Help! Too many expenses and strong desire for FI

[ginjaninja]

I would encourage you to calculate how much of your current expenses are directly related to the cousin.

Things I would include: higher housing costs for the bathroom being an issue, food costs, car costs, utilities costs (electricity and you have mentioned really long showers so water costs too), and any other costs you are providing to him. 

I am all for helping out family, but it seems as if you are shelling out $800-1500/month for this relative to live with you, if not more.  Sometimes you need to put your own oxygen mask on before you can help others.  If having this kind of money every month back in your pocket EVERY MONTH would allow you to spend time with your family or get closer to your financial goals it could be worth considering having different conversations with your husband and his cousin.  He is not just couch surfing and using minimal resources, and based on your shower comment and your comment around him helping with child care and cooking I expect he is disruptive to your family and unwilling to help out around the house for the privileges he is receiving.  He should be doing a hell of a lot of work around the house for that kind of money.  If you are paying someone $15/hour this would be equivalent to 53-100 hours/month. 

If there is a light at the end of the tunnel for you with this family member, maybe a few more months is worth it.  From my perspective it seems as if he has no motivation to move out and be successful on his own.  You moved houses to accommodate him, this is not a normal thing to do for temporary assistance.  You are paying him through the business and not allowing him to understand his financial responsibilities of being an adult.  If I was in his shoes I would in no way be considering going out on my own, it is way too comfy of a position to live with you. 

I am making some assumptions in my post, I am sure there are some other reasons he is living with you that you have not posted here.  But from my perspective that is how things look and it seems to be causing you a great amount of stress.  Put the facts in front of your husband so you can talk about them.  His cousin needs to understand what a privilege it is to live under your roof and start learning skills to be successful on his own. 

I do not mean any of this in judgement, my mom's friend just went through what seems like a similar situation with her son.  The son was home using all of his money to fund hobbies and not become a real adult.  He would eat all of the food and never replace it, take extremely long showers, leave messes all around the house, go to work and spend all of his money on computers and guitars.  His mom didn't want him to fail on his own (he was only working part time, not enough to cover all of life's expenses), and his dad wanted him out so he can learn the hard way that you need to take responsibility for your life and rent isn't free.  Them kicking him out on his own was the best thing for the son, he found full time employment and sold some of his electronics and guitars to pay for food.  It reduced the stress on my mom's friend and her husband because they were not constantly arguing around what to do about their son, and they had the freedom to live in their house with the rules they choose. 

I think it is totally fine to provide assistance to family, just understand what it is costing you and ensure you are okay with the costs. 

A crazy thought: another option could be to have him move out and still provide financial assistance for a period of time?  Maybe $200-500/month for the first 6 months as he gets out on his own?  This might be cheaper for you, he can still work for the business, and he can start to learn how to live on his own.  I would try to look at other options that could work better for your family. 

[kdaniel1010]

Thanks so much for the comments. Yes, I am pretty much over this situation. The plan is for him to go back home in a couple of weeks and he will not be invited back. I really wanted this to be a situation where it'd be mutually beneficial - we could teach, coach him on business, get him in a different environment from what he was in previously, and see him grow as a person and learn some new skills. In exchange he'd help us out around the house, watch the kids when needed etc. It did not end up working like that, and to be honest, it's put more stress on me than anything.

[ginjaninja]

I am glad that the situation will be over in a couple of weeks, I really hope it helps with your stress levels. Has it been stressful for your husband as well?

[kdaniel1010]

Thanks! Yes, it has, but I think it affects me the most.

Gaja - thanks for the comment. Yeah, owning 3 houses at once would not be a great idea. We are putting the one on the market this week though! I always jump the gun on things and want everything done yesterday, which is why we started searching. The townhome we saw yesterday was ... disappointing. Weird floorplan, lots of updates needed. I'll keep the search going and see what else comes up.

