Help! Too many expenses and strong desire for FI

[kdaniel1010]

Life Situation: Married filing jointly, 3 children ages 12, 6 & 3 (we also have another relative, living with us who is 21 years old and will eventually be moving out). We just moved to a house with more bathrooms to accommodate the extra person in the house. Now I fear that this wasn’t a great decision.

Gross Salary/Wages: Salaries total $170k - we both work full time. In addition, we own 19 rental units (some of the properties are  partnerships so we are 50/50 partners on those) and I have a very small property management company where I earn approx. $1k per month in management fee income. Commission income is variable based on lease renewals, leases signed etc. My husband owns a small remodeling company and the income on that is extremely variable as well. The cash flow that we net from the rental properties is approx. $3,000 per month currently (after all expenses etc.).

Individual amounts of each Pre-tax deductions Health insurance for our family deducted from paychecks is $350 per paycheck (biweekly). My husband puts in $312.50 per paycheck for his 401k (10% of his income). I am not eligible for the 401k at my job yet (will be in October). I do have a 401k from a previous employer with approx. $6k in it; my husband's has $10k. We cashed out of other retirement accounts to buy rental properties.

Other Ordinary Income: See above under gross salary/wages (rental income, side businesses).

Qualified Dividends & Long Term Capital Gains: N/A

Rental Income, Actual Expenses, and Depreciation: Cash flow of $3k per month. Once mortgages are paid off, cash flow will be $5,500 per month.


Current expenses: Here is our August budget AFTER I cut out some stuff today:

Category   Budget
Kid #1 braces payment   250
Pet care   40
Daycare    1900
Subscriptions    100
Kids Activities/Classes    200
Household Goods   100
Clothing    50
Medical   500
Restaurants    75
Spending - Husband   50
Spending - Wife   50
Fuel   600
Groceries, toiletries   850 (it was higher in July - trying to reduce)
Mortgage - primary residence   1920
Donation    25
Natural Gas   150
Water   45
Electricity   100
Netflix   12
Internet & Cable    66
Phone - AT&T & T-Mobile   250
Mortgage - Property for sale   1112
Christmas / Birthdays    100
Life Insurance    180
Car Insurance    242
Car Repairs   225
Debt Payments   450
Car payments (2 cars - truck paid by business)   550
TOTAL   10192
 


Assets: Real estate valued at approx. $1mil including 6 rental properties, 1 single family home that we are putting on the market next week and are aiming to net $30k from the sale after all closing costs, broker fees, loan payoff, etc.

Liabilities: Description, original loan amount, rate, original length, and monthly payment (which should be consistent with a spreadsheet PMT calculation).  Add current balance and time remaining if close to final payment.

Specific Question(s): My husband and I both work full time, have side businesses and own & manage our rental properties. We are looking for FI as soon as possible and have realized that our expenses are out of control. We live in a house that we purchased a few months ago, own 3 cars (one for me to use to drive to work and drop kids off at daycare, one for my husband to drive to work and pick kids up from daycare, and a work truck that is used by a family member who does most of our maintenance work for the properties. My commute is approx. 45 minutes each way, my husband’s is at least an hour each way. We have searched for closer jobs but nothing pays decent enough or comparable to what we currently earn. The town we live in is a suburb and is not walkable. I want to see how we can reduce expenses and make smart decisions! We are working on investing in index funds and opening an account. With the $30k we anticipate receiving from the sale of our house, we plan to pay off our credit card debt and invest the rest (either in the stock market as Mr. Money Mustache advises or in real estate). How can we best accomplish our goal of FI in as little time as possible? We are committed to reducing expenses and saving as much as possible so that we can cut back on the stresses of working nearly 24/7 at jobs we don’t particularly enjoy.

[nurseart]

I'm exhausted just reading this. Mad props to the both of you for the hustle.

They say that housing, transportation and food are the biggest expenses and if you can address those then you will be well on your way. That holds true for you generally (seem to be pretty good on groceries) although ouch that daycare bill hurts. And so does the gas. I cannot imagine spending $600 a month on gas. What sort of cars do you drive? I commute an hour but get 50 MPG in my used Prius. Since you owe on them anyway can you get something more fuel efficient and hopefully cheaper?

The math on the real estate seems a bit odd to me. You have 19 doors in 6 properties but are cash flowing 3,000 a month and that will only go up to 5,500 once mortgages are paid off? That seems low to me but I understand the partnerships might be messing up some of the math. Do you have some under performers you can get rid of? I'm all for real estate... when the numbers work.

Can you switch to ting or another cheaper phone package?

The mortgage is a lot and purchasing a house for an extra bathroom for a temporary person may not be in line with your goals especially for an extra $800 a month!

A far out thought you could consider...If one of your makes significantly less than the other it could be an option for that person not to work to save on daycare and manage the side hustles while the other can focus mostly on their W-2. Given your probable tax bracket, transportation costs and daycare cost you may or may not come out about the same.

[kdaniel1010]

Thank you SO much for the response!!

