Author Topic: READER CASE STUDY-Young and Dumb  (Read 10715 times)

thrifty1

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READER CASE STUDY-Young and Dumb
« on: August 17, 2015, 05:40:59 PM »
Life Situation: Married filing jointly with one on the way

Gross Salary/Wages: Combined 4600/mo after taxes

Savings$0

Pre-tax deductions: 401k at company 6% match, separate company provided IRA at 3% a year

Other Ordinary Income: none

Current expenses: Here we go

Mortgage- 2100 sqft two story new house 20 year loan @4%
1142/mo after PMI and escrow

Credit card(s)-
$5800@20%
$1400@0%
$2300@20%
$1300@0%
$500@0%

Car payments-
 400/mo not including taxes and insurance- 2014 dodge journey suv
 220/mo INCLUDING taxes and insurance(company discount lease)

Other-
Fluffy Mattress- $5000@97/mo
Motorcycle $2700@150/mo

Utilities-
trash pickup@18/mo
Water@32/mo
Power@208/mo
insurance@166/mo
Fuel@400/mo
Cable-56/mo
internet-63/mo
tv-56/mo


FOOD-
Eating out@300/mo
Eating in and beer@ 650/mo

DISCLAIMER!!!!
I understand this is an emergency and need to build a face punching robot for myself.

Here is a little background story. My wife and i have been married for two years now and we are 22. I have a job making about 70000 and she makes about 30000 but NO SAVINGS. our paychecks go straight to payments on miscellaneous things like a mattress, credit card, etc. We are trying to get out but it is a deep hole to fill when you have no extra money to throw in for pay downs. We just found out she is pregnant and we are happy and can afford the baby but we are currently in debt on her vehicle among other things and it is underwater 4200 dollars at least. It will sell by blue book value for 18000 and we owe 21000. The car is only on her credit and she plans to quit her job when the baby comes. Should we stop paying the payments and take the loss to free up 400 dollars a month and buy a 3000 car with cash? I need a life change NOW.

HOW IN THE HELL DO I START DOING SOMETHING ABOUT THIS?...before the baby gets here@7months to go...(Face punching encouraged)
« Last Edit: August 17, 2015, 09:42:55 PM by thrifty1 »

Bearded Man

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Re: First child. Should i stop paying my underwater car payment?
« Reply #1 on: August 17, 2015, 05:46:58 PM »
Sell the car and end the bleeding. Small price to pay to save money in the long run.

Another Reader

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Re: First child. Should i stop paying my underwater car payment?
« Reply #2 on: August 17, 2015, 06:13:43 PM »
You are living beyond your means and are in way over your heads.  Fortunately, you are very young and can fix this mess.

You can post a case study here and get a lot of face punches for wasteful spending.  In your shoes, I might start with reading a Dave Ramsey book.  He's very good at showing you what you are doing wrong and how to get on top of the situation.  Make a list of all of your debts and the payments.  Track every penny of your spending for at least a month.  Sit down with your spouse and write up a budget that allows you to pay at least the minimum payments on everything.  Then cut your other spending to nothing (rice and beans).  No restaurants, no shopping, no toys.  Once you have a little free cash, start paying off the debts.  Although mathematically it makes more sense to pay off higher interest rate debt first, it frees up more cash earlier on to pay the smallest debts first.

Do NOT stop paying on her car.  You will ruin your (her) credit for years and the lender will repossess the car, sell it cheap at auction, and sue you (her) for the difference between the outstanding loan and fees and what they get from the auction.

The reality of your situation is that it may not be feasible for her to quit when the baby comes.  You will have to compare the cost of daycare to her net income.  She may need to work a little longer to pay off some of the debt.  Once the balance on her car is less than what it is worth, then her car could be sold.  She might be able to stay home if the car is gone and the rest of your situation is under control.

There are some tough lessons here.  Best to learn them at 22, not 42 or 62.  You will have a much happier life as a result of your education.

lbmustache

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Re: First child. Should i stop paying my underwater car payment?
« Reply #3 on: August 17, 2015, 06:17:38 PM »
Don't sell the car: can we have a peek at your finances please?

1) What is the car in question? A gas guzzling behemoth, or just a Chevy Malibu or something?
2) Income is $100k pre-tax, I am guessing.
3) What is your current rent/mortage?
4) Current debt?
5) Any other reoccurring expenses like the car?

At your income, the car itself it not a huge issue. If you can't afford the difference, KEEP THE CAR. Don't take out another loan that you potentially can't pay. Where is the $3k in cash coming from to pay for a "new" car?

La Bibliotecaria Feroz

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Re: First child. Should i stop paying my underwater car payment?
« Reply #4 on: August 17, 2015, 06:39:53 PM »
Suck it up and keep paying.

I know that comparisons between people are dicey, but... we are in our mid-30s and have two little boys.

You make more money than we do, and we are doing all right. (I'm trying to be encouraging:-).)

I agree not to let the car get repossessed. Not worth the credit ding.

This would be a great time to take the Frugalwood Uber-Frugal Month Challenge: http://www.frugalwoods.com/category/uberfrugalmonth/ I love them! More recently, they have been posting about how they are getting ready for a new baby, too, while spending almost no money (which is what you need to do, yes?).