[Car Jack]

There's not any rocket science here, but there's also no unicorns and butterflies, which unfortunately the FIRE community has seemed to make it out as.

Your debt service is a big part of your outgoing money.  Because you've got rental properties, that's not unexpected.  But those debts are not going to go away and you should constantly be looking at them to determine if you really, really are making money from them.  There are tons of people who own rentals and think they're making money and when they finally put together a comprehensive spreadsheet of income and expenses, they're surprised to find that they lose money....even when figuring future sales.

You're looking at the now.  Swim lessons, Amazon Prime (which I have never understood....I just buy $35 in stuff and wait a week for it and it still ships free), gymnastics.  Those are all now expenses.  How about college.  Do you know what colleges cost?  What are the majors available at local community colleges?  State colleges?  Do the community colleges have robust programs so the courses can be transferred?  People say all the time "Your kids can take out loans for college but you can't take out loans for retirement".  Well, they're wrong.  Beyond Stafford loans, all other loans are parent loans.  Even those labeled student loans require a cosigner which means you which means it's your loan.  Where I'm going with all this is that college is expensive.  Some states like CA are cheap.  Some are not.  Resident state college in my state, living on campus is over $30k.  (which to me is cheap as my older son is just finishing at private college....this fall, incoming freshmen pay $70k a year and yes, some people, like me got zip for aid, so we paid full price.  Anyways, know.  Don't go retiring, thinking it'll take care of itself.  College is expensive and takes planning.  For you it's planning times 3. 

While I get that you want to FI early, I honestly think you've got a number of decades ahead of you. 

[kdaniel1010]

There's not any rocket science here, but there's also no unicorns and butterflies, which unfortunately the FIRE community has seemed to make it out as.

Your debt service is a big part of your outgoing money.  Because you've got rental properties, that's not unexpected.  But those debts are not going to go away and you should constantly be looking at them to determine if you really, really are making money from them.  There are tons of people who own rentals and think they're making money and when they finally put together a comprehensive spreadsheet of income and expenses, they're surprised to find that they lose money....even when figuring future sales.

You're looking at the now.  Swim lessons, Amazon Prime (which I have never understood....I just buy $35 in stuff and wait a week for it and it still ships free), gymnastics.  Those are all now expenses.  How about college.  Do you know what colleges cost?  What are the majors available at local community colleges?  State colleges?  Do the community colleges have robust programs so the courses can be transferred?  People say all the time "Your kids can take out loans for college but you can't take out loans for retirement".  Well, they're wrong.  Beyond Stafford loans, all other loans are parent loans.  Even those labeled student loans require a cosigner which means you which means it's your loan.  Where I'm going with all this is that college is expensive.  Some states like CA are cheap.  Some are not.  Resident state college in my state, living on campus is over $30k.  (which to me is cheap as my older son is just finishing at private college....this fall, incoming freshmen pay $70k a year and yes, some people, like me got zip for aid, so we paid full price.  Anyways, know.  Don't go retiring, thinking it'll take care of itself.  College is expensive and takes planning.  For you it's planning times 3. 

While I get that you want to FI early, I honestly think you've got a number of decades ahead of you.

Well that's quite depressing.

[Villanelle]

There's not any rocket science here, but there's also no unicorns and butterflies, which unfortunately the FIRE community has seemed to make it out as.

Your debt service is a big part of your outgoing money.  Because you've got rental properties, that's not unexpected.  But those debts are not going to go away and you should constantly be looking at them to determine if you really, really are making money from them.  There are tons of people who own rentals and think they're making money and when they finally put together a comprehensive spreadsheet of income and expenses, they're surprised to find that they lose money....even when figuring future sales.

