EDIT: Editing to add more details and to redo budget based on feedback. Italicized is added.
I have to say that I know I made a lot of mistakes. Especially the student loans. All I can say is that I wish I knew then what I know now. I am very frugal but my husband isn't but he has been trying. I shared this blog with him and we are both ready to move forward.
I do understand that Retire in 7 years is not possible, but I feel the goal will keep me motivated.
Thank you for all the honest feedback! And sorry for it being long. I have a very detailed budget.
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Income: (Monthly)
Rental Home Income: 1125
Mine: BiWeekly After Tax, Accident Insurance, 401K: 1299
Spouse: Semi-Monthly after Tax, Health Insurance, HSA contribution: 1844
Credit scores are both about 675
TOTAL MONTHLY: 7,628.72 (includes rental income) 6,503 without rental income
Current expenses:
MONTHLY BILLS
Hulu 7.99 -> I am thinking of canceling. Used to use as cable in our previous house through our smart tv. But we can’t use anymore in our new home because Internet is too slow.
Cell Phone 170.43 $112.00 including reimbursement and having others pay for their line -> We pay for 3 people in our household and 1 for husband’s father ($10) and 1 for my grandmother ($18). 5 lines total. No landline, though I am considering getting since we have bad cell phone reception at home and may need for an emergency. This plan is actually really good, even compared with the suggested Ting or Republic Wireless. But we may be able to cut more here. I will detail our bill.
4 Lines for $100, unlimited talk and text with limited high speed but then slow speed 4G
3 phones have $7.99 Insurance. Is this worth keeping? We used this once. The phones stopped working and they sent us refurbished ones.
Extra 5th line $10.00
Extra 4G data for Spouse work $10 but his work reimburses $30 for cell bill
Lookout Security for Teenager's phone in case we need to track him down (happened once) and he will start driving soon $4.00
Internet/Satalite Television 84.00 -> First time having cable in over 10 years! We used to use Hulu through our TV, but the only option for “cheap” internet at our new home is DSL. So we had to get cable if we wanted to watch shows, which we do. This includes the Internet and Satalite cable (we can only get satalite where we live). This introduction price will go up by $60 in a few months. I think the internet without tv is about 55-65.
Internet 44.00 -> DSL if anyone knows of faster cheaper option for the middle of nowhere, please share.
Satalite Cable 44/97 (before/after discount) -> Plan to cancel or since my husband doesn't want to get rid of it because he wants to watch his football, he can pay out of his allowance. I told him that is his only two options.
Home Security System 47.00 -> Makes me feel safe. My husband wants to get rid of it, but I would have if we got a big dog instead of the free (but adorable) chihuahua he brought home! This is going!
Electric Bill 300.00 -> Ranges from $160 - $300 Where we live, we can't have the temp go above 80 degrees because of mold. But we keep it at 78 during the day and lower to 75 at night. We can improve by keeping it at 78 at night. I will also contact the electric company to see if we can improve on winterizing. We already have the best insulation. We can probably improve by adding tint to the windows. The structure is already well shaded with trees and front porch on the south. The side windows (east and west) need more shading.
Banfield 57.95 -> For two small dogs. I am going to cancel when the subscription is up. I am going to do my own shots and found a cheap vet about an 1.5 hr drive from here. Also, twice a year, we have a vet come to the local Walgreens for $5 shots. I will add another section in the budget for the dogs.
Netflix 8.60 -> Watching movies on our smart tv. Our satellite cable doesn't include HBO or cinemax. They both suck anyway. Keeping since we are getting rid of cable.
Auto Insurance 151.03 -> For 2 cars. We can’t currently shop for new one because my husband got a speeding ticket 6 months ago. We are going to have to wait till it passes 2 years for it not to count.
TOTAL: 827 Brought down to 615 savings of 212
Dogs
heartworm med: 100 per year
flea med: 100 per year
Other shots: (estimated) 100 per year
TOTAL (year/month) $300/$25
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OTHER EXPENSES
BiWeekly
Groceries 200
Family Fun 60 7.50 (we go to Tuesday discounted movies) Once a month
TOTAL 260 207.50 Biweekly
Primary Home Expenses MONTHLY
Water System
Salt 11.00 2 bags per month at $5.50 each
Clorine 6.00 1 bottle per month
Water Test 2.08 Yearly water test with county
Carbon Media 5.56 Change every 3 years
Parts 13.89 Every 3 years fix major parts
Inspect Septic 16.67 Once a year
Sub-Total 55.19
Lawn & Garden
Pest Control 6.25 Estimated for Ant powder, Wasp spray, Home defense spray
Termite Bond 16.67 Yearly
Gas for Lawn 20.00 Estimated for Gasoline for Equipment
Presure Wash 0.83 Liquid for cleaning
Sub-Total 43.75
Home Supplies
Caulking 1.25
Fridge Water Filter 8.33
AC Filter 10.00
Lightbulbs 4.17 estimated
Sub-Total 22.50
TOTAL 121.44
Monthly Money Put Aside for Family and Holiday Expenses (I am just redoing this part.)
