Author Topic: Saving in the time of young kids - opinions welcomed  (Read 3615 times)

teamzissou00

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Saving in the time of young kids - opinions welcomed
« on: March 21, 2018, 09:04:27 AM »
Hi all.  Long time reader, rare poster.

I'll give this a shot as I've been thinking about this way too much without hitting an obvious answer.  I wont go all full boar case study, but just some necessary facts. 

I'm 37, married with 3 kids and wife stays at home.  With our current budget, I'm only able to save about $500/month.  This is before my raise kicks in in April.  Expecting about $250 more per month after that.  A lot of my potential savings above the $500 is going toward my mortgage, which I refi'd to a 15 year @3% two years ago.  That's paying $1040/month toward principal.  I'm also maxing out an HSA which is $5900 pre tax.  We have used $4000 in medical this year already (ear tubes for 1 year old was $3k).

Here's the other important fact, the $500 a month in savings facts in that I'm currently putting $0 toward retirement.  Last year I contributed about $6,000, but essentially funded it on the back of our savings account which was drained as we were living over our means.  So I halted everything, re-did our budget for 2018, and my plan is to only fund retirement when we've actually saved the money to do so. 

SO, back to my question.  I'm expecting to have roughly $750 a month to put toward 'whatever'.

Nowhere in my current budget is any vacation or Christmas spending.  So either we'll somehow trickle that cost within our existing budget, or borrow from the $750. 

Here's the potential targets for this $750:

- 401k (there is no match since I'm a stockholder in the company)
- Roth IRA
- Emergency Fund (we have about $5k in checking after all the bills are paid - was thinking this should be about $15k)
- Vacation Fund
- New Car Fund (just bought wife a newer minivan which will last us 15 years, i'll need a new commuter in 5 years)
- Pay down house (owe 209k)

I was considering taking the raise and directing it toward the roth and use every raise each year toward retirement moving forward.  And use the $500 to build the emergency fund.  Is that the right answer?
I know that we could analyze the budget we have and trim a lot, but that's another issue.  We went from spending more than we were making every month last year to saving $500 (at least for Jan/Feb) - so one step at a time.

thanks in advance for the feedback!

Millennialworkerbee

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Re: Saving in the time of young kids - opinions welcomed
« Reply #1 on: March 21, 2018, 09:21:43 AM »
I think you need to be frugal, but realistic, and set up a few “sinking funds” (to borrow terminology from Dave Ramsey).

You need a bigger EF especially since you only have one source of income, and you know that you will spend at least something on vacation, an eventual car replacement, and gifts. These amounts should be SMALL (maybe $50/month each?). I think the biggest benefit to creating separate funds for these areas is so that you don’t overspend when it comes time to make the purchases. If you only have $300 in your gift fund at Christmas, don’t spend $1200.

I wouldn’t worry about paying down the mortgage any faster, that is a great interest rate.

You’ve also mentioned it, but freeing up as much money in your monthly budget will mean that you can use it for bigger goals.

slappy

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Re: Saving in the time of young kids - opinions welcomed
« Reply #2 on: March 21, 2018, 09:32:55 AM »
You may have to go full on case study for this one, because it sounds like you will need to squeeze more out of the budget. Plus, I'm pretty much the same as you, so I'm just being nosy. :) (I'm 33, hubby 36, two kids, one on the way, stay at home parent, tight budget, maxed out HSA, already hit deductible. Living above our means and turned it around this year)

The extra money definitely should not be going toward the mortgage. I would max out a Roth and use the rest for sinking funds, but that's just me.

Why has paying more on the mortgage been more important to you than retirement savings? How much do you have in retirement savings?

MDM

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Re: Saving in the time of young kids - opinions welcomed
« Reply #3 on: March 21, 2018, 09:45:09 AM »
While it isn't one-size-fits-all, the list in Investment Order does fit most.  How do you see it for your situation?

The ~$1000/mo going to principal seems ~what one would pay on a 13 year loan for $209K at 3%, so you aren't making any extra payments toward the mortgage - correct?

teamzissou00

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Re: Saving in the time of young kids - opinions welcomed
« Reply #4 on: March 21, 2018, 09:48:14 AM »
You may have to go full on case study for this one, because it sounds like you will need to squeeze more out of the budget. Plus, I'm pretty much the same as you, so I'm just being nosy. :) (I'm 33, hubby 36, two kids, one on the way, stay at home parent, tight budget, maxed out HSA, already hit deductible. Living above our means and turned it around this year)

The extra money definitely should not be going toward the mortgage. I would max out a Roth and use the rest for sinking funds, but that's just me.

Why has paying more on the mortgage been more important to you than retirement savings? How much do you have in retirement savings?

Thanks for the feedback.  Love the question on the mortgage.  Maybe not the best answer but it's a two parter, 1) Didn't know we had such a budget issue when I refinanced, and 2) I really want to have enough money to retire if I choose to at age 50, so didn't want to be paying a mortgage past age 50.  That was my main motivator.  We went from a 30 year 4.5% mortgage that paid off $350/month in principal to paying over $1000 on principal each month.  How could I resist!?!?

We have about $520k in retirement (excludes home equity).  Hoping i'll be at $1.2M by age 50 (in 13 years).  Also very curious if anyone thinks i'll make it there and how much I'd need to contribute yearly to get there.

