Author Topic: Face Punching Line forms to the right.....  (Read 9875 times)

Steel_Rain

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Face Punching Line forms to the right.....
« on: January 08, 2013, 03:55:34 PM »
Mustachians;
 
     I have been reading this blog for about 6 months and have finally come out of hiding :)  My wife and I have come to realize that we need/want a simpler life and would like to punch out of the Rat race as early as possible.  A little bit about is, both are 47 and working with 2 kids, both in college and living at home.  We live in the far western suburbs of Chicago and I work downtown and commute by train and my wife works (let the face punching begin...)  50 miles away in a Northern Suburb of Chicago.  I am amazed at what MMM lives on and when i run the numbers, it seems very plausible to me.  I am very familiar with where he lives since Iím a CU Boulder grad.  I have come to realize that I have been approaching this the wrong way.   Itís clear that instead of trying amass ever greater piles of cash,  that we would be better served by reducing our costs.

   We are blessed with a very high combined income, as in up in the shit tons range compared to what I have seen discussed here and am embarrassed to say we are not all that close to Early Retirement.  Not due to lack of money, we have a net worth approaching 1M. However due to spending the numbers I was running and all the conventional advice was that I was going to need 3-4 M to retire and that seemed to be a long ways off. 

   So, I have the outline of a plan and want to see what folks here think.  This is an ongoing project and my wife is willing but skeptical about being so austere :)  Letís start with the big plus side of our leger;

- Savings Rate today, about 54%   
- Paid off house 2000 sq ft , what I would consider upper middle class but not McMansion level, reasonable($8000/yr)  by Illinois standards anyway Property taxes (Hence why we live so far West)
- 3 positive cash flow rentals, about $600/mo net everything. 
- No debt except that supporting the rentals, which I actually just consider leverage   Plenty of equity there so in my mind Iím debt free but that is not technically correct.

Now for the Sins that justify major face punching.  We are very time strapped so we spend a lot of money buying our time back. Classic double income treadmill.

-   4 paid off vehicles, one for each family member.  Other than numbers, the vehicles themselves are normal.  03 Honda Accord, 96 Ford Contour, 2000 Nissan Pathfinder (I drive this 6 miles a day to train station due to poor mileage) and a 06 Nissan Sentra.
-   Maid service $200 Mo
-   $800/mo grocery Bill, not counting eating out
-   $200/mo Eating out (Wow!)
-   $220 Cable/internet/phone bill
-   $200 Cell phone bills, (2 smart phones the wife and I 2 dumb phones for the kids)
-   My cost of commuting is $195/mo so not too bad, my wife however is about $1000/mo at $.50 mile, up there with bat shit insaneÖ.
-   I also believe we average about $500/mo in what I would call retail therapy 

So, without any more gory details, suffice it to say that out outgoing money every month is on the order of $6200/Mo.  At that consumption Rate, assuming a SWR of 4%, I will need a minimum of 1.9M to retire.  As I said earlier, our net worth is on the order of 1M but that includes 300k in total Real estate equity which is not really anything but an expense   So, I figure Iím at 700k and need 1.2M more.  Better in my mind is to reduce spending down to something like  $4200/mo therefore only needing 1.3M which is only about 600k more and with our savings rate and returns, can be  had in about 5 years at age 52.

Now that the face punching is commencing (I envision a scene very similar to that Scene in the movie Airplane where everyone is lined up to take a whack at the hysterical passenger) I have a plan outline that goes something like this. 

-   Replace all smart phones with dumb phones, saving about 100/mo. 
-   Drop Phone landline and get something like magic jack, (need a land line for work, con calls at all hours of the day and night) $50/mo
-   Reduce cable package to bottom tier $70, I know that a true mustachian would eliminate it, but I love my football 
-   Cut $200/mo from Groceries by teaching our little darlings how to cook and make them do so to pay their way   Side benefit, reduce eating out by $150/mo and lose weight to boot.

So, easy saves come out to $570/mo.  Now for the hard one.  The commute.  This is a real issue because where we live is pretty hard to change.  Itís inexpensive, in the same town and my mom, dad and siblings and is where we have lived for 17 years and is close to my kids campusís.  I have run some numbers and moving anywhere near cook county with a family type home doubles my Prop taxes to 12k/yr and that is on 1200 sq ft house that would cost 50% more than the sale value of my home.  I donít think this is a good way to go.

I wanted to run a radical plan by the Mustachians.  How about a commuter pad   What Iím thinking is that I could buy, a very small 400 sq/ft condo  near where my wife works and have it cost, all net, about $1500/mo.  Itís on a train line so I can commute from there with no extra costs and the size of the place is like a hotel room, we just own it and live there during the week.  In my mind, it works out like this;

   Current commute cost for Wife $1000/mo over 3 hours a day on the road

   Commute cost with new condo maybe $100/mo.
 
Since the condo is $1500 and new commute cost is $100/mo for a total cost of this plan is $1600.  But wait the crowd says, twirling their moustacheís, how can spending more help you out.  Hereís how, at least I think.  The $1000/mo we are currently paying is going down the shitter, nothing to show for it and is murder on my wife.  The $1600 option is in an asset that will hold value and be liquidated when we punch out.  I would pay cash for it so the cost Iím using here is opportunity cost of not having the investment the actual cost will be around $600 mo.  So, even at  $1600/mo I see this at only $600/mo going down the shitter.  For a savings of like $400/mo plus my wife gets a 5 min commute.

This is my Phase one plan; it nets $970/mo savings and gains an asset to boot.  Phase 2 will come mid year and will address the maids and the retail therapy issue.  Sorry for the huge wall of text, but this is the whole enchilada   Thanks for listening.

