Author Topic: Reader Case Study - Baby Stache struggling with just one income  (Read 8799 times)

kaetana

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Reader Case Study - Baby Stache struggling with just one income
« on: December 11, 2013, 03:17:48 AM »
Summary:
Im 28, and Im new to the Mustachian way. My husband, a contractor, let his last work contract run out due to an serious illness in the family, which was about three months ago. We just bought a house this year, so the timing wasn't great. Knowing wed need to be more careful without the extra income, I got into YNAB, and found MMM a few weeks later and a good thing too! Id always thought Id done pretty well, but after reading these forums a bit, its obvious that I need help.


INCOME

My salary: $60,000/year ($48,000 after taxes) or $4000 a month


CURRENT EXPENSES

Debt:
$    90      Credit card 1
$1800      Mortgage
$     15      Mortgage offset account fee
$      5      Credit Card 1 monthly fee

Bills:
$  70      two mobile phones
$ 167      electricity
$ 84      water
$ 105      gas
$  200      council rates for the house
$  70      data for iPads
$ 120      home internet + line rental (only used for the internet)

Transportation:
$ 190      transportation (I take the train to work)
$ 630      car loan payment
$ 300      petrol

Insurances:
$ 350      health insurance
$  59      home and contents insurance
$ 130      car insurance

Everyday Expenses:
$ 160      entertainment and eating out
$ 400      groceries
$ 200      personal fun money ($100 each)

TOTAL EXPENSES: $5,145

ASSETS
$ 7,750   emergency fund/savings
$ 3,000   extra payments on the mortgage
$17,200   my superannuation investments
$52,000   his superannuation investments
$ 6,000   equity on car
$30,000   equity on house

LIABILITIES
$330,000   mortgage, 4.88% with 100% offset account
$  22,000   car, 6% with an early termination fee of $1000
$    2,600   student loans, interest-free, indexed annually
$    2,400   Credit Card 1, interest-free, $5 monthly fee
$     +200   Credit Card 2 (positive balance), interest-free, no fee


Additional info:
-   My husband will be looking for a job in the new year. He has typically been able to bring home around $9,300 net per month.
-   I live 38 km away from work, which means I drive 8km to the train station and then take the train.

Things I know I can cut back on
1.   The car - At this point were unwilling to go entirely without a car, but we CAN definitely reduce the amount we spend on petrol. I would love to get some bikes, but I dont know anything about them and Im afraid itll be too expensive. The other option is that I could walk to the bus stop and take the bus to the train station every day, and walk to and from the grocery store.
2.   Mobiles - I could cut my mobile down by about $15, but even that would be stretching it. I could give it a try and see how it goes.
3.   iPad data - This is under contract until January, after which weve already agreed we will cut this out for both of us.
4.   Entertainment and personal fun money - I know this needs to be reduced Ive held off until now because when I first got into YNAB, I reduced the entertainment/eating out budget from $200/week and the personal fun money from $100/week each to the current levels. I was trying to break my husband into it as slowly as possible.

Some questions for you expert Mustachians:

-   Where would you cut back if you were me?
-   In what order should we be tackling our debt/retirement savings? (once my husband gets back to work and we have money to spare)
-   Is it reasonable to bump up certain budget categories when were back to having two incomes? If so, by how much?
-   How does a Mustachian travel? Our annual overseas trip to see my family is coming up (and I only see them once a year, so am unwilling to cancel), and although were staying with family, theres always a lot of pressure to eat out. We also want to show our gratitude for my family putting us up, which usually translates to several tabs we pick up. How do you guys handle it?

Thanks in advance for your suggestions - Im braced for some (hopefully constructive) face punches!
« Last Edit: April 06, 2014, 04:45:52 PM by kaetana »

omni

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #1 on: December 11, 2013, 04:24:46 AM »
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« Last Edit: April 19, 2017, 08:11:47 PM by omni »

marisska

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #2 on: December 11, 2013, 04:35:53 AM »
hi there. yes all those recommendations are great. you could probably review your insurance costs too. Could you possibly sell the car, get another one for about $6 -7k. would free up those repayments and reduce  car insurance costs?

aj_yooper

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #3 on: December 11, 2013, 04:43:41 AM »
Welcome to the forum.  We use YNAB too and have found it really helps us build a good financial plan.

