Author Topic: Looking To Turn Things Around Financially - Need Some Advice  (Read 21197 times)

Kyran Vale

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Looking To Turn Things Around Financially - Need Some Advice
« on: August 25, 2014, 01:19:04 PM »
Hey Folks,

Long time lurker, first time poster.  Iím looking for some help because despite all of the amazing advice here, Iíve made some incredibly stupid financial decisions over the last few years (Almost ALL car related).  Without getting into the fact that Iíve bought and sold about 8 cars in the last 3 years (new and used), Iím finally posting here to get myself on the right track and Iím looking for some advice.  I need some input in a few areas, and Iím hoping that I can get some honest feedback without being too harsh.  Itís taken me a lot to get to the point of posting here, but I think that recognizing this is my first step to getting my priorities straight.

I want anyone here taking the time to read this to have a good idea of who I am before I jump into numbers, so I apologize in advance for my long winded post.  Before I jump in, I do have a couple of points I guess I need to start with.  Selling my home, while I would do it Ė my wife will not.  She loves our home, and we do have an amazing neighborhood even though Iíd love to try something cheaper & in another state (lived here all my life).  To me itís a house, to her itís our home, and she will fight me tooth and nail to keep it, so thatís out of the picture.   Itíd be amazing to sell it and wipe out our student loan debt, but I just donítí see it happening.

Changing jobs is something that Iíd be open to.  But to be quite honest, I will probably not find a job that pays what I make now closer to my home.  I live in a suburb and most of the higher paying jobs are in the city.  I would love to cut out my commute, but I donít see it as an option to keep the same salary levels I make now.  Iím not happy with my job, and am only doing it out of necessity to keep our lifestyle at this point (yes I understand that itís horrible).  Maybe Iím wrong and there is something out there, and I just need to look.  I want to try the self employed route doing my side hustle full time someday but feel like itís a long way off.  I could see myself transitioning to a new role closer to home if I could make around 80-90k per year if I could ride a bike and be in a lower tax bracket after cutting expenses.  I think looking at this in February of 2015 might be an option, so I could get rid of a 401k loan I have at the same time (more on that later).

Anyways, hereís me below, and please be gentle.

Age:  34
Income:  Base Salary 125k, Bonus Potential usually around 10k annually.
Kids:  4
Married:  Yes & is a homemaker
Daily Commute:  30 minutes to 45 minutes each way depending on traffic.

Financials:
House: 2400/mo
My Car:  525/Mo (Just purchased in June & owe 31.5k @ 4.9% Ė did some upgrades, may be able to break even on sale but will lose upgrade costs)
Wifeís Car:  390/Mo (Owe 13k, may be worth around 22k @ .9%)
Student Loans:  400/Mo (Owe 80k or so at 2.5%)
401K Loan: 575/Mo (Owe 33k Had to take last year in my last job @ same company when I was forced to take on a new business source for 2 quarters that did not pan out.)
My Gas: 300/Mo
Yard Care:  90/Mo
Pool Care:  120/Mo
Television:  120/Mo
Cell Phones:  75/Mo
Internet/Phone:  90/Mo
Electric:   300/Mo Average
Kids Gymnastics:  290/Mo
Car Insurance:  120/Mo
Home Gas Bill:  50/MO
Dry Cleaning Bill:  90/Mo
Wifeís Money I give her:  1700/Mo (I donít know where she spends it or what itís spent on, but she usually goes over a little bit every month)

7635 Total Monthly Outgo, I will call it 8000.00 for eating out myself, other stuff I buy, etc.
I do have some ďside hustleĒ income from building websites for fun on the side, but for our purposes, Iím not counting it.

Assets:
Savings:  8k
Side Hustle Savings:  11k
401k Total Balance With Loan Deducted:  52k
Retirement:  25k
Home Worth:  420k, owed 325k

Total Assets:  186k Gross Assets

I know that selling my own car, cancelling the luxury services (yard, house cleaning Ė pool once I learn to do it) are where I need to start right away.  We could also sell my wifeís van, but itís still in great shape with 40K miles and itís very reliable transportation for all 4 kids and Iím not sure I want to cut that deep, but will consider it if itís necessary.  Luckily we donít take on credit card debt, but that also makes it harder in paying things down quicker as well.

Hereís where Iím looking for guidance.  Thereís a couple of different paths that I feel I could take but Iím not sure which one is right so Iím looking for help.  I know this, that Iím tired of my life and my stress levels.  Iím miserable at home at night with my kiddos and itís because Iím stressed all day about why my financial picture looks like it does as well as being in a career field I no longer enjoy.  I need a change so Iím formulating a plan and hopefully I get some good guidance by the experts here.

Option #1:  Stick it out at current job Ė sell my car, payoff the wifeís car next year with annual bonus & go buy a used Honda for 5k.  Have also thought about leasing something really cheap, have a couple of great Honda civic leases out there for nothing down and 200/mo, but this would only be an option if Iím staying put with my 60 mile commute that requires reliable transportation of that magnitude.  Slowly chip away at remaining debt by not taking on any additional debt and just keep working towards whatever end we need to.  This is my least favored choice for obvious reasons and doesnít help that Iím not satisfied where I work.  Plus itís starting to take a toll on my health (stress levels etc).

Option #2:  Stick it out until after the new year at current job, start looking for something close to home that I can ride my bike to in the 80k per year range.  This gets rid of my 401k loan (would not pay it back, just take the tax hit upon rollover), pays off wifeís car with year-end bonus and gets me a job thatís closer to home.  This would allow me to ride a bike to work, and possibly have more time to work on my side hustle to grow that until Itís ready to take off and I can do it full time.  This seems like the most obvious practical choice at the moment and would immediately shave out about 1500 per/mo in expenses that are almost all car related, even more when taking gas costs into consideration.

Option #3:  Stick it out until after the new year at current job, liquidate retirement & 401k and give the side hustle a full time run.  Iíd have about 9-10 months of runway, but itís obviously highly risky and I wouldnít do it unless I probably had around 2000/mo already coming in Ė plus the cost of healthcare which is a burden with a family of 4.  This is the most cavalier option, and while Iíd love to do it Ė probably not realistic to do until I have a bigger cushion that doesnít involve liquidating my retirement assets. 

Once again Iím sorry for the long winded post Ė and Iím hoping to get some valuable feedback from the forum members here.  Hopefully none of this comes off as total lunacy, and if it does, please be honest - I'm just looking to get my financial life back on track. 

Please understand that it took a lot for me to put this out there and just looking at my current spending habits leaves me pretty self conscious.  Iím open to feedback and/or any recommendation of ďOptionsĒ somewhere in between that people feel makes sense. 

Thanks all!

Ftao93

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #1 on: August 25, 2014, 01:40:40 PM »
Wow!

So I looked at your salary, and I was like "Oh man, how can this person have debt?"

then I saw the debts.  They aren't insurmountable, but I can see why you aren't content.

Not having your 'problem' of a higher salary, and being a total beginner too; here's what I see off hand:

Take your car and sell it.  Sell it at a loss if you have to.   Buy/lease a cheaper car, as you said.   Pay off your wife's car/buy 'new' used car with balance.  Maybe toss any leftovers at the 401k loan and extra house payment.

You'll notice a much greater effect over time by cutting the remainder of the expenses.  The van is probably worth keeping.

I would tell your wife that she can't spend 1700/mo on 'whatever'.  I would say that you both need to tell the other when you're making a purchase over $50 that isn't related to the home/family in general.  If you don't even know where nearly 2k/mo is going, wow....that needs to change NOW.  MMM has less kids, but his overall spending for the entire family, including most vacations, averages slightly more than that per year.   We live on that and I could still trim the fat by a lot more.   

