Author Topic: Case Study: Ridiculous Spending  (Read 12346 times)

HairOnFireHousewife

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Case Study: Ridiculous Spending
« on: August 02, 2016, 08:11:58 AM »
Life Situation:
We are a family of 5 located in Midwest husband (36) works in IT and I am a SAHM (30). Kids are ranging from baby to elementary school. Husband recently earned his Master’s and greatly increased his salary (nearly doubled). It feels like we’ve been treading water for so many years. We’ve had a lot of expensive life events but excuses aside, we need to get things moving in the right direction. Here goes!

Gross Salary/Wages:  $142,000 Salary equates to Bi-Monthly Gross salary: $5,916

Bi-Monthly Pre-tax deductions:
Vision, Life and Dental: $80
 401K contribution: $769

Other Ordinary Income: $300 per month Guard pay (this will be ending next summer, possibly sooner)

Qualified Dividends & Long Term Capital Gains: None

Rental Income, Actual Expenses, and Depreciation: None

Adjusted Gross Income: $3683 Bi-Monthly, $7,366 monthly take home

Taxes: Federal, state/local, and FICA.  Total: $969
(Breakdown: $661 Federal, $363 Social, $85 Medicare, $223 Income Tax)

Current expenses:
Mortgage: $1,552 PITI
Electric: $97
Gas (includes our heat, dryer and oven): $95
Sewer: $32
Trash: $15
ATT Internet/Cable: $110
Preschool: $296 (during school year)
Cell Phone: $30
Car Insurance: $120
Health Insurance: $211
Wife Life Insurance: $27 ($500,000 policy, 30 Year Term Insurance, 21 year term remaining)
Husband Life Insurance: $29.32 (Accidental Death, $250,000. Not eligible for other policies due to health. Has $300k from work)
Student Loans: $300
Car 1 Payment: $614.12
Car 2 Payment: $450
Window Credit Payment: $1,333
Discover Credit Card: $200
Roth IRA: $50
Husband Mad Money: $200
Husband Gasoline: $100
Wife Gasoline: $100
Wife Mad Money (includes going out to eat, activities, clothing and "stuff"): $200
Household (toilet paper, medication, etc.): $200
Miscellaneous: $200
Groceries: $600
Kids Expenses (Dance $30, Soccer, wipes and diapers, clothing, shoes, activities, school stuff, etc.): $200
Total Monthly Expenses: $7,361

Assets:
Opened 401K in February of 2014, current balance: $44,232.
Opened Roth IRA April 2015, current balance: $4,333
Savings: $9,000

Liabilities:
Windows: $4,000 Remaining Balance/ $12,714 original balance 09/2015 at 0% Interest
Home Mortgage: $251,000 Remaining Balance/ $257,000 Original Balance. VA Loan, no money down and no PMI. 3.25% 30 year loan
Master’s Degree Student Loans: $18,911 at 6.1%/ Original Balance $29, 150
Discover Credit Card: $4,800 Balance at 9.99%  (We used this for home improvements at our last home as well as our current. We have paid it off and ran up balances again countless times.)
Car 1: $36,043 (5 year loan at 0.9%)
Car 2: $25,778 (5 year loan at 1.9%)

Specific Question(s):  I feel so overwhelmed and behind with saving that I bury my head in the sand and act like it isn’t happening. It’s embarrassing to even write out our situation… Not sure where to even start.  New to MMM but know it well enough to know I’m about to get some serious facepunches!!!!
« Last Edit: January 22, 2017, 07:54:14 PM by HairOnFireHousewife »

mskyle

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Re: Case Study: Ridiculous Spending
« Reply #1 on: August 02, 2016, 08:54:14 AM »
OK, you have to go after the big stuff here, but I think people are going to need some more details -

1) what is "Home Improvement" and why are you spending $1333 a month on it when you have all this debt making you so anxious? Is that the window payment? If so, that's not *that* bad, because you'll have that paid off in a year or so, and then you can put that money somewhere else useful. But basically right now you are underwater on your house. That's not great. Stop making improvements until you're out of this hair-on-fire emergency.
2) Oh boy, those cars. You are spending ~$1500 a month on the cars. When did you buy them and how far underwater are you on them?

And then there's the littler stuff, which does add up - you have about $1000 a month going to different flavors of "miscellaneous" - mad money, household (I roll most household stuff into "grocery," fwiw), kids, AND miscellaneous. You need to get a handle on that. You could probably save money on cable. You could probably whittle your grocery bill down some.

You're doing some things right - at least you're saving some money in the Roth (curious why a Roth, though?) and the 401k.

But it doesn't sound like you guys have a great relationship with using short-term credit like home improvement loans and credit cards (and car loans) so maybe it's time to go a bit Dave Ramsey and forgo other things until you have at least the non-mortgage, non-student debt paid off.

And never, ever buy two expensive new cars ever again! Especially not with a 5-year loan!

ketchup

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Re: Case Study: Ridiculous Spending
« Reply #2 on: August 02, 2016, 09:03:16 AM »
You have $9k in savings and $4800 in CC debt.  Is there a reason you haven't simply paid that off?  If an "emergency" truly pops up, you could use the CC again if you really had to, but if it doesn't, that puts you ahead without having to do much at all.

Apart from that, your debts don't have completely insane interest rates (although you didn't list the rate for the "Windows").  I'd prioritize the 6.1% student loan, but probably only after you have the rest of your shit together.

The main Big Scary Line Item on your expenses list is $1,333 for home improvement.  Are you rehabbing an old house?  What's the story here?

Your "mad money" categories combined with "misc" are $600/month.  That's nearly your 401k contribution over again.  What's going on there?  If you're serious about improving your situation, you need to flesh this out more (and then cut it down).

Drop the cable, of course.  Your money and time deserve better than that.

Utilities could probably be optimized a bit, but that's not too bad (gas in particular seems high, but that could vary with location).

Do you really spend $200/mo on toilet paper and mediation?  Unless there's some particular health issues here that require specific mediation, this seems high.

Good things:
Your insurance rates seem reasonable.  You could always shop around and see if better rates can be found, but I don't see anything nutty there.
$600/mo to feed a family of five is quite good.  It looks like you don't eat out at all? Bravo, you're ahead of the crowd in that department.
You do have decent 401k/IRA savings, and are maxing the 401k.  Do make sure your 401k funds are allocated in a way that makes sense (lots of people here can help with that).
You utilized a VA loan with excellent terms.  Good on you.
Income.  You have an income over double the median American household.  You're filthy rich on the income side.

Other elephant in the room:

The cars.

