Hi and where to start?

[okkiedokki]

Ok, so I've lurked around for a little bit and been reading for the last month a ton of articles on the main site.  I'm 33 and have a wife, 3 year old, and 7 month, we live in ohio.  Currently, our combined income is about $80k (before taxes), however, my wife works in daycare with my two kids going so after her work takes day care out of her check we only have $100 a week. 

With that said we've tracked on mint.com and on an excel sheet each year our expenses and income.  I only recently decided to get all our debts together in one spreadsheet so i can figure out what I owe and what interest we are paying.  Now I'm not sure where to go from here.  We've cut our costs down but it's just not good enough.  So I thought I'd post some of our items on here and see if any mustachians could help me out.

Debts
$4,708.88   Medical (9 bills, a 10th will come for another $5k in a month)
$87,014.55   Student Loan (21k @ 3.38% and 65K @ 4.25% in my dad's name that i pay)
$7,902.40   Home Improvement Loan was $17k on sept 2013, paid most of it off, will be paid off by 9/16
$6,208.04   Credit Card (2 @ 0% interest, one @ 18.99%)
$162,960.53   Mortgage (3.5% interest)
$15,440.31   Auto Loan (2012 Jeep Patriot @2.74%)
$4255 - 401K loan
($847 in interest per month, $468 mortgage, $34.77 auto loan, $31.37 credit cards, $288 student loans, $23.71 home improvement loan)

Expenses:
Groceries: $130/week ( we take cash out and what's left over goes into savings usually we spend $110 to $120)
Formula & diapers: $160 per month (ordered through amazon subscribe and save for free shipping and no tax, plus a 20% discount)
Pet food: $60/month (usually lower, also ordered through amazon subscribe and save)
Water/utilities $250 every 3 months
Electricity ($300 in summer per month) winter it's double, and i think it's because of the defrost mode on my compressor still trying to figure this out.
auto insurance & insurance policy for art and jewelry $80/month
gasoline: about $240 per month on average
tv & internet: $88/month
cell phones: $145/month ($90 is paid by my work)
adt system: $39/month
credit cards: $160/month
auto loan: $339/month
home improvement loan: $306/month
medical bills: $350/month
student loans: $335/month
netflix: $9/month
amazon prime: $80/year
401k loan: $158/month out of my paycheck for repayment

Assets:
House $165k
401K: $24k
Stocks: $32k
`12 Jeep & `05 Equinox

I keep contemplating about selling my jeep for like an `08 or `09 used car.  My only issues is I work in construction so i do a lot of miles, I have to be able to drive in mud, been stuck several times in my old car.  And it gets really icy so i need to be able to get through that. 

I know, my eyes rolled too when i read through what i typed.  But anyways right now we have a shortfall of roughly $700 per month that i take out of our stocks to pay for things.  I also pay medical bills through my HSA account to get the maximum tax benefites and I'm only putting $50 into my 401k and we stopped putting money in our stocks.  I manage our stocks, my 401k and my parent's 401k, i've been really good in the market since i've done the managing over the last 5-6 years, heck last year i made 35.84% but last year was an anomaly. 

So part of me says as long as credit cards are paid off the interest i can make off the stocks far greater then the interest paid to the loans.  The other part of me says take the money out of stocks, pay off the credit cards, the home improvement loan, sell the jeep and get like an 09 mini van, or really something good for driving in mud try to pay $8k for that and leave myself with just student loans and the mortgage, which could give us almost and $800 per month swing. 

Anyways thanks for helping in advance, I wasn't sure if i should post our finances in total or not so i figured just go with it.

Edit: forgot to mension we are putting a used engine in my wife's 05 equinox because the head gasket blew and ruined a lot of parts, which will cost $3k but should help us last another 5-6 years.

[SunshineGirl]

Welcome!

I know you'll get a lot of advice and some face punches, too. All I'll offer is a suggestion for you to consider cashing in your stocks and paying off as much of that debt as possible, and then keeping some cash to cover short-term emergencies you might have. I'd be inclined to keep $10K to start with, and use the rest from the stocks to pay off some debt. I know it's very hard to cash/spend in savings, but what you're doing investment/debt-wise isn't logical. Stock investments should be done with money you can afford to lose, and right now, you can't afford to lose anything because of your debt.

[Jack]

So part of me says as long as credit cards are paid off the interest i can make off the stocks far greater then the interest paid to the loans.  The other part of me says take the money out of stocks, pay off the credit cards, the home improvement loan, sell the jeep and get like an 09 mini van, or really something good for driving in mud try to pay $8k for that and leave myself with just student loans and the mortgage, which could give us almost and $800 per month swing. 

Listen to the "other part" of yourself.

[hello867]

If your wife's take home is only $100 after paying daycare you may be better off not working as you should get back more with tax credits and than the $100 per month

[Fishingmn]

I think I'd hit reset and start over on your debt issues -

If I'm calculating correctly:

$9,709 Medical
$7,902 Home Imp
$6,208 CC
$4,255 401k
$3,000 Fix Car

$31,074 Total

Therefore, you could use your stocks to pay off all of these debts which would reduce your expenses by well over $1,000 (if you factor in extra medical bill coming and fixing car). This will allow you to have positive cash flow every month. If you don't want to totally exhaust the stocks then pay back those with highest interest rates for sure.

Things to work on after that -

1 - Expenses:  There are many things that stand out as possible savings. Electric bill is obscene - does your electric company offer a free electric audit? Water is higher than we pay and our city is higher than most. Pet food is probably double ours and we have 2 dogs and a cat - buy something like CostCo brand and don't buy overmarketed stuff like Blue Buffalo. Have you shopped around for car insurance recently and do you need an art rider? How many Van Gogh's do you have? Cable & Netflix & Prime? Are you in a dangerous area of town because one of the biggest deterrents for crime is an ADT sign/stickers which you will still have if you cancel monitoring (I buy the stickers off of eBay and skip system).