Steel

sol

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Re: Face Punching Line forms to the right.....
« Reply #1 on: January 08, 2013, 04:36:16 PM »
If you're going to move into a condo downtown five days a week, why not just rent out the house and live in the condo 7 days a week?  Rent should cover the cost of the condo, netting you free housing by accepting smaller quarters temporarily.  You can always move back into the house in a year if you don't like it.

Jack

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Re: Face Punching Line forms to the right.....
« Reply #2 on: January 08, 2013, 04:43:37 PM »
If you're going to move into a condo downtown five days a week, why not just rent out the house and live in the condo 7 days a week?  Rent should cover the cost of the condo, netting you free housing by accepting smaller quarters temporarily.  You can always move back into the house in a year if you don't like it.

Apparently, he has school-age kids and doesn't want them to transfer schools (or move into a tiny condo with him, probably).

...However, he said that his parents and siblings live nearby. Therefore, the solution is for him and his wife to move into the condo, and his kids to go live with their grandparents or aunts/uncles.

By the way OP, getting rid of the maid and "retail therapy" should be in phase 1.
« Last Edit: January 08, 2013, 04:46:06 PM by Jack »

happy

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Re: Face Punching Line forms to the right.....
« Reply #3 on: January 08, 2013, 04:54:11 PM »
The condo pad is one way of approaching this, but it seems like a complicated crutch for a basic problem. Also it will not really help the issue of 2 people working and buying time/convenience. You will be running 2 households, and inevitably end up with 2 sets of things.  I get your logic of seeing it as an "investment", but it seems like you are trying to fix the problem by throwing more money at it.

I guess from your post that the wife's job is "non-negotiable" in some way? Except from a MMM point of view its all negotiable. Options include: work part-time, get a different job close to home even if lower pay, stop working and live on 1 salary etc. Have you really looked at some of these? I mean REALLY looked at them?

If the wifes job is fixed, at present,  firstly I would dive in and start clearing up the other messes. If you've read the blog and the forum for 6 months you know what they are. I certainly have at least 1 major blooper that is not fixable right now, or at least I'm not prepared to go there just yet.......but I've still a ton of other things I am making progress with. Go for the easier wins first e.g. cars + maids + retail therapy  will get you that $1000 commute, if its of key importance.

Steel_Rain

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Re: Face Punching Line forms to the right.....
« Reply #4 on: January 08, 2013, 05:05:17 PM »
If you're going to move into a condo downtown five days a week, why not just rent out the house and live in the condo 7 days a week?  Rent should cover the cost of the condo, netting you free housing by accepting smaller quarters temporarily.  You can always move back into the house in a year if you don't like it.

Pretty hard to do until the kids actually fly.  Maybe 3 years, but after that, we can dump the big house all together probably.

Steel

Steel_Rain

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Re: Face Punching Line forms to the right.....
« Reply #5 on: January 08, 2013, 05:08:13 PM »
If you're going to move into a condo downtown five days a week, why not just rent out the house and live in the condo 7 days a week?  Rent should cover the cost of the condo, netting you free housing by accepting smaller quarters temporarily.  You can always move back into the house in a year if you don't like it.

Apparently, he has school-age kids and doesn't want them to transfer schools (or move into a tiny condo with him, probably).

...However, he said that his parents and siblings live nearby. Therefore, the solution is for him and his wife to move into the condo, and his kids to go live with their grandparents or aunts/uncles.

By the way OP, getting rid of the maid and "retail therapy" should be in phase 1.

Well, not quite that simple.  The maid actually does something that  would be pretty hard to do ourselves at the moment.  The retail thearapy thing should be first but has to be understood.  What i see now is a cash leak on that order without knowing what exaclty what we are doing with it.  So i need to get some tighter information over the next few months to get a bead on this.  My wife is sitting here asking me what the hell i have been spending $500/mo on, lol.

Steel

Steel_Rain

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Re: Face Punching Line forms to the right.....
« Reply #6 on: January 08, 2013, 05:20:02 PM »
The condo pad is one way of approaching this, but it seems like a complicated crutch for a basic problem. Also it will not really help the issue of 2 people working and buying time/convenience. You will be running 2 households, and inevitably end up with 2 sets of things.  I get your logic of seeing it as an "investment", but it seems like you are trying to fix the problem by throwing more money at it.

I guess from your post that the wife's job is "non-negotiable" in some way? Except from a MMM point of view its all negotiable. Options include: work part-time, get a different job close to home even if lower pay, stop working and live on 1 salary etc. Have you really looked at some of these? I mean REALLY looked at them?

If the wifes job is fixed, at present,  firstly I would dive in and start clearing up the other messes. If you've read the blog and the forum for 6 months you know what they are. I certainly have at least 1 major blooper that is not fixable right now, or at least I'm not prepared to go there just yet.......but I've still a ton of other things I am making progress with. Go for the easier wins first e.g. cars + maids + retail therapy  will get you that $1000 commute, if its of key importance.

My real thinking is that a temporary lifestye chage to the commute pad would crate a situation that lends itself to less buying our time back and more DIY.  The sort of place im thinking is more akin to a hotel room with a kitchen.  Lot of things like that here so not really two full households.  The car thing is a tough nut, if we did the condo thing, i could get rid of the pathfinder and get a bike to get me to the train.  We would need one car no matter what between us since we would go "home" on weekends.  The kids cars are pretty much a requirement to get to school and are cheaper then them having their own place on or near campus.  They live at home and get instate tuition, so i figure im making out on college costs.

The wife's job or mine for that matter are always negotiable.  I have run some numbers and with one of us dropping the job would extend out ER time out and that is not what we want.  Though the costs of working are very high, the earnings are very "profitable" on a after cost basis.  The ideal thing would be to dump the house and move to where she works but that is at least 2-3 years away and is pretty close to our ER date hopefully.  So the question you are really asking is this, and we have asked it, is it worth having your life full up to insane levels to get out at an earlier date?  For us, yes.