One more fact, not currently saving for Kids collect.  I'm kind of thinking I'd have lots of money when they are college age and I'd cash flow it and work a couple more years.  Or at least be contributing 15% toward retirement before starting to save for them.

boarder42

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Re: Saving in the time of young kids - opinions welcomed
« Reply #5 on: March 21, 2018, 09:52:02 AM »
if you're only able to scrape 750 a month together to "save" you should be looking for vacation and christmas spending money in your other budget which has to be bloated to all get out still.  Also your new car you'll need should come from what you have in your other budget ... cut the low hanging fruit - and post a full case study - this place is pretty good at finding hundreds to thousands of dollars in waste in an avg spenders budget.

also follow MDMs advice above

boarder42

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Re: Saving in the time of young kids - opinions welcomed
« Reply #6 on: March 21, 2018, 09:55:51 AM »
You may have to go full on case study for this one, because it sounds like you will need to squeeze more out of the budget. Plus, I'm pretty much the same as you, so I'm just being nosy. :) (I'm 33, hubby 36, two kids, one on the way, stay at home parent, tight budget, maxed out HSA, already hit deductible. Living above our means and turned it around this year)

The extra money definitely should not be going toward the mortgage. I would max out a Roth and use the rest for sinking funds, but that's just me.

Why has paying more on the mortgage been more important to you than retirement savings? How much do you have in retirement savings?

Thanks for the feedback.  Love the question on the mortgage.  Maybe not the best answer but it's a two parter, 1) Didn't know we had such a budget issue when I refinanced, and 2) I really want to have enough money to retire if I choose to at age 50, so didn't want to be paying a mortgage past age 50.  That was my main motivator.  We went from a 30 year 4.5% mortgage that paid off $350/month in principal to paying over $1000 on principal each month.  How could I resist!?!?

We have about $520k in retirement (excludes home equity).  Hoping i'll be at $1.2M by age 50 (in 13 years).  Also very curious if anyone thinks i'll make it there and how much I'd need to contribute yearly to get there.

One more fact, not currently saving for Kids collect.  I'm kind of thinking I'd have lots of money when they are college age and I'd cash flow it and work a couple more years.  Or at least be contributing 15% toward retirement before starting to save for them.

Calculator for you to play with here - http://www.moneychimp.com/calculator/compound_interest_calculator.htm

assuming your money is invested well in low cost index funds at vangurad or the like you dont have to save another dime to hit 1.2MM in 13 years with 7% returns. 

if you save 750 a month you'll hit it in around 10 years. 

Also having a paid off house isnt a FIRE requirement - interest rates are low carrying a house in retirement isnt a bad thing with today's rates.  Its actually helpful - i too used to think having a paid off house was better but its not based on current market conditions.

also congrats on the 520k saved already thats really better off than i was assuming you would be

MrGville

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Re: Saving in the time of young kids - opinions welcomed
« Reply #7 on: March 21, 2018, 10:11:30 AM »
I agree that you should post a full case study.  I'm sure the smart people on this forum would be able to help you save some extra money by cutting back on certain items. 

teamzissou00

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Re: Saving in the time of young kids - opinions welcomed
« Reply #8 on: March 21, 2018, 10:25:49 AM »
Ok, pretty nervous to show these numbers lol.  This is the monthly budget.  Not all amounts are used every month (i.e. clothes - but annualized makes sense).  I'm in a marriage, and some numbers aren't easily negotiable.  Cable TV is something we like for now and may change as the kids get in more activities - but for now it's here to stay.  Groceries are meal planned and we've cut here substantially so not a lot of room.  Fast food was cut to get to the $100 down from 4-500 of actual last year per month.  Toys/gifts are made into a monthly amount but obviously we'll realize these amounts mostly in birthdays and xmas.  Costco includes diapers, wipes, cleaning supplies and bulk chicken and school snacks.  We spent 190 and 194 in Jan/Feb at Target.  We get needed items here - not tracking everything individually

      
Categories   Budget Monthly
   
Auto Related
  Gasoline    $150.00
  Oil Changes    $25.00
Cable TV & Cell Phone    
  Comcast (includes cable, internet, security)    $156.00
  Tivo Bedroom Mini    $6.49
  Tivo Main Annual    $11.65
  Amazon Prime    $8.25
  Hulu    $11.99
  Netflix    $12.00
  Cell Phone ( this is wife, my cell phone is free from work)    $123.58
Entertainment   
  Activities - Kids (Incl. Karate)    $45.00
  Amazon  (based on past history)    $50.00
  Amazon Freetime    $3.24
  Scholastic Reading (books/fundraiser)    $9.09
  Spotify Family    $16.00
  Movies / Dates    $41.67
  Vacation    $125.00
  Toys/Gifts/Xmas    $166.67
Food   
  Fast Food    $100.00
  Grocery    $750.00
Household   
  Church    $10.00
  Clothes    $50.00
  Costco    $250.00
  Dry Cleaning    $6.82
  Haircuts    $29.17
  Holiday Purchases (Easter/Valentines,etc)    $8.33
  Lowes    $25.00
  Pest Control (not doing it myself)    $33.00
  School - (one child preschool)    $185.00
  Target    $250.00
  TurboTax    $5.42
Insurance   
  Auto Insurance/Umbrella    $150.00
  Life Insurance    $100.00
Interest only Debt @ 2% (long story, can't fix yet)    $125.00
Medical    $491.67
Mortgage    $1,900.00
Retirement    $500.00
Utilities    
  Trash    $45.00
  Water    $130.00
  Electric    $70.00
  Gas      $115.00
   
