Author Topic: What would you do???  (Read 8262 times)

Laura33

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Re: What would you do???
« Reply #50 on: January 12, 2017, 11:26:38 AM »
Baseball Registration for Spring is roughly $700 - that's only once a year
Tennis for the youngest girl is $120 a month - but only 6 months out of the year
Football registration for the oldest boy is $300 plus snacks and other items. 
The youngest is in swimming lessons for $100 a month - he goes once a week.

Good example of why you need a budget.  You just listed almost $3K of annual expenses, all of which are completely predictable over the course of the year.  So you do YNAB or something similar and allocate $250/month to the kids' sports, if that's your priority, so you have the cash to cover it and aren't surprised. (PS - I thought the $700 was a typo - our baseball registration is $70/yr!)

The root canal I get and feel your pain (first crown myself this year, thanks to a cracked tooth).  But that's what HSA/FSA/emergency fund is for.  Tires: yeah, they wear down, and you should be able to predict the replacement interval based on the tire rating and your annual mileage. 

The point is that all of these are manageable -- you just need to get ahead of the game a bit (which is clearly what you're trying to do here, so no criticism intended).  It feels like you're being "nickled and dimed" because you are reacting in the moment vs. having a plan to cover things like this that are infrequent but inevitable.

FWIW, I came from a similar background, so I get the pull.  But what is it you remember the most -- is it the "stuff"?  Or is it how frazzled and stressed your mom was about making ends meet?  Do you realize that saying yes to everything means that you are unintentionally re-creating exactly the same stressful life for your kids that you want so badly to avoid?

Mike58

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Re: What would you do???
« Reply #51 on: January 12, 2017, 11:28:21 AM »
Yes, the interest on the cards is hurting me financially for sure. I cant wait until they are paid off!

Dollar Slice

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Re: What would you do???
« Reply #52 on: January 12, 2017, 11:29:39 AM »
Do the case study questionnaire that people keep linking to. No one can help if we don't know where your money is going.

How much are you spending on gas? Kids' activities? Childcare? Cell phones? Cable TV? Restaurants? Alcohol? Hobbies? Etc Etc. These are the places you can cut to pay off your debt faster.

I live in Manhattan, my rent is identical to your mortgage, I take home slightly more than half your take-home pay, and I'm saving close to 25% of my income. And I'm *barely* mustachian (I eat lunches out, I take taxis, I go out to concerts all the time, etc.). What are you spending all that money on??
  Do you have a wife and four kids at that Manhattan apartment?
No, but I doubt he's spending $4,500+ a month (that's the difference in our spending levels) on food, clothes, and activities for the wife and kids. If he is, he has a MASSIVE spending problem. That's why I'm asking where all that money is going.

Malum Prohibitum

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Re: What would you do???
« Reply #53 on: January 12, 2017, 11:36:28 AM »
I do not track my expenses. I get paid and watch my balance dwindle down until I have less that $100 in my account. Isn't that ridiculous? A man who makes six figures but can't come up with $100 cash a lot of the time. Well, that's why I am here. I've always been intrigued by the minimalist lifestyle. I think its a learned skill.


THIS IS STEP ONE!

Start tracking, today!

You don't need anything fancy.  Just pen and paper (in fact, that is how I do it).  Purchase gasoline?  Write it down.  Buy lunch out?  Write it down.  Grab a six pack of beer on the way home?  Write it down.

Have your wife do the same.

Assign a category to each one (transportation, groceries, alcohol, eating out/fast food, kid's activities, clothing, and so on . . .)

When you add up where the money is going, it will be a lot easier to figure out where to stop frivolously spending it.

Start this right now!  Look around.  There must be paper and a pen nearby.  Right?  Grab it.  Write down whatever you have spent today.  Talk to your wife when you get home.  Write down whatever she spent, too.  Do this for every little expenditure (our spending yesterday was only $3, but we wrote it down, and now we know where that $3 went!).

