Author Topic: Help me refocus my financial efforts, please!  (Read 9516 times)

fallstoclimb

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Help me refocus my financial efforts, please!
« on: June 12, 2013, 07:28:35 AM »
I need help refocusing my financial efforts.  We recently bought a house and have paid off 20K in student loans over the past year, but now I think its time to step back and identify new priorities. 

The first challenge is that I have $41K remaining in student loans at 6.8% interest, divided over 4 loans:  3 just under $12K, and one just over $5K.  I make a $800/mo payment (overpaying by about $200).  I've been putting additional lump sums to the $5K loan whenever possible, because that $800/mo will go much further if it is only divided over 3 loans rather than 4.  Under normal circumstances I could have the 5K loan done in about 3-4 months, except for the next challenge:

My husband is required to get a masters degree for his job, and we have to pay for it (he's a teacher).  He will be starting in the fall and we are doing our best to pay out of pocket to refrain from raising our debt burden.  So far I've socked away 3K for him -- he will need about 16K total for this, spread over 6 semesters (2 years).  So, unfortunately, this is where most of our 'extra' money is going right now. 

We also have a $287K mortgage at 3.75%, on a house appraised at $305K, as we recently bought.  Overpaying the mortgage is currently one of our last priorities.

I am almost tempted to scale back our retirement contributions to help get that $5K loan off our back, because it'll start the snowballing in my other loans sooner (and, psychologically I will feel that I can stop focusing on my loans when none are at an 'attackable' amount).  However, I think we're a bit behind in retirement savings.  I contribute 5% towards my TSP (4% of which is matched), but only have $25K put away at the moment due to taking a break for school, and not putting away much when I was younger.  My husband only recently started contributing a nonmatched $50/biweekly toward a 403(b), so he has $4K in that account.  He is a teacher and I am a federal employee so we both SHOULD get pensions (his is pretty substantial, which is why he doesn't get matching funds in his 403b(b)).  We are only in our late 20s but obviously I understand the importance of retirement savings.  But then again, debt is an emergency!

The last point to note is that we only have 5K in emergency savings.  This makes me a bit nervous now that we have a house and a lot can go wrong, although I also understand that MMMers scoff at large emergency funds?

I haven't laid out our budget because I know the areas in which we can cut back (Home Depot for one!), but it'll only get us a couple extra hundred a month.  We stand to get about $1500 in a lump sum this summer which I think I will split between my husband's grad schoool and my loans.  But, I really want to get that 5K loan DONE.  Is it stupid to be so focused on it? 

I should also mention that I expect us to get a large tax refund next year, since we just bought a house and my husband will be a teacher going to grad school (I believe they get further tax aid than most grad students), plus we have my student loan interest.  I wonder if it would be worth meeting with someone to figure out how to adjust our withholdings - athough I am one of those who likes getting those yearly lump sums, especially at today's dismal interest rates.

Khan

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Re: Help me refocus my financial efforts, please!
« Reply #1 on: June 12, 2013, 07:48:48 AM »
I think it would be better to pay down your currently outstanding student loans then to save up for your husband's master's degree so that you guys don't take student loans on that end. I think you come out ahead if you take those loans when you have to rather than saving for the school.

fallstoclimb

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Re: Help me refocus my financial efforts, please!
« Reply #2 on: June 12, 2013, 07:53:08 AM »
I don't think I follow --- do you mean put off my husband's grad school for a while?  That's not really an option as he has to have it completed by his 10th year of teaching to maintain certification.  We have 1 or 2 years of 'wiggle' room in there in case something happens but we both really want him to get it over with in case we decide to have kids down the road. 

Frugal_in_DC

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Re: Help me refocus my financial efforts, please!
« Reply #3 on: June 12, 2013, 08:06:13 AM »
I'm assuming your husband has to pay for his graduate degree because his employer won't pay for it.  If that's the case, could he get a job at another school or school district with a tuition reimbursement program?  Many of my kids' teachers got their masters' degrees that way.  If nothing else, he could try to get a job offer from another employer that offers tuition reimbursement and see if his current employer will match the same benefit.  Sometimes people do that to negotiate salary increases, promotions, or retention bonuses.

