Author Topic: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!  (Read 10690 times)

MountainGal

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CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« on: September 29, 2014, 10:57:05 AM »
New, desperate mustachian here.  ADDED:  I primarily posted this for advice on how to start investing for retirement and understand I'll be debt free shortly.

Income: Self-employed insurance sales, 46, average $2,600 a month net after business expenses, plus a varying annual bonus paid in April, married, no kids, DH and I keep everything separate.  Bankruptcy discharged 2010.  Just as with many insurance agencies, business was down 40% after the Great Recession, and has slowly been recovering.  During the decline, I tried everything, including applying for a different job.  I live in a small town, where professional jobs for females are limited to banking, real estate and insurance.  When I moved here 12 years ago, I took a 50% reduction in income.

I am commission only, and my month to month income varies hence the $2,600 average.  I receive a commission check once a month, and therefore grocery shop and pay bills once a month.

Current monthly personal expenses:
Mortgage/taxes/ins $770 (my half, refi'd earlier this year to a 30 year fixed at 3.75%, includes PMI)
Gas/Elect $130 average
Water/sewer/trash $90 average
Auto ins (liab only, 13 year old vehicle): $31/mo.  My commute is just over a mile.  I don't bike or walk because I need my vehicle for client visits and business errands.
Life/LTC/AD&D ins:  $94/mo
Gas:  $40
Food/HBAs/Cleaning supplies:  $200 (DH supplements this during the month with fresh fruit, eggs, whatever else we might need, and his lunch snacks)
Cell (I deduct this via a Schedule C):  $85 (just went on a smart phone data plan a few months ago for work, which yes, I am face punching myself for)
School loan:  $75/mo $2,850 balance *9%*interest
Care credit (dentist-had some major, urgent dental issues earlier this year) $1,350 0% interest until next spring, I pay $50/mo
Cap One card:  $1,280 19% interest (This started out at 0%, then increased to 19% after the intro period.  I know, another punch), I pay $50, or more when I am able.
________________
Average monthly expenses:  $1,615/month + $125/mo for estimated quarterly taxes.

Earlier this month I called my school loan company asking for a deduction in interest rate if I put it on auto pay.  No dice.  I then called Cap One and asked for a reduction in interest rate.  Also no dice.

I am so frugal I squeak.  No new clothes.  A haircut once a year (it's long) using birthday money.  I exercise at home.  Nothing else that I know of can be squeezed from this turnip.  I do allow myself $20/mo spending for coffee/lunches with friends.

DH pays for my health insurance, and also the WiFi and satellite (he's cancelling the latter next month).  He takes care of (pays for!!) home maintenance, tools and supplies.  He brings home $1,800 net twice a month from job 1, and IDK for job 2.

Emergency fund, me: $95 in savings, $30 in the piggy bank.  We have a $600 cash stash.  Other than this, no IRA, 401K, nada.  Zilch.
Emergency fund, DH:  He has some, but IDK exactly how much.  He does have over $7,500 in his 401K.

Specific Question(s):  How do I expedite retirement savings to avoid becoming a bag lady?  My 64-year-old mother has $7,500 in her 401K and That.Is.It.  I won't even go into how screwed up her priorities are.  Someone suggested to me opening a SEP-IRA because annual cash investments can include more than a Traditional or Roth....?  My ultimate goal is to increase my savings rate to 50% next year.

Thank you in advance for your suggestions and expertise.
« Last Edit: September 29, 2014, 04:04:52 PM by MountainGal »

PloddingInsight

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #1 on: September 29, 2014, 11:11:44 AM »
You are making roughly $31k/yr.  That is not a lot.  If you can't increase your income and you want to save, you need to be living a radically minimal lifestyle.

That needs to begin with the large fixed expenses.  Does your spouse make more money than you?  Your total "rent" (770x2) is $1540!  For two people with relatively low incomes, in a small town, that seems really high!  Can you downsize?  If the spouse is not inclined to downsize, can he cover a bigger portion of the "rent", since you are staying in a bigger place to please him?  Something needs to change there, I'm not sure what.  You have to communicate about it.

Maybe the first question is:  is your spouse into MMM?


justajane

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #2 on: September 29, 2014, 11:15:39 AM »
Simple answer: you need more income.

