Author Topic: Noob with a few questions - update with more questions in last post!  (Read 3021 times)

Harper

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Hi all,

I read the forums like crazy.  We've been living well below our means for years.  This is totally on my husband - he taught me and I learned well.  My parents were awful with credit cards and spending and being overly generous without having the cash. (ETA:  they were wonderful loving parents but not good with saving).

We bought a reasonable house 2 years ago after saving forever.  Now that we are in a house our savings rate has really plummeted.  I'd like to track our spending however I really don't want to go automated (hooking into my accounts like YNAB or Mint).  Are there basic spreadsheets that i can use to track monthly to get a feel for where we can cut and really where our money is going?  Sorry, I looked around a bit here and couldn't find anything and the search feature seems to be wonky.

Also, haven't shared the idea of FIRE with my husband.  This is completely opposite of why most people struggle to get their spouse on board.  He would go way frugal and we would never have enough in his mind to RE.  Ever.  Any thoughts on working through that?  I feel that if I bring it up, I'm sentencing myself to a frugal life and no RE.

Thanks all!  You rock!
A
« Last Edit: July 12, 2016, 07:24:10 AM by arden »

MDM

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Re: Noob with a few questions
« Reply #1 on: May 18, 2016, 08:11:29 PM »
arden, welcome to the forum.

You could look at https://www.bogleheads.org/wiki/Household_budget and see if that will be useful.

SwordGuy

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Re: Noob with a few questions
« Reply #2 on: May 18, 2016, 08:23:31 PM »
The nice thing is that you can prove it works.

When you think you have enough, you put 100% of your paychecks into a special investment account and live off your FI income for a year (or two).

At the end of your test period, you check to see whether you have more or less money than you had at the start - not counting the special investment account.

If you have more, you've proven it works and built up an even bigger buffer while you proved it.

2buttons

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Re: Noob with a few questions
« Reply #3 on: May 19, 2016, 02:59:09 AM »
I built a simple excel sheet to track expenses.

Column a is monthly expense name, with rows of bills. Column B is monthly amount budgeted, column C is amount of actual bill, column D is difference between column b and c, with a total row under columns b, c, and d.  Basic formulas will help auto populate.

Obvious any leftover cash gets moved into next financial move.

MrMoogle

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Re: Noob with a few questions
« Reply #4 on: May 19, 2016, 08:49:45 AM »
The nice thing is that you can prove it works.

When you think you have enough, you put 100% of your paychecks into a special investment account and live off your FI income for a year (or two).

At the end of your test period, you check to see whether you have more or less money than you had at the start - not counting the special investment account.

If you have more, you've proven it works and built up an even bigger buffer while you proved it.
What if the market doesn't go up this one year?  Did you just disprove the 4% rule?
What if you're taking 10% out, but the market went up 15%?  Did you just create the 10% rule?

You have to prove the theory works, one year isn't going to prove anything.  If you believe the theory, that's what will let you sleep at night.  Also, create contingencies - going back to work, lowering your spending, selling off assets, getting a roommate, and on and on until you're satisfied.  And that's all that matters, if you're both satisfied with the plan.

TheMoneyWizard

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Re: Noob with a few questions
« Reply #5 on: May 19, 2016, 09:12:43 AM »
I built a spreadsheet myself to track all my spending. I use it to organize my spending by category for each month, and I can see my progress month to month. I like the nonautomated process because I feel like I have more control, and I can see exactly how much I'm spending on what.

PM me and I can send you a copy if you're interested.

Harper

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Re: Noob with a few questions
« Reply #6 on: May 19, 2016, 09:16:33 AM »
Thanks for the responses.  Much appreciated!

mlejw6

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Re: Noob with a few questions
« Reply #7 on: May 19, 2016, 12:02:53 PM »
Just FYI: You don't need to link your bank account in YNAB. (Actually, linked bank accounts are a bit buggy anyway.) You can enter everything manually, which is what I do.

Harper

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Re: Noob with a few questions
« Reply #8 on: July 12, 2016, 07:08:36 AM »
I'm back 2 months later with some data but I'm honestly not sure what to do with it.  Saving was so easy and passive before the house but now I feel that I just can't wrap my head around how we're breaking even every month (although we're paying an extra 3k/month on the house so there's that and our 401K contributions).