When your spouse is working, you will have a significant opportunity to work on financial independence, if you are able to manage a good budget and fund your investment accounts.  That is awesome!  With that income, you should now not have any current debt, except your mortgage, but you do ($27,200).  Additionally, your emergency fund, IMO, should be in the range of 3-12 months of expenses (~$15,000-60,000), but it's not.  This means you were and are living way beyond your means even when things were flush.   Your longer term investments are decent ($69,200), but not notable, especially given your higher income.  As a couple, you have a serious spending issue.

In your current situation, you are in a cash flow emergency.  You are currently running a deficit of $1145/month or $13,740/year.  Your emergency fund will be gone in 6 months.  So, you should only be spending on basics-no more going out or fun money ($360).  $190 for internet is way too much.  That's $550.  Can your husband optimize the insurance costs while he is at home?  Can you lower your utility costs by simplifying your daily routines?  I think your spouse needs to get the money rolling in now as you are in a precarious position, part-time would even be helpful

Best wishes..

marisska

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #4 on: December 11, 2013, 05:17:49 AM »
also, at this stage  I don't think you really can't be planning an overseas holiday. Once your living expenses are reduced, spouse is working and debts are gone  you could think about it then.

fodder69

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #5 on: December 11, 2013, 06:13:47 AM »
First off, congratulations. You are looking at making changes, so kudos.

First bit of advice is to get your husband working again as soon as possible. I don't know the travel plans and dates, etc. but tell him to get on it. If it's more than a couple weeks he can start a job and tell them about his travel plans upfront. No need to say 'I'll get a job when I get back' since you are bleeding money right now.

And bikes are not at all expensive and an 8km commute to the train station is pretty easy provided you have a safe way to get there. Think of the extra fitness you'll gain along with saving money on petrol. They are not scary, this is just another step to independence.

Bills: definitely look at Internet. Your utilities look a little high to me also, look at steps to reduce water, electric and gas. Cell is a little high and of course data for the ipads has to go (as you said).

Transportation: The car is killing you, $630 a month is crazy. Getting out of that would free up a lot of money. I get keeping a car for sure, but that is a lot. This would actually be the first big thing I would try to change that, either selling the car or paying it off quickly since that is your highest interest at this point.

Insurance: Wow, both health and car seem really high to me. Look at increasing deductibles to lower those and try shopping around also. This would be a very worthwhile use of your time.

Everyday: All eating out, etc. has to stop until your husband starts working and you are in a positive cash flow situation.

For your other questions:
-   Where would you cut back if you were me?

Car and insurance changes will be your big wins. Zero interest on your other cards means they aren't the biggest priority. Your house is expensive also but harder to change right away but something to consider changing if you can.

-   In what order should we be tackling our debt/retirement savings? (once my husband gets back to work and we have money to spare)

Debt first while still making contributions to retirement. I don't know enough about retirement plans in other countries to say how to work that out.

-   Is it reasonable to bump up certain budget categories when were back to having two incomes? If so, by how much?

Nope, not at all! Stop thinking in terms of budget, because if you've budgeted it, you'll spend it. Just work on not spending money and the budget part will work itself out. This isn't to say, don't ever go out, don't ever buy anything just think about every purchase you make.

-   How does a Mustachian travel? Our annual overseas trip to see my family is coming up (and I only see them once a year, so am unwilling to cancel), and although were staying with family, theres always a lot of pressure to eat out. We also want to show our gratitude for my family putting us up, which usually translates to several tabs we pick up. How do you guys handle it?

I'd say go, and just be upfront about not having a lot of money to go out. Setting expectations goes a long way. The fact that your husband is between jobs should be enough to quell any concerns your family might have. You'll still go out once or twice, but don't pick up the tab (still pay your share unless someone really wants to treat you). Can you cook? Maybe plan to cook for everyone a couple nights if someone can host. A couple bottles of wine and dinner at home will cost a lot less than going out and you'll have more fun with all of your family there. They are happy to have you there, you don't need to treat them, If you do go out, eat cheap. Have a snack before you go so you won't be salivating at the table and will be ok with a salad or what have you.


kaetana

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #6 on: December 11, 2013, 01:17:17 PM »
Definitely get rid of the credit card debt asap... a few notable things to me.

There are plenty of credit cards without fees, can you look for one? Citibank has a fee free offer at the moment for example here http://www.citibank.com.au/familyandfriends/

Is your emergency fund sitting in your offset account?

With mobile phone, I am with Woolworths mobile and pay approx $17 a month ($29 every 45 days). It comes with $500 credit, and 5gb data. This might be enough for you?

