Author Topic: I'm new and need a Mustachian view on our budget  (Read 5529 times)

jscott2135

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I'm new and need a Mustachian view on our budget
« on: May 29, 2013, 09:19:59 PM »
Hello all.  We have baby stepped our way through Dave Ramsey's Total Money Makeover but it was just never badass enough for my taste (plus I never felt like I could say things like "badass" on that forum so imagine my relief and pleasure at finding this forum.  We need o get our sh!t together.  We are DH (37) and me 32 and are now a one income family with 2 little ones (18mo and 7mo).  We both have degrees and I am considering going back to work in the next couple of months but for mow we are 1 income.  I'm going to post the budget and hopefully you guys can give me a sanity check on how we are doing so far. Before taxes DH makes 118k/annually plus a 15k target bonus...sometimes its more, sometimes a lot less depending on company performance.  We only have $110 in an IRA and $5k in his 401k which he is currently contributing the full 15% to and gets a nice 6% match.  We also just began contributing $500 a month to a Fidelity S&P 500 Index account and that has $2,500 in it.  We just bought a home in January and after 5% down our loan was for 282,900 on a 30 yr fixed with a 3.5% interest rate.  We currently owe 250k on it (after making a sizeable payment with a severance payment from last job).

TOTAL MONTHLY INCOME   5351.93
Mortgage (Taxes/PMI/Ins)   $1,858.43
Home Owners Association   29
Child Support - 6-10 more years   941
Invest in Fidelity S&P 500 Index Fund   500
Elect/Water/Sewer   135
Natural Gas   70
Garbage   35
Car Ins (2008 Toyota Tundra/2008 Ford Focus) $1000 deductible   85
Boost Mobile (Unlimited Plan with Canada Calling)   45
Netflix   8
Frontier - Internet   40
3X a year travel to another state for 1 week visit with step-daughter   150
Gas   255
Vehicle Maintenance/Tire Fund/Registration Costs   120
Food/Dog Food/Toiletries   618
Weekly Veggie/Berries from CoOp   100
Formula   102.5
Gifts   20
Clothes   100
Entertainment   50
Home Maintenance   50
Furniture Fund (Need Bunk Beds in a few years   40
TOTAL BUDGETED   $5,351.93

Things to note.  Next years bonus is going to go to principal so we can kill that $150/month PMI payment.  I would love to say that will go to principal but next year is also the year ex-wife has said she's going to ask for a raise in child support and since we make more now than the last time she raised it I'm sure a portion of that freed up money will go to Child Support which is fine, but when we are done with child support or if it doesn't go up then it will go towards principal.

DH used to do triathlons so convincing him to try and bike the 12 miles to work wasn't hard and I'm willing to bike around town if he can make the 12 mile haul.  Plus we live near Portland so being part of the bike culture should be no problem.  I expect to see that gas/transportation budget drop greatly over the next couple of months...but since we need to now buy bikes I don't anticipate a real change until August-ish.

Food - A big thing to us, is organic, non-GMO, humane and we juice a ton.  We pay the price for it and I know it.  In fact I go over on this budget often and am struggling a lot here.  I do all the normal things like shop at Costco and Trader Joes or good prices on Organic stuff.  We eat a lot of non-meat meals and when we do eat meat its from the meat we buy annually in bulk from a local farm. I rarely buy any processed food and cook mostly from scratch at home.  This year we are also trying to grow a garden for the first time and taking part in a local organic farms co-op to meet our budget requirements.

Elec.  We just bought two clothes racks, and replaced all the bulbs in the house with CFLs (the house is new and in every other way very energy efficient.  We never have lights on when we don't need them and the thermostat is set at 66 for heat and 76 for ac (dh won't budge on that 76 number) I'm hoping to reign in our costs even more here.  Last moth we used 515KW and our house is 2,550 sq ft.

Pheww ok I think that's it.

huadpe

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Re: I'm new and need a Mustachian view on our budget
« Reply #1 on: May 29, 2013, 09:39:44 PM »
First thing I see is an easy one: drop comp and collision on your cars.  Should shave like $40/mo off your insurance premiums and your emergency fund should be able to cover a replacement car if you are at fault in a crash or it's stolen.

Second, do you really need the Tundra?  That's a BIG truck.  If you're talking about going badass, an '08 Tundra can probably net you a tidy sum from the sale, save you on tires/insurance/gas, and people will stop asking you to help them move.  You said the DH is cycling to work, and since you're a SAHM, you could even commute him on those few days when a. he really can't cycle AND b. you absolutely need the car mid-day.

