My husband and I live in Wisconsin, have three children ages 8, 5, and 3 and are expecting a fourth in September. I discovered MMM in October 2013 and have been trying to implement several new strategies to get us to FI more quickly. Here are some of the changes we’ve made in the last few months:
- raised the deductible on all of our insurance policies to lower the premiums
- purchased a drying rack and have minimized use of our clothes dryer
- switched to Ting & Republic Wireless to lower our cell phone bills
- joined teamtreehouse.com and began teaching myself web design to try to increase our income (currently I am a stay-at-home-mom with no income, but I’ve always been interested in coding/web design and have dabbled in it in the past)
We already were living pretty frugally. We’ve never carried credit card debt and have no loans other than our mortgage. We prepare almost all of our meals at home and rarely eat out. We don’t buy a lot of expensive prepackaged, processed foods. I’m blown away by people who are able to live on such a small percentage of their income, but I’m having trouble seeing how we can live on less. Please help! Here are the details:
Income: My husband is self-employed as an independent contractor installing/repairing commercial doors and windows. His income fluctuates throughout the year as his work is seasonal. For example, sometimes we receive over $10,000 in one month, and sometimes less than $500. I was having a really difficult time budgeting this income to last throughout the year. In the past, I would simply transfer money from our business checking account to our personal checking account as needed. But occasionally we would not have the money there when we needed it and we ended up borrowing short term loans from our parents. So this year, I decided to give ourselves a fixed “paycheck,” and withdraw $5000 each month. Realistically, it may end up to be a little different, but it’s very hard to predict and this seems like a reasonable estimate for this year.
Total Income: $5000/monthCurrent Expenses:
Fixed Expenses:
Mortgage (including taxes & insurance): $1458.14
Electricity/Gas (fixed budget plan): $145
Water (fixed at $70 quarterly, usage not metered): $23.33
Car Insurance: $28.51
Cell Phone: $16.12
Health Insurance: $214.97
Estimated Tax Payments (federal & state): $1386.67
Treehouse Subscription: $25 (used for me to learn web design in my spare time)
Netflix: $8.40
Homeschool: $50 (we budget this amount towards materials, museum passes, field trips, etc.)
Children’s Allowances: $25
Donations: $100
TOTAL Fixed Expenses: $3481.14
Variable Expenses (average of January-March 2014):
Groceries: $478.17
Essentials: $68.32 (includes needed clothing, household purchases, personal care items, etc.)
Gas and Vehicle: $29.97 (unusually low as we only had one working vehicle; we payed to repair it in March 2014 and I have been driving with the kids a lot more - I would estimate this will be more like $100/month now)
Medical/Dental: $248.33 (we had significant dental work, and will need more in upcoming months)
Miscellaneous: $94.25 (includes entertainment, gifts, random purchases)
Restaurants: $35.64
TOTAL Variable Expenses: $954.68
Total Fixed and Variable Expenses: $4435.82Assets:
House (Current Zestimate): $225,074
SEP IRA: $31,672.80
Roth IRA: $11,061.09
2004 Pontiac Vibe: $3000 (needs some body work; this summer we are going to have to sell this and purchase a vehicle that seats at least six to hold our family. The Mazda5 will be too small for all the car seats we need to install, so we’re looking at minivans.)
Savings: $358.19 (just drained our savings accounts to fund the Roth IRA for 2013 tax year)
TOTAL ASSETS: $271,166.08Liabilities:
Mortgage: $219,050.08
No other debts/loans.
Summary:
Monthly Income - Monthly Expenses = $564.18
Assets - Liabilities = $52,116 (net worth)
If we can only manage to save $550/month from our income, that will be a total savings of $6600/year. Increasing our net worth by such a small annual sum will take so long to reach FI! How can we save more to reach this goal faster? How do people live on amounts that seem so much smaller than ours, when it feels like we are already frugal? Thanks in advance for your help. :)
I feel I should also add that reducing vehicle expenses by biking is not really possible for us, because I know that is a common suggestion! While I would love to live within walking/biking distance of a library, bank, grocery store, etc., that isn't going to be happening anytime soon. The nearest grocery store is 7 miles away and to get there involves traveling on winding country roads I would not feel safe biking alone on, much less with four little kids in tow. My husband also can't reduce his business commuting expenses (which aren't in this budget, but are paid for out of our business account) because he works all over the state and has to drive his minivan of tools/supplies to the job sites. He easily puts on 25k miles/year doing this, but that is what provides the income for our family.
I would love to reduce our monthly housing payment by moving to a smaller house, but unfortunately that also doesn't seem realistic for us right now. Last year we refinanced our mortgage to 3.75%, which brought down our monthly payment considerably. For the past two years we have had local real estate agents do a market analysis on our home, and both times were told that we would have to bring money to the closing in order to sell our house as we would not be able to get enough to pay off our mortgage and pay realtor fees. We are hopeful that housing prices will start to rise a bit more over the next year and will look at selling again next spring.