How many miles per year do you drive those vehicles, and what are they used for?  How far does your husband commute?  You could almost certainly do better, on the order of thousands of dollars per year.  Once you answer that question, we can tackle specifics.  Nobody needs ~$60k in auto debt.  That's completely nuts.  I'm sure you know this, but this is one thing that absolutely must change if you want to get your shit together.  You're looking at $1500/month in car expenses.
« Last Edit: August 02, 2016, 09:05:53 AM by ketchup »

HairOnFireHousewife

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Re: Case Study: Ridiculous Spending
« Reply #3 on: August 02, 2016, 09:06:48 AM »
1. Yes, the "Home Improvements" is the Window payment. We will have it paid off in 3 months. Unfortunately, we were idiots and bought our house without really paying attention to the windows. Only my husband had the strength to open them, so we bought them on 0% credit because we considered it a safety hazard. Happy to have that gone ASAP. After that, what would you suggest channeling that extra $1,333 to? We were planning on paying off the Discover. But then what?
2. We're pretty much stuck with the cars at this point. The idiots strike again! :/
3. You're right... our miscellaneous is out of control. Do you suggest taking cash out weekly and having a spending journal?
4. Not sure why we chose a Roth. Open to suggestions!

Thank you so much for the feedback!!

YTProphet

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Re: Case Study: Ridiculous Spending
« Reply #4 on: August 02, 2016, 09:11:17 AM »
It's the cars and home improvement. You've gotta change that. If they're not too far under water, sell them and take the loss and buy two junkers. That's the only way out.

Also, $27/month for $500,000 of life insurance for a 30 year old female is ridiculous. My wife is 32 and we pay $9.50 for a 30 year term policy. You need to go get a couple new quotes.

ketchup

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Re: Case Study: Ridiculous Spending
« Reply #5 on: August 02, 2016, 09:12:40 AM »
You're only stuck with the cars if you think you are.  There's always a way out.  It might suck, and be a pain in the ass, but you'll be better for it.  But we need more details.

What are your driving habits? 

How far does your husband commute?

How underwater are you on the cars (it sure sound like you're underwater)?

2Birds1Stone

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Re: Case Study: Ridiculous Spending
« Reply #6 on: August 02, 2016, 09:13:16 AM »
Your cars are costing you almost as much as your housing.

Having $61k of debt tied to two depreciating assets is crazy imho.

I would have a long hard talk with DH about where you can begin to cut the fat.

With expenses as high as yours, there are plenty of "low hanging fruit" areas you should be able to identify.

Welcome, you are taking the right steps by posting a case study!

laka

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Re: Case Study: Ridiculous Spending
« Reply #7 on: August 02, 2016, 09:30:09 AM »
I think the cars are key. I know it can feel overwhelming to deal with cars, but seriously, if you could get rid of those and buy two that you could *actually* pay for, you'd be in such better shape!

In three months, you'll have the windows paid off. That's $1333 freed up. If you use your savings to pay off the CC, that's another $200. If you can replace the cars with no car payment, that's another $1165.  That's a total of $2698 each month.  Even if you had to take out a small loan for the cars to get you over the hump, you could pay off that loan with that savings quickly.  So, let's say that in 6 months you have no window debt, no CC debt, and no car debt. And $2700 more each month than you have right now.  That would make a huge dent in the student loans (maybe another 8 months of throwing $3000 a month at those and be done?).

Spending is the other end, and that's something you need to look at more closely for yourselves. Where does the "mad money" go to? How can you reduce that? 

I do want to say good job on the pre-tax 401K savings.

little_brown_dog

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Re: Case Study: Ridiculous Spending
« Reply #8 on: August 02, 2016, 09:41:29 AM »
Fellow SAHM here!

First off, the hardest part is recognizing you have a problem, and the second is getting over your analysis paralysis. Once you start making great progress, your motivation usually will keep things moving in a positive direction. One step at a time. You already know the basics: high interest debt elimination and efunds are priority number one. You gotta get rid of that high interest Discover card debt. Once that is gone you can move on to less pressing issues. Honestly, unless you are in a questionable job or medical situation, I would personally just use my savings to get out from under that Discover card debt. Like...today. 

But now for the criticism...
Mad money - seriously, you are in debt. Why do you guys get 400 a month between you to blow when you are in debt? Having mad money when you have CC debt, student loan debt, car debt, etc is sort of like insisting that you deserve some extra time to finish your drink while the titanic sinks around you. You have the physical ability to rush to the lifeboats and save yourself and your family but you are purposefully refusing to, and ultimately you will be the one sunk in the end. Trust me, in a year's time you will NOT look back and think "oh thank goodness we bought (insert yet another gadget, expensive latte, dress, etc)"

No more mad money, or if you simply MUST have money to blow, dramatically limit it to <100 bucks total (<50 for you, <50 for him). Yes, you CAN do it. That will save you 300 bucks a month! The equivalent of a student loan payment! Take that extra 300 and throw it at the next financial goal (ex: building back up your savings as an emergency fund). Get to the lifeboat, leave the drink, save yourself.

For me, I would probably do something like this:

1. Pay off Discover card completely with savings this week
2. Channel the mad money funds to build savings back up over the next few months
3. Have serious conversation about dropping one of the cars and moving to something cheaper. Don't just throw up your hands and say oh we are stuck with them! Plenty of people have been able to sell financed vehicles and save money in the long term. You may decide to keep them, but do your due diligence and really objectively assess the situation. No cop outs.
4. Keep a journal or file of receipts documenting how often you go to different stores, and showing what you are buying. As a SAHM, make sure you aren't running to the store as an activity or a way to get out of the house...that will surely result in unnecessary spending over time. We all have our wasteful miscellaneous spending -for some of us its clothes, others it's coffee, and still others it is electronic gadgets and tech. Figure out where your spending weaknesses are and then take concrete steps to reduce the damage.

CU Tiger

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Re: Case Study: Ridiculous Spending
« Reply #9 on: August 02, 2016, 11:12:02 AM »
Life Situation:
We are a family of 5 located in Midwest husband (36) works in IT and I am a SAHM (30). Kids are ranging from baby to elementary school. Husband recently earned his Master’s and greatly increased his salary (nearly doubled). It feels like we’ve been treading water for so many years. We’ve had a lot of expensive life events but excuses aside, we need to get things moving in the right direction. Here goes!

Gross Salary/Wages:  $142,000 Salary equates to Bi-Monthly Gross salary: $5,916

Bi-Monthly Pre-tax deductions:
Vision, Life and Dental: $80
 401K contribution: $769

Other Ordinary Income: $300 per month Guard pay (this will be ending next summer, possibly sooner)

Adjusted Gross Income: $3683 Bi-Monthly, $7,366 monthly take home

Taxes: Federal, state/local, and FICA.  Total: $969
(Breakdown: $661 Federal, $363 Social, $85 Medicare, $223 Missouri Income Tax)

Current expenses:
Mortgage: $1,552 PITI
Electric: $97
Gas: $95
Sewer: $32
Trash: $15
ATT Internet/Cable: $110 (Can you cut this down or out? We gave up cable years ago and after a short adjustment, do not miss it at all.)
Preschool: $296 (As you are a stay at home Mother, why are you paying to put a child in Preschool? Is this usual? Also, is this monthly, or yearly? If yearly, never mind, I’m sure it’s worth it. If monthly, give it a hard look. You are staying home to look after the kids…so…look after the preschool aged ones as well.)