Total    $6,041.03


Lady SA

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Re: Saving in the time of young kids - opinions welcomed
« Reply #9 on: March 21, 2018, 11:01:37 AM »
You are actually in the same spot my DH and I hope to be in 10 years: you have a sizable stash in retirement funds already and assuming you have it invested in index funds, you can not contribute another dime to it and still hit your $1.2MM in ~10 years. This is based off the rule of 72: https://www.investopedia.com/ask/answers/what-is-the-rule-72/

essentially, with an average return of 7%, you can not touch your assets and it will naturally double every 10 years. With $500k now, on average it will double to your goal number in a decade, but you actually have 13 years, so I think you are in good shape.

I wouldn't contribute extra toward your mortgage. I would instead save in an emergency/sinking fund until it is where you want it, and then shift to contributing to your IRA or college savings.


My DH and I are currently in the accumulation phase, and hope to get to $500k before we have children. Then our plan is to scale back working to cover our expenses with a tad leftover for about 10 years, and let our investments grow to $1.2MM by themselves while we have more time with small kids. Once the kids are bigger, we can begin working more hours if we want to supplement our stash.
I would say you are in a great spot currently, assuming your investments are invested properly. Yeah, you won't be able to retire in 5 years, but since your plan is more long term and you already have the groundwork laid to enable it, you are in a great spot and right on target, actually.

Gondolin

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Re: Saving in the time of young kids - opinions welcomed
« Reply #10 on: March 21, 2018, 11:03:17 AM »
You have cable, and Netflix, and Hulu, and Spotify, and Prime, and a brutally high cell phone bill (especially for a single phone)?

If you must keep cable, cut the rest.

Also, hard to believe that between Costco, target and amazon you're spending $550 a month on cleaning supplies and non-grocery, non-clothing "necessary items".

Hard to tell but there's probably an easy $750-$1000 per month to be gained here even if you keep cable.

teamzissou00

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Re: Saving in the time of young kids - opinions welcomed
« Reply #11 on: March 21, 2018, 11:10:30 AM »
Maybe we can save Costco/Target receipts for a month and analyze. 

Odd question semi-off topic but you keep mentioning index funds. 

I'm in vanguard across the board. 
65% S&P 500
15% Total International
10% Small Cap
10% Bond

Is this an OK spread?  When you retire, how does it switch in terms of asset allocation?  Is there a master thread you can link me to?

norabird

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Re: Saving in the time of young kids - opinions welcomed
« Reply #12 on: March 21, 2018, 11:16:50 AM »
Just off the top, you can get a cell plan for much cheaper (mine is just under 50 after tax, from Straight talk Wireless; pretty much unlimited data and easy to set up, and it's still a 'luxe' plan from the point of view of someone with a just wifi-plan). And you can just cut out cable and save a ton there (or cut some of the other entertainment services, don't have both). I pay $45 for my monthly internet bill.

What's happening with Target and Costco if not grocery and clothes?

I'd also not worry about having a paid off mortgage, if it's coming at the cost of possible market gains.

Gondolin

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Re: Saving in the time of young kids - opinions welcomed
« Reply #13 on: March 21, 2018, 11:26:33 AM »
Quote
Maybe we can save Costco/Target receipts for a month and analyze. 

Yeah, I'd take a look. Right now that's $6600 a year that's MIA from a budgeting perspective.



As for investments, I don't think I'm the player who mentioned indexes but, that spread looks fine. As you finish your accumulation phase and look to begin drawing up your stash to pay living expenses you'll want to shift into a higher percentage of bonds in order to protect your capital against short(er) term volatility. The exact timing and % allocation depends on your personal risk tolerance and timeline to retirement.

RookieStache

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Re: Saving in the time of young kids - opinions welcomed
« Reply #14 on: March 21, 2018, 11:41:54 AM »
Not going to lie, I didn't expect you to have $520K in your retirement savings at 37 the way you laid out your circumstance in original post. The average for someone your age is circa $35,000 so i'd say you are doing well.

I'd like to know what your monthly expense breakdown looks like, i'm sure you can get closer to $900 a month from trimming the fat.

teamzissou00

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Re: Saving in the time of young kids - opinions welcomed
« Reply #15 on: March 21, 2018, 12:05:36 PM »
Not going to lie, I didn't expect you to have $520K in your retirement savings at 37 the way you laid out your circumstance in original post. The average for someone your age is circa $35,000 so i'd say you are doing well.