The maid thing is one area where I agree with you but my wife clearly does not.  I am perfcaly happy to do my share and have the boys do theirs, but it seems we never meet the mom standard of clean :)  Not sure what to do about that unless she does it all and that aint going to happen.

Steel;

tmac

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Re: Face Punching Line forms to the right.....
« Reply #7 on: January 08, 2013, 05:44:42 PM »
The kids cars are pretty much a requirement to get to school and are cheaper then them having their own place on or near campus.  They live at home and get instate tuition, so i figure im making out on college costs.

But the cars aren't the only expense for having the kids live at home. Really, your options are these:

A) Keep house, keep maid to clean up after four people, keep all four cars, buy new condo, pay upkeep on all of it.

B) Move kids into small apartment near campus where they can take care of themselves (which they should be learning how to do anyway), sell the house, sell three of the four cars, ditch the maid because now it's just the two of you, buy the new condo near work/train, and pay upkeep on just the condo and one car.

Seems like Plan B is way less expensive and gains you and your wife a lot of your life and cash back. You'd be swimmin' in it!  :)

tmac

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Re: Face Punching Line forms to the right.....
« Reply #8 on: January 08, 2013, 05:47:21 PM »
... (I envision a scene very similar to that Scene in the movie Airplane where everyone is lined up to take a whack at the hysterical passenger)

And this made me laugh out loud. Can I be the nun? :D

Steel_Rain

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Re: Face Punching Line forms to the right.....
« Reply #9 on: January 08, 2013, 05:57:49 PM »
The kids cars are pretty much a requirement to get to school and are cheaper then them having their own place on or near campus.  They live at home and get instate tuition, so i figure im making out on college costs.

But the cars aren't the only expense for having the kids live at home. Really, your options are these:

A) Keep house, keep maid to clean up after four people, keep all four cars, buy new condo, pay upkeep on all of it.

B) Move kids into small apartment near campus where they can take care of themselves (which they should be learning how to do anyway), sell the house, sell three of the four cars, ditch the maid because now it's just the two of you, buy the new condo near work/train, and pay upkeep on just the condo and one car.

Seems like Plan B is way less expensive and gains you and your wife a lot of your life and cash back. You'd be swimmin' in it!  :)
You know, I never actually ran any numbers on the B scenario.  I think i will.  I assumed it would be way too expensive, but with everything loaded, maybe not.  The deal here is its two diffent campus's, but still could be made to work perhaps.  One thing that works for this idea is that i would not actually sell the house, just rent it and it would cover my new digs easily and then some.  This could subsidize the kids apartments till they are out.  Even if breakeven, the less insane life is worth it.  Not everthing is about money :)  Thanks for the flash of insigt, I will come back with my findings.

Steel

Steel

Steel_Rain

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Re: Face Punching Line forms to the right.....
« Reply #10 on: January 08, 2013, 05:59:10 PM »
... (I envision a scene very similar to that Scene in the movie Airplane where everyone is lined up to take a whack at the hysterical passenger)

And this made me laugh out loud. Can I be the nun? :D

Hehe, was she the one with the Giant Wrench?

Steel

tmac

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Re: Face Punching Line forms to the right.....
« Reply #11 on: January 08, 2013, 06:05:23 PM »
... (I envision a scene very similar to that Scene in the movie Airplane where everyone is lined up to take a whack at the hysterical passenger)

And this made me laugh out loud. Can I be the nun? :D

Hehe, was she the one with the Giant Wrench?

Steel

One of the jive guys had the wrench (the other one had boxing gloves), but the nun did a great job of slapping her around. :)

Glad to help a little bit. More food for thought is always good.

Richard3

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Re: Face Punching Line forms to the right.....
« Reply #12 on: January 08, 2013, 07:02:50 PM »
If your net worth is a million bucks it seems like you should be able to retire. You have a paid off house and $600 a month cashflow from the rentals. Even if that's all your income producing assets (if it is you are a) not being very tax efficient and b) way over exposed to property) that's getting close to liveable... with frugal expenses.

As you said, it's all about the expenses though.

Quote
-   4 paid off vehicles, one for each family member.  Other than numbers, the vehicles themselves are normal.  03 Honda Accord, 96 Ford Contour, 2000 Nissan Pathfinder (I drive this 6 miles a day to train station due to poor mileage) and a 06 Nissan Sentra.

Bike to the train station and ditch the pathfinder?

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-   Maid service $200 Mo

If your adult kids are living at home and not paying rent WTF do you need a maid for?

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-   $800/mo grocery Bill, not counting eating out

No idea if this is reasonable or not given where you live.

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-   $200/mo Eating out (Wow!)

I don't mind this because I love fancy food. I've spent twice this on one meal for myself in the past. However, if you're not having memorable and excellent meals but are just frittering away money on Olive Garden or whatever because you're too lazy to cook then this is terrible.

Quote
-   $220 Cable/internet/phone bill

If the only reason you're keeping $70 cable is for the NFL, cut it completely the day after the Superbowl and then buy the NFL gamepass for next season. You'll save more than the $200 or whatever game pass is. Maybe add Netflix if you really like TV shows / movies that much. Not watching TV is a good habit though.

Quote
-   $200 Cell phone bills, (2 smart phones the wife and I 2 dumb phones for the kids)

Again, why aren't adult children paying for their own phones? I was paying my parents rent (a percentage of my income) and doing quite a lot of chores from age 15. Mollycoddling kids does not help them.

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-   My cost of commuting is $195/mo so not too bad, my wife however is about $1000/mo at $.50 mile, up there with bat shit insaneÖ.