Cell Phone: $30
Car Insurance: $120
Health Insurance: $211
Wife Life Insurance: $27 ($500,000 policy, 21 year term remaining)
Husband Life Insurance: $29.32 (Accidental Death, $250,000. Not eligible for other policies due to health. Has $300k from work)
Student Loans: $300
Honda Payment: $614.12
Honda Payment: $450 (Sweet Nellie, y’all really haven’t met debt you didn’t like. You have $9000 in savings, use whatever of that you have to to get out of these crazy cars and buy some cheap used cars. $1000 a month on cars is KILLING YOU.)
Window Credit Payment: $1,333 (Pay it off and NEVER borrow money for this kind of stuff again. Using credit cards and buying on credit is a sucka game. You’ll never get ahead that way. My Mom, a financial genius, believed in layaway or saving for things and never, EVER borrowing for them. Except a mortgage, for that she would borrow.)

Discover Credit Card: $200
Roth IRA: $50
Husband Mad Money: $200
Husband Gasoline: $100
Wife Gasoline: $100
Wife Mad Money: $200 (Cut down on your mad money and put that money towards your Window loan or your Discover payment. Look around and make sure you are getting the cheapest gas you can, and do what you can to plan your driving so you group errands, don’t just drive around for fun, and make each tank of gas last as long as possible. If you cut Mad $$ to $50 per person, and each of you spent $25 less per month on gasoline, you’d have an extra $350 to toss at your debt.)

Household (toilet paper, medication, etc.): $200
Miscellaneous: $200
Groceries: $600 (As the at home parent, what can you do to reduce this from $1000 to $600-$700? Identify stores where you can get better deals? Buy in bulk? Identify a week’s worth of cheap meals that everyone will eat and rotate them? Have meatless meals a couple of times a week? Cut out anything you buy that is valueless calories (Coke and other soda, chips, alcohol) and stupidly expensive things that cost more because of cutesy packaging (Gogurts, tetrapaks of apple juice.) My sister lets her kids have two choices for liquid refreshment: milk and water. I would maybe add iced tea to that list, because when she and I grew up, our choices were milk, water, or tea…but my sister doesn’t feel like making tea.)
PLAN your meals. Meal times come around like clockwork, so don’t be surprised that it’s five o’clock somewhere, and the kids are hungry, and you are tired and don’t have anything you can fix fast…so it’s takeout pizza. If you make lasagna, make two and freeze one, so all you have to do is pop Mr. Frozen Lasagna in the oven, make a green salad, and ta-da, fast meal with Momma doing very little actual work.)

Kids Expenses (Dance, diapers, etc.): $200
Total Monthly Expenses: $7,361

Assets:
Opened 401K in February of 2014, current balance: $44,232.
Opened Roth IRA April 2015, current balance: $4,333
Savings: $9,000

Liabilities:
Windows: $4,000 Remaining Balance/ $12,714 original balance 09/2015 at 0% Interest
Home Mortgage: $251,000 Remaining Balance/ $257,000 Original Balance. VA Loan, no money down and no PMI. 3.25% 30 year loan
Master’s Degree Student Loans: $18,911 at 6.1%/ Original Balance $29, 150
Discover Credit Card: $4,800 Balance at 9.99%  (We used this for home improvements at our last home as well as our current. We have paid it off and ran up balances again countless times.) (Dear One, I am not sure you two can be trusted with credit cards right now. You use them, pay them off, and then dive right off the Discover Diving Board back into the pool of We Owe at 9.9%. Cut it up. If that is too scary, freeze it in a block of water in the back of the freezer.

Honda Odyssey: $36,043 (5 year loan at 0.9%)
Honda Accord: $25,778 (5 year loan at 1.9%)

Specific Question(s):  I feel so overwhelmed and behind with saving that I bury my head in the sand and act like it isn’t happening.
No shame, no blame, stuff happens, it’s all in the past. What you have to do is start living differently RIGHT NOW. When the kids ask for toys at Target, say “NO, you have plenty of toys at home.” If your husband wants mad money for some super cool treat, remind him that you two are up to your tushies in debt and this is not the time to buy stuff.”
Make some of the changes people on this board have recommended. See if you have anything around the house to sell (unused appliances, kids clothes, old gold/silver that you don’t wear anymore) and use every scrap of that to pay off debt. Make a chart of your debt and post it on the fridge where you can see it go down. Talk to the kids about how Momma and Daddy made some mistakes with money, but you are fixing them. Celebrate with them when a debt goes away and your net worth goes up. Tell them you are all getting smarter about money!

If you keep doing what you have been doing, you’ll keep getting what you have been getting. Doing the same thing over and over and expecting different results is the definition of insanity. If you want your life to be different (and it sounds like you do) MAKE THE CHANGES. DO IT and things will get better.

Noodle

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Re: Case Study: Ridiculous Spending
« Reply #10 on: August 02, 2016, 11:42:45 AM »
I know you feel awful, but really this is not so bad. That $1300+ window payment is only 3 months from being done, and then as long as you keep putting that money toward debt repayment instead of letting it be eaten up by discretionary expenses, you can snowball your way out of a lot of this...and that's the baby Mustachian version of this before you even start picking other low-hanging fruit. So

Step A: Pay off windows--use money previously allocated to window payment to pay down other debts in whatever sequence you and hubby think is best and, somewhere in there, build your emergency fund especially since you are in an older house.
Step B: Sit down and talk about how big your emergency fund needs to be (does it make more sense to pay off the CC right away, or wait until after the windows are done?) and what to do about the cars. You have more car debt, for something that could get totaled tomorrow, than student loan debt. Resolving those two areas will free up money for the student loan, mortgage and retirement/college savings.
Step C: Revisit all these slush funds--Mad Money, miscellaneous, household, kids. Since we don't know what the "Mad Money" covers (is that just family accounting for a lot of small but necessary expenses, or is it really "fun" money) I am hesitant to nitpick without more context but I bet you will find plenty of places you can trim when you get into a frugal mindset.

Sibley

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Re: Case Study: Ridiculous Spending
« Reply #11 on: August 02, 2016, 12:01:26 PM »
Another thing - research refinancing the student loan to a lower rate. This doesn't make sense for everyone, it depends on your situation, but it is worth researching.

You've started, keep at it and you'll get there.

SeaEhm

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Re: Case Study: Ridiculous Spending
« Reply #12 on: August 02, 2016, 01:46:50 PM »
Why are people getting so irate about the windows?  It's at 0% interest!  It would be better to pay that off as slow as possible while paying down the Discover card and the student loan debt.

@YTProphet "Sell them and buy two junkers" 

Here OP, I have found two cars that YTPhrophet thinks you should buy!