Anyway, congrats on the new baby and welcome to the forums! I'll keep an eye out for the case study.

CU Tiger

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Re: READER CASE STUDY-Young and Dumb
« Reply #5 on: August 17, 2015, 09:26:09 PM »
You have lots of income so YAY, you have a big shovel to dig out of debt.

That is the good news. The bad news is you apparently have an addiction to buying everything on credit. Low down payment, $97  a month for the rest of your life! Pay premiums on everything and interest out the wazoo! No kidding kids, it is time to cut up the cards and pay your debts off. You have a kid on the way, time to stop spending like sailors on shore leave and start planning an awesome life for your future.

First, stop eating out and drinking so much. Your wife is pregnant, so she should not be drinking a lot of beer, and you can join her on the wagon. That right there would save you hundreds a month.

Sell the motorcycle. Sell it! Use the cash you make to pay off debt.

What are your other expenses? Cell phones? Cable and Internet? Start recording every expense....every time you gas up the car or buy a coke, or drop $20 at Five Guys. Track it. You make a friggin' fortune and have nothing to show for it other than a fluffy mattress and debt.

What else do you have that you can sell? Do you smoke? If so, stop and start using your cig money on debt?

How serious are you about turning the USS Debtridden around?

thingamabobs

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Re: READER CASE STUDY-Young and Dumb
« Reply #6 on: August 17, 2015, 09:35:48 PM »
uhm, where is your money going? I added up your expenses as listed to $3683 but you should have net income close to $6K a month combined. Starting NOW, writing down every penny that you spend adn track it.

lbmustache

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Re: READER CASE STUDY-Young and Dumb
« Reply #7 on: August 17, 2015, 09:42:42 PM »
VERY serious we are indeed. i dont smoke and my wife dont drink. i will add the cable and cell phone bills to the expenses up there. My motorcycle was posted on craigslist two days ago so my hopes are high!

The mattress is what it is: pay it off ASAP. And I thought my mattress was expensive :O Did you take out a 60month loan on it?

Start paying off the 20% CC's (see Dave Ramsey's snowball method to pay them off). Use the $$$ from the motorcycle to get rid of the $2300 CC immediately?

Reevaluate the food budget. That's over $1k for two people!!! Someone has to start cooking more or something.

It looks like you live in a LCOL (low cost of living) area: power/electricity bill seems REALLY high.

How far do you commute to work? $300 also seems high given your area, but the Dodge looks like a 22mpg avg or so. Not horrifically bad (I say that because I drive a 6 year old Jetta that does that...), leave the car $$$ till you sort out everything else. No point in adding additional debt on top of the debt you have. Once all the finances are sorted then you can see to fixing the car situation IMO.

Bracken_Joy

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Re: READER CASE STUDY-Young and Dumb
« Reply #8 on: August 17, 2015, 09:48:00 PM »
Will those 0% stay that way? How long do you have before those aren't at 0%, and then what rate will they be at?

Also, is your wife on board? Being a team in this will be one of the biggest possible things you can do to ensure success.

MDM

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Re: READER CASE STUDY-Young and Dumb
« Reply #9 on: August 17, 2015, 10:16:51 PM »
uhm, where is your money going? I added up your expenses as listed to $3683 but you should have net income close to $6K a month combined. Starting NOW, writing down every penny that you spend adn track it.
Even with the cable and internet (and the $100/mo bump in the posted fuel use), there is still a large amount unaccounted for.  Where is the $16K/yr going?  Table below is from the case study spreadsheet - you can download your own copy, enter more accurate numbers, and see if it is helpful to you.

CategoryMonthly
Comments
Annual
Salary/Wages$7,917$95,000
401(k) / 403(b) / TSP / etc.$475Room to increase?$5,700
Employer Match$475$5,700
Income subject to IRS tax$7,442$89,300
Federal Total Income$7,442$89,300
Federal tax$7822015 rates, MFJ, stand. ded., 2 exempt.$9,383
State/City tax$286Guess, using 5.00% * Fed. Taxable$3,435
Soc. Sec.$491Assumes 2 earners paying$5,890
Medicare$115$1,377
Total income taxes$1,674$20,085
Income before other expenses  $5,768$69,215
Monthly Expenses:
Mortgage$772$9,264
Property Tax$200$2,400
Mortgage Insurance$120$1,440
Home/Rent Insurance$50$600
Cable TV$56$672
Car Maintenance, Registration, etc.$220$2,640
Dining (Pizza, Restaurant, etc.)$300$3,600
Electricity$208$2,496
Fuel/Public Transport$400$4,800
Groceries$650$7,800
Internet$63$756
Life Insurance$166$1,992
Recycling/Trash$18$216
Water/Sewer$32$384
Non-mortgage total$2,483$29,796
Loans:
CC$267$3,200
CC$215$2,575
2014 Dodge$400$4,796
Mattress$94$1,132
Motorcycle$156$1,872
Total Expense$4,386$52,636
Total to invest$1,382$16,579

thrifty1

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Re: READER CASE STUDY-Young and Dumb
« Reply #10 on: August 18, 2015, 01:57:08 AM »
Thanks everyone for replies. Starting TODAY I am going to keep a hand written expense journal for every single cent i spend. When i have a complete month of expenses in my journal i will total them up and update this "accurate" portrayal of expenses. I still would like advice and have listened to dave ramsey multiple times and studied the debt snowball. apparently i need to implement it as well. *punch*

cerebus

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Re: READER CASE STUDY-Young and Dumb
« Reply #11 on: August 18, 2015, 04:38:06 AM »
Well, firstly, chill out a bit. You're 22 years old and you earn a combined 100k income. At 22 years old I wasn't even earning a salary, and I hadn't the foggiest idea of being frugal. You're incredibly young and time will work for you unless you work against yourself.