I'd like to know what your monthly expense breakdown looks like, i'm sure you can get closer to $900 a month from trimming the fat.

in my first 12 years of employment I saved 15% of my income to 401k, plus 6% match and an additional 4% profit sharing to 401k.  So that was 25% of my income for 12 years straight.  then kids happened =)

teamzissou00

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Re: Saving in the time of young kids - opinions welcomed
« Reply #16 on: March 21, 2018, 12:13:58 PM »
Just off the top, you can get a cell plan for much cheaper (mine is just under 50 after tax, from Straight talk Wireless; pretty much unlimited data and easy to set up, and it's still a 'luxe' plan from the point of view of someone with a just wifi-plan). And you can just cut out cable and save a ton there (or cut some of the other entertainment services, don't have both). I pay $45 for my monthly internet bill.

What's happening with Target and Costco if not grocery and clothes?

I'd also not worry about having a paid off mortgage, if it's coming at the cost of possible market gains.

Well, I'm sure the phone is facepunch territory, but a lot of that bill is the device cost that is built in.  she has an iphone 7 256gb that I think costs 950/24 = 39.50/month.  So we're really at $83/month for service fees.  We're Iphone lovers - another thing preventing us from true mustachians.  Sorry! 

I feel like we have to decide between nice vacations and high end tech devices/tv services. 

I'm also thinking that if I add my raises to my roth each year i'll be able to creep back toward the 15% toward retirement.
Target is some clothing, some cleaning supplies, and some food.  and some toys. 
Costco is some food, some kids clothes, batteries, diapers, wipes, Clorox wipes, some bulk fruit

As far as the mortgage, I'd lean toward leaving it alone, but not paying additional.  thanks for all the feedback I'm eating it up.

teamzissou00

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Re: Saving in the time of young kids - opinions welcomed
« Reply #17 on: March 21, 2018, 12:17:58 PM »
You are actually in the same spot my DH and I hope to be in 10 years: you have a sizable stash in retirement funds already and assuming you have it invested in index funds, you can not contribute another dime to it and still hit your $1.2MM in ~10 years. This is based off the rule of 72: https://www.investopedia.com/ask/answers/what-is-the-rule-72/

essentially, with an average return of 7%, you can not touch your assets and it will naturally double every 10 years. With $500k now, on average it will double to your goal number in a decade, but you actually have 13 years, so I think you are in good shape.

I wouldn't contribute extra toward your mortgage. I would instead save in an emergency/sinking fund until it is where you want it, and then shift to contributing to your IRA or college savings.


My DH and I are currently in the accumulation phase, and hope to get to $500k before we have children. Then our plan is to scale back working to cover our expenses with a tad leftover for about 10 years, and let our investments grow to $1.2MM by themselves while we have more time with small kids. Once the kids are bigger, we can begin working more hours if we want to supplement our stash.
I would say you are in a great spot currently, assuming your investments are invested properly. Yeah, you won't be able to retire in 5 years, but since your plan is more long term and you already have the groundwork laid to enable it, you are in a great spot and right on target, actually.

Thanks for the positivity.  You're plan on a reduced work schedule sounds pretty great.  Thankfully I really enjoy my job and just want to be financially independent so that I'm here for the right reasons.

boarder42

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Re: Saving in the time of young kids - opinions welcomed
« Reply #18 on: March 21, 2018, 01:16:49 PM »
your entertainment costs(cable and all that other crap cmon now) and food costs between grocery and target and costco are bleeding you dry you should start focusing on those areas  cell phone bill is absurd i dont care if you financed an overpriced phone you shouldnt be paying over 30 bucks a month for a single line for service

also life insurance at this point can likely be cut.  setup an SSA account for your self and look at what your wife would get monthly if you were to die its probably 4500 or so a month till the kids are 18.  at which point your stashe will be sizeable


at the end of the day hardly any of this actually matters as if you planned to be FI in 13 years you can do it without saving another dime.  so its just a choice of what you want to do

utilities are hard to guage based location but 130 a month in water seems crazy high to me -

FoundPeace

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Re: Saving in the time of young kids - opinions welcomed
« Reply #19 on: March 21, 2018, 03:55:28 PM »
I’ll jump in here to agree with what others have said. Netflix, Hulu, Cable, Amazon Prime, and Spotify are a bit overkill. Pick one or maybe two. Also, that phone bill...that’s a pretty crazy rate. Ever thought about an older generation iphone and/or at least an alternate carrier? I like my iphone, but there is zero chance I would have a 7 if it weren’t required by and paid for by work.

I also see a lot of potential waste in all the miscellaneous “shopping.” That is certainly worth some investigation.

Overall it does seem like your total savings are great, but if you wanted to tighten your belt a little, it would go a long way. It really depends on what your goals are though. You could continue without any changes and still retire by your target year. For me personally, I know that once I have snowballed my investments to the level you have them that I would be nearly done. I want to get away from being tied to a corporate gig asap.


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MrsWolfeRN

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Re: Saving in the time of young kids - opinions welcomed
« Reply #20 on: March 21, 2018, 05:06:11 PM »
Hi, I'm surprised no one has pointed this out yet but at your spending, you will need 1.35 million to be FI. You will have to get your spending below $4000/month , excluding mortgage principal, if you want to FIRE on 1.2 million. So the question is whether you want to retire in 13 years or 10. Your asset allocation looks great BTW.
  Tracking the Costco/Target receipts is a good first step. I am just starting to look at each receipt to see what was groceries vs diapers vs household items.
 You have already gotten a lot of good suggestions here r/t getting cheaper phone service, cutting down the grocery spend, and dropping some of the Spotify, Netflix etc.  Why do you have all of this plus cable? I don't even know what some of them are.