SeaEhm

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Re: Case Study: Ridiculous Spending
« Reply #13 on: August 02, 2016, 01:51:03 PM »
I think Ketchup has a good head on his/her shoulders by asking questions about transportation needs before getting too emotionally involved in responding to the cars.


Preschool: $296 (As you are a stay at home Mother, why are you paying to put a child in Preschool? Is this usual? Also, is this monthly, or yearly? If yearly, never mind, I’m sure it’s worth it. If monthly, give it a hard look. You are staying home to look after the kids…so…look after the preschool aged ones as well.)


 Are you 19 without children or something? How does one make a comment like that?

vivophoenix

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Re: Case Study: Ridiculous Spending
« Reply #14 on: August 02, 2016, 02:26:44 PM »
I think Ketchup has a good head on his/her shoulders by asking questions about transportation needs before getting too emotionally involved in responding to the cars.


Preschool: $296 (As you are a stay at home Mother, why are you paying to put a child in Preschool? Is this usual? Also, is this monthly, or yearly? If yearly, never mind, I’m sure it’s worth it. If monthly, give it a hard look. You are staying home to look after the kids…so…look after the preschool aged ones as well.)


 Are you 19 without children or something? How does one make a comment like that?


I am curious, what is wrong with this comment? the poster even asked if this was usual. there is no need to be condescending. just answer the question

SAHM means you stay home for the kids, if you are going to hire someone to do it, you could also be working?

I am not 19, and i don't have kids, but i have parents and relatives who have kids and they didn't stay home and then pay for child care, and then ask for advice about 'hair on fire' debt.
« Last Edit: August 02, 2016, 02:29:52 PM by vivophoenix »

SeaEhm

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Re: Case Study: Ridiculous Spending
« Reply #15 on: August 02, 2016, 02:34:54 PM »
I think Ketchup has a good head on his/her shoulders by asking questions about transportation needs before getting too emotionally involved in responding to the cars.


Preschool: $296 (As you are a stay at home Mother, why are you paying to put a child in Preschool? Is this usual? Also, is this monthly, or yearly? If yearly, never mind, I’m sure it’s worth it. If monthly, give it a hard look. You are staying home to look after the kids…so…look after the preschool aged ones as well.)


 Are you 19 without children or something? How does one make a comment like that?


I am curious, what is wrong with this comment? the poster even asked if this was usual. there is no need to be condescending. just answer the question

SAHM means you stay home for the kids, if you are going to hire someone to do it, you could also be working?

I am not 19, and i don't have kids, but i have parents and relatives who have kids and they didn't stay home and then pay for child care, and then ask for advice about 'hair on fire' debt.

Because when someone asks that question (especially in that...tone...), it assumes that the person is "getting rid of the child" to free up personal time instead of putting the child in a place where trained people work with children to socialize them, teach them, and other positives about preschool.

edit: I do see that that asked "Is this usual?" but then follows it up with the zinger that is... its your job to stay at home with them so stay at home with them"
« Last Edit: August 02, 2016, 02:42:00 PM by SeaEhm »

vivophoenix

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Re: Case Study: Ridiculous Spending
« Reply #16 on: August 02, 2016, 02:43:20 PM »
i am confused why you need pre school to do this. can you not teach you own child, do they not socialize with you, do they not have playgrounds or parent groups or relatives with free socialization? i dont have a dog in this fight but like i said hair on fire situation


edit: esp since it says during the school year, indicating that in the off season the kids are with someone for free.
« Last Edit: August 02, 2016, 02:49:10 PM by vivophoenix »

KCM5

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Re: Case Study: Ridiculous Spending
« Reply #17 on: August 02, 2016, 02:50:32 PM »
i am confused why you need pre school to do this. can you not teach you own child, do they not socialize with you, do they not have playgrounds or parent groups or relatives with free socialization? i dont have a dog in this fight but like i said hair on fire situation

Realistically, no, the child probably does not need to go to preschool. But your phrasing of the question wasn't helpful.

As long as the child is learning the things necessary for preschool in other ways (playgroups, being read to, learning number, letters, and colors) then the child will be fine/prepared for school

vivophoenix

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Re: Case Study: Ridiculous Spending
« Reply #18 on: August 02, 2016, 02:56:41 PM »
i sense some hysterical responses here.

people are allowed to lose their mind over(punch people in the face)  cars or credit card debt, but if someone points out the dissonance between being a stay at home mom, and paying for child care, now advice isnt helpful?

 i have said nothing derogatory. and people are using the internet to interpret tone.

if someone is paying for preschool for children during the school year, and they have a debt situation. i see two options, stop the pre school, or get a retail job during the school year.

mmm has an entire article on caring for his kid while using the himself and the world as a free learning resource.


mskyle

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Re: Case Study: Ridiculous Spending
« Reply #19 on: August 02, 2016, 03:05:02 PM »
Please let's not turn this perfectly nice case study into a referendum on preschool! I'm sure there is already a nice thread about that over in the mini mustache zone. Yes, the poster is in a hair on fire situation, but they can afford the preschool if they put out some of the other fires, if that's something that's important to them. I mean, kids only go to preschool for a couple of years. It's self-limiting.

Those cars though... I'm not ready to let go on the cars. I haven't had a car loan since 2003 or 2004, and I've never had to sell/trade in a car with money left on the loan so I am definitely not an expert in this area, but I'm pretty sure you *could* sell at least one of those cars even if you're somewhat underwater. If you could get rid of one of those car payments, that would free up a lot of money!

SeaEhm

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Re: Case Study: Ridiculous Spending
« Reply #20 on: August 02, 2016, 03:05:45 PM »
and people are using the internet to interpret tone.


The person used "... so ..."   

Is it really hard to interpret tone from that?
Helpful hint: go back and reread it using extra long pauses for the "..." 


HairOnFireHousewife

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Re: Case Study: Ridiculous Spending
« Reply #21 on: August 02, 2016, 03:10:52 PM »
Last year I enrolled my daughter in mini-preschool for two hours a week; she loved it and they have a wonderful curriculum and school structure.

This year, I enrolled her in 4 days of 3-Hour time slots. Yes, I am a SAHM and paying someone to watch my child for 12 hours a week. However, I will still be with my baby during that time as well. (Which is why I won't be working while she is at school)

There are many reasons why I believe it is important for her to be enrolled in this program. In an absolute worst-case scenario, could I not enroll her? Absolutely. BUT I would much rather trim the massive amounts of waste in our budget before doing so.

@CuTiger, thank you for all of your insight. I do agree that it isn't an absolute necessity for my child to go to preschool and I asked for facepunches... so I got them! But I do appreciate SeaEhm going to bat for me! Thank you to everyone for your comments and suggestions!


ChairmanKaga

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Re: Case Study: Ridiculous Spending
« Reply #22 on: August 02, 2016, 03:16:25 PM »
Those cars though... I'm not ready to let go on the cars. I haven't had a car loan since 2003 or 2004, and I've never had to sell/trade in a car with money left on the loan so I am definitely not an expert in this area, but I'm pretty sure you *could* sell at least one of those cars even if you're somewhat underwater. If you could get rid of one of those car payments, that would free up a lot of money!