As far as withholding, the IRS has a DIY withholding calculator at http://www.irs.gov/Individuals/IRS-Withholding-Calculator .  I would definitely change your withholding and put the extra money from every paycheck to good use right away.

fallstoclimb

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Re: Help me refocus my financial efforts, please!
« Reply #4 on: June 12, 2013, 08:24:03 AM »
Yeah, he already applied to all the local counties, but currently none are posting openings.  It's only his county which isn't currently reimbursing tuition (OR giving a raise for getting a master's), which is extremely frustrating, but given that none of the other counties are advertising openings I think we're on our own paying for his school for this year at least. 

nktokyo

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Re: Help me refocus my financial efforts, please!
« Reply #5 on: June 12, 2013, 08:28:10 AM »
If the interest payments on your school loans and the loans your husband would have to take out are the same, then I would suggest throwing all of your spare money at your current loan and borrowing again when your husband goes back to school.

Reason is that you're paying 6.8% interest on a loan and saving money at effectively zero NOW, for the privilege of saving 6.8% on his loan later. It's false economy to accept a return of zero instead of 6.8%.

Beyond that I think you guys might have another problem. You'll have $40-50K of school debt to clear and right about when it does disappear you'll be at the age when people start thinking about kids (income down, expenses up). What is your plan to properly get ahead?

jpo

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Re: Help me refocus my financial efforts, please!
« Reply #6 on: June 12, 2013, 08:32:11 AM »
It's only his county which isn't currently reimbursing tuition (OR giving a raise for getting a master's)
Why does he need a master's then?

fallstoclimb

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Re: Help me refocus my financial efforts, please!
« Reply #7 on: June 12, 2013, 08:38:34 AM »
To maintain his state certification.  It's a state requirement, most counties both reimburse for it AND provide raises once you have it, but given the current budget crisis his county froze both those benefits a few years ago.  If he doesn't get it he won't legally be allowed to be a public school teacher in the state.  Nevermind the fact that two years of grad school costs about 35% of his annual gross salary. 

Teachers aren't treated well out there, y'all.  I've come to terms with it. 

nktokyo

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Re: Help me refocus my financial efforts, please!
« Reply #8 on: June 12, 2013, 08:39:19 AM »
It's only his county which isn't currently reimbursing tuition (OR giving a raise for getting a master's)
Why on earth does he need a master's to teach high school?

fixed

fallstoclimb

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Re: Help me refocus my financial efforts, please!
« Reply #9 on: June 12, 2013, 08:43:14 AM »
Beyond that I think you guys might have another problem. You'll have $40-50K of school debt to clear and right about when it does disappear you'll be at the age when people start thinking about kids (income down, expenses up). What is your plan to properly get ahead?

Only having one kid, both of us working full-time, and hopefully retired parents to provide free day care at least on a part time basis.  I'm also anticipating a 15K raise in the next year or two (grade level bump).  One kid will be much cheaper than all this damn schooling. 

nktokyo

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Re: Help me refocus my financial efforts, please!
« Reply #10 on: June 12, 2013, 08:44:48 AM »
OK then. See my comment about paying your loans now vs saving money. I think it will be useful for you.

jpo

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Re: Help me refocus my financial efforts, please!
« Reply #11 on: June 12, 2013, 08:58:40 AM »
To maintain his state certification.  It's a state requirement, most counties both reimburse for it AND provide raises once you have it, but given the current budget crisis his county froze both those benefits a few years ago.  If he doesn't get it he won't legally be allowed to be a public school teacher in the state.  Nevermind the fact that two years of grad school costs about 35% of his annual gross salary.
How is he currently a teacher if he doesn't yet have the Master's then?

Any chance of moving, him teaching at a private school, getting a different type of job, etc?

fallstoclimb

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Re: Help me refocus my financial efforts, please!
« Reply #12 on: June 12, 2013, 10:42:45 AM »
How is he currently a teacher if he doesn't yet have the Master's then?

Any chance of moving, him teaching at a private school, getting a different type of job, etc?

It's a 10th year requirement -- you are allowed to teach for your first years without it but need it completed before your 10th year. 

