Author Topic: Reader Case Study: Help me get out of corporate prison to be with my new baby!  (Read 6818 times)

gipsygrrl

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Hello Lovely Mustachians!
I've been reading MMM for about a year and decided 6 months ago to try to really get our finances in order. I've started using YNAB, and husband and I have paid off all lingering consumer credit card debt (yay!). We have a baby coming in April, and I'm looking for a way to quit my job for a while to be a SAHM (something I think would be a great fit for my corporate-stifled personality). Neither husband or I are money/numbers people and budgeting has been a challenge. But we're trying, by god! Weíve cut our grocery bill down almost in half already (from $1200/mo!!) and are trying our best to move away from the consumer mindset we grew up with.

We live in a hip urban area in Colorado with hip urban, activities, friends and prices to match. My long-term plan sees us moving to a different area and shifting our focus to the mustachian things we love already (veggie gardening, outdoor sports, biking), but I need to figure out what to do in the short term to guide us in the right direction. Quitting my job will mean cutting $2200 out of our budget. Here are our details:

Monthly Income
Husband: 3000 (after health insurance premiums and 3% 401K deduction)
Me Corporate Job: 2200 (after 17% 401K deductionÖ trying to make up for lost time)
Me Freelance: 1200 (I'm a graphic designer and do freelance work in my spare time. I plan to keep this up after the baby is born. I could look at adding to this income, but would have to pay for child care if my hours exceed what I can manage in my downtime.)
Monthly income without my corporate job: 4200

Monthly Expenses/Utilities
Mortgage: 1373 (includes property taxes and homeowners insurance, we don't have PMI)
Phone: 133
Internet: 50
Electric& Gas: 145
Water: 25
Car Insurance: 130
Car Payment: 220
Fuel: 85
Self-Employment Taxes: 200

General Expenses
Groceries: 620
Household Goods (like TP, cleaning supplies): 100
Restaurants/Takeout: 380
Alcohol: 130
Medical out of pocket: 55
Clothing: 80
Personal Care/Exercise: 100 (includes yoga classes, haircuts, sports equipment)
Dog Food/Vet: 55
Family (and other) Travel: 400 (both families live in different states. We could reduce this some by removing trips to see friends, but want to keep family trips as a priority)
Entertainment: 60
House Maintenance: 80
Garden: 30
Gifts: 50
Baby: 160 (getting nursery ready, diapers, supplies)
Personal Spending on Credit Cards: 1000 (we've paid off our old debt, but somehow keep spending/paying off this amount per month on miscellaneous personal stuff. I want this number to be ZERO!!!)
Memberships: 20 (Costco, Netflix, Amazon Prime)
Savings: 700

Liabilities:
Car Loan (2009 Honda Civic): owe 7500 @ 3.45%
Mortgage: owe 227,000 @ 4.125

Assets:
Emergency Savings: 12k (4k of this is earmarked for baby delivery/insurance out of pocket expenses)
1999 Honda Accord (whose engine has been given a death sentence by our mechanic. We hope to get another year out of it and drive it into the ground.)

Iím not sure what to do about our car and car loan situation. Weíve lived as a one-car household before and have managed, although itís not husbandís ideal. He really wants to buy a truck for hauling & mountain use and then have a commuter car as a daily driver. He works 2 miles from home and bikes occasionally when the weather is nice, but not daily. Iím tired of our car payment and would love to get rid of that $200/month outflow. Should I work on paying that off asap (perhaps putting some of our emergency fund into it) or calm down about it? Iíve suggested selling it and buying something cheaper, but husband thinks itís a dumb idea to sell a used Civic only to turn around and buy an older Civic-like car with even more miles on it.

Sooo... what do you think, folks? I see A LOT of what we need to cut, expense-wise. Restaurants, alcohol, groceries and spending anything on our personal credit cards. Is there anything else that jumps out? Facepunch away!

Please shower me with your frugal wisdom and help me spend some quality time with the new bambino. Your input is so appreciated!!

ShoulderThingThatGoesUp

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Getting rid of the car payment, alcohol, takeout, reducing groceries to $400 (totally doable) and your "misc" basically gets you there.

2Birds1Stone

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Your "random spending" is some peoples entire monthly budget. That needs major addressing.

Aside from that if you cut down groceries by 30% , alcohol, eating out by 50% you are there.......

Christiana

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The biggest thing we do to save money is to keep categories like Household Supplies, Clothing, Entertainment/Eating Out, Baby Stuff, Personal care and misc. Personal Spending all on a very tight leash:  each gets from $5-25 per week in our budget, depending on category, and that's it.  This ensures that we can regularly buy -something- in each of these categories, but it also forces us to prioritize heavily toward actual needs and highly-desired wants, rather than random impulse purchases.


thd7t

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The big holes are pretty obvious, as other have pointed out, but you are spending a lot on car insurance for a 5 year old and 15 year old car.  You could also look at phone options.  Using ting for two working parents, our phone bill is $40-$50/month and we haven't changed our phone use at all from when we had a higher bill than you have.  Your baby is costing an awful lot, as well.  Babies don't need that much.  $1000/year adult clothing allowance is quite high, as well, particularly if you'll be out of corporate life.  These are small things, but working on them could get you into a habit of reducing costs.