This is the most important thing you can do.  You cannot fix this if you do not even know where the money is going.


notactiveanymore

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Re: What would you do???
« Reply #54 on: January 12, 2017, 11:41:48 AM »
OP, if you're having trouble completing the case study because you don't know how much you're spending, then you need to go download your bank statements from December and do your best to categorize expenses. You might not be able to remember exactly what you purchased, but you can at least get it down to how much you spent at target or at restaurants.

The first time I did this when I was single and spending freely because I had no debt and low expenses, I was shocked. I was wasting so much money on little trips to target or picking up a snack at the gas station. It was only after I did this exercise that I was able to start tracking my money as I was spending it, not just looking at the receipts and statements after.

Here are my suggested steps:

1. Review December statements and categorize ALL spending

2. Go over your debt situation with your wife to make sure you're on the same page, look over your spending together and talk about what you can do together to cut things. You can make a pact that you'll both make sacrifices (and the kids will too) so that you can pay off the debt. Once the debt is paid you can have a different conversation about what expenses are priorities. Understand that every dollar you don't put towards debt right now is actually costing you $1.25 due to the opportunity cost.

3. Work up a budget and decide how you're going to limit unnecessary purchases (cash only? tracking through a budget app?)

4. Each month look for new ways to cut back and save money

5. Consider more die-hard (as Dave Ramsey would say Gazelle Intensity) options for paying off this debt more quickly. Selling the vehicles and buying something cheaper in cash - even if you buy two cheaper vehicles - is the one that pops out immediately. But you could also look for other income opportunities between the two of you or consider other things you can sell.

6. Rinse and repeat.

If you're looking for motivation about paying off debt and ideas for other ways to cut, we found the Debt-Free screams from Ramsey to be really motivating: https://www.youtube.com/playlist?list=PLN4yoAI6teRO_vPRzFxsaEYrx9f1-nE6i
I wouldn't recommend Dave for much beyond budgeting and paying off debt, but those screams are real people who paid off a ton of debt.

Re: What would you do???
« Reply #55 on: January 12, 2017, 11:42:58 AM »
The Beatles case study might be a good thing to go read.

His situation is worse than yours, but the same advice about groceries and eliminating frivolous expense applies.

I don't think every mustachian is minimalist per se, more that mustachians don't over pay for things, put off buying things to get better deals, and skip frivolous purchases.

Take MMM for example. He lives in a nice house with nice furniture but he does it with minimal spending.

My wife and I eat like kings for $375 a month.

Looking forward to seeing that case study filled out.

The credit card debt looks like top priority. I'd say try to cut your monthly expense back enough that you could pay $3k a month on CCs. Tax return goes 100% to CCs. Get rid of at least one of those cars as well and replace with an older vehicle. The payments for the sold car go to CCs.

Really, you want to eliminate that CC debt now, but it will likely take a year, but you could probably do it in 6 months if you were very ambitious.


MrsDinero

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Re: What would you do???
« Reply #56 on: January 12, 2017, 11:45:36 AM »
The biggest thing you can do to change is to make sure you and your wife are on the same page.   If you and your wife are in agreement your kids will follow suit.

Most likely you are going to encounter resistance when you really realize your family cannot continue on this path.  Kids are very adaptable and will follow you and your wife's lead but they you can also expcet them to be resistant to making cuts.  You really can't blame them either if they are using to being indulged to now having restraints put on.

I'm not sure how old your kids are (I'll wait for the case study), but if they are teens then I would show them the budget and expenses and ask them for help to get your family back on its feet again.  I've found with teens if you are open and honest, they typically respond well.   They will most likely have to make some hard decisions like baseball or football, tennis or swimming, but not both.  At least not both until everything is paid off or if they start contributing to the costs. 

You also need to get the "this ONLY costs x once a year" out of your head.  Nothing only costs, it just costs.  Some things are more unexpected, like a root canal, but others are more routine, like baseball or a home maintenance. 

