Reader Case Study: Move large
farming family to city, to save on commuting?
Specific Questions:
1.
Should we move? I’m commuting 15 miles (about 25 mins) each way, 5 days a week (sometimes only 4 – I try to work a short week so I can take off one day a week, about twice a month; can’t get permission to do it any more than that, or to work from home). Wife has converted from being a trophy wife 10 years ago to being a Total Badass Homesteader. She is totally Little House on the Prairie now. She stays busy (and happy) working on our homestead and farm. She grows tomatoes, 15 kinds of vegetables, raises honeybees, raises dozens of chickens for eggs, raises batches of dozens of fat little chickens, rabbits and quail. All of that would end if we moved to the small city where I work. They don’t allow animal rearing due to zoning issues. You may say, Well you’re growing so much of your own food, that must be a tremendous savings. Well, it’s not. I really don’t think it is. Feeding all those animals – animals which we had to buy in the first place – is costing quite a bit more than just going to Wal-Mart. But it’s fun for her and the kids, and the food is of IMMEASURABLY better quality, since it is non-GMO, organic, all-natural, no antibiotics, yada yada.
Edit: If we move, I would want it to be from our paid off 5 bed/2ba 2500 sq ft home on 1 acre to a 1/4 acre 1400 to 1800 sq ft 3 bed/2 ba, for less money. A foreclosure / fixer upper within easy biking/walking distance of my job, church, grocery, and several potential future employers for when my wife returns to work in 2017. We'd sell 1 of our 2 cars and I would bike to work. Eliminates estimated car ownership, fuel, maintenance costs of $3600/year. Additional motivation: public schools there are supposedly much better.2.
What else can we cut? We've made major expense reductions this year and still don’t feel the accumulation of retirement money.
3.
Talk me out of forgoing health insurance? Strongly thinking of dropping Blue Cross’s garbage plan next year ($5,000 deductible costing us $190 per paycheck - only been to doctor once this year) and opting for Christian Healthcare Ministries or Samaritans (healthcare sharing ministries, which would exempt us from the Affordable Care Act’s individual mandate penalty).
Edit: Anyone with experience with this? The $190 vs. sharing ministry is about me & wife only. Kids still qualify for free health & dental.
4.
Edit with new question: How to save on grocery expense? We search coupons but most are for processed convenience foods - or food like edible substances -- which we don't eat. We read two America's Cheapest Family books and found some of their tips didn't work for us, e.g. our grocery stores don't double coupons. But my wife did switch to shopping every 2 weeks instead of every week, and is freezing rather than composting most leftovers now. We cook 95% of what we eat from scratch. Unlimited fruit, veg. Eating meat 3 times a day currently. Have tried vegetarianism twice and gave it up after 6 to 9 months.IRS Life Situation: IRS filing status married filing jointly, 4 dependents age 2 to 9, Louisiana, USA
Gross Salary: $71,500 per year, paid twice a month
Edited to gave more precise info:
$2982.93 Bi-weekly gross pay.
Taxes: $264.69 Total. That's $0 Fed tax, $63.40 State tax, $38.15 Medicare, $163.14 Social Security.
Deductions: $536.16 Total. That's $178.98 401k (that’s 6%; company pitches in an additional 3% which is their cap on their part), $22.00 Dental, $190.00 HDHP Medical Insurance, $139.58 deposited to my Health Savings Account (employer contributes nothing), $5.60 Voluntary Life (provides coverage of $100,000 for me, $25,000 for my wife, $10,000 per kid).
Direct Deposit of $2182.08 is split into 2 checking accounts and 10 savings accounts.
HSA funds are (earmarked for a $10,000 set of dental implants next year).
Med Insurance is a High Deductible Health Plan (HDHP) through Blue: $190 per check. Deductible is $5,000 so we basically try to avoid ever using non-preventive care.
Other Ordinary Income: Perhaps $300 per year from sales of farm products
Taxes: Federal – usually get a refund of $2,000 to $3,000. State: refund usually $150 to $250. Local property tax still only $800 per year but many similar houses paying $2000 per year.
Current Expenses – Total $2157.85 (edited to add $50). All items are “per check” (24 times per year). I’m actually a little unsure how to list these, since several are deposits to savings accounts, but are intended for future expenses so I’m not really considering that to be “savings” either. **SOME OF THE BELOW HAS ALREADY BEEN IMPROVED SINCE I FIRST POSTED THIS.**
- $0 Mortgage payments.
