Case Study: Financial Independence Retire EVER???

[lookingforadelorean]

Married filing jointly. DH is 44, I am 50, three daughters are ages 12, 10, and 7. We moved to a town 30 miles north of Seattle and purchased our home in April 2016.
Purchased home for $432K
Appraised in April 2019 for $510K (Redfin estimate is currently $550K, but we believe it would sell closer to appraised value)
Current payoff amount: $388K

I homeschool our three children. This is a lifestyle decision and something that is important to our family, especially as all of our family members live in other states. Similarly, our Forest School expense is one of our few non-negotiables as we determine how to move toward financial comfort. I have a masters degree in counseling, although I am no longer licensed and I hadn’t planned to work until my children are older. My husband is a benefits manager at a corporation that requires him to be in the office M-F at a location 15 miles from our home, which amounts to a 30-45+ minute commute depending on I-5 traffic.

With our ages, dependents, and lack of financial cushion at this stage, we aren’t trying to FIRE, but frankly, I’m terrified when I see the numbers required for my husband to stop working even at age 67. The most recent online calculator I used gave a figure of $3.9mil to maintain our SOL into retirement. Clearly, we’re not going to make that goal at our current spending levels. Is that how much we actually need??

Writing this information out, we see (and already knew but tried to keep our heads in the sand) many places we could reduce. The amount of money we spend on cereal alone each month is outrageous, and we just sat and estimated that by working on simple fixes like our grocery and media, we could put aside $4-500/month. However, that feels a little like putting a bandaid on gangrene. Of course, it’s better than continuing along our current trajectory, but what else can/should we consider?

Rent for a family of 5 is going to easily come in equal to our mortgage payment and that is for just a 2 bedroom. I’m willing to consider renting, especially at a location closer to my husband’s office, though, if it means we could expedite this process and get us closer to a feasible amount of retirement savings. Our home was built in 1945, and it will need to have the exterior painted soon, along with needing a new deck. Obviously, our lawn maintenance, as listed below, is also a huge expense as someone lovingly landscaped a gorgeous garden in our 1/3 acre. Sadly, I do not possess a green thumb, nor does my husband enjoy yard work, which is why we tend to farm out that labor at big costs.


Gross Salary/Wages:
$172K ($150K with an annual 15% bonus*)


Individual amounts of each Pre-tax deductions
401K — $650
HSA — $450
Insurance — $200
Dental — $100
Vision — $100
Life — $60
Long-term disability — $50
Dependent life — $100


Adjusted Gross Income:
$10,790 x 12 = $129,480-27,270 = $102,210 annual take home (roughly $8K/month after taxes)


Taxes: Federal, state/local, and FICA. 
$27,270


Current expenses:
Mortgage/property tax/insurance: $2525
 — P&I $1925  — T&I $600
Auto: Kia Sorrento $460, Volvo $0
Auto insurance: $145
Gas: $300 -- Volvo = $45 1x/week; Kia = $60 2x/month
Student loan payments: $525 for two, at 3-5%
Food: $1200
Internet: $80
Phones: $100
Media: $85
Utilities: Water/sewer $90; Electricity $125; Gas $150; Garbage/recycling $60
Clothing: $150
Forest School: $375
Swim lessons: $150
Lawn maintenance: $125
Pest control: $38 (we live near a lake, and because of our mild winters, rats can be a problem here. This covers trimester spraying and bait stations.)
Dog: $60
_____________________________________________________

Approximate monthly expenses total: $6768

*Misc: Bonus allocation typically used for travel, gifts, miscellany, and home maintenance (so far, new windows/water heater, electrical work, closet addition, etc.)


Assets:
$3K - car
$70K - 401K
$20K - employer stock (awarded annually)


Liabilities:
Original mortgage amount $415K. 30 year fixed at 3.875%
388K remaining
Student loans - Balance 1: $31K at 3%; Balance 2: $8K at 5.5%

[silverelephant]

Hi there!  I also homeschool our 3 kids and live in the Seattle area.  :)

Here's where I see you can free up some cash:

1.  Sell the Kia and buy a beater in cash, or see if your husband can take the bus to work.  His company might even comp a bus pass.  If he takes the bus, this will free up tons of gas money, too.  You can save on car payment, car insurance, and gas with this one!  Save $460 on the car payment, at least $50 on insurance, and up to $200 on gas?  Total Savings $500 - $700/month.

2.  Cut your grocery spending!  We are also a family of 5 (3 boys, ages 15, 13, and 9) and we spend between $700 - $800/month.  Shop at Winco and buy lots of oatmeal, dry beans, etc.  Free up $400 - $500/month.

3.  Shop your internet.  We pay $40/month but we had to haggle for it.  Save $40/month.

4.  Cell phones - use Republic Wireless.  We pay $40/month for 2 phones.  Save $60/month.

5.  Trash/Recycling - $60?  What company do you use?  We pay $15/month in Bellevue.  When we were in Bothell it was more like $40/month.  Can you swap out for a smaller garbage can?  Save $20/month

6.  Lawn Maintenance - you say you don't have a green thumb and your husband doesn't enjoy yardwork...but that doesn't mean you can't do it.  Plus you have 3 homeschooled kids - they can help, it's an important part of their education!  Save $150/month.

I get not wanting to touch the kids' activities...especially for homeschooled kids.  They do thrive on some time with other students and teachers!  So I'd keep the school and the swim lessons for sure. 

Total Money freed up:  $1170 - $1470/month!

With this savings, I would make knocking out those student loans my first priority, then focus on maxing out retirement accounts.

[Cassie]

I would put the kids in school and go back to work at their ages.

[actonyourown]

Just a thought on some things you can certainly cut back to help your spending.

Current expenses:
Mortgage/property tax/insurance: $2525
 — P&I $1925  — T&I $600
Auto: Kia Sorrento $460, Volvo $0
Auto insurance: $145
Gas: $325  This is a ton of gas.  Just taking this all from a 2019 Sorento (22city/29highway) it comes to 94.5 gallons of gas per month using the average cost of gas in Washington state ($3.44/gal).  That would put you between 2,079 miles or 2,740 miles per month.  That is an astounding number when you think about the time lost sitting in a car each month, to the point that this is not just your husband going to and from work each day.  Please look long and hard at what you are doing here because you are probably driving those cars into the ground faster than you think.  Trim this down to $200/month if possible. 
Student loan payments: $525 for two, at 3-5%
Food: $1200  Others will skewer you more for this than me, however, this seems excessive.  My parents raised a family of 6 on about $600-$800/month in groceries.  Granted that was some years ago, but this seems like a bit much.  Cut this to $800/month. 
Internet: $80
Phones: $100
Media: $85
Utilities: Water/sewer $90; Electricity $125; Gas $150; Garbage/recycling $60
Clothing: $150
Forest School: $375
Swim lessons: $150  You will need to teach your kids to swim.  I took lessons when I was a toddler but this seems crazy expensive, unless this is some kind of sport conditioning for the 12 year old for them to become a world class athlete, take the kids to a public pool and show them there.
Lawn maintenance: $125  Get those kids out there maintaining it with you!  You say you home school them, well some hard work out in the sun is an excellent lesson in why they might not want to do that line of work and learning how to do hard work is a worthwhile lesson, and it is cheaper for you in the long run.  If you and your husband are unable or unwilling to do this yourselves, dig the garden up and plant grass and have the kids mow it.  You and your husband deserve face punching for buying a place with a garden that you don't want to maintain yourselves and cannot afford to pay for.  In your calculations of renting, include this in your mortgage cost compared to a rental.
Pest control: $38  I'm not sure what this is.  Is this a necessary monthly cost for your home to keep bugs out? Does this have to do with the garden?
Dog: $60

These areas represent over $800 in potential savings to get you on the right track.  I don't think you can afford this lifestyle on this money.