Tuskalusa

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Re: What would you do???
« Reply #57 on: January 12, 2017, 11:50:42 AM »
I would suggest trying YNAB. Great app for tracking expenses. Go to YNAB.com and sign up for the trial. This will really help you track expenses. Even better, you and you wife can both access you YNAB from your phones, tablet and PCs. Very helpful.

Ryland

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Re: What would you do???
« Reply #58 on: January 12, 2017, 11:58:12 AM »
You are in the right place, Mike!!!

As you know, right now you have a cash flow problem. Not an income problem.

What we need to do is boost the margin between your income and your spending, while not sacrificing your lifestyle, but actually making it better. (That's what Mustachianism is all about!)

Financial independence is 80% decisions and 20% numbers.

Here's two great articles you should read. They will show you you're change is possible (and faster than you could imagine!)

http://www.mrmoneymustache.com/2014/12/10/case-study-average-everyday-complainypants-seeks-redemption/
http://www.mrmoneymustache.com/2011/10/02/what-is-stoicism-and-how-can-it-turn-your-life-to-solid-gold/

What you're doing should not feel like sacrifice. It should feel like improved happiness. (If you're feeling sacrifice, make sure to step back and reassess. Maybe even let us know! Something has to be missing for you to feel the change is a sacrifice.)

Good luck!

mad9q

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Re: What would you do???
« Reply #59 on: January 12, 2017, 12:13:18 PM »
I feel for you.  We have five kids and spend $10K annually on kid activities (sports and music primarily along with homeschool material).  My DH has a good income ($185K) but I feel like we need more if we want to continue with activities, yearly vacations and save for retirement and college.  Right now we are good for retirement but if we want to fully fund college at our current income level we will have to cut out vacations and activities.   

My suggestion is to make a budget on a monthly basis, after spending some time tracking your expenses. 

meandmyfamily

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Re: What would you do???
« Reply #60 on: January 12, 2017, 12:17:46 PM »
Malum Prohibitum-Please please help us families of 6 with our groceries!!  I can get to $800 sometimes.  How do you do $540?  Please advise!!


meandmyfamily

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Re: What would you do???
« Reply #61 on: January 12, 2017, 12:19:39 PM »
https://creditcards.chase.com/slate-credit-card/

immediately roll those cards to 0% and please cut up the old ones once you do!!!

Just Joe

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Re: What would you do???
« Reply #62 on: January 12, 2017, 12:46:21 PM »
I have to second (or third) Mint.com

When we first opened an account, it was amazing to see how much we spent at a particular store over whatever time frame I wanted to examine.

Or to look at how much we spent on any one topic such as for eating out.

It was a surprising thing. So much waste.

You're educating yourself and next you'll need to educate your wife and to a certain point - your kids. We chose to educate our kids on the reasons we had to be careful with money - not the real numbers. We'll cover that topic as they get older.

We drive older cars cheaply, stay home a fair amount, and we don't shop for entertainment's sake. Our kids were involved with Scouts and played sports in the community league for $75 a season or so per sport.

We have no debt aside from the mortgage but at one time had all the typical trappings you mentioned but we had less income and less debt.

These days we have enough that we can do more or less whatever we want within reason and never put a dent in our savings. Need a repair? Need to replace an appliance? Want to vacation for a week on the coast?

We can do things like that occasionally and our retirement plans are fully funded.

Don't beat yourself up about it. Baby steps. Be gentle with your household spenders as you steer them in the right direction. Lead by example. If you want something to happen on the cheap(er) then show them how it can be done.

MayDay

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Re: What would you do???
« Reply #63 on: January 12, 2017, 01:10:40 PM »
I have a 9 and 6 year old.  We have a HHI similar to yours.  We live in an affluent town.  I can imagine the social pressures you might feel with the kids activities.

My point is, you are spending a crazy amount on sports.  Are you in an expensive metro or a small town with no other options?  I ask because I cannot imagine most, or even half, of families can afford 700$ baseball.  Or 25$ preschool swim lessons.  That is a racket.  Makes me think there are cheaper alternatives but you are choosing the do the more expensive ones.