2 - Income: Your wife is working full-time for $5,200/year after daycare? Just seems like there might be an opportunity to either change jobs or look at alternatives. Heck, she could probably quit and watch someone else's kid at your home and come out way ahead.

It's great that you are trying to get on a positive path to financial freedom!

[okkiedokki]

Thanks for the suggestions, this is my thought, and I also apologize for the lack of detail, I've already paid $1000 of the $3000 on my wife's engine replacement:
Amount owed   Desc.                     monthly payment
$2,000.00   car                                 $0.00
$4,708.88   Medical                              $337.25
$7,902.40   Home Improvement Loan      $306.26
$6,208.04   Credit Card                  $160.00
$20,819.32      total                                $803.51

That leaves $10,500 in the stocks.  I talked with the hospital this afternoon and they said that just based on my income and my wife's income i would qualify for financial assistance for my son's upcoming medical bill.  I'm not sure if the stocks get in the way though so i have to see what the application form says (worse comes to worse I pay that off with stocks too).  This would end up leaving me in the positive and I can make additional payments to my 401k loan to knock that out quicker and still leave money in the stocks for emergencies.


Then in addition to that I could sell my car like i was thinking before and use the difference to pay for a used one plus a little more from stocks so i don't have a car payment.  That could would reduce my monthly payments by $1,142.51.  Am I thinking about this correctly?  Could I then use that difference to pay off my 401k loan in a few months?

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Therefore, you could use your stocks to pay off all of these debts which would reduce your expenses by well over $1,000 (if you factor in extra medical bill coming and fixing car). This will allow you to have positive cash flow every month. If you don't want to totally exhaust the stocks then pay back those with highest interest rates for sure.

Things to work on after that -

1 - Expenses:  There are many things that stand out as possible savings. Electric bill is obscene - does your electric company offer a free electric audit? Water is higher than we pay and our city is higher than most. Pet food is probably double ours and we have 2 dogs and a cat - buy something like CostCo brand and don't buy overmarketed stuff like Blue Buffalo. Have you shopped around for car insurance recently and do you need an art rider? How many Van Gogh's do you have? Cable & Netflix & Prime? Are you in a dangerous area of town because one of the biggest deterrents for crime is an ADT sign/stickers which you will still have if you cancel monitoring (I buy the stickers off of eBay and skip system).

2 - Income: Your wife is working full-time for $5,200/year after daycare? Just seems like there might be an opportunity to either change jobs or look at alternatives. Heck, she could probably quit and watch someone else's kid at your home and come out way ahead.

It's great that you are trying to get on a positive path to financial freedom!

1.  My electric company charges for an audit.  I did some calculations on my own and the issue that seems to stand out here is when my compressor goes into defrost mode.  I have all electric house, no gas (again sorry for the lack of detail).  I had an HVAC tech from work take a look, the compressor doesn't have a low ambient kit, so when it was -10 deg F this winter the heat pump would still run.  To make matters worse it was set to go into defrost mode every 60 minutes.  When it did this i stood by my electric meter and calculated the rotation into kwh used.  Ended up being an insanely high number consistent with what my electric bill had.  Heat pumps below 25 deg F are horribly inefficient, but all the other tests checked out fine.  Since then I bought a low ambient kit from a supplier at work for $147.  As luck would have it the temps warmed up and i haven't been able to test it since.  So this is something i look to finishing up in november/december area.

Water i think is outrageous, but it's inline with what i paid in my apartment 8 years ago so it must just be here. 

The pet food i have to re-evaluate because I found out last month that if you are an amazon prime member, and have 5 subscribe and save items you save 20% off the price on amazon.  The price is already lower then the stores and you get your free 2 day shipping and no sales tax.  So along with the baby formula and diapers i added the dog and cat food on there and got up to the 20% savings.  But that needs re-evaluated because that number might be a lot lower, i didn't track it in mint.com well so i threw a number at it; it said last month I spent less then $20 on pets.

Cable/netflix/prime: I do need prime, not for the movies but the diapers and formula savings.  Netflix i don't need but i buy the gift cards on ebay which ends up giving me a cheaper rate.  I was planning on canceling tv if i could but that's something is a tough sell.

I actually have ADT for the fire protection, it just cost the same to add the burglar.  My had an issue with the electric main coming in, in that the bolts weren't tightened enough and they started arching, ended up melting m entire electric panel.  I got adt as a result to monitor in case of a fire; but with that said I've been thinking of getting rid of it.

The additional art/jewelry insurance is $72 a year, I have toyed with canceling it and the security system but someone's been going around for a while now vandalizing cars in our neighborhood and recently last week they set cars on fire.  And i don't live in a bad neighborhood!

2.  This is a tough one.  Since my wife works at the day care we get a 50% discount.  So it costs us $541 every two weeks, or $1082 per month.  If she was to get another job paying more, we'd still need to pay for daycare, but it would cost us $2164 per month so instead of making $16k, she would need $28k after taxes just to break even.  At that time it doesn't mathematically even make sense for her to work.  She does have a degree in early childhood development.  I like the idea of possibly watching someone's child.  I'm not for her being a stay at home mom though without my kids having interaction with other kids during the day.  There's a much larger benefit I see to having them with others.  But that's my thought. 


Again I appreciate your help.  Excuse my comments above I'm just getting started so I could easily see them as antimustachian. 

[fallstoclimb]

You need to make some major, major changes. 

Your hair is on fire.  According to my math, you have $125K of non-mortgage debt.  I hope your wife is on board with the changes you have to make.