This brings me to the largest factor; that you need to get back to working now.  Not in 10 years, not in 5 years or 2, NOW.  I don't want to down play your work raising your kids how you want, however, I think you really need to change your expectations.  Let's say you raise your youngest until she is 18 in 2030.  She graduates and moves out immediately (almost never happening nowadays).  You are now 60.  Are you going to be able to get your counseling certificate easily then?  Do you think an employer will consider someone seriously at 60 when they haven't been in the workforce for more than 2 decades?  (Assuming you stopped working when you had your first kid.)  I don't want to rain on your parade but think about that because though they cannot be ageist, they can certainly weed out people for huge gaps in employment and do so all the time.  Even if you can get some part-time work right now, it would help your numbers immensely.  It would definitely make it easier for you to return to full-time work when you want to because you are keeping current in your industry.

On top of this, I hope your husband's work has solid short-term or long-term disability.  I say this because you have no savings listed, so I assume you have none, so if he were to be unable to work any longer, this will put your family in a terrible situation.  This is another area facilitated by you working as well so that the lights stay on in case something happens.

[Freedomin5]

Others have already talked about ways to shave your expenses. What about ways to increase income?

Since you were previously licensed, can you reactivate your license and work part-time on weekends? If you don’t want to go into a counseling office, can you offer online counseling/ telehealth services such as on iCouch? Or teach part-time at a local college? Supervise a couple interns or practicum students?

Do you have a basement or in-law suite that you could rent out for extra income? Can you rent out your garden to a neighbor in exchange for a part of the produce grown on your land?

Any of those could help to boost your family income, with all profit going towards savings.

[happy]

The most recent online calculator I used gave a figure of $3.9mil to maintain our SOL into retirement. Clearly, we’re not going to make that goal at our current spending levels. Is that how much we actually need??

No, even with your spendypants ways, this is an inflated figure. Your current expenses as you have listed are 81k a year. You will need 25x this amount if your expenses do not change. This is approx $2mill .

Keep in mind that in general total house-hold expenditure gradually rises as the kids get older. Once they leave home (or finish college if you are paying for it), expenses drop substantially.

That being said, I found the way of the moustache as my kids were just entering teens ( ie expenses should have been rising) and without depriving them too much, managed to keep whittling back expenses - fairly easily to 50%  savings rate and eventually to 60% with a bit more sweat and time.

[tamuaggie2011]

No, even with your spendypants ways, this is an inflated figure. Your current expenses as you have listed are 81k a year. You will need 25x this amount if your expenses do not change. This is approx $2mill .

Keep in mind that in general total house-hold expenditure gradually rises as the kids get older. Once they leave home (or finish college if you are paying for it), expenses drop substantially.

These are probably the biggest points. The amount of money you will need in retirement is substantially less as you won't be paying for the kids anymore.  When estimating how much you need for retirement look at the amount of expenses per year that is only related to you and DH then use the 25x number happy mentioned.

You also must have more savings (at least slightly) then you listed because you don't include an HSA balance but list a monthly contibution on your expenses list. This money should be assumed to be set aside to cover insurance in retirement.

I agree with previous posters that there are definitely ways to decrease savings and that is for sure important but I think the bigger goal here would be to find ways to increase income. I'm not an expert in the counseling field by any means but I would think that is a great field for pursuing part-time work.  If you could still home-school the kids (since this does in fact seem like goal #1 for you and DH) but find 10-15 hours a week to do part-time work this would be ideal. An extra 20-30k a year even would be a substantial boost to your savings and retirement accounts. Note if you did go this route ALL MONEY earned from your job should go straight to savings or to paying off the student loans it is not for spending.

Best of luck!

[lookingforadelorean]

Hi there!  I also homeschool our 3 kids and live in the Seattle area.  :)

Here's where I see you can free up some cash:

1.  Sell the Kia and buy a beater in cash, or see if your husband can take the bus to work.  His company might even comp a bus pass.  If he takes the bus, this will free up tons of gas money, too.  You can save on car payment, car insurance, and gas with this one!  Save $460 on the car payment, at least $50 on insurance, and up to $200 on gas?  Total Savings $500 - $700/month.

2.  Cut your grocery spending!  We are also a family of 5 (3 boys, ages 15, 13, and 9) and we spend between $700 - $800/month.  Shop at Winco and buy lots of oatmeal, dry beans, etc.  Free up $400 - $500/month.

3.  Shop your internet.  We pay $40/month but we had to haggle for it.  Save $40/month.

4.  Cell phones - use Republic Wireless.  We pay $40/month for 2 phones.  Save $60/month.

5.  Trash/Recycling - $60?  What company do you use?  We pay $15/month in Bellevue.  When we were in Bothell it was more like $40/month.  Can you swap out for a smaller garbage can?  Save $20/month

6.  Lawn Maintenance - you say you don't have a green thumb and your husband doesn't enjoy yardwork...but that doesn't mean you can't do it.  Plus you have 3 homeschooled kids - they can help, it's an important part of their education!  Save $150/month.

I get not wanting to touch the kids' activities...especially for homeschooled kids.  They do thrive on some time with other students and teachers!  So I'd keep the school and the swim lessons for sure. 

Total Money freed up:  $1170 - $1470/month!

With this savings, I would make knocking out those student loans my first priority, then focus on maxing out retirement accounts.

Hey! Nice to "meet" you! And thank you so much for the helpful input. Groceries for sure are going to be getting a lot of our attention. We've been buying way too much packaged/convenience food, although we do mostly eat/cook at home. I will try Winco -- we mostly use Haggen because it's close. Do your kids ever balk at things like oatmeal and beans? My kids are pretty adventurous eaters, but they will also most likely rebel at some of the changes we'd like to implement.

Looking into Republic is on my to-do list today.

I wonder if our trash costs are higher because we have the three large cans -- one for garbage, one for recycling, and one for yard/composting. We do try to compost, and it goes into that commercial composting bin.

The lawn maintenance . . . I have zero excuses for, other than feeling overwhelmed by it. It's beautiful! But, it's a lot. It's out of my league. It was one of those things that was a rarity when we looked at homes, and I've always WANTED to be a gardener, so I told myself I would learn. We obviously need to address this major expense.

How do you frugally address homeschooling costs? Do you spend money on curriculum? Are you unschoolers?

[lookingforadelorean]

It was exciting to wake up this morning and see the responses. Thank you all for taking the time to address my concerns. I also appreciate that it felt more like slaps than face punches at this point. I was expecting a bruising, and my husband and I both know we've done ourselves no favors in the financial realm so I've smiled and nodded along with your comments. Plus lots of sighing.

I have thought many times about trying to work alongside homeschooling. A popular option among homeschooling parents is to teach english online to foreign speakers. Does anyone have experience with that option?

I will also, of course, look into getting licensed here in WA. Returning part-time to counseling is appealing.

I'm honestly surprised no one has suggested selling our house. We'd rather not move, but would moving to a rental give us a big head start? Or is our house appreciating enough that staying put makes sense?

[EngineerOurFI]

@lookingforadelorean - At your age and at your income level, I'm pretty surprised you're still carrying that much in student loans.  If you're blowing your (pretty substantial bonus) on travel, gifts, and home maintenance, maybe it would help you to view your student loan debt as an emergency and other than perhaps a very, very small portion of your bonus (maybe 10% of your 15% bonus so 1.5% overall) use that bonus to knock the hell out of the student loans and then start saving at least 90% of your bonus going forward and retain the remaining 10% for travel/fun/home maintenance.

Hopefully others have pointed out areas to cut spending and hopefully get your 401k contribution up to maximum ($19k/year) and HSA contribution up to maximum ($7k/year) and Roth IRA (backdoor if needed) up to $6k/year per person.  If you can figure out how to cut spending to max out your 401k/HSA/Roth IRA, get rid of your student loans, and start saving a substantial portion of your bonus and stock grants, then I think you'd be FI even at a 3.5% SWR in a reasonable timeframe.

