The Money Mustache Community

Learning, Sharing, and Teaching => Case Studies => Topic started by: kdaniel1010 on July 26, 2019, 01:11:35 PM

Title: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 26, 2019, 01:11:35 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: nurseart on July 26, 2019, 01:43:06 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 26, 2019, 02:10:05 PM
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!
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Zamboni on July 26, 2019, 02:24:08 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 26, 2019, 02:31:20 PM
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!
Title: Re: Help! Too many expenses and strong desire for FI
Post by: gaja on July 26, 2019, 02:50:26 PM
Why is your commute 45 minutes if you own/manage your own company?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 26, 2019, 02:52:11 PM
Sorry if I wasn't clear. My husband and I both work FT jobs; in addition, we have our own side businesses.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: roomtempmayo on July 26, 2019, 04:55:58 PM
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?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 26, 2019, 05:01:43 PM
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?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: gaja on July 26, 2019, 05:11:17 PM
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?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: roomtempmayo on July 26, 2019, 05:19:51 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 26, 2019, 06:12:35 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: gaja on July 26, 2019, 06:45:08 PM
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).
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 26, 2019, 07:18:33 PM
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 ...
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Freedomin5 on July 26, 2019, 07:35:42 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Villanelle on July 26, 2019, 07:55:13 PM
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. 
Title: Re: Help! Too many expenses and strong desire for FI
Post by: SuperSecretName on July 26, 2019, 08:57:33 PM
Life insurance is very high. Is that a while-life policy?  If so cancel and buy term.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: MKinVA on July 26, 2019, 09:05:38 PM
Can you sell or rent the house you are in and move to one of your rentals to reduce costs?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 26, 2019, 09:07:57 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 26, 2019, 09:09:31 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Bracken_Joy on July 26, 2019, 09:16:50 PM
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?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Villanelle on July 26, 2019, 09:19:55 PM
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. 
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 26, 2019, 09:32:07 PM
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?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: SuperSecretName on July 27, 2019, 06:25:58 AM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Morning Glory on July 27, 2019, 06:35:29 AM
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?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Zamboni on July 27, 2019, 07:15:48 AM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 27, 2019, 08:26:19 AM
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!
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Roland of Gilead on July 27, 2019, 09:01:28 AM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: AccidentialMustache on July 27, 2019, 09:22:05 AM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 27, 2019, 09:37:11 AM
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!!
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Zamboni on July 27, 2019, 10:44:40 AM
https://www.mrmoneymustache.com/2015/07/27/rent-vs-buy/ (https://www.mrmoneymustache.com/2015/07/27/rent-vs-buy/)
Title: Re: Help! Too many expenses and strong desire for FI
Post by: MKinVA on July 27, 2019, 06:44:50 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 27, 2019, 06:52:31 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: MKinVA on July 27, 2019, 07:07:04 PM
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?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: gaja on July 27, 2019, 07:29:57 PM
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?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Villanelle on July 28, 2019, 08:49:07 AM
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.

Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 28, 2019, 09:44:51 AM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Kronsey on July 28, 2019, 10:54:04 AM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Villanelle on July 28, 2019, 11:24:54 AM
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?"
Title: Re: Help! Too many expenses and strong desire for FI
Post by: mistymoney on July 28, 2019, 12:33:56 PM
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?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 28, 2019, 01:03:28 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: gaja on July 28, 2019, 01:35:25 PM
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)?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Villanelle on July 28, 2019, 02:32:44 PM
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. 
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Cassie on July 28, 2019, 03:03:39 PM
I totally agree with Villanelle. You can’t keep going at this pace.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 28, 2019, 06:16:19 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: calimom on July 28, 2019, 06:36:08 PM
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.

Title: Re: Help! Too many expenses and strong desire for FI
Post by: Freedomin5 on July 28, 2019, 06:51:37 PM
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).
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 28, 2019, 07:04:07 PM
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!
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Dee18 on July 28, 2019, 07:11:19 PM
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. 
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Villanelle on July 28, 2019, 07:29:33 PM
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?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 28, 2019, 07:39:39 PM
No, his pay comes from my business, the rental properties’ maintenance funds, and my husband’s business. It doesn’t come from our W2 income at all.

We use YNAB and have admittedly spent frivolously the past several months. I used actuals and projections for decreased spending for my budget numbers.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: reeshau on July 29, 2019, 03:24:52 AM
No, his pay comes from my business, the rental properties’ maintenance funds, and my husband’s business. It doesn’t come from our W2 income at all.

This might be overstepping boundaries and the purpose of your post, but I think it would be better for your relative's development to pay him market rate, and charge him room and board.  In the current situation, it would be difficult / a dumb decision for him to move out--he can't afford it.  And depending on what you mean by helping him out, he is also missing the opportunity to budget for living expenses.  If you let him handle the value of his living, even if in the end it doesn't change your numbers, I bet it will help him build his self-esteem, and it should make the next step easier to do.  I would at least look to have his living "costs" model a roommate situation to prepare him to be on his own.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Stashing Swiss-style on July 29, 2019, 04:31:16 AM
I have just read through your case study and you have a great approach - very positive despite your difficult situation.  I think you must fix your own situation quickly.  Family life is tough and your kids are so young.  Burn-outs are real and serious - 12 hour days are unsustainable - you need to stop that.  Take care of yourself.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 29, 2019, 05:29:27 AM
Thank you, Stashing!