Swimming: go to the city pool or YMCA for these.  Even the expensive private college near us charges much less for group lessons.  Skip private/semi-private at this age, its mostly about getting used to the water. 

Baseball:  downgrade to the rec league.  Trust, your boys are not going to the pros and they aren't getting a college scholarship.  Play for fun.

Tennis:  this is a rich person sport, unless your parks and rec offers lessons (in which case they should be cheap!)  Your kid probably has had enough lessons to get the basic idea.  From now on, go out and play with her once a week instead of paying someone else to play with her.  You can always start lessons again in a year or so.

We put our kids in activities.  Some people on MMM go pretty anti-kid-activity.  I am not like that.  My kids are happier and learn a lot from being in sports and other activities.  My kids do horseback riding, dance, swim, and scouting. 

The key is, we spend way less than you because we don't do the fancy versions, and we are not in debt!  If we were in debt, you can bet my kids would have to deal with swimming with mom for a couple years.  In fact, I paid for my son's horseback riding lessons the first 2 years by mucking out the barn, while we got our savings built up. 

3K a year is TOO MUCH.  Cut that in half (at least!) for the next 304 years.  By the time you are in a position to increase it, your kids will be old enough to get more out of it. 

lbmustache

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Re: What would you do???
« Reply #64 on: January 12, 2017, 01:21:08 PM »
Does anyone else think that I should pay off my $9k car loan ($320) a month vs throwing it at my credit card debt?
I like the idea. Don't underestimate the psychological effect of having paid off that one loan. It will also free up an additional $320 each month to throw at your credit cards.

That is of course if you keep using the car instead of doing what most Americans do: get a new car loan as soon as the old one is paid off.

Yep, this is why I suggested it. :) Mike, I think you need the psychological motivation to kind of get the ball rolling. Your posts kind of give me the sense that you know you need to start, but not entirely sure where because you have so many things going on.

Although your debt is high, your income is also quite high, and I don't think you would be too adversely affected by paying off and keeping the 2014 Fusion, and then using the freed up $320 towards one of the CCs. If you roll the debt from the credit cards into a 0% card, then that $320 will go even further for 12-15-18 months, however long the 0% applies for.

AMandM

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Re: What would you do???
« Reply #65 on: January 12, 2017, 02:02:17 PM »
Assuming that you and your wife agree that this is a situation that needs to be fixed, the most important change is the attitudinal one.  The particular spending choices are secondary.

You are not being forced to cut back your lifestyle and suffer deprivation due to external limitations; you are internally deciding to improve your life by reducing your stress, increasing your family's security, and taking control of your future.  When you truly see this as a positive, independent act, each spending choice becomes an opportunity to increase your well-being.

Good luck!  It can be done.  More specifically, it can be done by you, and these forums can help!

Bee21

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Re: What would you do???
« Reply #66 on: January 12, 2017, 03:11:38 PM »
So, where is the case study with the numbers? People here will be able to offer suggestions once they see the numbers. It does not need to be perfect, you can update it as you dig out more data.

How old are the kids? Those sport expenses are over the top. You should be putting that money in their college account if you want to set them up for a better life. Your poor wife must be spending half her life in that van taxiing kids from one activity to the other. What does she think about this? Is she on board?

We don't have a strict budget, but we rough out a spending plan at the beginning of each year and i track the expenses (most of them).  Fixed expenses, fun money, anticipated big expenses like a new roof or tires, needs and wants. Don't react to situations, plan for them. I regard savings as a fixed expense though, it is a line in the budget.

If you are the breadwinner, you have to sort this out asap, it is a dangerous situation. You make a lot of money, that should provide for a very nice, comfortable life. We have similar sort of household income, but we both work, and i know that my part time income would cover our basic expenses if my HB lost his job.That, and a hefty emergency fund  takes away a lot of stress and pressure. No mortgage, just the last bit of a silly car payment. When he was forced to take 2 weeks extra unpaid holiday our first reaction was yay, the kids don't need holiday care and you can clean out the garage. You want to be in the same position and at that income you can totally do it if you focus. You will have to make some drastic changes in the short term, but it will be worth it on the long term.