One question: why are your oil changes so expensive? Can you DIY this?

teamzissou00

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Re: Saving in the time of young kids - opinions welcomed
« Reply #21 on: March 21, 2018, 05:21:27 PM »
Hi, I'm surprised no one has pointed this out yet but at your spending, you will need 1.35 million to be FI. You will have to get your spending below $4000/month , excluding mortgage principal, if you want to FIRE on 1.2 million. So the question is whether you want to retire in 13 years or 10. Your asset allocation looks great BTW.
  Tracking the Costco/Target receipts is a good first step. I am just starting to look at each receipt to see what was groceries vs diapers vs household items.
 You have already gotten a lot of good suggestions here r/t getting cheaper phone service, cutting down the grocery spend, and dropping some of the Spotify, Netflix etc.  Why do you have all of this plus cable? I don't even know what some of them are.

One question: why are your oil changes so expensive? Can you DIY this?

Regarding my FI number - does it grow each year or stay the same?  For instance, if I'm shooting to live on 50k/year that would be 1.25M to retire.  But that's today's dollars.  When I'm 50, wont the 50k need to adjust by cost of living increases?  does my final number have to increase year by year?

Oil changes are for two cars, and it's an estimate not a actual. 

Every time we evaluate the premium media services we struggle.  Netflix has new shows I watch every week, Hulu has new shows as well that I watch.  Cable would make the most sense, but if I kept my internet where it is at and kept the home security the wife likes for when I travel for work - I'm only cutting $60/month.  I know that grows with time - but we have a 1TB data cap with Comcast that we're getting close to each month.  we hit around 750GB.  So - what happens to that cap when I have zero cable - now we're streaming 100% instead of just 50% (Estimates) - so now my data cap overages exceed the cable costs potentially.  It's $50/month more for unlimited which matches my cable essentially.  Curious if people will agree that 750GB is pretty normal or think it's crazy.  I've verified my security is strong so no one is borrowing data.  We fall asleep to streaming TV comedies each night which might contribute a bit.

Other costs that aren't even really anticipated are Moss Treatments on the roof (I'm not climbing the roof), Tree Trimming on trees I can't reach (super tall), and siding maintenance to avoid having to repaint the entire house. 


87tweetybirds

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Re: Saving in the time of young kids - opinions welcomed
« Reply #22 on: March 21, 2018, 06:01:27 PM »
I'd second what many have said on the entertainment options. Since you're not willing to cut cable yet, then choose one video streaming service, (Amazon prime, hulu or Netflix, especially where you have tivo) and cancel the others. The phone bill is astronomical even for an iphone 7(unless you're on a contract and still buying that I-phone 7, in which case I'd look at getting out asap) My DH and I both have Iphones-which we too like better than android. His is an 8, mine is a 7 and my sister in law also has a 7 on the same plan and we pay less than 100/month with cricket. We did have to buy the phones, but in the long run we're saving quite a bit. Before we switched to cricket were with page plus and we paid less than $40 each. (cricket uses At&t towers, page plus is on Verizon towers). Also, depending on what kind of music streaming you need, you could look into Pandora unlimited (I think its about $5 a month, and we're able to connect multiple devices and stream radio, choosing the genre). Just a few ideas.


MrsWolfeRN

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Re: Saving in the time of young kids - opinions welcomed
« Reply #23 on: March 21, 2018, 06:16:16 PM »
Wow, that sucks about the data cap. I have no idea how much data I use at home, my DH and I take turns as the SAHP with an infant and toddler, so the TV is on a lot (Netflix plus DVDs from the library). We have DSL from the phone company and it is fine for streaming. You could save some data by streaming in a lower definition.
Saving $60/month is nothing to sneeze at, that is $18k off of what you will need to retire. Does this include what you are paying for the TIVO things? Also what happens if you go over the limit? Are there fees or do they just slow your speed down? Could you try it and see how it goes?  Netflix and Hulu let you pause your subscription at ant time, so you can alternate between the two easily instead of paying for both all the time.

Your FI number is 25x your annual spending, so it only increases if your spending increases. Right now you are spending 54k/ year. You need to get this down to $48k if you want to FIRE on 1.2 million with a 4% WR.

Nudelkopf

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Re: Saving in the time of young kids - opinions welcomed
« Reply #24 on: March 22, 2018, 05:20:53 AM »
You must be a real movie buff with all that data. 1TB? Damn. We have Netflix but average about 39GB for the 2 of us. Do you have any hobbies you'd rather focus on that sitting in front of the TV all day? Cultivating those hobbies will not only making your life in retirement (not to mention now) much more fulfilling.

boarder42

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Re: Saving in the time of young kids - opinions welcomed
« Reply #25 on: March 22, 2018, 07:14:41 AM »
Hi, I'm surprised no one has pointed this out yet but at your spending, you will need 1.35 million to be FI. You will have to get your spending below $4000/month , excluding mortgage principal, if you want to FIRE on 1.2 million. So the question is whether you want to retire in 13 years or 10. Your asset allocation looks great BTW.
  Tracking the Costco/Target receipts is a good first step. I am just starting to look at each receipt to see what was groceries vs diapers vs household items.
 You have already gotten a lot of good suggestions here r/t getting cheaper phone service, cutting down the grocery spend, and dropping some of the Spotify, Netflix etc.  Why do you have all of this plus cable? I don't even know what some of them are.

