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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: skela on June 05, 2013, 11:19:57 PM

Title: Need advice for the future
Post by: skela on June 05, 2013, 11:19:57 PM
Hi everyone,

I just started reading the MMM blog and think I could use advice on my family's kind of unique situation.  In our family is my son(7), my wife(25), and myself(26) and we are living in our 3BR 1.5BR townhouse that just before discovering MMM I had refinanced to take out the extra equity/get rid of PMI/lower the interest, the equity was used to pay off credit card debt and a car loan.  The unique issues we face are with my son, he has asthma, eczema, and seasonal as well as food allergies so is unable to eat Nuts of any kind as well as cod.  The end goal is for me to be able to leave my line of work in 14-19years the sooner the better because I have zero passion for it, the pay and the fact i work from home 99% of the time with full benefits are the reason I stay.   With that said the other major goal is to move as me and the wife can not stand living under and HoA/in a townhouse with minimal yard/privacy, we would be happier in a moderate house with a large yard and no HoA.  Outside of my line of work in technology I really have no idea where I could start either gaining extra income or where we could start cutting expenses.

The money breakdown is as follows:

Monthly Income:
Me: 2800
Wife: 1000-1500, she works on tips

Monthly Expenses:
Mortgage (including taxes and insurance): 430
HoA dues(includes water, trash and external building maintenance): 225
Electric/Gas: 100-200
Cell phones:  70
Cable/Internet: 100
Netflix: 9
Car insurance: 200
Food(groceries and eating out): 400-600
Wife student loan 1: 130
Wife Student loan 2: 65
My student loan 1(interest only): 100
My student loan 2(interest only):  62
My student loan 3(interest only): 38
My student loan 4: 290
budgeted extra just in case: 200

income: 3800-4300
expenses:  2419-2719
leftover: 1081-1881

Loan balances:
Mortgage:  72000@4.5%
My student loan 1(interest only):9800@11.25%
My student loan 2(interest only): 8150@9%
My student loan 3(interest only):6000@7.5%
My student loan 4: 45500@6%
Wife student loan 1: 10000@10%
Wife Student loan 2: 5000@10%

The current plan is to do the following:
Goal - Month
my student Loan 2 - 02/2014
wife student loan 2 - 05/2014
wife student loan 1 - 10/2014
my student Loan 3 - 03/2015
Save 30,000ish for down payment - 06/2016
Move - 07/2016

The reason for the move at this time frame is it will be the summer between elementary and middle school for my son and the hope is to minimize the impact to him.  After this point the plan would be to pay off my remaining 2 student loans as fast as possible with #3 before #4 because of interest rate, after which we will start investing all of our extra money(after I learn how but I have a lot of time to read).

I would like to thank everyone in advance for reading this and will check back as often as I can to respond to any questions or advice.
Title: Re: Need advice for the future
Post by: gooki on June 06, 2013, 12:59:07 AM
Your car insurance is exceptionally high. Start shopping around.

Look to cut your cable/Internet bill in half.

Reevaluate moving until all your student loans are repaid. Those are some damn high interest rates.
Title: Re: Need advice for the future
Post by: skela on June 06, 2013, 01:29:12 AM
I might be able to cut the cable/internet bill in half by removing cable entirely, unfortunately where i live Comcast is the only option so that is likely the only way to reduce that cost.

The insurance I will look into, should be able to reduce it for our two cars (2007 Saturn ion, 2004 Pontiac grand am) but not sure by how much.

Yes the student loans are at absolutely stupid rates, easily the biggest financial mistake was going to a private collage as everyone was just pushing the college = better job = better money so get a BA no matter what.  Lesson learned at least, colleges will fuck you if you have no one to get advice from.

As for the moving, that is something that would very much need to be considered as its hard to put a price on an increase in happyness in a living situation.  not going to far into it shitty HoA+shitty/borderline harassing neighbor in a townhouse is not the best,
Title: Re: Need advice for the future
Post by: lizzigee on June 06, 2013, 01:49:01 AM
Why are you paying off your student loans 2 and 3 before loan 1 which has the highest interest rate?
Title: Re: Need advice for the future
Post by: CU Tiger on June 06, 2013, 02:55:13 AM
Work on getting that power bill down. Get your son to help you by making it a game to turn lights off and unplug things you are not using.

Especially considering that your boy is food sensitive I would cut out eating out. Not to put too fine a point on it, you have a debt emergency and you should not be in restaurants unless you are working there. Plus, if you cook his food you know exactly what is in it.

Cut out cable. Spend time outdoors. Read more. Go to the library and check out books and movies for free. Teach your son to love reading. Read everything you can about frugal living, personal finance, and investing.

Consider paying debt off like this
My student loan 1(interest only):9800@11.25%
Wife Student loan 2: 5000@10%
Wife student loan 1: 10000@10%
My student loan 2(interest only): 8150@9%
My student loan 3(interest only):6000@7.5%
My student loan 4: 45500@6%

You all are still vey young, disciplined frugality and paying attention will set you up for a debt free, stress free future.

Title: Re: Need advice for the future
Post by: skela on June 06, 2013, 08:05:24 AM
You are both correct, with the order on paying off the loans and that's how i have it in my tracking spreadsheet don't know how i messed up the order here.  The eating out is currently at 1 time per week which could for sure go down to zero, though the wife and son wont enjoy that much but they will understand.  Cutting out Cable is going to happen, but we need to keep the internet because of my job as working from home is cheaper than driving 10ish miles to work.

the power bill wont be easy to cut down, due to his eczema we end up needing to purchase all fragrance and dye free soaps and laundry detergents as well as trying to keep him from sweating when possible so running the AC happens more often than would otherwise be needed.  We also get the joy of having a unit that is completely stripped down next to ours, so on one side of us the insulation is literally just a single layer of drywall.  We still might be able to cut down on some power usage by raising the temp the AC kicks on from 76 to 78, but would need ideas on how to equalize the temp between upstairs and downstairs as the top level will often be 5-10 degrees hotter in the summer.

Would it be worth switching to costco from sams club or are their prices close to the same?

looking at quotes today for auto insurance, I might be able to lower that by 100/month or so, which is far more than I expected.  The only question i would have about that is everyone i know has always gone with full coverage, to lower my bill that much would mean switching to liability only is there much more risk with that?