Can your wife negotiate a day a week (or more) of work remote?

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-   I also believe we average about $500/mo in what I would call retail therapy 

You know what is going to be said about this.

Jamesqf

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Re: Face Punching Line forms to the right.....
« Reply #13 on: January 08, 2013, 08:52:47 PM »
One thing to keep in mind here is that, if your goal is accumulating enough for early retirement, the commuting costs are a business expense that will go away when you do retire.  Of course that's no reason not to try to reduce them, but you & wife are apparently making far more than enough to justify the costs.

Second, how attached are you to your current house?  Would you want to live there after ER, or move elsewhere?  If you do want to keep it, I would go with the commuting pad.  Did it myself for a couple of years, when I had a contract that put me in Silicon Valley - 250 miles from home - every other week.  With the maid and supposedly semi-adult/responsible kids living in the current house, you shouldn't have to do any work there.

On the matter of buying time, your time is too darned valuable to waste watching TV.  Cable can go, along with expensive cell phone plans.  And of course, address the retail therapy problem.

JJ

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Re: Face Punching Line forms to the right.....
« Reply #14 on: January 08, 2013, 11:23:07 PM »
Sorry to be blunt, but it sounds like the kids aren't paying their way.  As far as i can tell they have cars, phones, get fed, have a roof over their head and have a maid clean up after them.  I have no problem with getting kids up and running in life, but in my view this is overdoing it if there's nothing on the income statement from them.  I agree with a previous poster that they are at the point where they need to take a little more responsibility.  I don't envy you the conversation though ;).

happy

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Re: Face Punching Line forms to the right.....
« Reply #15 on: January 09, 2013, 05:12:50 AM »
Quote
Even if breakeven, the less insane life is worth it.  Not everthing is about money :)

Where you sit on this is a matter of personal preference. If you wish to do it fast and furious (which is what you've said), then thats fine....everyone in the family will need to be aware that it will be uncomfortable for a short period including the kids... to save money, some of it is habit, but some  of it is trading time and convenience as you've already figured out.  So to save money and do fast and furious, something has to go: namely leisure! What none of us can tell you is what your balance point is regarding fast and furious and "the less insane life".

The kids do look to be on a good wicket. Its not their fault you've provided so magnanimously, so I think its fair to gradually rehabilitate them towards being more self-sufficient eg maid-type chores, and getting a part-time job to pay for phones, cars, petrol etc.  Do they REALLY both need a car if they are not putting anything towards it?  Trust me I've been here already: in 2011 I was paying around $3500 Aus to have my teens driven to and from school in an airconditioned bus, door to door," so I didn't have to worry", since I was too busy working my high-powered job. One of the train stations  they would need to negotiate if catching public transport is pretty dodgy and I was anxious about this. 2012 I stopped the bus, but drove them to school and back when I could around my work schedule, and they used public transport for the rest. 2013 we will all be on public transport, most of the time.

Pre-MMM in 2011 I was planning to buy the eldest his own car when he got his licence... and that would have been very convenient and made my life a lot easier, but post MMM I have not and will not be going to. Sorry about the essay, but just trying to illustrate assumptions we make around safety, necessity and convenience.

It might be helpful if you and your wife explain your new financial goals/lifestyle to the teens.  My teens picked it up and dubbed it"Mum's hippy thing" - rolling eyes, groaning etc.  A year in, and they are more involved: eg making laundry detergent " ooooh, can I help?, sounds like a chemistry experiment". A year ago I thought I didn't need to save that money due to my earning capacity.

My only other suggestion is that you try tracking expenses a little more accurately  ( e.g. what is that $500/month going on?). Amazing what you can save on when you have a black and white expense list and stop to question everything.

Steel_Rain

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Re: Face Punching Line forms to the right.....
« Reply #16 on: January 09, 2013, 05:38:47 AM »
Quote
Even if breakeven, the less insane life is worth it.  Not everthing is about money :)

Where you sit on this is a matter of personal preference. If you wish to do it fast and furious (which is what you've said), then thats fine....everyone in the family will need to be aware that it will be uncomfortable for a short period including the kids... to save money, some of it is habit, but some  of it is trading time and convenience as you've already figured out.  So to save money and do fast and furious, something has to go: namely leisure! What none of us can tell you is what your balance point is regarding fast and furious and "the less insane life".

The kids do look to be on a good wicket. Its not their fault you've provided so magnanimously, so I think its fair to gradually rehabilitate them towards being more self-sufficient eg maid-type chores, and getting a part-time job to pay for phones, cars, petrol etc.  Do they REALLY both need a car if they are not putting anything towards it?  Trust me I've been here already: in 2011 I was paying around $3500 Aus to have my teens driven to and from school in an airconditioned bus, door to door," so I didn't have to worry", since I was too busy working my high-powered job. One of the train stations  they would need to negotiate if catching public transport is pretty dodgy and I was anxious about this. 2012 I stopped the bus, but drove them to school and back when I could around my work schedule, and they used public transport for the rest. 2013 we will all be on public transport, most of the time.

Pre-MMM in 2011 I was planning to buy the eldest his own car when he got his licence... and that would have been very convenient and made my life a lot easier, but post MMM I have not and will not be going to. Sorry about the essay, but just trying to illustrate assumptions we make around safety, necessity and convenience.

It might be helpful if you and your wife explain your new financial goals/lifestyle to the teens.  My teens picked it up and dubbed it"Mum's hippy thing" - rolling eyes, groaning etc.  A year in, and they are more involved: eg making laundry detergent " ooooh, can I help?, sounds like a chemistry experiment". A year ago I thought I didn't need to save that money due to my earning capacity.

My only other suggestion is that you try tracking expenses a little more accurately  ( e.g. what is that $500/month going on?). Amazing what you can save on when you have a black and white expense list and stop to question everything.