For home internet/line rental, is TPG ADSL available at your place? I am with them at the moment for $60/month, unlimited adsl2+. Includes line rental

Health insurance at $350 a month is a lot. My wife and I pay $160 a month for comparison. It may be worthwhile shopping around a little.

The biggest one imo is a relocation if at all possible. Your car alone cost you $1060 (including insurance) a month, a significant amount. It may also be cheaper to rent and have your house leased out.

The only reason I keep the credit card with monthly fees around is that it's interest free. Unless there's a card somewhere with no fees and no interest, I don't think I'd find a better product.

Yes, all savings other than our retirement savings are in the offset.

I was all excited about the Wooly's mobile idea until I read that they've been shut down: http://www.lifehacker.com.au/2013/09/woolworths-mobile-shutdown-what-customers-need-to-know/

Home internet/line rental -- Thanks! TPG is definitely something I need to check out. That would be substantially cheaper than our current internet (we're with iinet).

Health insurance - Is that $160 for hospital and extras, or just hospital? Another thing I should mention is that my husband has three children between 17 and 21 who have all moved out but whom the insurance covers as well. While we don't expect to have to include them in our health insurance forever and have told them so, that's how it is right now.

This means you were and are living way beyond your means even when things were flush.

Actually, we have been very good at living within our means until recently-- granted, we should have been living way below our means so as to save much more, but this time last year, we had no mortgage, no credit card debt, no student loans, and our old car was about $5000 away from being paid off. After that, however, we made some mistakes which I now regret, such as trading in our old car and buying and refinancing a new one. Another big one was that we bought a house. We had been saving for one, but it being our first house, we severely underestimated how much it would cost -- not in terms of the downpayment but in terms of moving. The credit card debt we do have was to buy furniture. We also had a bunch of up-front costs we didn't expect, like telephone and cable hardwiring to our house.

I mention this not as an excuse but just to say that we ARE capable of living within our means. We just need to find our way back to it because I agree that we certainly aren't living within our means NOW.

kaetana

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #7 on: December 11, 2013, 01:41:17 PM »
fodder69, here are some responses:

Going on holidays -- Our trip is about a week and a half away, and we paid for the flights early this year so as to get the cheapest price possible for flights around Christmas. At this stage there is no point in cancelling - we'd lose most if not all of the money we've already paid, and as I said, I am reluctant to do this anyway as this is the only time I will see my family this year. However, I have talked to them about the possibility of THEM travelling to Oz next Christmas and staying with us, and they seemed keen. That would be great for us.

Because the trip is so soon, it's also unlikely my husband will find and start a job before we leave. He has actually already started looking, but December isn't the best month to look for new jobs, so we expect it will be January or February before he gets another job. It is unlikely he will be out of a job longer than that.

Bikes - I guess what's stopping me from exploring this option is that I don't have much experience with bikes in general. So I'm not really sure where to start. I know there are bikes available on Gumtree (our equivalent of Craigslist), but I don't know what kind of bike I would want or what would be good value. I also haven't ridden a bike in YEARS, so I would have to relearn that and acquaint myself with traffic laws on bikes in Australia. I do think it's something I need to look into.

Utilities - After discovering MMM, I stopped using the clothes dryer completely and instead hang everything on the clotheshorse. I haven't gotten the bill yet since I started doing this, so we'll see how much this has saved. Last weekend my husband and I also bought some LED lights-- four 5W, 300 lumens for $35 total. We intend to slowly replace our halogen lights with them now that we've tested them and are happy with the light quality. I do think our utilities are higher than normal because my husband has been home - normally he and I are both away from the house during standard work hours.

Car - This is a sore point for us and we've had many discussions over this. I also suggested we make this our number one priority due to both the high interest and the high minimum monthly payment. However, my husband brought up the point that the car is actually leased through his company (of which he is the sole proprietor, and which he uses to run his contracts through), and there are tax benefits to doing it this way. He is of the opinion that we should make at most one extra repayment a month so as to continue enjoying tax benefits on leasing rather than paying it off quickly and treating it like an asset that could be subject to capital gains. To be honest, I haven't looked up whether this is true and don't really know much about Australian tax laws (being relatively new to the country).

Insurance - Should I dial down from hospital and extras to just hospital? Would this be just for while my husband's unemployed, or is this something I need to consider doing permanently?

Thanks everyone for your input so far. You've already given me a lot to think about.

kaetana

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Re: Reader Case Study - Baby Stache struggling with just one
« Reply #8 on: December 11, 2013, 01:51:52 PM »
Definitely get rid of the credit card debt asap... a few notable things to me.