The main thing I'm looking at is the food bill. $300 of eating out plus $650 eating in is ridiculous. Figure out how to trim it down.

Secondly, babies are not all that expensive unless you make them so. There was an awesome thread on here about how to get baby stuff for free or cheap. We managed 3 little ones on much less than your salary. You could even consider having the wife stay home full time at least while the baby is small, as the $30k she makes will not be too far off what you'd end up paying for her to commute plus put the child in daycare. Run the numbers and see - from experience, things go much smoother at home if the mother can be full time with the children. Maybe she's not biologically predisposed to it though, so what can I say?

Good luck dude - your debt is an emergency.

Another Reader

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Re: READER CASE STUDY-Young and Dumb
« Reply #12 on: August 18, 2015, 05:08:18 AM »
It's not just you, although a lot of the excess spending does appear to be yours.  Your wife has to be on the same page.  Unless she understands her hair is on fire and is in full agreement with the spending reductions and debt payoff, you will not have a willing partner.  Sit down with her, go over the bills/debts, and make a budget together.  Discuss the future, including her staying home and all the other goals you have.  Once you are in agreement about your long term goals (figuring all those out is tough at 22), it should be easier to do what is necessary to achieve them. 

thrifty1

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Re: READER CASE STUDY-Young and Dumb
« Reply #13 on: August 18, 2015, 06:39:11 AM »
PS. Just to clarify my wife is onboard and also has a complete understanding of the smoking hair situation.

MissStache

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Re: READER CASE STUDY-Young and Dumb
« Reply #14 on: August 18, 2015, 06:47:28 AM »
Hey, congratulations on the baby AND on your new way of life!  Welcome to Mustachianism.  It is magical!  (OK, not really, but it will make you free!)

First off, kudos to recognizing that you've got a emergency situation and for taking action to fix it (did the motorcycle sell?).  You two are young and have a tremendous amount of earning potential.  You can turn this shit around lickity split, but it's going to take some hard work up front! 

Tracking expenses is the best thing you can do for yourself, because I bet that you don't know where all of your money is going (I sure didn't).  Once you get that under your belt, post a full case study and we can give you some tips. 

The easy one is obviously your food costs, which you clearly recognize since you put that in there for us to be aghast about.  We are aghast!  Stop spending all of your money on food!

Good luck and keep us updated!

patrickza

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Re: READER CASE STUDY-Young and Dumb
« Reply #15 on: August 18, 2015, 07:46:35 AM »
You're about 5 years ahead of most people with that salary, stage of life regarding kids and marriage, but you're probably a lot better off in terms of debt, though you still have way too much.

As you have loads of time, you don't have to stress out too much. First find places to cut money, you're bound to be able to do this quite easily. Then you can tackle this two ways:
-The best way financially is to see where you're paying the highest percentage interest and to pay that off. When done that will free up some money and you can tackle the next highest.
-The best way psychologically is to tackle your smallest debt. That will knock off the smallest one quite fast, and the rest of the freed up money will make the next biggest one almost as fast, and maybe even faster to knock off.

In both cases though, you have to keep paying the minimum on all debts. Whether or not to sell the car depends on many things.

sstants

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Re: READER CASE STUDY-Young and Dumb
« Reply #16 on: August 18, 2015, 07:58:59 AM »
You can do this!!

I think between a little financial finagling and some lifestyle changes, you can definitely get this all taken care of in under a year!

I would take a good hard look at all of your credit card debt and look into shuffling it around if possible. Do the numbers on moving some of it to one of the 0% cards. Call the rep up and see if they will waive or lower the transfer fee (and compare that fee to interest on the existing card vs how many months it will take you to pay). The 0% card may take your debt because they don't expect you to pay it down anyway!! It never hurts to ask.

The car is a bit of a sticky point, seems like you're stuck with it! Lesson learned...but throw extra money at that loan in the future.

The mattress is scary to me, I'm sure it's awesome but can you get out of that? Get a Casper for 800 bucks (google it) and get out from under a 5k mattress loan. Take any extra cash and throw it against debt and into an emergency fund.

I think that while your debt is definitely an emergency, building up a small cash reserve is not a terrible idea in your situation either. You should start stashing extra 100s away when you see it in your bank account (after you start cooking at home and stop eating out and stop buying clothes and other crap). If you build up 4-5k in reserves, the next time a big expense comes along (like the birth of your child) you'll be able to put it on a rewards card and pay the balance down immediately!

Good luck!! Just take it one step at a time, and don't get discouraged.