I apologize for my curtness - currently holding a napping baby and can only type with one hand, but that would solve most of your problems. I know, I know. Easier said than done, especially in a small town.

« Last Edit: September 29, 2014, 11:18:47 AM by justajane »

PloddingInsight

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #3 on: September 29, 2014, 11:18:39 AM »
Are your non-debt expenses really only $1440 a month?  If so, you have over a grand a month to put towards debt, right?  So your credit card debts will be paid down in less than 3 months, right?  Just want to make sure these numbers are correct.  Did you forget something in the budget?

If that all is right, maybe you're doing fine.  You would expect to have a 45% savings rate after paying down all your debts, which should be doable in about 6 months.

MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #4 on: September 29, 2014, 11:18:50 AM »
You are making roughly $31k/yr.  That is not a lot.  If you can't increase your income and you want to save, you need to be living a radically minimal lifestyle.

That needs to begin with the large fixed expenses.  Does your spouse make more money than you?  Your total "rent" (770x2) is $1540!  For two people with relatively low incomes, in a small town, that seems really high!  Can you downsize?  If the spouse is not inclined to downsize, can he cover a bigger portion of the "rent", since you are staying in a bigger place to please him?  Something needs to change there, I'm not sure what.  You have to communicate about it.

Maybe the first question is:  is your spouse into MMM?

We made $107,000+ gross last year.  My net above is after my business expenses, which average $900/mo.  Our mortgage plus taxes and insurance is about the same we would be paying in rent here.

He is slowly coming around to the MMM lifestyle.  :)

MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #5 on: September 29, 2014, 11:23:31 AM »
Are your non-debt expenses really only $1440 a month?  If so, you have over a grand a month to put towards debt, right?  So your credit card debts will be paid down in less than 3 months, right?  Just want to make sure these numbers are correct.  Did you forget something in the budget?

If that all is right, maybe you're doing fine.  You would expect to have a 45% savings rate after paying down all your debts, which should be doable in about 6 months.

Yes, my non-debt expenses are really only $1,440.  So far, any extra I've made this year I've put toward debt, for a total of $4,845 according to my meticulous excel spreadsheet.  I did pay for a weekend away for our anniversary, and for two birthday celebrations, but that is it this year.

And, thank you for your encouraging words in your last paragraph.  Except when discussing our financial status with DH, I've been internalizing this panic for quite some time.

MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #6 on: September 29, 2014, 11:24:29 AM »
Simple answer: you need more income.

I apologize for my curtness - currently holding a napping baby and can only type with one hand, but that would solve most of your problems. I know, I know. Easier said than done, especially in a small town.

No worries, I've got a thick skin.  Congrats on the baby.  :D

PloddingInsight

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #7 on: September 29, 2014, 11:30:47 AM »
According to the classic "Shockingly Simple Math" post ( http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ ) a 45% savings rate means you must work about 19 years.  46 + 19 = 65.

So you're on track for retirement, just barely.  You're not on track for early retirement, though.  And there's basically no room for error.

Quote
Our mortgage plus taxes and insurance is about the same we would be paying in rent here.

Does this mean rent for the same size place you have now?  How big is it?  Can you find something smaller?  Alternatively would your husband, who makes 2/3 of the total income, be willing to pay 2/3 of the cost of the house?  Housing is the biggest item in your budget, and a meaningful change there would make a bigger difference than completely eliminating one of your other expense categories.

Cpa Cat

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #8 on: September 29, 2014, 11:35:04 AM »
Can you explain the difference?

You have $2,600 in income per month.
And $1,615 in expenses per month.

Why are you feeling so squeezed? Don't you have almost $1,000 to spare each month?

Am I misunderstanding something?

MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #9 on: September 29, 2014, 11:38:43 AM »
According to the classic "Shockingly Simple Math" post ( http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ ) a 45% savings rate means you must work about 19 years.  46 + 19 = 65.

So you're on track for retirement, just barely.  You're not on track for early retirement, though.  And there's basically no room for error.

Quote
Our mortgage plus taxes and insurance is about the same we would be paying in rent here.