- $0 Car payments. So far have been able to buy our cars with cash.
- $25 Smartphone service. Covers talk & text, but no internet. Or you can pay $35 and that includes a decent amount of internet. I am trying to stick to the $25 plan but sometimes get the $35. (Total Wireless from Wal-Mart, provided via Tracphone, I believe – the phone itself was about $80).
- $0 Internet: Ok sometimes $10 on the months in which I choose to have internet on our smartphone. No internet connected to our PC or TV, after reading MMM.
- $0 Netflix. Cancelled after reading MMM’s challenge to cut the cable TV cord.
- $675 towards a personal loan (increased from $200, after reading MMM). Balance $16,000. We’ll kick the tax refund towards that, plus money from side-gigs, and plan to pay that off by Nov. 2016. Interest rate of 4% will start on that starting in Dec. 2016. Till then, it’s 0%.
- $840 Household Account. This is my wife’s share of each paycheck. From this she feeds our household of 6, including packing a bag lunch every day for me and for the 3 kids who are of school age. She also buys all the animal feed, occasional supplies (watering dishes, cages, etc.). This also covers our clothes and school uniforms. She also maintains a barn cat with a small bag of food – mostly he is to hunt mice. Edit: Only about $34 per check going to farm expenses, rest goes to Sam's Club & Wal-mart and clothing. This year we had unusual startup expenses for new projects in amount of $3300 for bees, bee boxes, small barn, fencing, etc. Nevertheless $840 seems high, and after reading my post and the first 8 replies, she has requested to drop to $750.
- $40 my pocket money, usually spent on lunch out with my wife. For example, we each get a Chinese lunch special ($5.75 per person) and take it to the park.
- $208 saved for future college expenses, which is $52 per check per kid. Won’t be nearly enough but we’re depending on scholarships and in-state public universities.
- $33 saved towards paying the annual property tax bill.
- $32 saved towards paying semi-annual car insurance bill (Progressive, state requires liability only, have no collision or uninsured motorist).
- $12.50 for trash service.
- $8.35 for pest control (I could do it cheaper myself, but am horrified of messing with bug chemicals).
- $0 for grass cutting service (this was costing us $800 per year until we started reading MMM).
- $100 for gas.
- $100 for electricity. No gas bill. No water bill. Water is from an underground source via an electric pump. We live in the Deep South, way down in Louisiana, where at 80 degrees any one of you mustachians would be drenched in sweat, I gahr-ron-tee it. No but seriously, it is really really really uncomfortable and sticky-sweaty-hot about 10 months out of the year here. After reading MMM we’ve gone to setting our thermostat on 75 or 76 rather than 72. And as many days as we can stand it, we open the windows and run our whole-house fan, which works pretty well keeping us cool, but makes the inside of the house get way too humid (like, standing moisture on the floors). Ok, that’s enough excuses for our electric bill. Oh yeah one more – we are pumping water to all those animals we intend to eat.
- $12 per check saved towards future birthday expenses.
- $12 per check saved towards future Christmas expenses.
- $10 per check toward retirement. Yeah. Yikes. Soon as we pay off our personal debt, we plan to put that $675 per check towards retirement savings. I was saving about $80 per check towards that, but we increased the amount we are paying towards debt and currently I save only $10 per check for retirement.
I’m working from the library’s free internet, and I’m positive I forgot one or two savings accounts or expenses, so if my numbers don’t add up, put that towards a Misc. Expense.
Update/edit: Back home now and can fill in more numbers...
- $20 home repair savings.
- $20 savings for next car replacement.
- $10 savings for hosting 2 future weddings.[/i]
Assets: $126,847(updated from $85,500) in funds, plus a home on 1 acre valued at about $180,000 (or $210,000, before the market collapse).
(All the below are Vanguard accounts are about 90% VFIAX or the other one that tracks the whole market, I think VTSAX, with a little in a healthcare index fund and a little in a REIT fund.)
- $12,000 in a taxable Vanguard account. This is earmarked for a future expense . An elderly family member gave me $10,000 to hold for his burial expenses and then for me to keep any interest or gains earned on it. Since then, I’ve turned it into $12,000, and recently moved it from a bank CD to Vanguard.
- $57,000 in Traditional IRAs at Vanguard.
- $3,000 Roth 401(k) at old employer.