Your bonus + stock grants alone are a massive FI meal ticket and you should start viewing them as such.  Personally, over the past 3 years I've changed my financial mindset and started viewing bonuses and stock grants as "not real income" that never sees my normal bank account and only goes to pay down debt or 100% to savings.  I'd recommend a similar strategy for you.  If you have to in order to maintain psychological focus, consider only a small portion (10%) of the stock grant/bonuses as money towards your expenses (travel/home maintenance).

Update as I just noticed your house question and side-gig question:  Honestly, I think there's enough other areas to cut and spending not accounted for (entirety of bonus, how much of your stock grants, and the ~$1,749 spending gap mentioned below) that needs to be addressed and could help you towards savings goals to "tighten up" before you start looking at house changes, etc.

What does it take to get your certification in counseling renewed?  Is it possible to do remote counseling via betterhelp.com or something like that for one day a week?  If so, how much does something like that pay?  Could it help you keep skills fresh and provide some minor side income to help with your goals and maybe even increase your eventual return-to-work income level since you mention maybe returning to work after kids are out of primary school?  Maybe this income method could be viewed as college savings vehicle?  Just throwing out some ideas, as I know tying things to specific motivation/goals helps me.

My notes on budget breakdown:

• I agree that based on your stated commute lengths, your monthly gas bill is very high.  My commute is 3x as far and my wife also commutes, but our gas bill is a bit lower.  Does your number include tolls or something?
• I understand your travel budget comes from bonuses - but how much $$ are you looking at here yearly?  Do you travel hack for airline/hotel points?
• Dependent Life insurance - Is this term life insurance for a spouse?  I just want to make sure you're not paying $100/mo for life insurance for the kids....?
• Lawn Maintenance - The 12 year old is certainly old enough to learn to mow, edge, weed eat, and blow the lawn.  10 year old can weed the beds.  That frees up parents to handle larger tasks like trimming hedges, fertilizing, doing your own pest control, trimming trees, applying mulch, etc.
• I'm not 100% following the math - you have monthly take home of $8,517 and monthly expenses of $6,768.  Where is the difference of $1,749/mo going since you're not yet maxing 401k/HSA/Roth IRAs and I don't see any 529s or extra debt paydowns in budget?  This is a pretty substantial gap - I'm surprised nobody else asked about this? 
• Did you just start contributing to HSA or are you using the entire contribution amount yearly?  Asking because I don't see any HSA asset listed
• Just checking, as this is an important factor when determining any FI timeline if you've got 3 kids and may help with motivation to reduce overall spending:  Do you have plans to start any kind of 529s for college savings vehicles? What percentage do you plan to assist with college funding for each kid?  Do kids have clear expectations on grades/school performance (not sure how that works with homeschooling, but just asking) and/or SAT/ACT score planning in order to "do their part" with getting scholarships? 

[lookingforadelorean]

@lookingforadelorean - At your age and at your income level, I'm pretty surprised you're still carrying that much in student loans.  If you're blowing your (pretty substantial bonus) on travel, gifts, and home maintenance, maybe it would help you to view your student loan debt as an emergency and other than perhaps a very, very small portion of your bonus (maybe 10% of your 15% bonus so 1.5% overall) use that bonus to knock the hell out of the student loans and then start saving at least 90% of your bonus going forward and retain the remaining 10% for travel/fun/home maintenance.

Hopefully others have pointed out areas to cut spending and hopefully get your 401k contribution up to maximum ($19k/year) and HSA contribution up to maximum ($7k/year) and Roth IRA (backdoor if needed) up to $6k/year per person.  If you can figure out how to cut spending to max out your 401k/HSA/Roth IRA, get rid of your student loans, and start saving a substantial portion of your bonus and stock grants, then I think you'd be FI even at a 3.5% SWR in a reasonable timeframe.

Your bonus + stock grants alone are a massive FI meal ticket and you should start viewing them as such.  Personally, over the past 3 years I've changed my financial mindset and started viewing bonuses and stock grants as "not real income" that never sees my normal bank account and only goes to pay down debt or 100% to savings.  I'd recommend a similar strategy for you.  If you have to in order to maintain psychological focus, consider only a small portion (10%) of the stock grant/bonuses as money towards your expenses (travel/home maintenance).

Update as I just noticed your house question and side-gig question:  Honestly, I think there's enough other areas to cut and spending not accounted for (entirety of bonus, how much of your stock grants, and the ~$1,749 spending gap mentioned below) that needs to be addressed and could help you towards savings goals to "tighten up" before you start looking at house changes, etc.

What does it take to get your certification in counseling renewed?  Is it possible to do remote counseling via betterhelp.com or something like that for one day a week?  If so, how much does something like that pay?  Could it help you keep skills fresh and provide some minor side income to help with your goals and maybe even increase your eventual return-to-work income level since you mention maybe returning to work after kids are out of primary school?  Maybe this income method could be viewed as college savings vehicle?  Just throwing out some ideas, as I know tying things to specific motivation/goals helps me.

My notes on budget breakdown:

• I agree that based on your stated commute lengths, your monthly gas bill is very high.  My commute is 3x as far and my wife also commutes, but our gas bill is a bit lower.  Does your number include tolls or something?
• I understand your travel budget comes from bonuses - but how much $$ are you looking at here yearly?  Do you travel hack for airline/hotel points?
• Dependent Life insurance - Is this term life insurance for a spouse?  I just want to make sure you're not paying $100/mo for life insurance for the kids....?
• Lawn Maintenance - The 12 year old is certainly old enough to learn to mow, edge, weed eat, and blow the lawn.  10 year old can weed the beds.  That frees up parents to handle larger tasks like trimming hedges, fertilizing, doing your own pest control, trimming trees, applying mulch, etc.
• I'm not 100% following the math - you have monthly take home of $8,517 and monthly expenses of $6,768.  Where is the difference of $1,749/mo going since you're not yet maxing 401k/HSA/Roth IRAs and I don't see any 529s or extra debt paydowns in budget?  This is a pretty substantial gap - I'm surprised nobody else asked about this? 
• Did you just start contributing to HSA or are you using the entire contribution amount yearly?  Asking because I don't see any HSA asset listed
• Just checking, as this is an important factor when determining any FI timeline if you've got 3 kids and may help with motivation to reduce overall spending:  Do you have plans to start any kind of 529s for college savings vehicles? What percentage do you plan to assist with college funding for each kid?  Do kids have clear expectations on grades/school performance (not sure how that works with homeschooling, but just asking) and/or SAT/ACT score planning in order to "do their part" with getting scholarships? 

Thanks for your detailed response, Engineer. I stayed up late last night reading through lots of MMM posts about attitude, and so I appreciate that you pointed out the same ideas -- thinking about how to better utilize that "bonus" money.

Because, yes, we have been living as though it's a "bonus" that can be dipped into throughout the year for whatever we please. We always start out thinking it will go straight to, and remain in, savings, but then we mostly fritter it away (aside from occasional legit necessities like a new water heater). And even then, you calculated correctly -- there should be a whole lot of leftover monthly even without touching the bonus. I didn't try to account for that because I really have nothing to show for any of it. It all goes to the typical(?) lifestyle creep items that need to be eliminated -- drive-thru coffees, books, subscription services (canceling them all as we speak), take-out once a week, my husband's lunches, etc. We got free zoo passes this weekend, and it was REALLY hard not to buy each of my kids a stuffed animal at the end of it. That probably sounds ridiculous, but it's still true. That ONE refusal of an impulse buy was a huge win for me.

We've actually made pretty great progress on the student loans. Mine has been the first we addressed most aggressively (relatively speaking). It was for my graduate degree, which I didn't complete until age 38.