One question: why are your oil changes so expensive? Can you DIY this?

Regarding my FI number - does it grow each year or stay the same?  For instance, if I'm shooting to live on 50k/year that would be 1.25M to retire.  But that's today's dollars.  When I'm 50, wont the 50k need to adjust by cost of living increases?  does my final number have to increase year by year?

Oil changes are for two cars, and it's an estimate not a actual. 

Every time we evaluate the premium media services we struggle.  Netflix has new shows I watch every week, Hulu has new shows as well that I watch.  Cable would make the most sense, but if I kept my internet where it is at and kept the home security the wife likes for when I travel for work - I'm only cutting $60/month.  I know that grows with time - but we have a 1TB data cap with Comcast that we're getting close to each month.  we hit around 750GB.  So - what happens to that cap when I have zero cable - now we're streaming 100% instead of just 50% (Estimates) - so now my data cap overages exceed the cable costs potentially.  It's $50/month more for unlimited which matches my cable essentially.  Curious if people will agree that 750GB is pretty normal or think it's crazy.  I've verified my security is strong so no one is borrowing data.  We fall asleep to streaming TV comedies each night which might contribute a bit.

Other costs that aren't even really anticipated are Moss Treatments on the roof (I'm not climbing the roof), Tree Trimming on trees I can't reach (super tall), and siding maintenance to avoid having to repaint the entire house.

technically it grows each year but when we do projections like the one i did above i assumed 7% return which is after inflation so while the correct answer to your question is yes you'll need "more"  when we calculate the total we remove inflation to make it simpler. to understand.  So if you use 7% or less to calc your return you're going to end up with a number that excludes inflation and give you a conservative timing to reach your FIRE goal - i use 6 in my own calcs

terran

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Re: Saving in the time of young kids - opinions welcomed
« Reply #26 on: March 22, 2018, 07:47:53 AM »
After writing it, I realized this could come off as "tough." Please don't take it as criticism of your lifestyle. These are just things to think about coming from someone who has made different choices than you have. We spend a lot more on travel than you do, so nobody's perfect.

Also take it easy on your wife with all of this. I realize that a lot of the things I mentioned could hit a little closer to home for her than for you since she's probably the one doing the shopping/cooking, wanting to keep the kids entertained during the day, doesn't have the work paid for cell phone, etc, etc. Try to tackle things that don't really impact her too much first. When she sees you making sacrifices she'll probably want in on it.

Regarding my FI number - does it grow each year or stay the same?  For instance, if I'm shooting to live on 50k/year that would be 1.25M to retire.  But that's today's dollars.  When I'm 50, wont the 50k need to adjust by cost of living increases?  does my final number have to increase year by year?

Your FIRE number will grow at the same rate as your expenses, whether that's from lifestyle inflation (buying more of whatever) or regular inflation (the things you buy becoming more expensive). However, you should do all your calculations in real/current dollars because that makes the numbers relatable (they "feel" right because you have a good idea of what that amount will buy you) and it makes the math easier. To do this you just use real (inflation adjusted) growth rates in your calculations. Historically that's been around 7% for stocks. I use 5%. If you are to believe the pessimists about future returns (which, to be fair includes some heavy hitters like Vanguard founder John Bogle) it could be even lower in the near future.

Every time we evaluate the premium media services we struggle.  Netflix has new shows I watch every week, Hulu has new shows as well that I watch.  Cable would make the most sense, but if I kept my internet where it is at and kept the home security the wife likes for when I travel for work - I'm only cutting $60/month.  I know that grows with time - but we have a 1TB data cap with Comcast that we're getting close to each month.  we hit around 750GB.  So - what happens to that cap when I have zero cable - now we're streaming 100% instead of just 50% (Estimates) - so now my data cap overages exceed the cable costs potentially.  It's $50/month more for unlimited which matches my cable essentially.  Curious if people will agree that 750GB is pretty normal or think it's crazy.  I've verified my security is strong so no one is borrowing data.  We fall asleep to streaming TV comedies each night which might contribute a bit.

Wow, that's a lot of data! I just took a look at the 7 months we've been with our current internet provider at we've averaged 90GB with the highest month being 156GB. We stream (netflix) at about 3 one "hour" shows per day, although I've been known to go through phases of watching more. Let's say that's 45min/show, 3 shows, is 135 min/day at 90GB/month or 3GB/day in a 30 day month so that's 0.022GB/min of streaming. There are 1440 min in a 24 hour day, so if we constantly streamed all day and night that would be 32GB/day or 960GB in a 30 day month -- still under a TB.

The normal settings for netflix are to advance to the next show automatically, but you can disable this feature. Try doing that. If you're too asleep to advance it to the next show you don't really need it playing do you? If that doesn't work there's something else hogging the data, so keep looking for what that could be.