Reeshau, you make some good points. The goal is to get him to be self sufficient. Will talk to my husband about this. In the meantime we asked our real estate broker to set up a search for properties that would give us more wiggle room in our budget.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: mistymoney on July 29, 2019, 07:17:05 AM
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.



That is a lot to keep juggling.

Can you push for working from home 1-2 days per week? Or look for another job that is a little less demanding, at least time-wise or commute-wise?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Villanelle on July 29, 2019, 08:43:05 AM
No, his pay comes from my business, the rental properties’ maintenance funds, and my husband’s business. It doesn’t come from our W2 income at all.

We use YNAB and have admittedly spent frivolously the past several months. I used actuals and projections for decreased spending for my budget numbers.

So why are you pushing the losses on to your personal finances?  Pay him market value (which sounds like it would be lower end because it's not specialized labor) and charge him room and board.  Right now, you are essentially channelling money from your personal finances to your business because you are paying him less and then compensating him with free room and board paid for by your personal accounts. 

Have you looked at the numbers yet for quitting your job?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 29, 2019, 09:51:02 AM
So it would save me $1,400 in daycare per month and around $300 I'm guessing in gas. I'm not sure what other expenses would be reduced/eliminated if I am not working. But, it would allow me to try and scale up my business and I could advertise for my husband's remodeling company as well. I don't think we'd be able to cover our basic expenses this way unless we have more $$ saved up. Perhaps I could get a part time job if I quit this one to help with expenses, one that would be much closer to home.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Villanelle on July 29, 2019, 11:03:18 AM
So it would save me $1,400 in daycare per month and around $300 I'm guessing in gas. I'm not sure what other expenses would be reduced/eliminated if I am not working. But, it would allow me to try and scale up my business and I could advertise for my husband's remodeling company as well. I don't think we'd be able to cover our basic expenses this way unless we have more $$ saved up. Perhaps I could get a part time job if I quit this one to help with expenses, one that would be much closer to home.

Isn't daycare $1900?

In addition to ramping up the side hustle, some jobs are pretty easy to find when you have availability.  You could get a weekend job since presumably your husband would be home (though that's lost time together, but it could be temporary while you hopefully ramp up your business).  You could also do things like watching kids during that difficult after-school time where parents scramble to bridge the gap between school ending and getting home from work.  And during school vacations, half-days, etc. 

You would also have more time to cook, carefully grocery shop, etc.  Anything that you currently spend more on because you just don't have the time (meal planning, scouring coupons, going to two different grocery stores to take advantage of loss leaders, etc.)

And it would allow you to move closer to your husband, and to have time to supplement a weaker school for your kids, allowing you to live in a cheaper home.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Zamboni on July 29, 2019, 11:16:06 AM
Good going trying to search for changes that will be positive for you and your family.

Based upon some of what you have written, I can't help but feel like you are doing too much guessing. You use YNAB, but do you enter every single tiny expense in there? I got a little Debbie snack cake yesterday at a quickie mart for 50 cents and I entered it . . . . that is the level you need to be tracking for at least 3 months. Then you'll know exactly how much you will save if you change something rather than guessing.

My brother's older sons work at his shop at he pays them the prevailing market wage for skilled shop labor even though they still live in his house. I have to agree with the other posters who are suggesting that this is what needs to happen for the cousin. By essentially compensating him "cash under the table" with room and board, you are gipping him wages that could count towards his social security benefits some day, for example. That's on top of reducing his ability to function like an adult who pays his own bills.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 29, 2019, 11:23:52 AM
Daycare is $1,400 per month when school starts; closer to $1,900 during the summer. I should average this so that it's not more out of our pockets during the summer.

I do enter everything into YNAB so it's balanced with our checking account. We literally froze (in the freezer, in water) our credit cards that we use when we're short on cash over the weekend so that there's no temptation to use them, and I cut out a bunch of extra subscriptions and things like Hulu, ipsy, reduced grocery spending etc. so if there is anything that sounds like I'm guessing, it has to do with the fact that I am changing/eliminating expenses. We worked really hard at our budget and used YNAB back in 2014/2015 when our incomes were half of what they are now, and we still had extra money to throw at savings! So my goal is to get back into that sort of situation so we can put as much as possible into savings/stock market/pay off debt of course.

Title: Re: Help! Too many expenses and strong desire for FI
Post by: Villanelle on July 29, 2019, 12:08:57 PM
Daycare is $1,400 per month when school starts; closer to $1,900 during the summer. I should average this so that it's not more out of our pockets during the summer.

I do enter everything into YNAB so it's balanced with our checking account. We literally froze (in the freezer, in water) our credit cards that we use when we're short on cash over the weekend so that there's no temptation to use them, and I cut out a bunch of extra subscriptions and things like Hulu, ipsy, reduced grocery spending etc. so if there is anything that sounds like I'm guessing, it has to do with the fact that I am changing/eliminating expenses. We worked really hard at our budget and used YNAB back in 2014/2015 when our incomes were half of what they are now, and we still had extra money to throw at savings! So my goal is to get back into that sort of situation so we can put as much as possible into savings/stock market/pay off debt of course.

This proves what I suspected--these numbers aren't actual historical expenses over a long term.  They are estimates.  You don't spend $1900/mo for childcare.  You spend closer to $1525 (that's $1900 for 3 summer months and $1400 for 9 school months.)  That means your posted budget isn't at all accurate, and I am sure this isn't the only line item where you don't have actual expenses.  The mention of "not more out of our pockets" says, "we spend and don't track whatever is left". 