Anyway . . .
1. Volvo = $45 1x/week; Kia = $60 2x/month. Estimating total gas costs at $300/month
2. Travel really varies. We usually go somewhere locally that we can drive to once or twice/year. This year has been an exception, as we got a phenomenal deal on tickets to AZ, so we traveled to my mother's house (for the first time in 10 years, so I feel a little bit justified on that expenditure). And I just booked a ticket to Chicago to see my first and only newborn niece. Usually, I would say we spend around $2500 annually.
3. For me and kids
4. Great points.
5. Gaps addressed above.
6. Using the entire HSA
7. Each of our children has a 529 that was started with $10K each in 2007, 2009 and 2012. I would have to check on current values, but they haven't performed spectacularly. I wish we'd known then what we know now. However, IF they choose to attend college, I will insist on them utilizing the Running Start program available here, which allows them to complete their final two years of high school and earn an associate degree simultaneously for free. At the bare minimum, I'm a huge advocate of community colleges, and I will strongly encourage them to complete an associates before transferring to a four-year university.

[Blue Skies]

Where did you get the budget numbers in your first post?  You mentioned that the gap is a lot of random things not included in the first post.  Can you put some values/categories to that?  One of the first things to do when trying to increase savings is to first figure out where EVERY DOLLAR is currently going.  How much is your husband spending on lunches at work?  How much are you spending on take out/restaurant eating (not a category in your first post, unless you include it under food)?  How much are you spending on gifts or other one off items (stuffed animals at the zoo)?  Once you track that for a while and can really see how things add up it can be very motivating to change your spending. 

Your gap is a problem.  You need to figure out where that money is going and see whether your spending is really warranted.

Other than what was mentioned above, your gas/electric is about double what mine is per month.  Something to consider. 
I agree with the poster above - you have so many other things to look at right now, don't worry about the housing situation.  Especially if you think rent would be the same $/month anyway.  Tackle your spending first and then consider whether moving might make sense.

[lookingforadelorean]

Where did you get the budget numbers in your first post?  You mentioned that the gap is a lot of random things not included in the first post.  Can you put some values/categories to that?  One of the first things to do when trying to increase savings is to first figure out where EVERY DOLLAR is currently going.  How much is your husband spending on lunches at work?  How much are you spending on take out/restaurant eating (not a category in your first post, unless you include it under food)?  How much are you spending on gifts or other one off items (stuffed animals at the zoo)?  Once you track that for a while and can really see how things add up it can be very motivating to change your spending. 

Your gap is a problem.  You need to figure out where that money is going and see whether your spending is really warranted.

Other than what was mentioned above, your gas/electric is about double what mine is per month.  Something to consider. 
I agree with the poster above - you have so many other things to look at right now, don't worry about the housing situation.  Especially if you think rent would be the same $/month anyway.  Tackle your spending first and then consider whether moving might make sense.

Absolutely agreed. The not-knowing is terrifying. My goal is to get us up and running on Personal Capital. Is that everyone's preferred method for tracking?

Also, is there any support for an old-school cash envelope system?

[Blue Skies]

I'm not a big fan of cash only systems.  I like credit card rewards.  And I like not having to go to the bank to withdraw cash every month.

On the other hand, I'm not blowing large amounts of money on who knows what either.  For people who don't have the discipline or self control to NOT charge it when you know you have spent too much already, then cash is a great way to force the issue.  When you run out, you run out.  (well, as long as you don't start charging things at that point!)

[lookingforadelorean]

I'm not a big fan of cash only systems.  I like credit card rewards.  And I like not having to go to the bank to withdraw cash every month.

On the other hand, I'm not blowing large amounts of money on who knows what either.  For people who don't have the discipline or self control to NOT charge it when you know you have spent too much already, then cash is a great way to force the issue.  When you run out, you run out.  (well, as long as you don't start charging things at that point!)

Thanks. Maybe I should start with YNAB. I'm pinging around like a pinball over here today. So much to do . . . the more I review options, the more I'm wondering if YNAB might be better for us than Mint or Personal Capital? Especially as a place to just get a handle on where everything is going?

[martyconlonontherun]

Adding how many years left of the car and student loans would provide context. If there is only 2 years left, you can plop that right into retirement accounts for 20 years. Do that immediately. Don't suddenly think you have an extra 1k to budget with each month. Nope, that is already pre-assigned to increase in retirement accounts.

Between that, your current contributions and a few other minor changes, you will be on pace for retirement in 20 years. (if you keep your lifestyle in check)

Seems like you use your house and you don't save much by incurring selling costs, renting and buying a new place short-term. Probably better off to keep the house until the kids are 18 and then sell immediately for your forever downsized place. Less risk of kids staying and you having too many memories to sell by the time grand kids start popping in.

[dmmms]

Just try pen and paper! Give H a notebook to write in each day as he spends money and you do it, too!! Also, if you use debit or credit cards, you can just download 3-6 mos of expenses to at least start to get an idea of spending, even if just categorizing by store! If it's cash, at least calculate that amount as a start.

I'd love to see you harness that MA to pay off the school loan it cost and save something under your name for retirement! How could there not be a need for counseling in the HS world (entry to/from public, peer groups, parent groups, siblings...)?

Where all are you going that requires a gas fill up a week? And are you SURE your H isn't buying snacks at the gas station when he fills up "twice a week?" Only ask bc I may have done that once as a teenager...happy friends that day!

[Freedomin5]

Re: teaching English online

There’s a whole thread on here about that. There are a good number of people on the forums doing just that.

https://forum.mrmoneymustache.com/entrepreneurship/potential-side-hustle-teach-english-online-for-$20-an-hour!/msg1468266/#msg1468266

However, given that you have a masters in counseling and a license that can be reinstated, I wonder why you want to earn $20/hr teaching English online when you can earn $50/hr doing online counseling at your leisure on iCouch. The link is: https://simple.icouch.me/icouch-for-online-therapy

[lookingforadelorean]

Re: teaching English online

There’s a whole thread on here about that. There are a good number of people on the forums doing just that.

https://forum.mrmoneymustache.com/entrepreneurship/potential-side-hustle-teach-english-online-for-$20-an-hour!/msg1468266/#msg1468266

However, given that you have a masters in counseling and a license that can be reinstated, I wonder why you want to earn $20/hr teaching English online when you can earn $50/hr doing online counseling at your leisure on iCouch. The link is: https://simple.icouch.me/icouch-for-online-therapy

I brought up teaching English because it seems like something I can start pretty quickly. Getting licensed in WA is going to be a time-consuming process. I have only just started the research, but since I haven't been licensed since 2007 (and that was in Illinois), I'm expecting lots of hoop jumping to get to a point where I can practice here (or anywhere). It's certainly possible; it just won't be immediate.

[lookingforadelorean]

Oh! And I messed up the gas explanation. We fill up DH's car 1x/week -- $45. We fill up my car once every 1-2 weeks -- $60. This barely changes the total expenditure, though. I've adjusted my initial expenses tally to $300 monthly.

[Nick_Miller]

At risk of being face-punchy, you're 50 with what, about $50K in net worth? (I counted the home as net zero, although frankly fees/costs on a sale might force you to bring money to the table)

I think you have to treat this like an emergency situation.

1) Sell the nice car

2) Enlist kiddos to do yard work (I understand this is more complex than most yards, but there's no way its impossible to learn). My 13-year-old daughter has been cutting grass with me since age 9, so at least two of your kids could be of some real help.

3) Get those groceries down to $800 or $900/month.

4) I know you're saying the School is non-negotiable, so I get that, but you need to earn some income then, during evenings or weekends or something. Even a $1000/month would help tremendously. You all have set up a lifestyle that is not sustainable unless you want to be 65 and essentially broke. Your husband earns a good living, but your family gobbles most of it up every month, so a combination of increased income and decreased spending would really move the needle.

5) How is housing appreciating up there? If it's on fire, I'd be hesitant to suggest selling and renting (especially like I said above that you might have to bring money to closing), but generally renting, even if monthly rent is equal to a mortgage payment, is so much cheaper!

Insurance, property taxes, all the crap people buy for outside, maintenance/repairs, and all that yardwork you're mentioning, all go away. Plus, it could potentially simplify your household tasks and free up time for you find a part-time gig.