TinyLightsBelow

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You can reduce your phone bill to less than $40/mo with Republic Wireless, Ting or a similar service (there are plenty of articles on the blog about this).

I have to say that spending a total of $1000/mo on food is definitely facepunch-worthy. I can't even fathom this! You are spending more on groceries, not counting restaurants, than my husband and I do on our rent! The only way I can work it out in my head is that you and your husband don't know how to cook, so you just buy frozen meals or something. Or maybe you buy really expensive vegetables like broccolini and just let them go bad in your fridge. I highly recommend using your Costco membership to stock up on bulk foods, particularly ones that are cheaper (beans, lentils and grains like rice or barley are probably the most economical foods you can buy in a grocery store in terms of cost-for-calorie) and, if you don't know how to, learn how to cook some cheap and easy meals using those as the basis. Don't buy really expensive tiny jars of fancy things like cashew butter, etc. -- go for the cheap stuff 90% of the time and eat the expensive stuff only as an occasional treat. If your concern is coming home tired and needing something to eat right then, buy things that are reasonably healthy, but convenient. Eating at home should never be so inconvenient that you HAVE to go out or get takeout -- after all, fresh fruit, a peanut butter and jelly sandwich, and fresh veggies with bean dip or hummus are all 'fast food' that you can get much more quickly than driving to a restaurant and waiting for 20 minutes, or waiting 40 minutes for takeout to arrive.

You can eliminate your 'entertainment' budget too -- you already have Netflix and Amazon Prime, and I assume you live near public libraries or parks considering that you live in beautiful Colorado!

Good luck!

mm1970

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Personal spending on credit cards: eliminate this by...not carrying credit cards.   Give yourself a bit of cash.  (Seriously, when I was trying to lose weight 12 years ago, I packed my lunch every day and LITERALLY took no cash or cards with me to work)
At a minimum, look at your statements and categorize it.

Meals out: $380?  Ouch.  Stop that
Alcohol: aren't you pregnant?  When I was pregnant, it was zero, because if I'm not drinking, he's not drinking.

I'd focus on paying off the Civic and keeping it. Seems like a lot to owe for a 5yo car (we have the same car, a 2009 Civic, plan to drive it until it dies, hopefully make it 20 years).

theonethatgotaway

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Kids keep you busy and not shopping.

I have a hunch that your budget will go down just because of baby.


Unique User

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Take each line item one by one and figure out what you are really spending for those items like the credit card bill, entertainment, etc.  For items like insurance, internet, quote them with other firms or call the provider up and see how much you can get the bill down, one by one.  You should be able to easily get there, but only you know what areas you can stop spending, but that is the key, just stop spending.  Cut up the credit cards and look at every single purchase.  Ask yourself if each purchase is worth having to continue to work. 

A good exercise might be to start putting your net into emergency savings right now so you can figure out how to live on the lower amount. It's in emergency savings if you need it, but try to live on the lower amount and see how it goes. Your mortgage and car payment aren't the problem, all your random spending is the problem. 

dunhamjr

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a big downer that i see once you stop the corp job...

Husband: 3000 (after health insurance premiums and 3% 401K deduction)
Me Corporate Job: 2200 (after 17% 401K deductionÖ trying to make up for lost time)

that 17% into the 401k you are currently contributing will stop completely as well.

so its NOT just the $2200/mo of income you are losing, its another $XYZ/mo NOT going into the FIRE fund as well.

gipsygrrl

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Many, many thanks to those of you who responded! It's much appreciated.

Yeaahhh... we see the giant holes in spending that need to be fixed. I even hesitated before I posted, thinking "well, I KNOW what our spending problems are". I think figuring out HOW to cut the spending is the hard part for us, so reading about your tips/tricks and practical suggestions is particularly helpful.

We're also having trouble with the cultural shift. Living in an area where our food/restaurant budget seems restricted (compared with our friends) makes it hard to not feel deprived (What, you can't join us on the rooftop of the new small plates restaurant for $15 cocktails tonight? You guys are going to be home eating your Costco cheese and boxed wine AGAIN?). I've been reading all the back-posts I can find about this topic. Maybe we need to try to move to a new area sooner rather than later. And, you know, make new friends too :)

2Birds1Stone

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Many, many thanks to those of you who responded! It's much appreciated.

Yeaahhh... we see the giant holes in spending that need to be fixed. I even hesitated before I posted, thinking "well, I KNOW what our spending problems are". I think figuring out HOW to cut the spending is the hard part for us, so reading about your tips/tricks and practical suggestions is particularly helpful.