Car Registrations 12.50
Kids Only
Summer Clothes 8.33 4.17
Winter Clothes 8.33 4.17
Hair cuts 16.67
Christmas Fund 32.92 25.00 This and their birthdays are the only time my kids get toys and we do make sure it is something they use and play with.
Fall Sport 18.33
PTA 1.50
School Clothes 25.00
School Events 12.50
School Supplies 8.33
Spring Sport 18.33
Summer Activities 15.00
Birthday’s Gifts and Party 25.00 8.33
Halloween 5.00
Thanksgiving 4.12
Travel
Nothing right now. But we want to put aside $2,000/year for summer vacation. This is at Zero right now.
TOTAL 238 178.95 PER MONTH (savings of 59.05) -> We put this aside in a separate bank account and draw from it as needed for only these items.
Any expenses that are needed for my husband and me (clothes, gas, gifts for each other, etc.), we pay for ourselves out of our own money. I will explain this later.
Expected ER expenses: (optional, if relevant) I haven’t worked the numbers yet, but I am sure we can more than get by with $30,000 a year if we had no mortgage or any other debt or kids. I do plan on working during retirement but mostly on my own businesses. I had a very successful business before but stopped because I wanted to grow my family and it wasn't easy to do with a family. I love to work and run businesses.
Assets:
$600, Employer Vangard, 401K, just started with my company 7 paychecks ago. They match 5% of 20%. This is 1% of my income.
I have 2 websites but I haven't worked with them in 2 years, so I haven't made an income on them in that time but it is costing me domain and hosting fees (about $500 per year). Domains have good age. (Currently a liability, but can be an asset. They used to pay for themselves.) I can bring this down by 275 by moving one of the sites to my other hosting account. That will bring this down from 80 to 50 per month. (saving of 30 per month) I can also work on making these money makers. I have gotten freelance work from them, I just need to put in the time.
Liabilities:
After feedback I am now able to put an extra $870 towards the CC payments monthly. I am still working to cut back more to increase this.
Primary Home: Worth 275,000, owe 245,000 with a 4.5% 30 year FHA mortgage with lifetime 250 per month MI. Would like to refinance to conventional. Total monthly payment with everything taxes, insurance…1950
Our current primary house is our dream home on a 6 acre farm. We got it at a great price and am not interested in moving. We are planning on getting to the point of growing food and we have chickens which give us eggs.
Rental Home: Worth 175,000, owe (total 215,000) 134,000 1st 30 year mortgage 6.5%, equity modified only paying 2% interest now, will end up being 6.5%in 2015 on 72,000 20 year loan. Rental income is $1125, but putting aside $150 out of pocket per month to cover difference and possible expenses and vacancy. Current renters want to buy it. Total montly payment with both loans 1250
Car 1: Owe 11,000, worth 5,300. Runs good and reliable but husband ran up the milage because of work having him go to an alternative location 2 hours away once a week. Monthly payments 363 at 8%.
Car 2: Owe 2,500, worth 7,700. Runs good and reliable. Good milage. Monthly payments 127 at 8%.
TOTAL CARS: 13,500
3 at same store CC: Total of 2,200 at 0% for the moment. Then 27% in Feb 2015.
1 other store CC: Total of 8,000 at 27%
TOTAL Credit cards: 10,500
STUDENT LOANS: Over 90,000! Monthly payment 860. The rates are between 3% and 6%. Most are 3%.
TOTAL MONTHLY DEBT PAYMENTS: 1,654
HEALTH COSTS:
We pay a high deductive insurance about $600 per month through employer, and have $20 from each paycheck put in HSA account. We are pretty healthy. If we get sick we go to Walgreens which is $45 a visit compared to $100 elsewhere. But the largest cost is my son's peanut allergy epipens at $800 a year (price almost doubles each year) because they expire in a year and our school needs their own set to stay there and won't take something expired. We usually keep the previous year's at home instead of spending $400 for our set. I am starting to seek other options and may have found one, but will need to learn to use a needle! My oldest also broke his arm which put us $2,000 in the hole (already paid off) and so that that doesn’t happen again and because we now live on a farm and accidents can happen, I purchase employer based accident insurance at $12 per paycheck.
Health costs per paycheck: 332 (we are thinking of putting more aside in the HSA next year for increases epipen expenses.)