Other than those two, we're really left with food and the house.  Child support is stuck unfortunately.  Do you garden?  Putting in a big garden could be a help to your food budget.  I would start with stuff that's easy to grow and expensive to buy.  Herbs especially are super easy to grow yourself and are way overpriced at grocery stores.  Lettuce is also easy.  We have a line of arugula in our garden that's maybe 1ft wide and 10ft long.  It's good for 3 family size salads a week for a month.  Plus gardening is fun and gets you outdoors with the kids.

Now, your house payment is high.  It's eating up over 1 in 3 of your dollars earned.  You just moved in, so I doubt you're gonna consider moving, and I know the Portland area is expensive, but if you're looking at multi-year planning, don't be fixated on this house being where you live forever and ever. 

nktokyo

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Re: I'm new and need a Mustachian view on our budget
« Reply #2 on: May 30, 2013, 12:45:11 AM »
I agree, ditch the truck. It sounds like you're already 90% running as a one-car family so why not make it official and use the money to pay off your mortgage or car loan (if there is one).

Quote
Food - A big thing to us, is organic, non-GMO, humane and we juice a ton.  We pay the price for it and I know it.  In fact I go over on this budget often and am struggling a lot here.  I do all the normal things like shop at Costco and Trader Joes or good prices on Organic stuff.  We eat a lot of non-meat meals and when we do eat meat its from the meat we buy annually in bulk from a local farm. I rarely buy any processed food and cook mostly from scratch at home.  This year we are also trying to grow a garden for the first time and taking part in a local organic farms co-op to meet our budget requirements.

I have friends with credit card debt and all sorts of money issues (that I don't see on your list) and they insist on organic/local/whatever everything even though they can't afford it. They equate any other food as poison, which tells me the organic folk are really good at marketing.

I get that eating healthy is important. But are you OK with ONLY buying stuff at this price point when that money could be going to paying off your house? Are there any compromises you could make here? Juicing is healthy, but it's pricey too. You can nibble on a carrot and drink a glass of water for 10 cents and own your own home faster instead of running stacks of veges through a juicer each day.

In 5 years time your kids will eat as much as you do so whatever you spend on food now is going to double.

Do you guys subscribe to that American ideal of funding your children through college? That's another $100K per, including step-children, that needs to be worked into your budgets. 

ep114

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Re: I'm new and need a Mustachian view on our budget
« Reply #3 on: May 30, 2013, 01:50:17 AM »
Do you really need to spend $100 a month on clothes? That seems like a lot to me...

aj_yooper

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Re: I'm new and need a Mustachian view on our budget
« Reply #4 on: May 30, 2013, 02:57:31 AM »
Once you get to $237 on your mortgage, you will no longer have PMI.  Divert the money ($500) going to the taxable account to the mortgage towards the mortgage; the $13k will yield $1800 per year (14%). 

Gardening is a very good idea.  You are spending $802 per month on food for a family of 4-not good.  As noted, your food costs will eat you alive as your children mature.  Is your garbage cost, a charge from a village or a private firm?  It seems high.

lhamo

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Re: I'm new and need a Mustachian view on our budget
« Reply #5 on: May 30, 2013, 06:01:33 AM »
Some of what I was thinking to suggest has been mentioned by others already, but I'll go ahead and reinforce:

1)  Food:  REALLY high for two adults and two babies.  I think you can do much better than that and not sacrifice your principals.  I also question the whole juicing concept -- really expensive way to get your calories -- but if you are going to continue that then try to focus on juices that have inexpensive fruits and veggies as their main ingredient.  Buy a bushel of carrots, a bushel of apples, etc.  You can also buy fruits and veggies that don't look perfect at a substantial discount -- you're going to mash them all up anyway, so no need for them to be whole food beautiful.  Try to find a good fruit/vegetable stand you can go to once a week.  There are several of those in Seattle and I would imagine Portland has them, too.

2)  Clothes -- waaaaaay high unless your husband has had to get a whole new wardrobe for his new job.  Do not buy ANY clothing new for your kids -- no need.  Baby/toddler stuff is easy to get through second hand channels.  If you need stuff as your body changes shape, try second hand sources first.  Even if you need work clothes, focus on thrift/consignment stores and see what you can borrow or trade with friends before buying new.

3)  Bunk beds -- do you REALLY need to save $40/month for this?  I bet you can find something decent and cheap on Craigslist if you keep your eyes open.

4)  Entertainment - you have two kids under 2, what kind of entertainment do you realistically have time for?  This isn't a lot, but I'd still cut it back further. 

