Need to save $$ (long)

[cashqueen]

Hi! I’ve been lurking and figured it was time to jump in. I am ready for my family to be financially healthy. A brief intro – DH and I have a DS who will be 2 in Sept. We both work. He is a business instructor at a community college and I am a cost accountant. After my son was born I worked 4 days/wk until a couple of months ago when I changed jobs to a full-time position. The extra $$ has been helpful though I have to admit now that I’ve tracked it we’ve pissed away quite a bit of it. So a great opportunity came up and I am about to change jobs for an even bigger pay raise and I want to make sure we use that money wisely.

Goals:
Short term – Lower our food bill. We spend a ridiculous amt of $$ on food for a family of only 2 ½ people. I think last month we spent around $750 including eating in and out and I think some months it has been more. CRAZY!!! I tried coupons for a month but didn’t save enough to cover the cost of the papers every week. There were 2 weeks where there were no coupons that we would use. If I could get the Sunday coupons somewhere for free then it would be worth it.
Mid range goal – Lower our debts and save enough $$ to allow me to take a lesser paying job. One that has a better schedule and is more family friendly.
Long-term goal – save for DS college and retire early (I am 34 and DH is 35)

Our expenses/debts

Mortgage - $1520/month including escrow for ins and taxes – I think our total mortgage is around $207K. We did overbuy but it was part investment. Our home has already appreciated by 25% in less than 3 years and we expect it to grow even more. This will greatly help with our midrange goal. In a few years we plan to sell it and buy a more modest home with a very small mortgage.
Childcare - $600/month – There are less expensive alternatives (in home daycare, etc) but we love where he goes and the $$ is well worth the peace of mind. I would never skimp on childcare.
Truck payment – $335/month (2005 GMC). I think we owe about $16K. Financed through a credit union for 60 months, I think we still have 55 payments left. Sigh. No we didn’t NEED it. The car it is meant to replace is a 99 with 175K miles on it. It still runs but we got a really good deal on the new truck and we didn’t want to wait until we HAD to buy one. It is nice to have 3 vehicles b/c there have been a couple times when 1 is down so we still could get to work, etc.
Boat payment - $135/month – Total owed $10K. Yes, a total luxury. We chalk it up to entertainment expense since we live on a lake it gets used quite a bit. It was financed over 10 yrs to keep the payment low. We still have 9 years though I usually pay a bit more than the payment to shorten the payback time.
Student Loans - $210/month – Total owed about $15,500. DH’s MBA. I’m not sure of the interest rate on this. My student loan is down to about $230 and I will pay it off next month instead of pay the $50/month for another 4-5 months.
Utilities – range from $150-$325/month – we have a lot of utilities in one bill. Electric, water, sewer, fire protection, garbage/recycling pickup. It is more during summer months b/c we live in a hot area. We are getting better about turning it up/down when we aren’t there.
Phone/Internet - $104/month – We have unlimited long distance because we live 1000 miles away from family.
Cell phones - $48/month – right now DH has a really good plan that will expire in Oct and is not renewable. I pay about $36/month. I like to be accessible anywhere b/c DS is at daycare and I want them to be able to reach me if I’m away from my desk or at lunch.
Satellite TV - $73/month. Yes, I could live without this. I’m not sure DH could (or should I say WOULD). Still $30/month less than cable tv around here.
Home warranty - $33/month – This has paid for itself with some of the repairs we’ve needed
Credit Cards – right now we owe about $6300. I will get a signing bonus at the end of July/early Aug that will bring it down to about $2300. The past couple of months we have been really good about not adding to it so we should be able to pay it off completely by the end of the year.
Food – OUCH! TOO MUCH. I would like to get this to $100/week. I don’t cook but am trying to perfect a few simple meals. We eat out WAY too much. We need help writing out meals, grocery lists and sticking to them.
Gas - $120/week. DH has a long commute. My commute right now is short but will get a bit longer when I switch jobs next month. We tried switching vehicles to save on gas but DH hates driving my car.
Car/boat ins - $2400/year. We are now saving for this.
Misc – I just realized we still owe ds $300 from Dec when we borrowed money from his savings acct to pay the car ins.