You're looking at the now.  Swim lessons, Amazon Prime (which I have never understood....I just buy $35 in stuff and wait a week for it and it still ships free), gymnastics.  Those are all now expenses.  How about college.  Do you know what colleges cost?  What are the majors available at local community colleges?  State colleges?  Do the community colleges have robust programs so the courses can be transferred?  People say all the time "Your kids can take out loans for college but you can't take out loans for retirement".  Well, they're wrong.  Beyond Stafford loans, all other loans are parent loans.  Even those labeled student loans require a cosigner which means you which means it's your loan.  Where I'm going with all this is that college is expensive.  Some states like CA are cheap.  Some are not.  Resident state college in my state, living on campus is over $30k.  (which to me is cheap as my older son is just finishing at private college....this fall, incoming freshmen pay $70k a year and yes, some people, like me got zip for aid, so we paid full price.  Anyways, know.  Don't go retiring, thinking it'll take care of itself.  College is expensive and takes planning.  For you it's planning times 3. 

While I get that you want to FI early, I honestly think you've got a number of decades ahead of you.

Yes.  That's why I keep harping on selling the lower performing properties.  The debt (and related payments) goes away.  If the average is a 6% return, some are probably making 4%, or less.   Ditch them.  The finances will be better in several ways (better returns on average in equities, better cash flow to handle unexpected expenses, etc.).  And the overall quality of life will be better because there is less stress and work.

OP, would you make in investment right now that would return only 3-4% and add to your stress and lack of time?  If not, why do you continue to hold on to the ones you have under the same terms? 

This poster is correct--financial independence is decades away for you is your numbers are even close to reality, and that is your spending doesn't grow at all, other than inflation.  If you want to change that, you need to be willing to consider difficult, intense, probably uncomfortable, out-of-the-box solutions.  Thus far, it doesn't seem like you are willing to do that, which is completely fine.  Working until you are 55 or 65 or 70 is what most people do.  But just know that by deciding to do very little, that's what you are choosing.  If it's not what you want, then you need to consider big changes (quitting your job if the numbers work), dropping expensive kid activities, selling the least attractive rentals, ramping up the side hustle, etc.  You say that it's "depressing", but only you can decide if it is depressing enough to make major life changes in order to avoid it. 

[kdaniel1010]

There's not any rocket science here, but there's also no unicorns and butterflies, which unfortunately the FIRE community has seemed to make it out as.

Your debt service is a big part of your outgoing money.  Because you've got rental properties, that's not unexpected.  But those debts are not going to go away and you should constantly be looking at them to determine if you really, really are making money from them.  There are tons of people who own rentals and think they're making money and when they finally put together a comprehensive spreadsheet of income and expenses, they're surprised to find that they lose money....even when figuring future sales.

You're looking at the now.  Swim lessons, Amazon Prime (which I have never understood....I just buy $35 in stuff and wait a week for it and it still ships free), gymnastics.  Those are all now expenses.  How about college.  Do you know what colleges cost?  What are the majors available at local community colleges?  State colleges?  Do the community colleges have robust programs so the courses can be transferred?  People say all the time "Your kids can take out loans for college but you can't take out loans for retirement".  Well, they're wrong.  Beyond Stafford loans, all other loans are parent loans.  Even those labeled student loans require a cosigner which means you which means it's your loan.  Where I'm going with all this is that college is expensive.  Some states like CA are cheap.  Some are not.  Resident state college in my state, living on campus is over $30k.  (which to me is cheap as my older son is just finishing at private college....this fall, incoming freshmen pay $70k a year and yes, some people, like me got zip for aid, so we paid full price.  Anyways, know.  Don't go retiring, thinking it'll take care of itself.  College is expensive and takes planning.  For you it's planning times 3. 

While I get that you want to FI early, I honestly think you've got a number of decades ahead of you.

Yes.  That's why I keep harping on selling the lower performing properties.  The debt (and related payments) goes away.  If the average is a 6% return, some are probably making 4%, or less.   Ditch them.  The finances will be better in several ways (better returns on average in equities, better cash flow to handle unexpected expenses, etc.).  And the overall quality of life will be better because there is less stress and work.