Bracken_Joy

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Re: READER CASE STUDY-Young and Dumb
« Reply #17 on: August 18, 2015, 08:29:35 AM »
There are a lot of threads on cooking on the forums, and for good reason. It costs a lot and is a prime target for saving money. The most basic: someone needs to be cooking. Every meal should be homemade. Make extra and eat the leftovers. That alone will help a ton. Then, bump it up by looking at WHAT you cook. Interestingly, most people end up with much more nutritious food when they start to cut their food budget- no more snack foods and pre packaged soups, lots of fresh veggies and inexpensive cuts of meat and legumes and rice. A great place to start is Budget Bytes. I highly recommend meal planning at least the first few weeks. Another big food cost for most people is WASTE. You should not be throwing food away. Veggie scraps can become soup broth, bones go in too. Beans can be refried or put in a soup, etc. If you have a lot of food in your house right now, I encourage you to look on the "throw down the gauntlet" thread at the "eat all the food in your house- take 2" or "skip grocery shopping this week".

AlwaysLearningToSave

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Re: READER CASE STUDY-Young and Dumb
« Reply #18 on: August 18, 2015, 08:46:30 AM »
It looks like you have good enough credit to qualify for 0% introductory offers for credit cards.  Look into transferring the balances on your cards with 20% interest to a new credit card with 0% introductory rate.  This will save you lots of money on interest and help you dig out of the hole faster. 

But DO NOT, under any circumstance, use the new credit card for additional purchases!  Cut the card into shreds the day you receive it if you cannot trust yourselves to not use it.  The 0% rate is a tool to get out of debt faster, it is not a license to use credit.

The people on this forum are awesome.  You will keep getting great advice and encouragement as long as you do your part to give us more accurate information about your spending and you keep coming back with updates. 

Seppia

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Re: READER CASE STUDY-Young and Dumb
« Reply #19 on: August 18, 2015, 08:49:56 AM »
You can get out of this fairly easy, I would not worry too much.
1- sell the motorbike
2- ditch the cable, substitute eventually with Amazon prime: save at least $46.
3- you're spending way too much on Internet. I am in NYC and have a premium connection and I pay $35 per month. Shop around or downgrade, you can easily save another $30 here
4- eating out $300? Sorry you will have to cut that, ideally to zero but let's give you a $100 allowance anyway. Savings $200.
5- grocery + alcohol budget: my wife and I love to splurge on this, we shop mostly at whole foods and somehow never go above $500 per month (average around $350). I don't see how you cannot do at least as good as we do. Savings $300.
Good tips can be: drastically reduce meat, and swap to season vegetables, dry beans/lentils/chickpeas and grains.
On the alcohol: eliminate all liquor and buy just bud/miller/colors beer.

Just by cutting the fat you have found $575 per month, that I would use towards the 20% credit cards.

AlwaysLearningToSave

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Re: READER CASE STUDY-Young and Dumb
« Reply #20 on: August 18, 2015, 09:19:52 AM »
$208 per month for electricity seems very high.  I'm assuming that's for air conditioning in July in South Carolina and that it is not that high at other times of the year.  Still, set the thermostat at a higher temperature, especially while you are both at work.  Make sure all lights in are off except for a few in the room you are currently in. 

Some badass mustachians say you should never use air conditioning.  You have a pregnant wife, so you get some grace in this category, but I'm sure there's savings to be found here. 

Ozapftis

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Re: READER CASE STUDY-Young and Dumb
« Reply #21 on: August 18, 2015, 09:20:07 AM »
Car payments-
 400/mo not including taxes and insurance- 2014 dodge journey suv

...

insurance@166/mo
Fuel@400/mo

This is a great example to illustrate how expensive driving really is. Let's assume for a second that half of your monthly insurance payments and fuel cost goes to the Dodge Journey SUV. Then you come up with:

$400 car payment + $83 insurance + $200 fuel + $??? taxes -----> at least $683/mo for nothing but driving for one single person.

If you divide this by 20 working days per month that means you spend more than $34/day for your ride to and from work. Excluding taxes, excluding car maintenance.

If you allow another $100/mo for taxes and car maintenance, then you arrive at more than $39/day.

It's not just your hair that's on fire, but your tires are, too.

EDIT: added missing data.
« Last Edit: August 18, 2015, 09:38:01 AM by Ozapftis »

snogirl

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Re: READER CASE STUDY-Young and Dumb
« Reply #22 on: August 18, 2015, 09:32:31 AM »
Stop spending today.
Start writing down in a small notebook everyday what you spend money on.
Everyday.
That will track where all the little daily expenses go, it is extremely eye opening!
You will start making adjustments once you see the small areas leaking money everyday.
Sell as much unneeded stuff you can and put it towards debt.
Eliminate any luxuries you can....ie cable
Keep a journal of some sort here or a notebook to track your progress.
You can do it.  Hair on fire debt can totally be snuffed out if you take a one day at a time approach.
I know for I did it (35k) in 18 months following this approach.  Good luck.

Easye418

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Re: READER CASE STUDY-Young and Dumb
« Reply #23 on: August 18, 2015, 12:04:15 PM »
You can get out of this fairly easy, I would not worry too much.
1- sell the motorbike
2- ditch the cable, substitute eventually with Amazon prime: save at least $46.
3- you're spending way too much on Internet. I am in NYC and have a premium connection and I pay $35 per month. Shop around or downgrade, you can easily save another $30 here
4- eating out $300? Sorry you will have to cut that, ideally to zero but let's give you a $100 allowance anyway. Savings $200.
5- grocery + alcohol budget: my wife and I love to splurge on this, we shop mostly at whole foods and somehow never go above $500 per month (average around $350). I don't see how you cannot do at least as good as we do. Savings $300.
Good tips can be: drastically reduce meat, and swap to season vegetables, dry beans/lentils/chickpeas and grains.
On the alcohol: eliminate all liquor and buy just bud/miller/colors beer.