Happy;
    Their vehicles do not really cost that much.  They do pay for gas, oil, their clothes etc.   The cars go with them when they leave and are not really a big cost item.  the maid is more to do with my wife.  We had a long conversation last night about standards and how to perhaps be more flexable in what she would accept.  On the other hand, the kids should do more and they do not seem to be opposed.  The $500 money leak i completely agree with.  We use a lot of cash which can evaporate without record, so we have come to the decision to use our Credit Card for everything and i will be able to build a spreadsheet to track what is really going on.  Paid off every month of course, hehe.

This discussion has been of enourmous help to us mostly because it is helping to overcome my wife's inertia a bit now that she knows its not really a crack pot scheme on my part, lol.  I am working on one of the suggestions from above and it the numbers work, we may make a very big change. 

Steel

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Re: Face Punching Line forms to the right.....
« Reply #17 on: January 09, 2013, 06:55:18 AM »
The $500 money leak i completely agree with.  We use a lot of cash which can evaporate without record, so we have come to the decision to use our Credit Card for everything and i will be able to build a spreadsheet to track what is really going on.  Paid off every month of course, hehe.

Mint.com is a great tool that can help with this once you have transitioned away from cash purchases. Basically you add your credit card / bank accounts to it and it will download your statements / transaction list and let you view all of your accounts in one place. It will categorize things for you and help you really see where your money is going, as well as give you trend information once you've been on it for a while.

tmac

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Re: Face Punching Line forms to the right.....
« Reply #18 on: January 09, 2013, 07:08:48 AM »
Thread hijack:

I use QuickBooks for business and Quicken for personal accounting. Is Mint better than Quicken? If so, how? I'm happy with Quicken, but if there's a benefit to switching, I'd be open to it.

sherr

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Re: Face Punching Line forms to the right.....
« Reply #19 on: January 09, 2013, 09:31:15 AM »
I use QuickBooks for business and Quicken for personal accounting. Is Mint better than Quicken? If so, how? I'm happy with Quicken, but if there's a benefit to switching, I'd be open to it.

I've never used either Quicken or QuickBooks so I don't know for sure, but the main difference looks like it's just that Mint is free and Quicken isn't. Mint makes money by partnering with credit card companies and the like, so they're constantly offering you "better" credit cards or other ways to "save money." If you're happy with Quicken (and are capable of shopping for the best savings account / credit card on your own) they I'd say stay where you are.

tmac

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Re: Face Punching Line forms to the right.....
« Reply #20 on: January 09, 2013, 09:39:18 AM »
I've never used either Quicken or QuickBooks so I don't know for sure, but the main difference looks like it's just that Mint is free and Quicken isn't. Mint makes money by partnering with credit card companies and the like, so they're constantly offering you "better" credit cards or other ways to "save money." If you're happy with Quicken (and are capable of shopping for the best savings account / credit card on your own) they I'd say stay where you are.

Thanks for the information. I hadn't realized Mint was free. That's a big benefit. :)

DoubleDown

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Re: Face Punching Line forms to the right.....
« Reply #21 on: January 09, 2013, 09:40:29 AM »
Just wanted to add that I don't think your situation is all that egregious; it's actually far better than most of the cases we typically lampoon, where people are carrying heavy debt burdens, not saving at all, living paycheck to paycheck. Your spending is very typical for upper-middle class families, but your saving is great and atypical. Yes, as high earners you can't help but realize now just how much you let your lifestyle inflate, but in all you are doing very well, so don't let it bother you.

I think you've put forth some ideas to save more, and folks here have also provided some great insight that include questioning basic assumptions. Your idea of a commuter pad could definitely work in conjunction with some of the other suggestions offered. You are now already on the right path -- you are aware of where you are/were financially, and what is possible. And you're already instituting some important changes that will just snowball into more and more savings and early FI. Good luck, I guarantee if you continue to question assumptions, you will continue to find ways to hit FI early that will amaze you.

5inatrailer

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Re: Face Punching Line forms to the right.....
« Reply #22 on: January 09, 2013, 09:41:36 AM »
There is so much good advice here, it's hard to feel like I could add anything...

Your kids are at college now? They should be cleaning the $hit out of your house if they have free room and board, as well as a car provided for them! That being said, I love how you support them. The few more years of supporting them through college (through room and board) will go their lifetime in repaid rewards. Think of it as an investment too:)

Maybe they WANT to move out. If their college experience is anything like mine...Could you buy them a condo/townhouse near college they can rent from you or you could loan them? Sell your place and move closer to work? Your house will be an empty nester soon anyway. Will you be keeping it in retirement and that the boys are on their own?

All of the face-punching aside, you've done a great job of providing for your family. Both you and your Wife should be proud. The decisions you make with choices like these will teach your kids more than they will ever learn in school.

Keep the updates coming dude.
« Last Edit: January 09, 2013, 09:43:39 AM by 5inatrailer »

kythuen

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Re: Face Punching Line forms to the right.....
« Reply #23 on: January 09, 2013, 09:57:21 AM »
Sorry to be blunt, but it sounds like the kids aren't paying their way.

Agreed.  Speaking as someone who watched her brothers be given every opportunity in life and asked for no money or work in return, I assure you this is an excellent recipe for children who have absolutely no incentive to leave home or work for a living.  My dad's in his 80's, and my brothers?  In their 50's.  Still living at home, still paying no rent, and still not helping out around the house.  When Dad's gone, they'll have nothing.  You're not doing your kids any favors.

nofool

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Re: Face Punching Line forms to the right.....
« Reply #24 on: January 09, 2013, 10:21:54 AM »
Quote
Even if breakeven, the less insane life is worth it.  Not everthing is about money :)

Where you sit on this is a matter of personal preference. If you wish to do it fast and furious (which is what you've said), then thats fine....everyone in the family will need to be aware that it will be uncomfortable for a short period including the kids... to save money, some of it is habit, but some  of it is trading time and convenience as you've already figured out.  So to save money and do fast and furious, something has to go: namely leisure! What none of us can tell you is what your balance point is regarding fast and furious and "the less insane life".

