Author Topic: Rural family of 4 - Case Study included!  (Read 5023 times)

TheInsuranceMan

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Rural family of 4 - Case Study included!
« on: August 17, 2016, 10:20:55 AM »
About us:  DW and I are both 28, live in rural America, and have two children, 2 years old and 3 months old.  My wife works in the health care industry in the nearest hospital to where we live, and I work as an insurance agent.  We also have a bit of other income that comes from helping farm, and that will total $3-$5k per year, at this point.  Should increase as we grow older as our stake in the farm grows.

Gross Salary/Wages:
(going to be a bit off due to some small commissions on the monthly check that I’m looking at)
Me: $3,233.33 (per month - Salary) + commissions
Pre-tax Deductions:
Me: Health insurance: $24 a month
Dependent Care - $416.67 a month
HSA - $50 a month
Taxes
Fed withholding: $235.00
Social Security: $173.18
Medicare employee: $40.50
State withholding: $123.00
Total: $571.68
Roth 401k (10%) = $323.33
Net Pay: $1,882.29

Gross Salary/Wages:
DW: $1,478.93 (biweekly - $18.90 an hour)(this check at 78.25 total hours)
Deductions:
Heath Insurance: $123.70 (her and our two kids)
State Pension: $88.00 (employer $132.07)
Dental Ins: $27.04
Taxes:
Fed: $13.33
State: $58.41
FICA: $82.40
Medicare: $19.27
Total: $173.41
Net Pay: $1,060.88
Total monthly net income: $4004.05 + $416.67 dependent care reimbursement = $4,420.72

Assets
Dwelling Value: $50,000
DW IRA (rollover from previous employer) - $1,670.24
DW State Pension - $5,915.00
My old 401k - $28,744.00
Current 401k - $9,315.52
Total: $95,644.76

Liabilities:
Mortgage: $23,823.12 ($309 a month, P&I, no PMI)  15 year fixed at 2.875%, purchased this spring
Auto Loan: $14,500 remaining @ 2.95%
Student Loans (mine): $17,116.73
Credit Card 1: $4,077.45
Credit Card 2: $3,900 (0% interest until 8/24/17)
Credit Card 3: $338.48
Total: $46,639.05

Networth: $49,005.71
I should use Zestimate on my house, because it shows it’s worth $100k.  Never has a house in my town sold for 100k, ever.  $60k-$70k, maybe, but not $100k.  I’m comfortable with it valued at $50k

One other vehicle in the house, my truck, which is paid off and has been for many years.

Budget (this should be fun!):
Bills   
Mortgage   $309.35
Student Loans   $190.00
Daycare   $840.00
Car Payment   $272.00
Alliant   $175.00
Car Insurance   $90.22
Life Insurance   $83.00
Home Insurance   $92.52
US Cellular   $150.00
Internet   $39.95
Phone   $30.00
Hospital   $50.00
Netflix   $7.99
Hulu   $7.99
City   $150.00
Chase Credit Card   $41.00
Total   $2,529.02
Other Bills   
Dog   $30.00
Groceries   $300.00
Gas   $300.00
Entertainment   $100.00
Total   $730.00
Income Total   $4,338.43
Bill Total   $3,259.02
Difference   $1,079.41



As you can see, I have the Chase credit card payment factored in, as that’s the minimum, and that’s what we’ll be paying until the $4k card debt, that is accruing interest is cleared.

Our E-Fund is currently at $800, which is terrible.  We got into this situation due to my wife’s maternity leave, and us not understanding how they pay it out.  We figured we’d get 60% of her paycheck each pay period, until the 6 weeks of disability was over.  When, in fact, it came in one large chunk that we obviously wasted away.

I know everyone will hate on the car payment, but it’s staying.  We live in a town of 500, that I work in part of the week, and part of the week I visit a different office to the north.  My wife works in the opposite direction and will be taking the kids to daycare.  So, we upgraded cars to include AWD, so she feels comfortable in our Iowa winters, and her peace of mind is worth a lot more than $272 to me each month, as is the safety of her and our children.

Also, the home insurance for $92 will disappear after we’ve been in the house for a year, since we will be then escrowing our insurance payment as well (escrowed now as well, but that’s to build up the escrow account for future insurance payments)

Cell phones are high, I get that, but we have very, very poor service with about every carrier around.  Google Fi isn’t something we are able to get in our area, and I’ve heard of 0 people having luck with the smaller carriers everyone talks about on here.  I think that comes with how rural our location is.