There are plenty of credit cards without fees, can you look for one? Citibank has a fee free offer at the moment for example here http://www.citibank.com.au/familyandfriends/

I forgot to mention that my credit card is interest-free over a bit more than 3 more years, although I've been making extra repayments so it shouldn't last that long. The Citibank card you linked to is only interest-free for 6 months. After I pay the card off, though, I'm definitely closing it!

Anatidae V

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #9 on: December 11, 2013, 04:32:28 PM »
Hi fellow Aussie! I am a similarly new mustachian, and we had the same issue although ours was planned - my income's the same as yours, and my partner is finishing his degree. We'd saved money to cover the "gap", but now we're trying to cut expenses down to below 1 income. (Journal is Growing a moustache in booming Perth)

Bikes - find someone who does know something about them. I have several friends and co-workers who love riding their bikes, so I just interrogated them until I was comfortable (and I spent too much on my bike pre-MMM). Also, bikes are fun. You get the hair-in-the-breeze-I'm-flying experience that you just don't get in a car. Even with a helmet on. A friend of mine rides her bike 5km to the train station, you might have to work your way up to it but it'll definitely save you in petrol. If you're a normal sized person, you should be able to find a bike fairly easily; I'm petite, so picked up a smaller bike, brand new.

Petrol - You spend a LOT. We spend ~$120 to $180/month, and I drive 18km each way to work (no nearby public transport). Is there a lot of after work/weekend driving you could swap for walking, public transport, biking, or could you put some trips together?

Health insurance - We spend ~$210/month. What do you actually use? I think dental makes sense as teeth can be unexpected and pricey, but also consider if you're planning/could get pregnant (that added $700 to our annual cost), if you use the physio frequently (I do right now due to some medical issues), or if the cost of the extras cover is more than what you'd normally pay in a year anyway. We have gapsaver as well, so I get >30% off my physio visits, which works out better for us right now. We have a mid-range hospital cover, which I was very happy with when in hospital for illness last year.

Car insurance - That seems really high. Is it comprehensive? Can you shop around a little? Is it because it's owned through a business? Is it a very pricey car?

Debt/Retirement: I think the car might be hair-on-fire-debt. However, once you are over this bit... Your employer should be putting a tidy 9.5% into Super, so don't bother with that. (I'm just repeating advice I got, might be worth looking at some of the other Australian journals in the Journals section :) ), so you get to dump money into your house and spend some time researching how you want to invest your money for FI.

Other than that, like I said, I'm a shiny new mustacian with only the hint of stubble. Good luck on your husband getting a job!

aj_yooper

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #10 on: December 11, 2013, 04:48:52 PM »
When your spouse is working, you will have a significant opportunity to work on financial independence, if you are able to manage a good budget and fund your investment accounts.  That is awesome!  With that income, you should now not have any current debt, except your mortgage, but you do ($27,200).  Additionally, your emergency fund, IMO, should be in the range of 3-12 months of expenses (~$15,000-60,000), but it's not.  This means you were and are living way beyond your means even when things were flush.   Your longer term investments are decent ($69,200), but not notable, especially given your higher income.  As a couple, you have a serious spending issue.


The way I look at it, if you lived within your means, you would not have current non-mortgage debt and you would have a strong emergency fund plus more in investments.  You were going through $13,000 a month and don't have that many assets.  That is a spending problem.  This is past praying for, but is part of an expensive education you are living. 

kaetana

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #11 on: December 12, 2013, 03:09:42 AM »
Thanks to the advice of everyone who's contributed so far, I've made a few changes today.

1. Petrol
Petrol - You spend a LOT. We spend ~$120 to $180/month, and I drive 18km each way to work (no nearby public transport). Is there a lot of after work/weekend driving you could swap for walking, public transport, biking, or could you put some trips together?

Hi! Nice to see another Aussie on this thread. :) Thanks to your comparison being local, I double-checked our gasoline figures. As it's run through the company, my husband handles it, so when he said $300, I didn't question it. Long story short, it's not $300! It's more around $80. Oops. On the plus side, it caused me to do some calculations and I realised that it costs about $60/month for my husband to drive me to the station and back. It's a bit of a luxury, really, because I can easily drive myself and leave the car at the station - thus cutting that in half. So I'd save $30/month.

And yes, by the way, our car insurance is comprehensive and it's more expensive because it's for the company. Our car is not that pricey; it's a 2011 Toyota Camry Hybrid that we got last year for about $25,000.