Does it include food, clothes, and other expenses?  If so you guys can sit down and see what is really needed.   We currently live on mostly rice and beans.  I don't recommend that with 4 kids :P.

The other expenses can be trimmed.  Maybe she can take care of the pool.  Maybe you can both team up to keep it cleaner, and reduce the amount of visits that the actual pool expert makes. 

Electric can always be trimmed a bit.  LED bulbs, keeping lights/heat/AC in check, etc.  Maybe you can get that down 50-100/mo by being more frugal with it.

Kids gymnastics also seems high.  Maybe you could find another program that is a bit cheaper.  I try to average things out by hour of use per/$ spent.  If they're getting 8 hours of work out of it for $300/mo...you do the math.  If they REALLY LOVE IT  maybe it's still worth it.  It could easily be made up for by lack of your car payments and your wife lowering other expenses.

At 34 you've already noticed it, and you have a good salary.  Consider taking a year to throw most of your salary at debt while you build up the side hustle.  Plus, you can always change your mind.  If you manage to nuke your debt in 6 months, maybe you'll feel more comfortable pulling the trigger!

marblejane

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #2 on: August 25, 2014, 01:45:59 PM »
Your biggest priority is to get a better handle on your complete financial picture. I would recommend getting YNAB or at the very least Mint. What is your monthly take-home pay? It appears to me that your take home, net of taxes, doesn't cover $8,000/mo in expenses. You need to really understand, in detail, how much you take home each month and how much you are spending before making major decisions about selling cars and changing jobs.

You also need to have a conversation ASAP with your wife about finances. To me, it is a big red flag that you give her $1,700/mo and have no idea what she is spending it on. You need to understand what she does with that money each month (mind you, I'm not questioning the legitimacy of what she is purchasing so much as saying that you MUST understand where every dollar goes), and she needs to also understand your family's complete financial picture.


Kyran Vale

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #3 on: August 25, 2014, 01:52:50 PM »
Thanks to both of you for the replies.  I shouldn't have said "I don't know where she spends it" - better clarified would be family food, her gas, clothes and whatever else she feels she needs to spend on.  I don't micromanage it for her, but maybe we need to do that.

There are a lot of Target trips, and other items that can probably be cut out, but it's been easier on me to give her a monthly figure and let her manage it.  The problem is that neither of us are doing a very good job - which is why I'm here!  :)

mrdebtbeard

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #4 on: August 25, 2014, 01:55:40 PM »
Hey Kyran,

I'm brand new to the forums myself so maybe I'm not the best qualified to help you but I'm going to give a shot at it anyways. And I hope I can help because I've been dealing with peoples personal finances in the mortgage industry for the past 12 years and years of credit card collections before that (which is AMAZING training for seeing what not to do :P)

Lets start with the good news:
You make enough money to fix your problem.
You done the most important first thing by recognizing a problem without hiding your head in the sand.
You haven't dug yourself too deep of a whole that you need something drastic (like selling the house etc.)

Bad news
By the amount your spending both you and your wife have gotten financially flabby and its going to take a few months of pain to start pulling out of the nose dive.
I'm going to guess that there is some other consumer debt you haven't talked about
I'm going to guess that you and your wife don't discuss your finances together (other wise you'd know what she spends her money on and she'd know you where stressed out)
Just playing better offence isn't going to fix this for you, you guys need to start playing defense together.

Here's what I would do in order of priority
First explain to your wife how you FEEL, women listen to feelings like "I'm stressed every day because of this..." "I'm scared I can't ever retire because of..." "I really want to feel like I'm doing a good job as a provider but I need your help with..." "I feel trapped in a job I don't like because of..."
DO NOT start out by attacking her spending or going on a rampage about radically changing the families budget. Get her on board with how you feel and let her offer to help you feel better.
Make a budget - Start with where you are at right now, no judgments, no stress just face what your actually spending and on what (I personally love mint for this as it will down load the last 3 months of transactions and let you really see where all your money has gone)
Once you know where you are at, make a budget for where you want to be - "I'm spending $400 a month on eating out, that can really be $200 a month etc."
Set a time once a WEEK to sit down with your wife and go over your budget, do this weekly for the first few months with the goal that once spending is under control you can cut this weekly family financial review back to monthly.
Make her responsible for playing defense because your marriage is a team, and if she feels powerless and stressed then your playing the game with half your team on the bench (PS I've done this with my wife and got our spending down from about 6k a month to 4k a month and we are together closing in on under 3k a months which is where I think we'll settle)
Things I'd personally cut right away
Yard care - $0 one month will pay for a lawn mower and the next will pay for a weedwacker if you need one
Pool care - $0 um yeah you know this one is a no brainer already
TV - $0 I'm going to guess you're already paying for internet and netflix is 8 bucks a month, and hulu is free
Kids Gymnastics - $0 ummm go hikeing, go to the park, go swim in your own pool those are all free
Dry cleaning - $10 max, I wear suits every day for years and I don't think I've ever spent more than about $10 bucks a month I usually clean one suit a month and cycle through them ever few months, my wife washes my shirts ever few days as needed, and yes that mean I'll wear a suit for 4-7 months before it goes back to the dry cleaners, and with some basic hygene and a lint roller no ones ever complained I stink or look shabby
Cell phones - $50 MMM has a great blog on cell phones
Internet/landline - $40-$60 I'm a tech junkie with a high powered gaming rig a box dedicated as our media center a tablet and 2 smart phones, all of our media comes from online streaming (see the $8 netflix) a 3-6mps monthly plan is more than enough and ca be had for less than $60 a month.
So that right there is $715 a month without even touching her $1700 your eating out, your groceries, your utilities or your excessive cars (she doesn't work trust me you guys can live with one car) I guarantee you there is another $2000 a month buried in there.


SunshineGirl

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #5 on: August 25, 2014, 02:01:15 PM »
I second the idea of using YNAB to understand your expenses. If your wife is willing, have her be the one to manage the money, and the two of you can discuss weekly or monthly how you're doing.

I would NOT advocate leaving your job to try making your side hustle your full-time gig. It's too risky with you being the sole income earner.

Gone Fishing

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #6 on: August 25, 2014, 02:08:30 PM »
Keep the job.
Sell your car-replace with used commuter car that gets 35mpg+ and is <$10k
Get the family on board
Cut expenses
Pay off 401(k) loan
Build 'stache'

What is your mortgage rate?

The family part will be the hardest.

Ynari

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #7 on: August 25, 2014, 02:37:16 PM »
Most of those expenses don't need to be that high to get the same end result.  Others have mentioned most of what I'd say.  (I'd keep the gymnastics, but I'm biased since I think gymnastics is awesome.)

Re: the $1700 going to food, gas, clothes, and Target.

Itemize those expenses.  Maybe something like $700/food, $100/gas, $200 shopping would seem reasonable to me compared to your current spending levels, but you may come up with different numbers (especially if you want to try to lower the numbers incrementally).  You need to be on board with your wife, here.  Unless you give her motivation/reasoning/whatever she needs to understand, she's going to upset with a budget that's only $1000 now.  Though, even if you just itemize it to $1700 you might see her coming in under budget instead of over budget (or at least, you'll know WHERE the over budget is coming from), and you can go from there.


In the mid-to-longer-term, is moving an options?  I know you've got 4 kids (I grew up as one of 4), but could you do better, smaller, cheaper?  The pool might be fun but you could probably find a place with a public pool and stop paying $$$ for maintenance, electricity, and water costs.  Could you find a job you enjoy slightly more in a lower COL area and move to a house close enough to bike?  Some kids love moving, others just complain about losing friends, but they will all get over it (even faster if you show them how to use Skype).