Post that case study and start tracking your expenses. Do it every night with the wife. No judgement, no arguments, moving forward. An excel spreadshhet will do for the start.


galliver

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Re: What would you do???
« Reply #67 on: January 12, 2017, 04:05:31 PM »
Baseball Registration for Spring is roughly $700 - that's only once a year
Tennis for the youngest girl is $120 a month - but only 6 months out of the year
Football registration for the oldest boy is $300 plus snacks and other items. 
The youngest is in swimming lessons for $100 a month - he goes once a week.

$700/year for baseball
$720/year for tennis
$300/year for football
$1200/year for swimming
$2920/year in just sports registration fees

I wouldn't advocate cutting the kids' activities as a first step, but is there any way to economize?  Our parks department tot swimming lessons are $34 for a 10 week session.  Parks department tennis lessons are $53 for 8 weeks.

The thing in your post that stands out to me is "but it's only once a year".  A lot of expenses are "only" once a year, or "only" $25/month, but add them up and your whole paycheck is gone.

I sense you are not tracking expenses and budgeting, because otherwise you'd know exactly how much per year you spend on activities and whether you can afford that.

I'm going to go against the grain and say that's 243/mo and LESS THAN THREE PERCENT of your monthly take-home. If sports are something that is important to you, I think it's a luxury you can figure out how to afford (and I think there good arguments for that; in my experience people who did sports growing up have made fitness a higher priority as students/adults...). Find the big leaks, and clamp down on the extras. Sports equipment makes great birthday presents! Or find it secondhand (except helmets). Figure out some filling and nutritious snacks to make from scratch instead of spending a fortune on (I'm guessing here:) organic, college-educated, adjective granola/meal bars.

Poundwise

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Re: What would you do???
« Reply #68 on: January 12, 2017, 04:29:10 PM »
I'm posting to follow, because I'm also spending a lot on kid activities. We have "only" 3 kids, but it does pile up and there's a lot of social pressure to do the travel team.

 I recently had a talk with my oldest son about shifting him from an expensive music school to a local teacher. We're considering letting him take a portion of the savings as a sort of grant to help him follow different interests, if he likes.  We get our soccer cleats from the soccer swap, but younger son wants to buck the trend and go for baseball.  I know some families who just decide that they are baseball families, soccer families, or whatever and have all their kids do the same thing. 

CmFtns

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Re: What would you do???
« Reply #69 on: January 12, 2017, 04:44:11 PM »
Mike,

You must remove yourself from this debt and interest that is absolutely crippling you! To do that you must make first accept that your life and habits will need to drastically change.

This is what helps me:
When you dig real deep and think about what you and your family really need and i mean REALLY REEEEEALYY need to be happy and healthy all the spending just disappears. Since 2016 just finished I have been looking back through every dollar I spent in 2016 and found that 93% of what I spent went into these three categories: Home & Utilities, Groceries, Auto & Transport

Every time I think about spending anything... one dollar, even 25 cents, I deeply consider if I HAVE to have this and do I REALLY need it and will it truly make me happier... It works man, Spending outside of housing, food, and transportation it truly waste in many, many cases.

Do you truly believe that you would be depriving your family of a good life if they were provided a great safe comfortable home, had delicious and healthy home cooked meals ever day, and be able to travel wherever they needed to be on a moment's notice? From the numbers you posted for things such as your mortgage and food budgets I believe that you could save close half of your paycheck if you just took on this strategy even without downsizing your housing or learning to efficiently shop groceries.