2. Private health insurance
Quote
Health insurance - We spend ~$210/month. What do you actually use?

I changed the private hospital cover part of our insurance to go from no excess to a $500 excess. This alone will save us $50/month. I thought it would be a good start while we're deciding whether to cut it down further.

I'm unwilling to cut down the private hospital cover. The extras, however, I could look at dropping down to a lower level or just cutting it out altogether. If I gave it up entirely, we could save $94/month. I'm not sure if that's the best solution, though, because last financial year we got more money back than we spent for the extras portion. My husband has back problems, so he used quite a bit of the massage and physiotherapy allowances. All five of us (my husband, his three kids, and me) wear glasses, and are entitled to $300 a year per person. That's just off the top of my head.

3. Home internet and line rental

I looked into TPG and actually signed up for the $60/month unlimited ADSL2+. Unfortunately, I quickly got an email back saying that our phone line is not compatible because we're on a pair gain system, whatever that means. Apparently what we can use are their off-net plans, which end up more expensive than our current plan. I did some researching and it turns out we're not even using the monthly quota on iinet. So I moved us down to a lower tier, which moves us down to $90/month. That's $30/month saved!

4. Mobile

I've disabled the automatic recharges on our current (prepaid) mobile plans. We'll be on holiday anyway, so I'll wait until we come back before I switch us over to a new plan. So far I'm thinking of moving to Vaya (http://www.vaya.net.au/?option=Mobile&4Gsimonly&plan=Power%20Plans), to their $18 plan. That would save us $34/month!

marisska

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #12 on: December 12, 2013, 04:13:37 AM »
well done.That was a good day's work , flexing that frugality muscle is fun! keep going!. also you could check out Aldi mobile , very good value prepaid plans.Also shop around for car insurance,  the supermarkets have very competitive deals.

Melody

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #13 on: December 12, 2013, 05:11:32 AM »
Hi, I am another Aussie, my journal on the forums is "Music Mayhem and Money".

Your car is killing you. Luckily you have an emergency fund so you can buy something simple and reliable in cash (like a used toyota yaris, echo, etc) - this should be $5k or less. Then you can sell the car freeing up the $6k of equity in it.  This gets you out from $630/month of expenses and removes a $22k liability from your balance sheet without changing your asset position (you still have a car and the same amount of EF.) Depending on what type of car you have currently you can reduce petrol significantly. You should also consider usage as you are only doing 350 work related kms a month. Even in a 4x4 $3000 should get you 1500kms so what are you doing the rest of the time? (Savings $150/month). [FYI: the car will not become a capital gains asset, it will become a depreciating asset through which your partner can take depreciation deductions against the business. This will be more tax beneficial than the lease... leasing is beneficial for normal people as they are not able to depreciate their vehicles as they do not have their own business.]

Self insure car for savings of approx $100/month, keep basic third party. Unless you plan on writing off your car every 4 years or more often, in which case keep the insurance ;-)

Electricity and Gas are very high. In my to person household (with frequent overnight visitors) we pay $60/month electric and $60 gas. Shorter showers, no AC unless it's 40+, no heating, turn stuff off if you are not using it and low energy bulbs will get you there (we are still running 2 fridges, one of which is older than I am, so our bill is no where near as low as we could go.) (savings $52/month)

If you can cut the phone plan (and get rid of the ipad plan in Jan), and internet plan, raise a few insurance deductibles, curb a bit of the dining out you should be back into cash flow positive territory.

[note: I would also seriously consider axing your hospital cover unless you think over the course of the year you would take a hefty tax hit for not having it. It's a luxury you can't afford while you are drowning in debt - I only started buying private health when they had to for tax reasons... it's perfectly fine. Extras sounds like a good deal for your family though so you should keep it. If you partner is over 32 and lifetime loading would apply keep the lowest level of hospital insurance for him only - get rid of it for yourself.]

Part of your problem is you don't seem to have a good idea what you spend your money on - for example do you ever buy clothes (even a bare bones budget would have an allowance for shoes and underwear). Do you go to the pharmacy (cosmetics, over the counter medications etc? Do you visit a doctor that doesn't bulk bill? Do you service your car (or is this included in the lease)? Do you buy gifts for family (your husbands kids?) etc? Do you need to buy things for the house (any trips to Bunnings, Ikea etc?) It might help for you to track things more closely, because right now I think you could cut stuff out of this budget so you would theoretically be cashflow positive, but would still find you're going backwards each month due to all the categories you have forgotten about.

