Help for new Mustachian

[mamaof4]

I am an obsessive new fan of the mustache.  I found it from getrichslowly and I am trying to implement the plan.  I need some help! 

We own a 1997 Toyota Camry and a 2007 Toyota Sienna outright, both gifts from our parents.  I inherited $13000 in stocks? bonds?  from my grandfather this past May. I get a statement every few weeks from a brokerage firm but I know nothing about it.

My husband has a retirement account at his old job he has yet to roll over.  He worked there 8 years.  His new job he also has a retirement account but he has no idea what is in it, but he maxes it out. He’s been there 10 months so it’s still a small amount.

I went through our bank statement and tracked our spending last month as:

Groceries $996.45

Gas $613.79

Out to eat $209.42 (including paying $100 to  school lunches account at $2.35 per meal per child)

Entertainment $214.90 (Netflix, HuluPlus, WOW accounts, a book subscription, no cable)

Utilities $464.30

Mortgage $1700

Insurance was due $450.00

Medical $1185.12

Clothes $466.55 (winter coats for kids)

Pet food $60

Car Maintenance $35.51

Home repairs $65.92

Misc $494.94 (target trips, amazon.com, school pictures)

Total: $6956.89   HOLY WHOA!!!!

Income:

Travis take home:  $4900 per month ($66500 per year)

Me: varies due to my work being a tip job but approximately $1400 per month for 2 5 hour shifts per week

This month we cleaned out a saving account we had at a previous employer and put that in checking:  $1650. Otherwise we would have been upside down.  Obviously that can’t happen every month and we have to make some serious changes if we want to be debt free and comfortably retired in 15 years.

We have a cushion in savings of $1500 in an ING savings account for emergencies

Our debt is as follows:

Furniture loan, interest free $3400

Student loan 3.2% interest rate:  $24000

Mortgage: 4% interest rate $266000 remaining

I hope to have this all paid off in under 10 years.  We do have 4 children and a large 3096 square foot home.  We live on 20 acres 23 miles from town.  There is no option of moving closer to town as we live in the Western North Dakota oil boom where a 1 bedroom apartment rents for $3000+ a month if you can even find one.  I have thought of refinishing our basement and renting it out but that would involve a tidy sum as it is completely unfinished and supplies in this area have more than doubled due to the oil boom.  We could probably rent it out for upwards of $1000 per month if we did finish it, not the inflated sum we could get in town but still decent. 

[inthebiz]

Mama,

I initially typed out this huge plan with numbers, but the bottom line is this: how willing are you to sacrifice your wants (and what you think you need) to achieve your goals? For example, you can choose to stay in the house you live in, or you can downsize, move closer to your husband's job and you've cut down on housing costs, commute time and gas. Limit your grocery stops to once a week and plan your meals. My famliy cut our grocery spending by 40% doing this. I'm willing to bet not all of your kids *needed* *new* coats this winter. Clothes should be bought secondhand. No eating out and find other ways to go out and entertain yourselves. We do picnics all the time with warmer weather. Drop the entertainment. Hulu/Netflix are good, but not necessary. Definitely drop the book subscription and use a library. Realize that as much as pets are part of the family - having them is a luxury. I'm not telling to get rid of your pet, I'm just trying to present as many options to you based on your info. Again, what level of sacrifice are you willing to make? Would you spend less on car maintenance if you only had one car? How could you make one car work? Yes you would pretty much have to rearrange your lives and adjust, but many Mustachians have made it work. Not sure what the Medical is, but assuming that's not constant - hopefully that's money you're putting away when it's not being spent. Misc. has got to go. All that stuff.

What are your fixed costs? What your fixed costs to survive? Are they really needed for survival? How can you cut/minimize your variable costs? Gas, utilities, clothes, medical, entertainment.

I'll tell you what my family did. We looked at our survival needs, then we looked at cost of convenience needs (car/insurance/gas) and made a plan to minimize them all with whatever it took. Then we looked at our variable costs, which mostly were wants and cut them completely. We realigned our spending with what we truly want - FI as quickly as possible. Misc for us went from ~$600 month to less than $100. Also, we don't spend any money on a nonbudgeted item until the end of the month. Then we look at our surplus for the month and ask ourselves, "do we want to go back to those stores and buy xyz, or do we want to bank all this extra dough?" 9 times out of 10, we bank it and it feels awesome.

Check out Mint.com

[twinge]

Some areas that jump out at me:

Kid spending: pack lunch instead of school lunch--healthier and cheaper, secondhand coats and clothes (I have always gotten very nice coats for my kids for $<10 at 2ndhand stores/garage sales or in community hand-me-down swaps--I like saving the money and the environmental resources to not buy a new coat that will soon be outgrown).  Your month's clothes budget is about how much we spend as a family of 4 in the whole year including shoes which we buy good ones new.  School pictures seem obsolete in this age of constant photography so we never get them. 

Grocery: Our family of four regularly spends $400/mo and that includes the various household goods (e.g., tp, toothpaste) and alcohol--and everybody's lunches for work and school--and I don't do any couponing etc.  So it shouldn't be too hard with mindfulness to winnow this down.

Misc. shopping: We just carefully, carefully think before we pick something up at target or amazon or whatever.  Avoiding the places is often the best.  Many things that years ago I might have thought as "needs" or mildly pleasant extras seem like obnoxious waste now.

Gas: Avoiding extra grocery and other shopping trips is key.  Just don't go.  Tell yourself you'll only go out and do errands with the car 2x a month and plan accordingly.  This will save gas and make you realize that you don't need as much as you thought.  If you need something between those 2 monthly times either find a way to do without or find a way to bike/walk/bus even if it's outside your comfort zone.  Weaning yourself off from idle car travel is a huge step in the mustachian direction.