If I were you, from this exact moment, You need to question every dollar, every cent that falls outside of these categories and do not buy that thing. Of course there are exceptions and you should obviously pay outstanding obligations or bills and maybe your children's sports and activities can slide or maybe your family can treat yourself to the occasional luxury but you must cut out all the nickel & diming in these extra categories that absolutely tears up the average american budget

EDIT: Now just a note I work very hard to keep my life simple and stressfree and this might not be easy for everybody but even a step in this direction I think could make huge positive changes in many people's lives and budgets.
« Last Edit: January 12, 2017, 04:57:24 PM by CmFtns »

Poundwise

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Re: What would you do???
« Reply #70 on: January 12, 2017, 05:04:00 PM »
Quote
- Root canal for me - $1,200
- Crown for root canal - $857

The MMM way is to do your own root canal!  Come on man, don't be a wuss!

Seriously speaking, I'm doing a little more thinking and you could probably cut down on the younger kids' activities for a year or two if they are tweens or younger.  I know my own kids like having free time. Or, you could trade for cheaper activities until you pay off those credit card bills.  When you are tempted to overspend again, you will see that you're choosing between kids and convenience foods, or a smartphone, etc.

We don't have all the details, but I would guess that you could do better with an older van and no car payments, you may have a bunch of mobile phones with unnecessary data plans, etc. 

 

The Happy Philosopher

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Re: What would you do???
« Reply #71 on: January 12, 2017, 05:22:00 PM »
Mike,

You have taken the simple of action of realizing you are in a bad situation and reached out for help. That is a big first step. Don't beat yourself up over the past. That's all water under he bridge. The first step is to attack that debt like it is a deadly alien parasite. You can Dave Ramsey that shit with a debt snowball or go all spreadsheet mathematical but it's gotta be killed quickly. Once you start nibbling away at the debt and cutting your spending you will be surprised how fast things turn around.

Like others said you should budget, track your spending, or both. I personally find budgeting too much like a diet, but tracking my spending made me much more aware of where my money was going, and I could adjust and reallocate as necessary. Submit your data and prepare for massive face punching!

larmando

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Re: What would you do???
« Reply #72 on: January 13, 2017, 07:57:19 AM »
Mike,

Consider this: *just* what you pay in consumer interest is enough to fund a retirement, over the course of 30 years. And being 35 retiring in 30 years is *not optional*. Chances are you may want or need to stop working earlier than that.

You really need to buckle up and get rid of CC and car debt ASAP. If needed you can present it as a two years plan. No new electronics, no travel, nothing. Two years *max*. Then the debt is gone and you can reassess, start saving, and bring back *some* of that non-essential spending. In the meantime you really can't afford it: you have lived above your means and now you need to cut back. *now*.


MountainFlower

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Re: What would you do???
« Reply #73 on: January 13, 2017, 02:56:04 PM »
I don't think that I saw anyone mention this, but your credit card balances are really high.  I think that it would be difficult to get 0% credit cards for anywhere near 38K.  Depending on your credit, maybe half of that?

We were able to refinance our credit cards with our credit union for 7.9% and also with Sofi.com for about the same.  We ended up with extremely high balances at the end of home building project that went off the rails on the budget. 

By reducing your interest down to 8 or 9%, a lot more of your monthly payment will go to principal.  At that point you can take out 0% cards and put a portion of the debt there to help even more. 

Malum Prohibitum

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Re: What would you do???
« Reply #74 on: January 13, 2017, 04:23:14 PM »
Malum Prohibitum-Please please help us families of 6 with our groceries!!  I can get to $800 sometimes.  How do you do $540?  Please advise!!
I'll see if I can get Mrs. Malum Prohibitum to chime in on that.  She does the grocery shopping.  She puts a lot of work into comparison shopping and getting our protein requirements (eggs and meat) for the lowest price per pound that she can, and keeping the grocery trip down to once a week to save on gasoline (which unfortunately for us is still a way too big expense).
« Last Edit: January 13, 2017, 04:25:29 PM by Malum Prohibitum »

With This Herring

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Re: What would you do???
« Reply #75 on: January 14, 2017, 10:43:32 AM »
Posting to await the case study.  :)

GlassStash

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Re: What would you do???
« Reply #76 on: January 14, 2017, 03:19:54 PM »
Posting to await the case study.  :)

Same here!