5)  AC set at 76?  This is ridiculous.  Our standard trigger for turning on the AC is 30C (85 F).  And we have a lot of humidity in Beijing.  DH needs to adjust his body temp.  The idea of AC in Portland or Seattle is just silly to me.

jscott2135

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Re: I'm new and need a Mustachian view on our budget
« Reply #6 on: May 30, 2013, 08:40:14 AM »
lhamo - I could just hug you or the AC comment.  I'm going to make DH read this ad then embarrass him into changing it lol (all with love of course).

You're right about the food budget.  And I will absolutely focus my energy there now that we've cut cable and begin biking.  I think it will make a huge impact on our budget.  Juicing def works or our family and when I see the 18mo old eager to down a glassful of spinach drink I think BOOOYAHH!  It'll be my w personal challenge.  Th garden will help and so will the co-op.

Clothes budget I can def cut back on, I have no shame in consignment shopping, good will or craigslist.

The bunk bed budget will include a bunk bed/two new mattresses, and bedding.  Once we get it (and I will shop smart) I'll put that money towards retirement.

Other questions to answer - No we do not subscribe to funding our kids way through college.  they are 1/4 Navajo and can qualify for some payment from the Navajo Nation for college.  We will have a 529 account for each and have agreed to a reward system.  1st year...figure it out on your own.  With a 3.5 and above we will give them 25% bonus at year two...same philosophy but 50% at year three and 75% for the final year.

I'll look into dropping the collision part of the ins today.

Garbage is through the city and is what it is:/  For this area its not that bad unfortunately

Wow I never thought of using my $500/mo on the mortgage to kill he PMI.  DONE, DONE, DONE.


As for the truck.  We live in the Northwest and we are not some add on 30 something hipsters.  I grew up here and we love it.  We USE the truck.  It goes over the cascade pass in the winters/and through the Columbia gorge in the winters to Spokane WA.  We need something reliable and with 4 wheel drive.  It goes in the mountains too (our entertainment budget - salmon fishing/camping/mountain biking).  Any thoughts on a downgrade that would meet those expectations?  I have no idea how much its worth but its in great shape and honestly the plan was to keep it until the wheels quite literally fell off of it.

Dee18

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Re: I'm new and need a Mustachian view on our budget
« Reply #7 on: May 30, 2013, 09:01:51 AM »
Ihama made many of the suggestions I would.  I must second a couple of them:
Furniture-First, wait and see how your kids are before buying bunk beds.  Our doctor said no kids under age 7 should have bunk beds in the room and even then only if the kid is low key, not rambunctious.  I got a great used bed and mattress given to me when my daughter was the right age (older couple had bought sets for their grandkids who spent the night once a month; they were all moving to CA). Even if you bought brand new bunk beds and mattresses from IKEA (which I did when my daughter wanted a loft for her birthday) the total current cost would be $310 (and the IKEA loft was super sturdy).  Add on sheets and it's $330. 
Check your budget for other unnecessary buys for kids. I was amazed at what high quality used items I could find--including $10 boxes of children's books on ebay from retiring teachers.
As for juicing--my nutritionist mom always went crazy when people did this.  She said the whole fruit is way better for you than the juice.  You might want to believe her; she turned 90 Sunday and is still in good health!
Remember to buy your bikes on Craigslist, rather than new.  You can benefit from non-Mustachians who want the latest and greatest even when their current bikes are fine.

Best of luck to you!

limeandpepper

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Re: I'm new and need a Mustachian view on our budget
« Reply #8 on: May 30, 2013, 09:16:47 AM »
Why juice? I agree with Dee18 about whole fruit being better for you. So why not have smoothies instead? You get a nice hit of fiber content, there's more bulk to it so you end up using less fruits and vegetables. At the same time it fills you up better and thus gives you more bang for your buck. Also the resulting beverage isn't as high in sugar. It reduces food waste as well because you don't end up with all that pulp.

jscott2135

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Re: I'm new and need a Mustachian view on our budget
« Reply #9 on: May 30, 2013, 09:37:20 AM »
Ohhh just an easy word to use, we Whole juice so yeah, smoothies and no waste.

huadpe

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Re: I'm new and need a Mustachian view on our budget
« Reply #10 on: May 30, 2013, 10:43:06 AM »
Re: truck

You have one of the biggest and least fuel efficient vehicles on the road today.  It gets worse gas mileage than a Hummer.  I am not making this up: Hummer H3 is 14mpg combined, Toyota Tundra 4wd is 13mpg combined.

Everything you do could be accomplished in a used Ford Escape, CRV/Pilot, Jeep Liberty, etc.