The kids do look to be on a good wicket. Its not their fault you've provided so magnanimously, so I think its fair to gradually rehabilitate them towards being more self-sufficient eg maid-type chores, and getting a part-time job to pay for phones, cars, petrol etc.  Do they REALLY both need a car if they are not putting anything towards it?  Trust me I've been here already: in 2011 I was paying around $3500 Aus to have my teens driven to and from school in an airconditioned bus, door to door," so I didn't have to worry", since I was too busy working my high-powered job. One of the train stations  they would need to negotiate if catching public transport is pretty dodgy and I was anxious about this. 2012 I stopped the bus, but drove them to school and back when I could around my work schedule, and they used public transport for the rest. 2013 we will all be on public transport, most of the time.

Pre-MMM in 2011 I was planning to buy the eldest his own car when he got his licence... and that would have been very convenient and made my life a lot easier, but post MMM I have not and will not be going to. Sorry about the essay, but just trying to illustrate assumptions we make around safety, necessity and convenience.

It might be helpful if you and your wife explain your new financial goals/lifestyle to the teens.  My teens picked it up and dubbed it"Mum's hippy thing" - rolling eyes, groaning etc.  A year in, and they are more involved: eg making laundry detergent " ooooh, can I help?, sounds like a chemistry experiment". A year ago I thought I didn't need to save that money due to my earning capacity.

My only other suggestion is that you try tracking expenses a little more accurately  ( e.g. what is that $500/month going on?). Amazing what you can save on when you have a black and white expense list and stop to question everything.

Happy;
    Their vehicles do not really cost that much.  They do pay for gas, oil, their clothes etc.   The cars go with them when they leave and are not really a big cost item.  the maid is more to do with my wife.  We had a long conversation last night about standards and how to perhaps be more flexable in what she would accept.  On the other hand, the kids should do more and they do not seem to be opposed.  The $500 money leak i completely agree with.  We use a lot of cash which can evaporate without record, so we have come to the decision to use our Credit Card for everything and i will be able to build a spreadsheet to track what is really going on.  Paid off every month of course, hehe.

This discussion has been of enourmous help to us mostly because it is helping to overcome my wife's inertia a bit now that she knows its not really a crack pot scheme on my part, lol.  I am working on one of the suggestions from above and it the numbers work, we may make a very big change. 

Steel

As a recent graduate, I think I generally agree with the consensus that your kids could be a bit more financially independent of you and your wife. I totally understand that you want to provide for them, and I think that's so great that you're in a position to be able to help them through college.

My parents paid my way through school, and even gave me a monthly subsidy for living costs. I'm so grateful for that, but my lifestyle was certainly more extravagant than most students who had to take out loans or had to pay their way through school. I think if things were a bit tighter, I would have been smarter with my money in college. It didn't kill any of my friends, and it wouldn't have killed me to sacrifice comfort for 4 years.

Do your kids have jobs? Because that is honestly the best way to set them up for post-college life. The job market is tough, and even tougher if you have zero experience coming out of college. If they are not currently working, encourage them to work. Ask them to start paying rent, and set aside that money for them in a savings account. Maybe giving them control of that savings account could be their graduation present?

Togoshiman

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Re: Face Punching Line forms to the right.....
« Reply #25 on: January 09, 2013, 11:39:57 AM »
One other point is simply the timeframe - not everything has to be done at once.  A few hundred here and there each month and your cashflow projections start improving rapidly.  Rather than chuck the whole family in the deep end, how about building out a family plan for the next few years that everyone agrees on?  As in, when each cell phone contact comes up for renewal, you either take it over or we drop it.  Your mother and I are moving to prepaids ourselves.  When football season is over, we're dropping to basic cable and netflix.  Next year, it's just netflix and an antenna on the roof.  But you'll have graduated and moved out by then anyway.  Et cetera.  You're young enough and wealthy enough with enough cashflow that you can have a transition that will still get you where you want to go - savings going up faster and faster, expenses going down faster and faster and so on.

I'm going to buck the trend and say moving or condo pad or whatever will actually cause too much grief given the length of time you've had the lifestyle.  Go used Honda Civic instead of a Pathfinder, not rent your house out and move to a condo when you say you want to keep your house to be close to family (these two ideas don't seem to actually work).  Extrapolate this to all the other categories.

I think we all grapple with what works on paper and what works given our relationships and committments.

Just some thoughts.

alandjackson

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Re: Face Punching Line forms to the right.....
« Reply #26 on: January 09, 2013, 12:42:32 PM »
This has been skirted by a few posts, but don't forget that you need to cover your retirement expenses not your current expenses with investment income. You won't need to "buy back time" when you are retired.
  • You and your wife won't have a hugely expensive commute when you retire
  • I assmume that kids will be gone when you retire
  • Hopefully you can have collected enough (nice) stuff that you don't need "retail therapy" after retirement.
  • Without kids, a smaller house or condo might make more sense - cheaper utilities, less to clean (even for a maid), etc

I would recommend making a "planned retirement" budget to see what you think you'll need in retirement and make that your goal. Once you are closer, you can experiment with one of you quitting work or both/either of you cutting down hours to ease into a retirement lifestyle.

Steel_Rain

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Re: Face Punching Line forms to the right.....
« Reply #27 on: January 09, 2013, 02:26:57 PM »
Update!