We've cut our Netflix package down. 
Husband is calling electric company today to see what could be done for our rates.
Restaurants/takeout/groceries are killing us.  We really need to cut back on that especially as we're only 3 people although our son is getting to the age where he's an eating machine.  We also need to figure out how to use up our food.  I had to throw out $15 worth of pantry items because they were expired.  That's stupid.
I pay for WW (I know - facepunch) and it's been successful where other plans have not been.  I hate to cancel it but that would save $47.  I thought it was $40 until I really started tracking.
We're not coffee people but i seem to have a dumb Walgreens habit.  Not even sure what I"m buying there?  Snacks? Toiletries?  $10-15/month.
Right now I'm tracking Walmart/Target/Home Depot as categories as per my credit card but I probably should go deeper and track with the receipt to see what it is.

Thoughts?  I'm really shocked because I thought we were on the right path because we don't spend stupidly but apparently we do.


FrugalFan

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Re: Noob with a few questions - update with more questions in last post!
« Reply #9 on: July 12, 2016, 07:53:52 AM »
Tracking can be a real eye opener. Sounds like you've had a bit of lifestyle inflation. For us, a lot of things had become habits and we've just slowly tried to change those habits. We used to get take-out most Fridays, now we go out to eat on special occasions only. We just had to get out of that habit. For things like Walgreens and Target, I have found it easier to avoid going to those places unless absolutely necessary, and to only go with a list and only buy the items on the list. We've also worked hard at avoiding food waste. On thing that has helped is buying almost enough meals for the week, and putting something together from the fridge/pantry/freezer on one or two days a week. It helps cut down waste and I have not thrown food away in months.

After a few months of tracking, I was able to try and set reasonable goals for reducing certain budget lines (clothes, gifts, etc) and stick to those. For other lines that are more essential, like groceries, we've just been trying to be more conscious of buying in season and stocking up on staples when they are on sale. We could definitely do better there but not with full time jobs and two young kids.

You mention paying an extra 3k a month on your house. You mean on top of your regular mortgage payments? Would you consider investing some of that money instead?

Harper

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Re: Noob with a few questions - update with more questions in last post!
« Reply #10 on: July 12, 2016, 08:00:25 AM »
Thanks Traveling Biologist!  I'm a biologist too but I don't get to travel.

Re: mortgage payments.  We want to pay off our mortgage early.  I know there's varying thoughts on this topic but I think it's a psychological one for us.  We do have a stache in investments.  We have a great savings, it's just that we haven't been able to add to it since the house.

MDM

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Re: Noob with a few questions - update with more questions in last post!
« Reply #11 on: July 12, 2016, 08:17:42 AM »
Consider How To: Write a "Case Study" if you would like more specific feedback.

2buttons

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Re: Noob with a few questions - update with more questions in last post!
« Reply #12 on: July 12, 2016, 08:22:54 AM »
When you are tracking your savings rate are you factoring in the principal reductions on your mortgage? Obviously don't know your income, but that is a pretty sizable amount of a PR, even for a high wage earner.

FrugalFan

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Re: Noob with a few questions - update with more questions in last post!
« Reply #13 on: July 12, 2016, 08:23:24 AM »
Re: mortgage payments.  We want to pay off our mortgage early.  I know there's varying thoughts on this topic but I think it's a psychological one for us.  We do have a stache in investments.  We have a great savings, it's just that we haven't been able to add to it since the house.

That's what I thought. Either way, you are "saving" 3k per month with those extra principal payments, but at the cost of investing. We did that for a while too but now looking back I wish we had invested more instead. I can definitely see the psychological appeal of paying it off super early too, but interest rates are so low right now that it doesn't make much sense for us at least (2.94%). If we could pay it off very quickly, like one or two years, I would consider going all in. But given that it would take more like 3 or 4 years, it is too long for us to sit out the market. In fact, by my rough calculations, in just under 4 years we can either pay off the mortgage if we put all or savings aside from our pension contributions into our mortgage, or we can save enough to generate 80% of our mortgage payment in perpetuity following the 4% SWR. The other way I see it is that I currently would not take money out of our investments to pay off our mortgage (which we could afford to do right now). So for now we will keep investing and maybe in a few years if we feel like it, take out a chunk from our even larger investments to pay it off.

I guess you could still continue to prepay your mortgage and contribute to your stache if you find other places to cut expenses and save.

 

Wow, a phone plan for fifteen bucks!