OP, would you make in investment right now that would return only 3-4% and add to your stress and lack of time?  If not, why do you continue to hold on to the ones you have under the same terms? 

This poster is correct--financial independence is decades away for you is your numbers are even close to reality, and that is your spending doesn't grow at all, other than inflation.  If you want to change that, you need to be willing to consider difficult, intense, probably uncomfortable, out-of-the-box solutions.  Thus far, it doesn't seem like you are willing to do that, which is completely fine.  Working until you are 55 or 65 or 70 is what most people do.  But just know that by deciding to do very little, that's what you are choosing.  If it's not what you want, then you need to consider big changes (quitting your job if the numbers work), dropping expensive kid activities, selling the least attractive rentals, ramping up the side hustle, etc.  You say that it's "depressing", but only you can decide if it is depressing enough to make major life changes in order to avoid it.

I'm not unwilling to make changes. That's why I'm here and why I keep coming back day after day to get more advice. I am looking into less expensive housing and working on our budget to reduce expenses as much as possible. I am also VERY willing to start an investment account in index funds as suggested by MMM and Millennial Revolution. Question first, what type of account do I open? I went to Vanguard I believe it was, and it asked if I wanted to open a traditional or Roth IRA. Does anyone have any recommendation on which one to start with? I know that there are limits on how much can be contributed annually.

In addition, we are working on paying off credit card debt and getting ourselves out of that hole.

I can look into selling the rentals for sure - I'll run the numbers this weekend and talk to our partners.

With my business, I am seeking additional clients and was referred to an HOA to manage last night - I called them and left a message this morning. I'm really not sure what else I can be doing right now to work toward these goals.

Cousin is moving out in August; confirmed w/husband this morning.

What else can I do at this point?

[Hirondelle]

Congrats on your cousin moving out so soon! If it's for that short of a period now, isn't it easier, like previously suggested, to move back into your old house and sell this larger one? That would save you lots of money.

[kdaniel1010]

Thanks! We talked about doing this; however, we have a lot of rehab expenses related to that house that need to be paid back once we sell it. It wouldn't make sense to move back there financially because we'd have the $1112 mortgage plus paying off 4 months of rehab work (we updated the property to sell it for as much as possible).

[gaja]

Thanks! We talked about doing this; however, we have a lot of rehab expenses related to that house that need to be paid back once we sell it. It wouldn't make sense to move back there financially because we'd have the $1112 mortgage plus paying off 4 months of rehab work (we updated the property to sell it for as much as possible).

Is that was has been charged on the credit cards, or do you owe more money somewhere else?

How much do you expect to get in surplus when you sell the new house, and where will that money go?

or

If you increase the mortgage of the original house to incorporate the cost of the rehab, and move back there, what would the new mortgage be?

[kdaniel1010]

Thanks! We talked about doing this; however, we have a lot of rehab expenses related to that house that need to be paid back once we sell it. It wouldn't make sense to move back there financially because we'd have the $1112 mortgage plus paying off 4 months of rehab work (we updated the property to sell it for as much as possible).

Is that was has been charged on the credit cards, or do you owe more money somewhere else?

How much do you expect to get in surplus when you sell the new house, and where will that money go?

or

If you increase the mortgage of the original house to incorporate the cost of the rehab, and move back there, what would the new mortgage be?

Those expenses are due back to my husband's remodeling company because he employed the guys that did the remodeling work. We expect to net $30k after paying that back, all selling fees etc.

That's an excellent question re: refinancing... let me talk to my husband about that!

[kdaniel1010]

I came up with $1,667/month.

[gaja]

I came up with $1,667/month.

And where would you rather live?

[kdaniel1010]

Either one is totally fine. We are looking at a similar townhome in our current neighborhood on Friday which would make our monthly payment around $1400 including HOA, PITI, and it has 3 beds and 2 full baths. The old house has 3 beds and 1.5 baths. I'm fine either way. I just want to make sound financial decisions moving forward. Can't change anything about the past unfortunately.

