Trying to Get Started

[CharlesSowAV]

Hello, all

We are a family of 5 wanting to decrease our monthly budget. Here's the information.

Me: College Professor, 30 years
Husband: Stay-at-home dad, substitute teacher, working on Masters for Teacher Education, 30 years
Kids:
8 Year Old has autism, will likely not be able to live on his own
5 Year Old has medical needs, hospitalized 8x in 5 years, but should be able to function as normal adult
2 Year Old is typically developing

3195.10 - Take Home Monthly Wage (after taxes/insurance/retirement) (Okay, okay, that's not my real monthly pay because I'm paid every 2 weeks instead of twice a month. But I'm not good with math so that's my check that I get every 2 weeks x2).
6% - Amount Company Contributes to 403B
3% - Amount I contribute to 403B (maxing out match, but hope to contribute more)
Currently have 67K in 403B retirement (not all from this company, but that's my total)

50K in bank accounts getting very little interest (Capital One 360)
25K in mutual funds through ShareBuilder

Husband substitute teaches for $85/day. He averages 2 days a week, but the jobs are available to work every single day. We just moved and he's been working on projects at home so he hasn't subbed as much as he could, but he would like to work more in the fall, at least 4 days a week.

1361 - Mortgage (Home was 217K, put down 20%, owe 172K, 4.5% interest. Just purchased. Very stupid, extravagant home with 3000sf/marble bathrooms/granite windowsills....but we needed this school district for their autism program so whatever)
177.71 - AFLAC
20.56 - Life insurance (have 300k on each adult)
130 - Electricity average
40 - Cancer policy on family
40 - Gas average
20 - Hospital insurance
174 - Cell phone
75 - Water/sewer
120 - Internet/cable
83 - Car insurance
450 - Food
80 - Gas
200 - Misc
=2240ish

No Debt Whatsoever besides mortgage - I got a PhD with no school debt and hubby is taking classes at my college for 50% off (and we're paying cash). No car debt. No credit card debt.

I work from home teaching for an online university. We live within easy walking distance of the kids school. We have 2 vehicles, a 2006 minivan and a 2005 truck. We don't drive a lot because we don't commute.

I don't think early retirement is really an option for us since we really need health insurance and my health insurance through my work is FABULOUS! Our oldest child is likely going to be with us forever, so we've got to consider that.

We'd just like to reduce our overall expenses. Since moving to this extravagant, expensive area, we've been disgusted by all the Moms waiting in the carpool line for an hour in their giant SUVs and then driving through Starbucks for a latte and later doing lunch at an expensive restaurant...we don't want to be like that. We want to save for whatever the future holds. We don't want to be stupid.

Where can we start cutting expenses to save for the future? My number one goal would probably be to pay off our house early. If we can do that, we really have a lot more options. I just want to make sure that we're doing everything we can do to care for our children, 2 of whom have special needs. Do you have any advice? We would also like to know what to do with our savings--where should we put it to get more than the .75% interest we're getting now??

[CharlesSowAV]

I believe the first place to start is cell phone and supplemental insurance.

Our cell phone bill could be reduced, period. We've just been too lazy to do anything with it. We have 2 smartphones and that's it, so I think there are lower-cost options out there.

Our supplemental insurance (AFLAC/cancer insurance) is important to us. My son is regularly hospitalized and several of these policies have paid for themselves and then some (to the tune of several thousand dollars) every single year since we've had them (hospital, accident). Still, we have an ICU policy with AFLAC that we pay $23/month for and our kid has never been in ICU, so I think we can ditch that. We also have 2 hospital policies, so we can probably get rid of one of them. It's so hard, because my son has been SO SICK before. We've always got more back from AFLAC than we paid in to them, but my son hasn't been hospitalized in over 10 months now so do we keep paying for the supplemental policies? Argh!

[Bracken_Joy]

I believe the first place to start is cell phone and supplemental insurance.

Our cell phone bill could be reduced, period. We've just been too lazy to do anything with it. We have 2 smartphones and that's it, so I think there are lower-cost options out there.

Our supplemental insurance (AFLAC/cancer insurance) is important to us. My son is regularly hospitalized and several of these policies have paid for themselves and then some (to the tune of several thousand dollars) every single year since we've had them (hospital, accident). Still, we have an ICU policy with AFLAC that we pay $23/month for and our kid has never been in ICU, so I think we can ditch that. We also have 2 hospital policies, so we can probably get rid of one of them. It's so hard, because my son has been SO SICK before. We've always got more back from AFLAC than we paid in to them, but my son hasn't been hospitalized in over 10 months now so do we keep paying for the supplemental policies? Argh!

I often see people direct to the MMM and ERE articles on insurance. In your case, though, it's very hard to say. It isn't 'perceived' risk here, at least not historically. It depends on the condition though, for sure, and the expected trajectory.

The $200 for 'misc' constitutes a decent chunk... that is half your food budget! Do you use a program like mint to track your spending? Remember- what gets measured, gets managed. You need to see where you leaks are. Commit to doing this for at least one whole month, and I promise you will learn a lot.