This paycheck, coming at the end of August, will have $1,100 in commissions for me, and all that extra will get put towards the large credit card bill.  I think we can pound it out in short order, but I wanted to lay everything out for the MMMers to review, and facepunch me, and give me their ideas.

jamesbond007

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Re: Rural family of 4 - Case Study included!
« Reply #1 on: August 17, 2016, 10:32:22 AM »
Netflix and Hulu are now $9.99 going forward. But what is the Entertainment expense that you listed here? Just curious what constitutes Entertainment according to you.

Nick_Miller

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Re: Rural family of 4 - Case Study included!
« Reply #2 on: August 17, 2016, 10:52:36 AM »
Well,  you took the cars off the table and your groceries are already low (good job!)

I tend to look at the biggest "chunks" of stuff.

1) Is there potential for more income? What are your growth opportunities as an agent? Are you a captive agent?

2) Any other daycare options? If not, I get it. My wife and I have two children as well. You might tread water a bit until you can jettison the daycare costs in a five years or so. We're just getting out of the "daycare tunnel" and it WILL free up money for you guys. But it's a long haul.

Otherwise, you're not in bad shape. You're young and you're investing, and your expenses aren't crazy, and you're on course to own your home outright in your early 40s. Keep chugging along, and as daycare costs slowly decrease, make sure to either invest that money or put it toward debt.

EDIT TO ADD: Oh, one more thing. I would use the positive difference in the next few months' budgets to get your E-Fund up at least a month's worth of expenses. So I'd guess in November you'd have it up to about $4000? You don't want a "hiccup" to disrupt your progress or point you back to using credit cards.
« Last Edit: August 17, 2016, 11:06:46 AM by Nick_Miller »

TheInsuranceMan

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Re: Rural family of 4 - Case Study included!
« Reply #3 on: August 17, 2016, 11:09:44 AM »
Netflix and Hulu are now $9.99 going forward. But what is the Entertainment expense that you listed here? Just curious what constitutes Entertainment according to you.

Entertainment probably should be listed as misc.  In a town of 500, with the nearest stoplight, or big box store (or any store, actually) a 30 min drive away, there really isn't much "entertainment".

TheInsuranceMan

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Re: Rural family of 4 - Case Study included!
« Reply #4 on: August 17, 2016, 11:12:46 AM »
Well,  you took the cars off the table and your groceries are already low (good job!)

I tend to look at the biggest "chunks" of stuff.

1) Is there potential for more income? What are your growth opportunities as an agent? Are you a captive agent?

2) Any other daycare options? If not, I get it. My wife and I have two children as well. You might tread water a bit until you can jettison the daycare costs in a five years or so. We're just getting out of the "daycare tunnel" and it WILL free up money for you guys. But it's a long haul.

Otherwise, you're not in bad shape. You're young and you're investing, and your expenses aren't crazy, and you're on course to own your home outright in your early 40s. Keep chugging along, and as daycare costs slowly decrease, make sure to either invest that money or put it toward debt.

EDIT TO ADD: Oh, one more thing. I would use the positive difference in the next few months' budgets to get your E-Fund up at least a month's worth of expenses. So I'd guess in November you'd have it up to about $4000? You don't want a "hiccup" to disrupt your progress or point you back to using credit cards.

I know cars are the most hated thing on this site, and given that I have a truck, and an AWD SUV, I figured I'd be thrown off, but I took the risk!

1)  I work for an independent agency, and the room for growth is when my VP retires (4 total staff, 3 are over 55), and writing more business for more commissions. 
2) Daycare - this is actually cheaper than the daycare lady that is closing, which is unfortunate, because we loved her!  The only other option is a daycare center for $1,200 a month, which is going exactly the wrong way. 
Daycare sucks, but there isn't a way around it, besides one of us staying home, which isn't a viable option.  So, we'll ride it out for now!

I've pondered adding to the EFund before killing the credit card, and I'll take what you said into consideration.  Credit card debt weighs much heavier on me than my lack of an EFund, to be completely honest. 

KCM5

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Re: Rural family of 4 - Case Study included!
« Reply #5 on: August 17, 2016, 11:24:09 AM »
Page Plus worked great for me in rural Iowa. I know it depends WHERE in rural Iowa, so take that with a grain of salt. We were on the Verizon network and for 250 min, 250 texts it was $13/mo each.

TheInsuranceMan

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Re: Rural family of 4 - Case Study included!
« Reply #6 on: August 17, 2016, 11:51:07 AM »
We've also got a few things that we are going to try to sell to put towards the debt as well.  Nothing huge, but could be $300-$500 dollars worth, so it'd help.

I'll update as the month goes, thanks for all the input so far.