Am I right in that your wife only makes $400/mo after daycare expenses are taken out?  I highly doubt that is worth it.  If she is willing, she should quit her job and stay home with the kids.  Then you can sell BOTH cars and get an older Jeep or something that can handle the mud and ice you have to drive through on your commute.  If she stays home she may be able to find ways to make your dollar stretch – cheaper groceries, more food from scratch, maybe cloth diapering?  (Although the initial investment of that may not be worth it for you; run the numbers). It won’t be easy, but this is the biggest change you can make.   As others have mentioned she may even be able to watch other people’s kids at home.  I understand that you want your children to have interaction with others – is there an opportunity for her to join some mommy groups during the day?  (May be hard without a car, depending on your area).  Even if there isn’t, they can interact with each other.  You have too much debt for this.

Pet food – this seems high.  What kind of pet is it?  This may be a luxury you cannot afford.

Electricity is ridiculously high even for an all-electric house.  Is this A/C related?  Stop using your A/C except when its dangerously hot for your kids. 

TV & Internet –You do not need even basic cable.  Especially if you have both Netflix and amazon prime! 

ADT – Dump it and fix the fire hazard. 

Art/Jewelry protection – Seriously?  You have 125K of non-mortgage debt and you are paying an additional price to protect some valuables?  SELL the valuables and drop the coverage!  Are there other things in your house that can be sold to help you get out of debt?

Cell phones – lower your data right now and do Republic Wireless next time.

I wouldn’t worry about your mortgage, unless your house is underwater, but some of your debt is highly suspect.  A home improvement loan, when you were already drowning in student loan debt?  There’s no reason to dwell on past mistakes, but I do hope you can learn from the past and not repeat it. 

And I would take everything out of the stocks (assuming no/low penalty).  That is too risky an investment for you right now.  Save 5 or 10K as an emergency fund and put everything else into paying off the highest interest debt.   

[okkiedokki]

You need to make some major, major changes. 

Your hair is on fire.  According to my math, you have $125K of non-mortgage debt.  I hope your wife is on board with the changes you have to make.

Am I right in that your wife only makes $400/mo after daycare expenses are taken out?  I highly doubt that is worth it.  If she is willing, she should quit her job and stay home with the kids.  Then you can sell BOTH cars and get an older Jeep or something that can handle the mud and ice you have to drive through on your commute.  If she stays home she may be able to find ways to make your dollar stretch – cheaper groceries, more food from scratch, maybe cloth diapering?  (Although the initial investment of that may not be worth it for you; run the numbers). It won’t be easy, but this is the biggest change you can make.   As others have mentioned she may even be able to watch other people’s kids at home.  I understand that you want your children to have interaction with others – is there an opportunity for her to join some mommy groups during the day?  (May be hard without a car, depending on your area).  Even if there isn’t, they can interact with each other.  You have too much debt for this.

Pet food – this seems high.  What kind of pet is it?  This may be a luxury you cannot afford.

Electricity is ridiculously high even for an all-electric house.  Is this A/C related?  Stop using your A/C except when its dangerously hot for your kids. 

TV & Internet –You do not need even basic cable.  Especially if you have both Netflix and amazon prime! 

ADT – Dump it and fix the fire hazard. 

Art/Jewelry protection – Seriously?  You have 125K of non-mortgage debt and you are paying an additional price to protect some valuables?  SELL the valuables and drop the coverage!  Are there other things in your house that can be sold to help you get out of debt?

Cell phones – lower your data right now and do Republic Wireless next time.

I wouldn’t worry about your mortgage, unless your house is underwater, but some of your debt is highly suspect.  A home improvement loan, when you were already drowning in student loan debt?  There’s no reason to dwell on past mistakes, but I do hope you can learn from the past and not repeat it. 

And I would take everything out of the stocks (assuming no/low penalty).  That is too risky an investment for you right now.  Save 5 or 10K as an emergency fund and put everything else into paying off the highest interest debt.

Yeah she's not too receptive to stay at home or watching someone else's kids.  Might be something i have to work on.

The pet food I looked at is more like a total of $32.12 per month.  Dog is a 9 year old Samoyed and cat is 13 year old.

Electricity high is heating related, A/C isn't an issue, its super cheap in spring/summer/fall.

TV & internet i agree.

ADT - fire hazard was fixed for free from an electrical contract I work with a lot.

Art/jewelry I see everyone's point.  Selling the art will be tough, but something that can be worked on.

Cell phone: I have unlimited data, and my work pays for my phone, texting, and data.  I'm required to keep Verizon through my contract with work.  Of the $145, only $55 comes out of my pocket.

Home improvement loan was actually required, 25% of the siding on my house was rotted, it was going to cost me $6k just to put new wood siding up.  I opeted $17k for vinyl so I don't have to put new siding up or paint it in 4 years.  But that's going to be paid off after i sell the stocks.  Which was an easy sell.  My wife an I agreed, put $10k for emergencies away and use the rest to pay all the debts but the house and the student loans off. and start from 0 kind of.

[Cassie]

Go to Dog Advisor to look at how dog food is rated.  I did this and you can find one that is good quality but costs less then Blue Buffalo.  You can also sign up for dog food alerts in case something is recalled.  If your wife stays home she could use cloth diapers which saves a fortune, cook good meals, figure out other ways to save $ etc.  I did this until my youngest was in school.  We were also a one car family that my hubby took to work.  I did grocery shopping, errands, etc at nite after dinner when he could be home with kids.  If kids had doc appt we took bus, etc.  She could take in a child which would bring in $ & provide company for your kids.  She could invite other stay at home moms over with their kids for a play date.

[skunkfunk]

You don't make enough money for all of these things. Do not invest in stocks with that much debt. If you have enough for an emergency fund, pay down debt with the rest. The problem is that while you may *average* higher return on stocks, it is a losing proposition to buy stocks on margin like that. The deviation in the market stays the same, but your effective interest rate goes down because you are paying interest on the capital. Basically, it makes it a 2-3x riskier investment than if it were cash (depending on debt interest rate).