Does this mean rent for the same size place you have now?  How big is it?  Can you find something smaller?  Alternatively would your husband, who makes 2/3 of the total income, be willing to pay 2/3 of the cost of the house?  Housing is the biggest item in your budget, and a meaningful change there would make a bigger difference than completely eliminating one of your other expense categories.

Thank you for the link and calculations.  :)

Yes.  Same size.  It's a 3 BR/2.5 BA.  We love the interest write off.  I'll propose it this way:  We can either move to a place with no yard, garage or shed for him, or ask him to pay the 2/3.  :D

MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #10 on: September 29, 2014, 11:47:17 AM »
Can you explain the difference?

You have $2,600 in income per month.
And $1,615 in expenses per month.

Why are you feeling so squeezed? Don't you have almost $1,000 to spare each month?

Am I misunderstanding something?
I know, confusing, right?  ;)

Because my commission check (before my office expenses) fluctuates each month, (from $2,350 to $4,100 so far this year), the numbers in my OP are averages.

So for instance, in May, I made $2,350 gross.  I then had to pay office rent, land line, my monthly E & O insurance payment, and a few other office expenses resulting in $1,412 income for me.

On the flip side, in June my gross commission check was just over $4,000, so I was able to put nearly $1,000 toward debt that month.

Separately, my $1,400 bonus in April went toward debt.

dandarc

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #11 on: September 29, 2014, 01:07:13 PM »
I really think the key in your situation is to stop thinking of things (income, expenses, etc) as 'his' or 'hers', and start thinking of everything as 'ours'.  You don't necessarily have to combine accounts, but both heading in the same direction is critical for your relationship.  Single person with 31K in after tax income who has roommates is a very different scenario than a married couple with about 70K after tax.  It seems like the numbers should add up the same, but often they don't - you might not be aware of areas where he has low-hanging fruit in terms of reducing expenses and vice-versa.

What are you going to do 20 years from now if you wind up with a sizable nest egg because you've made this a priority to your budget, and he winds up with very little because he frittered it all away over the years?  I'd think there would be a lot of resentment in that scenario.  Get on the same plan and you'll be shocked at how fast you can progress.

PloddingInsight

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #12 on: September 29, 2014, 01:25:50 PM »
Yes.  Same size.  It's a 3 BR/2.5 BA.  We love the interest write off.  I'll propose it this way:  We can either move to a place with no yard, garage or shed for him, or ask him to pay the 2/3.  :D

OK, I am faxing you that facepunch you requested right now.

Terrestrial

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #13 on: September 29, 2014, 01:29:17 PM »
I don't think your situation is that bad.  I understand your income varies but if the 2600 is really an accurate 'average' then it shouldn't matter.  You need to bank more in the months your commissions are fat to cover the months that are lean and that will smooth out your cash flow.  That should still leave you with about 1k/month of debt reduction/savings power.  You have pretty minor debt in the scheme of things, about 5500 across all your accounts isn't horrible.

The interest rate for the CC is a bit of a kicker but I wouldn't worry too much about it since the balance is so small, buckle down and pay it of in ~1.5 months.   If your husband is amenable and has the cash, ask him for the 1,280 to just get rid of it and not pay any excess interest, then pay him back over the next month or two, with maybe a nice dinner thrown in as 'interest'.  After that the student loan should be gone in another few months, then the dental bill.  Overall you should be debt free and starting to save in about 6 months, not bad!

I second some of the other posters that your biggest problem isn't your debt (pretty small) or even your savings rate (1k on 2.6k income isn't that bad...~40%), it's not communicating with your husband.  You don't have to combine everything and separate accounts are fine if that's what works for you guys, but you at least need to have a convo IMMEDIATELY about where you both stand.  The fact that you don't really know how much he has in his accounts, what his total income is, etc, probably needs to change.  You should at least have everything out on the table and then figure out where to go from there.  If you want to start saving and he's not on board, that is fine too (though not ideal), but make it crystal clear that when you save enough to retire and he hasn't, he's still going to be responsible for his own half of the bills and if he has to keep working, so be it.

Cpa Cat

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #14 on: September 29, 2014, 01:36:51 PM »
... resulting in $1,412 income for me.

So in a month like this, where you fall short of your expenses, are you putting the extra on the credit card? Or does your husband make up the difference?