We're also having trouble with the cultural shift. Living in an area where our food/restaurant budget seems restricted (compared with our friends) makes it hard to not feel deprived (What, you can't join us on the rooftop of the new small plates restaurant for $15 cocktails tonight? You guys are going to be home eating your Costco cheese and boxed wine AGAIN?). I've been reading all the back-posts I can find about this topic. Maybe we need to try to move to a new area sooner rather than later. And, you know, make new friends too :)

We shifted from bars, restaurants, etc to having company over our place one week, friends the next, another friends the next. We do a BYOB and potluck style dinner/drinks nights regularly. Not only are you avoiding the 300-500% food/alcohol mark up but we are enjoying games, movies, good conversation without having to worry about being in a loud venue or a restaurant were you feel rushed after your meal. We still go out but try to do that for special occasions, take advantage of happy hour specials, weekday lunch deals, price fix menus, and groupon (tons of gold on here). We are getting out circle of friends to start enjoying activities that are free/cheap in the warmer months as well. Picnics, hikes, beach, etc.

YTProphet

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Many, many thanks to those of you who responded! It's much appreciated.

Yeaahhh... we see the giant holes in spending that need to be fixed. I even hesitated before I posted, thinking "well, I KNOW what our spending problems are". I think figuring out HOW to cut the spending is the hard part for us, so reading about your tips/tricks and practical suggestions is particularly helpful.

We're also having trouble with the cultural shift. Living in an area where our food/restaurant budget seems restricted (compared with our friends) makes it hard to not feel deprived (What, you can't join us on the rooftop of the new small plates restaurant for $15 cocktails tonight? You guys are going to be home eating your Costco cheese and boxed wine AGAIN?). I've been reading all the back-posts I can find about this topic. Maybe we need to try to move to a new area sooner rather than later. And, you know, make new friends too :)

Your budget looks pretty great except for that $380 eating out and $400 for travel. Both of those are insanely high in my opinion and I'm much more of a spender than most people on this forum. I feel bad when I hit $200 for eating out and any time I buy plane tickets (you can travel hack your way to free plan flights like I do).

RunHappy

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By my calculation if you cut your phone bill and travel in half, eliminate:  eating out, alcohol, personal spending then you've just shaved off almost $1800 of your monthly spending.

I also question the $160/month prepping for baby.  I am also expecting a baby.  By my estimates IF I were to buy everything new (which I'm not) all baby items would cost max $1800 (Including 2 car seats, crib, changing tables, etc).  By using Craigslist for most of the furniture and baby clothes I will be saving a lot of money.  There are some great threads on here about minimalist planning for baby.  If you're going to be at home then check out using cloth diapers and breast feeding (if you haven't already) to save on costs.

odput

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We're also having trouble with the cultural shift. Living in an area where our food/restaurant budget seems restricted (compared with our friends) makes it hard to not feel deprived (What, you can't join us on the rooftop of the new small plates restaurant for $15 cocktails tonight? You guys are going to be home eating your Costco cheese and boxed wine AGAIN?). I've been reading all the back-posts I can find about this topic. Maybe we need to try to move to a new area sooner rather than later. And, you know, make new friends too :)

Regarding the bolded statement...you won't be going out to those places once baby arrives anyway, so when your friends ask you about going to those places, why not turn around and invite them over to your place instead of going out?  Like 2B1S mentioned, you can have the same conversation and probably better food at someone's house/apartment.

Also, if this happens to you every week...jump out in front of it and invite people over for game night/movie night/whatever you find fun before you even have to decline their invitations...then they can't go out either, because they already have plans!

The Beacon

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In addition to what others have suggested about your car payments and phones, I will try to use my family budget for a house hold of 4, parents with a one year old and a 4 year old.
=================================================
Groceries: 400-450 for 2 and  550-600 including the incoming baby  //  Ours are 700-800 and we eat healthy food

Household Goods (like TP, cleaning supplies):  50 //  not sure why you need 100 month.  Our paper towel and TP last forever. Buy them from Sams club or Costco

Restaurants/Takeout: 50 // we eat out once a month at most

Alcohol: 20  // we do not drink or smoke
 

Personal Care/Exercise: 50 (includes yoga classes, haircuts, sports equipment) //  we do not go to the gym. We just jog outside when the weather permits or exercise inside.


Dog Food/Vet:  20 //  Having a pet is a luxury. We have no pets, not even a gold fish

Family (and other) Travel: 100 (both families live in different states. We could reduce this some by removing trips to see friends, but want to keep family trips as a priority)  // is this per month?  if it is, that is way too much. Well my family is on a different continent. We skype just fine.