So, the $5,500 cash flow after mortgages are paid off is a pretty conservative estimate. I budget around 30% of the monthly rents received for repairs/turnover/etc. Also, I'm in IL so property taxes are ridiculously high. It should end up being higher, but I didn't want to overextend.

We have been spending more on groceries. I am aiming for $850 in August and moving forward with better meal planning and shopping. My husband drives a tiny Hyundai Accent (2016) and I drive a Kia Sedona minivan (2016). Is it worth switching? What kind of cars are best to buy? I did see the article on the hatchbacks that MMM listed, wondering if those are still the best options.

YES we are definitely looking to switch phone carrier to save more. Actually, I just ran daycare numbers again and we should be at $1,400 per month now that my oldest has different after school plans this year. So that saves $500, yay.

Ugh, what can I do about the housing situation? Totally regretting that decision now. We need 4 bedrooms at this point and any rental in our town is more than what we are paying with our mortgage (just checked Zillow).

Thanks again for your response; I appreciate the feedback!

[Zamboni]

Wow, you've got a lot going on!

Obviously you need to knock out the CC debt ASAP . .  . that should be your first step.

Your car insurance just seems insanely high to me for two adults unless one of you has a lot of accidents or moving violations in the recent past. Do you have the truck insured as only a part time driven vehicle? It shouldn't be costing that much to insure. I would think about the actual value of the vehicles and see how I could drop that, perhaps by dropping collision and comp coverage on the least valuable vehicle and shopping around to other insurance providers.

Ditch your phone plans and switch to Virgin or Republic. There is a whole thread on phones by IP Daley.

Keep tracking your spending.

[kdaniel1010]

Thank you - yes, cc debt will be attacked as soon as we sell that house. I'll check in on the car insurance; thank you! I will be looking into the cell phone thing right away.

Thanks again!

[gaja]

Why is your commute 45 minutes if you own/manage your own company?

[kdaniel1010]

Sorry if I wasn't clear. My husband and I both work FT jobs; in addition, we have our own side businesses.

[roomtempmayo]

My husband drives a tiny Hyundai Accent (2016) and I drive a Kia Sedona minivan (2016). Is it worth switching? What kind of cars are best to buy? I did see the article on the hatchbacks that MMM listed, wondering if those are still the best options.

If you're spending $600/mo on gas, your cars average 30 mpg, and gas is about $3/gal, it looks like you're driving 6,000 miles a month?  If so, it's not so much the vehicles you're driving, it's that you're driving a ton.  Can you find a way to cut down on your driving?  Are you driving in the same direction as your husband?  Why not move closer to at least one person's work?

The natural gas bill also seems odd.  In the summer in Illinois, I'm not sure how you could burn $150 in natural gas in a month.  Maybe something strange is going on there?  If you're in a program that averages the bills for the year, then this would make sense because you're paying part of your winter heat in the summer.

The other issue is that daycare is eating you alive.  Does that get better in the fall when the kids go back to school?

[kdaniel1010]

Thanks so much for the response. We also include our IPasses (tolls) in the fuel, which is around $80/month I would guess. My husband starts work at 7am and I start at 9am, and this allows me to be able to drop the kids off in the morning and for him to pick up, so unfortunately there is no way for us to commute together. We somewhat go in a similar direction to work, but I would say we work a good 20 miles away from each other (him downtown, me in a suburb southwest of where we live).

Daycare will go down about $25/week once school starts, so $1300 total instead of $1400 per month.

Natural gas - good point. I think my husband put one of our properties' accounts on that bill for some reason. I'll look into that.

Driving/living situation ... if we move closer to our jobs, rent/mortgage will be more than what we're paying now and we'll have to start over in new school districts etc. Is it worth it?

[gaja]

With so much work, and so long commutes, how do you have time to see each other and the children? For me, reducing the commute would be worth it simply for that reason. But you can also look at those 3.5 hours a day as lost time you could have spent earning more money. With your earning potential; how much is that time worth compared to the extra cost of living closer to work?

Also; are the rentals worth it? What are they worth, compared to what they bring in?

[roomtempmayo]

Just saw the assets part. 

Assets: Real estate valued at approx. $1mil including 6 rental properties, 1 single family home

If I'm reading it right that you have $1m in real estate equity outside of your primary residence, I think the quickest path to financial independence is to sell it all asap and dollar cost average that money into the S&P once we're officially in recession.

A million in the S&P will pay you $70,000-80,000 on average annually.  Leave it alone for another decade and you should be set.

[kdaniel1010]

Gaja - that's the problem; we are stressed out, overworked and extremely tired. We've started paying for conveniences which defeats the purpose of everything we're doing. There currently isn't a similar job to what I do that pays as much as I make closer to home. Same for my husband ... we live in the suburbs; the money is made closer to the city. If I were to take a similar job closer to home, I'd be making a little more than half of what I earn now. All good questions that I need to figure out ...