If you are entering things in YNAB, then you should know where that extra $4500 annually ($500x9 months) ended up.  It's not in your budget anywhere, which means it disappeared.  But "disappeared" is budget-speak for "wasted".

You need to know what you are actually spending.  That should be 100% based on what you have actually spent in the past, unless you have concrete reason to KNOW that something will change, like you've found a new day care or have decided to stop eating out entirely (and are SURE you will stick with that).  Otherwise, it's just a dream budget.  If you don't know what you are actually spending, you don't know what you can cut, or what things would look like if you made specific changes. 
Title: Re: Help! Too many expenses and strong desire for FI
Post by: gaja on July 29, 2019, 12:17:24 PM
Daycare is $1,400 per month when school starts; closer to $1,900 during the summer. I should average this so that it's not more out of our pockets during the summer.

I do enter everything into YNAB so it's balanced with our checking account. We literally froze (in the freezer, in water) our credit cards that we use when we're short on cash over the weekend so that there's no temptation to use them, and I cut out a bunch of extra subscriptions and things like Hulu, ipsy, reduced grocery spending etc. so if there is anything that sounds like I'm guessing, it has to do with the fact that I am changing/eliminating expenses. We worked really hard at our budget and used YNAB back in 2014/2015 when our incomes were half of what they are now, and we still had extra money to throw at savings! So my goal is to get back into that sort of situation so we can put as much as possible into savings/stock market/pay off debt of course.

Could you set up a new case study based on you quitting your job, and including all the expenses you know you can get rid of then? I think it is doable, but it is difficult to know without seeing all the numbers.

What is the current total take home pay from your individual jobs, and how much will it be if one of you quit (I would presume that would change something about tax and medical?).
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 29, 2019, 03:03:22 PM
Sure I will work on the new numbers.

As for my budget Villanelle, you're right - it's not exact. Our spending was a little (a lot?) out of control over the past several months as we moved, rehabbed the old house, worked on our businesses and tried to balance everything (which meant paying for conveniences that I'm not trying to pay for now). My numbers are based on averages from previous months as well as my goal for August as we work to cut unnecessary items and reduce spending, paying more attention to the numbers. I'm not sure what more I can do at this point to narrow it down and make it more accurate.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: doingfine on July 29, 2019, 06:56:54 PM
$36k/year in return for managing 19 properties? Geez that sounds like a significant amount of work and risk if I’m also working full time and raising a family. That’s less than $2k/unit annually. I wouldn’t own a rental property to make $2k annually. I’m not sure owning 19 such units is a good deal, but then I’m pretty skeptical of real estate generally. How much cash could you generate if you sold all of the properties?

I generally agree with the sentiments here. I would focus on either the rentals or your job - right now you have too many demands on your time.

Title: Re: Help! Too many expenses and strong desire for FI
Post by: Villanelle on July 29, 2019, 07:43:12 PM
$36k/year in return for managing 19 properties? Geez that sounds like a significant amount of work and risk if I’m also working full time and raising a family. That’s less than $2k/unit annually. I wouldn’t own a rental property to make $2k annually. I’m not sure owning 19 such units is a good deal, but then I’m pretty skeptical of real estate generally. How much cash could you generate if you sold all of the properties?

I generally agree with the sentiments here. I would focus on either the rentals or your job - right now you have too many demands on your time.

Yeah, I'm trying to figure out the numbers.  Rents for each property are posted, but it seems to me like the profits should be higher based on those numbers, because the rents compared to the purchase prices don't look awful.  So where is the money going?

Op, you said you have 19 units, then only posted values for 6 of them?  What about the others?  And what do your expenses look like?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 29, 2019, 07:52:15 PM
We are 50/50 partners on 4 of the properties which of course reduces cash flow. We are long term buy and hold investors. The idea was for this to fund our retirement (the cash flow will increase once the mortgages are paid off in 25-30 years) and to acquire so many properties that it could replace my w2 income so I could manage them full time.

I’d have to do some calculations to determine how much we’d net if we sold them all right now. Our partners would obviously have to be on board as well. I understand you guys are concerned about the returns, but our cash on cash return for each property is 16% or more so I do still strongly believe that they are all sound investments.

We have 19 units in 6 properties. We put aside 30% of the monthly rents for expenses and draw out of that for repairs, vacancy expenses etc. This is all in separate accounts (checking) and we hold security deposits in interest-bearing savings accounts.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 29, 2019, 07:54:24 PM
Ptf

Thanks for your helpful comment.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: a-scho on July 29, 2019, 08:13:08 PM
Ptf

Thanks for your helpful comment.

sarcasm?  i think they were "posting to follow" not "programmed to fail"
Title: Re: Help! Too many expenses and strong desire for FI
Post by: doingfine on July 29, 2019, 08:17:12 PM
16% return indicates you have ~$225k cash invested? How much time do you and your husband legitimately put into this enterprise to generate that return?

The two issues I see as a passive investor is that while the 16% return shows the power of leverage in driving RE returns - does that $36k return adequately compensate you for the time you are putting into this and the risks you are taking on? This is a job as much as it is an investment.

Finally, while it will feel good to have the mortgages paid off and the increased cash flow that will bring, realize that when you do away with the leverage of holding a mortgage, you lose most of the excess return RE is capable of bringing over and above the market as a whole. You may find you can get a similar return via a truly passive investment at that time (or, if your are still wanting to take an active role, turn that $2M into 40 properties, each benefitting from the cheap leverage of a mortgage).
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 29, 2019, 08:32:01 PM
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. 😳
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 29, 2019, 08:37:36 PM
16% return indicates you have ~$225k cash invested? How much time do you and your husband legitimately put into this enterprise to generate that return?