Second, your expenses suck. You can't afford this shit with a $700 monthly shortfall.

Groceries - This is kinda high. Might work on whittling that down.
Formula & diapers - switch to cloth. I just bought a set of 20 cloth diapers for $60 on craigslist, adjustable size. Will last for at least 2 kids.
Electricity - Outrageous. Turn up/down your thermostat. Wear less/more clothes.
Insurance - get rid of the car and get a cheap one with liability only. And if you own pricey stuff that you can't afford to self-insure, you must sell it. If it's so far above your income that you can't afford to lose it (and it's not your house), you shouldn't own it.
Gasoline - Outrageous. Get a bike and trailer for short trips, and a more efficient vehicle. Family of 4 does not need anything more than a small car.
TV - cancel that. You can't afford it right now. Maybe later when you don't have thousands per month in debt payments.
ADT system - Useless. Fire alarm will still go off without the contract.
Auto loan - Sell that thing. You can't afford the payments. Get a cheap car that gets great mileage and learn to work on it.
Mortgage - I calculate that to have a $700 shortfall monthly your mortgage must be ~$2700/month. Somehow I doubt this is the case, so there are unlisted expenses out there. Categorize all of them and track every dollar. I recommend mint.com or something.

I know I'm harsh. Your interest rates are not low enough to justify keeping those loans. Use your capital sitting around to pay off the debts and you will be in the green. Keep going further than that and get a DIY attitude and you can get well on the path to FIRE. My wife and I make about the same as you and have a similar mortgage (149K @ 3.75%, $1450 payment). September and October 2013 (pre-MMM) our expenses were $8k/month. April and March 2014, they were $3.5k/month (including all mandatory loan payments. We saved *$3100* in April to pay down debt by making a little extra cash on the side and cutting expenses.) If anything we are living better now than we were 6 months ago, so I know that you can do it!

[cpa cat]

I get that your wife isn't thrilled about the idea, but your situation really does scream for some kind of in-home day care situation. If your wife were to pick up a kid or two, she would be netting more per year and you'd be in a good situation to write off some of your household expenses (portion of mortgage, utilities, plus netflix) on your taxes. The net result would very likely be tax free income for you.

Her degree is a great selling tool, which would likely allow you to charge a slight premium.

Mathematically, your situation improves considerably if she gets on board with becoming even marginally self-employed until your kids are school-aged.

[Exflyboy]

Yes I have to agree with the above.. Get out of debt now (hair on fire) and put the income generated from not servicing debt into savings.

As a long term benefit, learning some DIY skills would not be a bad idea.. Replacing a cylinder head gasket (you get a machine shop to service the head or buy one outright from a number of suppliers on Ebay, NW cylinder heads is one.. My Neon one cost $200 outright) is about a Saturday's worth of work. Replacing siding is easy.

In fact I the ONLY contractor I have ever hired is a concrete firm to build the footings and pour the crete when we doubled the size of our house.. The rest we did ourselves in our precious little spare time.

You might think the above is extreme (and I agree it is), but when you consider my cars have never seen the inside of a mechanic's shop and we saved about $60k on doubling the size of our house.. well those things add up fast, and if your sincere about becoming FI, DIY is a way to accelerate that process.

I mean, are you still worried about your electrical panel?.. an hour with a screwdriver will allow you to check the tightness of every joint in the panel.. IF you KNOW what your doing.. Do not attempt without training.

Frank

[skunkfunk]

Replacing a cylinder head gasket (you get a machine shop to service the head or buy one outright from a number of suppliers on Ebay, NW cylinder heads is one.. My Neon one cost $200 outright) is about a Saturday's worth of work.

Not to be a jerk, but (I'll be a jerk in the next paragraph) that estimate is highly variable. I did one car where it was an entire days work just to tighten the exhaust manifold. For two people. That thing sucked, and I haven't yet mentioned part where I had to fish all the little exploded parts of my valvetrain out of the oil pan. Another one I spent the whole day messing with the intake manifold (sanding it, splicing wires [stupid TBI], etc. etc.) It can get pretty ridiculous at times. My policy is to always assume that it will take twice as long as I think it will, lest I wind up forgetting to screw in a sensor or some such that requires me to tear it down again. The curse of only practicing any particular job infrequently.

my cars have never seen the inside of a mechanic's shop

Never?? When I rebuilt my front suspension, for instance, it was completely unusable without a trip to the alignment shop. Also, got a washer  on backwards (really) and had to do it twice.

Now the good thing is that all of this stuff is fun! What's better than entertaining yourself whilst fixing your stuff and saving money?!

[Exflyboy]

Replacing a cylinder head gasket (you get a machine shop to service the head or buy one outright from a number of suppliers on Ebay, NW cylinder heads is one.. My Neon one cost $200 outright) is about a Saturday's worth of work.

Not to be a jerk, but (I'll be a jerk in the next paragraph) that estimate is highly variable. I did one car where it was an entire days work just to tighten the exhaust manifold. For two people. That thing sucked, and I haven't yet mentioned part where I had to fish all the little exploded parts of my valvetrain out of the oil pan. Another one I spent the whole day messing with the intake manifold (sanding it, splicing wires [stupid TBI], etc. etc.) It can get pretty ridiculous at times. My policy is to always assume that it will take twice as long as I think it will, lest I wind up forgetting to screw in a sensor or some such that requires me to tear it down again. The curse of only practicing any particular job infrequently.

my cars have never seen the inside of a mechanic's shop

Never?? When I rebuilt my front suspension, for instance, it was completely unusable without a trip to the alignment shop. Also, got a washer  on backwards (really) and had to do it twice.

Now the good thing is that all of this stuff is fun! What's better than entertaining yourself whilst fixing your stuff and saving money?!