Moving counties -- I'd love it but it doesn't seem likely.  Private schools pay terribly and a different type of job it out.

I've resigned myself that we have to pay for his grad school - I'm not clear on the benefits of taking his out on loans while paying down my balance though, as has been suggested.  I assume we will not qualify for subsidized loans (gross household income ~ 125K) and therefore any loans he takes out will be earning interest while he's in school.  So, why would taking out new loans for him while we pay down mine be preferable to paying his out of pocket and not taking on any additional loans, while just slightly overpaying mine?

I'm also looking for input on our emergency fund (should a top priority be building that, over debt?) and retirement savings (should we cut back on that now to beat down debt?)

wrightstuff

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Re: Help me refocus my financial efforts, please!
« Reply #13 on: June 12, 2013, 02:20:14 PM »
You might consider MMM's comments on "hair on fire" emergencies, but it seems you've made headway on your debt to date and are asking some good questions.  Keep looking for ways to free up cash to put to your loans!

I would suggest you continue your contributions as you are getting the 4% match, presumably with the match you are getting a better return than 6.8%.  IMO your husband's contributions to his plan are better allocated to paying off the old debt first, roughly another $600 for the remainder of the year just helps a little more.

I would leave the 5k of emergency funds as it is, just put all remaining extra cash, including the 3k you've saved, towards the student loans.  I also wonder if consolidating your student loans wouldn't have some benefit, having 1 instead of 4, for sanity's sake if nothing else.

Good Luck!

nktokyo

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Re: Help me refocus my financial efforts, please!
« Reply #14 on: June 12, 2013, 06:52:45 PM »
My point was that paying your loans vs paying his gives you the same net benefit... so you lose over the period that you're saving money to pay his loan at some later date.

Simple example...
Say you have $20,000 of debt @ 7% now and he will take on $20,000 @ 7% gradually over the next 2 years starting in six months time.

Any money you put against your debt effectively earns (saves) you 7% right now + the power of compounding returns (next week you'll be charged interest on less principal).

If you save money now, you effectively pay 7% (0% savings rate vs 7% debt) for the privilege of having less debt later on - at the same rate.


markstache

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Re: Help me refocus my financial efforts, please!
« Reply #15 on: June 12, 2013, 07:22:02 PM »
I haven't laid out our budget because I know the areas in which we can cut back (Home Depot for one!), but it'll only get us a couple extra hundred a month.  We stand to get about $1500 in a lump sum this summer which I think I will split between my husband's grad schoool and my loans.  But, I really want to get that 5K loan DONE.  Is it stupid to be so focused on it? 

I should also mention that I expect us to get a large tax refund next year, since we just bought a house and my husband will be a teacher going to grad school (I believe they get further tax aid than most grad students), plus we have my student loan interest.  I wonder if it would be worth meeting with someone to figure out how to adjust our withholdings - athough I am one of those who likes getting those yearly lump sums, especially at today's dismal interest rates.

1). If I'm not mistaken, since you have a TSP, you are a public employee, would you qualify for loan forgiveness program?

http://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service

2). I would not say you are wrong to concentrate on the 5k loan, but what you really want to concentrate on would be higher interest rates:

http://www.creditsesame.com/blog/paying-off-debt-07202011/

If you are serious about getting out of debt, you will try to find ways to trade student loan debt for a lower interest rate, such as a home equity line of credit. There are other downsides here such as costs of associated with opening the HELOC and the ability to defer student loans in hardship. I'd be interested to get others' opinion of this idea as it is certainly unusual. If you dont' want to out and out pull money out, a HELOC could replace a large portion of your emergency fund and get that money working for you today.

3). Does you husband want to keep teaching? If you have to pay for schooling anyway, perhaps this is an opportunity for a career change.

4). Don't get a big tax refund, keep your money now! You should be able to walk through a 1040 and get a ball park of what you are going to pay in taxes. Adjust your withholdings immediately. Perhaps check again in Q4. Remember, you have a great interest rate right now 6.8%!

I'd also double check your assumptions that itemizing is going to help with taxes. It didn't for me, no matter how many times my real estate agent told me it would during the buying process.