Caleb - for the rentals we do have mortgages still. We have at least 25% equity in the properties, but more than that because we buy the properties for less than retail.
Property #1: purchased for $115k, worth $150k, gross rents $2,400/month
Property #2: purchased for $254k, worth just about that but could sell for more in this market, gross rents $3,330/month
Property #3: purchased for $100k, worth $120k, gross rents $1,750/month
Property #4: purchased for $135k, worth $150k, gross rents $2,350/month
Property #5: purchased for $196k, worth $250k, gross rents $2,750/month
Property #6: purchased for $109,500, worth $125k, gross rents $2,000/month.

We are 50/50 partners on properties #2, 4, 5, 6. Let me know if you have any other suggestions? I really appreciate your guys' responses.

[gaja]

Gaja - that's the problem; we are stressed out, overworked and extremely tired. We've started paying for conveniences which defeats the purpose of everything we're doing. There currently isn't a similar job to what I do that pays as much as I make closer to home. Same for my husband ... we live in the suburbs; the money is made closer to the city. If I were to take a similar job closer to home, I'd be making a little more than half of what I earn now. All good questions that I need to figure out ...

What about the other way: you said housing closer to work would be more expensive. How much more expensive, compared to what your commute costs you today (including the hours you would save commuting)?

I have a 7 minute commute (20 minutes if I walk). My salary translates to about $32/hour, so if I got a job offer increasing my commute with 5 hours/week, they would have to pay me at least $700 more per month for it to be worth it. Plus the transportation costs.

A short commute is fantastic. Not only because of the extra time together with family, and lower stress levels, but because of the convience. If I forget something at home, I can get it in minutes. My boss has no problems with me working from home, since I'm available in minutes if something happens. If something happens at the kids' school, I can be there right away. And if I have a meeting at the school, or need to take the kids to the dentist/doctor/something, I can still work nearly a full day first.

The drawbacks: The house is small, a fixer-upper, and there is some noise from traffic. Also, crime is not non-existent (we actually feel the need to lock our doors if we leave the house).

[kdaniel1010]

Totally agree on the commute thing. So ... my hesitancy to move has more to do with the fact that I really dislike my job and don't want to be there much longer, or at all. I like the town where we live now, although I would love to be FI and travel with my family all the time. So, my plan was once we reach FI we'd sell the house (I feel like selling it now would put us into a deeper hole due to us just purchasing it and not being able to find something with enough bedrooms for less than, or equal to what we pay for our mortgage now) and move somewhere located in a more agreeable climate and conducive to outdoor activities year round, or just travel. The schools where I work are awful, the taxes were just raised in that county and that location is still 30 miles away from where my husband works. I definitely don't want to be resistant to change and people's ideas here, which I greatly appreciate, but I'm not sure that's the best move. Let me know what you think. Maybe I should look for a job where I don't HAVE to be there 9 hours per day, have a better commute etc.? I have applied to multiple jobs recently with a lower pay than what I earn now, with no luck. I checked out the train schedules since there's a train station right next to my work, but the schedule does not work for my work schedule/kids' school/daycare timing. I'm sure there's another solution out there ...

[Freedomin5]

You may want to consider stopping your purchases of properties for now. It is not considered passive income. Your lives sound overloaded right now, and it sounds like moving to a different house, reducing commutes, or changing jobs are not possible at this time. You also have three young kids. Your most valuable asset right now is your time.

Therefore, you need to find ways that will allow you to keep making money without more demands on your time. I would use any extra funds to pay of CC debt and to invest in index funds, which is true passive income.

If possible, you might also want to consider getting rid of some of your lower performing properties. Once the family member moves out, consider renting the extra bedroom for additional income.

Your housing, kid-related expenses, and transportation are your three biggest expenses. I’d focus on cutting those or off-setting those as much as possible, rather than focusing on cutting little things here and there. You’d have a bigger impact on your budget if you focused on those.

[Villanelle]

Medical is $500/mo?

Car insurance seems high.  Have you shopped that?

And decreasing your daycare seems like it might be possible.  I know people tend to resist that, but that's nearly 20% of your budget. 

[SuperSecretName]

Life insurance is very high. Is that a while-life policy?  If so cancel and buy term.

[MKinVA]

Can you sell or rent the house you are in and move to one of your rentals to reduce costs?

[kdaniel1010]

Freedom - I agree with you. I’m going to sit down and talk to my husband about all of this this weekend.

Villanelle - my 6 year old and I both have chronic conditions that require lifelong medication. Last month we spent $016 on medical expenses. We’ve met our deductible and out of pocket max already this year so I’m hoping August expenses will be lower. We owe $250/month on an $8k bill for a procedure our daughter had in May which is part of this amount. Will shop around car insurance for sure.

Super - we pay $75/month for 3 whole life policies for our kids. I have a chronic condition for which I could not be approved for term insurance. I didn’t want my kids to go through the same thing if they ended up being diagnosed with something similar, so I bought those policies when they were babies. I have a whole life policy and a custom variable something or other policy totaling a $250k or so death benefit. This was another question I had. What should I do with this? I know once I have my retirement $$ saved, I won’t need it.