Never.. with one qualification...:)... I do get the $150 lifetime alignment deal on my cars from Firestone and I take them down there to have the "free" alignment checked every 6000 miles.. Yes you could run without an alignment check but it would be a false economy.

OK now I'll be a jerk.. Having the right tools is both a great time saver, but also expensive. Your intake manifold for example would have been sanded flat in about 5 minutes on my 4 foot long belt sander (Harbor freight yay!) and definately some cars are a giant PITA as far as getting at some of the fasteners so I think you have a point it is highly car dependent.

I can't help you with errors in re-assembly, but practice makes perfect right?..;)

Frank

[quilter]

You posted "Electricity high is heating related, A/C isn't an issue, its super cheap in spring/summer/fall." From reply #7

I don't get this. In post #1 you said electric is 300 per month, double in the winter. No one is home all day.   That is not super cheap. It is really really high.  My all electric house bill  averages less than $100 per month and we are home all day.   Even when we lived where it was super cold we were on the budget and it was less than $140 per month.

[jpdcpajd]

"auto insurance & insurance policy for art and jewelry $80/month"

Some one once asked my dad how much he paid for jewelry insurance

My dad responded "don't have any"

Guy said "you don't have jewelry insured?"

"No, we don't have any jewelry"

[CarDude]

You've gotten lots of good advice already, so I'll just chime in on the car part, since that's what I do:

1. Sell the Jeep.

2. Share the Equinox.

I'm not going to recommend a new car because I'm hoping you can talk to your wife about the benefits of staying home, which have already been covered above. $100 a week isn't worth all the money you're losing in other areas (e.g., the car payment, your electricity bills, your gas fillups, jewelry insurance, home security system, Amazon subscription, etc).

[homeymomma]

Congrats on having the guts to bare it all! I've done it, and the face punches are hard to take. I'm looking at your numbers with great interest. I'm surprised it seems like you're doing so "badly" because we make a similar amount (67000/yr) with no benefits and live in a high COL area (dc suburbs) with a toddler and one kid on the way. I stay home. We have no debt (also no house) but even with rent expenses we save 25% per month! and we still go to starbucks sometimes. Just saying we are hardly the frugalest of folks.

It looks like you guys went a little further down the same road my husband and I did when we finally got married and settled down and decided to have kids. We saw room in our monthly budget for things we wanted, like a new car, or saved up ahead of time for nice things for the house or whatever, and therefore figured we could afford it. Also it's easy to mistake a perceived "need" as affordable I.e. We should have a home security system, because it's something grow ups have and we're grown ups and therefore we can afford it. Similar to seeing cable as a basic life necessity. (What kind of cheap losers can't afford cable??)

It will take a minute, and probably many minutes for your wife if she's not already interested in MMM or financial stuff generally- but you need to realize that your lifestyle has gotten out of hand. You can't afford the things you have. The numbers spell this out (a monthly shortfall). You can't afford jewelry insurance, cable tv, or spending $240 on gas every month. It's lovely and comforting to have all that $$ in stocks but it's not real security. The only way to have real security is making sure your monthly income exceeds your expenses. It looks like you've already decided to sell stocks and pay off the debt. Good choice. But I'd caution against becoming complacent after that point. You will not only need to build yourself up again, you will need to do it while consciously limiting spending (which will be hard once you have this big surplus each month).

Some things that stood out to me:
Two gas guzzlers - we've got an Hyundai elantra and are about to have 2 kids and I can't see myself needing more than that until a) we have a third or fourth kid, or b) our kids are teenagers are both join lacrosse and hockey and 3 other sports and our car becomes a junk hauling necessity. Switch your wife's car with a sedan which will carry just as much stuff and get better mileage. Id never suggest that she stay home with no car with two kids just to save money- that is torture unless you live very centrally. As for your car, I understand the need for your job but trading down to a slightly older model will help you a lot.

Amazon prime- look into costco. The yearly fee is $55 and savings are quite impressive if you're not picky about brands. They only carry Huggies manufactured diapers, for example, but we stay below $35/mo for diapers and wipes by going there (1 kid). I don't know about formula though because I breastfeed. If your water is really expensive, cloth diapers will raise it a bit, but you'd still come out ahead if you buy them used.

Explain more why losing cable tv is such a hard sell. We have it where we live and literally never turn it on. We have a roku and watch netflix instead. No commercials, tons of kids stuff, it's awesome. If you'd miss current tv too much, maybe consider getting hulu as well as netflix. We don't have it but I think it has more current stuff. It might soften the blow of losing cable.

Medical- do you have health insurance through work? Why are your medical bills so high? We are setting aside $$ for delivery of a baby in the fall and it's going to run us about 6K, but we have crappy individual market insurance. Something you get through work should be better, should it not? If your medical expenses are that high you may need to look into paying slightly more for a better policy next time around. It might be more each month but worth it if you consistently max out your out of pocket limit each year.

I disagree with people on here saying your wife should stay home with your kids with no car. I can't think of a faster way to have her resenting you and the kids and get you both arguing over finances 24/7. If she enjoys her job and it nets at a profit, and youre happy with the environment for your kids, I say she should stay. If, on the other hand, she would enjoy having a home daycare for another kiddo or two, it would definitely be financially beneficial. But I get if she doesn't want to be alone with babies all day, believe me. Again swapping hers equinox out for a fuel efficient sedan would be a really good move.

I'm curious if these are actually all your expenses. Target runs for toilet paper? Any of you get haircuts? Ever buy clothes? I'm not saying you need to do these things if you don't do them now, but there is a suspicious lack of a "miscellaneous" category.

Good luck! You'll feel better when that debt is under control.

[ArbitraryGuy]

Hello to a fellow Ohioan!  Don't forget that when/if you sell your stocks to pay your debts (and I agree with the previous posters that you should) that you calculate how much tax you will owe and set that aside.  Also, if it's not obvious, don't touch your 401k -- use your taxable holdings to pay down the debt.