EXPLANATION OF SPOUSE AND WIFE MONEY MANAGEMENT
So, I am very good at handling the budget and the money. But my husband likes luxuries and to splurg (especially on christmas gifts for his newphews and brother and parents) and beer. If we go to a restaurant, I will drink water and he will order the most expensive beer and get two or three. He got so man overdrafts on our joint account debit card. So I got rid of that bank option and got 2 more accounts so that he has his own and I had my own and I will put money in there for his gas and work expenses. He was tire of me giving him an allowance and would complain that he wants to control his own money. But at the same time, he wanted me to control our budget, pay our bills on time (because he couldn’t) and pay down our debts (which he got us into). He also approved the budget yearly with me but still complained about what he was allowed per paycheck.
My solution, which we recently started, was that fine, you get to control your own money. So, I split our budget by the percentage of our incomes. Got him to approve the family budget. Anything that was for us too, like clothes, our own car payments or his family gifts were taken out of the budget. We also approved additional money to put aside to pay down the debts (currently 437 per month). Then anything left over was given to us respectively out of our paychecks. Now, he pays for his own family’s gifts and beer and what ever his heart desires, but the bills and debts and family expenses still get paid! No more complaints! If he spends all his money, too bad! He already knows not to ask me, which he already tried.
I did though take money for his car payment so that he doesn’t ruin his credit! It is taken out before he gets the left overs from his check.
The money (allowance) is used to pay for our own cars' gas, car maintenance, tolls, car payments, and 401k. I pay for my own car, websites and 401k out of my allowance. He pays for his car out of his allowance. The insurances, income deductions and taxes are split between us. He also gets additional money from work to cover travel for the other work location.
Bi-Weekly allowances:
His allowance after car payment: 205 + extra travel work reimbursement
My allowance after car payment, websites and 401k: 115
If we eat out, it will come out of our allowance. I found that this has been discouraging us to eat out! Especially since he would many times invite his parents with us and then want to pay for them. I told him he will have to pay for them out of his allowance. He tried to get me to pay for them once and I told him "no".
The farm expenses also come out of our allowances. We decide together on what is needed and pay 50/50.
Most of my favorite clothes are second hand. I have no problem with saving on clothes. But my car needs oil changes and I need to put aside for brakes as well or if something breaks. And I pay for my vitamins out of my allowance. I really can't spare anymore of my allowance.
He refuses to stop paying for gifts for his parents, brother and his wife, and their children. So that savings is out of the question for him. But he is paying out of his allowance.
SAVINGS AFTER CHANGES FROM FEEDBACK $394 PER MONTH! Now I have to go make some calls to cancel some stuff. I am sure I can do better and am open to more feedback. The holiday stuff I could only give in so much. I do want my kids to enjoy the holidays somewhat.
To remark on the "husband's second job". This isn't possible with our current work schedules. I drop off the young one and he picks him up. We can't do public bus with the young one because of his severe peanut allergy. I don't trust them to watch him. BUT, my husband did do some dj work for extra money which he is using to help pay for new tires needed for his car.
I can make more money by picking up more freelance work through the websites.
Specific Question(s):
Where can we cut expenses?
How can we pay the debt down faster?
Currently, I am planning on defering the student loan payments to pay the CC debt down faster by June, then taking those monthly payments and paying off the student loans. But the student loans are about $10,000 interest per year. It will probably increase by 5,000 if I defer till the CC are paid off. Should I defer the student loans anyway?
Should I continue to put money aside for the family expenses or should I use that money to pay down the CC debt and then pay the family expenses as they come up?
Should I consolidate the CC debts in a personal loan with lower interest to pay off quicker? The CC with no interest is going to be 27% soon and the interest is about $100 a month.
Should I pay off the car debt faster too or just keep paying the minimun for the last 2 years it is left? I am just paying the car loans as is because I feel that the one that is owed more than what it is worth is not worth paying off early because if it is crashed beyond repair the insurance would pay off the loan, but if it was crashed and we paid off the loan early, we would have wasted that money on a car we no longer have and it would have come out of "our" pockets. But I hope that doesn't happen, but you never know.
What do I do with the Rental Home that is upside down? When the interest raises, we will be paying more on it monthly than we would get in rent. I am not sure if we would be allowed to refinance and if we do, I still don't think the payments would be less than the rent payments. Do we pay the difference out of pocket (maybe $500 per month) until the home is paid off and we use in the future as retirement income? Or do we short-sell and later buy another rental when we are out of debt and in better financial situation (the current renters want to buy it)?
What do I do with my 401k? I am not happy with my 401K performance. They didn't give me the stats when they made me choose an option and the one I am in is based on retirement date. It was started in 2006 and has a history of only a 6% return. I already lost at -9%. There was another option with more risk but created in 1990 with a 9% return history. Should I change to that option (I think it was US equities)? Or should I roll it over to a roth IRA and try Peer Lending investments at an average 7% with more risk? The employer match is only 5% on 20% of income, really not much, and if I leave before 5 years I won't get to keep it anyway. I don't currently see anywhere for me to go in the company and am looking for a new position elsewhere to make more money and doing what my degree and experience is in.