Kyran Vale

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #8 on: August 25, 2014, 02:41:17 PM »
Thanks for the feedback.

The three options I provided I guess were more targeted at my happiness around my employment situation and less about the debt reduction.  I'd like to be able to do both, and finding something that pays less, but lets me accomplish a few of the goals at the same time next year seemed like a good idea. 

I like the idea of taking a paycut, riding a bike, selling the car, etc - and getting a job closer to home.  Sounds like most folks are advising me to revise my current debt/pay structure while sticking it out in current role with the lengthy commute. 

I can do that, was just looking for an amicable solution to all of the above.

To Freznow:  I would strongly consider a home sale along with liquidation of all assets, as it would get us debt free in one swoop, but moving isn't an option right now.  The home means too much to the wife, and even at 80k is probably affordable if I'm able to rearrange some of our spending habits.

« Last Edit: August 25, 2014, 02:43:01 PM by Kyran Vale »

4alpacas

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #9 on: August 25, 2014, 02:50:26 PM »
No one is saying that you can never quit your job, ride a bike, and avoid your commute.  You have a lot to do before you can realistically make the jump. 

It's troubling that you equate cutting your spending to fit an $80k salary as being "affordable."  I would think about cutting your salary, but still being able to set aside about 40-50%. 

wutra

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #10 on: August 25, 2014, 02:53:58 PM »
Thanks for the feedback.

The three options I provided I guess were more targeted at my happiness around my employment situation and less about the debt reduction.  I'd like to be able to do both, and finding something that pays less, but lets me accomplish a few of the goals at the same time next year seemed like a good idea. 

I like the idea of taking a paycut, riding a bike, selling the car, etc - and getting a job closer to home.  Sounds like most folks are advising me to revise my current debt/pay structure while sticking it out in current role with the lengthy commute. 

I can do that, was just looking for an amicable solution to all of the above.

To Freznow:  I would strongly consider a home sale along with liquidation of all assets, as it would get us debt free in one swoop, but moving isn't an option right now.  The home means too much to the wife, and even at 80k is probably affordable if I'm able to rearrange some of our spending habits.
My advice is to stick out your job for now while getting your wife on board with your future goals and eliminating/lowering as many expenses as you can. Definitely link all of your accounts to mint so you can get the complete picture. Once you've begun to eliminate a lot of these monthly expenses, I would consider looking for a lower paying job nearby. Getting everyone on board will likely be easier said than done but the good news is, you can start right away by cutting your own grass, servicing your own pool, and cutting back your electricity useage.

Gone Fishing

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #11 on: August 25, 2014, 02:54:40 PM »

I like the idea of taking a paycut, riding a bike, selling the car, etc - and getting a job closer to home.  Sounds like most folks are advising me to revise my current debt/pay structure while sticking it out in current role with the lengthy commute. 


You can do that, it is what FI is all about, calling your own shots.  You just need to get your spending/debt in line before the cut, not the other way around, that is what FI is all about!

Kyran Vale

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #12 on: August 25, 2014, 02:57:44 PM »
While I am not disagreeing with you, I'm just not sure how I'd be able to save 40% if I were to take a job at 80k per year that's closer to home (realistic for salaries in my living area).  Especially with 4 kids and health insurance costs (current employer benefits run me around 700 per/mo before taxes).

Maybe you are right and I just need to change my complete view on spending, but I have a feeling that would come with getting rid of the house. I'd prefer not to do as we do truly enjoy our neighbors (trust them with our kids, etc.) and is a big deal to my wife.

So Close:

Thanks for the feedback, I also like the idea of cutting expenses and starting that path first with the idea that within 6-12 months I can be looking for a lower paying role closer to home.

4alpacas

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #13 on: August 25, 2014, 03:05:49 PM »
While I am not disagreeing with you, I'm just not sure how I'd be able to save 40% if I were to take a job at 80k per year that's closer to home (realistic for salaries in my living area).  Especially with 4 kids and health insurance costs (current employer benefits run me around 700 per/mo before taxes).

Maybe you are right and I just need to change my complete view on spending, but I have a feeling that would come with getting rid of the house. I'd prefer not to do as we do truly enjoy our neighbors (trust them with our kids, etc.) and is a big deal to my wife.


I think that's the point of the forums and MMM.  Push yourself out of your comfort zone.  BUT I would make sure you have your spouse on board first. 

Gone Fishing

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #14 on: August 25, 2014, 03:12:50 PM »
Sounds like the house might be non-negotiable, at least for now.  Can you refi for a better rate?

okashira

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #15 on: August 25, 2014, 03:24:03 PM »
While I am not disagreeing with you, I'm just not sure how I'd be able to save 40% if I were to take a job at 80k per year that's closer to home (realistic for salaries in my living area).  Especially with 4 kids and health insurance costs (current employer benefits run me around 700 per/mo before taxes).

Maybe you are right and I just need to change my complete view on spending, but I have a feeling that would come with getting rid of the house. I'd prefer not to do as we do truly enjoy our neighbors (trust them with our kids, etc.) and is a big deal to my wife.

So Close:

Thanks for the feedback, I also like the idea of cutting expenses and starting that path first with the idea that within 6-12 months I can be looking for a lower paying role closer to home.

Foxus on the easy targets first.

Fact is, you could cut your expenses in HALF and KEEP THE HOUSE AND COMMUTE.

Your spending in the other, easier to target areas is that absurd.
Cut the other crap , then you can look at the house / commute.
The 1700/mo you give your wife for her monthly prada bags is more then I spend on EVERYTHING. And I make near 100k/yr.

Kyran Vale

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #16 on: August 25, 2014, 03:31:18 PM »
While I am not disagreeing with you, I'm just not sure how I'd be able to save 40% if I were to take a job at 80k per year that's closer to home (realistic for salaries in my living area).  Especially with 4 kids and health insurance costs (current employer benefits run me around 700 per/mo before taxes).

Maybe you are right and I just need to change my complete view on spending, but I have a feeling that would come with getting rid of the house. I'd prefer not to do as we do truly enjoy our neighbors (trust them with our kids, etc.) and is a big deal to my wife.

So Close:

Thanks for the feedback, I also like the idea of cutting expenses and starting that path first with the idea that within 6-12 months I can be looking for a lower paying role closer to home.

Foxus on the easy targets first.

Fact is, you could cut your expenses in HALF and KEEP THE HOUSE AND COMMUTE.

Your spending in the other, easier to target areas is that absurd.
Cut the other crap , then you can look at the house / commute.
The 1700/mo you give your wife for her monthly prada bags is more then I spend on EVERYTHING. And I make near 100k/yr.

Thanks - The 1700 a month is more like 200/mo for gas, 800/mo with costco and 300/mo with the regular grocery store & the rest towards kids clothes, target, etc.  I guess my point with "not knowing where she spends it" is that I give it to her and let her figure it out. 

Kyran Vale

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #17 on: August 25, 2014, 03:32:25 PM »
Sounds like the house might be non-negotiable, at least for now.  Can you refi for a better rate?

@ 3.75 it's unlikely.  It is an FHA loan though, and after 3 years will drop the PMI and reduce another 350/mo.

okashira

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #18 on: August 25, 2014, 03:34:24 PM »
While I am not disagreeing with you, I'm just not sure how I'd be able to save 40% if I were to take a job at 80k per year that's closer to home (realistic for salaries in my living area).  Especially with 4 kids and health insurance costs (current employer benefits run me around 700 per/mo before taxes).

Maybe you are right and I just need to change my complete view on spending, but I have a feeling that would come with getting rid of the house. I'd prefer not to do as we do truly enjoy our neighbors (trust them with our kids, etc.) and is a big deal to my wife.