[kdaniel1010]

MKinVA, wow, I didn’t think of that. All of our rentals are currently occupied. None are in the same school district but that may not be an issue depending.

[Bracken_Joy]

You detailed why not move close to your work. But what about your husbands? Reducing one commute would still be a win.

Agreed that the rentals seem to be a large burden on your life, and I’m not sure the numbers actually make sense on them. With all the work you put in... what would that money be doing sitting in the market in index funds earning you actual passive money?

[Villanelle]

Freedom - I agree with you. I’m going to sit down and talk to my husband about all of this this weekend.

Villanelle - my 6 year old and I both have chronic conditions that require lifelong medication. Last month we spent $016 on medical expenses. We’ve met our deductible and out of pocket max already this year so I’m hoping August expenses will be lower. We owe $250/month on an $8k bill for a procedure our daughter had in May which is part of this amount. Will shop around car insurance for sure.

Super - we pay $75/month for 3 whole life policies for our kids. I have a chronic condition for which I could not be approved for term insurance. I didn’t want my kids to go through the same thing if they ended up being diagnosed with something similar, so I bought those policies when they were babies. I have a whole life policy and a custom variable something or other policy totaling a $250k or so death benefit. This was another question I had. What should I do with this? I know once I have my retirement $$ saved, I won’t need it.

So are these not long term tracked expenses?  If you have an annual cap, then your budgeted expenses should be no more than that cap/12 months (plus, for the short term, the medical debt payoff).  Unless that $8k is part of the annual cap?  Sorry, I'm probably making this more confusing that it is, but I'm having trouble following, and that's causing me to question whether the posted expenses are actual and long term, or as we sometimes see, estimates and projections.

And just because none of the rentals are available now doesn't mean they won't be soon(ish).  Assuming you decide to stay in the area, pick a house that works for you (and hopefully one of the ones that has a lower profit) and when the lease is about to expire, give the tenants notice and plan to move in, assuming it will be a decent--hopefully improved!--commute. 

[kdaniel1010]

I apologize if I wasn’t super clear, but I do enjoy the rentals. We have great tenants and I have/had hope that they would be the key to early retirement and financial stability. If I could manage my own rentals full time as a job, I would (meaning purchase enough properties to replace my w2 income). In fact that was my plan up until I read about investing in index funds and MMM as well as Millennial Revolution. What I hate is being stuck at my full time job. I’m gone 12 hours every day because of it (dropping kids off, commute, mandatory 9 hour workday).

Living in one of our rentals wouldn’t improve the commute unfortunately.

Regarding medical expenses, the $500 is the low end average that I’ve tracked. It varies based on what happens throughout the year of course, but I will be much more conscious of my spending which will help us stay at that $500 mark. The $8k bill was out of the ordinary.

My husband works in the city. Buying or renting a 3/4 bedroom would be more than what we are currently paying, and then there’s the change in school district (schools are worse out there) and we’d need to find new childcare. Am I looking at this situation the wrong way?

[SuperSecretName]

Super - we pay $75/month for 3 whole life policies for our kids. I have a chronic condition for which I could not be approved for term insurance. I didn’t want my kids to go through the same thing if they ended up being diagnosed with something similar, so I bought those policies when they were babies. I have a whole life policy and a custom variable something or other policy totaling a $250k or so death benefit. This was another question I had. What should I do with this? I know once I have my retirement $$ saved, I won’t need it.

Stop right now. If your kids want to buy a policy for themselves when older they can. But insurance for kids is a no-no.  You also say “if” so not even guaranteed I guess. It’s a nice thought for them, but not financially sound.

[Morning Glory]

Former Illinois-ian here :-)

You have some great cash-flowing rentals!!!

Do you mind sharing how much you and your husband each make per month after taxes at your 9-5 jobs? Then take the lowest one and subtract the daycare and commute costs, then divide by how many hours that person spends per month working and driving.

For example (rounded to make the math easy): if you make 100k/year and have a 25% effective tax rate (don't forget state taxes and FICA), that is $75k/year or $6250/ month. After daycare and gas/tolls that is $4050. Assume there are 20 working days per month at 12 hours per day you are only making 16.87 per hour, or 48,600 per year. It looks like your rentals net 36,000 so you are close to replacing your income.

The problem you have is that you have inflated your lifestyle with the extra money, instead of replacing your job. Once the SFH is sold that is 1100/month out of your budget. Maybe the $450 debt payment will go away too?

So anyway your first priority is to get that house on the market. Once that's done you could further optimize such as cutting cable, finding cheaper groceries, shopping around phones, insurance, etc. Maybe you could start a journal so we can all watch your progress?

[Zamboni]

Have you read the MMM post about living in Toronto (downtown near work vs. in the suburbs)? Try to find and read that one. You are making a lot of rationalizations that he discusses.

[kdaniel1010]

Hi guys, thanks again for the responses.

