Author Topic: Have I left it too late?  (Read 9847 times)

Bumfluff

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Have I left it too late?
« on: October 08, 2013, 09:52:39 PM »
Edited because I realised I gave almost no info whatsoever!

Hello everyone,

I'm very new to MMM (discovered him yesterday!) and am completely won over by all the sensible advice and the big fat dollop of attitude. Now, call me a slow learner but I'm 39 years old (married with two gorgeous little kids) and I'm really worried I have left it too late to really turn our finances around.

Is anyone else in BIG 4-0 region who has recently started getting their finances in order? Is retiring early even an option for someone as dried up and shrivelled as me?

What's the first thing you did to get started?

Thanks!

More info:

Earnings
My husband earns $4870 per month and should receive an annual bonus of $10,000 bonus in June next year.
I'm a SAHM who just signed up to do some work from home which will bring in approx. $500 per month, starting next week. This also means childcare costs unfortunately which will cost $227 per month.

Assets
$200 in savings (working towards a $1000 'safety net' as a starting point)
Seven year old car that we own outright
Husband's company make Superannuation contributions, we do not.
I am in the process of consolidating my three old Superannuation funds which no longer receive contributions

Debts
Credit card with balance of $2,828 and interest rate of 21.49% (Working REALLY hard to pay this one down ASAP)
Credit card with balance of $9,275 interest 13.99%
Credit card with balance of $12,918 interest 13.24%
Credit card with balance of $15,772 interest 1.9% (intro rates, ends in six months time)

So $40,793 total debt over four cards. Two are paid over the minimum, two are paid at the minimum rate.

Outgoings per month
Rent $2000. We just signed a 12 month contract so can't move for a while
Debt repayment $1139
Groceries $565
Health insurance $221
Utilities $75
Home and car insurance $75
Mobile phones $113
Home phone and internet $80 (thinking of getting rid of the home phone which will save $30 per month)
Pay TV $67 (This has to go, I know!)
Petrol $56
Train card $28
Entertainment $175 (this includes shopping for food when we have people over, as well as any meals out or paid activities we do with the children including swimming lessons)
Gifts and donations $175 (this seems a lot when I see it written down like this!)
Savings $50
Clothing $56

I think that's everything - we are just about breaking even.
« Last Edit: October 08, 2013, 11:05:37 PM by Tiddlesticks »

Scrooge McDuck

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Re: Have I left it too late?
« Reply #1 on: October 08, 2013, 09:59:07 PM »
No way - never too late. You've got heaps of time and you are definitely way ahead of many non-mustachian people. 
All the best!
Scrooge

JamesAt15

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Re: Have I left it too late?
« Reply #2 on: October 08, 2013, 10:21:36 PM »
Hi Tiddlesticks, and welcome to the forum.

You're definitely not alone. There have been a couple of other similar threads in the past, so you might want to look through them.

http://www.mrmoneymustache.com/forum/welcome-to-the-forum/any-over-40-and-just-starting-your-journey-to-badassity/

http://www.mrmoneymustache.com/forum/welcome-to-the-forum/any-other-older-folks-reading-this-blog/

Are you too late? Well, it's probably too late for you to retire in your thirties, if that's what you're asking. ;) But it's never too late to take a good look at how you spend your life and your money, how and when you can retire, and then work on improving that situation.

destron

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Re: Have I left it too late?
« Reply #3 on: October 08, 2013, 10:22:51 PM »
Better to start living sensibly now and retire at 50-55 than to not start and NEVER retire. It will take a great weight off your chest to move from wondering about whether you will have enough money to accomplish the things you want to seeing your retirement account grow.

Hamster

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Re: Have I left it too late?
« Reply #4 on: October 08, 2013, 10:23:35 PM »
The easy answer is it's never too late to turn things around.

Other than that, I think it's hard to respond or offer advice that would be relevant for you without knowing anything about your situation.

I'd suggest being more explicit about your current financial situation and exactly what your question is.

How to get started? Track all your spending, spend less, eliminate waste wherever possible... Read the whole blog and some case studies, then  go from there.