On the streaming subject, do you really need netflix, hulu, and Prime? I get that you have shows you're watching on each of them, but is that really worth giving up your future for? Missing a show seems like a pretty small sacrifice, so it's a good place to start becoming a badass. Try cancelling at least netflix or hulu and keep the other an prime. That should give you plenty of content. You could even cycling through by cancelling one at a time and binge watching the shows on the other until you catch up.

Some thoughts on your other expenses:

  Amazon  (based on past history)    $50.00
  Toys/Gifts/Xmas    $166.67
  Fast Food    $100.00
  Grocery    $750.00
  Clothes    $50.00
  Costco    $250.00
  Lowes    $25.00
  Target    $250.00

That's a lot of spending on food and stuff. I would track that more closely and see what all you're getting for that money and whether it matches your values.

How do you feel about the fast food spending? How to does it physically make you feel? Is it a convenience for when your wife is too busy? Could you take up some of the cooking slack? Maybe make some make ahead freezer meals? Or even just get some frozen pizzas (not healthier, but cheaper at least) for when she's too busy/stressed to cook?

  Pest Control (not doing it myself)    $33.00

Try to find out from neighbors if any of them aren't doing this. It might be necessary where you live (more likely in warmer climates), but it's definitely not necessary everywhere. And assuming this means spraying poison, is that something you want around your kids?

Same with the roof moss control you mention elsewhere. We had moss on parts of the roof of the house we used to own. So did our neighbors. How much does having it removed really extend the life of your roof? I don't know the answer to that, but it would be worth looking into.

  Haircuts    $29.17

How much of that is for you and any boy children? If any, then I would like to introduce you to https://www.amazon.com/Wahl-Complete-Accessories-Professionals-79300-1001/dp/B00006IVEN/ and since the scissors that come with that are crap https://www.amazon.com/gp/product/B00KVYBY8M/

You could do it yourself for a simple buzz cut, and even something short, but a little more advanced (longer on top than sides) isn't that hard with help. Let's just say my wife isn't that talented with the hand-eye coordination, but she's getting pretty good!

Supposedly long hair is pretty easy too (there are some youtube videos with instructions), so you could even move on to girl children and then your wife once the boys have blazed that trail.

  Spotify Family    $16.00
  Movies / Dates    $41.67
  Amazon Freetime    $3.24
  Scholastic Reading (books/fundraiser)    $9.09
  Comcast (includes cable, internet, security)    $156.00
  Tivo Bedroom Mini    $6.49
  Tivo Main Annual    $11.65
  Amazon Prime    $8.25
  Hulu    $11.99
  Netflix    $12.00

You are one well entertained family! Do you have time for all of that? I know the individual dollar amounts aren't that high, but this feels like a good place to start stretching some mustachian muscles without too much pain.

  Cell Phone ( this is wife, my cell phone is free from work)    $123.58

I know you said part of this is the payment plan on the phone, but still. Look into MVNO's. Cricket runs on AT&T's network and is unlimited everything. It wouldn't save a lot, but it's something. If your wife is home all day then some careful use of data when not on wifi could open a whole bunch of other options. My wife and I pay around $25 for the two of us on Ting, but we're more careful with all data/text/talk than I think most people are willing to be.

Try to buy your phone in cash next time. For that matter, consider buying used next time. I bought a 5s used a few years ago and it's still working just fine. 
« Last Edit: March 22, 2018, 07:57:28 AM by terran »

Carrie

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Re: Saving in the time of young kids - opinions welcomed
« Reply #27 on: March 22, 2018, 07:53:47 AM »
I think I would reorder some priorities and time usage. You guys spend a lot on media - tv services, phone services, and on top of that you've got money in the budget to go to the movies! How do you even find enough decent shows to watch?!
I'm impressed with your current retirement stash - that's great! You could just let it ride and be fine, but I'd like the challenge to at least max your 401k, keep the mortgage at 13 yr pay off, and cashflow college. I bet you guys could figure out how to squeeze enough from the budget to do that. 1. Choose a tv service, 2. Reduce cell plan 3. Stop going to target. You can buy t.p. at the grocery and eliminate the temptation. Play games to reduce the household shopping (how long can we go between trips.... how few paper goods can we use if we switch to cloth & rags..... how long can we stretch beauty product, etc)
Reduce toy consumption. Kids don't need many toys and they don't need big Christmases.  Hand me downs and minimalist mindset are actually great for little kids. :)

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Re: Saving in the time of young kids - opinions welcomed
« Reply #28 on: March 22, 2018, 09:44:06 AM »
Netflix and Hulu let you pause your subscription at ant time, so you can alternate between the two easily instead of paying for both all the time.


Agree, this is low hanging fruit.  Even if you usually watch weekly; you can just hold off and catch up at the end of a season.

teamzissou00

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Re: Saving in the time of young kids - opinions welcomed
« Reply #29 on: March 22, 2018, 10:26:57 AM »
Thanks for all your time and valuable comments.  They will be reviewed with myself and my wife.  For sure, some things are lifestyle choices and we might just be OK with them. 

We don't watch as much media as our subscriptions would indicate.  We watch about an hour of cartoons in the morning while everyone gets ready for school, assuming wife watches about 2 hours during the day in the background, combined with a good amount of music streaming on Sonos speakers in the house.  In the evening, we watch a good NBA game if in season (hence cable subscriptions), and then an hour comedy or drama once the kids are put to bed. 