You can do this!   Good luck!

[cpa cat]

You've gotten lots of good advice already, so I'll just chime in on the car part, since that's what I do:

1. Sell the Jeep.

2. Share the Equinox.

I'm not going to recommend a new car because I'm hoping you can talk to your wife about the benefits of staying home, which have already been covered above. $100 a week isn't worth all the money you're losing in other areas (e.g., the car payment, your electricity bills, your gas fillups, jewelry insurance, home security system, Amazon subscription, etc).

I think he'll have a hard time convincing his wife to stay home without a car. Unless he's the one who will be giving it up.

She's already resisting, so having no car will bring up the whole gamut of "You expect me to do X without a CAR and with a baby and toddler?!?" to "What if there's an emergency?!" to "Who will want to bring their kids to my home daycare if I don't have a means of transporting them to the park?!"

I think that suggesting she get rid of her vehicle will immediately shut down the conversation.

[CarDude]

You've gotten lots of good advice already, so I'll just chime in on the car part, since that's what I do:

1. Sell the Jeep.

2. Share the Equinox.

I'm not going to recommend a new car because I'm hoping you can talk to your wife about the benefits of staying home, which have already been covered above. $100 a week isn't worth all the money you're losing in other areas (e.g., the car payment, your electricity bills, your gas fillups, jewelry insurance, home security system, Amazon subscription, etc).

I think he'll have a hard time convincing his wife to stay home without a car. Unless he's the one who will be giving it up.

She's already resisting, so having no car will bring up the whole gamut of "You expect me to do X without a CAR and with a baby and toddler?!?" to "What if there's an emergency?!" to "Who will want to bring their kids to my home daycare if I don't have a means of transporting them to the park?!"

I think that suggesting she get rid of her vehicle will immediately shut down the conversation.

Those are good points. However, I was suggesting he get rid of his vehicle, not that she get rid of hers. But if she doesn't want to share, then I'd suggest selling the Jeep and replacing it with an older 4WD SUV. In either case, the Jeep needs to go.

[Thegoblinchief]

$160 for formula and diapers is ridiculous. Generic diapers from Target, Sam's or Baby R Us, whichever is closest. Ditto formula.

Even when we had two in diapers and one on formula, it was about $100.

[Cressida]

I am really disappointed in all of the suggestions that the poster's *wife* is only bringing home $100/week after childcare. Childcare is a joint expense. You don't just deduct it as a cost of the wife working. To suggest otherwise is profoundly sexist.

This is the right way to think about it. (made-up numbers follow) If a husband takes home $40K and a wife takes home $25K and daycare costs $20K, it is not accurate to say that the husband takes home $40K and the wife takes home $5K. It is accurate to say that the couple takes home $45K after daycare. This is a better deal than $40K and an unhappy wife, all the way around. Sorry.

[CarDude]

I am really disappointed in all of the suggestions that the poster's *wife* is only bringing home $100/week after childcare. Childcare is a joint expense. You don't just deduct it as a cost of the wife working. To suggest otherwise is profoundly sexist.

This is the right way to think about it. (made-up numbers follow) If a husband takes home $40K and a wife takes home $25K and daycare costs $20K, it is not accurate to say that the husband takes home $40K and the wife takes home $5K. It is accurate to say that the couple takes home $45K after daycare. This is a better deal than $40K and an unhappy wife, all the way around. Sorry.

I can't speak for everyone, but I would be saying the same thing if the wife was the one earning 40k and the husband earned $400/mo after childcare...I'd certainly be advising him to stay home with the kids, as otherwise, he'd be working full time just to bring an extra $400/mo to the household budget.

[Thegoblinchief]

I am really disappointed in all of the suggestions that the poster's *wife* is only bringing home $100/week after childcare. Childcare is a joint expense. You don't just deduct it as a cost of the wife working. To suggest otherwise is profoundly sexist.

This is the right way to think about it. (made-up numbers follow) If a husband takes home $40K and a wife takes home $25K and daycare costs $20K, it is not accurate to say that the husband takes home $40K and the wife takes home $5K. It is accurate to say that the couple takes home $45K after daycare. This is a better deal than $40K and an unhappy wife, all the way around. Sorry.

It's not sexist. It's good advice. I stay home and work weekends only, because we would LOSE money if I worked during the week.

[okkiedokki]

Wow a lot of great advice, my wife and I do appreciate it.  If we wanted a sugar coated answer on how to fix our finances I would have called up a friend of ours and just asked them.  I fully expected to get kicked around and I appreciate that.  I actually had a reply earlier i posted but my computer must not have gone through and i got frustrated and just shut it down.  Now i can't get it to start up so I'm on my work computer.

Anyways, my wife and I have reviewed the comments a lot and talked about everything.  I think the first thing I do want to clear up is since my wife works in day care her work directly deducts the child care from her check.  Otherwise I would have said that daycare costs $12k a year and we bring in $80k before taxes.  With that said she and I think it's best for her to stay at work.  We need that $400 a month.  Her gas is very negligible because she works really close to home.  Her car is 10 years old and has 80k miles on it we never drive her car.  When my daughter goes to school in 2 years we will have an extra $541 per month to pay towards my student loans.  I know it's not the most MMM decision but sometimes you need to have piece of mind as well, or atleast that's what I feel.

About my car, we decided I will be selling it and getting something more sensible without a payment.  It will be some sort of car to get through the mud but now has to be good on mileage because in central ohio i just got put on a construction job in Iowa.  Chances are high i won't have to visit the job site but if i do I want to maximize my gas mileage when my work pays me the mileage back.