With This Herring

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Re: Rural family of 4 - Case Study included!
« Reply #7 on: August 18, 2016, 08:48:06 AM »
*snip*
Credit Card 1: $4,077.45
Credit Card 2: $3,900 (0% interest until 8/24/17)
Credit Card 3: $338.48
*snip*

Would you post the names of the credit cards here to match what you put in monthly payments?

Also, I'm surprised not to see a checkings account or other bank accounts in the assets.  The vehicles' approximate current values should also be in assets.

*snip*
US Cellular   $150.00
*snip*
Cell phones are high, I get that, but we have very, very poor service with about every carrier around.  Google Fi isnít something we are able to get in our area, and Iíve heard of 0 people having luck with the smaller carriers everyone talks about on here.  I think that comes with how rural our location is.
*snip*

You should post in I.P. Daley's communications & technical thread about this (link is to a recent post on US Cellular, though in another state).  He might know of an MVNO (basically a company that resells wireless service) that uses US Cellular's network.  This would provide you the same quality connection for possibly less money.  It's a long-shot, but try him.

*snip*
Hospital   $50.00
*snip*

Your wife works at this hospital, correct?  Why are you two paying the hospital?  Is this medical debt that you need to add to your list, or is this monthly parking fees for her job?

1967mama

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Re: Rural family of 4 - Case Study included!
« Reply #8 on: August 18, 2016, 01:15:25 PM »

Daycare sucks, but there isn't a way around it, besides one of us staying home, which isn't a viable option.  So, we'll ride it out for now!

I'm a SAHM and when I do a bit of math, it looks like your wife's net pay is $1060 and daycare costs are $840. So is she bringing home $220/month? I may be wildly off here, but is there a side hustle your wife could do to be able to stay home with the kids for a couple of years until they start school? (ie: doing home daycare, etsy, baking for others, etc)

If she loves her job and needs a break from the kids, that's another story. YMMV

mm1970

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Re: Rural family of 4 - Case Study included!
« Reply #9 on: August 18, 2016, 02:03:14 PM »

Daycare sucks, but there isn't a way around it, besides one of us staying home, which isn't a viable option.  So, we'll ride it out for now!

I'm a SAHM and when I do a bit of math, it looks like your wife's net pay is $1060 and daycare costs are $840. So is she bringing home $220/month? I may be wildly off here, but is there a side hustle your wife could do to be able to stay home with the kids for a couple of years until they start school? (ie: doing home daycare, etsy, baking for others, etc)

If she loves her job and needs a break from the kids, that's another story. YMMV
I think her income is bi-weekly and the daycare expense is monthly

ooeei

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Re: Rural family of 4 - Case Study included!
« Reply #10 on: August 18, 2016, 02:35:15 PM »
we upgraded cars to include AWD, so she feels comfortable in our Iowa winters, and her peace of mind is worth a lot more than $272 to me each month, as is the safety of her and our children.

http://www.mrmoneymustache.com/2014/12/01/all-wheel-drive-does-not-make-you-safer/

Worth a read.

TheInsuranceMan

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Re: Rural family of 4 - Case Study included!
« Reply #11 on: August 18, 2016, 02:37:18 PM »
*snip*
Credit Card 1: $4,077.45
Credit Card 2: $3,900 (0% interest until 8/24/17)
Credit Card 3: $338.48
*snip*

Would you post the names of the credit cards here to match what you put in monthly payments?

Also, I'm surprised not to see a checkings account or other bank accounts in the assets.  The vehicles' approximate current values should also be in assets.

*snip*
US Cellular   $150.00
*snip*
Cell phones are high, I get that, but we have very, very poor service with about every carrier around.  Google Fi isn’t something we are able to get in our area, and I’ve heard of 0 people having luck with the smaller carriers everyone talks about on here.  I think that comes with how rural our location is.
*snip*

You should post in I.P. Daley's communications & technical thread about this (link is to a recent post on US Cellular, though in another state).  He might know of an MVNO (basically a company that resells wireless service) that uses US Cellular's network.  This would provide you the same quality connection for possibly less money.  It's a long-shot, but try him.

*snip*
Hospital   $50.00
*snip*

Your wife works at this hospital, correct?  Why are you two paying the hospital?  Is this medical debt that you need to add to your list, or is this monthly parking fees for her job?

Medical debt from our daughter born in May.  0% interest.  I think we owe $800, and I have about that in my HSA that I opened this year.  So, it's between waiting until my HSA matches what we owe, then paying it off, or letting the HSA grow and keep paying 0% interest.