Still if houses are appreciating like 5% a year up there, it might be smarter to hold. That's obviously a huge decision.

Good luck!

[fuzzy math]

I agree with others about your housing. You have to live somewhere. If you move, you're just paying money into something else. Given where you live it's not that bad of a deal.

That being said you have a few glaring issues (that I'm sure you're aware of):

1) You need income. Your kids are old enough that you can leave them alone for a few hours here and there for you to earn some $$. If your hubby if able to work remote, work a flexible schedule, you could try to offset that to minimize their time alone. But really your 12 yr old can babysit for a couple hours while dad is commuting home. My kiddos are 12, 9 and 7 and we do this.

2) your gas costs are outrageous. Do you live near the sounder line? (Everett)? There have to be tons of busses too. There's also gotta be some options for finding a commuting buddy. Look on Craigslist. Consider gas mileage for your vehicles too. My DH currently has a 35 mile commute each way, but the vehicle he drives gets 38 Mpg. Your DH's vehicle does not need to be able to fit all 5 of you comfortably if your vehicle does. He can even take all 3 kiddos out without you (12 yr old in the front), as long as your vehicle is reserved for the times when all 5 of you go out.

3) how often are your kids going to Forest school? Does this explain some of your gas costs? Public school is free. Homeschooling is a choice, but homeschooling plus taking your kids to an expensive NOT HOMESCHOOL program, plus taking yourself out of the work force to drive them to their not homeschool program is 3x the costs burning through your wallet.

4) pest people do not spray for rats. You can easily manage to put out your own rat traps since you are at home. Also, what would happen if you just stopped paying a gardener? do you live in an HOA where you would be fined if you did not have the fanciest garden in the neighborhood? Is this garden even in the front yard where other people would see and if they could see would they care?

5) Since you are at home and your homeschool, teach your kids to cook. Cooking from scratch is a huge life skill that will save you and them tons of money.

6) your library likely has passes to tons of free activities. Familiarize yourself with all your local museum free nights. And don't feel like your kids need lots of treats (stuffed animals etc). You having dedicated your life to educating, being present and chauffeuring them around is the biggest treat you can give them.

7) your student loan debt has to go ASAP, but this needs to happen while you are simultaneously saving more for retirement. Your DH should be maxing out his 401k ($19,000) while you are maxing out a spousal traditional IRA ($6,000). You are paying $20k in federal taxes because your taxable income is so high. If you get that down by saving into retirement accounts, your federal bill will come down.

You seem to just spend because it's there. What would happen if you just ratcheted up your savings, and had less money available in your accounts? It might be the easiest way to force yourself to live within your new more limited means.

[Stashing Swiss-style]

Tracking expenses is absolutely essential and, frankly, a notepad or simple excel file is fine to start with.  Getting started is the key.  I agree with the idea of you getting an income.  Your qualifications have no financial value unless you use them yet they have already cost you a lot.  You can do this! 

[six-car-habit]

 Keep the house.  Nice house thats comfortable for 5 people on a 1/3 acre [?], relatively close to work, just North of Seattle for $430K is going to be hard to replace anywhere near that price.

  At what age will the kids start public school ?   Interesting that you are big on community college, but not public gradeschool and middle school. I can't imagine there are any "running Start " credits available for home schooling. Maybe get the children into public school a year or so before the running start program begins , so they can make some friends / acclimate first....

  Put all spending on paper. On the refrigerator, where everyone sees it every day !!  We put up a new sheet each month.  6 Categories - My spending / wife spending /  kid spending /  groceries / household fixes[ paint + brushes/ gardening supply/ etc] / restaurant-eating out.  If you put it in a notebook , you'll wonder why no-one has updated it for 2 weeks.  Trust me, on the fridge puts ALL spending front and center, very hard to fudge #'s or hide purchases if you'all have a modicum of honesty.  Everyone is in-and-out of the fridge at least once a day, there is no better place to put it. At the end of the month put the page in your "tracking file" and start a new sheet.

[lookingforadelorean]

At risk of being face-punchy, you're 50 with what, about $50K in net worth? (I counted the home as net zero, although frankly fees/costs on a sale might force you to bring money to the table)

5) How is housing appreciating up there? If it's on fire, I'd be hesitant to suggest selling and renting (especially like I said above that you might have to bring money to closing), but generally renting, even if monthly rent is equal to a mortgage payment, is so much cheaper!

Insurance, property taxes, all the crap people buy for outside, maintenance/repairs, and all that yardwork you're mentioning, all go away. Plus, it could potentially simplify your household tasks and free up time for you find a part-time gig.

Still if houses are appreciating like 5% a year up there, it might be smarter to hold. That's obviously a huge decision.

Good luck!

You couldn't possibly face punch me more than I am already doing it to myself. Still, thanks for being gentle. ;-)

My husband and I are both on board to address everything you mentioned. I'm actually kind of excited about the grocery challenge. I think it might be kind of fun to see how much we can cut/save.

That said, #5 is what keeps me up at night and has for many months. I feel like our house purchase was the one "right" financial decision we've managed. We purchased our home in April 2016 for $432K. We just had it appraised in April of this year, and the appraisal came in at $510. This allowed us to get out of the PMI, so our mortgage went from $2800 to $2525 just this month. Redfin's estimate is currently $550K. I doubt anyone would pay $550K for this house, but we could reasonably expect $520.

With that kind of appreciation, should we keep the house? This is something I've hoped some more knowledgable souls would help us with. We enjoy seeing what else is out there in our area, and I can assure you that we CANNOT buy a similar home today for $432K. If we sold our home, we would have to be prepared to rent indefinitely or pay substantially more for the same home somewhere else. Would MMM tell us to move closer to my husband's office so he can bike there?

[lookingforadelorean]

2) your gas costs are outrageous. Do you live near the sounder line? (Everett)? There have to be tons of busses too. There's also gotta be some options for finding a commuting buddy. Look on Craigslist. Consider gas mileage for your vehicles too. My DH currently has a 35 mile commute each way, but the vehicle he drives gets 38 Mpg. Your DH's vehicle does not need to be able to fit all 5 of you comfortably if your vehicle does. He can even take all 3 kiddos out without you (12 yr old in the front), as long as your vehicle is reserved for the times when all 5 of you go out.

3) how often are your kids going to Forest school? Does this explain some of your gas costs? Public school is free. Homeschooling is a choice, but homeschooling plus taking your kids to an expensive NOT HOMESCHOOL program, plus taking yourself out of the work force to drive them to their not homeschool program is 3x the costs burning through your wallet.

4) pest people do not spray for rats. You can easily manage to put out your own rat traps since you are at home. Also, what would happen if you just stopped paying a gardener? do you live in an HOA where you would be fined if you did not have the fanciest garden in the neighborhood? Is this garden even in the front yard where other people would see and if they could see would they care?

5) Since you are at home and your homeschool, teach your kids to cook. Cooking from scratch is a huge life skill that will save you and them tons of money.

6) your library likely has passes to tons of free activities. Familiarize yourself with all your local museum free nights. And don't feel like your kids need lots of treats (stuffed animals etc). You having dedicated your life to educating, being present and chauffeuring them around is the biggest treat you can give them.

7) your student loan debt has to go ASAP, but this needs to happen while you are simultaneously saving more for retirement. Your DH should be maxing out his 401k ($19,000) while you are maxing out a spousal traditional IRA ($6,000). You are paying $20k in federal taxes because your taxable income is so high. If you get that down by saving into retirement accounts, your federal bill will come down.

You seem to just spend because it's there. What would happen if you just ratcheted up your savings, and had less money available in your accounts? It might be the easiest way to force yourself to live within your new more limited means.

2. DH's only public transport option is the bus, which is pretty straightforward, just time consuming. The line he would take, including one transfer, shows a 105 minute commute. And I'm assuming that's not in peak traffic. It's not entirely off the table.