Just by cutting the fat you have found $575 per month, that I would use towards the 20% credit cards.

Good tips.  I have been MMM for the last 3 months.  Groceries is a huge leak for us, but now I think we have it under control with Costco.  We bought 10lbs of chicken, 20 chicken patties, 20 Turkey Burgers, and 5lbs of Chicken Nuggets.  I also have left over Brats and Hamburgers.  I think we may be able to live off all of this food for the entire month, if not, every 3 weeks.  It cost us around $80 bucks for all that meat.

It is amazing that we were spending $800-$900 bucks on food a month.  The only rough thing is beer in Texas:  Case of Miller runs $20 bucks.  I budget a case a week so $80 a month on beer alone.  Eventually, we are going to cut Sunday drinking out of the routine.

Bracken_Joy

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Re: READER CASE STUDY-Young and Dumb
« Reply #24 on: August 18, 2015, 12:26:07 PM »
You can get out of this fairly easy, I would not worry too much.
1- sell the motorbike
2- ditch the cable, substitute eventually with Amazon prime: save at least $46.
3- you're spending way too much on Internet. I am in NYC and have a premium connection and I pay $35 per month. Shop around or downgrade, you can easily save another $30 here
4- eating out $300? Sorry you will have to cut that, ideally to zero but let's give you a $100 allowance anyway. Savings $200.
5- grocery + alcohol budget: my wife and I love to splurge on this, we shop mostly at whole foods and somehow never go above $500 per month (average around $350). I don't see how you cannot do at least as good as we do. Savings $300.
Good tips can be: drastically reduce meat, and swap to season vegetables, dry beans/lentils/chickpeas and grains.
On the alcohol: eliminate all liquor and buy just bud/miller/colors beer.

Just by cutting the fat you have found $575 per month, that I would use towards the 20% credit cards.

Good tips.  I have been MMM for the last 3 months.  Groceries is a huge leak for us, but now I think we have it under control with Costco.  We bought 10lbs of chicken, 20 chicken patties, 20 Turkey Burgers, and 5lbs of Chicken Nuggets.  I also have left over Brats and Hamburgers.  I think we may be able to live off all of this food for the entire month, if not, every 3 weeks.  It cost us around $80 bucks for all that meat.

It is amazing that we were spending $800-$900 bucks on food a month.  The only rough thing is beer in Texas:  Case of Miller runs $20 bucks.  I budget a case a week so $80 a month on beer alone.  Eventually, we are going to cut Sunday drinking out of the routine.

Um, isn't that like 4 beers a day? Because a case is 24, right? That seems... a bit much. And this is coming from someone who has a drink nearly every night.

Bettis

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Re: READER CASE STUDY-Young and Dumb
« Reply #25 on: August 18, 2015, 12:46:03 PM »
I'm picturing King of the Hill style here, just standing around in the alley with the neighbors after work but yeah 4/day, even 2/day every day is a bit excessive.

robartsd

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Re: READER CASE STUDY-Young and Dumb
« Reply #26 on: August 18, 2015, 12:55:49 PM »
The expense list shows cable and TV - is the television itself on a payment plan? Since you pay quite a bit for internet (cut that back if you can - 3 megabits per second is usually enough for 1 HD video stream) I assume you have a computer to use it with, so you can use that for your news and entertainment. You have no need for cable or a television set on a payment plan.

Food - it is so easy to spend more than you think here. This is the area my wife and I are struggling the most to control - it just seems to drift upward if you don't keep an eye on it at all times.

Electric - I won't argue that you dont NEED AC, but the thermostat should be set high enough that your still a bit uncomfortably warm (at least 78, but low 80's would be even better).

Personally I'd attack the loan on the Dodge until it is no longer upside down then sell it to go down to a single car family until credit card debt is eliminated (your wife should be able to stay home with your kid when you unload the Dodge).

humbleMouse

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Re: READER CASE STUDY-Young and Dumb
« Reply #27 on: August 18, 2015, 01:25:17 PM »
dear lord, I would suggest buying a few vegetables to go with all that meat.

BlueHouse

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Re: READER CASE STUDY-Young and Dumb
« Reply #28 on: August 18, 2015, 02:27:41 PM »
Great advice from everyone above. 

Here's a good test to see how committed you and your wife are to the mustachian lifestyle.  7 months to baby and I bet you guys think you need a ton of stuff, right? 
Well, how willing are you to go without a crib?  How willing are you to have your baby sleep on a pad in the middle of a room with no furniture?  How willing are you to get all clothing second-hand?  How willing to take used bottles and toys?   Could you commit to any part of this for the first year? 

Honestly, babies don't know the difference and it's actually safer than cribs and fancy bedding. 

This test will show your level of commitment because it will do NO HARM to the child, but it will be mildly uncomfortable to explain to family/friends that this is how you WANT to prioritize your spending. 