So Close:

Thanks for the feedback, I also like the idea of cutting expenses and starting that path first with the idea that within 6-12 months I can be looking for a lower paying role closer to home.

Foxus on the easy targets first.

Fact is, you could cut your expenses in HALF and KEEP THE HOUSE AND COMMUTE.

Your spending in the other, easier to target areas is that absurd.
Cut the other crap , then you can look at the house / commute.
The 1700/mo you give your wife for her monthly prada bags is more then I spend on EVERYTHING. And I make near 100k/yr.

Thanks - The 1700 a month is more like 200/mo for gas, 800/mo with costco and 300/mo with the regular grocery store & the rest towards kids clothes, target, etc.  I guess my point with "not knowing where she spends it" is that I give it to her and let her figure it out.

Between the two of you, you spend $500/mo on gas? Your wife doesn't even work, where is she driving to spend $200/mo in a minivan?
You need to get a used Prius for yourself....
My commute is 30 min and I only spend $90/mo in gas and my car only does 29-30mpg.

okashira

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #19 on: August 25, 2014, 03:38:35 PM »
Sounds like the house might be non-negotiable, at least for now.  Can you refi for a better rate?

@ 3.75 it's unlikely.  It is an FHA loan though, and after 3 years will drop the PMI and reduce another 350/mo.

You can refi sooner then that to get rid of PMI.
My 15 year is at 3.0%, which I got a year ago (rates are similar now?)

350 for three years is $12600, so this alone would make it worth it.

Overall, the house can be okay to keep, depending on your answers to the following:
-How much is property tax/yr
-How much is homeowners insurance
-How much is your HOA
-Are you willing to do something about your crazy commute cost by getting a better car?

former player

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #20 on: August 25, 2014, 04:01:56 PM »
I'm going slightly against the "hair on fire debt emergency" views here.  I think your biggest emergencies are that you are unhappy with your job and are only able to carry on with it for the sake of your family, that you are 34 but only have $25K in retirement, and that you have 4 kids and no way to help any of them with any of their college costs.

I think you need a quiet time to sit down with your wife and tell her all this.  Then tell her that your work is making you miserable, that you could put up with it for the sake of her and your children, but that you look at your financial position and you are frightened for the future unless things can change.   Ask her to help you change things.  Say you've looked on the internet and found some advice sites and recommended books - Dave Ramsey, MMM, Your Money or Your Life, etc.  Can she look at them to see whether she thinks any of them make sense for you as a family?

Once your wife is on board with the need to go forward, and between you there is an agreement on the broad outlines, then start cutting costs in the ways suggested.  Personally, I'd say keep the job (until you have stabilised your finances), the house and probably the gymnastics, and ruthlessly cut everything else.  Max out your retirement and tax-advantaged funds, and don't tie yourself into paying for the kids college but have some sort of funds earmarked for it if appropriate at the time.  Good luck.

darkadams00

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #21 on: August 25, 2014, 04:04:25 PM »
1) Kill some car expense--primarily the loans. Also, you could downgrade to more "reasonable" cars to offset the gymnastics. Remember, choices. Years ago, I took public transit and put the extra money into the kids' Christmas fund---bought musical instruments and recording equipment that they still use today, years later. For you, this could mean selling and downgrading just a bit.

2) Wife's money--simply put, WOW!! My wife has about half that to pay for groceries, gifts, haircuts/personals, clothing, and two subscriptions (Netflix and local newspaper/coupon mill). Our monthly entertainment budget usually comes out of that as well. Granted we have 2 kids instead of 4, but after several years, I still can't see two more kids pushing that number over $1000. We eat well, dress well, and do fun stuff, just within our plan. Full disclosure--this area took the most time to get a handle on because it was the most irregular category and involved us constantly communicating. Other budget items are auto drafted or paid very regularly, usually by me. This is a hole that money can get dumped into by $20's, $40's, and $80's that add up. Your wife will almost ALWAYS overspend here because she's not keeping tabs and has learned to just swipe a debit card as needed--and your kids will always supply her with "needs." If she's like my wife, she could spend $100 on the kids without a thought even though she might not spend $10 on herself. I would also hit the "holy crap" button on the wife's gas. If your wife is going to be a HOMEmaker with no income, then it's her task to reduce family expenses to the nth degree. Hopefully, she has the attitude of a wife/mother instead of a kept woman. If so, she'll be fine. If not, good luck.

You might have the funds, but it's slipping out the door instead of paying down your debt and working on your savings. The plan that eventually worked for us--Figure out a sketch budget/goal that includes paying down your debt. On payday, pay down the debt first. Then pay your regular bills. Then see how the "discretionary" items play out. For the first 2-3 months, I'm almost certain, your wife will run short at the end of the month. It's good for discussion and financial temperance. After the debt's gone, you can do the same with savings--Contribute to your savings/investments first. Then pay the bills. Then use the "discretionary" funds as needed for the rest of the month.

Finally, track your expenses religiously for several months. Get as good an idea of those discretionary spends as you seem to have on the regular expenses. If you purposefully make adjustments at the end of each month instead of in the middle, you will avoid overspending into your pile of "whatever money I have left at the end of the month." If you set reasonable goals, pay yourself first, and track your expenses, you will begin to reach financial milestones,




Kyran Vale

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #22 on: August 25, 2014, 05:16:06 PM »
I want to thank everyone for the responses.  Seems like a lot of differing viewpoints but all come to around the same idea with some being more aggressive (set your hair on fire debt emergency) to others just recommending some drastic lifestyle changes.

I guess the first step is taking the plunge and sitting down to have a conversation.  Budgeting software across the smartphones and computer seem like a good first step, especially looking at the 200.00 in charges on my wife's visa card that I'm looking over right now (outside of the 1700.00 she got at the beginning of the month).  Most of it's food or convenience purchases which probably need to be aggressively tapered.

I think it just comes down to setting up the software and starting a plan to make it stick. 

Selling my car will also be a good step but I'll tackle that after I do some budget tracking and analysis.  Once I've gotten that piece down, I'll move to look to sell the car over the next few months and tackle the job piece of it later on.  Who knows, the job may become more enjoyable if I'm able to start putting away 2k a month into savings and/or debt each month instead of making ends meet and occasionally burning savings that I replenish with my annual bonus.

@ Former Player - the 25k is just my pension, there's around 53k not loaned against in my 401K, but I need to knock out that loan after I've tackled the car issues.  That's IF I'm not able to liquidate that by finding something closer to home in January/February from an employment perspective.

Who knows, maybe the side hustle will pay off by then, only time will tell.  Thanks again to all the great responses, face punching or not! 

Side note - does the YNAB software loop in with your bank accounts and track all expenses?  I am going to check it out, but seems like folks recommend it here and other financial forums.

Kyran Vale

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #23 on: August 25, 2014, 05:40:58 PM »
Sounds like the house might be non-negotiable, at least for now.  Can you refi for a better rate?

@ 3.75 it's unlikely.  It is an FHA loan though, and after 3 years will drop the PMI and reduce another 350/mo.

You can refi sooner then that to get rid of PMI.
My 15 year is at 3.0%, which I got a year ago (rates are similar now?)

350 for three years is $12600, so this alone would make it worth it.

Overall, the house can be okay to keep, depending on your answers to the following:
-How much is property tax/yr
-How much is homeowners insurance
-How much is your HOA
-Are you willing to do something about your crazy commute cost by getting a better car?

Sorry - I wanted to respond to this one as well.  Tax/Ins/HOA and HOI are all included in the 2400/mo figure that I provided.  Our house is 3300 sq feet and personally I don't care about the size, it's an incredible community of people that are in line with how we raise our children from both a moral and spiritual perspective, which is incredibly important to us.