And yes, I could have included my truck, valued at 15k, and my wife's car, which books for 20k to increase my networth figures, but I don't like using vehicles as they are an extremely depreciating asset.

Credit Card 1 has a min payment of $80, with 12% interest (or so)
Card 2 is 0% interest, min payment is 10% of balance
Card 3 isn't due in August, so I don't know what the minimum payment is
« Last Edit: August 18, 2016, 02:50:15 PM by TheInsuranceMan »

TheInsuranceMan

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Re: Rural family of 4 - Case Study included!
« Reply #12 on: August 18, 2016, 02:38:10 PM »

Daycare sucks, but there isn't a way around it, besides one of us staying home, which isn't a viable option.  So, we'll ride it out for now!

I'm a SAHM and when I do a bit of math, it looks like your wife's net pay is $1060 and daycare costs are $840. So is she bringing home $220/month? I may be wildly off here, but is there a side hustle your wife could do to be able to stay home with the kids for a couple of years until they start school? (ie: doing home daycare, etsy, baking for others, etc)

If she loves her job and needs a break from the kids, that's another story. YMMV

Yep, paid bi-weekly, so monthly net income is $2,120

TheInsuranceMan

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Re: Rural family of 4 - Case Study included!
« Reply #13 on: August 18, 2016, 02:47:54 PM »
we upgraded cars to include AWD, so she feels comfortable in our Iowa winters, and her peace of mind is worth a lot more than $272 to me each month, as is the safety of her and our children.

http://www.mrmoneymustache.com/2014/12/01/all-wheel-drive-does-not-make-you-safer/

Worth a read.

There isn't really a point in arguing with me, because you'll blindly believe the article above.  Personally, I can tell you that I feel much more comfortable driving on snowy roads in a AWD or 4WD vehicle than a FWD one.  So, that's my response to that question.


ooeei

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Re: Rural family of 4 - Case Study included!
« Reply #14 on: August 18, 2016, 02:51:26 PM »
we upgraded cars to include AWD, so she feels comfortable in our Iowa winters, and her peace of mind is worth a lot more than $272 to me each month, as is the safety of her and our children.

http://www.mrmoneymustache.com/2014/12/01/all-wheel-drive-does-not-make-you-safer/

Worth a read.

There isn't really a point in arguing with me, because you'll blindly believe the article above.  Personally, I can tell you that I feel much more comfortable driving on snowy roads in a AWD or 4WD vehicle than a FWD one.  So, that's my response to that question.

There's nothing wrong with that, I figured you might not have seen it.  I know people who feel uncomfortable not driving huge SUVs because they're worried about crashes, it's their choice.

TheInsuranceMan

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Re: Rural family of 4 - Case Study included!
« Reply #15 on: August 18, 2016, 03:19:03 PM »
we upgraded cars to include AWD, so she feels comfortable in our Iowa winters, and her peace of mind is worth a lot more than $272 to me each month, as is the safety of her and our children.

http://www.mrmoneymustache.com/2014/12/01/all-wheel-drive-does-not-make-you-safer/

Worth a read.

There isn't really a point in arguing with me, because you'll blindly believe the article above.  Personally, I can tell you that I feel much more comfortable driving on snowy roads in a AWD or 4WD vehicle than a FWD one.  So, that's my response to that question.

There's nothing wrong with that, I figured you might not have seen it.  I know people who feel uncomfortable not driving huge SUVs because they're worried about crashes, it's their choice.

Oh, absolutely, and I can understand that.  However, here, where 98% of my wife's drive is outside of town, on county blacktops (not state highways), there is a good chance that the road just won't be completely clean, or the snow will have drifted back over between the plows (if they get out on time) and her going to work.  It's a "safety" thing to us, and obviously, a comfort thing.  She is more comfortable knowing that she has a larger vehicle, that has more power, that might be able to help her out in an iffy situation. 


And, I use my truck on the farm, and hunting, and ice fishing, and to visit with farm customers and prospects.  Could I have a car, yeah.  But, I bought this thing for half of book because it was a salvage title (with 23k miles on it!), and it has been relatively bullet proof.  Just sucks because it isn't worth anything on trade, which I knew when I went down the road of purchasing it.  Driving it til she dies.

HotPotato

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Re: Rural family of 4 - Case Study included!
« Reply #16 on: August 18, 2016, 07:26:29 PM »
US Cellular   $150.00
Internet   $39.95
Phone   $30.00

So you have cell phones, home phone and internet? Have you thought about dropping the landline and just using cell phones or even doing VOIP?

waltworks

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Re: Rural family of 4 - Case Study included!
« Reply #17 on: August 18, 2016, 09:49:05 PM »
we upgraded cars to include AWD, so she feels comfortable in our Iowa winters, and her peace of mind is worth a lot more than $272 to me each month, as is the safety of her and our children.

http://www.mrmoneymustache.com/2014/12/01/all-wheel-drive-does-not-make-you-safer/

Worth a read.

