Reader Case Study: First Post - Where we stand

[Bigjones]

Income:

 My take home is $974 Bi-Weekly
- $219 to 401k with $70 employer match
-$175 for family health insurance w/5k deductible
-$125 to HSA

My wifes take home varies but is normally around $1350 Bi-Weekly
-$120 to 401k with $45 employer match



Current Expenses:

edited:

We built a new home with 75k cash, but financed the rest using cc's which I was moved over to a home equity 70k.  The payment is $210 if I wanted but that's interest only at 4%. My payment is setup for $210 is the min i can pay, but i can pay what i want.  I thought this was good for now while i really try hard to pay off the CC and other debt , then i can concentrate on hammering the home loan.

My car is paid off and only has 50k miles
Wife car is a lease at $275 per month - about 1.5yrs remaining
Only Credit card is at $9500 at 21.9%
Local hospital bills $8k at 0% - payment plan is $200 a month.
Car insurance is $500 every 6months.
Food and other living is $1k per month - this equates to gas, food, entertainment, clothes, lunches for kids, etc
Electric bill is roughly $100 monthly
Property taxes $1500
Homeowners $400 annually
Cell is $90 monthly
Netflix is $9 monthly
Water is $0 - well
Sewer is $0 - Septic

My commute to work is 80miles round trip per day.

Savings:

I have roughly $20k in 401k i contribute 13% - my employer will give 4% if i give 5%

Wife has roughly $10k in 401k
No other real savings as ive used them and our emergency fund to pay off recent debts and to get rid of some monthly payments.


Question:  Im in my early 40's and we have made some mistakes along the waybut we still have dreams of ER.   I have two boys at home still so they cost
more money than most think.

We do not plan to go into debt to help them through college.  We own a
camp free and clear and the goal is to someday live at the camp during the summers and live out west in a small RV in the winter. Considering selling the house to pay for the rv when the time comes.

My goal is to really hit the CC HARD from now until spring and have it paid off.
I recently picked up a side job that will pay me 2k in the next 6 week and im
going to put that squarely on the cc to go along with i hope 1k a month or more until its paid off.

Folks i know we are very much behind where we should be and we have made some silly foolish mistake but we are ready to put our best foot forward and grow a mustache.  I would appreciate any advice you could offer.

Thanks for this site and all the helpful

[Calvawt]

can you post more about your monthly expenses?  that will give people more information to be able to offer advice.

[Bigjones]

Vawt: added more details

[Rezdent]

Welcome aboard!
I'm gonna be a bit blunt here...
Some stuff is still vague - "food and other living"?  Lights - is this electric bill?  What about cable, telephone, water?

If you aren't exactly certain on where every penny is going...well you need to fix that first.  You need to know where the money is going so you can make choices about how to make it better.

Agree with you that the CC debt needs to be first priority.  This is a lot of high interest dollars flying out the window.

You seem to be treading water with some stuff, such as a leased car and the interest only home payment.  You won't end up owning the car or the house making payments like this - basically you are paying really good money to rent the car and you are not building any equity in the house to offset the loan.

Any hope of getting out of the car lease and buying an older used car?  Or is it setup so that the costs of doing this outweigh the benefits?
Your car insurance may be lower with an older car.  If your sons are driving age that might be keeping the cost higher.

With the dual 401K contributions: are you paying in only the minimum to get the employer match?  Because that CC debt is awful.  If it were me, I'd only match on the IRA until the CC debt is gone.

[Bigjones]

yes im locked into the lease and im going to buy used next time through. 
Ive updated my post above. Im very much not trying to sound vague, i just feel
compelled to post right now even tho im not at home.  Ive been reading this site
all day.

[Bigjones]

.

[waltworks]

-401k loan will kill your CC and you are paying the interest to yourself so it's a no-brainer. Talk to your HR people at work.
-$100/mo is a lot of electricity. What is the rate per kWh and how much are you using?
-80 mile commute is costing you a fortune - probably something like $40/day just in gas/oil/wear and tear on the car, let alone your time (probably at least 2 hours?) Let's not even talk about how unhealthy all that sitting is...
Move if at all possible. Your wife's job is basically just paying for your ridiculous car expenses - no, I'm not joking. She has a job just so you can own/sit in your cars a lot. Your housing costs might be low but overall, you're not doing any better than you would be living near work and renting for $1200/mo or something thanks to the commute.
-How much could you get if you sold the house/land? The car(s)?

On your present course, you're not going to be saving up much money anytime soon, as your costs are wicked out of control even without paying any principle on the house. Time to sit down and think about what you really want in life. If it's living where you live and you're ok working until you die, great. If not, time to think about a move.

-W

[Bigjones]

Thanks for the reply Walt.  Consider this, my wife who makes more $ than I if we moved would then have to do commute the 40miles.  My employer has promised that i will be able to transfer back to my town within the next 16months.  We have offices in several towns. 

The $100 a month for electricity factors in hot water, electricity for heat and AC etc.  I would agree its high and i believe its mostly because of the constant dryer running with two active muddy boys.  I do drive a very economical car that gets 35mpg. 

My plan was to somehow put everything i can muster into that CC and have it paid off by spring.  Then really ramp up my 401k and HSA contributions as well as double up the house payments the best I can.

[Rezdent]

I grabbed a pencil and tried the math on this - of course I might have made mistakes.  I am not an expert and I feel like there are missing items.
Some of your numbers are monthly and others are annual.  I just divided the annual numbers by month.
Monthly income: ~4100.00
Monthly bills: ~3200 + guessing ~ 500 for the CC debt= 3700
 That leaves ~400/month unaccounted?
That's pretty significant.
Suggest you sit down with the wife and look at your spending and figure out where it's going.  Get a handle on this asap.

The 90$ cell phone - is that for just you?  Or does it include your wife's phone?

You mentioned you'd like to RE - you are in your 40s now.   I believe this could be possible for you in your 50s but you'll need to be focused and hard ass to make it.  You won't get there if you keep doing what you're doing.

Like Waltworks mentioned, you could consider a 401K loan...but be aware that if you lose the job the loan is payable immediately or will be considered a distribution and taxed at a higher rate.  Only do this if you feel secure with the job.
 
Taking out the loan to repay the CC isn't going to solve the spending issues.  You need to fix the spending or you'll just end up back where you are now but with a 401K loan added.  You can't fix it until you know where it's going.