And yes, willing to do what I need to about the crazy commute and buying a cheaper/more efficient car, although it might drive my wife crazy, as I have commitment issues with cars - not women  :)

RetiredAt63

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #24 on: August 25, 2014, 06:36:02 PM »
One work thought - can you take public transit for part of the commute?  Someone else doing the driving gives you time for yourself, and takes a lot of the stress out of the commute, especially if you can manage to avoid the worst of the rush hour.  I loved taking the train to work when I could, it took longer than driving but was so much nicer.  I decompressed on the way home, not when I got home.

House stuff - my DH and I both worked full time, and we did almost all of our own regular house maintenance - the only thing we hired out was having the driveway cleared in winter (that meant we could actually get to work on time).

Kids - how old?  What can they do?  If you are paying for gymnastics, they should be doing things in return.  Really they should be anyway, they are part of the family, and house stuff is family stuff.  They need to learn how to do things for themselves, for when they leave home.  And, they need to learn that Mother is not spelled "maid".  I've seen too many people think that they can leave a mess at work, because they leave a mess at home.  I've seen too many college/university students go home every weekend with dirty laundry, and expect Mom to do it for them.  Not good for them or Mom.

theonethatgotaway

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #25 on: August 25, 2014, 09:40:00 PM »
Oh my god, huge mc mansion! You'll def . eventually downsize. There are great people everywhere. I imagine once your spending aligns better with how you want to live you'll possible outgrow the neighbors anyway!

You can't change everything at once and you are burnt out at work because you don't see the savings you should have. In two years with all the above suggestions in place, you'll be golden. It's the action that counts though. I would get rid of the cars asap (why so expensive??).


Kyran Vale

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #26 on: October 29, 2014, 01:56:16 PM »
I know that updates probably don't happen as often as first time posters, so I wanted to made sure I circled back and gave an update.  Feel like we are on the right track but probably need a lot more work.  Opinions and thoughts are appreciated. 

Here we go:

Age:  34
Income:  Base Salary 125k, Bonus Potential usually around 10k annually.
Kids:  4
Married:  Yes & is a homemaker
Daily Commute:  30 minutes to 45 minutes each way depending on traffic.

Financials:
House: 2400/mo - Unchanged as of 10/29, my wife will never move unless no other option.

My Car:  525/Mo (Just purchased in June & owe 31.5k @ 4.9% Ė did some upgrades, may be able to break even on sale but will lose upgrade costs) - As of 10/29 I Will be listed for sale this weekend and should get at least what I owe.  I haven't had time to focus on the sale due to other obligations. 

Wifeís Car:  390/Mo (Owe 13k, may be worth around 22k @ .9%)  As of 10/29 - will be paid in full by 2/1.  Either through Year end Bonus or otherwise.  Wife drives too much to go to an older car with more miles, but more on that later.

Student Loans:  400/Mo (Owe 80k or so at 2.5%)  As of 10/29 - Baby steps - planning on this being around for some time.

401K Loan: 575/Mo (Owe 33k Had to take last year in my last job @ same company when I was forced to take on a new business source for 2 quarters that did not pan out.)  As of 10/29 - Also planning on this being around for a while, but is my primary goal to have this gone by end of 2015.

My Gas: 300/Mo - As of 10/29 - Plan on this changing to 80-100/mo once my car is sold.
Yard Care:  90/Mo - As of 10/29 - Cancelled
Pool Care:  120/Mo - As of 10/29, still active but will cancel once I've made the time to learn basic pool care.
Television:  120/Mo - As of 10/29, still active.
Cell Phones:  75/Mo - As of 10/29, still active.
Internet/Phone:  90/Mo - As of 10/29, still active.
Electric:   300/Mo Average - As of 10/29, still correct, but going into nice season in AZ, so this will drop to 50/mo for 3-4 months.
Kids Gymnastics:  290/Mo - As of 10/29, Reluctantly cancelled.
Car Insurance:  120/Mo - As of 10/29, still active but anticipate this dropping with car change.
Home Gas Bill:  50/MO - As of 10/29, still active.
Dry Cleaning Bill:  90/Mo - As of 10/29, still active.
Wifeís Money I give her:  1700/Mo (I donít know where she spends it or what itís spent on, but she usually goes over a little bit every month) As of 10/29, down to 1500/mo after cancelling 200/mo that she was paying to house cleaners.  Unfortunately 250 of this month is for straight up gas costs as she drives the kids absolutely everywhere.  It's still a 200/mo savings.

7635 Total Monthly Outgo, I will call it 8000.00 for eating out myself, other stuff I buy, etc.
I do have some ďside hustleĒ income from building websites for fun on the side, but for our purposes, Iím not counting it.

Summary as of 10/29:

At around 8000 total estimated monthly outgo, we are currently down to 7420 and that's with me throwing in 350 a month for "miscellaneous" expenses such as alcohol, eating out, etc.  There are other bills that I'd classify in that 350/mo that have been reduced including a gym membership (now working out at home for the last 30 days).

Once I've sold my car and have that reduced, I figure that will help drastically.  Still have a long way to go, but we are working towards getting things remedied as quickly as we can with 4 kids. 

Summary:

August Outgo:  8000/mo
October Outgo:  7420/mo
November Outgo Goal after car is sold with reduced gas cost, insurance etc:  6675/mo.
Goal for 2015:  Get to 5000/mo in total outgo.


Once we hit that goal by end of November, it's going to be time to push ourselves in every way possible to "get uncomfortable."  I'd like to have the 401K loan completely paid in full by the end of 2015 along with no car payments at all.

Question on car buying:

I will be getting a year end bonus which I'll be using to pay for a car in cash, or I can also just use savings depending on the vehicle.  I've been looking at anything that may be slightly reliable with under 60K miles, and everything I seem to find is above the price range recommended by MMM a couple years back.

Am I crazy to be looking at a 9-15k car, or should I be absolutely setting my limits at 6-7k?  I absolutely MUST have reliable transportation to get me back and forth to work.  I've found a couple used Prius's in the 9-15K range under 60k miles, but that's way over the recommended budget.  I was able to find a Mazda3 hatchback with 48K miles for 12.5k and I would imagine I can get it to the 11.5k range.  Everything else I'm finding is outside the 2009 year recommendation or has ridiculously high mileage.

Any tips here are appreciated, and please again, be gentle.  We are working at it.  I understand this probably seems like we are still way overspending to some people, but we didn't get here overnight and it's not going to be an overnight fix.  It might be a slow process, but I'm confident we will get there.  We also have a meeting setup with our Church Pastor that manages finances this weekend and he'll be setting up a strict budget for us to follow.

4alpacas

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #27 on: October 29, 2014, 02:26:10 PM »
I think you have too many unknowns to solicit feedback.  You have a $1500 black hole of spending.  You also have another section for  "eating out myself, other stuff I buy, etc." that you don't assign a value. 

I'm confused about your priorities.  You cancelled your children's gymnastics, but kept two expensive cars, cable, pool care, dry cleaning, and a ridiculous gas bill.  Your wife refuses to sell the house. 

As for the car, why are you looking for something with less than 60k miles?  Reliability of a vehicle doesn't go away when you have a 5 yo car with over 75k miles.

horsepoor

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #28 on: October 29, 2014, 02:52:44 PM »
Why are you focusing on paying off the van when it has the lowest interest rate of all your debt?  It seems like it would be better to put the extra towards buying yourself a used, fuel efficient car for cash once the expensive car is gone, or prioritizing paying back your 401(k) loan.  Average returns you're missing out on while you have money out of your retirement account should be much higher than the 0.9% interest on the car loan.