I'm not convinced that separate finances makes a lot of sense when one person has widely fluctuating income.

For example, your budgeting might be simplified if you used HIS income for day-to-day expenses and your entire income for mutual savings/mutual debt repayment.

ZiziPB

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #15 on: September 29, 2014, 01:38:56 PM »
Quote
$2,600 a month net after business expenses

Does that include taxes?  Do you pay qaurterly estimated payments?

frugaliknowit

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #16 on: September 29, 2014, 01:44:32 PM »
Explore other lines of work.  Commission sales is not paying you much.  I understand, I was a realtor in a previous life.  I was about average in sales.  Guess what, average realtors starve.  You can do much better!!

MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #17 on: September 29, 2014, 01:47:15 PM »
I don't think your situation is that bad.  I understand your income varies but if the 2600 is really an accurate 'average' then it shouldn't matter.  You need to bank more in the months your commissions are fat to cover the months that are lean and that will smooth out your cash flow.  That should still leave you with about 1k/month of debt reduction/savings power.  You have pretty minor debt in the scheme of things, about 5500 across all your accounts isn't horrible.

The interest rate for the CC is a bit of a kicker but I wouldn't worry too much about it since the balance is so small, buckle down and pay it of in ~1.5 months.   If your husband is amenable and has the cash, ask him for the 1,280 to just get rid of it and not pay any excess interest, then pay him back over the next month or two, with maybe a nice dinner thrown in as 'interest'.  After that the student loan should be gone in another few months, then the dental bill.  Overall you should be debt free and starting to save in about 6 months, not bad!

I second some of the other posters that your biggest problem isn't your debt (pretty small) or even your savings rate (1k on 2.6k income isn't that bad...~40%), it's not communicating with your husband.  You don't have to combine everything and separate accounts are fine if that's what works for you guys, but you at least need to have a convo IMMEDIATELY about where you both stand.  The fact that you don't really know how much he has in his accounts, what his total income is, etc, probably needs to change.  You should at least have everything out on the table and then figure out where to go from there.  If you want to start saving and he's not on board, that is fine too (though not ideal), but make it crystal clear that when you save enough to retire and he hasn't, he's still going to be responsible for his own half of the bills and if he has to keep working, so be it.

Thanks.  Some info on DH:  He's 39, so 7.5 years younger than I.  He didn't think he would live this long.  Yes, I know, morbid, but his mom passed away when he was 25, and his dad passed 2 years ago next month.  His step-mom passed away earlier this year.  (The result was a $17.5K inheritance, which, under my father's suggestion, went into a CD.)  His dad and step-mom were  heavy smokers, and his mom was subjected to 2nd hand smoke for years.  Both of his grandfathers passed away early.

I do our taxes, so I know how much we brought in last year.

When first eligible for his 401K at his new job 2 years ago, I encouraged him to put in to at least his employer's match.  This weekend I reminded him again to max that sucker out.

I have seen his bank statements.  The only frivolous things, in MMMs eyes, are daily energy drinks and chewing tobacco.  He buys a lot of tools, but we write those off as part of his job.

MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #18 on: September 29, 2014, 01:47:56 PM »
... resulting in $1,412 income for me.

So in a month like this, where you fall short of your expenses, are you putting the extra on the credit card? Or does your husband make up the difference?

I'm not convinced that separate finances makes a lot of sense when one person has widely fluctuating income.

For example, your budgeting might be simplified if you used HIS income for day-to-day expenses and your entire income for mutual savings/mutual debt repayment.

No


MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #19 on: September 29, 2014, 01:48:36 PM »
Quote
$2,600 a month net after business expenses

Does that include taxes?  Do you pay qaurterly estimated payments?

No.  And, yes I do make the quarterly estimates.  I'll adjust my OP.

VirginiaBob

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #20 on: September 29, 2014, 01:59:18 PM »
Nothing wrong with being a bag lady.  Embrace it.

MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #21 on: September 29, 2014, 02:04:41 PM »
Nothing wrong with being a bag lady.  Embrace it.