- $12,500 Traditional 401(k) at current employer.
- $1,000 in a 529 plan for future college expenses, all in Vanguard funds.
updated: also
- $3100 in various savings accounts for upcoming expenses like home repair, property tax, next car, birthdays, Christmas, weddings, camping trips
- $2685 in bank CDs at 2.25% held for next car replacement
- $9512 total in bank CDs for 4 kids college
- $16500 in wife's vanguard t-IRA
- $8200 in HSA but all earmarked for major restorative dental
- $1350 in bank CDs for weddings
Liabilities: None other than the above-referenced $16,000 personal loan.
$0 Checking balance at all times. Sort of. I pay bills 21 times per year (dividing my annual expenses by 21, and sending in payments in advance), so that a fat $1050 of every 5th paycheck is a bonus freebie which I can put towards the personal debt or other unanticipated major expenses. Once the personal debt is paid off, those 5th checks (well, $1050 of each 5th check) will go towards retirement.
Edit to answer more questions: Don't yet have the discipline to consolidate accounts. I'm a recovering spendaholic. If I put my roof repair $ with my next car $ with my wedding $, well, there's a decent chance I'd buy a new bed next week!
Tax refund reduction: I like the idea, but how to fix? My W4 is already maxed out and my refund is waaaay more than I pay in. I asked HR what they show for me and the number of dependents is right. Maybe I should be changing that to "exempt"? I just reviewed my stub and have paid $0 fed income tax so far this year. Not sure how to fix the tax refund issue by revising the W-4. I get credits for having so many kids, and other credits that change my $0 to you guys owing me money. Sorry. No I'm not.
Wedding savings accounts and CDs both exist. Savings held paycheck deposits till big enough for CDs. Post-MMM, I don't do bank CDs anymore, and am gradually converting all to Vanguard.
Do I like the homesteader lifestyle? I think "yes" is the right answer to that. I'm not 100% on it, but my wife likes it in a Big Way and my kids seem to enjoy it a lot. I personally like being able to walk to the grocery rather than living 10 miles from one. Before kids, we lived in a very different large city and had no car. We walked everywhere, used public transpo, got our groceries on foot with backpacks, could run to the corner store at 11pm and be back in 5 minutes, were very fit as a result of so much walking, and we both liked being in a city. Things are different now. Not sure how I'd like being in a city now, with 4 small kids.
11/9/15 Updates:
Update #1: Farm Vs. City. Hmm, I reckon I agree, this IS about lifestyle more than commuting costs. I appreciate the advice. I was looking at it as a more black-and-white issue, To Drive or Not to Drive. I would LOVE to sell my car and have my bike be my only means of transpo. But can use these insights to further target and refine my house search: I have located a neighborhood that I really like in town, which is apparently zoned agricultural, because in that neighborhood there is a small ranch with several horses, and a 1-acre goat farm. If I could find a spot in that area, I’d be 1 mile from work, 1 mile from church, 1 mile from Wal-mart. Pretty sweet. So this was very helpful; I can say with confidence that I should NOT move to town to a place where we can’t farm, like one of the many subdivisions where neighbors are only 15 feet away. But if there is a spot where we could keep some chickens and have a large garden, yet I could still be a bike-only commuter, we might be combining the best of both possibilities.
Update #2: Since I posted this and pondered your replies and discussed them with my wife, our savings rate has just increased by almost 11%: We’ve stopped putting aside money out of every check towards kid’s college ($4992 per yr savings). We’ve stopped putting aside money for future weddings ($240 per yr savings). We’ve reduced bi-weekly wife’s portion of my paycheck from $840 to $750 – AT HER SUGGESTION, right after she read this thread ($2160 per yr savings). We’ve stopped putting aside $12 per check for future birthdays; wife advises she’ll cover that from her portion ($288 per year savings). Total
$7680 per year in increased savings towards debt then retirement. That could grow to almost $113,500 in 10 years (if 7% returns ever materialize), which is about 19 months’ worth of my life and freedom!!
Update #3: Also reconsidered some long-term money goals and erased some of them. Posted that here:
http://forum.mrmoneymustache.com/share-your-badassity/reducing-and-eliminating-some-spendy-long-term-goals/.
Please note that since I don’t have internet at home and access is very restricted at work, it may take me a few days to reply to any questions or emails. THANK YOU FOR ANY ADVICE!