We will definitely talk to ATT and check out Verizon/cricket and get an unlocked iphone this September. 

Target/Amazon/Costco/Grocery - We don't always spend those budgets in full - and we have cut dramatically.  Grocery store spending is almost perfected that this point without a lot of waste (although we don't eat beans and rice daily).  Costco is always dangerous with bulk spending...

My goal is to try to cut a couple hundred over the next few months and add that to the retirement accumulation.  Each raise will go toward retirement - and hopefully in 2 years we'll be maxing out both roth IRAs.  We've also said that when our TIVO breathes its last breath we'll cut cable for a year and see how Streaming goes.  It's been a bit glitchy lately so that could be any time now.

thanks!

boarder42

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Re: Saving in the time of young kids - opinions welcomed
« Reply #30 on: March 22, 2018, 11:53:04 AM »
you subscribe to cable to watch one NBA game a night if in season - there are other ways to watch NBA games if they are that important to your overall well being.

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Re: Saving in the time of young kids - opinions welcomed
« Reply #31 on: March 22, 2018, 04:14:44 PM »
Dang, we're pretty spendypants in our house, and even I can't fathom having that many different entertainment options, especially if you say you don't really use them that much and don't have your retirement contributions maxed out currently.

We have Amazon Prime (I listen to Prime Music ALL day long, which negates the need for something like Spotify, and we actually spend less on Amazon using Prime since I'm never concerned with reaching the "free shipping" level anymore), and we get Netflix included as part of our T-Mobile bill ($140/mo for our family plan: unlimited talk, text, data for 3 people, including international text and data. We ran the numbers on all the other, cheaper providers, and decided this worked for us at this point in our lives with the teenage data hog, even if it isn't all that mustachian). We cut cable back in 2015 and haven't missed it at all. There are SO many options for streaming these days, but I can't personally see paying for ALL of them AND cable. It's funny, we told ourselves when we cut cable that we could always pay a la carte to watch a show occasionally, but nothing has been worth spending the money. Also, our library has quite a few DVDs, although I've never checked them out. I know that's how my uncle was watching Game of Thrones, albeit a season behind.

Here are a few things I would recommend:

-I think at a minimum you should take some of the excellent advice here to consider switching off which entertainment you're paying for each month and binge-watch your series every few months. See if you can live with Amazon Prime music instead of paying extra for Spotify, or deal with the occasional commercial.
-I highly recommend you break out all of your purchases by category instead of store. We started doing that in 2015 and it was incredibly eye opening.
-check out books/movies at the library instead of spending on Scholastic.

You're doing really well to have so much already saved up for retirement! We were similar in having a big chunk saved up, then we scaled back our contributions during kids/lifestyle inflation. We finally got everything maxed again last year and it feels great. We did the same thing you're planning: every raise went to retirement until we got maxed out again. Wishing you the best.

vivian

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Re: Saving in the time of young kids - opinions welcomed
« Reply #32 on: March 22, 2018, 06:46:12 PM »
Dang, we're pretty spendypants in our house, and even I can't fathom having that many different entertainment options, especially if you say you don't really use them that much and don't have your retirement contributions maxed out currently.

We have Amazon Prime (I listen to Prime Music ALL day long, which negates the need for something like Spotify, and we actually spend less on Amazon using Prime since I'm never concerned with reaching the "free shipping" level anymore), and we get Netflix included as part of our T-Mobile bill ($140/mo for our family plan: unlimited talk, text, data for 3 people, including international text and data. We ran the numbers on all the other, cheaper providers, and decided this worked for us at this point in our lives with the teenage data hog, even if it isn't all that mustachian). We cut cable back in 2015 and haven't missed it at all. There are SO many options for streaming these days, but I can't personally see paying for ALL of them AND cable. It's funny, we told ourselves when we cut cable that we could always pay a la carte to watch a show occasionally, but nothing has been worth spending the money. Also, our library has quite a few DVDs, although I've never checked them out. I know that's how my uncle was watching Game of Thrones, albeit a season behind.

Here are a few things I would recommend:

-I think at a minimum you should take some of the excellent advice here to consider switching off which entertainment you're paying for each month and binge-watch your series every few months. See if you can live with Amazon Prime music instead of paying extra for Spotify, or deal with the occasional commercial.
-I highly recommend you break out all of your purchases by category instead of store. We started doing that in 2015 and it was incredibly eye opening.
-check out books/movies at the library instead of spending on Scholastic.

You're doing really well to have so much already saved up for retirement! We were similar in having a big chunk saved up, then we scaled back our contributions during kids/lifestyle inflation. We finally got everything maxed again last year and it feels great. We did the same thing you're planning: every raise went to retirement until we got maxed out again. Wishing you the best.

About your entertainment services, Doesn’t Spotify have a free version? I listen to the free Pandora service all day via my Sonos, so there is no need to pay for music. As for Hulu, they have a nice feature where you can “pause” it for up to three months. I’ve done it where I paused it for a month and watched Netflix during that month, then paid for Hulu to catch up on my shows, and then paused it again. So, really only paying for it half the time and never more than a few weeks behind on current shows.


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