They're Hondas, and seemingly fairly new ones. I've found that book values are generally quite low on the actual market. Take them both to Carmax to get a guaranteed quote. They're weirdly accurate and more generous than most retailers. THEN list them wherever you feel they belong, but use TrueDelta to see where the actual transaction prices lie. Use Autotrader, even if you have to pay for the ads. CL buyers are frustrating flakes, generally. But sell them both - they're ruining you.

By and large, cars are the single worst thing to go into debt for, and generally one of the worst things you could spend your money for period.

1967mama

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Re: Case Study: Ridiculous Spending
« Reply #23 on: August 02, 2016, 04:16:07 PM »
The section that lists the following has me wondering a few things:

Wife Gasoline: $100
Wife Mad Money: $200
Household (toilet paper, medication, etc.): $200
Miscellaneous: $200

Do you need to drive that much as a SAHM of mostly little kids? Maybe you live way out of town or something?  Could you drop your mad money to $50 a month (or less) like others have mentioned? Household and Misc seem high - as a SAHM myself, I find that in the course of a year, you can actually make those "surprise" expenses not so surprising since they occur every year:-)

P.S. I'm in the con group for preschool :-/ sorry about that! Have raised a heap of kids without preschool -- so far, so good:-)






CindyBS

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Re: Case Study: Ridiculous Spending
« Reply #24 on: August 02, 2016, 04:58:25 PM »
I would highly recommend not dropping preschool unless you absolutely have to.

I work in an elementary school and without looking in the records, can usually correctly guess by the first week of Kindergarten which kids have not gone to preschool. 

Back when most of us went to school, 20,30,40 years ago - Kindergarten was used to prepare children for the demands of "real" schoolwork.  Thanks to Common Core and educational reforms, Kindergarten is real school. 

The curriculum is set up so that in the beginning of school that kids without what I would call "classroom" skills, things like having an authority figure other than mom or dad, knowing how to be in a large group of unfamiliar children, being away from home, lining up in a line to walk in the hall, raise his/her hand to talk, etc.  can struggle.  These are all skills that you cannot teach at home.   An outgoing extroverted kid who has been taught basic skills at home can do fine, but for the most part - I think the vast majority of kids do much better starting school if they have had preschool.


As for the case study, I agree with others.  Time to get new (used) cars.




CU Tiger

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Re: Case Study: Ridiculous Spending
« Reply #25 on: August 02, 2016, 05:03:05 PM »
I think Ketchup has a good head on his/her shoulders by asking questions about transportation needs before getting too emotionally involved in responding to the cars.


Preschool: $296 (As you are a stay at home Mother, why are you paying to put a child in Preschool? Is this usual? Also, is this monthly, or yearly? If yearly, never mind, I’m sure it’s worth it. If monthly, give it a hard look. You are staying home to look after the kids…so…look after the preschool aged ones as well.)

Are you 19 without children or something? How does one make a comment like that?

I am 50 and was asking the OP if she had considered the expense considering they have a lot of debt. All expenses are up for discussion - Not sure why it flew up your nose so bad. Good day sir or ma'am.

RetiredAt63

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Re: Case Study: Ridiculous Spending
« Reply #26 on: August 02, 2016, 05:10:57 PM »
I would highly recommend not dropping preschool unless you absolutely have to.

I work in an elementary school and without looking in the records, can usually correctly guess by the first week of Kindergarten which kids have not gone to preschool. 

Back when most of us went to school, 20,30,40 years ago - Kindergarten was used to prepare children for the demands of "real" schoolwork.  Thanks to Common Core and educational reforms, Kindergarten is real school. 

The curriculum is set up so that in the beginning of school that kids without what I would call "classroom" skills, things like having an authority figure other than mom or dad, knowing how to be in a large group of unfamiliar children, being away from home, lining up in a line to walk in the hall, raise his/her hand to talk, etc.  can struggle.  These are all skills that you cannot teach at home.   An outgoing extroverted kid who has been taught basic skills at home can do fine, but for the most part - I think the vast majority of kids do much better starting school if they have had preschool.


As for the case study, I agree with others.  Time to get new (used) cars.
That was what DD's kindergarten teacher told me too (I was back to work full-time after the first year, so daycare was essential).   Plus DD had a whole bunch of friends with her, all her friends from daycare, so the transition was that much easier.  As I said in another post, she even went part-time in the summer, which I had off, simply because she enjoyed it so much.  I was OK with that because it meant no issues with having a place the next fall, and it was only 2 days/week.

Too bad OP isn't in Ottawa, I know of a 2007 Mazda 5 hatchback with rear passenger sliding doors for sale for $6,000 CAN, excellent condition, 74,000 km.  If I were unhappy with my present car I would be buying it  ;-)

CU Tiger

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Re: Case Study: Ridiculous Spending
« Reply #27 on: August 02, 2016, 05:19:20 PM »
i sense some hysterical responses here.

people are allowed to lose their mind over(punch people in the face)  cars or credit card debt, but if someone points out the dissonance between being a stay at home mom, and paying for child care, now advice isnt helpful?

 i have said nothing derogatory. and people are using the internet to interpret tone.

if someone is paying for preschool for children during the school year, and they have a debt situation. i see two options, stop the pre school, or get a retail job during the school year.

mmm has an entire article on caring for his kid while using the himself and the world as a free learning resource.

I just reread my post, and I made lots of suggestions that I think were reasonable. Not sure why questioning child care makes me a 19 year old child-hating moron. For the record, alas, I am not 19. I do not hate kids or working moms or stay at home moms. The mustachian way is to question anything and everything.

A list of the debt:
mortgage
Educational loans
Two cars nicer than anything I have ever driven
Credit cards
Windows bought on credit

The first thing you do,when you are in a debt hole, for fuck's sake, is quit digging. Then you use all the tools in your arsenal to cut expenses. Or you can continue down the yellow brick road to even more debt.
« Last Edit: August 02, 2016, 05:26:25 PM by CU Tiger »

ShoulderThingThatGoesUp

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Re: Case Study: Ridiculous Spending
« Reply #28 on: August 02, 2016, 05:28:59 PM »
I would highly recommend not dropping preschool unless you absolutely have to.

I work in an elementary school and without looking in the records, can usually correctly guess by the first week of Kindergarten which kids have not gone to preschool. 

Back when most of us went to school, 20,30,40 years ago - Kindergarten was used to prepare children for the demands of "real" schoolwork.  Thanks to Common Core and educational reforms, Kindergarten is real school. 

