Ok, here's the goods according to the case study template -
Life Situation: Engineer living in Colorado, married with two young kids (3 and 1). 15 minute commute (I plan to start biking in the summer to save on this) and we live in a wonderful neighborhood with an obscenely good Walk Score. We can walk to the library, park, pool, grocery store, thrift store, etc during the summer. This is almost a disadvantage at times because there's a really good coffee shop and great mexican food half a block away.
Gross Salary/Wages: Gross salary for myself is $65k. My wife is mainly a stay at home mom but makes $12k annually with a photography business on weekends.
Pre-tax deductions: My current employer matches 15% of my salary into a SEP-IRA. No employee contribution required. I put $30 from each paycheck into a 529 college savings plan (not much, but starting it got me some bonus starter funds). I've got life, dental, and medical insurance that also comes out pre-tax.
Net income: After all is said and done, I've got biweekly paychecks of $1900 (26 checks/year) with another $1000 a month from photography (on average, it is much higher in the peak season and lower in the slow times). So call it $5k a month.
Current expenses:
Auto Insurance - $150 (Based on the former leased vehicle. I expect this will come down some with the cheaper 2010 car)
Life Insurance - $17 (Brings some comfort of mind. Also, my mother-in-law is my insurance agent... it's hard to turn her down)
Auto Payment - $166
Gas - $100 (biking will help, but much of it is because my wife travels to clients for photography)
Internet - $40 (negotiated down from $70 thanks to MMM - good internet is needed for photo business)
Cell phones - $60 (My projection. Just switched to Ting, was on Sprint previously at $140!)
Electric - $70
Gas - $50 (on average. $17 in summer, $100 January-March)
HOA - $211
Ballet - $50. My daughter does this once a week. Probably can't afford it, but I'm having a hard time letting this one go.
Mortgage - $1365 (1174.46 P&I, $75 PMI, $120 T&I)
Now, the embarrassing part... based on Mint, here's our spending for the last year...
Health and Fitness - $100 (Mostly doctor visits and prescriptions - wife and kids are sick frequently)
Pets - $100
Food and Dining - $1000
Shopping - $500
I recognize that this is a big part of the problem - so recommendations are appreciated here, but I'm already totally on board that eating out, shopping, and grocery spending all need to be slashed.
Assets:
SEP-IRA - I just got vested last year, so only about $5k is in right now, with 85% in Schwab S&P index, and then 10% in Schwab Index Bonds fund and 5% in an international fund. I'm thinking when the disbursement comes through this year (it is one lump sum in February each year) I'm going to move it all over into the S&P index. That should bring the total to ~$15k.
Savings - $1000 kept for emergencies in a credit union savings account
2006 Pontiac Vibe, paid off.
$500 total in kids 529 college accounts
Townhome, purchased for $170k, appraising now at $220k.
Liabilities:
2010 Mazda5, $166 month payment with $9000 owed. Turning in a leased vehicle next month and this is the replacement.
Mortgage, payment listed above, $147k owed at 3.75% on a 15-year term.
Wife student loans - $29k @ 6.75%, $200/month
My student loans - $47k @ 5.23% (weighted average of several smaller loans) at $450/month
Credit Card 1 - $1800 @ 18%
Credit Card 2 - $2500 @ 22%
Credit Card 3 - $4000 @ 0% (balance transfer, 3 months of no interest remaining)
Specific Question(s):
So I'm midway through the process of a cash-out refinance (move down to 3.375% interest rate, end PMI, consolidate debt) and I'm really wondering what the best course is with that. Cashing out the maximum (up to 80% of appraised home value) and putting it straight to credit cards and then high interest student loans seems to be the best angle based on the spreadsheet numbers, but there might be lots of things that I'm not considering.
Overall I'm trending in the right direction over the past few years. Net worth was -$86k in Dec 2013, -$70k in Dec 2014, and will probably turn positive any day now thanks in no small part to the recent real estate market. But I'm tired of these goddamn loans and I want to stop throwing money down the interest hole every month. I'm frugal by nature but my wife is the opposite and so I have to try to bring her on board - she is willing but it will be a challenge for her because she's lived for 30 years seeing spending as happiness. I've developed some bad habits of my own as well.
The last 3 years really beat us to hell thanks to a very poor job decision ($28k teaching job with a 45 minute commute) and the expenses/downtime of 2 kids being born, but I'm not complaining - just acknowledging that we stacked things against ourselves and so now we're paying for some poor life choices. I'm seeing the MMM light though and I think we're positioned now to make a lot of headway finally, I'm just trying to optimize the choices.