The two issues I see as a passive investor is that while the 16% return shows the power of leverage in driving RE returns - does that $36k return adequately compensate you for the time you are putting into this and the risks you are taking on? This is a job as much as it is an investment.

Finally, while it will feel good to have the mortgages paid off and the increased cash flow that will bring, realize that when you do away with the leverage of holding a mortgage, you lose most of the excess return RE is capable of bringing over and above the market as a whole. You may find you can get a similar return via a truly passive investment at that time (or, if your are still wanting to take an active role, turn that $2M into 40 properties, each benefitting from the cheap leverage of a mortgage).

I definitely see where you’re coming from here and get it. What drove me to this site was reading Quit Like a Millionaire. I have always been afraid of the stock market especially after the recession, and found real estate instead. It’s something I’m good at - I manage properties, lease them, like the financials and most of the stuff in between. I figured it’d be a natural course for us to take especially with my husband’s background in accounting and his ability to teach himself home repairs and renovations. We saw this as the best way to make money, although never believed it to be passive. I don’t spend a ton of time on our rentals except for when there’s an ongoing issue or I’m trying to fill a vacancy. That’s the story behind that.

After reading the book I’m very interested in the stock market and index funds as discussed there, which is why I came here. I’m just trying to get to the point where we can throw a bunch of money into those accounts every month.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Stashing Swiss-style on July 30, 2019, 04:30:31 AM


"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. 😳
[/quote]"

Don't worry!  It's normal to feel a bit sensitive - the advice given is good, needed, comes from people wanting to help, but it's tough to hear sometimes.  You are handling it all very well.

ptf is what we forum lurkers do when we are interested in something but not quite ready to comment :-)
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 30, 2019, 05:48:00 AM
New case study based on my quitting my FT job:

Category   Budget
Kid #1 braces payment   250 - this is now ZERO because I just found out our last payment was in July!!
Pet care   40
Daycare    0
Subscriptions    100
Kids Activities/Classes    140 - swimming lessons only?
Household Goods   100
Clothing    50
Medical   500
Restaurants    75
Spending - Husband   50
Spending - Wife   50
Fuel   300
Groceries, toiletries   850 (it was higher in July - trying to reduce) - don't think it can get lower than this but we will see in August
Mortgage - primary residence   1920
Donation    25
Natural Gas   75
Water   45
Electricity   100
Netflix   12
Internet     66
Phone - AT&T & T-Mobile   250 - still need to work on this.
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   7,607

Total income from my husband would be $3,800 from his job, about $1k from my business, and $3k from the rental properties which totals $7,800. HMMMM. What do you all think? What makes me nervous about this, is that we won't have much/anything to save on a monthly basis, until/unless I ramp up my business or get a part time job.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: gaja on July 30, 2019, 06:16:11 AM
New case study based on my quitting my FT job:

Category   Budget
Kid #1 braces payment   250 - this is now ZERO because I just found out our last payment was in July!!
Pet care   40
Daycare    0
Subscriptions    100
Kids Activities/Classes    140 - swimming lessons only?
Household Goods   100
Clothing    50
Medical   500
Restaurants    75
Spending - Husband   50
Spending - Wife   50
Fuel   300
Groceries, toiletries   850 (it was higher in July - trying to reduce) - don't think it can get lower than this but we will see in August
Mortgage - primary residence   1920
Donation    25
Natural Gas   75
Water   45
Electricity   100
Netflix   12
Internet     66
Phone - AT&T & T-Mobile   250 - still need to work on this.
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   7,607

Total income from my husband would be $3,800 from his job, about $1k from my business, and $3k from the rental properties which totals $7,800. HMMMM. What do you all think? What makes me nervous about this, is that we won't have much/anything to save on a monthly basis, until/unless I ramp up my business or get a part time job.

1) 1112 will be gone as soon as you sell the house, and you mentioned that the debt payment of 450 (credit cards) will be taken care of then too? That gives you wiggle room of 1758/month. More if you ramp up the business. Also: a lot of your rental income goes to paying down mortgages. That is also a form for saving.

2) Do you still need two cars and a truck if you are not both commuting?

3) $100/month for Christmas and birthdays is a lot, and you have still kept 100 for subscriptions in addition to 16 for Netflix. Is all that necessary?

4) I support only keeping swimming lessons. My kids are much more happy if they don't have too many acitivities. Do not underestimate the value of free play for small children.

5) Phones seem crazy high.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: doingfine on July 30, 2019, 06:40:38 AM
Yeah, as noted, once you sell that property you'll have a bunch of extra cash from that.

You would also want to make a plan to get out of those car payments. You should be able to go down to 2 cars and preferably both of them paid for. This will also allow you to reduce your insurance costs.

The Debt payments category should go away once you pay it off after selling the property, right?

I would not budget $0 to child care even if you will be staying at home. You will need some care for days when you need to pour more energy into the rental business or just need a break, summer camps, etc.

I don't see a category for maintenance and repairs on the house. That should be several hundred per month.

Altogether in the not-too-distant future, you could have a couple thousand dollars of slack in the budget to start saving more, and a tremendous amount more family/free time.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: gaja on July 30, 2019, 06:46:53 AM
If I were in your shoes, I would think long and hard about whether I would take the kids out of daycare, or keep them there and get a job close to home (maybe part time) that pays at least 1500/month. That should not be hard to find.