MrsWolfeRN: take home pay for me is about $5500 after taxes each month (health insurance for me and the kids comes out of my paycheck) and my husband takes home about $4120 monthly (his health ins is deducted plus his 401k contributions. Daycare = $1400 monthly, gas is $600 so that’s $2k. Yikes, so that puts him at $10/hr if we deduct those expenses from his paycheck. If we deduct from mine, it puts me at $16.67/hr. That’s not very cute. Yes, I’d love to start a journal on this. Thank you for the idea!

Zamboni: I totally realize that I’m making rationalizations and want to change my perspective. I searched for the article but wasn’t able to find it right off the bat. I’ll look again. Thank you!

[Roland of Gilead]

If I'm reading it right that you have $1m in real estate equity outside of your primary residence, I think the quickest path to financial independence is to sell it all asap and dollar cost average that money into the S&P once we're officially in recession.

A little off topic from the main thread, but could you hit me with a PM also to let me know when we are going to be in a recession?  I only need to know two or three months in advance, tops.

[AccidentialMustache]

Category   Budget
Subscriptions    100
Natural Gas   150
Netflix   12
Internet & Cable    66
Phone - AT&T & T-Mobile   250

Wat? Cable and Netflix? What "other" subscriptions are there? How in are you burning $150 worth of natural gas in the SUMMER? (the $100 electric bill is doing pretty good though).

That phone bill is out of control and needs work. If you have cells you either don't need a home line and/or can use the ultra basics local only home line ($25 or so) and sign up for google voice to be able to place long distance calls. For the cells, you could be on Google Fi with unlimited everything for $80 (less if you aren't a pig with data) for the first line and $15 per line after that. Even if that's all six of you that's still $180 total (att local only, fi x6). You'll have to BYOD, which is good because I'd bet you're paying off phones in that bill too -- time to quit buying $800 iphones and discover the 2-400 range is 90% as good and under half the cost.

Also, re: Illinois -- if a business makes you use the phone, make the business pay for it. Its the law now. (https://www.fisherphillips.com/resources-alerts-new-in-2019-illinois-employers-must-reimburse) Even if its just your rentals, that should let you take some of the cost off business income pre-tax, so that's something.

[kdaniel1010]

I cancelled Hulu yesterday. The $66 per month is for Internet in the house. We don’t have any landlines. We pay for 3 lines - mine, my husband’s and our 12 year old’s. We definitely want to switch carriers ASAP. Also, good point about business reimbursement. I use my cell for my FT job so I’m going to request monthly reimbursement on that.

Regarding gas, I mentioned earlier that I think there are 2 properties’ bills in that category. Will figure that out.

Subscriptions: gym (which is not used and we will cancel), Amazon prime, and I had an Ipsy subscription which I cancelled this week. This should be lower moving forward.

Thank you!!

[Zamboni]

https://www.mrmoneymustache.com/2015/07/27/rent-vs-buy/

[MKinVA]

If there is no way to improve the commute because it impacts other things like schools, what about does moving into one of the rentals imorove the overall budget? Your mortgage payment is over the top.

Also, in your monthly budget you listed Pet care $40, what is this? How about the extra $200 in Kids' activities and classes? In addition to daycare? What are Household goods $100 to in addition to Groceries and toiletries? Also, kids' life insurance? All of these expenses need to be reevaluated and opefully slashed from the budget.

[kdaniel1010]

Read the article! It makes a lot of sense. I talked to my husband about this today. If we moved closer to his work, I could take the train to work and we could probably find something close to our mortgage payment for rent, and give up one of the cars. BUT, this would put our kids in a less desirable school district (or require us to put them in private schools due to poor quality public schools), and most importantly we’d be an hour or more away from our rental properties and the other properties that I manage for my side business (we’d also be farther away from my husband’s side business work locations). What’s the best route to take here? I guess try to find jobs closer to home that pay as close as possible to what we make now?

MKinVA: we could potentially move into a rental however it would put us into a very poor school district (again, for some reason this keeps coming up). Also, the largest rentals we have are 3 bedrooms and we have a 4 bedroom now.

Pet care - we have a bunny and a cat.
Household goods - household items aside from toiletries and groceries (things like light bulbs, batteries, random household things).
Kids activities - swimming and gymnastics for the youngest two.

[MKinVA]

Can you find a cheaper 4 bedroom in your area? Can you find daycare that also has activities? When does this 21 year old move out and does he or she contribute to the household income?

Do you have any ideas for cutting your budget? It looks to me like you tried to do all the right things in the most expensive way possible. Can you reevaluate the rentals with an eye toward getting rid of the ones that are not paying enough? Or are not going to appreciate in value?

[gaja]

Sounds like you are more emotionally invested in the area you live in than in the jobs you currently have. Then I think it is a good idea to structure your life so you can spend more time closer to home. Why not start with one of you getting a shorter commute (and lower paid job if necessary), and then you can see how it impacts the rest of your lives (and economy), and adjust course after that?

[Villanelle]

Why *must* you have a 4 bedroom?   