Edit: thanks for adding in all the info
« Last Edit: October 08, 2013, 11:55:34 PM by Hamster »

imustachemystash

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Re: Have I left it too late?
« Reply #5 on: October 08, 2013, 10:58:15 PM »
Not too late.  Lots of people in here have gotten out of debt quickly once they put their mind to it.  40 is not that old anyway.  Just read all the blog posts and you will catch on!

Bumfluff

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Re: Have I left it too late?
« Reply #6 on: October 08, 2013, 11:13:17 PM »
Thank you Scrooge McDuck!

Thanks for the links James At15, it is reassuring to know I'm not alone, will go and read those right now. Yes, the retiring in my thirties ship has sadly sailed. Retiring in my fifties is the new goal.

Hamster good point, I have edited my post to add financial details. I suppose my question is really how quickly can I get back to a zero position in order to start saving/building wealth?

Destron you are right. I live in fear of being old and poor. No point wishing I had started earlier, better to just crack on with the changes I can make NOW.

imustachemystash I don't feel old, that's for sure. I'm just panicking a bit as I approach the milestone birthday and wanting so much to turn our financial situation around as quickly as humanly possible.

Mark31

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Re: Have I left it too late?
« Reply #7 on: October 09, 2013, 12:58:39 AM »
There's probably a few things you've left out, to fully work out your situation.

First, is the $4,870 a month income before or after tax?
Second, with that income, SAHM and two kids, you'd be getting $6k to $10k a year in Family tax benefits A & B. That should also go in the income category.
Third, at your age, and years away from FI, the amount you have in super is important and should be included in your assets

Looking at your costs, groceries is splendidly cheap. Less than 2/3 what I spend on a family of four.
Petrol is very cheap - you must be doing only 5,000 km a year. That's good. If you can get it lower than that, car sharing would maybe make economic sense, if it's available.
PT costs, also very good.
Phone and internet - Wow! I thought I paid a crazy amount for these, but it turns out I'm wrong.

You husband's wage seems about $60k a year - this is around about the median.

From your rent, I'm assuming that you're living in Sydney or Melbourne, or possibly Perth, and located close to reasonable PT and shops. If you're not, that's way too high, and you'll need to fix it next year.

You mention childcare - any chance of swapping with other parents for care?

You're forking out serious amounts on health insurance, but could you even afford to pay the gap if you went private? The public health system is fantastic in Australia.

More comments to come later.......

Bumfluff

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Re: Have I left it too late?
« Reply #8 on: October 09, 2013, 01:10:24 AM »
I'm sure I have left a few things out but that's the best picture I can manage at the moment. Those dollar values have all been converted into US dollars since the majority of users here are from the US (I think!)

Income is after tax. I forgot about Centrelink, we receive $127 Aus dollars per fortnight in FTB etc (just over $3k per year) so nowhere near your $6 to $10k estimate unfortunately! I have a stagnant $20k (Aus $) in my Super, need to check my husband's.

Bumfluff

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Re: Have I left it too late?
« Reply #9 on: October 09, 2013, 01:24:32 AM »
Sorry, pressed post too soon.

I am a demon when it comes to grocery shopping - meal plan, shop at Aldi, grow my own veg and herbs etc. but that number does sometimes hit $750 (Aus $) per month.

We do live close to work, PT and facilities. We have one car and use it as little as possible. I didn't include rego, roadside assist and servicing costs though, something else to add on.

I don't think I could swap with other parents but I could look at family daycare which is a bit cheaper than centre-based care.

We should look into dropping PHI but have been scared of the tax hit - I must investigate what that hit actually is. I currently have the top hospital cover but hoping to be able to drop that this year.

Thanks for your input, you've given me lots to research and think about!

Ozstache

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Re: Have I left it too late?
« Reply #10 on: October 09, 2013, 02:49:02 AM »
Another vote for it's never too late. I was flicking through a few financial plans I used to produce when I was young (25) and ambitious. I was earning about $20K after tax back then and the wife was earning $15K but about to stop work within a year to become a SAHM. In the span of three years we went from $8K in debt to $40K saved. Granted, that included selling off a few things that we weren't using anymore, but it turns out that's a perfectly valid mustachian thing to do.