5). Others might disagree, but I would scale back any unmatched retirement contributions and attack the student loan. Guaranteed 6.8% return is hard to beat.

6). Don't scoff at a few hundred a month. Make it happen. Then make it happen again next month.

Finally, I wanted to offer some praise for attacking these issues head on. Its easy to get frozen in the headlights. Good work!

Riceman

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Re: Help me refocus my financial efforts, please!
« Reply #16 on: June 12, 2013, 08:20:13 PM »
    As a Federal employee with the possibility of a pension down the road, you are in a different position than many Moustachians.**  If you make it to your FERS retirement age, your pension alone (and you also have your husband's potential pension!) will generate enough income for you to live a nice, Moustachian-retirement.  If your goal is to work until you get the pension, and not to retire early, than your retirement is in great shape unless you drop an atomic bomb of spending on your budget. 

    The downside to the guaranteed pension is that you are stuck in the system with heavy penalties to get out.  Your compensation will be conditional and deferred, and you will retire later in life.
If that's a problem, you should start looking for other employment now.  If that's not a problem, don't overdo saving for retirement.  Just give 5% to TSP to get the full match and focus on your debts.  If you focus on retirement savings rather than debt AND plan to get the pension, here's what your finances will look like for the rest of your life:

30's: Very few liquid assets
40's: Below average liquid assets
50's: Average liquid assets
60s+: ROLLING IN MONEY

If you work til pension age and put only the minimum into TSP to receive the 5% match, when you hit retirement age, you would have:

-Your pension (30-50k per year?)
-Your Husband's pension (50k per year?)
-Your TSP base contributions (10% of your total accumulated salary, with compounding tax-advantaged interest)
-Social Security
-The house you have paid off and the remaining liquid assets you had[/li][/list]

This is enough money to fund even a very non-moustachian lifestyle.  Focus on paying off debts and building the liquid assets that will tide you over until you get your pension or in case you decide to seek new employment.  One great way to do that is by switching to a HDHP with HSA.  The rates are lower and the government puts money in the account for you, so it's good even if you can't contribute more to it.  When your debts are paid off, max the rest, and you'll have tax-advantaged money that you can use no matter what you decide to do.


**I'm also a federal employee, although my pension plan, the Foreign Service Pension System (FSPS), operates slightly differently from FERS.
« Last Edit: June 12, 2013, 08:31:33 PM by Riceman »

fallstoclimb

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Re: Help me refocus my financial efforts, please!
« Reply #17 on: June 13, 2013, 06:37:08 AM »
Thanks so much for all the great advice -- this is exactly the type of feedback I was looking for.  I was hesitant to increase our loan burden at all, but I do see the benefit of paying down my debt rather than saving for his now that its been explained, thank you.  I believe its too late to get loans for this fall but I will certainly look into it for the spring.

I see HELOC as an option if there is a TRUE emergency more than our little 5K can cover, but I don't like the idea of taking it out now to cover school.  I know its lower interest but we have so little equity in our house since we just bought, and the last thing I want is to wind up underwater.  We plan to stay here for years and years and I can't imagine why we would ever 'have' to move (all parents are in the area, I'm a fed so why would I live the DC-Balt region) but that still makes me nervous. 


To answer a few other questions that have come up:

I would qualify for public loan forgiveness except I make too much money to qualify for extending my loan repayment beyond the standard 10 years (which is the forgiveness mark).  Even with my husband's grad school I believe we are on track to have my loans paid off in ~5 to 7 years total.

My husband will continue working full-time while he is in school, so thank you for the concern, but 'today' will be fine  :)  No credit card debt or car payments either.  We have roughly an extra 1K every month after retirement contributions, student loan payment, etc, so we are hardly living paycheck to paycheck.  The reason I posted was because I was unsure where to direct that extra money given our competing priorities. 