3. The kids go to forest school one time/week. It does account for some of the gas. It's a 45-minute drive there and often a 1.5-hour drive home. Last year was their first year in the program, and we saw so many benefits from it, we're not willing to let it go.

4. Our pest control company sprays for bugs, maintains bait stations for rats. It's my understanding that bait stations and rat traps are not the same. We're working on a plan for the yard maintenance.

5. We do this.

6. We utilize our library more than most families, and we always have.

7. These are great points. So, with the monthly surplus we'll soon have, we should pay down student loans FIRST? Or split the surplus between paying down student debt and maxing out 401K?

[lookingforadelorean]

Keep the house.  Nice house thats comfortable for 5 people on a 1/3 acre [?], relatively close to work, just North of Seattle for $430K is going to be hard to replace anywhere near that price.

  At what age will the kids start public school ?   Interesting that you are big on community college, but not public gradeschool and middle school. I can't imagine there are any "running Start " credits available for home schooling. Maybe get the children into public school a year or so before the running start program begins , so they can make some friends / acclimate first....

  Put all spending on paper. On the refrigerator, where everyone sees it every day !!  We put up a new sheet each month.  6 Categories - My spending / wife spending /  kid spending /  groceries / household fixes[ paint + brushes/ gardening supply/ etc] / restaurant-eating out.  If you put it in a notebook , you'll wonder why no-one has updated it for 2 weeks.  Trust me, on the fridge puts ALL spending front and center, very hard to fudge #'s or hide purchases if you'all have a modicum of honesty.  Everyone is in-and-out of the fridge at least once a day, there is no better place to put it. At the end of the month put the page in your "tracking file" and start a new sheet.

Actually, yes, homeschoolers can jump right into the Running Start program. No need for attendance at public school.

The sheet on the fridge is a GREAT idea. I love something visible so the kids can see what we're doing and help out with spending/saving/tracking. Thank you!

[mistymoney]

7) your student loan debt has to go ASAP, but this needs to happen while you are simultaneously saving more for retirement. Your DH should be maxing out his 401k ($19,000) while you are maxing out a spousal traditional IRA ($6,000). You are paying $20k in federal taxes because your taxable income is so high. If you get that down by saving into retirement accounts, your federal bill will come down.

You seem to have plenty of income relative to expenses. It seems to be frittered away in ways a bit unknown to you.

Make auto payments for the above - H maxes his 401k via payroll and then you get the spousal IRA going with auto monthly payments. I would also add maybe 250/month to an EF account. I can't recall if you have one? Might also want to do 250/month into irregular expenses account. put all of this on autopay monthly, or with each paycheck.

Then budget based on what's left. Once you are able to max your retirement savings and put aside monthly for rainy day and also have savings available for irregular expenses such as house maintenance, you will be in a good position to evaluate your position vis a vis relocation, renting, etc.

But imo, you need to get a large chunk of cash monthly into various savings vehicles and establish what you are really spending on before making that decision.

[mistymoney]

also - in regards to eventual retirement - you and H will get ss income I'm assuming.

You had children later in life - I also assume that you qualify for your own ss at 62?

That greatly decreases the large nestegg needed to retire.

Also - on that score - you have only 12 years until you could collect something. Think about how getting some kind of income going now will increase that number.

[dandarc]

+1 to maxing traditional retirement for both of you - will save a bundle in taxes, so it won't hurt to do that. Seems like there is quite a bit more spending than listed in your budget - you should be making steady progress with this income / expense situation already, and any further optimization would just speed up the process even more. So you gotta start tracking your actual expenses - doesn't need to be complicated, but does need to be more complete than it appears to be currently.

Basically, what everyone else already said said.

[dandarc]

also - in regards to eventual retirement - you and H will get ss income I'm assuming.

You had children later in life - I also assume that you qualify for your own ss at 62?

That greatly decreases the large nestegg needed to retire.

Also - on that score - you have only 12 years until you could collect something. Think about how getting some kind of income going now will increase that number.

+1 to this - social security is not too far off for y'all. Outlook may look a lot better if you factor that in.

[former player]

Please don't sell your house.  With the levels of financial indiscipline you have displayed to date any money that you get out of it will just be pissed away the same way you have pissed away your husband's very good salary.  If you can keep to a budget for the next year then you can reassess.

The first thing you need to do is max your husband's 401k contribution.  The second thing you need to do is have your husband check what funds it is going into: the whole of that frankly pathetic $70k should be 100% low cost index funds.  And you might also check what position each of you is in in relation to social security: that is going to be what keeps you fed and housed in old age, not the few hundred a year you've saved for retirement in your 30 years of adult life so far, so you need to know what you can expect.

The second thing you need to do is tell your kids that you will not be able to afford to subsidise them through college, other than what is already in their 529s, because you still have student loans of your own to pay off and you are behind on your retirement savings too.  And if your kids decide at any point that they need to go to school to get the results that will get them to college you need to let them.  Also, check what the 529s are invested in and make sure that it is 100% low cost index funds.

The third thing you need to do is pay off the student loan at 5.5%.  It's only $8k, so you should be able to see it gone inside three months max if you put your minds to it.

The fourth thing you need to do is get off your comfortable butt and start working for a living.  By which I don't just mean paid employment, although that is vital for all the reasons already given by others, but it also means not relying on other people to do your dirty work.  Mow your own lawns: it's not rocket science, and it doesn't have to be perfect.  And why the everlasting fuck are you paying for your composting to be taken away when you have a third of an acre?  You and the kids can work out where the best place in the yard is for a compost heap as part of their education, and what if any construction it needs, and then build it - for nothing, or next to nothing, because you are going to scrounge any materials you need for free from the neighbourhood/waste recycling, etc., and then tend to it.  And what exactly is the problem with the rats?  Are they getting in the house?  If so, stop them getting in.  If they are not getting in the house, are they nesting under it?  Stop them from getting under it.  Otherwise leave them alone, don't feed them, and they'll leave you alone.  If they don't leave you alone, buy some traps and learn to use them.  And if you can swim, teach your own kids to swim.

The fifth thing you need to do is look around your house for everything you don't need that has value and sell it.  Put the money towards your student debts.  Student debts of that size at 50?  sheeesh.

If you can put into practice the other savings suggested above, then you will find that it all starts to work in your favour.  For instance, cutting out all that expensive packaged food will reduce your garbage amount and what you cost to have it taken away - and it's better for the environment your kids will be living in too.  How many TVs and computers are in your house?  If there's more than one TV sell the others and see your electricity bill come down a bit.

[lookingforadelorean]

7) your student loan debt has to go ASAP, but this needs to happen while you are simultaneously saving more for retirement. Your DH should be maxing out his 401k ($19,000) while you are maxing out a spousal traditional IRA ($6,000). You are paying $20k in federal taxes because your taxable income is so high. If you get that down by saving into retirement accounts, your federal bill will come down.

You seem to have plenty of income relative to expenses. It seems to be frittered away in ways a bit unknown to you.

Make auto payments for the above - H maxes his 401k via payroll and then you get the spousal IRA going with auto monthly payments. I would also add maybe 250/month to an EF account. I can't recall if you have one? Might also want to do 250/month into irregular expenses account. put all of this on autopay monthly, or with each paycheck.

Then budget based on what's left. Once you are able to max your retirement savings and put aside monthly for rainy day and also have savings available for irregular expenses such as house maintenance, you will be in a good position to evaluate your position vis a vis relocation, renting, etc.

But imo, you need to get a large chunk of cash monthly into various savings vehicles and establish what you are really spending on before making that decision.

This was very helpful. Thank you!

[lookingforadelorean]

@former player I won't try to defend the position I'm in except to point out that my student debt is for a graduate degree that I completed at age 38. Not trying to excuse the debt, but I'm sure glad I have a thick skin.

Your suggestions primarily seemed thoughtful, though, so thank you for that. Even with the bruising delivery, having an action plan listed out is helpful for me.