On the upside your income will increase in future and your mortgage payments are not that bad (especially with a second income they are very low). So if you cut some of this waste now, you will be well prepared for paying off your debts when hubby returns to work.

fodder69

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #14 on: December 12, 2013, 07:26:18 AM »
Good job already cutting that much in a month! It's great saving money just by using a little brainpower and making a few calls.

As far as bikes, even if it has been years I seem to remember an old saying about that. Something like, 'It's just like riding a bike, you never forget how'!

Good luck.

kaetana

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #15 on: December 13, 2013, 09:54:49 PM »
well done.That was a good day's work , flexing that frugality muscle is fun! keep going!. also you could check out Aldi mobile , very good value prepaid plans.Also shop around for car insurance,  the supermarkets have very competitive deals.

Thanks, Marisska! We're actually already with Aldi mobile at the moment-- we're both on the $35/month plan. We definitely intend to shop around for car insurance, though... I found one (AAMI) that would be $90/month cheaper!

Hi Melody! I had a chat with my husband about the car and it's really unlikely that we would get what we paid for it. So although we've paid off ~$6000 so far, that will probably be eaten up by the lower selling price. We're not willing to decrease our emergency fund at the moment, so that will unfortunately have to wait. Car insurance also needs to be comprehensive (it's a condition of the car lease), but we will be shopping around for cheaper ones for sure. And you're right, we definitely need to do something about the petrol.

Electricity and gas -- how big is your house? Do you or your housemate both have jobs? I ask because we have a four-bedroom house and my husband is currently at home all day, which of course uses up much more electricity and gas than normal. You're right that we have to decrease this, but I don't think we'll ever get it down to $60/m!

Private health insurance -- I've already done the calculations on going without it and we are definitely better off having it, tax-wise. Due to this, my husband being significantly older than me, and the three stepkids being reliant on us for health insurance, we're really not comfortable having NO health insurance. I've dropped this down to $300/m for now (higher excess), but I would consider maybe going down a tier for extras or something like that.

Extra stuff not included in my figures-- Don't worry, I'm a YNABber so I have full knowledge of how much we're spending on all of those things you mentioned. I lumped a lot of them together (under House or personal fun money) for simplification here, but they are definitely being accounted for. Some things, like gifts and home improvement stuff, we had already saved for outside of the savings I've mentioned. Although obviously we're trying to spend less than expected on those if we can. With YNAB we enter every single transaction (except for the car payment, car insurance, petrol, home internet, and ipad data, all of which are run through the company and show up on the company credit card) so there's little chance of anything slipping through the cracks. It's a valid question though.

Thanks to everyone that has contributed. You've all given me a lot to think about, and this exercise has really forced me to scrutinise all our expenses. With any luck, my husband will get back to work in January, and the extra income plus lower expenses will have us debt-free (except for our mortgage) and with more savings by Christmas next year.

Melody

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #16 on: December 15, 2013, 03:53:42 PM »
Cool :) That's good to know you're not missing stuff, that means as long as you can get the numbers you have down you will be fine :)

I work full time and housemate is a student. It's a 2 bed plus study house (not apartment). I don't think gas would just because you have someone at home all day? (Cooking/Showering unlikely to increase). However electricity would increase but not as much as you might think - a large part of electricity is "base load" stuff like your fridge (in our case it's older than I am and makes up a really large portion of the bill). When my other housemate lived here and was unemployed for a few months our bills were at about the level they are now (and were lower when she was working) - but she was very careful. Current housemate isn't wasteful, but isn't as careful as the previous one.

sleepyguy

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #17 on: December 15, 2013, 06:18:02 PM »
To be honest once your husband gets' back to work making 120k/yr then you'll be fine.  Overall some things jump out to me... 330k morgage and you only put down 30k?  I guess that is ok IF your husband is working... I like the 2-2.5 rule (alot of people go with the crazy 3.5x rule which I think is INSANE, but whatever.  Now on to our ongoing expenses.