Lastly, thank you for kicking me in the butt about scoffing over a few extra hundred a month  :)

« Last Edit: June 13, 2013, 06:40:03 AM by fallstoclimb »

nktokyo

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Re: Help me refocus my financial efforts, please!
« Reply #18 on: June 13, 2013, 07:41:52 AM »
If you don't mind us asking, what does your broken-down monthly spend look like?

fallstoclimb

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Re: Help me refocus my financial efforts, please!
« Reply #19 on: June 13, 2013, 08:18:00 AM »
It's more or less the following:

Mortgage: 1670
Student Loans: 800
Gas: 150-300  (varies based on if its summer break or not)
Utilities: 100
Cell phones: 70
Internet:  50
Groceries:  400-500.  This is absurdly high for 2 people and to be honest I'm baffled by it every month.
Restaurants: 200.  Another area where we can cut back on. It used to be 300 though, so yay us...?
'Everything Else'*: 1000-1500
'Extra' money: 1000

*'Everything Else':  What we are spending on here varies greatly (hobbies, gifts, Home Depot/home maintenance, car maintenance & misc costs, car insurance (2x/yr) bike costs, clothes, 'bites to eat', alcohol).   I know this system wouldn't work for everyone, and I will be the first to admit we could be more frugal here, but I will say we buy very little 'stuff'.  We have some expensive (non-negotiable) hobbies and just recently moved to a less expensive (but still pretty expensive) area.   

Since we just bought a house and moved the 'Everything Else' category has just been completely overhauled and I haven't really been able to track our new patterns enough to measure the new changes very accurately.  We have cut way back on travel, gifts, clothes, and happy hours, but have new spending demands like home maintenance and lawn care.  Maybe when our costs settle down I will track this area more closely. 


** modified to add utilities, I forgot about those! 
« Last Edit: June 13, 2013, 08:52:08 AM by fallstoclimb »

aj_yooper

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Re: Help me refocus my financial efforts, please!
« Reply #20 on: June 13, 2013, 08:31:53 AM »
Have you thought of using Mint to track your past expenses?  The everything else category is a big tell:  you need to get on a budget now, not later.  I think there is a serious leak in your checking account.  Track the expenses now; they may never settle down.

Gerard

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Re: Help me refocus my financial efforts, please!
« Reply #21 on: June 13, 2013, 08:33:37 AM »
There will definitely be advantages to closely tracking what actually makes up the "everything else" category. You may be surprised by what you find... if nothing else, actually knowing where it's going will remind you that you're spending an absolute shit-ton on what seem to be non-essential expenses. I worry a lot less about your "absurdly high" grocery bill and a lot more about your "non-negotiable" hobbies, given your debt load and the aggressive cutbacks in your state.

fallstoclimb

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Re: Help me refocus my financial efforts, please!
« Reply #22 on: June 13, 2013, 08:38:26 AM »
I do use Mint, but only have the top categories broken out.  I will get on doing a better job of tracking.  Some of the problems I'm having with tracking via Mint is every 6 months we have a large ($900) car insurance bill and every 3 months I have a large ($500) bill for my non-negotiable hobby and I haven't really figured out how to handle variable expenses in there.  Even without those, that's still basically $1000/mo that is 'unexplained' so I will start being more aggressive about it.  I don't like budgeting areas like gifts and clothes and fast casual meals - basically we just try to buy these things as little as possible, and spend as little as possible.  I guess that strategy isn't working real well though.

Rebecca Stapler

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Re: Help me refocus my financial efforts, please!
« Reply #23 on: June 13, 2013, 08:43:10 AM »
1) I agree w/ paying down your current SLs and taking out SLs for your husband if he needs them for the reasons stated above PLUS, for those loans that are subsidized, you will not be charged interest while he's in school. The last I checked, he could get up to $8500/year for subsidized Stafford loans (if you qualify).

2) PSLF eligibility also depends on the total household debt burden. I don't recommend putting off your SL payments because you'll both qualify for PSLF if your husband accrues enough SL debt -- UNLESS you're really close to PSLF eligibility (like, $8500 away). It doesn't sound like that's the case, but if it might be, do some calculations on an IBR calculator with an estimate of your income and loans after your husband is in school for a year.