But that is me - I'm not at all suited to staying home with kids, or other types of full time caretaking.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: doingfine on July 30, 2019, 06:56:53 AM
Agreed. You should be totally honest with yourself about how well you will do being a full time at home caretaker.

Realistically I think you simply need to adjust any one of your major life variables - you currently are raising a family with both parents working full time, with long commutes, plus managing a bunch of rentals. The family has to stay so cut back/out one of the full time jobs, reduce a commute to near zero, or get rid of the side work.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Peachtea on July 30, 2019, 08:09:56 AM
If you have a 21 year old living with you room and board free and you employ him, thus controlling his work hours, why would you not arrange his work hours so he can do daycare pick up and drop off, or at least one as part of room and board? For example, you, husband and children could car pool to daycare drop off and then to train station(s) for commute. Then cousin picks up kids and starts doing dinner prep while waiting for your return from work. This would give you more time, more time with husband, help with burn out, and let you drop a car or replace it with a very cheap beater. You’d save on car payment, insurance, and maintenance, plus gas. You’ll have less maintenance if driving is significantly reduced. Probably it’d work out ahead, although maybe not by much, if after cousin left you hired someone local for 1-2 hours to do this as well (if you don’t quit your job). Plus, having to plan dinner for the week in advance to give cousin or part time sitter prep instructions would make you grocery shop once and likely save money in groceries too.

Also, in general if husband works downtown why isn’t he taking commuter rail? I see you worked out what it would take for you to take train, but I didn’t see anything about him (in current location), although maybe I missed it.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Roland of Gilead on July 30, 2019, 08:36:29 AM
One big item right away that I see if you quit your job is that your take home pay from your husband's job should increase because you can have a smaller amount of taxes taken out.  The less you make the less you pay in tax.   This is assuming that you were each withholding according to their gross income.

Could be an extra couple hundred a month in tax saving.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 30, 2019, 10:22:55 AM
Hi everyone, thanks so much for the feedback.
Yes, I did miss home maintenance so that should be around $250/month (less if we downsize).
The $1112 mortgage would go away once we sell the house, but I realized after I posted that we'd need to pay another $1100 or so in insurance (medical) for myself and the kids based on a quote I received from the marketplace a few months back.

Regarding the daycare, you guys are right. I don't know how it'd work out with me as a full time caretaker and I'd need to budget in something for days/times when I need childcare. I'd just have my youngest (3 yo) since the older two are in school (during school year of course; summer would be TBD).

Yes I'd love to drop one of the cars and pay off the other two.

My husband used to take the train but has been driving lately because the train adds more time onto his commute; he can drive faster and get home sooner/leave later which saves him time.

The plan is to pay off all cc debt as well, so yes that'd be gone too.

I'd like to see if I can get a PT job too if I quit my FT job ... so I had some sort of extra income aside from the rentals and my business.

Regarding the cousin .... I'm not sure how to put this but having him start dinner or help with the kids is not an option. I'd feel much better having myself or my husband handling all of that.

 
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Villanelle on July 30, 2019, 10:37:31 AM
Hi everyone, thanks so much for the feedback.
Yes, I did miss home maintenance so that should be around $250/month (less if we downsize).
The $1112 mortgage would go away once we sell the house, but I realized after I posted that we'd need to pay another $1100 or so in insurance (medical) for myself and the kids based on a quote I received from the marketplace a few months back.

Regarding the daycare, you guys are right. I don't know how it'd work out with me as a full time caretaker and I'd need to budget in something for days/times when I need childcare. I'd just have my youngest (3 yo) since the older two are in school (during school year of course; summer would be TBD).

Yes I'd love to drop one of the cars and pay off the other two.

My husband used to take the train but has been driving lately because the train adds more time onto his commute; he can drive faster and get home sooner/leave later which saves him time.

The plan is to pay off all cc debt as well, so yes that'd be gone too.

I'd like to see if I can get a PT job too if I quit my FT job ... so I had some sort of extra income aside from the rentals and my business.

Regarding the cousin .... I'm not sure how to put this but having him start dinner or help with the kids is not an option. I'd feel much better having myself or my husband handling all of that.

Understandable.  But then you need to find a way to stop the hemorrhaging of money from him.  He's an able bodied person.  Pay him for his labor, charge him for the resources he uses. 

Also, the more you post (all these forgotten and miscalculated expenses, the more I realize your case study is of little value.  And it makes sense because the numbers don't seem to add up.  You have 19 properties (full or partially) and the numbers on the ones you posted aren't bad.  But your profit on each is an average of less than $2000, if my math is correct.  That's >$2000 PER YEAR!  (You reported $3000 total per month, which is only $157 per property, times 12 is $1894 per property for a year.  If that is really all you are making with hundreds of thousands of dollars invested, you should dump every last one of them.  If that number is because some of the properties are losers or very low earners and they are dragging down the overall returns, then you need to dump those properties.  That will not only increase your cash flow, but it will also take a lot off your plate.

Your numbers on the rentals DO NOT add up.  It was very headscratchy to me that someone who owns 19 supposedly decent (from a $ perspective) properties is barely keeping afloat.  But a bit of digging shows that the reason it was surprising is that some major piece of this puzzle is missing. 