Can your wife find a way to bring in some money?  I know being a SAHM is no walk in the park, but maybe she could provide child care for a neighbor's kid or do something else to earn a couple hundred a month?  At a minimum, she should be the Executive Frugality Officer.  It's crazy that you guys are paying for all these services when an able-bodied person is at home each day, and insisting on the expensive home with the pool.

Goldielocks

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #29 on: October 29, 2014, 03:43:59 PM »
OP,

I am disappointed that you do not have a budget with the basic categories posted.   You need to know what you spend your money on. 

I did a quick estimate, an on personal spend, (cell phone, car, yard and pool service, 401k loan repayment, other items) you are spending 2.5x what your wife is spending on herself. I quickly estimated it at $2420/month!.

This money issue is not a problem with your wife, it is you. 
She has now cut the kids gymnastics and house cleaning services, but I don't see where you have dramatically cut..

A budget needs to review the big three - house, food, transportation.   Then add in "luxuries / wants", and "Debt repayment".

Based on this, here is where I put your finances at:
House   $2,400
Cars    $1,685
Groceries   $800
Luxuries   $1,410 (cell phones, clothing and household spending at costco / target,etc, yard work, personal spend, kids spend, fast food) 
Utilities   $378 (including internet / one home phone)
Debts   $975

New Total    $7,648


          His Portion      Her Portion
House   ----shared--------   
Cars            $945              $740
Groceries    ----shared--------   
Luxuries    $900              $233 

Utilities   ----shared-------   
Debts    $575 (401k Loan)   
          $2,420           $973

% Total Spend   out of monthly budget
                     32%             13%
   
missing $'s are assumed to be household / for the kids
« Last Edit: October 29, 2014, 03:53:03 PM by goldielocks »

Kyran Vale

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #30 on: October 29, 2014, 04:33:52 PM »
Horsepoor - I appreciate your practical feedback, and yes we've talked about once all 4 kids are in school full time for her to go back to work.  I agree, the 401K loan has gotta go.  The reason I am choosing to pay off her car is I feel I can take the 400/mo and roll it back into the 401K loan immediately and try to pay it off within the next year.

Goldilocks - not sure How I'm being assigned such a huge chunk of the "luxuries."  The only thing I'm keeping is my pool cleaners at the moment until I can learn to do it, and the dry cleaning is a 2106 expense on my end of year tax returns.  Seems unreasonable to me to ask the wife to do my laundry when she has to keep up with it for 4 kids.  The 401K loan is also a shared expense, as it was not an option for us at the time when it was taken.

4Alpacas - Selling the home at this point is not an option.  I'd do it tomorrow as it would payoff every debt we have and allow us to go rent someplace cheap for a couple years and continue to save.  My wife loves our house and wants us to retire there, so selling it is not something I can even discuss at this point. 

The way I looked at it is that we shaved off 7.2% of our monthly outgo in 60 days by cancelling services, and should be able to drop it by close to that again by the end of November.  That is encouraging.  It may not be encouraging "enough" for everyone here, but I feel like it's progress. 

Back to Cars since it's my next point of attack:

Based on what the MMM original post from 2012 had laid out, he recommended that if you have an insane 15k/year commute, that a 2006 at the time should be the oldest model you should look at if I read it correctly.  Do most people recommend buying a car over 100k/mi if it's a "newer" model?  I'd love to find something that's under 7k that I can just pay cash for and drive into the dirt, just seems like they are hard to find in my area unless they are pretty worn out.

NewbieFrugalUK

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #31 on: October 29, 2014, 05:08:48 PM »
Just wanted to say - it looks like have made encouraging progress so far. Obviously there is a way to go but you are headed in the right direction!  Keep going and keep us posted.

surfhb

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #32 on: October 29, 2014, 05:11:16 PM »
Horsepoor - I appreciate your practical feedback, and yes we've talked about once all 4 kids are in school full time for her to go back to work.  I agree, the 401K loan has gotta go.  The reason I am choosing to pay off her car is I feel I can take the 400/mo and roll it back into the 401K loan immediately and try to pay it off within the next year.

Goldilocks - not sure How I'm being assigned such a huge chunk of the "luxuries."  The only thing I'm keeping is my pool cleaners at the moment until I can learn to do it, and the dry cleaning is a 2106 expense on my end of year tax returns.  Seems unreasonable to me to ask the wife to do my laundry when she has to keep up with it for 4 kids.  The 401K loan is also a shared expense, as it was not an option for us at the time when it was taken.

4Alpacas - Selling the home at this point is not an option.  I'd do it tomorrow as it would payoff every debt we have and allow us to go rent someplace cheap for a couple years and continue to save.  My wife loves our house and wants us to retire there, so selling it is not something I can even discuss at this point. 

The way I looked at it is that we shaved off 7.2% of our monthly outgo in 60 days by cancelling services, and should be able to drop it by close to that again by the end of November.  That is encouraging.  It may not be encouraging "enough" for everyone here, but I feel like it's progress. 

Back to Cars since it's my next point of attack:

Based on what the MMM original post from 2012 had laid out, he recommended that if you have an insane 15k/year commute, that a 2006 at the time should be the oldest model you should look at if I read it correctly.  Do most people recommend buying a car over 100k/mi if it's a "newer" model?  I'd love to find something that's under 7k that I can just pay cash for and drive into the dirt, just seems like they are hard to find in my area unless they are pretty worn out.

I congratulate you!    Good work but you still have some work to do.  Well, actually you have alot of work to do :)

BTW I have a 2007 Civic in perfect condition with 66K miles Im looking to sell.    PM me if youd like.....I live in OC, Ca
« Last Edit: October 29, 2014, 05:28:31 PM by surfhb »

Kyran Vale

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #33 on: October 29, 2014, 06:29:11 PM »
I may take you up on that SurfHB.

Just listed my Jeep today on Craigslist.  Sad to see her go, but nessecary.

MySweets

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #34 on: October 29, 2014, 07:20:18 PM »
Just curious but was your wife receptive to the changes?

Kyran Vale

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #35 on: October 29, 2014, 07:25:24 PM »
Just curious but was your wife receptive to the changes?

Thanks for asking MySweets - yes, she is very receptive.  She basically said that she'd be willing to cut anywhere if it meant sticking it out in our neighborhood/house because she loves it and feels secure for our kids future here.  I figure I owe her that much because she's an amazing person and after 10+ years our marriage is stronger than ever.  I'm sure she'd be "open" to selling the house if it was between that and the streets, but only if she had no other choice.

As far as everything else, she's all in on reigning back any expenses we don't need until we can get things on the right track including her going back to work part time sometime within the next 2 years.

It's just going to be an aggressive discipline that we have to start now.

Goldielocks

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #36 on: October 29, 2014, 07:57:17 PM »
Hi,  I had to take a few guesses, in the breakdown, this is how it went:   Definitely some guesses here.

    Your splurges include Cell phone, pool, yard service and $365 (the difference up to $8k you mentioned for your "whatever" spending), were assumed to be exclusively yours. $900

    Her luxuries are an assumed cell phone $45 for her (out of her spend), the $205/2 amounts remaining after that $1700 is spent on groceries, her gas, etc, but split in half between her and 4 kids.  (kids do cost incidentals) $233.   

Where do the church donations come from? 

   Joint luxuries between you are extra $300 or so from Costco, TV bill.  (assumed split by 1/3 each, between you, kids, her and included above).  Note that I assume she pays for the kids school incidentals, clothing and small items on a daily basis from the "$1700" budget.

Your car and expenses are a lot higher, too.   Although you do commute
Someone made the 401k loan decision, which is in the past, but I assigned it to the person who had to sign the papers. 


The big point is that house, utilities, and food do not take up excessive amounts of your budget, but mistakes with luxury spending, huge car costs and then acquiring 401k loan do.

