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.