So take heart, it can be done. Kill the debt, sell off unused/under utilised things, stop accumulating unnecessary things (ie. the things that grew your credit card debt in the first place), optimise living expenses and invest your eventual savings. Seems like you're already planning on doing a few of these things, so keep on truckin'!
« Last Edit: October 09, 2013, 03:34:33 AM by Ozstache »

Christof

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Re: Have I left it too late?
« Reply #11 on: October 09, 2013, 02:54:44 AM »
I don't think I could swap with other parents

Why not? If you simply don't know any parents to swap with, the first step would be to get to know other parents. In Germany, grocery stores have a board where you can put on requests like these. Can you somewhere pin a piece of paper with your request and phone number, preferably in a place where other parents would be?

Bumfluff

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Re: Have I left it too late?
« Reply #12 on: October 09, 2013, 03:19:31 AM »
Thanks so much Oztache for such an encouraging reply. Your story is inspiring! This afternoon I listed a chest of drawers on a local FB page and sold it within 10 mins! Am now eyeing off various items around the house... As a fellow Aussie, what are your thoughts on ditching PHI until we're debt free?


Christof, I do know other parents but the friends that I'd feel comfortable leaving my child with don't have schedules that work with mine. I also don't think I'd be very good at looking after other people's children!

Ozstache

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Re: Have I left it too late?
« Reply #13 on: October 09, 2013, 03:41:37 AM »
Thanks so much Oztache for such an encouraging reply. Your story is inspiring! This afternoon I listed a chest of drawers on a local FB page and sold it within 10 mins! Am now eyeing off various items around the house... As a fellow Aussie, what are your thoughts on ditching PHI until we're debt free?

We had PHI with the birth of our first child and were so disgusted with the multitude of "gap" payments we still had to make for what was essentially a bog standard medicare delivery. Dropped it for the second one, didn't pay a cent and haven't picked it up again in the 21 years since. With the $3K a year we've saved over that time, that's $63K worth of self insurance we could apply against any major illness that is covered by medicare or takes too long to get life saving treatment (can't think of, and haven't experienced, any). In short, not a big fan of PHI.

Bumfluff

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Re: Have I left it too late?
« Reply #14 on: October 09, 2013, 03:57:14 AM »
Thanks for that. I'm leaning that way myself. I'm a bit concerned about dental costs as I need a root canal. Guess I could have it soon and then cancel my insurance though.

kh

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Re: Have I left it too late?
« Reply #15 on: October 09, 2013, 05:17:15 AM »
You said you're paying more than the minimum on two cards? Nope. Minimum on everything but the 21%er until it's gone. What happens to the 1.9% after the intro period?

Mark31

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Re: Have I left it too late?
« Reply #16 on: October 09, 2013, 05:31:28 AM »
I'm back.

I'm not sure what your husband earns before tax, or how old your children are, but if I use these calculators here http://www.rdlaccountants.com.au/calculators.php plug in $80,000 for him, $0 for you, and a 6 and a 8 year old, I get $7,700ish.

I just got my assessment, and the calculator puts out the right numbers for me, so I would seriously look into it. Did you remember to register your second birth?(!)

Health Insurance: For ten years now, I've kept track of how much we would have put into health insurance, subtracted how much we would have received, and incremented it by our mortgage rate, or more recently investment returns, and we're $25,000 ahead, even after some major dental work.
We spent several thousands of dollars on some elective surgery, and if we'd had insurance, would have only got $100 back (after the $500 excess). Babies in public hospitals are free, and the caesarian rate is ten percentage points lower.
My son was in hospital recently, and the quality of care was top notch, and it didn't cost a cent.

Not sure why you're worried about the tax hit on not having PHI, currently, a couple can earn up to $176,000 and not pay it. (Source: http://www.privatehealth.gov.au/healthinsurance/incentivessurcharges/mls.htm)

Anyway, back to you....

In my opinion you have a debt emergency, and you have no business having pay TV, or spending $175 a month on gifts and donations. Skip donating now, and make up for it when you're in the clear. Christmas is coming up, tell family you want a handmade only Christmas. Don't spend more than five dollars per person on materials. Kids parties are a bother, but you're going to have to go to close friends only, and keep the price down to under $10. Tell everybody you don't want gifts for your birthday, so you can then skip theirs.