Seems like that is a want, not a need, so you just have to decide it you want it more than you want FI and a more simple life.  You could move into a three bed rental or sell your current home and downgrade to a three bed, depending on which set of finances make the most sense. 

Have you also run the numbers to see if one of you could quit your job?  Saving money on commute and other expenses, changes to your taxes, cutting out that massive daycare bill (~20% of your expenses!), etc., might actually make it close to a wash.  And it could allow you to scale up the rental side hustle. 

Also, it could allow you to have much more time, which could mean you could supplement educational activities, perhaps offsetting the "bad school district" problem you are butting up against.

[kdaniel1010]

I checked Zillow on Friday and 4 bedrooms in our area run $2200-$3k per month. We have our youngest 2 who share a bedroom, oldest who has her own room, my husband and I share a room and the relative who lives with us has a room. I suppose we could look for something more affordable or go back down to a 3 bed when the relative moves out. I just feel like we’d be wasting the closing costs etc. that we paid when we bought the house a few months ago. Or we could turn this into a rental however I don’t think the cash flow would be decent. As far as the school districts I’m more concerned about a safe environment for my kids than anything. We talked about my husband quitting his job; it still makes more sense financially for him to work and he is also eligible for some great bonuses ($20k and up) if he stays. I totally see how this lifestyle could work out if we didn’t have kids, or didn’t have rental properties that we need to live near to properly manage, but I’m not seeing a great solution here that makes sense. I definitely don’t want to be resistant to change or make up reasons for not sacrificing, and I appreciate everyone’s input and suggestions.

The relative does not help with any expenses. We took him in to give him a fresh start in a different part of the country. My husband is thinking he might be here for another 6 months or so. We employ him at a low hourly rate to complete work on our properties and assist with our side businesses.

I have been looking at other jobs closer to home, so I’ll continue that search.

[Kronsey]

I won't touch on the financial aspects. I'm more concerned about your physical and emotional well-being. I was exhausted and had anxiety just from reading.

As someone who started a business when I probably should have waited with the end result being a surgery, chronic diagnosis, and almost being financially ruined, I would suggest you do some soul searching before burning out and dying (I don't say that jokingly or lightly).

Your post reads more like a cry for help than a financial problem. What good is FIRE if you almost kill yourself on the journey?

All this from someone who learned the hard way!

Please take care or yourself. Take a long weekend getaway with your husband. I don't care how much it costs. Schedule time for some rest, but also schedule multiple hours to work through exactly what it is you are trying to accomplish.

[Villanelle]

I checked Zillow on Friday and 4 bedrooms in our area run $2200-$3k per month. We have our youngest 2 who share a bedroom, oldest who has her own room, my husband and I share a room and the relative who lives with us has a room. I suppose we could look for something more affordable or go back down to a 3 bed when the relative moves out. I just feel like we’d be wasting the closing costs etc. that we paid when we bought the house a few months ago. Or we could turn this into a rental however I don’t think the cash flow would be decent. As far as the school districts I’m more concerned about a safe environment for my kids than anything. We talked about my husband quitting his job; it still makes more sense financially for him to work and he is also eligible for some great bonuses ($20k and up) if he stays. I totally see how this lifestyle could work out if we didn’t have kids, or didn’t have rental properties that we need to live near to properly manage, but I’m not seeing a great solution here that makes sense. I definitely don’t want to be resistant to change or make up reasons for not sacrificing, and I appreciate everyone’s input and suggestions.

The relative does not help with any expenses. We took him in to give him a fresh start in a different part of the country. My husband is thinking he might be here for another 6 months or so. We employ him at a low hourly rate to complete work on our properties and assist with our side businesses.

I have been looking at other jobs closer to home, so I’ll continue that search.

IF the relative has no money to help with expenses, fine.  But then you are paying him for labor?  Seems to me that his labor should be buying his room and board.  That won't help your financial picture but it takes something off your plate which seems like a huge thing for you.

And frankly, if he's not paying anything, factoring in keeping/finding a larger house so he can have his own room doesn't make much sense to me.  You are helping him out.  If he has to sleep on a sofa and unmake his bed every day, so be it.  It's not mean or punative to say, "we can't sustain our current lifestyle.  We are moving to a smaller home.  You are welcome, but we may have to have you sleep on the sofa" or to say, "we can't afford to keep paying you as we are for your help, which we very much need and appreciate.  How does us counting the first 10 hours of labor as a few for room and board, and then paying you for the rest sound?"

[mistymoney]

I checked Zillow on Friday and 4 bedrooms in our area run $2200-$3k per month. We have our youngest 2 who share a bedroom, oldest who has her own room, my husband and I share a room and the relative who lives with us has a room. I suppose we could look for something more affordable or go back down to a 3 bed when the relative moves out. I just feel like we’d be wasting the closing costs etc. that we paid when we bought the house a few months ago. Or we could turn this into a rental however I don’t think the cash flow would be decent. As far as the school districts I’m more concerned about a safe environment for my kids than anything. We talked about my husband quitting his job; it still makes more sense financially for him to work and he is also eligible for some great bonuses ($20k and up) if he stays. I totally see how this lifestyle could work out if we didn’t have kids, or didn’t have rental properties that we need to live near to properly manage, but I’m not seeing a great solution here that makes sense. I definitely don’t want to be resistant to change or make up reasons for not sacrificing, and I appreciate everyone’s input and suggestions.