   Since im sure everyone here is has been holding their breath and all :)  First, My wife and I would like to thank everyone for being helpful and not snarky at all.  The exercise was really a conversation between my wife and I with you as willing spectators :)  so, we have made some decisions and are starting to act.  24 hours is a lot of time when you are motivated.

First, we are going to stop using so much cash and use credit cards so we can better track where we are spending.  The whole cash thing was due to my extreme reluctance to ever pull out my credit card.  Neither one of us can account for the $500 mo we are spending, so my guess is its pissed away on things that dont matter. 

Second and largest by far is that after doing some analysis on housing our kids in collage and moving.  In the near team its not cost effective, however, since oldest is graduating and will presumably be employed by end off 2013 we will only have to worry about one.  That is feasable and we are now serously considering moving after he is out the door.  This is at least a year away, but that not that bad.

Maid stays, bottom line, my wife values it a lot and we can afford it.  Without it, we lose a lot of what little free time we have.  This is a cost that i know and can remove from our retirement budget for planning.

Groceries, both kids are signed up for doing the grocery shopping and cooking to a spefic pre-determined menu.  Oldest is working that out now.  They both are pretty excited about this, but we will see how long that lasts.  My youngest even thought that we could save money on food by buying it more frequently and having less spoilage and ingredient overhang during the week, Brovo young grashopper, we are going to do that as well.

For those of you who were concerned about the level of support being given to the little darlilngs, have no worry.  They are both outstanding students, have part time gigs, one earned a scholership which covers 30% or his tuition.  Both have good grades, never had a car accident, dont drink and have not knocked anyone up, etc.  So the kennedy clan they are not, hehe.

Some have mentioned that a lot of this is cost of working type stuff and will not be present in retirement.  I agree, but my problem is that I dont know what magnatude of spending would be reasonable in retirement.  I have worked up a budget, but i dont trust it.  I want to live it a bit before i make any big decision like retiring.  At a minimum, I can establish a likely ceiling on costs and work from there.  I would love to leave the state as soon as possible due to a trifecta of horrible conditions here includeing extreme Tax and spend government, corruption and just plain old shitty weather.  My wife does not want to leave or at least until we know where our kids and hopefully grandkids are at.  So for now, im stuck in this Midwestern cesspool for the duration.

 I will come back and update everyone on month one on how the groceries and tracking our spending is proceeding.  The largest issue, where we live, will have to be addressed in due course, but can be done I hope by end of year.  Once again, i want to thank everyone here for helping to facilitate this discussion with my familly, who said the internet is frivolous!!

Steel
« Last Edit: January 09, 2013, 02:45:06 PM by Steel_Rain »

SunshineGirl

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Re: Face Punching Line forms to the right.....
« Reply #28 on: January 09, 2013, 03:25:28 PM »
Glad to see your update, Steel_Rain!

For what it's worth, with your lack of debt and a savings rate of 54%, there is no harm spending what you do for the maid and what you call "retail therapy." My thoughts:

-- Your kids are fortunate to be able and willing to live at home during college and ideally avoid debt while in school. When mine are in college, I would be happy to let them stay home and use my resources in a similar manner. If not in school, I would probably charge them a proportional amount based on household expenses.

-- I think the maid is well worth it, given your expenses.

-- I think buying a condo is a bad idea since you're on a short-term horizon. One or the other of you changing jobs makes much more sense, or just staying at a hotel occasionally to give your wife a break from all the driving she does. Or, RENT an apartment near her job. Buying is just something you'll have to untangle later.

-- I think coming up with a plan and a timeline is the best thing you can do. Maybe whoever likes their job least can quit first in XX years. Also, it might be easiest to choose a savings rate and just make it happen. Save 60% this year SOMEHOW (have the money automatically moved from your checking account). Then, 62% the next year, etc.

-- Finally, take a look at your rentals and see if it makes sense to refinance or pay them off more quickly. I know for myself, we have rentals, and the intention is they will cover my property taxes, electricity, and other necessary expenses so we "live free." As long as we do this, no guilt about a need to downsize - we will when it makes sense. If you can have your rentals pay your property taxes and utilities, that's awesome, and as the kids leave the nest, you'll find your expenses even lower.

My point is, you're doing well and a gentle approach is all that's needed. 

sol

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Re: Face Punching Line forms to the right.....
« Reply #29 on: January 09, 2013, 03:42:49 PM »
My wife does not want to leave or at least until we know where our kids and hopefully grandkids are at.  So for now, im stuck in this Midwestern cesspool for the duration.

My parents said the same thing when I finished college, that they wanted to know where I would end up so they could be sort of close.  I was very reluctant to give them an answer, in part because I honestly didn't know and in part because I wanted some space.

I spent the next decade travelling the world and getting a PhD and not really having a real home.  Everything was temporary, and my parents finally conceded that they should make decisions about their own lives based on their own lives, not mine.  You can't wait around forever waiting for your kids to settle down, especially in today's economy when young people are so likely to change jobs every two to three years.

So my advice is to figure out where you and your wife want to live and just do it, with the understanding that in five or ten years when your kids look to be settling down more permanently you may move again.  Don't stay somewhere you hate while waiting for them.

eyePod

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Re: Face Punching Line forms to the right.....
« Reply #30 on: January 10, 2013, 12:37:39 PM »
You can completely cut out cable and instead do direct online (250 for the whole sunday packate) or stream it through less reputable sources for free.  You'd miss any MNF (ESPN) or Thursday (NFLN) games.  I even split my package with someone who is a fan of a team across the states so most of the games don't overlap and we both get to watch our teams.

happy

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Re: Face Punching Line forms to the right.....
« Reply #31 on: January 10, 2013, 06:33:18 PM »
Its great you've made decisions and a plan and are getting cracking so quickly! If the teens are paying for petrol, oil etc and clothes, then I think this is good.