The curriculum is set up so that in the beginning of school that kids without what I would call "classroom" skills, things like having an authority figure other than mom or dad, knowing how to be in a large group of unfamiliar children, being away from home, lining up in a line to walk in the hall, raise his/her hand to talk, etc.  can struggle.  These are all skills that you cannot teach at home.   An outgoing extroverted kid who has been taught basic skills at home can do fine, but for the most part - I think the vast majority of kids do much better starting school if they have had preschool.

I hated elementary school so much, I'm going to have such a hard time making my children go. I know they have to. But ugh. Lining up in the hall and dealing with all the nonsense. The memory of it makes my skin crawl.

mm1970

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Re: Case Study: Ridiculous Spending
« Reply #29 on: August 02, 2016, 06:31:30 PM »
Yeah, for me it's:
1.  Mad money.  Cut it in half.
2.  The cars.  You can't keep them both.  I'd sell the minivan and get a used one.


I'm a fan of baby steps.  Start with those.

1967mama

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Re: Case Study: Ridiculous Spending
« Reply #30 on: August 02, 2016, 06:46:21 PM »
I would highly recommend not dropping preschool unless you absolutely have to.

I work in an elementary school and without looking in the records, can usually correctly guess by the first week of Kindergarten which kids have not gone to preschool. 

Back when most of us went to school, 20,30,40 years ago - Kindergarten was used to prepare children for the demands of "real" schoolwork.  Thanks to Common Core and educational reforms, Kindergarten is real school. 

The curriculum is set up so that in the beginning of school that kids without what I would call "classroom" skills, things like having an authority figure other than mom or dad, knowing how to be in a large group of unfamiliar children, being away from home, lining up in a line to walk in the hall, raise his/her hand to talk, etc.  can struggle.  These are all skills that you cannot teach at home.   An outgoing extroverted kid who has been taught basic skills at home can do fine, but for the most part - I think the vast majority of kids do much better starting school if they have had preschool.

I hated elementary school so much, I'm going to have such a hard time making my children go. I know they have to. But ugh. Lining up in the hall and dealing with all the nonsense. The memory of it makes my skin crawl.

They don't have to go, ShoulderThingThatGoesUp! I'm a former elementary school teacher who has been homeschooling my passel of kids from the start. We have four homeschool graduates so far. Two of the four are now attending university and the other two have permanent, full-time jobs doing work they enjoy with benefits and excellent salaries.

FIREby35

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Re: Case Study: Ridiculous Spending
« Reply #31 on: August 02, 2016, 08:08:53 PM »
OP -

Don't be afraid. Cheap cars do the same thing as expensive ones. They just cost less.

I know you think you had a good justification for the windows and the deed is done. But next time you have a home repair, ask if you can fix it yourself. Even if you don't know how, give it a try. The worst you can do is destroy something you were already contemplating throwing away. The windows struck me specifically because I'm in year 2 of a project to refurbish A LOT of windows in my 100 year old home. But, I've learned how to fix pulley/weight systems, glaze windows, replace broken glass, abate lead, sand and stain. You and your husband can do it! Or, at least you can try and fail and, sometimes, come up a winner :)

Also, cancel cable. Once its gone, you realize how worthless it is.

Otherwise, I agree with everyone else's advise. Pay your debts and don't take any new debts. Your income is enough to fix all your past mistakes. One step at a time - you can do it.


PharmaStache

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Re: Case Study: Ridiculous Spending
« Reply #32 on: August 02, 2016, 08:45:07 PM »
I'm all for preschool, but that amount is almost as much as I spend to send my 4 year old to daycare full time!  Isn't there anything cheaper in your area?

meandmyfamily

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Re: Case Study: Ridiculous Spending
« Reply #33 on: August 02, 2016, 09:12:58 PM »
I am another one that votes for no preschool!  We haven't sent any of our 4 and they have done great!

Secret Agent Mom

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Re: Case Study: Ridiculous Spending
« Reply #34 on: August 02, 2016, 11:07:49 PM »
Welcome, it's great that you are here asking for advice :)  I would cut the preschool and look for other options in your area.  There are mom groups, library time, and the park for socialization.  I have 4 kids that went to Kindergarten without preschool, and all were just fine.  We are now homeschooling, but I am sure the last one would have been just fine, too.  It's not a necessity, and if you are serious about getting rid of the debt, that $300 a month can go a long ways... plus the gas getting there and back... and maybe a snack along the way b/c you are hungry... and a few cute outfits b/c she's in preschool and you don't want to her to look unkempt ;)  It snowballs!  Add up the TOTAL cost- your gas bill seems high.   Also, check to make sure you cannot go to the public school's PreK or Head Start if this is really important to you.  If it's free, then sign up.  If it costs, just pass and enjoy a nice year with your kiddos :)

You say she's also in dance (you just threw this in there with diapers)?  This is an expensive sport, and it will just get more expensive as she gets older.  Stop and ask yourself if this is really the lifestyle you want. Does she really get that much out of it, or is it more of an image/status thing?  Stop and go back over the last year- add up dance outfits, shoes, classes, recitals, ect.  Now, add this to the daycare and realize that this money could have gone to paying off debt to make her parents more stable financially.  Does a child old need this?  Would she rather have less-stressed parents, and parents with a paid off house/cars when she's in high school and college?  This is what you are trading- your financial future for classes she won't remember.  She will have pictures and maybe a video you will never watch.   It's not a matter of a few hundred dollars a month, it's a matter of a lifestyle you are buying into that says you 'need' to put your child into these activities.   

I would take the emergency fund and pay off the CC immediately.  I would possibly keep *one* of the newer cars, sell the other one and use the rest of the savings if you need to cover the loss, or to buy a new (used) car.  I'd stop the dance classes and the preschool- diapers I'm thinking are maybe $40/mo (I used cloth, but that might be a bit further than you are willing to go right now)- so instead of $500 in kids spending, you are at $50- savings of $450- multiply by 12!  You will be saving a LOT of money.

What do you buy w/ Mad Money?  Would you both be willing to go to $50/mo?  That's a savings of $300 you could throw at those student loans or the car loan. 

Are you really only spending $600.mo for groceries?  SOmehow, considering the rest of your spending this seems low (unless the Mad Money is for eating out?)  Same for the household stuff- what is this and how much are you really spending?  I thnk you need to do a little more research into this category.  If you are only spending $600/mo on groceries- GREAT!!!

Where are your clothes?  They are not budgeted for- are they mom's mad money?  Just put on the Discover card and rolled into other debt? 

Good luck :)

cchrissyy

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Re: Case Study: Ridiculous Spending
« Reply #35 on: August 02, 2016, 11:44:45 PM »
I agree with those who say you are not doing too bad, and with the new higher income you can really knock out a lot of the debt as long as you don't overspend.

I would - TODAY -  take savings to get rid of that 9.9% cc debt. Easy choice. Then I would cut or freeze the card. Don't close the account, it is good for your credit score to show an older account still open, and to have unused credit. And since you tend to charge it back up, stopping that habit will be a big helpful step for you guys.