[ashem]

Have you read The Tightwad Gazette by Amy Dacyczyn? While the prices are dated, she had a very large family (6 kids) and was the queen of frugal living.
If you focus primarily on numbers and budgets, you'll probably fall back into your old habits eventually. Change your mindset and try to embrace a simple living lifestyle - environmentally, financially, spiritually. Think of this as an opportunity to teach your kids about money, gratitude, hard work, sacrifice, and self-sufficiency.

I have a few suggestions and questions. How old are your kids? How many years do you have left on your mortgage and how much equity do you have? Is your husband on board with your plan?

Groceries $996.45
Do you have a Costco nearby? Aldi? Are you doing all of your shopping at one store? How many shopping trips do you make each month? Start substituting a couple of vegetarian meals each week - lentils, rice, breakfast for dinner, leftovers, etc. Even if you only get your bill down to $850, that will make a big difference (especially if that includes school lunches and a packed lunch for hubby). Try a cash-only system and learn to make-do with what's in the pantry after you run out each week. Get creative, shop around, and clip a few coupons and you can get this bill way down.

Gas $613.79
As others have mentioned, combine trips. Can your husband car pool? Do your kids ride the school bus or do you drive them every day? You have a large family, so not many options to get a more fuel-efficent vehicle. Read MMM's blog post on expert driving. Fill up on gas when the prices are down, even if you're not low on gas. Try cutting this down to $550/month at first.

Out to eat $209.42
Pack lunches, pack lunches, pack lunches. I only have 2 kids, but I refuse to pay $4.50 a day for crappy school lunches. Challenge yourself to only eat out 6 times in the next year, to celebrate each family member's birthday. Use groupons, coupons, take advantage of 'kids eat free' deals. Get this down to $60/month

Entertainment $214.90 (Netflix, HuluPlus, WOW accounts, a book subscription, no cable)
This seems awfully high. What are WOW accounts? Does this include internet? Go to your library when you're in town. Swap books with friends. Ask the grandparents to buy video games, books, music as birthday gifts instead of toys. Try getting this down to $30 max.

Utilities $464.30
It's easy to see these as fixed prices, but watch your usage. Do you have compact flourescent bulbs and smart power strips? Do you turn off lights during the day and when you leave the room? This forum has inspired me tremendously to get our utility bills down. We're about to re-insulate our old house, which I would imagine in North Dakota would make a huge difference in the winter. Are you cell phones/home phone service included here?


Mortgage $1700
4% isn't bad, but could be better if you refinance now. Does this include taxes and insurance?

Insurance was due $450.00
Automatically set aside $75 each month so it doesn't sneak up on you. I assume this is 6 months worth of auto insurance? Do you still have comprehensive coverage on the Camry? If you've been with the same company for a few years, shop around and you'll probably be able to lower your rates.

Medical $1185.12
Is this insurance, doctor bills, prescriptions? Is this a typical monthly bill? Does your husband's job offer a pre-tax flexible spending account for medical bills?

Clothes $466.55 (winter coats for kids)
I've bought really nice used coats on ebay for $10-$15. I just bought barely-used snow boots for $15 at a yard sale last weekend. They would have cost $60 new and both of my kids will wear them. We live for hand-me downs.

Pet food $60
We pay $25 for 40 pounds of dog food at Costco. It's painful how much more we used to pay for this at Target and the grocery store.

Car Maintenance $35.51

Home repairs $65.92

Misc $494.94 (target trips, amazon.com, school pictures)
I avoid Target at all costs. It's hard to get out of there without spending at least $80. Try to take out $100 or $150 cash for all household shopping on payday and don't spend a penny more.

If I were you, I'd try to live on your husband's salary alone and use all of your tips to pay off the furniture and student loans. Maybe others can advise you on what to do with the $13,000 stocks.

Good luck!

[Jack]

Entertainment $214.90 (Netflix, HuluPlus, WOW accounts, a book subscription, no cable)
This seems awfully high. What are WOW accounts? Does this include internet? Go to your library when you're in town. Swap books with friends. Ask the grandparents to buy video games, books, music as birthday gifts instead of toys. Try getting this down to $30 max.

WOW is World of Warcraft, a massively-multiplayer online role-playing game with a monthly fee of $15 per player. The fundamental point of the game is to acquire fancier and fancier stuff in order to satisfy peer pressure. It's probably the most anti-Mustachian video game ever (exceeding even Farmville). The game's nickname is "Warcrack" because it's so addictive.

In other words, that shit's gotta go pronto, despite the fact that the kids (or whoever the players in your household are) are going to be really, really pissed off about it.

(Note: I'm aware that it's a fun game, and I sympathize. But no game is worth $15/person/month. There are other games -- including even MMOs -- without fees that your family could switch to, if doing the truly badass thing -- finding something more useful to do -- is too hard.)

[mamaof4]

Ashem-  No Costco or Aldi. We have a locally owned store that is very expensive and we have a Wal-Mart,that's it for groceries.  My husband is not on totally board.  He doesn't want to be extremely wasteful but he's not willing to get rid of his entertainment either.  So the Wow accounts and book subscription are staying.  He uses the book subscription at work so he's going to try to get that in his company's budget starting inJanuary.  Other than those 2 things and gas money he doesn't spend.  I'm going to do what I can on my end with the groceries and the misc expenses. 

We will be able to live on his salary and devote my money to the debt.  I hope to devote some of his to the debt as well.

As for my stocks, I need advice there but first I need to get some information about them!!

[ashem]

Check out this blog: http://www.onehundreddollarsamonth.com
She has an ENORMOUS garden in Washington state, clips coupons, and manages to get great deals on household stuff through Amazon.com.
She's also big on swapping good and services, and even "reclaims" unused food from grocery stores.