Baby: 50 (getting nursery ready, diapers, supplies) // buy all baby furniture , toys on Craigslist

Memberships: 20 (Costco, Netflix) // get rid of Amazon Prime if you have Netflix.  I got rid of mine.  Shipping is free when you buy over 35 dollars. Just plan it carefully and bundle not so urgent stuff.


Saving is an art. It is kind of delicate because you do not want to feel deprived.   I hope my suggestions are not over board for you.  But I can tell you my family does not feel deprived.


« Last Edit: February 24, 2015, 11:44:48 AM by Sharpy »

SomedayStache

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Wait wait wait.  $1000 in personal spending that disapears into thin air???!

You are using YNAB right?  So unless you are using it all wrong all this spending should have categories.  You've got to take a real look at everything and put names to those big numbers.

Moving to a new area may seem like an easy answer to your spendy ways, but you can embrace those fun mustachian activities right now.  Right where you are.  Moving would be one way to hit a big RESET button for your life, but you are about to have that happen anyway with a new baby!!!

Everyone has heard the story of Target sending customized coupons out to a teenage girl, the teenage girl's Dad getting mad at Target for sending his daughter (gasp!) BABY coupons, and then the sheepish father later admitting that, unknown to him, his teen daughter had actually been pregnant.  Target is supremely good at gathering details about peoples' lives based on what they buy - and a demographic they heavily seek are those folks about to have their first child.  This is because the period around a new baby is one of the times that people's lives go through a reset.  Spending patterns change, shopping patterns change, sleeping(!) patterns change.  Everything changes.  Target wants to take advantage of this by building a habit of shopping at their stores.  You can also choose to take advantage of this time and reorient your life on a path you mindfully choose.

You have a solid basis on which to build a $4200 monthly budget. 

Your mortgage payment easily fits into this. 
Lower the phone bills. 
Stop the restaurants/takeout. 
Cut alcohol at least in half. 
Stop buying clothes (scouring thrift stores for deals is a fun way to 'shop'.)  If you are an American you have enough clothes in your closet to last for years without stepping foot into a store again.  Start hosting clothing swaps at your house or at the public library.
Clear out a spot on your floor and youtube some free yoga sessions. 
Let your husband cut your hair and start cutting his.  (This is fun and bonding!  Plus your friends will be jealous of your relationship).
$400 a year on travel is fine.  Wait, did you mean per month?  That's fucking crazy.  Your family needs to come visit you.  If you visit them I hope you aren't wasting money on a hotel?
Stop buying baby stuff.  Just stop.  I have 3 kiddos and I've been there.  I practically lived online during my first pregnancy.  And it was silly and unneccesary.

Don't throw big money at the car loan until after the baby is born and is healthy and there are no surprises.  A few months in once things have settled maybe you pay it all off-wait on that though.  Don't go throwing away your emergency fund at this point in the game.

I'm going out on a limb to say that probably your husband isn't as on board as you are.  (Probably only one of you is actually using YNAB because how in the heck do you have $1000 mystery spend otherwise?).  What does he mean by a truck for 'hauling and mountain use'?   What are you hauling every day/week?  And mountain use?  Really?  I lived in NM during college and regularly drove my 15-yr-old manual Honda accord down arroyos and up mountains.  It was great to get out in the middle of nowhere and be surrounded by all these 4 wheel drive monsters...and then there's my Accord!  And I never got stuck.

You can totally rock this if you choose.  But it's a far cry from the way you've been living.  You get to choose.

justajane

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Your grocery/eating out/household goods are the elephants in the room. Can you break down what you buy to spend $100 a month on household goods? That's sounds incredibly high. Cleaning supplies shouldn't have to be bought every month. Even if you buy fancy pants detergent/shampoo/soap, you can bring this down by buying at Costco. Are you using paper towels and napkins? If so, switch to cloth. That disposable stuff adds up quickly, especially paper towels. 

Do any of these regular expenses have to do with dressing up for your corporate job? If so, you can figure that this will go down if you stay home. No makeup needed when you're caring for a baby at home. Also, hopefully your clothing budget could be reduced somewhat. We have a monthly clothing budget of $50 for a family of five, and that's mostly for the kids' shoes and pants. 

Argyle

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You're not going to be joining your friends on the rooftop of the small plates restaurant anyway once the baby comes.  Even if you're not dead tired, you won't want to wake the baby to get there, and they may well feel that an evening with you spent passing the baby around and cooing at the baby is not the fun carefree lifestyle they had before.  Instead, invite them over for nibbles.  Homemade nibbles.  When you're awake enough.

At my house we feed one adult and one teenage boy/mammoth eater on $200 per month.  That includes organic meat.  So that would save you $1000 per month right there.  The keys: find the cheapest groceries and buy stuff there; use lots of beans and lentils and grains; plan ahead; make big batches on the weekends.  Keep a chart of how much money you're saving, because the skyrocketing totals will be very encouraging.