Really question the internet/cable bill. Consider Hulu or Netflix or other online TV. Internet alone should be half that much. Change companies for a new customer special, if that helps.

Definitely look in to the car thing. I assume you need the minivan for the 3 kids around town stuff, and the whole family on the weekend stuff.  But is the Accord for commuting?  You could sell it and use your remaining savings to buy a much cheaper commuter that was still comfortable and safe enough.

This fall, when the window payment and 2nd car payment are gone, you will have nearly $2k per month of breathing room, and you can get aggressive about paying off the student loan.

Another thing I don't see mentioned is you only have 1 IRA, funded 1 year. Make it a clear goal to fund IRAs for BOTH of you for 2016.

Villanelle

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Re: Case Study: Ridiculous Spending
« Reply #36 on: August 03, 2016, 12:34:02 AM »
How badly do you want to change your situation. Ask yourself it you really want to change it, or you just want to think about changing it. 

You say you are stuck with the cars, but then provide no additional information.  It's very unlikely that there is no way out.  You might ton tike the options, but recognize that they are options and that you are rejecting them even though they would save you money. Even if you have to bring money to the table (which you could save up pretty quickly once the window payment is gone, if nothing else), you very likely would be better off doing that and then buying a car for less than $5000.  You'd also likely save money on insurance and gas, in addition to not having those massive car payments. Sell the accord, by a 2000 Toyota Echo (for example) with low mileage for about $4000.  Better gas mileage, cheaper insurance, and within a very short time, no car payment, even if you make nothing on the sale of the Accord. Also, cut the amount of driving you do, especially since you have a car that likely gets mediocre at best gas mileage.  Every time you enter the car, you need to ask yourself if it is 100% necessary, and what trips you need to do in the next week that can be combined. 

Also, we've established that pre-school is a must for you. So be it, but first you need to make sure you own that as a choice you are making.  (I'm not saying you aren't owning it.  I can't tell one way or the other.)  If that's your Thing, fine, but you need to realize that you've sort of used up your One Big Thing, and then everything else needs to be on the table.  If preschool is it, then in your shoes, I'd say cable needs to go, and that your "mad money" needs to be cut by at least 2/3.   Dance?  Again, you've decided that preschool is your non-negotiable. You said you'd rather trim massive amounts than give this up. Great.  But that means you actually need to trim those amounts, and be a bit ruthless.   Also, you said your child was in a 2 hour program last year and now its 12.  Is there some compromise?  Perhaps 2 days a week for 6 hours total instead of 4 for 12, so that she gets that socialization and you get a breather, but you save a few hundred dollars?

lhamo

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Re: Case Study: Ridiculous Spending
« Reply #37 on: August 03, 2016, 01:20:14 AM »
I don't want to be overly morbid here, but the huge elephant in the room is your DHs inability to get life insurance and your reliance on his sole income.  I know it probably doesn't make sense for you to go back to work with little ones at home, but I hope you are thinking if ways to increase your income/get your career restarted as they need you less. You would get something from social security while the kids are minors and you are caring for them, but it wouldn't cone close to covering your current expenses.

Reducing your debts/spending in the areas others have mentioned would help you build wealth more rapidly and eventually get to the point where the lack of life insurance isn't such a big red flag.

HairOnFireHousewife

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Our To Do List
« Reply #38 on: August 03, 2016, 07:25:01 AM »
Thanks everyone for the insight and recommendations!

To Do List:

1. Get our cars valued to get a better grasp of how far underwater we are with our vehicles.
2. Miscellaneous & Gas Money - I started a journal so we can track every dollar for the month of August.
3. Drop Cable
4. Life Insurance - I agree that this is an issue. My husband should be eligible to apply again in less than 6 months. Regarding my insurance, I recently had another quote and it was around the same cost. Is there a company you'd suggest contacting for better rates? I think I used SelectQuote.
5. Pay off our Credit Card today. Freeze cards.
6. Groceries - We do spend $600 a month but our Mad Money has allowed us to go out to eat as well. We buy a half cow and shop at an inexpensive grocery store, so we will just cut out our restaurant spending and save a lot!
7. Dance - This is the first activity she has participated in and it's $30 per month. (Recital outfit is $50). I wouldn't say it's for "image", she just likes to dance and it's with some of her friends at a comparatively inexpensive studio. If I budget this out of our $200 kids money, do you think it is still too much? I hate making our kids suffer for our stupidity. Or if I combine that with slashing the adult spending money?
8. Fund both IRA's for 2016. Do you think I should fund this after we pay our Window & CC? Also, someone asked why Roth IRA's. Any additional information about this would be helpful.
9. Some people have suggested me thinking about working. I didn't mention it before because it is in the early stages but I did create a company for a side hustle. It has been doing better than I anticipated but I have been leaving all of the funds in my business account. I would think, after tax I should be able to take about $3K in December. Suggestions of where to funnel this money?
10. Student Loans - After paying our Windows & CC, should we be funding an emergency fund? Is there a number that you think we should target? Then start aggressively paying the student loans?

Thanks again!

vivophoenix

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Re: Case Study: Ridiculous Spending
« Reply #39 on: August 03, 2016, 07:30:48 AM »
not sure if anyone has mentioned it you should refinance your loans with earnest or sofi.

I get 3.3%

cherio

little_brown_dog

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Re: Case Study: Ridiculous Spending
« Reply #40 on: August 03, 2016, 09:22:56 AM »
I think if you get rid of the mad money, the cc debts, and cut back in other areas as you listed on your to-do list, there is probably no reason to get rid of dance. Physical activity is wonderful for health, and the cost is minimal compared to the gains you will make if you really knuckle down on the spending in other areas. I don’t think your situation is so extreme that you need to withhold $30 dance from your child.

As for the debt vs retirement savings, there are different ideas on this based on your values. For me, I hate debt, even if it is 0-2% interest debt. I feel like it traps me, and I can’t stand feeling obligated to pay every month. This is probably because I spent the last 5 years eliminating 100k in student loans, which left a really bad taste in my mouth. I never want to feel owned in that way ever again, even if the interest rate is minimal. So I personally would pay off all debts as quickly as possible, and then go for the IRAs. However, mathematically, you will almost certainly make a historical gain of >2% on your retirement accounts so technically it is “smarter” to put any excess money towards retirement and slowly pay down the low interest debts. Note however, this method only works if your debts remain at a very very low interest rate. If they jump up to >4-5% the table turns and debt elimination usually becomes the more appropriate choice. So, if for example that 0% Window debt suddenly jumps to 18% once you hit the year mark (I’m assuming the 0% interest was a promotional thing for a limited period?), then it would make sense to eliminate the remainder as quickly as possible in the months before the rate increases. It is unlikely that you will make an 18% return on your retirement savings, but you will certainly lose 18% in mandatory interest payments.