[MKinVA]

 You are a little all over the place right now. Forget about investments for now. You have to pay off your debts. All the extra money needs to go to those. To create the extra money, in addition to selling your original abode, look through your budget VERY CLOSELY. Use the average of May and June as your benchmarks. Evaluate each and every expense. Come next month, your grocery bill should go down because the cousin will be gone. Capture that amount and apply it to debt before you simply absorb it into the budget. You still have subscriptions at $100. Is that going down or being eliminated? Did you mention earlier that you have 3 cars? Get rid of at least one this weekend. Sell it. Put the money on any debt.
Reaching out into the future and "solving" those situations (like a new townhouse, like worrying about what investments to make) is avoidance of the current issues and will get you nowhere. Also, HOA fees? Aaahh!
No one thing is going to fix your situation. It will be a combination of things, adjustments, and commitments.

[kdaniel1010]

Agreed, we are trying to approach it from all angles so that we can make an impact faster. I’ll focus on one house at a time. And we will decide which car to get rid of ASAP. Thank you!

[TassieFI]

Ptf

Thanks for your helpful comment.

sarcasm?  i think they were "posting to follow" not "programmed to fail"

Omg, I’m so sorry! I took it as “palm to face” and started getting a little sensitive about putting all my info out there. 😳

No worries on the misinterpretation....lol.  Sorry that it stressed you out.  I think you are doing a great job dealing with all of this.  The hardest part imo is just facing up to the situation and getting started.  Considering you only posted your case study less than a week ago, I think you are doing fantastic addressing as many issues as you have.  Take a deep breath, focus on one thing at a time and get it sorted, and before you know it all the little changes will add up to huge overall change.  Good luck and will be cheering you on from the sidelines.

[kdaniel1010]

Lol no worries at all, my mistake!

Thanks so much - I really appreciate that.

[Aunt Petunia]

I have 2 bathrooms and you can't use both showers at the same time because it messes with the water temperature and pressure.

[kdaniel1010]

For some reason we're able to do so without a problem most of the time. Aside from the showers it's the getting ready, the hair, the tooth brushing, etc.

[ATR]

PTF

[Christof]

Look, I'm from Europe and almost any SFH in my country comes with 1.5 bathrooms. I've never heard that this is an issue big enough for people to find 2 bathroom houses.

Everyone around here in Germany would say, we have two bathrooms. However, my US friends consider our house to be a 1.5 bathroom house, because we have only a shower in one bathroom and only a tub in the other, which each is like 3/4 bathroom to them.

[kdaniel1010]

I would still consider that 2 bathrooms! But yes I see the distinction.

Anyway, I feel like this thread is coming to an end unless anyone has any advice on stock market investments and opening our accounts. I appreciate everyone's input and responses. I know what we need to do and feel like we have made a good start so far. We have decided which vehicle to get rid of and I even have a business opportunity that has opened up to me in the past week which will help my small business, getting me closer to quitting my FT job and commute! It's not easy to hear people critique on your way of living and decisions made up until this point, and I tried my best to be fair and receptive to everything.

I hope to come back soon to the forums to talk more about our journey, progress and path to FI!

[Freedomin5]

Read jlcollins’ Stock Series for info about investments and accounts.

https://jlcollinsnh.com/stock-series/

[TassieFI]

You could also consider starting a journal where you can track your progress and get lots of support without the advice (unless you ask for it). :-)

[kdaniel1010]

Thanks guys! I may do the journal thing.

[Hirondelle]

Good to hear that kdaniel! Yes it can be hard to have other people criticize your former and current choices, but I guess sometimes that's also necessary to see what are feasible changes/cuts for you vs non-negotiables.

I'm excited to see you progress either in this thread or in a journal.

[kdaniel1010]

I started one at: https://forum.mrmoneymustache.com/journals/kdaniel's-journal/