LOL!  <<high fives>>

Seņora Savings

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #22 on: September 29, 2014, 02:07:50 PM »
Can you move somewhere else?  If you're sacrificing your career to be where you husband can earn more, separate finances do not make sense.  Particularly if you're living in more house than you can afford because your husband has expensive hobbies.  I live more frugally than most people around here, but I'm pretty sure I can say that one bathroom per person is enough.  Also, one extra bedroom/garage/shed per person is enough.

Also, I think a little more history would help out.  It's hard to give advice when your case study makes it look like your debts will be gone in three average months.  Do you have less or more debt than you did one year ago?

MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #23 on: September 29, 2014, 02:17:34 PM »
Can you move somewhere else?  If you're sacrificing your career to be where you husband can earn more, separate finances do not make sense.  Particularly if you're living in more house than you can afford because your husband has expensive hobbies.  I live more frugally than most people around here, but I'm pretty sure I can say that one bathroom per person is enough.  Also, one extra bedroom/garage/shed per person is enough.

Also, I think a little more history would help out.  It's hard to give advice when your case study makes it look like your debts will be gone in three average months.  Do you have less or more debt than you did one year ago?

No.  My business is in the same town where I live, a mile away.  Housing costs are higher elsewhere (we are in a bedroom community to a nationally known ski area).

DH does not have expensive hobbies.  He and I each own paid for ATVs and that is our recreation and he has a used Honda dual purpose bike.  The shed holds the garden/yard/ATVs, his garage holds his tools, workbench, etc.

I have less debt.  If all goes as planned, I will have paid off $8K debt this year.  (A personal loan and my school loan.)  So, less debt than last year.  I achieved accelerating my debt repayments by moving my office to save $275/mo on rent, among other things.

Primarily I posted my case study for advice on how to begin investing.  I'll adjust my OP accordingly.
« Last Edit: September 29, 2014, 02:19:55 PM by MountainGal »

MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #24 on: September 29, 2014, 02:23:09 PM »
Yes.  Same size.  It's a 3 BR/2.5 BA.  We love the interest write off.  I'll propose it this way:  We can either move to a place with no yard, garage or shed for him, or ask him to pay the 2/3.  :D

OK, I am faxing you that facepunch you requested right now.

Received.  Thank you.  :)

Jouer

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #25 on: September 29, 2014, 02:23:19 PM »
[side note]

Wait! His whole family died from tobacco and he chews tobacco?!!!??! I just....I don't....wow.

[end side note]


MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #26 on: September 29, 2014, 02:24:55 PM »
[side note]

Wait! His whole family died from tobacco and he chews tobacco?!!!??! I just....I don't....wow.

[end side note]

I know.  :( :( :(  At least he quit smoking.  I know.  :( :( :(

eta:  To be fair:  Not his whole family.  Just his dad and step mom for sure.  His mom died of cancer, never smoked, but we can conclude it was from second hand.  Unsure of how his grandfathers passed away.

Gone Fishing

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #27 on: September 29, 2014, 02:26:39 PM »
My guess is that you are overestimating income and/or underestimating expenses in your case study.  Go back and use 12 months of statements to figure out EXACTLY what your income and expenses were for the period.  I think you will be surprised by the numbers. 

Seems like you are comingling business and personal income and expenses.  Do not include business gross income/expenses in your personal budget, only the net income (profit).  You should have two budgets when you get done.  For example:

Business
Insurance Commisions:                                                 $3000
Office expenses:                                                       $900
Net Income:                                                                 $2100

Net Income (Take home):                                             $2100
Personal expenses/debt payments:                           $1600
 Amount remaing for savings/additional debt payments: $500               

Personally, I'd take the emergency money and put it towards the card balance. Then I would find some way, any way, to make a few extra bucks.  Babysitting on the weekends, staying late to chase an extra policy sale, second job at the grocery store running a checkout, anything.

How many sq ft is the house?

Do you pay 1/2 the utilities or all of them?

See what you can sqeeze out of your utilities.  Turn the heat down and the air up.  Turn off everything you can, all the time.  Turn your water heater down a few degrees.  Put CFLs in all your fixtures.  Can you take the trash to a drop off for free? 

It won't help much, but there are a few $ to be squeezed out of your food budget.  Oatmeal and potatoes are your friend.  Spend $10 on a shovel and a few packs of seeds and start a little garden. 

It is going to take quite a bit to get to a 50% savings rate.   


MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #28 on: September 29, 2014, 02:39:20 PM »
My guess is that you are overestimating income and/or underestimating expenses in your case study.  Go back and use 12 months of statements to figure out EXACTLY what your income and expenses were for the period.  I think you will be surprised by the numbers. 

Seems like you are comingling business and personal income and expenses.  Do not include business gross income/expenses in your personal budget, only the net income (profit).  You should have two budgets when you get done.  For example:

Business
Insurance Commisions:                                                 $3000
Office expenses:                                                       $900
Net Income:                                                                 $2100

Net Income (Take home):                                             $2100
Personal expenses/debt payments:                           $1600
 Amount remaing for savings/additional debt payments: $500               

Personally, I'd take the emergency money and put it towards the card balance. Then I would find some way, any way, to make a few extra bucks.  Babysitting on the weekends, staying late to chase an extra policy sale, second job at the grocery store running a checkout, anything.

How many sq ft is the house?

Do you pay 1/2 the utilities or all of them?

See what you can sqeeze out of your utilities.  Turn the heat down and the air up.  Turn off everything you can, all the time.  Turn your water heater down a few degrees.  Put CFLs in all your fixtures.  Can you take the trash to a drop off for free? 

It won't help much, but there are a few $ to be squeezed out of your food budget.  Oatmeal and potatoes are your friend.  Spend $10 on a shovel and a few packs of seeds and start a little garden. 

It is going to take quite a bit to get to a 50% savings rate.

I keep a to the penny detail about my income and expenses in excel.  Business and personal are separate.  For simplicity purposes, I'll use Jan-Sept:

Commissions $30,145 + $1,407 bonus = 31,552
minus
Business expenses $9,483 - $600 coop reimbursement = 8883
=22,669  / 9 months = $2,518.00

minus the $1615 personal expenses mentioned in my OP (am including my cell under personal, but can remove the $85 if necessary) =
$903

1740 sq ft house

Yes, I pay the utility bill.  DH gives me $$ toward it on higher usage months (summer/winter).  I have done everything I can think of/read about to reduce this.  Programmable thermostat, AC set at 74 when we are home, unplug EVERYTHING we don't use daily (extra lamps, etc.).  No free trash drop off options.  Our utility bill is much lower than local friends I've spoken with.  Like, $150+ a month lower.  Same with our water bill.

Actually, oatmeal and potatoes are not my friend-I follow a low carb lifestyle.  We have a small garden in the back and this year was the first year we are harvesting tomatoes, zucchini, and peppers.  I also coupon, and take advantage of our store's value card savings, including fuel points.

I like everyone's suggestions so far.  Keep 'em coming.

ETA:  Actually, to be completely accurate, I received a small, separate $100 bonus earlier this year.  It was also used to throw at debt.
« Last Edit: September 29, 2014, 02:51:18 PM by MountainGal »

MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #29 on: September 29, 2014, 02:55:33 PM »
So, we've established how much I bring in.  Now, what to do with it?  Open an IRA?  A SEP IRA?  Both? 

ZiziPB

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #30 on: September 29, 2014, 03:12:08 PM »
You still have not accounted for taxes.  I don't know how much you pay but I would assume that at least a portion of the $903 "excess" goes to taxes (income, FICA).

MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #31 on: September 29, 2014, 03:15:20 PM »
You still have not accounted for taxes.  I don't know how much you pay but I would assume that at least a portion of the $903 "excess" goes to taxes (income, FICA).

Ah.  Okay.  So $903 - $125/mo to put toward quarterly estimated taxes = $778 extra right now to throw at debt.  So, after the debt is paid off, how do I begin aggressively saving toward retirement?

dandarc

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #32 on: September 29, 2014, 03:37:37 PM »
Let me preface this by saying I'm not sure you are ready to start investing just yet - you can't handle credit (bankruptcy, carrying CC balance, borrowing money for dentist).  This is not necessarily bad, but you have to factor it in to your plans.  Because of this, you need a cash emergency fund, or you'll wind up not sticking to your investment plan, borrowing on CCs again, selling the retirement funds to pay for whatever - what if your car dies tomorrow?  So basically the first part of the Dave Ramsey plan:

0.  Get on same page - live on written budget - cut up credit cards - etc.
1.  $1,000 in bank ($600+ already!)
2.  Pay off debts - this should not take all that long with the low balances
3.  3-6 months emergency fund (maybe about 10K between you and your husband)?