With your car insurance and contents insurance, do you have high excesses? This keeps costs down. You should be insuring for catastrophic loss, not cosmetic damage, or a few stolen DVDS.

Your superannuation accounts will almost certainly be deducting Death and TPD insurance. Decide if you want this, and what level of coverage you want. This is a cost, just like all your other costs, that eats away at your stash. Your husband's super may be deducting income protection insurance. If he has a large amount of sick leave accrued, this may not make sense to keep.

Everyone here is being very positive about your chances of retiring early, but if you're paying $500 a week rent then chances are houses in your area cost $700,000. If you want to retire at 55 and keep living in the same area, you would have to do something pretty amazing on the income front. If you're willing to move somewhere a lot cheaper when you retire, then you're in the game.

Lastly, do your own sums and your own research - I'm just a random on the internet.

Bumfluff

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Re: Have I left it too late?
« Reply #17 on: October 09, 2013, 05:39:50 AM »
Yes I'm paying quite a lot more than the minimum on the 21%er. I'm also paying extra on the 1.9%er to try and pay down as much of the principal as possible before the higher interest kicks in in six months time - it will be another 21%er when it does. I have a feeling you are going to tell me that is the wrong thing to do?!

While I'm fessing up to mistakes, I probably should have transferred the balance of the highest interest card to a low interest card but because it's the card associated with my main bank account it's been really easy to keep transferring small amounts as I save/create/earn a bit extra and have the reduction in debt instantly visible, it's been really motivating.

Bumfluff

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Re: Have I left it too late?
« Reply #18 on: October 09, 2013, 05:50:58 AM »
Thanks Mark31 but I'm pretty sure we are on the right amount of FTB. Our annual income estimate for the year includes my husband's likely bonus and projected earnings of $12,000 for me as we want to make sure we aren't overpaid so that reduces it right down. I remembered to register our second child!

It sounds like getting rid of our PHI is a good idea, right after we have that dentist appointment.

I didn't realise that the tax hit didn't apply below $176k until a friend told me about an hour ago. Safe to say I'm no longer worried.

We have mid-table excesses on our contents and car insurance. Our Superannuation doesn't deduct TPD or income protection. We won't retire in this area or pay $700,000 for a house so I can cross that one off the list.

I am doing my own sums and my own research, as I said I only discovered MMM yesterday and this is my first post. I was interested to hear from people who are living it that's all.



« Last Edit: October 09, 2013, 05:57:54 AM by Tiddlesticks »

pachnik

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Re: Have I left it too late?
« Reply #19 on: October 09, 2013, 07:23:20 AM »
Hi Tiddlesticks,  welcome to the MMM site.

I found MMM when I was 48.  Clearly, I also won't be retiring in my 30's or 40's!  LOL. 

I was doing 'okay' financially - saving a bit more than 10%, no CC debt etc.  Since I got here I began really looking at my spending and cutting out unnecessary stuff to the tune of about $250/per month.  What is really scary is that I don't even miss the stuff.  My husband has gotten on board too and is paying off his credit card like 'his hair is on fire'.  This is a huge added bonus. 

But I also found a very satisfying way of life here.  The way I see it, is okay I can't retire early, but at least I don't have to live like an unthinking consumer drone - i.e.  'walk past a Starbucks - must go inside'.  I really think about how I am spending my $.

Never too late to have a new beginning in my opinion and if you have worries about how you will retire, well you can sort all that out here.

TrulyStashin

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Re: Have I left it too late?
« Reply #20 on: October 09, 2013, 07:38:04 AM »
I'll be 45 tomorrow and thanks to a variety of good and not-good reasons, I'm also deeply in debt (mostly student loans for my law degree). 

I found this blog in May and have done a 180 with my spending by embracing every aspect of Mustachianism (even hanging my clothes to dry).  You can search my name and get more details if you want, but I went from spending about 70% of my take-home pay to spending about 40% with every spare dime thrown at debt.