Here, for example, is a $12,900 Ford Escape Hybrid in your area.  http://portland.craigslist.org/clc/cto/3834540476.html  That gets 27 MPG in the 4wd version.

If you got that, it could possibly replace both the Tundra and the Focus, from how I read your lifestyle?


jscott2135

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Re: I'm new and need a Mustachian view on our budget
« Reply #11 on: May 30, 2013, 11:47:31 AM »
Great info thank you for taking a look so much deeper into our budget.  We were always so proud of paying off both these vehicles we never thought about downgrading the big dumb truck to something that would accomplish the same and be more fuel efficient.  Awesome, you just provided a whole evening discussion for dh and I tonight.

huadpe

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Re: I'm new and need a Mustachian view on our budget
« Reply #12 on: May 30, 2013, 01:06:08 PM »
Great info thank you for taking a look so much deeper into our budget.  We were always so proud of paying off both these vehicles we never thought about downgrading the big dumb truck to something that would accomplish the same and be more fuel efficient.  Awesome, you just provided a whole evening discussion for dh and I tonight.

Cool and thanks. I hope you find a solution that optimizes things better for you. 

One thing to keep in mind is that people way overestimate the need for big 4wd vehicles for doing outdoorsy/snow stuff.  When those passes are bad enough that regular cars can't get through safely, they're closed anyway.  And you would be amazed at the tiny cars that everyone used when I lived in Montreal, which is snow-bound for 5 months of the year.

nktokyo

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Re: I'm new and need a Mustachian view on our budget
« Reply #13 on: May 30, 2013, 06:31:55 PM »
Cool. Let us know what the numbers look like after the vehicle downsize and going more aggressive on your house.

Bunk beds don't look too bad http://portland.craigslist.org/search/fua?zoomToPosting=&query=bunk&srchType=A&minAsk=&maxAsk=

On the food industry, the way it was explained to me was there are varying degrees of "evil" in regards to non-organic. Because some foods take far more processing and pesticides than others you might be able to get 80% of the benefit of switching to all organic with 50% of the vegetables or so I was told.

I haven't ever bothered to to a lot of research into this to back up those numbers but it might be worth taking a look at. There are a lot of studies done each year http://www.thedailygreen.com/healthy-eating/eat-safe/dirty-dozen-foods#slide-1


lhamo

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Re: I'm new and need a Mustachian view on our budget
« Reply #14 on: May 30, 2013, 11:30:11 PM »
Glad you appreciated the A/C comment.  Your body does adapt to the heat -- you should direct your DH to MMM's post on that topic, which is great. I still remember how horrible I felt the first time I came to China in the summer -- I was in Taiwan dealing with 90-100 F temps and 90-98% humidity and I thought I would DIE!  But after 20 years, over 16 of them spent in this hot/humid summer climate I have adapted quite surprisingly (I'm a native Seattlite, so it can be done).  Yesterday it got pretty hot here and our apartment heats up awfully because we have floor to ceiling west facing windows on the 30th floor, but we just kept the windows open and didn't turn on the AC at all.  It was probably 35 C in the living room when I got home around 4pm, and cooled down to 30C ish before going to bed.  My body has adapted to be able to take it over time -- we've been in this apartment 4 years.  The first year we probably had the AC set to come on at 24-25C.  We've pretty much upped it 1 degree every year.  Last year I couldn't sleep if the bedroom was hotter than 28 C.  This year I seem to be ok at 30 C.

Do you guys have room for a freezer?  Because if you do, maybe you could plan to do a bunch of upick fruits and veg this summer and freeze a lot of it for use in your smoothies during the late fall/winter/early spring.  That might be one way to bring the cost of food down a little more. 

mpbaker22

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Re: I'm new and need a Mustachian view on our budget
« Reply #15 on: May 31, 2013, 07:34:33 AM »
Without knowing the area, that seems like a hella ton to have paid for a house, 1/3 of your take home pay.  Granted, you might get a second income, etc. but I would not have made that decision if there were alternatives.  The past is in the past, but maybe you could downsize in x years?

Being a young male, I don't want to be offensive here, but maybe think about whether the formula is necessary?  If you're a SAHM, it might be an option to at least partially cut.  Then again, this isn't always a choice ...

As others have said, get rid of the Tundra.  I'll even let you keep the focus.  If you really want to get a commuting car, get a cheap 10+ year old car.  You'll only be using it a few miles a day.  And it's probably worth ~$1000/year in opportunity costs from not investing.  And you'll save on gas.

That's about all I got for more obvious cuts.