3) Your budget has $2000-$2500 of "extra" and "everything else" money. You hate your $5k in SLs. But you're only putting $200/month towards them. I have a ton of SLs, and was somewhat in a similar situation -- not putting nearly as much per month towards them as I could have. What really helped me throw more money at them was to pay as much as I could at the beginning of the month, based on my estimates of that month's expenses. That way, any savings we realized the previous month get thrown directly at the thing that I hate so much. Waiting until the end of the month to see what's "left" was not working for us, and neither was setting a specific amount to throw at the loans per month. Prioritize it to the beginning and hold your other spending accountable to that big lump sum SL payment.

4) Your grocery budget doesn't look awful to me, but I'm sure you could trim it without even feeling it. Meal planning will help you avoid wasting food that spoils, shopping the sales cycles will save you money (check out Stephanie Nelson's Coupon Mom's Guide to Cutting your Grocery Bill in Half), and couponing will save you a sh!tton on toiletries and household goods (check out the "Couponing 101" series at www.hotcouponworld.com). Using those methods, I save 30-40% on my groceries every month, and 50-100% on household goods and toiletries. It might be fun to learn how to do it during your summer break. 

5) Your car insurance and hobby bill aren't "variable." You can anticipate and quantify them. You know they're going to happen and can plan for them. Mint does allow you to budget for these items, you tell it that you spend that money every 6 or 3 months.

fallstoclimb

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Re: Help me refocus my financial efforts, please!
« Reply #24 on: June 13, 2013, 08:49:04 AM »
3) Your budget has $2000-$2500 of "extra" and "everything else" money. You hate your $5k in SLs. But you're only putting $200/month towards them.

5) Your car insurance and hobby bill aren't "variable." You can anticipate and quantify them. You know they're going to happen and can plan for them. Mint does allow you to budget for these items, you tell it that you spend that money every 6 or 3 months.

Sorry I should have been more clear about that 'extra' money. I do always throw that money towards loans -- previously mine, recently saving up for my husband's school, although after reading this thread I am going to direct it back to mine.  I actually do that at the beginning of the month as well, and then more often than not find a few more hundred left over at the end to direct towards debt paydown as well.  That's how we discharged 20K of debt this year while saving up for a down payment as well. 

Thanks for the tip on Mint, I wasn't aware of that. 

fallstoclimb

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Re: Help me refocus my financial efforts, please!
« Reply #25 on: June 13, 2013, 10:06:11 AM »
It's more or less the following:

Mortgage: 1670
Student Loans: 800
Gas: 150-300  (varies based on if its summer break or not)
Utilities: 100
Cell phones: 70
Internet:  50
Groceries:  400-500.  This is absurdly high for 2 people and to be honest I'm baffled by it every month.
Restaurants: 200.  Another area where we can cut back on. It used to be 300 though, so yay us...?
'Everything Else'*: 1000-1500
'Extra' money: 1000

Wait...I just realized I miscalculated.  Some of my transfers, loan payments, etc were winding up in the 'everything else' (I've been neglecting Mint).  Here's a better breakdown on the Everything Else.  This is from February, because March, April and May were way jacked from buying a house and all the subsequent costs:  inspection, appraisal, furnishing (cheaply), and necessary front-end improvements.

Public transit & car costs:  180   
Alcohol & bars: 80  (this prob includes some happy hour 'dinners', less a part of our lives now)
'Misc' food:  65   (coffee shops, fast casual, fro yo -- stupid eating out)
Gifts: 50
Pharmacy: 20
Dental: 50
Shopping:  150  (MUCH higher than usual bc i just started a new job)
Travel: 90  (stayed in a hotel to visit a friend, not a common occurence)
Misc:  150   (amazon order of household goods most likely, and then other little things here and there)
Bikes: 100

So, that Everything Else actually sums to about 900.  This is probably fairly typical,  except now 'shopping' is at about a 0 but home maintenance/repair is in there aruound hopefully 200, maybe less. 

The other 2 bills, as I mentioned, are:

900/6mo for car insurance
500/3mo for my hobby

nktokyo

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Re: Help me refocus my financial efforts, please!
« Reply #26 on: June 14, 2013, 01:20:51 AM »
If you went into lockdown mode, ie, one of you just lost your job & need to stop all non-essential spending... what would your monthly spend look like in that case?

lhamo

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Re: Help me refocus my financial efforts, please!
« Reply #27 on: June 14, 2013, 04:38:07 AM »
That's how we discharged 20K of debt this year while saving up for a down payment as well. 