[Steeze]

7) your student loan debt has to go ASAP, but this needs to happen while you are simultaneously saving more for retirement. Your DH should be maxing out his 401k ($19,000) while you are maxing out a spousal traditional IRA ($6,000). You are paying $20k in federal taxes because your taxable income is so high. If you get that down by saving into retirement accounts, your federal bill will come down.

You seem to have plenty of income relative to expenses. It seems to be frittered away in ways a bit unknown to you.

Make auto payments for the above - H maxes his 401k via payroll and then you get the spousal IRA going with auto monthly payments. I would also add maybe 250/month to an EF account. I can't recall if you have one? Might also want to do 250/month into irregular expenses account. put all of this on autopay monthly, or with each paycheck.

Then budget based on what's left. Once you are able to max your retirement savings and put aside monthly for rainy day and also have savings available for irregular expenses such as house maintenance, you will be in a good position to evaluate your position vis a vis relocation, renting, etc.

But imo, you need to get a large chunk of cash monthly into various savings vehicles and establish what you are really spending on before making that decision.

This was very helpful. Thank you!

+1 - max out the 401k, HSA, 2x Roth, then contribute 5% take home pay to an EF, then create a budget with what is left. Bonus goes first to maxing your Roth IRAs for the year, then topping off your EF, then deferred maintenance on the house and vehicles (read: not upgrades!). I recommend looking at maintenance on the house and vehicles over 2-3 years and setting aside a monthly payment in a separate savings account that will cover it.

I would keep the house, you need the forced savings of a mortgage to keep you in check. Increasing savings by renting is a pipe dream unless you are disciplined with your finances.

“Pay yourself first” - save then spend, not the other way around.

[mistymoney]

@former player I won't try to defend the position I'm in except to point out that my student debt is for a graduate degree that I completed at age 38. Not trying to excuse the debt, but I'm sure glad I have a thick skin.

Your suggestions primarily seemed thoughtful, though, so thank you for that. Even with the bruising delivery, having an action plan listed out is helpful for me.

not to pile on, but the clarification has me wondering what has been going on with the sl payments. Standard repayment is done in 10 years, it is 12 years post-degree.

Did you do income based repayments? have some deferments?

I myself have more SL debt and at an older age (but for my children's educations). I am just starting down the road to try to repay, so wondering how the sls are hanging on so long.

And I have several in the 7% interest range, so - definitely worse off than you!

[lookingforadelorean]

@former player I won't try to defend the position I'm in except to point out that my student debt is for a graduate degree that I completed at age 38. Not trying to excuse the debt, but I'm sure glad I have a thick skin.

Your suggestions primarily seemed thoughtful, though, so thank you for that. Even with the bruising delivery, having an action plan listed out is helpful for me.

not to pile on, but the clarification has me wondering what has been going on with the sl payments. Standard repayment is done in 10 years, it is 12 years post-degree.

Did you do income based repayments? have some deferments?

I myself have more SL debt and at an older age (but for my children's educations). I am just starting down the road to try to repay, so wondering how the sls are hanging on so long.

And I have several in the 7% interest range, so - definitely worse off than you!

Just paid the interest for years, but have been paying more the last 6 years or so.

[lookingforadelorean]

When recommending maxing the 401K, are you advising contributing pre-tax or Roth?

[Steeze]

When recommending maxing the 401K, are you advising contributing pre-tax or Roth?

Pre-tax

[lookingforadelorean]

When recommending maxing the 401K, are you advising contributing pre-tax or Roth?

Pre-tax

Thank you!!

[dandarc]

I'd do a traditional IRA for you too - seems like you're not "covered by a retirement plan at work" currently, so you should be eligible to deduct that. He may have to do a Roth IRA, but that 401K contribution + HSA + all those pre-tax insurance deductions might help with that.

[calimom]

You're getting some great recommendations for cutting back expenses and increasing savings, as well as some pretty blunt reality checks. It's commendable on how gracious you are in absorbing everything, so kudos to you.

My own blunt observations: What's the logic in working hard (and you're clearly smart) and investing so much leveraged $$ that you never use? You're paying for an advanced degree that has cobwebs on it, while at the same time not making use of the public school system that your property taxes support. There is a bit of a disconnect. Homeschooling is a very, very personal decision, but you're paying an extraordinary high price for it.

And the cost of the tuition for Forest School, plus the long commute to and fro is also puzzling. You have a forest school in your own backyard just waiting to be explored. You live near a lake! Even those of us who don't home school understand that it doesn't mean actually being at home all the time, but there are more budget friendly options to investigate.

Can we also talk about the rat "bait" stations? It's safe to say most of us don't want rodents in our living spaces, but poisoning them is horrible for the environment. You could well be poisoning cats, owls, and other creatures along the food chain. Please set traps instead.

Rooting for you as you contemplate and take small and large actions to better balance you budget and life.

[EngineerOurFI]

@lookingforadelorean

I'd echo some points here that basically I think you've got your head on straight and are focused, committed, and clearly eager and understand that you clearly need to:

1) start doing a detailed budget analysis every month and for now probably be reviewing it weekly (I'm doing the same right now if you look at my journal and have been cutting just tons of stupid expenses).  Just pick a method - Mint/YNAB/Paper Pen.  Just make sure every single dollar spent has a bucket somewhere and you know where every single dollar went every week and every month.  As you said, you've gotta totally change your mindset on bonuses/stock grants.  Budget the travel and house maintenance etc. into your monthly cashflow and force yourself to make those things compete against other monthly expenses to "earn" the right to use a dollar of your money....and then view bonuses/stock grants as little green workers that can demolish debt and/or immediately fund Roth IRAs for the year, etc.  If it helps, keep back a small percent of bonus for "fun" to help you stay focused long term.  Kind of like a fattie (me) eating a cookie every now and then but still staying on weight loss plan.  The amount my wife and I were able to save by even casual use of mint over ~6 months is staggering - now that we're working on more detailed budgeting it's jaw dropping.  Best time to start, though, is today!!


I think your immediate goal would be to pick a budget method and revert back with detailed budget breakdown for month of July and plan to start chopping up areas and working on a few budget sections at a time.  Probably can circle back with follow-up budget in August and then go from there!!  Looking forward to seeing your progress and I'm excited to follow!  Once you get the cashflow on autopilot, it's all going to seem pretty easy.  I really think you are going to be able to put yourself in a much better cash flow situation in short order and help teach your kids about money management to help with their future.  Imagine if your kids learn some of this as they're in high school and set out with this mindset and lower debt at age 22 after college?


2) I completely agree there are enough areas to cut that even with remaining in house you can probably get to where you're maxing your $19k/year in 401k (pre-tax) and maxing $6/year in Roth IRA (post-tax, obviously) and probably even maxing your HSA.  For now maybe you still use your HSA on medical expenses, but soon hopefully you consider the HSA pure savings and don't even touch it even when medical expenses come up unless they're just big/shocking expenses.  Keep in mind these HSA + 401k contribution level will save you some in taxes as well.


3) Honestly, I think you can reach the above "level" pretty quickly if you get control of spending (or at least get pretty close).  I think you'll get there within a matter of a few months.  Once you've got a handle on your spending and bump up contributions to the above level, then you can start demolishing the hell out of that student debt.  In the meantime, perhaps you can consider your bonuses/stock grants as wonderful little green workers that you can throw at student debt and just demolish it ASAP.  Honestly, I think there's no reason you couldn't be at this "level" in less than ~2 years depending on your bonus cycles and spending cuts.