Bills:
$  70      two mobile phones (shop around, not sure of down under there are better rates but $10-15/mth is possibe in US and Canada)
$ 167      electricity
$ 84      water (seems pretty friggin high but maybe thats location based)
$ 105      gas
$  200      council rates for the house
$  70      data for iPads (really, you don't need this... tons of free internet everywhere)
$ 120      home internet + line rental (only used for the internet)  (That is crazy expensive, again maybe just the location... here in Canada I pay $33 for 15/1 DSL (300GB/mth) which is plenty fast enough for everything we do, and we use VOIP which is an extra $10/mth... so under $50/mth total)

Transportation:
$ 190      transportation (I take the train to work)
$ 630      car loan payment (please pay for your cars... depreciating assets should always be BOUGHT!... yes that is a rule that you should generally always follow)
$ 300      petrol (maybe location based again but that seems crazy high... we drive WAY too much and sometimes I drive over 200km/day, but I dont' think we've ever gone over $250/mth on gas)

Insurances:
$ 350      health insurance
$  59      home and contents insurance
$ 130      car insurance

Everyday Expenses:
$ 160      entertainment and eating out
$ 400      groceries (seems high but again, could be location based)
$ 200      personal fun money ($100 each)


Everything else seems reasonably.  Key is your husband needs to find work within his salary range again.  Reduce those cost I outlined... also may start topping up your mortgage payments, talk to you bank.

Hope that helped.

Mumintheburbs

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #18 on: December 15, 2013, 07:07:02 PM »
Just wanted to throw in my 2 cents re health insurance. I think you should really seriously consider if you can manage without it, at least in the short term. I realise that the idea of staying in a private hospital if you are ill seems like a non negotiable, but when free public healthcare can take care of all your medical needs and private health is a major chunk of your budget deficit maybe it is worth thinking about some more.
I say this as someone who has had an identical major surgery in both a public and private setting. Yes private hospitals have carpet and nicer pictures on the walls but the care you receive is the same.
Maybe you could consider self insuring eg put the $300 per month into a savings account to use for health related needs.

stripey

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #19 on: December 21, 2013, 03:54:24 AM »
It's lovely to see other Australians here to compare figures to! Hooray for all of the hard work you've done in so little time-- I hope you're getting some satisfaction from reducing all your expenses! There is a lot of good advice already here and I'll try not to repeat too much of it.

To me, both the electricity and gas are incredibly high but as has been discussed in other Australian journals, mine may be unusually low. Hrrm.
- Can you get a watt meter of some sort and check what is using up so much energy?
- Can you turn the heating/air con off or control the indoors climate less than what you're doing?
- Can you do the washing in cold water? (Or most loads?) And whilst we are on the topic of washing, have you thought about home made laundry detergent? (A two minute internet search will turn up a heap of options, and yes it does work)
- Can you set the hot water service to to a lower temperature?
- If you're in Melbourne you have the option of way more options for electricity providers than I do (I have no choice). Maybe explore that a little...?
- Some cities have environmental agencies that can come out and inspect your place and offer ways to reduce gas/electricity/etc. for little/no cost. May be worth looking in to.

Your groceries do seem high to me (and I live in a higher COL town). Can you get fresh produce from markets? Can you shop from a list- that usually reduces spur-of-the-moment purchases. Can you batch cook? It will depend on work schedule, but sometimes cooking up a heap of an awesome curry or bolognaise (if you eat meat) and freezing several portions is a hassle-free way of doing meals. This sort of cooking most definitely has saved me money. It doesn't take much more time to triple a recipe than to make a single lot usually. I love my slow-cooker for this because it'll use cheap cuts of meat and is pretty low maintenance but it's certainly not a necessity.

To the posters across the pond, water rates in Australia are high and very location based. They vary between different councils, and in my region it is also linked to the valuation of the property. And in Australia water is a precious commodity. I think the only way the OP can compare water rates is to other people in her city.

I would second anatidaev's advice regarding bikes. Find a friend (hopefully not a MAMIL or too much of a gear-nerd Weekend Warrior type) and get some advice. I would definitely get a bike rack- it'll give you options for transporting stuff. I personally use panniers but my brother used octupus straps and a milk crate to good effect. In terms of brushing up on road rules, the internet is an amazing place. There should be maps of your area available with the cycling commuter in mind that will give you a good indication of 'safe'/easy/bike-laned routes. Remember-- this should be fun and also a good challenge! If you're like me, you may like to track the amount of money you save cycling for extra momentum.

With regards to the opening post about increasing various budgets once the partner has a job-- my gut reaction is no. If it were up to me I would keep up the saving momentum, and smash through your debts (and your credit card debt should be gone in no time) then work on putting more in that offset account.

Have fun reveling in all your reduced expenses! I appreciate that December is a bad month for unplanned expenses, but hopefully in a couple of months you'll look at the difference in your expenditures and smile!

kaetana

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #20 on: December 22, 2013, 02:06:23 AM »
Thanks, Stripey! I agree, Americans with their super low figures always make me cringe with shame.