About the medical expenses, one bill is my daughter, she had a reconstruction surgery when she was 6 months old.  I split that with the hospital into 24 payments that i have 6 left to make.  I have 3 doctors bills because last year i had major issues last year.  Then we have 4 bill's for my son's delivery from last year, and 2 weeks ago he himself had a reconstruction surgery at 7 months old.  Both surgeries were were absolutely needed and after getting second opinions both doctors said to do the surgeries after 6 months old and before 1 year old.  That's about all i will talk about the surgeries.  I will say my work has a general HSA/high deductible insurance.  It's a $5k deductible per person, $12k max per family in network.  I got screwed last year with my emergency and the insurance said the doctor wasn't in network.  Wasted $2k but it was an emergency.  From talking to my wife's grandfather who sold insurance for a living he told me that there is good insurance out there, the businesses choose not to take them.  My work is now self-insured and it's just not a pretty sight.

I'll be honest I don't know where to go from here on our electricity.  We keep heat at 72 and a/c at 76, is that a good range?  What do you guys recommend?  From what the HVAC tech said looking through everything he said my system is running optimally.  No leaks, nothing; its a SEER13 system form 1999.

As far as groceries, we continue to work on these.  We eat far less meat and have started substituting meat with beans for fillers and protein.  We make all our meals, we try to make them on sundays and individually wrap them in our food saver my grandparents gave us and freeze them.  Then when we get home we grab stuff from the freezer heat it up and go from there.  We don't eat out, although we did go to Max and Erma's for mothers day.

Shopping, I'm still wearing the same 3 pairs of jeans I bought from goodwill 2 years ago.  Beyond that I can't remember the last time I bought cloths for myself.  My wife only buys cloths when someone gives her a target or some other gift card.  Honestly i can't remember the last time we paid cash for cloths other then at goodwill.

Diapers and formula: this is a hot topic in my opinion.  I don't think I'm illustrating things properly.
Box of 186 luvs diapers from amazon.com with the prime membership=$25.39 and lasts 1 month.  Regular price $32.99, plus tax makes it $35.30 savings = $9.90
Wipes 448 count off Amazon.com w/prime membership = $8.78 lasts 3 months.  Regular price i think is $12, with tax= $12.84.  Savings $4.06
Total savings $9.90*12+4.06*4= $135.04 minus prime membership = $55.04 savings. 
Is there a better deal out there?  I'm not willing to really look at cloth diapers right now; but I will go to baby's r us, costco, sam's club, walmart, etc this weekend and investigate all generic brands of diapers and do a cost analysis per diaper and per ounce of formula.  However, the formula is touchy because my son is allergic to the regular brands.

Our action plans going forward:
-I've already sold the stocks (all but $10,500 of it).  Not worried on capital gains because i just transitioned into a new set of stocks (energy, foreign markets, and some misc metals.)  My gains weren't that great yet because I owned them for a short amount of time. 
-We talked it over and will cancel: tv, security system, insurance on jewelry.
-I'm going to try and see what i can get for my car and look for a car that is a lot more sensible w/out a monthly payment.

I started working on mint.com and expected to get further on it.  I will have to post something later when i clear things up more.  But i didn't give all the misc categories.  Preliminarily it says we spend something in the $4k per month.

[Cressida]

I am really disappointed in all of the suggestions that the poster's *wife* is only bringing home $100/week after childcare. Childcare is a joint expense. You don't just deduct it as a cost of the wife working. To suggest otherwise is profoundly sexist.

This is the right way to think about it. (made-up numbers follow) If a husband takes home $40K and a wife takes home $25K and daycare costs $20K, it is not accurate to say that the husband takes home $40K and the wife takes home $5K. It is accurate to say that the couple takes home $45K after daycare. This is a better deal than $40K and an unhappy wife, all the way around. Sorry.

It's not sexist. It's good advice. I stay home and work weekends only, because we would LOSE money if I worked during the week.

Goblinchief, I apologize for the misunderstanding. I was irked because it appeared to me that the posters were following the old "women are the ones responsible for childcare" trope. That trope is sexist. One parent staying home because it genuinely makes sense, and not because of stereotypical gender roles, is not sexist.

[cpa cat]

I am really disappointed in all of the suggestions that the poster's *wife* is only bringing home $100/week after childcare. Childcare is a joint expense. You don't just deduct it as a cost of the wife working. To suggest otherwise is profoundly sexist.

It's not sexism. His wife works at the daycare center where their children go to daycare and the expense of that daycare is deducted from her paycheck from the daycare center (at a discount).

This clearly and directly links childcare expense to her job and compensation. It doesn't make any kind of sense to try to detach it from her work - given that that their reality is that her work is childcare.

[jpdcpajd]

"We don't eat out, although we did go to Max and Erma's for mothers day."

mmmm Tortilla soup is fantastic only one left in st louis

[lizzigee]

You keep your heat between 72 and 76?  I've converted to celcius (I live in New Zealand) and  that's 22-24.  Unless someone in your household has serious medical issues, there's a LOT of leeway to toughen up a bit there. Adjust your mindset and the amount of clothing you wear! There's a huge difference between the absolute optimal temperature range for human contentment, and a tolerable range. 

[plainjane]

You keep your heat between 72 and 76?  I've converted to celcius (I live in New Zealand) and  that's 22-24.  Unless someone in your household has serious medical issues, there's a LOT of leeway to toughen up a bit there.

To be fair, Kiwis are weird about temperature.  I was at my in-laws when it was 9C. They had the windows open and the kids were running around in t-shirts and bare feet.  I was wearing my wool socks & sweater.

That being said, OP - we keep our temp at 19C (67F) in the winter, and we don't have AC (just a couple of ceiling fans and windows).  You should be able to push the AC up to 84F - we don't run the fans until it's over 29C.  Just be good about closing blinds early so the sun doesn't warm up the house in the summer.  Oh, and be careful about what you cook on hot days.  Look at whether some weather stripping could help.  I know kids can have trouble sleeping when it's too warm - think about whether to move their sleeping areas when it's uncomfortable.