Easye418

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Re: READER CASE STUDY-Young and Dumb
« Reply #29 on: August 18, 2015, 03:23:38 PM »
You can get out of this fairly easy, I would not worry too much.
1- sell the motorbike
2- ditch the cable, substitute eventually with Amazon prime: save at least $46.
3- you're spending way too much on Internet. I am in NYC and have a premium connection and I pay $35 per month. Shop around or downgrade, you can easily save another $30 here
4- eating out $300? Sorry you will have to cut that, ideally to zero but let's give you a $100 allowance anyway. Savings $200.
5- grocery + alcohol budget: my wife and I love to splurge on this, we shop mostly at whole foods and somehow never go above $500 per month (average around $350). I don't see how you cannot do at least as good as we do. Savings $300.
Good tips can be: drastically reduce meat, and swap to season vegetables, dry beans/lentils/chickpeas and grains.
On the alcohol: eliminate all liquor and buy just bud/miller/colors beer.

Just by cutting the fat you have found $575 per month, that I would use towards the 20% credit cards.

Good tips.  I have been MMM for the last 3 months.  Groceries is a huge leak for us, but now I think we have it under control with Costco.  We bought 10lbs of chicken, 20 chicken patties, 20 Turkey Burgers, and 5lbs of Chicken Nuggets.  I also have left over Brats and Hamburgers.  I think we may be able to live off all of this food for the entire month, if not, every 3 weeks.  It cost us around $80 bucks for all that meat.

It is amazing that we were spending $800-$900 bucks on food a month.  The only rough thing is beer in Texas:  Case of Miller runs $20 bucks.  I budget a case a week so $80 a month on beer alone.  Eventually, we are going to cut Sunday drinking out of the routine.

Um, isn't that like 4 beers a day? Because a case is 24, right? That seems... a bit much. And this is coming from someone who has a drink nearly every night.

I'm picturing King of the Hill style here, just standing around in the alley with the neighbors after work but yeah 4/day, even 2/day every day is a bit excessive.

Sorry, I should of clarified, we are weekend drinkers, 2 people, 4 beers a night, drink Friday and Saturday (sometimes Sunday).


dear lord, I would suggest buying a few vegetables to go with all that meat.

I just listed the main course... of course there is veggies.  Always a veggie with dinner.
« Last Edit: August 18, 2015, 03:28:46 PM by Easye418 »

Seppia

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Re: READER CASE STUDY-Young and Dumb
« Reply #30 on: August 18, 2015, 03:33:13 PM »
The cost of beer seems odd, I can find sub-$1 per can beer in gristedes in Manhattan (possibly the worst combination in terms of COL ever lol), are you sure in Texas there's nothing  below $1.25?
I travel a lot to Texas, always for work so I don't happen to buy many things in supermarkets but I do not recall alcohol being spectacularly expensive there.

Easye418

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Re: READER CASE STUDY-Young and Dumb
« Reply #31 on: August 18, 2015, 03:34:11 PM »
The cost of beer seems odd, I can find sub-$1 per can beer in gristedes in Manhattan (possibly the worst combination in terms of COL ever lol), are you sure in Texas there's nothing  below $1.25?
I travel a lot to Texas, always for work so I don't happen to buy many things in supermarkets but I do not recall alcohol being spectacularly expensive there.

Texas is the #1 highest beer prices in the country.  Its the bible belt for god sakes.

$18.97 before tax on a Miller Lite 24pk 12oz Bottles so you figure $20 a case.  You did your math backwards:  $20/24= .8333c
« Last Edit: August 18, 2015, 03:35:51 PM by Easye418 »

Seppia

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Re: READER CASE STUDY-Young and Dumb
« Reply #32 on: August 18, 2015, 03:35:28 PM »
However, I do agree prices per category can vary a LOT depending on the state, the meat prices you list are pure fiction for me, but I have to say I do not even look at nuggets and brats to be honest, in my Italian mind they do not qualify as "food" :D

Easye418

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Re: READER CASE STUDY-Young and Dumb
« Reply #33 on: August 18, 2015, 03:36:32 PM »
However, I do agree prices per category can vary a LOT depending on the state, the meat prices you list are pure fiction for me, but I have to say I do not even look at nuggets and brats to be honest, in my Italian mind they do not qualify as "food" :D

The whole point was that you can eat a variety of meats at a low price point.  At least in Texas at Costco for 2 people.

We mainly eat chicken, we just started introducing red meats into the equation to add variety. 

We like to eat mainly lean, so we would have in a given week, chicken breast, chicken sandwiches, ground turkey tacos, chicken tenders (just switched to nuggets for the saving), etc.

What's wrong with Chicken Nuggets?  Just breaded chicken breast sliced in smaller finger sized portions covered in Panko breaking.  Delicious and cheap.
« Last Edit: August 18, 2015, 03:40:26 PM by Easye418 »

Seppia

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Re: READER CASE STUDY-Young and Dumb
« Reply #34 on: August 18, 2015, 03:40:05 PM »

The cost of beer seems odd, I can find sub-$1 per can beer in gristedes in Manhattan (possibly the worst combination in terms of COL ever lol), are you sure in Texas there's nothing  below $1.25?
I travel a lot to Texas, always for work so I don't happen to buy many things in supermarkets but I do not recall alcohol being spectacularly expensive there.