Electricity and gas: Good idea about the watt meter. I should really do that! About the heating and AC-- this is probably what has jacked up our electricity bill. There were several days where we had the heater going all day (mostly because my husband was home; normally he'd be at work during the day. I just started doing the washing with cold water. It was something I never thought about, really. I also switched providers recently (to Momentum Energy).

Homemade laundry detergent: Thanks for the idea! To the Google!

Groceries: I think the reason ours is higher than it could be is that my husband is an amateur chef and LOVES trying out new and exotic recipes. He's also rather picky and prefers higher quality food. I'm working on it! This actually used to be $200/week, so there has been considerable progress.


Some things I've done since I last posted here:
- As mentioned earlier, I switched electricity providers and locked in rates for the next three years at a rate already cheaper than our last provider's.
- We've replaced most of our light bulbs from halogen to LED ones. Bigger cost upfront, but a ~$200/year saving from here on out!
- Changed the car insurance to a MUCH better deal. $50/month less!
- Increased the excess of the home and contents insurance without changing the level of cover. $15/month savings.
- Bought a bike!! Again, a big upfront cost but hopefully a long-term saving. I got on it for the first time yesterday and had to re-learn how to ride it. I'm still shaky and far too nervous to actually use it on the road, but I will eventually get there! And when I do, I will ride it to the grocery store as well as to the train station. Have to say, though, that day seems really far away at the moment. I'm extremely sore in all the wrong places!
- Found out that my husband's company credit card (which I didn't include in our list since it's paid off in full every month) has an annual fee of $109. I did a bit of research and got him to apply for a much lower rate credit card with no annual fee. He just got the card and will be cancelling the old one soon!

potm

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #21 on: December 22, 2013, 05:48:04 PM »
The car payment looks bad but at a 6% interest rate most of that is going to pay off the principle so it's not as bad as it seems.
Maybe making the purchase was a bad decision but that's done now.

For health insurance I would actually consider the opposite of what you are suggesting.
As you said, you get a lot out of the extras but what does the hospital part actually give you?

Australia has a very good public hospital system so I think this is one area you can cut back on without much impact.
The only concern is if you make more than the medicare levy surcharge but as a couple that should be around 176k combined.

Can you let me know what credit card you are using which gives you 3 years interest free? I need to get myself on that!

kaetana

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #22 on: December 23, 2013, 06:22:39 PM »
The car payment looks bad but at a 6% interest rate most of that is going to pay off the principle so it's not as bad as it seems.
Maybe making the purchase was a bad decision but that's done now.

For health insurance I would actually consider the opposite of what you are suggesting.
As you said, you get a lot out of the extras but what does the hospital part actually give you?

Australia has a very good public hospital system so I think this is one area you can cut back on without much impact.
The only concern is if you make more than the medicare levy surcharge but as a couple that should be around 176k combined.

Can you let me know what credit card you are using which gives you 3 years interest free? I need to get myself on that!

Yeah, taking out a car loan for a new car when our old one was serviceable and paid off was definitely a bad decision... but that was pre-YNAB and pre-MMM. All I can do now is make the most of it!

Yeah, giving up the hospital part of our health insurance has been suggested before. It makes sense intellectually. I guess I just have to come to terms with it emotionally - I'm incredibly risk averse and can't help but worry. And yes, when my husband is working we do make more than 176k combined.

The credit card I have is a store card, unfortunately -- http://www.gomastercard.com.au/. I got it at Harvey Normal with 48 months interest free on furniture, but they have similar deals for other stores (like Dick Smith). It does also have a monthly fee of $4.95.

fodder69

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #23 on: December 27, 2013, 05:26:18 PM »
Great job again on your changes. The little things do add up.

firelight

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #24 on: December 29, 2013, 11:36:48 AM »
Is there a way to use Prosper or Lending club to get one loan and pay off your car payments and credit card loans? Their interest rates are lower, you have one loan and none of the fees that accompany the cards.


Longwaytogo

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Re: Reader Case Study - Baby Stache struggling with just one income
« Reply #25 on: January 02, 2014, 10:34:59 AM »
I'm not sure what people have had success with lending club/ prosper but personally the rates I was offered (13% and 16%) were higher then most of my credit card debt (11,12,7.5, and 16%) yes 4 credit cards. I am on serious debt emergency. I still considered doing it just to have a fixed plan over the revolving line. But ended up getting my credit cards rates lowered so ended up not doing it.