That said, now that I'm 6 months in I've learned a few things that may help you. 

First, after the initial euphoria wore off ("finally!  I know what to do!  I'll do it and everything will be ok!") I'm finding that the debt paydown is slower and more frustrating than I had thought it would be.  This is not a reason to stop or change course.  But I highly suggest that you seek out Mustachian friends and/ or this forum to help you work through the emotions.  This will be a roller coaster of emotions.  My boyfriend is very much on board and I have local friends who also read MMM and post here -- that makes all the difference.

Second, expect life to throw problems your way that reduce your ability to pay off debt as fast as you'd like now that you've seen the light.   Life keeps throwing $ curve balls at me that have prevented me from making a truly monster payment toward my primary debt target. If I get a month without curve balls, I'm pretty sure I can send about $2k toward that debt and I really can't wait for that rush of adrenalin and to see that balance go down.  But so far the curve balls keep coming.  (e.g. my son is a high school Jr. and between this month and last I've shelled out about $1500 on various college-search related items and other necessary expenses like his braces and driving instruction.  There's more coming too).  So far, the biggest payment I've been able to make has been $1000.  And then I had to charge an airline ticket for an upcoming business trip (will get reimbursed) and the balance went right back to where it was.  Though I know that charge is temporary, I hit a little wall of depression there for a bit that I had to work through.

If you're too old, then I'm screwed.  ;)  So, NO you're not too old.  It will be wonderful at times.  It will be really, really hard at times.  Keep going.  Keep posting.  Keep optimizing.   We can do this.

Bumfluff

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Re: Have I left it too late?
« Reply #21 on: October 09, 2013, 05:02:02 PM »
Thanks pachnik! I had a good chat with my husband last night about the hair on fire reaction to our debt. Something MMM had written about how when you are in debt, every dollar you spend is on credit really hit home with me and I told my husband and he had his "lightbulb" moment. I mean of course we knew that we're not doing so well financially and that our debt repayment was moving very slowly but I think he was focusing on slow and steady wins the race (and wanting to avoid too much personal discomfort I believe) while I am running around shrieking that the sky is falling in! Now we're both running around shrieking things will be easier. Now there's a sentence I never thought I'd write!

I had made some changes to our budget before discovering MMM - massively reducing our grocery bill, limiting car use etc. and I found it really satisfying. But now we need to turbo-charge our debt clearance and I think being here will help both in terms of ideas and in keeping me honest. I don't mean to sound smarmy but it is genuinely inspiring to hear how others are just caning their debt. I picture you all as marauding Genghis Khans, complete with a  predilection for little fur hats...

Happy Birthday TrulyStashin! I hope you're having a great day. I'm going to search on you and read your story, real-life examples are my favourite source of motivation. I spent much of last night reading case studies and looking through the forum. I absolutely hear you on the initial euphoria, I'm all excited about the MMM philosophy at the moment but I know that after a few months of "deprivation" my enthusiasm will wane. That's why I was keen to join in the forums, tough love is great but support is necessary too. Love Rosie the Riveter!


TrulyStashin

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Re: Have I left it too late?
« Reply #22 on: October 09, 2013, 07:55:47 PM »
Happy Birthday TrulyStashin! I hope you're having a great day. I'm going to search on you and read your story, real-life examples are my favourite source of motivation. I spent much of last night reading case studies and looking through the forum. I absolutely hear you on the initial euphoria, I'm all excited about the MMM philosophy at the moment but I know that after a few months of "deprivation" my enthusiasm will wane. That's why I was keen to join in the forums, tough love is great but support is necessary too. Love Rosie the Riveter!

Thanks!  One thing I should clarify is that I do not feel the least bit deprived and I bet you won't either.  My life is better now than it was six months ago.  Every day I bike over one of America's largest and most historic rivers and often pause in my commute to sip my coffee and watch the herons slowly step through the shallows.  I have new friends who are thoughtful, wonderful people.  I have a renewed sense of well being and optimism about the future. I'm constantly trying new things and learning new skills.  My comfort zone is very malleable.   Deprivation is a word that simply does not apply to my life.  ;)

Bumfluff

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Re: Have I left it too late?
« Reply #23 on: October 09, 2013, 10:11:00 PM »
That's wonderful to hear. I did put deprivation in inverted commas because I don't really believe that's what it is, just meant doing without the things I'm used to really.