Texas is the #1 highest beer prices in the country.  Its the bible belt for god sakes.

$18.97 before tax on a Miller Lite 24pk 12oz Bottles so you figure $20 a case.  You did your math backwards:  $20/24= .8333c

So you drink more than 4 beers per person twice a week.
96 beers per month = 1152/year = 22 per weekend = 11 per person.
I did the math on the "4 beers per day per person twice a week for an expense of 80$ per month"

Easye418

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Re: READER CASE STUDY-Young and Dumb
« Reply #35 on: August 18, 2015, 03:43:13 PM »

The cost of beer seems odd, I can find sub-$1 per can beer in gristedes in Manhattan (possibly the worst combination in terms of COL ever lol), are you sure in Texas there's nothing  below $1.25?
I travel a lot to Texas, always for work so I don't happen to buy many things in supermarkets but I do not recall alcohol being spectacularly expensive there.

Texas is the #1 highest beer prices in the country.  Its the bible belt for god sakes.

$18.97 before tax on a Miller Lite 24pk 12oz Bottles so you figure $20 a case.  You did your math backwards:  $20/24= .8333c

So you drink more than 4 beers per person twice a week.
96 beers per month = 1152/year = 22 per weekend = 11 per person.
I did the math on the "4 beers per day per person twice a week for an expense of 80$ per month"

Gotcha.

I am trying to cut my beer consumption down, but I don't think 4 beers on a weekend is too shabby.

Right now, its more like 4 x 3= 12 beers per person per weekend.  24 beers per week-
« Last Edit: August 18, 2015, 03:44:45 PM by Easye418 »

Seppia

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Re: READER CASE STUDY-Young and Dumb
« Reply #36 on: August 18, 2015, 03:47:14 PM »

The whole point was that you can eat a variety of meats at a low price point.  At least in Texas at Costco for 2 people.

We mainly eat chicken, we just started introducing red meats into the equation to add variety. 

We like to eat mainly lean, so we would have in a given week, chicken breast, chicken sandwiches, ground turkey tacos, chicken tenders (just switched to nuggets for the saving), etc.

What's wrong with Chicken Nuggets?  Just breaded chicken breast sliced in smaller finger sized portions covered in Panko breaking.  Delicious and cheap.

Absolutely and I do agree with you 100%.
Did not mean to insult you, just trying (failing) to be funny, I hoped the smiley helped but evidently I was mistaken sorry!

Nuggets, if cheap, are terrible products, filled with fats and made mostly with chicken skins (extremely fattier than the meat) that has been atomized and reconstituted.

Very, very, bad.

At our place we have chosen to reduce meat and poultry in particular because (I work in the food business) it does not make sense that a thing that you have to feed,raise, kill, clean, transport with a more expensive logistics than dry grocery (has to be refrigerated, shorter "best before" dates) can be cheaper per pound than, say, vegetables.
When I see chicken at $0.59 per lb I cringe.

If you look at how these animals are raised you would figure it cannot be super healthy.

BarkyardBQ

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Re: READER CASE STUDY-Young and Dumb
« Reply #37 on: August 18, 2015, 04:37:52 PM »
Skimmed... no one mentioned it, but have you adjusted your W-4's and added exemptions? This should increase your take home.

Patrick A

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Re: READER CASE STUDY-Young and Dumb
« Reply #38 on: August 18, 2015, 04:58:56 PM »
dear lord, I would suggest buying a few vegetables to go with all that meat.

+1

My thoughts exactly.  The list (and the ensuing comment) made me laugh quite hard. 

Meat is expensive too! 
« Last Edit: August 18, 2015, 05:02:05 PM by MAnton »

Patrick A

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Re: READER CASE STUDY-Young and Dumb
« Reply #39 on: August 18, 2015, 05:01:35 PM »
Also in his defense I'm not sure Miller Lite really counts as beer.   ( ;


Easye418

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Re: READER CASE STUDY-Young and Dumb
« Reply #40 on: August 18, 2015, 05:27:55 PM »

The whole point was that you can eat a variety of meats at a low price point.  At least in Texas at Costco for 2 people.

W

Absolutely and I do agree with you 100%.
Did not mean to insult you, just trying (failing) to be funny, I hoped the smiley helped but evidently I was mistaken sorry!

Nuggets, if cheap, are terrible products, filled with fats and made mostly with chicken skins (extremely fattier than the meat) that has been atomized and reconstituted.

Very, very, bad.

At our place we have chosen to reduce meat and poultry in particular because (I work in the food business) it does not make sense that a thing that you have to feed,raise, kill, clean, transport with a more expensive logistics than dry grocery (has to be refrigerated, shorter "best before" dates) can be cheaper per pound than, say, vegetables.
When I see chicken at $0.59 per lb I cringe.

If you look at how these animals are raised you would figure it cannot be super healthy.

Didn't insult me at all. Deriving the point that I can pick up (expensive as MAnton says) meats at Costco for pretty cheap  .

Believe the nuggets are whole breast meat.

dear lord, I would suggest buying a few vegetables to go with all that meat.

+1

My thoughts exactly.  The list (and the ensuing comment) made me laugh quite hard. 

Meat is expensive too! 

Of course, veggies are on the list. Typically, I get those on a weekly basis from my local market. Not bulk of Fresh produce.