Re the retirement budget:  once you have all your expenses tracked  and optimised you can easily go down the page and eliminate the work-related ones. Once you have your other expenses  tracked and shaved down, then you know what  your basic living expenses will be, although going from family to couple may be harder to predict. I am facing a similar time span with my teenagers and its not clear how things will reduce exactly and when...I am projecting for current expenses minus my work expenses minus teenager related costs that will obviously disappear (fees, books, orthodontics etc). At some point (?5years) this will be an overestimate..but I like a margin of safety. The other question that determines the retirement budget is what you are going to DO...

Some of us here say it takes a couple of years to learn and execute how to cut the budget: once you start you keep finding things that you don't really need, and after a while, things you couldn't go without become much easier to let go of. 

Most of all, keep working on the MMM mindset (eg that stuff doesn't give happiness, hedonic adaptation  etc) and some of the dependence/necessity for very expensive parties/vacations etc will reduce. The spending is just a symptom, not the underlying cause.  Otherwise you are just on a "money-diet" and when you stop dieting, you will have to keep fighting the spending.

Steel_Rain

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Re: Face Punching Line forms to the right.....
« Reply #32 on: February 03, 2013, 02:00:24 PM »
Update #2

     Im sure everyone was on pins and needles.  Here is where we are now.  Signed up for a Capital One rewards card and as a family have gone mostly cashless.  Both my kids have a card attached to this account so they can do the shopping, etc.  Its very hard for me to get used to using a credit card, it is so ingrained in me that the damn things are evil that i twitch pulling it out.  But so far, its working great.  We have very good visability to our spending and here is where it led.

- The $500 ish leak i claimed as retail therapy was not that large, it seemed so, but using cash it was hard to tell.  I would say we are more in the $300/mo pissing away and will now reduce or elimiate that.  Most of it seems to be stuff for other folks and supporting a modest social life.  We can cut it back at least $100, and wifey is on board with this.

- we have very much lowered our food costs.  Both kids are now doing the shopping together, using the capital one card and cooking at least 4 nights a week now.  Seems we have cut at least $90 from the food budget and have only spent about $40 on eating out.  This im pretty happy with this.  Turns out the oldest makes a mean Kabob with scallops :) 

So, it looks like we elimiated about $250/mo of expenses without much pain.  I want to see how sustainable this is before i claim any victory.  But its clear that we can go further.  Next effort is the cable/internet/phone bill.  More on that later.  Thanks for listening.

Steel

Togoshiman

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Re: Face Punching Line forms to the right.....
« Reply #33 on: February 04, 2013, 09:00:16 AM »
Honest question, and my apologies if the answer is buried somewhere in the thread above:  Why are your adult children on your credit card as cardholders?  If you are supporting their living expenses or school, can't you do that with a direct transfer?  Is their spending not their own responsibility?  This isn't meant to be passive-aggressive, real question.  If they can't afford something, wouldn't it be healthier for them to know they don't have your credit as a safety net?  Even the process of them applying for their own credit and potentially being rejected?  Or making a decision to not have credit themselves?

I moved out in the middle of high-school and never looked back.  The idea of parents giving me a credit card under their credit is completely alien. 

SunshineGirl

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Re: Face Punching Line forms to the right.....
« Reply #34 on: February 04, 2013, 09:28:36 AM »
I love that your kids are shopping and cooking! I may steal that idea this summer....

jpo

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Re: Face Punching Line forms to the right.....
« Reply #35 on: February 04, 2013, 09:42:06 AM »
Honest question, and my apologies if the answer is buried somewhere in the thread above:  Why are your adult children on your credit card as cardholders?  If you are supporting their living expenses or school, can't you do that with a direct transfer?  Is their spending not their own responsibility?  This isn't meant to be passive-aggressive, real question.  If they can't afford something, wouldn't it be healthier for them to know they don't have your credit as a safety net?  Even the process of them applying for their own credit and potentially being rejected?  Or making a decision to not have credit themselves?
My sister is running into this as well, when I was in college I got a card no problem. She has no credit history, and these days banks aren't lending so easily, so she can't get a card. Catch-22.

NumberCruncher

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Re: Face Punching Line forms to the right.....
« Reply #36 on: February 04, 2013, 10:50:22 AM »
keep in mind that you can most likely keep your smartphones and still be able to cut down the monthly bill. http://www.mrmoneymustache.com/2012/10/11/our-new-10-00-per-month-iphone-plans/  if you like using your phones a lot

I've got a $12 a month plan from Ting with an android (100 min, 100 mb). My husband might get on the plan shortly (his current monthly cost is $7 on a pay as you go service), and I'd expect the monthly bill to be $18 for the two of us.

It all depends on your use, but there are a lot of low cost plans out there.

Steel_Rain

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Re: Face Punching Line forms to the right.....
« Reply #37 on: February 04, 2013, 03:18:53 PM »
Honest question, and my apologies if the answer is buried somewhere in the thread above:  Why are your adult children on your credit card as cardholders?  If you are supporting their living expenses or school, can't you do that with a direct transfer?  Is their spending not their own responsibility?  This isn't meant to be passive-aggressive, real question.  If they can't afford something, wouldn't it be healthier for them to know they don't have your credit as a safety net?  Even the process of them applying for their own credit and potentially being rejected?  Or making a decision to not have credit themselves?

I moved out in the middle of high-school and never looked back.  The idea of parents giving me a credit card under their credit is completely alien.

Reasonable Question.  They both have their own card for personal use in their own name, this card is for things that I pay for but they fetch :)  Like Groceries, we get points from all the cards aggregated into one account to boot.  Also simlifies my tracking of expenses, which was the actual purpose of doing this in the first Place.

Steel