The tone of "I don't know what she does with $1700 but she often goes over even that" seems to suggest that you think her spending is over the top.  In actual fact, it is far less than yours according to your own numbers.   

 You have the money to fix this in your income.   
Starting with cutting outside home services, cutting luxury spending, and cutting car costs will really help and is easy once you see it.


As to the car,
100 (miles or Km) is a magic number and you get a steep price discount to buy a car with 108k miles on it versus one with 92kmiles.   Look for a car with a great body and 100k on it.  Newish tires are nice too.   A 2006 will start to have more expensive but routine maintenance, like brakes and eventually spark plugs, but these are not excessive and you get the great discount.



horsepoor

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #37 on: October 29, 2014, 08:10:23 PM »
Horsepoor - I appreciate your practical feedback, and yes we've talked about once all 4 kids are in school full time for her to go back to work.  I agree, the 401K loan has gotta go.  The reason I am choosing to pay off her car is I feel I can take the 400/mo and roll it back into the 401K loan immediately and try to pay it off within the next year.

I can see where you're coming from, but it doesn't make any mathematical sense.  And I'm curious her ability to bring in some extra money or find places to save. If you sell your Jeep and get a $10K bonus, you could buy a car for cash, throw a little at the 401(k), and you'll have probably an extra $600 a month to throw at the 401(k) loan.  If you throw that money at the 0.9% car loan, no dent is made in the 401(k), and you don't have the cash on hand to buy the commuter car; financing a used car will cost more than 0.9%.  It does seem reasonable for her to do your laundry if it's an expense of your job, which is sustaining the whole family in this current lifestyle. 

Kyran Vale

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #38 on: October 29, 2014, 08:14:08 PM »
Hi,  I had to take a few guesses, in the breakdown, this is how it went:   Definitely some guesses here.

    Your splurges include Cell phone, pool, yard service and $365 (the difference up to $8k you mentioned for your "whatever" spending), were assumed to be exclusively yours. $900

    Her luxuries are an assumed cell phone $45 for her (out of her spend), the $205/2 amounts remaining after that $1700 is spent on groceries, her gas, etc, but split in half between her and 4 kids.  (kids do cost incidentals) $233.   

Where do the church donations come from? 

   Joint luxuries between you are extra $300 or so from Costco, TV bill.  (assumed split by 1/3 each, between you, kids, her and included above).  Note that I assume she pays for the kids school incidentals, clothing and small items on a daily basis from the "$1700" budget.

Your car and expenses are a lot higher, too.   Although you do commute
Someone made the 401k loan decision, which is in the past, but I assigned it to the person who had to sign the papers. 


The big point is that house, utilities, and food do not take up excessive amounts of your budget, but mistakes with luxury spending, huge car costs and then acquiring 401k loan do.

The tone of "I don't know what she does with $1700 but she often goes over even that" seems to suggest that you think her spending is over the top.  In actual fact, it is far less than yours according to your own numbers.   

 You have the money to fix this in your income.   
Starting with cutting outside home services, cutting luxury spending, and cutting car costs will really help and is easy once you see it.


As to the car,
100 (miles or Km) is a magic number and you get a steep price discount to buy a car with 108k miles on it versus one with 92kmiles.   Look for a car with a great body and 100k on it.  Newish tires are nice too.   A 2006 will start to have more expensive but routine maintenance, like brakes and eventually spark plugs, but these are not excessive and you get the great discount.

Thanks for the breakdown and insight.  That's on me for clarifying - and when I had listed it, was more of a point of frustration.  Our tithing usually comes out of tax returns or year end bonuses which I've not calculated into our monthly figures and just count as extra as it's not always guaranteed.

As far as luxury spending, I agree some of that belongs to me, but both of us are taking our fair cuts.  Her budget now that the cleaners have been neutralized are 1500 for groceries and gas.  250/week is about the best we've done with all 6 of us, sometimes it goes to 350 depending on what we are in need of (twin boys eat alot).

I've nixed the yard folks, killed my gym membership and the only thing really left over is the Pool service which I'm hoping to learn next month.  I don't think my wife's spending is excessive, but she sucks at tracking what she spends, just like I suck at reigning things in when they are going a little haywire.

Thank you for the input on the car issue as well - I was always told the opposite that 100K+ is when a car dies, but I know alot of folks have had good success with high mileage cars after reading this blog and forums.  I've seen a few in the 6k range that were around 80kish and 2007-2009 in model.  I will definitely try to see if I can find one that falls into that bracket, especially if it's a Prius (might make sense to go to 8k for a hybrid since I drive 60 miles a day).

I do appreciate everyone's comments and I'll keep you posted by the end of November to let you know if I can manage to hit our goals.

Stay tuned!

Kyran Vale

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #39 on: October 29, 2014, 08:16:44 PM »
Horsepoor - I appreciate your practical feedback, and yes we've talked about once all 4 kids are in school full time for her to go back to work.  I agree, the 401K loan has gotta go.  The reason I am choosing to pay off her car is I feel I can take the 400/mo and roll it back into the 401K loan immediately and try to pay it off within the next year.

I can see where you're coming from, but it doesn't make any mathematical sense.  And I'm curious her ability to bring in some extra money or find places to save. If you sell your Jeep and get a $10K bonus, you could buy a car for cash, throw a little at the 401(k), and you'll have probably an extra $600 a month to throw at the 401(k) loan.  If you throw that money at the 0.9% car loan, no dent is made in the 401(k), and you don't have the cash on hand to buy the commuter car; financing a used car will cost more than 0.9%.  It does seem reasonable for her to do your laundry if it's an expense of your job, which is sustaining the whole family in this current lifestyle.

I see where you are coming from.  I was basically thinking of paying off her car with what's sitting in savings, but maybe you are right - just keep the money there as a cushion since I've already paid most of the interest anyways.  I'm also anticipating making a couple thousand on the sale of the car, and due to some business expenses this year (side hustle) I should get a little back from uncle sam too.  I may have enough to replenish the 4-6k I need for a used car once burned from savings if the Jeep sells quickly.  Fingers crossed.

Little Nell

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #40 on: October 29, 2014, 08:23:23 PM »
Good for you! Yard work is good for you (who needs a gym) and, eventually, it's good for the kids.

horsepoor

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #41 on: October 29, 2014, 08:26:30 PM »
Horsepoor - I appreciate your practical feedback, and yes we've talked about once all 4 kids are in school full time for her to go back to work.  I agree, the 401K loan has gotta go.  The reason I am choosing to pay off her car is I feel I can take the 400/mo and roll it back into the 401K loan immediately and try to pay it off within the next year.

I can see where you're coming from, but it doesn't make any mathematical sense.  And I'm curious her ability to bring in some extra money or find places to save. If you sell your Jeep and get a $10K bonus, you could buy a car for cash, throw a little at the 401(k), and you'll have probably an extra $600 a month to throw at the 401(k) loan.  If you throw that money at the 0.9% car loan, no dent is made in the 401(k), and you don't have the cash on hand to buy the commuter car; financing a used car will cost more than 0.9%.  It does seem reasonable for her to do your laundry if it's an expense of your job, which is sustaining the whole family in this current lifestyle.

I see where you are coming from.  I was basically thinking of paying off her car with what's sitting in savings, but maybe you are right - just keep the money there as a cushion since I've already paid most of the interest anyways.  I'm also anticipating making a couple thousand on the sale of the car, and due to some business expenses this year (side hustle) I should get a little back from uncle sam too.  I may have enough to replenish the 4-6k I need for a used car once burned from savings if the Jeep sells quickly.  Fingers crossed.