How much is left to pay on your DH's school? Even if this isn't 'debt' per se, it's an expected expense. There are some other things I would include on here that aren't being captured in recurring expenses- clothes, entertainment (although $120 seems very high for internet to me), etc. It could be worthwhile to look at how much you spent vs earned last year. What was the difference? Is that being captured completely by your budget?

[CharlesSowAV]

Thank you so much for your reply, Bracken_Joy!

I do use Mint, and it was very telling. Most of our "Misc" is eating out fast food. I really hope to reduce it to almost nothing, but I figured I ought to put it down. For entertainment, we have a community pool & playground (HOA is counted in mortgage payment) and live very close to a splash park, so we don't do a lot there.

Very conservatively, we owe 4000-4500 before DH gets his teaching degree (should have 18 months left). At that point, he can make 48K/year in our district or 51/k in the district next to us. Teaching jobs abound in both districts.

Yes, the internet costs. I need to work on that. I work from home and we have the largest plan available...but not sure we need it. I need to look into reducing that.

We've talked about getting rid of one vehicle--we might use both of them at the same time only once or twice a month. However, then we'd lose our multi-car discount and it would only be a savings of about $30 a month...so we're not sure it's worth it. If middle son starts having health issues again, then we'll be doing a lot more commuting back and forth to the children's hospital and we'd need both cars.

Ugh! Why can't I be 25 and childless? Kids complicate money so much!

[Bracken_Joy]

Thank you so much for your reply, Bracken_Joy!

I do use Mint, and it was very telling. Most of our "Misc" is eating out fast food. I really hope to reduce it to almost nothing, but I figured I ought to put it down. For entertainment, we have a community pool & playground (HOA is counted in mortgage payment) and live very close to a splash park, so we don't do a lot there.

Very conservatively, we owe 4000-4500 before DH gets his teaching degree (should have 18 months left). At that point, he can make 48K/year in our district or 51/k in the district next to us. Teaching jobs abound in both districts.

Yes, the internet costs. I need to work on that. I work from home and we have the largest plan available...but not sure we need it. I need to look into reducing that.

We've talked about getting rid of one vehicle--we might use both of them at the same time only once or twice a month. However, then we'd lose our multi-car discount and it would only be a savings of about $30 a month...so we're not sure it's worth it. If middle son starts having health issues again, then we'll be doing a lot more commuting back and forth to the children's hospital and we'd need both cars.

Ugh! Why can't I be 25 and childless? Kids complicate money so much!

If most of that $200 is fast food, then your food overall is $650. I'm less face-punchy in the food area than most people, but brace yourself, they're coming =P I will say though, I spend more on food because it is a deliberate priority... fast food can be avoided with planning though. I doubt you say to yourself, "this fast food matters to me and is worth the money". So in that case, I gently gift you some face punches. On the bright side, this is an area you can change that will pay more dividends than just money- health and discipline and a sense of home! Food is powerful stuff =)

What would happen if you increased your 403B contribution from 3% to 4%? Or even 5%? A lot of people go that route- you probably won't even feel it, but the change in the numbers you 'see' will affect your behavior and result in you spending less. Give it a few months to settle, and bump it again. This is the route my SO and I have taken. If you never see the money, you never spend the money.

Another area I see a lot of families spending a lot of money are gifts (their kids' bdays, christmas, other kids' bdays, etc). Do you have your spending in control in this area?

[lindsayk]

i just wanted to say i think you are going a great job by having no debt. You have a lot on your plate with 2 special need kids and that could equate to a lot of stress spending for a lot of people (i know i would)....so while i dont have a lot of advice to offer on where to cut/what to do better I just wanted to say KUDOS to you for how good of a job you've done so far with so much on your plate!!

[CharlesSowAV]

i just wanted to say i think you are going a great job by having no debt. You have a lot on your plate with 2 special need kids and that could equate to a lot of stress spending for a lot of people (i know i would)....so while i dont have a lot of advice to offer on where to cut/what to do better I just wanted to say KUDOS to you for how good of a job you've done so far with so much on your plate!!

Thank you so much! We had debt initially with our first son and all the stress of getting him diagnosed and therapy. Then we realized the financial stress just adds to our life stress so we did DR to get out of that debt and live differently. Hubby quitting his fantastic job was a stress, but he's been home for 4 years now and he can better handle the kids' needs.

[Janie]

I'd focus on the income side.

[Bracken_Joy]

I'd focus on the income side.

To be fair, income will increase when her DH takes more sub gigs and completes his masters. So I think that's in the works for them it sounds like.

[CharlesSowAV]

I'd focus on the income side.

Yes...in taking my new job in January, I signed an agreement that I wouldn't work anywhere else for a year. After that year, I'm able to start adjunct teaching again (in addition to my salary). I was making $2500 for each extra 8 week class I taught before, which is how we built our savings. We would put that money straight into savings and live off my regular salary. Once I can start adjunt teaching again, that will considerably increase our income.

Hubby is working on a Masters...he can't go back to his previous field because too much travel was involved and I need his help with the kids. So, teaching is a good gig for him in that he'll be able to be off when they're off (mostly) and all that. Still, it's hard to sit and wait.

He's applied to a summer position teaching at a tutoring center near our house. It would be part-time, but it would help, especially through the summer when he can't substitute teach.