No need to spend a fortune on Groceries for two.

Also in his defense I'm not sure Miller Lite really counts as beer.   ( ;

Subjective ;)


Enough about beer and meats, the point is there is always ways to reduce spending.

Lets focus back on orig topic.

Sorry for the thread hijack OP
« Last Edit: August 18, 2015, 05:29:32 PM by Easye418 »

Argyle

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Re: READER CASE STUDY-Young and Dumb
« Reply #41 on: August 18, 2015, 05:38:57 PM »
Wait a minute, if your wife is pregnant, who is drinking the 12 beers x 2 people on the weekend?  Do you mean you're drinking 24 beers per week yourself?  All on the weekend?  12 beers on Saturday, 12 on Sunday? 

I think you may have more pressing problems than overspending.  I hope no one drinking 12 or even 6 beers in an afternoon will be in charge of the baby when it comes.  No offense, but this is verging on crossing a line.  You might reconsider this rate of consumption, or it won't matter how frugal you want to be.

Seppia

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Re: READER CASE STUDY-Young and Dumb
« Reply #42 on: August 18, 2015, 05:49:18 PM »

Wait a minute, if your wife is pregnant, who is drinking the 12 beers x 2 people on the weekend?  Do you mean you're drinking 24 beers per week yourself?  All on the weekend?  12 beers on Saturday, 12 on Sunday?

Then he might have two problems if that's the case
One is anti-mustachianism
The second one is EXTREME AWESOMENESS!
Joking obviously, but while I consider myself semi-old, I am still too young to consider a 24-beer weekend anything but great :)

Easye418

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Re: READER CASE STUDY-Young and Dumb
« Reply #43 on: August 18, 2015, 05:59:52 PM »
Wait a minute, if your wife is pregnant, who is drinking the 12 beers x 2 people on the weekend?  Do you mean you're drinking 24 beers per week yourself?  All on the weekend?  12 beers on Saturday, 12 on Sunday? 

I think you may have more pressing problems than overspending.  I hope no one drinking 12 or even 6 beers in an afternoon will be in charge of the baby when it comes.  No offense, but this is verging on crossing a line.  You might reconsider this rate of consumption, or it won't matter how frugal you want to be.

I am not the OP and my wife is not pregnant! So this is all wrong.

Come on, read before making such judgements.


Wait a minute, if your wife is pregnant, who is drinking the 12 beers x 2 people on the weekend?  Do you mean you're drinking 24 beers per week yourself?  All on the weekend?  12 beers on Saturday, 12 on Sunday?

Then he might have two problems if that's the case
One is anti-mustachianism
The second one is EXTREME AWESOMENESS!
Joking obviously, but while I consider myself semi-old, I am still too young to consider a 24-beer weekend anything but great :)


So am I. I'm only 26.  :)

Easye418

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Re: READER CASE STUDY-Young and Dumb
« Reply #44 on: August 18, 2015, 06:07:26 PM »
WHOA! haha argyle that was another guy posting about the beer weekends! Only i do the drinking, she is pregnant. To answer the motorcycle issue it hasnt sold yet but i will repost it. But the good news is i sold another gun today for a cool $600 so add that to the debt paydown! Also started the expense journal today and had to add a pregnancy appointment. But the good news is that i have no deductible and the whole thing will only cost me $640 TOTAL for all appointments at the doctor up until the birth!(rather than 6000). ALSO i am glad to say that i am blessed with somewhat money savvy family and the 4n1 crib, stroller,and a few more items will be gifts!  Thanks for all of the replies and i will keep it updated!

Nice progress. Keep it up.

Villanelle

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Re: READER CASE STUDY-Young and Dumb
« Reply #45 on: August 18, 2015, 06:24:41 PM »
Nice progress.  If the bike isn't getting much interest, that means you've priced it too high.  Getting rid of it ASAP means you instantly start saving on insurance and on the interest for the debt you pay down, so price it to sell. 

CalFIornia

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Re: READER CASE STUDY-Young and Dumb
« Reply #46 on: August 19, 2015, 11:03:38 AM »
First off, thrifty1, big props for sending up the flare. Agree that you and Mrs. thrifty1 can turn this around in short order. You are in good hands here.

Something not yet mentioned and IMHO important is to find good (read, free or very low cost) replacements for the things you will be giving up. Once the high-motivation period of first pass unloading is underway, it can be easy to start feeling deprived, and from there it's a quick step over to low morale and possible relapse. Don't underestimate the power of familiar prisons vs. unfamiliar freedom.

Some things are quick fixes: library for free DVDs/books to replace both the TV and cable (consider selling the TV and watching DVDs on the computer), and look at canceling home internet if you don't need it for work (which is what Mr. CalFI and I have done for the past year without any problem - he uses wifi at work and I use free networks around town).

For bigger issues, like what to do with friends/family who might not really understand or support your new lifestyle - "Come on, lighten up! It's only ____" (insert spendy item/activity here) - anticipating this and thinking up workarounds beforehand is wise. Mr. CalFI and I live in one of the most expensive and (on the surface) un-Mustachian places on the planet, and have had to become quite adept at this in order to avoid being total pariahs.

Keep up the good work, and let us know how you're doing!
« Last Edit: August 19, 2015, 05:45:23 PM by CalFIornia »