[agent_clone]

Here's what is recommended in Australia.  But some of these may not apply to somewhere that it gets cold...

http://www.originenergy.com.au/2410/Save-energy-FAQs

It states that for each degree you heat/cool it requires an extra 5-10% of energy.

They recommend 18-20C (64.4 - 68F) in winter.

Oh also, do you have your heating/cooling on all night?  If you need to have the heating on (e.g. frozen/burst pipes or whatever the people are talking about to do with really cold temperatures), can you reduce it and have warmer doonas/sheeting while sleeping? I find 10C (50F) is quite a nice temperature while sleeping though too cold while awake unless your out in the sun.  But I guess with young kids this may not be ideal?

I don't see that much of a problem with the AC temperature in the summer, but you could try raising it and seeing what your comfortable with.

edit: Oh I also found this http://www.consumerenergycenter.org/tips/winter.html

[mrsggrowsveg]

There has been some really great advice here so far.  You mentioned that you heat the house at 72 and air condition at 76.  Those aren't terrible temperatures, but they could be improved.  I would suggest no higher than 65 when you are at home and not sleeping.  At night you can bundle up and go to 60-62.  I also would wait to turn on air until at least 80.  There was a MMM post that said the day you turn on the air conditioning should be an event of celebration.  It should be a big deal. 

[Thegoblinchief]

You keep your heat between 72 and 76?  I've converted to celcius (I live in New Zealand) and  that's 22-24.  Unless someone in your household has serious medical issues, there's a LOT of leeway to toughen up a bit there. Adjust your mindset and the amount of clothing you wear! There's a huge difference between the absolute optimal temperature range for human contentment, and a tolerable range.

We got the heat down to 64F versus 73ish last year. Despite the awfulness of this winter, our bills were regularly HALF what they had been.

Haven't had a chance to flex our Mustachian A/C muscles yet, but in the past I've been fine with a breeze and fan until temps get close to 90F. We've survived (miserably) summers over 100F without air, but that was awful. We spent a lot of time walking aimlessly around the mall to cool down.

[fallstoclimb]

With that said she and I think it's best for her to stay at work.  We need that $400 a month.  Her gas is very negligible because she works really close to home.  Her car is 10 years old and has 80k miles on it we never drive her car. 

So does that mean she carpools with you to work, or bikes, or walks?  If any of those are true, definitely dump one car.  I have a car sitting around that I rarely drive, and it sucks whenever you need to get work done on it.  Better to just sell it while you can get a little money out of it.  Cabs or friends are always an option in an emergency.

Given the short commute, I do take back my suggestion that she stay home with the kids, if she isn't interested in doing it.  To the poster thinking that was a sexist suggestions, sorry I didn't couch it enough, but it seemed pretty obvious she should be the one to stay home because she makes less money, she gets a discount at day care and it comes out of her check, and she could probably even make more than she currently is by staying home if she started an independent day care business.  If he made less than his wife and had a possibly-more-profitable freelance option at home I'd suggest he stay home.

Heat at 72 seems super high.  I HATE being cold, but we still never put our heat above 68.  Put on more clothes!

[ZiziPB]

Heat at 72 is crazy high.  I have mine at 68 when at home and 60 at night and when at work.  Just put on a sweater, socks and slippers and you will be fine.  AC at 76/78 seems to be fine, but I just don't turn it on at all unless we have a genuine heat wave.  A ceiling fan keeps me comfortable otherwise.

[rujancified]

Disclaimer that I'm from New England, now live NC, and don't have children but those temps seem pretty high to me.

When I lived on my own (in a 2nd floor south-facing Condo), I set heat at 60 or so, bumping it up if I was sick. In the dead of summer (when it's 93-97 for 3 months straight), I'd go 78-80 during the day and 72-ish when I was home. My bill was rarely over $55 and in the shoulder seasons it was frequently less than 30. HVAC unit was new in 2006 or so and the condo wasn't large, so it had that going for it.

Bills are obviously higher at new our house (because it's 3x the size of my condo), but they're still well under $100 nearly every month. My husband is super hot-blooded and gets very uncomfortable at night, so we AC ~70 at night/75 during days. In the winter we did about 60-63. I wore lots of flannel and got fancypants Ugg slippers. We'll have to adjust the heat up when we have kids (or we could just have my husband a/k/a the furnace hold the kids all night :)).

My advice from my youth in an 1800s house matched with new england winters: Draft snakes, plastic coverings on the windows, storm windows, where possible shut doors that lead to outside doors, hot chocolate.

Good luck! You can do it!

[SunshineGirl]

Nice job with all the changes! I look forward to hearing about more.

[Cassie]

You are doing a great job with the changes!  when I lived in cold WI with little kids we kept the heat at 65 during the day since we were home & put it down to 62 at nite.  We only used air conditioning if the heat got to 90 because of the humidity.  Those were not uncomfortable temps-just have to get used to them.  I think that is one area you could save $.

[norabird]

Have you already tried bargaining the health care bills down? I would really try to put a lot of pressure on the provider/insurance/hospital/etc.

[quilter]

Have you heard of a  kill a watt?  They are available on amazon for less than $23. Check your library first, someone told me they borrowed one from theirs but i never heard of it anywhere else. It meters how much electricity everything uses. We got one and DH found out that handy fridge he had in the garage was using over $25 per month in electricity.   That was quickly gone. How many tv's do you have?  Do you leave anything on all the time? 
Is the heat down during the day when everyone is gone? 
Definitely look into fans and how to maximize the heating and cooling aspects of your home. Blinds and shades when it is cold to keep the heat in or sun out on the sunny side of the house. Check for drafts a round windows and doors. Even raising the air two degrees higher and the heat two degrees lower could make a difference. Turn everything off you can. Look into pipe and water heater insulation. There may be a cost saving after a few monts payback.