There isn't really a point in arguing with me, because you'll blindly believe the article above.  Personally, I can tell you that I feel much more comfortable driving on snowy roads in a AWD or 4WD vehicle than a FWD one.  So, that's my response to that question.

I have lived in the mountains my whole life, and I live at a ski resort now. We get 350" of snow a year.

I drive a front wheel drive Kia minivan, with good snow tires in the winter.

Why not AWD? Because AWD only helps you *go* in the snow. It doesn't help you *stop*. And unless you're very adventurous or a very bad driver, going is seldom the problem. If your car gets stuck, worst case scenario you're bored for a night (I assume you've got survival gear in the car, if you're that worried about winter driving).

Sorry for the digression. If it makes you happy because your wife feels safer, great. You should make it very clear to her that she is in fact *not* any safer and that the AWD will often give her a false sense of security in slippery situations, though. I don't *want* to hit the gas and feel the car act normal if the road is bad. I want it to f*cking slide around right away and need to be babied up the driveway so I know that I need to be really freaking careful about leaving enough space to stop for things. If it's so bad that I can't get out without 4wd, I don't want to be out, because all the other idiots with 4wd are busy running into things.

-W
« Last Edit: August 18, 2016, 09:50:48 PM by waltworks »

TheInsuranceMan

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Re: Rural family of 4 - Case Study included!
« Reply #18 on: August 22, 2016, 10:27:44 AM »
US Cellular   $150.00
Internet   $39.95
Phone   $30.00

So you have cell phones, home phone and internet? Have you thought about dropping the landline and just using cell phones or even doing VOIP?

The town in which we live requires a home phone connection for their internet service.  Which, they also happen to be the only internet service provider in town, unless we go with a satellite dish service.

TheInsuranceMan

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Re: Rural family of 4 - Case Study included!
« Reply #19 on: August 22, 2016, 10:31:54 AM »
we upgraded cars to include AWD, so she feels comfortable in our Iowa winters, and her peace of mind is worth a lot more than $272 to me each month, as is the safety of her and our children.

http://www.mrmoneymustache.com/2014/12/01/all-wheel-drive-does-not-make-you-safer/

Worth a read.

There isn't really a point in arguing with me, because you'll blindly believe the article above.  Personally, I can tell you that I feel much more comfortable driving on snowy roads in a AWD or 4WD vehicle than a FWD one.  So, that's my response to that question.

I have lived in the mountains my whole life, and I live at a ski resort now. We get 350" of snow a year.

I drive a front wheel drive Kia minivan, with good snow tires in the winter.

Why not AWD? Because AWD only helps you *go* in the snow. It doesn't help you *stop*. And unless you're very adventurous or a very bad driver, going is seldom the problem. If your car gets stuck, worst case scenario you're bored for a night (I assume you've got survival gear in the car, if you're that worried about winter driving).

Sorry for the digression. If it makes you happy because your wife feels safer, great. You should make it very clear to her that she is in fact *not* any safer and that the AWD will often give her a false sense of security in slippery situations, though. I don't *want* to hit the gas and feel the car act normal if the road is bad. I want it to f*cking slide around right away and need to be babied up the driveway so I know that I need to be really freaking careful about leaving enough space to stop for things. If it's so bad that I can't get out without 4wd, I don't want to be out, because all the other idiots with 4wd are busy running into things.

-W

Correct, I understand that it doesn't help you stop, and I understand the comments that you've made in regards to it.  However, the purchase is already done, we love the new car, the room, and the upgrade.  It isn't breaking us (or, I should say, shouldn't be if we weren't dumb with our credit card), so I'm really not concerned with it.  According to my rough budget, we should cashflow $1k positive each month, once credit card debt is paid off.

That will allow us to pay down my student loans faster, and get that hammered out of the way.

***Brief bit of good news.  We are working on trading our lawn mower with my parents, who live on an acreage.  Our loan mower is a 60" deck, zero turn, that was awesome for our nearly 4 acres that we previously lived on.  Now that we have two lots in town, it was taking a whooping 12 minutes to mow.  So, as long as everything goes as planned, I'll have a $1,500 check in hand, and a different mower in my garage (54" zero turn, just not quite the quality as my old one), which means I'll owe exactly $1,500 less on that credit card.