And that's where I'd start, in your shoes.  Downgrading cable and shopping for a better phone plan are great and you should do them, but they are not the low hanging fruit, or the types of things that are going to solve your problems and change your lives.  You need to dig in to the rentals.  Look at each property individually.  What were the expenses for the last 3 years? Projected future major expenses? Rents?  Which properties make the least, and what does "least" mean?  It seems like for at least some of them, it has to mean they are losing money, because the properties you posted about seem like they should be making decent cash, unless there are huge expenses (massive property taxes, huge HOA, old properties that require tons of maintenance, etc.  So if they are making okay money but your average is less than $2000 per property per year, then some of them have to be hemorrhaging money.

Determine the losers and weakest properties, and sell them. 

Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 30, 2019, 11:18:57 AM
Hi Villanelle,

Again I apologize for expenses that were forgotten or miscalculated. As I stated previously I am in the process of overhauling the budget, using previous actuals as well as budgetary goals based on eliminating and reducing expenses. I'm not sure how much more accurate I can get at this point. I've seen other budgets posted here that are missing line items and that have estimates; I didn't realize that this was a requirement for posting here so my apologies if I missed that.

In any case, I own 19 units. These units are in 6 properties. The properties have anywhere from 2 to 5 units each. We are also 50/50 partners on 4 of the 6 properties. Each unit cash flows over $200 per month, which is the standard we had established when we first started investing and which is also the number that is recommended by other investors and resources like BiggerPockets. The rentals cash flow very nicely. I'm not sure if you're not understanding the above details, or if you think $200+/unit per month strict cash flow is not worth it. We put 30% of the gross monthly rents aside for maintenance, turnover, capex work, vacancy every month and distribute the remainder to the investors.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Villanelle on July 30, 2019, 12:04:32 PM
Hi Villanelle,

Again I apologize for expenses that were forgotten or miscalculated. As I stated previously I am in the process of overhauling the budget, using previous actuals as well as budgetary goals based on eliminating and reducing expenses. I'm not sure how much more accurate I can get at this point. I've seen other budgets posted here that are missing line items and that have estimates; I didn't realize that this was a requirement for posting here so my apologies if I missed that.

In any case, I own 19 units. These units are in 6 properties. The properties have anywhere from 2 to 5 units each. We are also 50/50 partners on 4 of the 6 properties. Each unit cash flows over $200 per month, which is the standard we had established when we first started investing and which is also the number that is recommended by other investors and resources like BiggerPockets. The rentals cash flow very nicely. I'm not sure if you're not understanding the above details, or if you think $200+/unit per month strict cash flow is not worth it. We put 30% of the gross monthly rents aside for maintenance, turnover, capex work, vacancy every month and distribute the remainder to the investors.

Definitely no need to apologize.  I'm not harping on it to shame you.  I'm trying to get you to see that your numbers don't make sense and that until you sort that you, you probably can't solve your underlying problem.

If each unit is cash flowing $200 per month (is that your share on the joint units, or total?), then 19x$200=$3800/mo, which would be $45,600 per year.  But that is far less than the number you listed in your budget.  (You said $3000/mo, or $36,00 per year.  So there is a roughly $10,000 discrepancy there. Also, depending on the total you have invested, $45k in returns may or may not be good, but it's definitely better than $36k

You have over a million dollars in property (between you and the other investor;  That is bringing in about $150k in rent annually, assuming few vacancies.  Yet you end up with only $36,000 (or maybe $45,000 )in rent.

So:
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 (Your half is about $130k,  gross rents are $1665)
Property #3: purchased for $100k, worth $120k, gross rents $1,750/month
Property #4: purchased for $135k, worth $150k, gross rents $2,350/month (Your half is $67.5k, $1175)
Property #5: purchased for $196k, worth $250k, gross rents $2,750/month ($175k, $1375)
Property #6: purchased for $109,500, worth $125k, gross rents $2,000/month. ($62.5k; $1000)