I think you could be done with those things in about a year.  Once that is there, you'll want to run your options as to how to handle your investing - you do the taxes so you should be able to estimate pretty well the implications of Roth vs. Traditional for your income.  If you're serious about a 50%+ savings rate, and your income doesn't go up dramatically, you might want to look at an individual 401K - it allows a much higher contribution at your income than a SEP-IRA would, and allows for a Roth option, if you decide your tax rate is low enough to warrant that.  IRAs give you yet more space to work with.

Want to get there faster?  Make more money - you're in a fantastic job to do that.  Sales is a numbers game - take more calls per day, go out to pitch a few more potential clients every month, and you can increase the income.

Cheddar Stacker

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #33 on: September 29, 2014, 03:48:30 PM »
+1 to everything dandarc said with one change. Once the debts are gone I would start the individual 401K before the emergency fund buildup. Reduce your taxes in 2014 if possible. Any tax savings can go towards the EF. Read all the rules, because some plans must be paid by 12/31 while others allow until 4/15 or beyond if extensions are filed.

MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #34 on: September 29, 2014, 03:49:20 PM »
Let me preface this by saying I'm not sure you are ready to start investing just yet - you can't handle credit (bankruptcy, carrying CC balance, borrowing money for dentist).  This is not necessarily bad, but you have to factor it in to your plans.  Because of this, you need a cash emergency fund, or you'll wind up not sticking to your investment plan, borrowing on CCs again, selling the retirement funds to pay for whatever - what if your car dies tomorrow?  So basically the first part of the Dave Ramsey plan:

0.  Get on same page - live on written budget - cut up credit cards - etc.
1.  $1,000 in bank ($600+ already!)
2.  Pay off debts - this should not take all that long with the low balances
3.  3-6 months emergency fund (maybe about 10K between you and your husband)?

I think you could be done with those things in about a year.  Once that is there, you'll want to run your options as to how to handle your investing - you do the taxes so you should be able to estimate pretty well the implications of Roth vs. Traditional for your income.  If you're serious about a 50%+ savings rate, and your income doesn't go up dramatically, you might want to look at an individual 401K - it allows a much higher contribution at your income than a SEP-IRA would, and allows for a Roth option, if you decide your tax rate is low enough to warrant that.  IRAs give you yet more space to work with.

Want to get there faster?  Make more money - you're in a fantastic job to do that.  Sales is a numbers game - take more calls per day, go out to pitch a few more potential clients every month, and you can increase the income.

Thank you very much.  I have read the Dave Ramsey and his baby steps.  As my thread title states, I am scared about my lack of retirement funds, but absolutely get where you are going with your first statement.

I just learned there was such a thing as a solo 401K about 20 minutes ago on a different message site I read and agree this might fit my needs better.

I also agree about sales being a numbers game.  Sales were up over 9% last year vs 2012, and are projected to be up 15% this year vs last.

As mentioned in my OP, the recession hit my business very, VERY hard.  That being said, I am not one for making excuses and am absolutely committed to the 50% savings rate next year.  :)

Thanks again, dandarc.
« Last Edit: October 01, 2014, 02:13:37 PM by MountainGal »

MountainGal

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #35 on: September 29, 2014, 03:50:04 PM »
+1 to everything dandarc said with one change. Once the debts are gone I would start the individual 401K before the emergency fund buildup. Reduce your taxes in 2014 if possible. Any tax savings can go towards the EF. Read all the rules, because some plans must be paid by 12/31 while others allow until 4/15 or beyond if extensions are filed.

10-4. Thanks, Cheddar.  :)

bwall

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Re: CASE STUDY: Scared Straight, Hair Nearly Gone, Help?!
« Reply #36 on: September 29, 2014, 05:06:10 PM »
"Housing costs are higher elsewhere (we are in a bedroom community to a nationally known ski area)."

In the spirit of the other posters who said 'increase income'; is it possible to rent out a room in your house on Airbnb?  A guest one or two nights a week could bring in a few hundred extra dollars a month.