The relative does not help with any expenses. We took him in to give him a fresh start in a different part of the country. My husband is thinking he might be here for another 6 months or so. We employ him at a low hourly rate to complete work on our properties and assist with our side businesses.

I have been looking at other jobs closer to home, so I’ll continue that search.

IF the relative has no money to help with expenses, fine.  But then you are paying him for labor?  Seems to me that his labor should be buying his room and board.  That won't help your financial picture but it takes something off your plate which seems like a huge thing for you.

depends on what the low hourly rate is compared to market comparisons. It costs $75 or more an hour for a handyman in HCOL areas, forget a journey level plumber or carpenter.

If they are paying $10/hr for labor that would ordinarily cost $40/hr, it might be an equitable arrangement.

Also - it sounds like the H is trying to give a young relative a start.

Is this his son from a previous relationship?

[kdaniel1010]

Hi guys, yes I am completely burnt out. Having the kids, the side business and the rentals with my full time job is freaking exhausting. I’ve had breakdowns and I just recently took a week off from work to decide if I wanted to quit or not. Ultimately I deleted my Outlook work email account from my phone and established clearer boundaries for my staff regarding contacting me outside of my normal working hours and over the weekend. That had helped somewhat but I’ve always had this goal of quitting my job so that I can pursue my business and my rentals and not have to be somewhere else 12 hours out of the day, and so I can spend more time with family and try to enjoy life....because life sucks right now and it has for a few years.

I feel like this is the only way to get ahead - to push ourselves for a while until we can break free. It’s just not happening as quickly as I’d like and I feel like I’m missing out on my kids’ lives in the process.

Anyway, as far as the relative goes - it’s my husband’s cousin. Yeah, now that he is working for my side business I’m struggling to decide how much to pay him for his work. He works with our maintenance guy as more of a helper. I plan to have a conversation with him about this today.

[gaja]

Hi guys, yes I am completely burnt out. Having the kids, the side business and the rentals with my full time job is freaking exhausting. I’ve had breakdowns and I just recently took a week off from work to decide if I wanted to quit or not. Ultimately I deleted my Outlook work email account from my phone and established clearer boundaries for my staff regarding contacting me outside of my normal working hours and over the weekend. That had helped somewhat but I’ve always had this goal of quitting my job so that I can pursue my business and my rentals and not have to be somewhere else 12 hours out of the day, and so I can spend more time with family and try to enjoy life....because life sucks right now and it has for a few years.

I feel like this is the only way to get ahead - to push ourselves for a while until we can break free. It’s just not happening as quickly as I’d like and I feel like I’m missing out on my kids’ lives in the process.

Anyway, as far as the relative goes - it’s my husband’s cousin. Yeah, now that he is working for my side business I’m struggling to decide how much to pay him for his work. He works with our maintenance guy as more of a helper. I plan to have a conversation with him about this today.

Are you certain you can't do this now? How would your budget look if you quit your job and focused on the sidegig and the rentals (and your husband kept working for a bit longer)?

[Villanelle]

Hi guys, yes I am completely burnt out. Having the kids, the side business and the rentals with my full time job is freaking exhausting. I’ve had breakdowns and I just recently took a week off from work to decide if I wanted to quit or not. Ultimately I deleted my Outlook work email account from my phone and established clearer boundaries for my staff regarding contacting me outside of my normal working hours and over the weekend. That had helped somewhat but I’ve always had this goal of quitting my job so that I can pursue my business and my rentals and not have to be somewhere else 12 hours out of the day, and so I can spend more time with family and try to enjoy life....because life sucks right now and it has for a few years.

I feel like this is the only way to get ahead - to push ourselves for a while until we can break free. It’s just not happening as quickly as I’d like and I feel like I’m missing out on my kids’ lives in the process.

Anyway, as far as the relative goes - it’s my husband’s cousin. Yeah, now that he is working for my side business I’m struggling to decide how much to pay him for his work. He works with our maintenance guy as more of a helper. I plan to have a conversation with him about this today.

Again, run the numbers to see what it would look like if you quit now, especially if you were able to ramp up the side hustle and cancel the day care, as well as end some of those commute costs (and maybe make it easier to move to a cheaper place).

I know it's so tough to consider make life decisions when you are already overwhelmed, but it seems like that's the best way forward, given what you've posted.  There aren't many small tweaks you can make that are going to give you the significant change you seem to be seeking.  Downgrading the cable package isn't going to end your burnt out or allow you to retire much more quickly. 

[Cassie]

I totally agree with Villanelle. You can’t keep going at this pace.

[kdaniel1010]

That should save us about $2k per month. We would have the added expense of health insurance for myself and the kids, though, whether it’s us being added to my husband’s policy or using the marketplace.