I would personally build up the efund before going on a full student loan assault, particularly if you cut into it to eliminate your Discover debt. As a one income family, you have no wiggle room if your husband gets sick, hurt, or loses his job. We keep 3 months of expenses on hand as an efund. Our monthly expenses are a little under 5k (HCOL area) so that means a $15k efund. For us that feels sufficient, given that my husband has a very stable job and I also generate a small side income. Others here feel nervous with anything less than 6mo expenses in an efund.

meandmyfamily

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Re: Case Study: Ridiculous Spending
« Reply #41 on: August 03, 2016, 09:40:20 AM »
Great job!  We have a 12 year old in dance and it start off not that expensive but you don't want to know how much we spend now!!!  That said everyone spends on different priorities!  Keep up the good work!

mm1970

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Re: Case Study: Ridiculous Spending
« Reply #42 on: August 03, 2016, 02:00:24 PM »
I'm all for preschool, but that amount is almost as much as I spend to send my 4 year old to daycare full time!  Isn't there anything cheaper in your area?
$296 a month??

Where I live, I pay $320 a WEEK for my 4 year old, full time.

mm1970

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Re: Case Study: Ridiculous Spending
« Reply #43 on: August 03, 2016, 02:02:39 PM »
I agree with those who say you are not doing too bad, and with the new higher income you can really knock out a lot of the debt as long as you don't overspend.

I would - TODAY -  take savings to get rid of that 9.9% cc debt. Easy choice. Then I would cut or freeze the card. Don't close the account, it is good for your credit score to show an older account still open, and to have unused credit. And since you tend to charge it back up, stopping that habit will be a big helpful step for you guys.

Really question the internet/cable bill. Consider Hulu or Netflix or other online TV. Internet alone should be half that much. Change companies for a new customer special, if that helps.

Definitely look in to the car thing. I assume you need the minivan for the 3 kids around town stuff, and the whole family on the weekend stuff.  But is the Accord for commuting?  You could sell it and use your remaining savings to buy a much cheaper commuter that was still comfortable and safe enough.

This fall, when the window payment and 2nd car payment are gone, you will have nearly $2k per month of breathing room, and you can get aggressive about paying off the student loan.

Another thing I don't see mentioned is you only have 1 IRA, funded 1 year. Make it a clear goal to fund IRAs for BOTH of you for 2016.
This is location dependent.  Internet only in my town is $95.

PharmaStache

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Re: Case Study: Ridiculous Spending
« Reply #44 on: August 03, 2016, 03:40:48 PM »
I'm all for preschool, but that amount is almost as much as I spend to send my 4 year old to daycare full time!  Isn't there anything cheaper in your area?
$296 a month??

Where I live, I pay $320 a WEEK for my 4 year old, full time.

$416/month, plus I get like 40% back as it's tax deductible.  The price is regulated so it's the same all across my province.

Everyone I know complains that it's too expensive!  I just laugh because I know what people pay in other places...

ChairmanKaga

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Re: Case Study: Ridiculous Spending
« Reply #45 on: August 03, 2016, 03:53:35 PM »
The basic Google Fiber plan, which is 100MBPS, is only $70 here in Austin. You can get cheaper - I think AT&T and TW both have 5-7MPBS plans for about $25-30 a month. We were paying $75 for 25MPBS thru AT&T.
Haven't had cable in 6 years. No landline for 10. Miss neither.
Get rid of the cable. You don't need it.

1967mama

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Re: Case Study: Ridiculous Spending
« Reply #46 on: August 03, 2016, 03:59:31 PM »
An OTA antenna for 30 bucks at Best Buy has been a great addition to our cable free life. Looking forward to watching local coverage, in HD, of the Olympics :-) We get about 4 good channels.

csprof

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Re: Case Study: Ridiculous Spending
« Reply #47 on: August 03, 2016, 10:06:36 PM »
It's the cars and home improvement. You've gotta change that. If they're not too far under water, sell them and take the loss and buy two junkers. That's the only way out.

Also, $27/month for $500,000 of life insurance for a 30 year old female is ridiculous. My wife is 32 and we pay $9.50 for a 30 year term policy. You need to go get a couple new quotes.

It's whole life, not term.

But, in general, whole life is a terrible idea, unless you've very, very carefully selected it as a part of an overall financial planning strategy for a very specific reason.  OP, why whole life, instead of term?  In general, whole life is substantially more expensive than term - if you have a concrete horizon for being FI, then you don't need term that extends much beyond that.

Bee21

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Re: Case Study: Ridiculous Spending
« Reply #48 on: August 04, 2016, 03:48:03 PM »
First I thought you were exaggerating that your hair is on fire, but reading through this, you are right, as a single income family with these debts and  expenses, you are a paycheck away from financial disaster. I would be furiously slashing expenses for a few months until I can build up a buffer. Think of it as a temporary situation. A few months, and life will be much better next year. That would include preschool ( reduce it to one day a week), the food (reduce it for a few weeks if you can, though it is low enough, maybe have a 2 week fridge/pantry challenge), get rid of the mad money, and try to sell those cars. Driving a new car doesn't add too much value to your life. If you are at home, all you need is a comfortable older vehicle you can drive to school, the shops, library. ( I bought mine used for 7k 8 years ago, and it is still going strong, all it needed was a new set of tyres).

And please reconsider how you use the mad money. Rename it for a start. 50$ each free spending $ should be enough. The rest should be labelled and allocated to something. The Windows for a start, this will speed up the process. I didn't see anything in your budget about clothes and vacations, you should have a budget for them, Christmas included, or else the money gets spent too freely. If you have 50$ for clothes, you think twice what you buy, if you have 200 mad money, you think that you can afford whatever. Look at your budget again and see what else is missing. Is it a spending plan, wishful thinking, or it realistically reflects actual spendings?

With that income coming in, you can turn it around by the end of the year. Give yourself a deadline and you will be able to do it easily. Is your husband on board?

Villanelle

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Re: Case Study: Ridiculous Spending
« Reply #49 on: August 04, 2016, 10:20:58 PM »
You asked about what to do with extra money (from your business or anything else).  Once the windows are paid, pay off the Discover card.  (Actually, I'd make some phone calls today--right now!--to see if you can transfer that debt to a card with a 0% introductory rate, and then move it to the bottom of the debt priority list, making sure you have enough cash and remember to pay if off before the rate expires.)

I'd also look in to re-financing the student loans.

I'd first use any cash to help me get out from under those insanely expensive cars, if it is needed. 
Then I'd pay off discover, if I couldn't get it to a 0% card.
Then I'd build up the emergency fund.  I wouldn't suggest this for everyone, but you are a single income family with very little cushion.  I'd want 3 months bare bones expenses as a minimum. 

So I'd add to your to-do list

Then I'd fund another IRA (I'm the wrong person to ask about Roth or Traditional, but there are plenty of experts here).

11) Find 0% offer for Discover balance transfer
12) Re-fi student loans
13) Get rid of the whole life policy and get a term policy. 

And if you actually do all the things on your list, I think keeping dance is fine, or at least it would be according to my priorities and values.