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.

~~~~~
 Current value of your properties (though I'm not factoring in transaction costs if you sold) is $705,000.  Your gross rents are $9365/mo.  So you are grossing $112,000, yet net is $36/45k.  Where is the rest of that going?  And, let's say your new number of $45k is correct (in which case you can adjust the budget and that buys you 5 figures of space annually!!).  Are you good with a $45k return on $705,000?  45k/705k=a roughly 6% return (not factoring in equity growth).  That's... fine.  But given the work you are putting in to managing 19 properties, it seems like a poor choice. 

Do you see why I'm questioning your numbers?  Either 36 or 45k, don't seem to make sense if you are collecting $112,000 in rent. For each of your six properties, are you actually spending nearly $20k per year?  Maybe you are, but given the wiggle in your numbers, I have to question it.  And if that is in fact accurate, why not just sell, take all that off your plate, and get nearly the same results in the stock market, which requires almost no work at all?  Or at least sell all but your 2 most profitable properties? 
Title: Re: Help! Too many expenses and strong desire for FI
Post by: doingfine on July 30, 2019, 12:41:40 PM
Villanelle - you aren't factoring in that they have mortgages on these properties, taxes, and expenses. Their share of the property values is roughly $604k. They have $225k in cash down. So roughly assume $379k in their share of the mortgages at 4.5%, 30 year - that's $1920/month, $23k annually. Say another $20k in taxes and insurance. They are reserving 30% of rents for expenses - so $34k. That's $77k in expenses. The left-over is their positive cash-flow - in my case using estimated numbers - that's $35k annually, or $2900/month which is right in the ballpark of what they are getting.

Their return is $35k on $225k invested or almost 16% after most expenses which is pretty good if their numbers are accurate.

I think they are doing a much better job than the vast majority of people who post about their RE investments (real or imagined) which is why even me, as a real estate skeptic, is encouraging one of the options to be taking this side venture full-time.

(The skeptic in me does still wonder if they are paying themselves anything for their management time before calculating this return. If you assume $75/door in management costs, that suddenly makes a split of $17,100/year in salary for managing the property, leaving just $18,900 in real 'investment return' - or 8.4% on the $225k cash invested.)
Title: Re: Help! Too many expenses and strong desire for FI
Post by: ontheway2 on July 30, 2019, 12:46:09 PM
How much longer do you anticipate the 21 year old living with you? If the larger house was primarily purchased because of him, could you rent the other single family and move back in once he moves out? You could then sell your current house and save at least $800/month.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Roland of Gilead on July 30, 2019, 12:48:23 PM
I don't see it as a 16% return because technically they are on margin.  If I had $225k in a stock account and went on margin, I could get a decent return as well.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: doingfine on July 30, 2019, 12:56:03 PM
I don't see it as a 16% return because technically they are on margin.  If I had $225k in a stock account and went on margin, I could get a decent return as well.

Leverage is how most people make money in real estate. It's not quite the same as margin though because the terms are much more favorable to the borrower.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 30, 2019, 01:36:59 PM
Doingfine, you are correct. Thank you for explaining that. We collect a 5% management fee per month on all of the properties, and count that toward my side business income as my management company manages them (initially, we didn't charge a management fee but once I rolled out my company we realized it was stupid not to charge a fee, so we lowballed it at 5% with the understanding that future acquisitions would have closer to a 10% management fee. We just were really hungry for deals and should've charged from the beginning). In addition I have 3 other clients currently (2 acquired this month alone, so I'm hoping to continue to acquire more clients as I become more established as a business). The other clients are charged more of course, plus commissions and fees for renewals, new leases etc. consistent with competitors in the area.

I'm hoping the relative moves soon. The old house had 1.5 bathrooms; we had 5 people in the house prior to him moving in. Once he moved in, it was really difficult to share 1 full bath amongst us all. That was what really prompted me to look for something bigger. The extra bedroom was a plus and was something I factored in to the search. Now I am totally good with moving back down to a 3 bed, 2 bath ideally.......ugh, mistakes.

Title: Re: Help! Too many expenses and strong desire for FI
Post by: Villanelle on July 30, 2019, 04:27:46 PM
Villanelle - you aren't factoring in that they have mortgages on these properties, taxes, and expenses. Their share of the property values is roughly $604k. They have $225k in cash down. So roughly assume $379k in their share of the mortgages at 4.5%, 30 year - that's $1920/month, $23k annually. Say another $20k in taxes and insurance. They are reserving 30% of rents for expenses - so $34k. That's $77k in expenses. The left-over is their positive cash-flow - in my case using estimated numbers - that's $35k annually, or $2900/month which is right in the ballpark of what they are getting.

Their return is $35k on $225k invested or almost 16% after most expenses which is pretty good if their numbers are accurate.

I think they are doing a much better job than the vast majority of people who post about their RE investments (real or imagined) which is why even me, as a real estate skeptic, is encouraging one of the options to be taking this side venture full-time.

(The skeptic in me does still wonder if they are paying themselves anything for their management time before calculating this return. If you assume $75/door in management costs, that suddenly makes a split of $17,100/year in salary for managing the property, leaving just $18,900 in real 'investment return' - or 8.4% on the $225k cash invested.)

I am definitely factoring that in.  And it all adds up to a very unremarkable 6% return, which is what I'm trying to get her to see.  If these numbers are even correct, and there's reason so suspect they aren't.  But if they are, then how is all this work worth it for a very modest return?  They could do as well in equities, with none of the workload.   

If starting from scratch, would you tell someone who was overwhelmed with work to buy properties if they were going to make a 6% return (and that may be before escrowing anything for future maintenance, since I didn't see mention of that)?  Does that seem like a wise path forward?  Keeping the 2-3 best properties and ditching the rest (and investing the money in index funds) will likely increase returns and decrease work.  Keep a few properties to increase diversity and because the best of the bunch are surely doing better than that 6% average.  Ditch those that are underperforming.  Oh, and simplify life considerably, which is the other main goal. 
Title: Re: Help! Too many expenses and strong desire for FI
Post by: ysette9 on July 30, 2019, 04:59:56 PM
Posting to follow. This sounds like a tough nut to crack and I with the OP well. We have two kids and two full-time careers and often I feel that is more than I can handle. I agree that all of this sounds exhausting and something has to give.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: doingfine on July 30, 2019, 08:15:40 PM

I am definitely factoring that in.  And it all adds up to a very unremarkable 6% return,

I laid out the numbers pretty clearly in my post. Your 6% return assumes $45k revenue on $705k investment - however they have $36k of revenue on only $225k cash invested. The $705k is ~the properties value, not how much they have invested personally. This is how leverage can work in your favor in real estate. (This is also why I stated earlier that even though the cash flow improves tremendously once the mortgages are paid off, the actual return falls pretty much in line with a passive market investment, making it a tough sell at that point).