Savings – For the past 6 weeks I have had $250/week direct deposited into a savings acct at my CU. I had some $$ in there before that b/c I was putting $100 per paycheck at my previous job. I just wiped it down to $500 to pay the car ins (due every 6 months). DH will take another $250 for his vacation next week. In about 6 weeks when my direct deposit from my new job kicks in I will put $350 per paycheck in. This will cover car ins and Christmas. I’d like to build an emergency fund of $3000. After that anything extra can be put in our Schwab acct.

Retirement – We both have 401Ks. I think DH puts in 10%. I have not been at this job long enough to contribute and it will take 30 days at my new job to qualify for the 401K. I will also put in 10%. Both employers match. I think we have about $14K in IRAs, too.

Nest egg – we have a Schwab acct with our ‘nest egg’ that we want to add to. This will be what we mainly live off to retire until we start using our 401Ks, IRAs and soc sec (assuming it’s still around).

Sorry for the book but any advice/feedback/support etc. is appreciated. I think my biggest goal will be to get DH to sacrifice a little so that we have more later. I grew up comfortable but definitely on a budget and he never had to worry about anything. I also want to teach my son how to spend responsibly. Aside from food we do very little misc spending. I have started buying fall/winter clothes at garage sales so I shouldn’t have to spend much for that. I buy very few clothes for myself, as does DH. We just need to trim the fat and put it away.

Thanks for reading all of this! I look forward to getting to know all of you and learning from your experiences.

[sweeps]

A few notes...

Childcare: Do you take advantage of a DCFSA at work?

Savings: You must budget for items that don't get paid monthly (e.g. car insurance, Christmas fund, etc.). Otherwise, they will wipe out your savings when you're not looking. Be sure to include these in your budget spreadsheet.

Retirement: Find out how much you're putting towards this, and increase it if possible. This is even more important than your son's education funding.

Telecommunications: Have you shopped for a package deal to roll up your satellite TV, phone, cell phones, and Internet together? You should be able to save some $$ on this.

What are the interest rates on the CC, truck, boat and student loans? I'm concerned about the lingering balance on the CC in particular.

[cashqueen]

Sweepsplayer:

My current job does not offer DCFSA but new job will and I will take advantage of that.

I think I will try to list out what the $350/paycheck that is going to savings will go toward. Like $100 will go toward car ins, $100 toward xmas (this includes plane tickets/travel costs to be with family) and then $150 toward building the emergency fund. Is this what you meant?

Retirement: I know my DH has better matching so we will probably increase his contribution. Honestly he doesn't make much so increasing his % won't add too much. After I am comfortable with how expenses are working I can increase mine, too.

I will certainly look around to decrease our telecommunications. Anyone have any ideas on who has the best deals/where I should start looking?

Interest rates: I'm not 100% sure but I think the truck is 6.25%, boat is 8.5% (high but the only way we could keep the payments low. I will definately pay this off early). Student loan - not sure. I can't find out b/c it's not in my name and I keep bugging DH to call. I think the CC is at 4% through July and then it goes up to around 17%. I just looked at a statement and realized this so I guess it is in our best interest to pay the balance off ASAP. Even before our emergency fund?

We actually have the $$ in our nest egg to pay some of this off but we are making a higher % on our investments right now (some stocks and mutual funds) than we are paying in interest so we want to leave that money there.

[Ima saver]

Yes, I agree with sweeps, your emergency fund and your retirement savings have to come first before a college fund. It sounds like you have a good income, you really should be saving more and not touching it. You need to budget so much per paycheck and put it away for car insurance, christmas, those once or twice a year payments. I do that . I figured out my car insurance (4 cars) house insurance and property tax run about $5000 a year, so I put away $100 a week and keep track of it on paper in my personal checkbook.
You are spending way too much on food. I am not critizing, I eat out a lot, but I get cheap meals and drink water.

[Ima saver]

17%, wow, pay off the credit card first!!

[cbmeeks]

I didn't see where you indicated how much money you two make.

A lot of this depends on how much you make.

But $200+k on a house with only 3 of you? That is bad.

We actually have the $$ in our nest egg to pay some of this off but we are making a higher % on our investments right now (some stocks and mutual funds) than we are paying in interest so we want to leave that money there.

Is that including inflation every year?

You SERIOUSLY need to learn how to cook. I love to cook. But we were spending way too much eating out too. I brought our food bill from $1100/month down to $600/month for FIVE people. Plus, that includes things like Shampoo, cleaning supplies, etc.

