Hey Folks,
Long time lurker, first time poster. I’m looking for some help because despite all of the amazing advice here, I’ve made some incredibly stupid financial decisions over the last few years (Almost ALL car related). Without getting into the fact that I’ve bought and sold about 8 cars in the last 3 years (new and used), I’m finally posting here to get myself on the right track and I’m looking for some advice. I need some input in a few areas, and I’m hoping that I can get some honest feedback without being too harsh. It’s 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 – my wife will not. She loves our home, and we do have an amazing neighborhood even though I’d love to try something cheaper & in another state (lived here all my life). To me it’s a house, to her it’s our home, and she will fight me tooth and nail to keep it, so that’s out of the picture. It’d be amazing to sell it and wipe out our student loan debt, but I just don’t’ see it happening.
Changing jobs is something that I’d 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 don’t see it as an option to keep the same salary levels I make now. I’m not happy with my job, and am only doing it out of necessity to keep our lifestyle at this point (yes I understand that it’s horrible). Maybe I’m 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 it’s 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, here’s 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% – did some upgrades, may be able to break even on sale but will lose upgrade costs)
Wife’s 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
Wife’s Money I give her: 1700/Mo (I don’t know where she spends it or what it’s 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 “side hustle” income from building websites for fun on the side, but for our purposes, I’m 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 – pool once I learn to do it) are where I need to start right away. We could also sell my wife’s van, but it’s still in great shape with 40K miles and it’s very reliable transportation for all 4 kids and I’m not sure I want to cut that deep, but will consider it if it’s necessary. Luckily we don’t take on credit card debt, but that also makes it harder in paying things down quicker as well.
Here’s where I’m looking for guidance. There’s a couple of different paths that I feel I could take but I’m not sure which one is right so I’m looking for help. I know this, that I’m tired of my life and my stress levels. I’m miserable at home at night with my kiddos and it’s because I’m 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 I’m formulating a plan and hopefully I get some good guidance by the experts here.
Option #1: Stick it out at current job – sell my car, payoff the wife’s 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 I’m 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 doesn’t help that I’m not satisfied where I work. Plus it’s 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 wife’s car with year-end bonus and gets me a job that’s 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 It’s 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. I’d have about 9-10 months of runway, but it’s obviously highly risky and I wouldn’t do it unless I probably had around 2000/mo already coming in – plus the cost of healthcare which is a burden with a family of 4. This is the most cavalier option, and while I’d love to do it – probably not realistic to do until I have a bigger cushion that doesn’t involve liquidating my retirement assets.
Once again I’m sorry for the long winded post – and I’m 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. I’m open to feedback and/or any recommendation of “Options” somewhere in between that people feel makes sense.
Thanks all!