I just cancelled Pay TV and am awaiting a call back re cheaper insurance. I'll get there!
« Last Edit: October 09, 2013, 11:27:20 PM by Tiddlesticks »

dadof4

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Re: Have I left it too late?
« Reply #24 on: October 09, 2013, 10:14:25 PM »
Stating the obvious / A bit of tough love:
At your current rate, it will take you 4 years just to repay those credit cards, assuming life doesn't throw anything unexpected at you. After which you'll have very little assets outside those superannuations.

Your rent is taking up a very significant part of your income. Find cheaper housing as soon as you can. If it's possible to get out of your contract by finding sub-letters, you should explore that. If you have parents you can move in with until your CC debt is paid, it would be something to consider.

SAHM is a very real and challenging job, but it doesn't make money. If you serious about ER. try thinking about how you can make more money, Many jobs can be done from home if you're hesitant to have someone else watch your kids.

But never lose hope. The mental switch is the real hard part, and you seem to have done that. After this, good things will naturally follow. It is definitively doable. Good luck!

Bumfluff

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Re: Have I left it too late?
« Reply #25 on: October 09, 2013, 11:15:23 PM »
Thanks Dadof4, I'm going to do everything I can to reduce that four year debt repayment. Not sure if you saw it in my first post but I have taken on some work (two days a week, working from home). I start on Monday. I will of course up my hours as my little ones get older.

We really can't get out of our tenancy agreement without incurring large costs so we're stuck for a while. Although the rent is high, the location of the house does allow me to walk most places, gives my husband cheap public transport travel and has space for me to have a decent veggie patch and fruit trees so there are some money-saving positives. Our parents live 10,000 miles away sadly (as do all members of our extended family) so no help on that front unfortunately.

I do feel that something has changed and all our focus is on sorting out this mess now. Husband is currently looking at a change to contract work to up his income while I ring providers to try and get cheaper utilities etc. Every cent saved will be hurled at that debt.

sleepyguy

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Re: Have I left it too late?
« Reply #26 on: October 10, 2013, 09:48:08 AM »
First off congrats on changing your mindset, 40 isn't too late.  Okay onto the advice.

"I'm a SAHM who just signed up to do some work from home which will bring in approx. $500 per month, starting next week. This also means childcare costs unfortunately which will cost $227 per month."

Honestly, this right here is pointless unless you can work that to at least $1000+/mth.  Time with your kids is more important than a couple of hundred bucks.

$2000 rent seems a bit high but I guess you are locked in for awhile.

$550 groceries can get down to $300-400 to be honest... and that's not skimping much.

and the BIG one... $40k CC is pretty crazy.  Don't even bother saving for ANYTHING... just put everything towards this.  Vacations, screw it... movies, screw it... just get those CC wiped out then start your savings.  All bonuses should go direct to pay it off, pay off highest interest first.

Bumfluff

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Re: Have I left it too late?
« Reply #27 on: October 10, 2013, 02:55:29 PM »
I'm a buffoon!!! It will be $500 PER FORTNIGHT, not per month so yes, $1,000 per month for now and rising as I increase my hours. (Childcare of $227 is monthly). I think I mentioned projected earnings of $12,000 for the year somewhere. It's only two days a week as I don't want to be away from my children for any more than that at this stage in their lives. In fact the baby will be at home with me but it's about the number of hours I work, not the 9-5 so I'll be working during naps and post bedtime. I was very lucky to get such a flexible role so grabbed it with both hands. I won't pay tax either as I'll be under the tax free threshold for the year.

I will look at the grocery budget again, I know we can lose some treats and our eldest is toilet training so no more pull-ups!

The credit card debt IS crazy and embarrassing and soul destroying. It is absolutely our primary focus and we know our hair is on fire. Lots of reasons for the debt, some noble, some ridiculous but no time to beat ourselves up anymore, time to move forward.

« Last Edit: October 10, 2013, 03:08:33 PM by Tiddlesticks »