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Peachtea on July 30, 2019, 09:24:19 PM
Does your husband pay for parking when driving to work? Is that in your gas budget? Does it really save that much time or is it worth it compared to the costs? Maybe the answer is yes. I was just surprised to read it because all the people I know in the burbs, as far out as Geneva and most of whom make more than you guys, all take the commuter rail in and then walk 15-20 min from Ogilvie to work, regardless of if they have kids or not. And these are not frugal folks by any means...so there must be a good reason they all take the train. Perhaps if your husband has subsidized parking when most don’t that makes the difference.

Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 30, 2019, 09:53:10 PM
Yes he actually does have free parking - his boss owns a lot nearby. If it weren’t for that and the time savings, he’d still be taking the train for sure.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 31, 2019, 06:03:38 AM
We saw a townhouse last night. Is it worth it to move to a fixer upper 3 bed/2 bath with the PITI + HOA fee totaling approx $1350/monthly instead of staying in the current home which is updated and $1920 monthly all in?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: gaja on July 31, 2019, 07:07:51 AM
We saw a townhouse last night. Is it worth it to move to a fixer upper 3 bed/2 bath with the PITI + HOA fee totaling approx $1350/monthly instead of staying in the current home which is updated and $1920 monthly all in?

You already own two houses. I don't see how getting another one, and with the extra work of a fixer-upper, will help you simplify your life? Get at least one of them sold before you take the next step.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Hirondelle on July 31, 2019, 07:36:51 AM

I'm hoping the relative moves soon. The old house had 1.5 bathrooms; we had 5 people in the house prior to him moving in. Once he moved in, it was really difficult to share 1 full bath amongst us all. That was what really prompted me to look for something bigger. The extra bedroom was a plus and was something I factored in to the search. Now I am totally good with moving back down to a 3 bed, 2 bath ideally.......ugh, mistakes.

Now I haven't involved myself into any other part of this discussion as I know little about real estate, but this boggles me.

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. I've seen most Americans here more often report multiple bathrooms for even 3 bedrooms houses only which only makes sense to me if you are a family renting out a room to a stranger. What makes it so hard to share 1.5 bathroom over 5 people of whom two are little kids?? Are y'all afraid to see each other naked? Can't you wait 5 minutes if you have to go to the toilet and both are occupied at the moment?

(this is a genuine question and I guess if others than the OP can enlighten me I'm happy to hear it too)
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 31, 2019, 08:20:53 AM
We were okay with 1.5 baths with a family of 5 (2 adults, 10/11 year old at the time, 2 small kids). Once the cousin moved in, it became an issue. We were all on similar schedules, and the cousin took SUPER long showers even after we harped on him about it. Hope that makes sense? If not, I guess we must be spoiled!
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Hirondelle on July 31, 2019, 08:27:50 AM
We were okay with 1.5 baths with a family of 5 (2 adults, 10/11 year old at the time, 2 small kids). Once the cousin moved in, it became an issue. We were all on similar schedules, and the cousin took SUPER long showers even after we harped on him about it. Hope that makes sense? If not, I guess we must be spoiled!

That makes more sense to me! 6 people of which 1 is not direct family (cousin) and being demanding in his shower activities. I somewhat misunderstood as you also said that you would like to go back to 3 bedrooms while keeping the 2 baths somewhere. On the other hand.. moving to keep up with the shower activities of someone that you're trying to help out is maybe a bit overkill :p.



It also wasn't necessarily something to judge you on btw, but I've seen it in threads here more often and never really get the point unless you're sharing with non-family members.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 31, 2019, 08:48:47 AM
No worries! Lol. I figure that as our kids get older, their bathroom routines will become more intensive as well, so moving up to 2 full baths would benefit us, especially if we're all on similar schedules (which has been the case).
Title: Re: Help! Too many expenses and strong desire for FI
Post by: ginjaninja on July 31, 2019, 08:58:33 AM
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. 

Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 31, 2019, 09:23:41 AM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: ginjaninja on July 31, 2019, 09:38:00 AM
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?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 31, 2019, 10:17:04 AM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Car Jack on July 31, 2019, 11:53:51 AM
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. 
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 31, 2019, 12:49:34 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Villanelle on July 31, 2019, 12:58:23 PM
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. 
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 31, 2019, 01:27:37 PM
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?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Hirondelle on July 31, 2019, 02:44:18 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 31, 2019, 02:52:53 PM
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).
Title: Re: Help! Too many expenses and strong desire for FI
Post by: gaja on July 31, 2019, 03:37:14 PM
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?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 31, 2019, 03:40:18 PM
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!
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 31, 2019, 04:31:28 PM
I came up with $1,667/month.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: gaja on July 31, 2019, 04:47:53 PM
I came up with $1,667/month.

And where would you rather live?
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 31, 2019, 04:55:52 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: MKinVA on July 31, 2019, 07:33:54 PM
 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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on July 31, 2019, 07:37:06 PM
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!
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on August 01, 2019, 06:22:27 AM
Lol no worries at all, my mistake!

Thanks so much - I really appreciate that.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Morning Glory on August 01, 2019, 01:19:51 PM
I have 2 bathrooms and you can't use both showers at the same time because it messes with the water temperature and pressure.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on August 01, 2019, 01:30:48 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: ATR on August 01, 2019, 01:36:46 PM
PTF
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Christof on August 01, 2019, 02:21:38 PM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on August 01, 2019, 04:16:51 PM
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!
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Freedomin5 on August 01, 2019, 04:47:27 PM
Read jlcollins’ Stock Series for info about investments and accounts.

https://jlcollinsnh.com/stock-series/ (https://jlcollinsnh.com/stock-series/)
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on August 01, 2019, 07:07:40 PM
Thanks guys! I may do the journal thing.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: Hirondelle on August 02, 2019, 12:29:31 AM
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.
Title: Re: Help! Too many expenses and strong desire for FI
Post by: kdaniel1010 on August 02, 2019, 09:40:42 AM
I started one at: https://forum.mrmoneymustache.com/journals/kdaniel's-journal/