4) Once you've "graduated" from the level of maxing out 401k, his Roth IRA, your Roth IRA (assuming picking up side gig as I think you need $6k earned income, but would need to check this point?), and family HSA, and student debts are paid off, and you no longer have to use HSA for your yearly medical and instead are investing it as a "retirement vehicle", and of course everything is in low-expense fee index/total market funds with high % equities...... and you can now use the freed up student loan debt payments to seriously reduce your house payment timeline and still partially fund some 529s, etc.  Especially if you control additional lifestyle inflation between now and then.  I know what I did when trying to knock out car debt was I put extra income that I wanted to earmark towards debt-pre-payment directly in a secondary savings account not tied to my primary checking.  That way I never saw that income and it went straight to debt.  No chance of spending it. Not sure if that type of psychological barrier is something that would help you, but it helped me in 2018 to burn down car debt to $0.

Side note - I agree that changing house shouldn't even be on your radar.  The forced mortgage savings is a good thing for you for now and house may not be mustachian (mine isn't either) - but it's not crazy high for your area and once you get all of the other expenses under control, you'll be in a position to pay it off early.

Side note #2 - At your asset and income level and tax bracket level and with your age, I for sure like the idea of contributing some pre-tax dollars (401k), some post-tax dollars (Roth IRAs are beautiful), and some triple-tax-advantaged dollars (HSA is a magical retirement vehicle).

[lookingforadelorean]

You're getting some great recommendations for cutting back expenses and increasing savings, as well as some pretty blunt reality checks. It's commendable on how gracious you are in absorbing everything, so kudos to you.

Can we also talk about the rat "bait" stations? It's safe to say most of us don't want rodents in our living spaces, but poisoning them is horrible for the environment. You could well be poisoning cats, owls, and other creatures along the food chain. Please set traps instead.

Rooting for you as you contemplate and take small and large actions to better balance you budget and life.

Thanks for the support. We'll add pest control options to the list of expenses we need to discuss/change/eliminate.

@lookingforadelorean

I'd echo some points here that basically I think you've got your head on straight and are focused, committed, and clearly eager and understand that you clearly need to:

I think your immediate goal would be to pick a budget method and revert back with detailed budget breakdown for month of July and plan to start chopping up areas and working on a few budget sections at a time.  Probably can circle back with follow-up budget in August and then go from there!!  Looking forward to seeing your progress and I'm excited to follow!  Once you get the cashflow on autopilot, it's all going to seem pretty easy.  I really think you are going to be able to put yourself in a much better cash flow situation in short order and help teach your kids about money management to help with their future.  Imagine if your kids learn some of this as they're in high school and set out with this mindset and lower debt at age 22 after college?

Thanks for taking the time to write out all those details. I'm going to check out your journal! The comment above is huge for me -- I didn't grow up with good examples of how to live frugally, and it's important to my husband and me that we get this as "right" as we can with our own kids.

Agree that you need to do some kind of budget tracking to get on top of what you are REALLY spending.  Mint has some flaws/shortcomings, but it is free and pretty easy to work with once you get all your accounts entered.  I would try that first and only switch to a paid service if you find it really doesn't work for you.

I would not sell the house, at least not right now. With 1/3 of an acre, I am wondering why you can't turn it into your very own Forest School?  I would try networking on sites like Buy Nothing (Facebook based) or Nextdoor to see if there are other families in your area who would be interested in working together on projects to transform their lots into different types of habitat -- some might want more natural/native habitat restoration while others might be interested in permaculture.  I bet you could find local people with the relevant expertise/degrees to work with you as consultants -- most people with an environmental background are to some degree in the field because they are stewards at heart, and would value the opportunity to mentor kids.  @sol lives somewhere N. of Seattle and may have people in his network who would be interested.  @Erica/NWEdible doesn't post here much anymore but you should definitely look a her blog (NWEdible). 

Your DH should look at getting a more fuel efficient vehicle (I love my Ford Cmax hybrid, which gets about 40 mpg), and see if there are park and ride options that would make more sense for at least a partial transit commute.  Also working flex hours if he can to reduce the time stuck in traffic can really reduce gas costs -- my sister lived out in the Snoqualmie Valley for years and used to work 7am-3pm shifts to make her commute to Seattle more tolerable.  If he can negotiate 1-2 days of WFH/week, that also reduced fuel costs by 20-40%.   If you don't NEED an SUV I would also consider downsizing to a smaller, more fuel efficient car for you and the kids.  And REALLY focus on minimizing driving.  Group all errands so that you can do stuff in one or two trips a week, even if it makes for a long day.

Most importantly, involve your kids in the budgeting and home economizing process.  If they want to keep going to Forest School, make it contingent on THEM coming up with ways to contribute to the cost by cutting down on spending in other areas.  Maybe that looks like them taking over the lawn and garden maintenance.  Or figuring out how to reduce the garbage/compost/recycling bill.  Or figuring out how much it costs to make pizzas versus buying frozen or ordering, and then learning to make the pizzas themselves.  Maybe it means learning to make cheaper stuff for breakfast (muffins, scones, your own granola will all be cheaper than store bought cereal; if you want more protein they can learn to make eggs different ways, or yogurt).  Maybe they can try to get some walking distance jobs -- pet/house/plant sitting opportunities, or more yard work once they learn the basics.  Anyway, all of this is a very important part of their education and since you are homeschooling anyway it should be easy to integrate this kind of life skill work into your daily routine.

Hang in there and keep coming back.  The face punches can be painful, but when you make progress -- and we know you will! -- we will be here to cheer you on to even greater successes.

Thank you very much! I've admired Erica for ages, and we refer to her cookbook often. I think we'll start out with Mint since it sounds like several people here have had great luck with it. Thanks, again!

[Cassie]

You guys spend money on things that we have always done ourselves.  Get rid of them.  You need a income. You can’t afford to live life the way you have been.  Keep the house.

[dmmms]

Also, since you are 50, you can do the catch up contribution for your IRA. It's $7k (up from $6k).

I love the ideas to involve the kids esp as you could eliminate excess food costs, lawn maintenance, and pest control to balance out the $375 Forest School. Plus so much room for family financial literacy!

Consider downsizing the $460 car payment and review the dependent life insurance as it just needs to fund all you do if something happens to you, your children don't need their own life insurance. I hope it is TERM! Please check!

Can you download bank/credit card statements for June to get an idea of where you are spending?

[Neustache]

I am mostly posting to follow, because you have a great attitude and lots of room for improvement. I look forward to watching your progress!
Re: homeschooling.....and Forest School......I am a big advocate for homeschoolers even though I don't homeschool and I teach at a public school. I have seen a number of homeschoolers justify extra expenses they can not afford and then end up losing their house or remaining poor because of it. You are woefully behind in saving. Can Forest School be cut until you payoff school loans and then be put back on the table?  It doesn't have to be gone forever...how about taking a year or two off? Can you list what you like about it and then find ways to recreate for free? Do you need the break? No judgement if so, but can you get that in a less expensive way?

[Chrissy]

Do your kids get allowances?  It's common for families on this site to start allowances at AGE FOUR to begin the kids' financial education.  It also helps control impulse buys like stuffed animals after the zoo by putting the choice/responsibility on the kids for the purchase.

I think conversations about college should start now for the 12-year-old.  Talk about the AA program.  Show the 529 and explain how it's invested.  Research the cost of nearby colleges together.  Also, make clear your own financial situation, and talk about student loans, grants, and scholarships, so your kid knows what's expected and how it works.

[lookingforadelorean]

Progress as of:

7/10
- DH shopping for used lawn mower
- DH raised 401K contribution to 10% of pre-tax (for now, until we have figured out how to lower expenses further to afford max contribution)
- I'm getting a crash-course in a bunch of financial terms that used to be Greek to me
- Started a Mint account . . . but wondering if I'm more of a pencil/paper kind of girl. TBD.
- Canceled Hulu and Audible. Flirting with whether we should kill NF, too.
- Is there any reason not to jump into an account with Visible? I have the iPhone XR with Verizon currently. That switch would save $60/month.
- Need recommendations on how to lower internet costs.
- Researching WA state counseling licensure requirements.

Feeling pretty geeked about this. Clearly, I have soooooo much to learn. But I'm up for the challenge.

[former player]

That's an impressive list - congratulations.  I think you are going to get this done!