How many months did you do this in and how much was the downpayment?  figuring that out will give you good targets to work toward -- if you did it once, you should be able to do it again, or at least a good percentage of it.

If I were you, I would try to save up enough in the emergency fund to cover your DH's full grad school costs.  You already have 8k, right -- the 5k emergency fund + the 3k you have already set aside for school.  So if you can double that in the next 3-4 months, you basically have the reserve fund set aside for school and as long as you keep topping it up when you draw it down (making payments each semester, so not ever wiping out the whole thing), you have no psychological stress when it comes to the school fund.  Note that the psychological security factor is why I am recommending this -- without stressing over where the money for school is going to come from, you can focus your attention on cost cutting/paying off debt/building up investments in other areas.  It might not be the optimal choice in terms of the pure numbers, but I think the mental benefits outweigh that.

Do adjust your tax situation -- you shouldn't be waiting for big refunds (though the one you are expecting will help beef up that emergency/school fund).

And get a grip on where your money is actually going.  And don't succumb to lifestyle inflation.  Lots of people spend tons of money when they first get a house filling it up with furniture and stuff.  No need.  If you lived without it in an apartment, you can probably live without it for awhile in a house.  Take your time and try to get most of what you want/need off of craigslist and freecycle, not at Ikea, Target, Crate and Barrel, etc.  If people give you a hard time about empty/unused rooms in your house, explain that getting DH through grad school is your financial priority right now. 

fallstoclimb

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Re: Help me refocus my financial efforts, please!
« Reply #28 on: June 14, 2013, 05:48:27 AM »
It looks like in the past year we saved up 10K plus paying off 20K of loans.  I'm actually not sure how we did that since my 'math' of an extra 1K a month would only give us 12K.  There's the student loan payments of 800/mo, but about 300 of that goes to interest alone I believe.  I guess the little extra money I found here and there added up!

I think I'm concerned because I've been trained to think that a house 'eats up all your money'.  I'm just not sure yet I can count on the extra money lying around that I used to always find - although we have cut back our spending in many other areas just as part of natural lifestyle change.

If there was a true emergency, I think we could cut our spending in half.  Both hobbies would for sure be out, we could scale the 'everything else' category back to 100/mo if we had to.  We could live on spaghetti and cut groceries in half, and cut the restaurant budget down to 0.  That is in an emergency situation though.  Like many people, I'm sure, both halves of this family are not equally 'all in' to the MMM lifestyle.  (My husband has come around to not buying "stuff", except for when its bike stuff, but he strongly believes we need to live life while we're young and childless).

Anyway, I actually feel a lot better about our situation having gotten all this advice, and being forced to do the math about all the financial progress we made in the past year, which we should be able to continue at more or less the same rate minus any huge issues with the house.  We do have very little liquid assets but we are making (what I consider to be) good progress on our debt, although it is still a lot.  I'm going to be open to the idea of putting my husband's spring semester at least on loans, and for now just get that 5K loan DONE with.  Then, revisit.

And, I had a talk with the husband about the 'stupid eating out' category, which is the area of our budget that I hate the most. 

Rebecca Stapler

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Re: Help me refocus my financial efforts, please!
« Reply #29 on: June 14, 2013, 08:40:29 AM »

And, I had a talk with the husband about the 'stupid eating out' category, which is the area of our budget that I hate the most.

I'm also on the debt payoff journey, and new to 'stachianism, so only recently realized that most of our dining out budget is attributed to food that I don't really want to eat (e.g., pizza) on the nights when I'm too worn out to cook. So, I started "stache"-ing quick meals in the freezer, for the nights I'm too tired to cook. Now we have a monthly "food" category that includes dining out and groceries and really only allows for 1 modest dining out meal per month -- for a date night dinner where we can pick out some cuisine that we don't usually eat and enjoy it together, instead of buying something at the last minute that I could have made at home but just wasn't in the mood for cooking, and it's not healthy for me anyway.