Yeah, throw all that at the 401(k) loan and the new used car.  0.9% is almost like free money.  On 13K it's a whopping $117 in interest this year, not even counting the $4500 in principal drawdown you'll have this year by making regular payments.  If you could afford to throw some of your cash on hand towards the car, you can afford to throw it at the 401(k).

frugal_c

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #42 on: October 29, 2014, 08:38:15 PM »
Quote
Am I crazy to be looking at a 9-15k car, or should I be absolutely setting my limits at 6-7k?  I absolutely MUST have reliable transportation to get me back and forth to work. 

Absolutely stay in the recommended range.   You should be able find a base model honda/toyota/hyundai for 6-7 k with 70-80k miles and in good condition.  Just be sure you have an inspection done on it before you buy and give it a good look-over yourself.   It's really when you get down to 2-3k that reliability becomes a serious issue.  6-7k is luxurious in my opinion.   Could you have a breakdown with a 6k car? Yes!  Of course you could with a brand new vehicle as well and I have seen that first hand.

Kyran Vale

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #43 on: October 29, 2014, 08:48:06 PM »
Quote
Am I crazy to be looking at a 9-15k car, or should I be absolutely setting my limits at 6-7k?  I absolutely MUST have reliable transportation to get me back and forth to work. 

Absolutely stay in the recommended range.   You should be able find a base model honda/toyota/hyundai for 6-7 k with 70-80k miles and in good condition.  Just be sure you have an inspection done on it before you buy and give it a good look-over yourself.   It's really when you get down to 2-3k that reliability becomes a serious issue.  6-7k is luxurious in my opinion.   Could you have a breakdown with a 6k car? Yes!  Of course you could with a brand new vehicle as well and I have seen that first hand.

Thanks for chiming in.  Seems like everyone says to stick within the recommended range so I'll stick to it.  It may be a slow process but eventually I'd like to become a mustacian although I'm not sure if I can sacrifice some luxuries (still like cable so I can watch The Walking Dead) - but I want to take the right steps to get there and this seems like a good start.

Kyran Vale

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #44 on: October 29, 2014, 09:04:36 PM »
What's the max recommended age you all think I should be looking at?  I drive about 60 miles per day all in.  Found this one on Craigslist locally, looks nice.  AC is a must - I live in AZ :)

http://phoenix.craigslist.org/evl/cto/4734292001.html

Psychstache

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #45 on: October 29, 2014, 09:44:01 PM »
1. go to troublefreepool.com
2. read through pool school and FAQ
3. Fire pool guy and DIY
4. ???????
5. Profit

horsepoor

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #46 on: October 29, 2014, 09:54:45 PM »
What's the max recommended age you all think I should be looking at?  I drive about 60 miles per day all in.  Found this one on Craigslist locally, looks nice.  AC is a must - I live in AZ :)

http://phoenix.craigslist.org/evl/cto/4734292001.html

That looks pretty good - personally I like to use CarFax to check for wrecks.  There can be other good info in the CarFax report too, depending on the state/county you're in.  Also, most vehicles need a major service at 100K miles, so it could be a good buy if that has been completed, but if not, maybe not so much.  A Corolla will probably be good up to 200K, so at say 20,000 miles per year, you'd be good for 6 years, at which point you should be in a better situation and well able to pick up another good used car, or maybe you'll have expenses under control and be biking to a different job by then!

MDM

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #47 on: October 29, 2014, 10:13:37 PM »
Didn't see anything about current 401k or IRA contributions - are there any?

Even before reducing expenses further, it appears you could contribute the maximum $17,500/yr to a 401k.  See table below: the 401k deduction would reduce your AGI (and thus taxes) enough so the $14,547 available would increase to allow the $17,500.

Of course there are some guesses in the table so it might not reflect reality.  You could download a template and run the numbers for yourself from http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/msg274228/#msg274228.

When you lose the car payments (and implement other suggestions from this thread) you could do IRA contributions, expedite other loan payoffs, etc.  With your income you have the ability to get your family in excellent financial shape - good luck!

CategoryMonthly amt.CommentsAnnual
Salary/Wages$11,250$135,000
Pretax Health Ins.$700$8,400
FICA base salary/wages$10,550$126,600
$
Federal Adj. Gross Inc.$10,550$126,600
$
Federal tax$7912014 rates, item. ded., 6 exemptions$9,493
State/City tax$369Guess, using 0.035 * Fed. AGI$4,431
Soc. Sec.$605Assumes 1 earner paying$7,254
Medicare$153$1,836
Total income taxes$1,918$23,014
Income before other expenses  $8,632$103,586
Monthly Expenses:$$
Mortgage$1,621Guess various items$19,451
HOA$100to get total$1,200
Property Tax$229housing cost$2,748
Home/Rent Insurance$100to $2,400/mo$1,200
PMI$350per OP$4,200
Cable TV$120$1,440
Car Insurance$120$1,440
Dry Cleaning$90$1,080
Electricity$300$3,600
Fuel/Public Transport$550$6,600
Gas/Oil for heating$50$600
Internet$90$1,080
Miscellaneous$1,615DW=1250, DH=365$19,380
Phone (cell)$75$900
Sports/Recreation$120Pool care$1,440
Non-mortgage total$3,909$46,908
Loans:$$
Student Loan$400Adjust P to match $400/mo in OP$4,800
401k Loan$575Guess numbers to match $575/mo in OP$6,900
Car loans$915Guess numbers to match $915/mo in OP$10,980
Total Expense$7,420$89,039
Total to invest$1,212$14,547
« Last Edit: October 29, 2014, 10:17:44 PM by MDM »

daymare

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #48 on: October 29, 2014, 10:15:30 PM »
I was really excited to see an update from you, but a bit disappointed with how little progress was made -- I have to second Alpaca's comments:

Quote
I'm confused about your priorities.  You cancelled your children's gymnastics, but kept two expensive cars, cable, pool care, dry cleaning, and a ridiculous gas bill.  Your wife refuses to sell the house.

If you are happy with your life & spending - fine.  But, it doesn't sound like you are.  And if you want to change how you feel, change your situation to be able to bike to work and take a job with a lower salary -- well, that's not compatible with keeping most things as they are.

I don't understand how, if you're serious about wanting to change, you haven't been able to learn how to take care of the pool over the course of TWO months.  Why are you still paying $120/month for TV?  How about hulu plus or netflix or amazon prime, and then buying episodes off itunes of your must-watch show?  That would come out to being way cheaper, more like $20 a month even if buying several episodes.  You're paying $90/month in dry cleaning? I don't even understand. You should be able to get button-downs laundered/starched for pretty cheap, suits don't need to be dry-cleaned that often. You have about $350/month of your own nebulous spending - you need to stop spending without accountability.

Here is my suggestion - next month, keep track of EVERYTHING you and your wife spend money on.  My suggestion would be for both of you to carry around a notebook (or use a google doc on your phone) to write down every.single.purchase.  You should take on the task of consolidating all this information into categories, so that at the end of the month you have a clear picture.  Then discuss together - is what you're spending in line with what you thought you were spending, and what you *want* to spend?  Set a budget for the next month, or try to give yourselves challenges (ie, days where you spend nothing, or you both compete for who spent less on eating out that month, loser cooks dinner and gives winner a massage).

Your spending is totally crazy.  But if you want to change, you guys can kick so much ass and truly live the good life. :)

skyblue

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Re: Looking To Turn Things Around Financially - Need Some Advice
« Reply #49 on: October 29, 2014, 11:00:04 PM »
Do you have a term life insurance policy?  If not, you should think hard about getting one.  You are the sole breadwinner supporting 4 kids and a spouse and you don't have a substantial net worth.  What would happen to your family financially if you died?