we are living large and yet we are spending over 100k a year!  This is crazy!!  I can't go to the grocery store without spending at least 150 and then I still like to get takeout.  Help whittle down our budget!

Thank you in advance!

[With This Herring]

I have to ask, what are "barn birds"?  Chickens?  Geese?  Pigeons?  Don't turn your animals out on the street (they shouldn't pay for your mistakes), but do not replace them when the fosters are adopted out or when any pass away.

Everyone else has good advice.  For getting your food costs down (my GOSH, you spend a lot on food!), check out the excellent recipes on Budget Bytes.  Why don't you like reheated food?  Is it the idea of leftovers?  Is it the texture?  Is it the uneven heating?  Changing the way you reheat food can help some of these things.  Instead of microwaving a portion of lasagna, for instance, you might find that the evenness of the heating is improved by putting it in a toaster oven for a while.  Anything that was crispy also benefits from being heated in a toaster oven instead of a microwave.  Stirfries a best reheated in a pan on the stove.

[notmyhand]

Quickly update and answer some questions -
We had a small farm where we were and we purchased another small farm.  The reason it was self sufficient and now it is not is because I have not had time.  I show rabbits and poultry and then breed and sell and it makes up for the travel to shows and the feed etc.  However, with school and the extra work I have taken on, I have not had time to show and I won't breed non-winning animals.  Starting after December, hopefully this should change.  We had some chicks born and they have not sold as well here as they sold back at our old place so I think we are going to tone down our poultry side.

As for the other animals, we are getting our final group of foster cats this week and I have let our group know that we will not be taking anymore and probably won't get anymore once these are adopted. 

My husband and I have sat down and decided I will be taking extra projects and he will help me with them when he can so our income will hopefully increase.  We are going to not get any more animals until it starts being profitable again. 

As for food, the 600 includes eating out and food.  We don't cook a lot so our groceries are often oven or microwave ready which are expensive.  We are going to try to be better about this.

I have some added motivation to pay off this car and try to cut this mortgage time down.  We love the property and really want to stay here so extra work will go to try to pay it off asap.

I will review the rest of the suggestions here and go from there.  Hopefully we can keep this motivation up!

Thanks everyone!

[ShoulderThingThatGoesUp]

It will help to address the inconsistency in your head that you don't like reheated food but you buy prrcooked food to (re)heat.

Owning two unprofitable farmettes is not a great situation.