I was just looking online and found a townhome, 3 beds, going for a rate that would make our mortgage payment (including PITI) $1100-$1360 per month! What do you guys think about that? Would it be worth pursuing that if it means netting $0 or even having to bring money to the closing of the sale of our current home? It could save us $600+ per month, plus we wouldn’t have to worry about exterior maintenance, snow removal or landscaping.

[calimom]

Hi guys, yes I am completely burnt out. Having the kids, the side business and the rentals with my full time job is freaking exhausting. I’ve had breakdowns and I just recently took a week off from work to decide if I wanted to quit or not. Ultimately I deleted my Outlook work email account from my phone and established clearer boundaries for my staff regarding contacting me outside of my normal working hours and over the weekend. That had helped somewhat but I’ve always had this goal of quitting my job so that I can pursue my business and my rentals and not have to be somewhere else 12 hours out of the day, and so I can spend more time with family and try to enjoy life....because life sucks right now and it has for a few years.

I feel like this is the only way to get ahead - to push ourselves for a while until we can break free. It’s just not happening as quickly as I’d like and I feel like I’m missing out on my kids’ lives in the process.

Anyway, as far as the relative goes - it’s my husband’s cousin. Yeah, now that he is working for my side business I’m struggling to decide how much to pay him for his work. He works with our maintenance guy as more of a helper. I plan to have a conversation with him about this today.

Again, run the numbers to see what it would look like if you quit now, especially if you were able to ramp up the side hustle and cancel the day care, as well as end some of those commute costs (and maybe make it easier to move to a cheaper place).

I know it's so tough to consider make life decisions when you are already overwhelmed, but it seems like that's the best way forward, given what you've posted.  There aren't many small tweaks you can make that are going to give you the significant change you seem to be seeking.  Downgrading the cable package isn't going to end your burnt out or allow you to retire much more quickly.

@Villanelle has great ideas and insights. OP you and your husband work so hard and it's admirable, but as you say, not getting you there as fast as you'd like.I'm in the camp of encouraging you to quit your high commute job that you don't like all that much and is robbing you of so much time with your family. Has the idea of moving back into your previous house been discussed? Is that a possibility at all? It would be great if you could spend more effort on the PM business that brings you pleasure and has lots of flexibility. And could the 21 year old eventually move into one of your rentals as a vacancy arises and serve as some sort of onsite PM for reduced rent as part of his compensation?

I have small business that I designed to work around my kids' school hours when they were young, though I did have day care for the youngest when she was a pre-schooler. Real estate has been an ongoing goal of mine, and have a small handful of properties. It really has helped with the life/work balance.

A lot of people are rooting for you guys. Kudos to you for looking at all the angles and listening to suggestions. You're doing lots of things right.

[Freedomin5]

Yes! I would move to the townhome. It’s not just about the one-time closing costs. The stuff that really kills your budget are the monthly maintenance/heating/cooling/etc. costs. Correcting a past mistake may cost you a bit at the outset, but if you stay in the townhome for a few years, you more than offset the one-time costs. Look at the costs and savings from a longer term perspective.

In addition, I know you have 19 properties, but does that really require full-time work on the part of the cousin? Our family owns 5 properties, and that requires maybe an average of 2 hours of work per week. If you’re trying to give the cousin a fresh start, shouldn’t he be looking for other part-time/full-time work to establish himself rather than mooching off of you in terms of room, board, and work? I think giving him room and board in exchange for part-time help on gas properties is fair. And then I’d encourage him to actively look for full-time work. Otherwise, it sounds like you’re raising another child (give him a room to sleep, food to eat, and allowance for helping with household chores).

[kdaniel1010]

Yes! The idea was for him to move into one of our rentals eventually. That’s the plan. He’s been busy working lately to rehab our old house which we are putting on the market this week, doing work for my husband’s remodeling business, taking care of maintenance requests at our properties and working on the properties that I manage for other investors. I just took over management of 8 units for another investor that require a lot of work, so that’s been keeping him busy. Eventually the work will scale down. If he doesn’t have enough work between the properties I manage and my husband’s business he will look for another job.

My husband and I talked about moving to the old house today. The rehab costs are high, some of which we had to finance. We bought the house for $125k as a fixer upper and are looking to sell it for $230k. It would make more financial sense at this point to find another place to rent or buy, because we need to pay off the rehab expenses when the property sells. After reading all of your feedback I no longer feel so hesitant to get up and move. I already contacted our real estate broker to see the townhouse and am getting excited about getting things in order! Thank you guys for all of your support!

[Dee18]

Gymnastics for a 3 and 6 year old?  I think swimming lessons are great for each child to learn to swim, but I’m wondering if you got sucked into a gymnastics program at your daycare.  Just say no to things like that, at least until your debt is down. 

[Villanelle]

Where is the pay for the cousin listed in your budget?  I don't see it listed.  So is your budget just guesses at projected spending going forward?  And not including things you are actually paying?