Get Dave Ramsey's book "Total money makeover". Read it 10 times until it sinks in.

stop eating out so much! Your food bill should be $200/month including the baby. Sell that truck too.

[boefixepa]

From the rough math I did I got an average monthly expense budget a little over 4400 a month, not including CC payments. I'd add another 200-300 a month to build emergcy fund, christmas, medical expenses, car maintence, and play money, kind of stuff. So let's go with a total expense colum of 4,800.00. Now the ticket is...what is your net take home pay? The difference well, that's the $$ you have to work with. So besides making sure your getting the best deal on everything your paying out (make sure you are) the question then becomes what do you do with the difference between your take home and your expenses?

Since you sounds like there is a positive difference the first thing I'd attack is that CC balance. Get rid of it and never pay interest on a CC again. If you this means cutting them up then do it. If you can use it and pay it off every month fine. Personal call.....

Then list the debts in order of interest rates....my guess is they go like this...
Boat, Truck, Student Loans

Snowball that difference into each one. Meaning once the CC are paid off take what you were paying them and add it to the boat payment. When that's paid off take that difference and the boat payment amount and add it to the truck payment. Then take the truck payment, the boat payment, the CC payment, and the difference and pay that to the student loan. Make a nice little chart and see how fast you could have things paid off.

Once that is done then all you'd have left to attack is the house. And let me tell you...that feeling is GREAT!!! Attack the house and build your retirement and smile as you watch your pennies grow....

That's my two cents.

[cashqueen]

When I start my new job next month our base income will be 107K/yr. This does not include any summer classes b/c they are not guaranteed (which are $1350 each). DH only got 1 this summer b/c not enough students signed up for the other one. With gas prices the way they are he won't make a whole lot with only 1 class.

[cashqueen]

Oh and yes, the house is more expensive than we originally thought we would spend. BUT in our defense we knew it would make money since it is on the water in an up and coming area. As I mentioned it already has appreciated quite a bit. Besides my husband is really into bass fishing and I will probably have to pry him out of it!

[Ima saver]

It looks like you should have a lot of money left over to pay off all your debts. Tackle them first!

[Ima saver]

207K for a house on a lake is a wonderful price. A lake lot around here goes for $400,000 plus without a house.

[cashqueen]

Originally Posted by Ima saver

207K for a house on a lake is a wonderful price. A lake lot around here goes for $400,000 plus without a house.

It was actually more than that but we had made some $$ on our last house and were able to keep the mortgage 'affordable'. But yes, it was still 'cheap' for a waterfront home. Based on houses that recently sold we *could* make about $65K on it right now. Well, assuming we sold FSBO, not having to pay real estate commission.

[Ima saver]

I don't know what area you are in, but anything on water is good. We sold our house on the river about 10 years ago, for $110,000. Now the land alone is going for $250,000, so your house is a good value!

[boefixepa]

Just get motivated make a bidget stick to it and get that debt down and all will be well! You are in a great position.

[34saving]

As far as phone/cell/internet/satellite. Check EVERYBODY who services your area and make them compete against each other. I think you're paying way too much, but I live in metro Minnesota, so maybe my world is a lot different than yours. We pay $10 for cell (add on to my sister's plan -- all family calls don't count against the minutes. You and dh should look into a family plan -- maybe some of the far away relatives could join too.). $23 for phone (long distance with calling card from Sam's club for 2.3 cents a minute . . .but usually we use the cell) $55 for cable and cable internet.

[cashqueen]

Originally Posted by 34saving

As far as phone/cell/internet/satellite. $55 for cable and cable internet.

OMG that is cheap. It is over $100/month for cable and cable internet here.

[PauletteGoddard]

cashqueen:
I find your goals intriguing. I'm also part of a two-income family, one kid, both of us in the mid-thirties, and we're earning about the same gross, only the cost of some services are squeezing us dry.

Food costs reductions are the easiest to take care of.

I'm envious of your low daycare costs, and that you can afford a boat, cellular phones, and satellite television. Have a look at <a href="http://pauletteg.savingadvice.com/goals/">my budget</a>, goals, and net worth.

It breaks my heart that your gas costs per month exceed your food budget. ($120/week versus $100/week).

Are all your monthly loan obligations with the same APR, and are all of those APRs below the APR of what you're currently earning?

[disneysteve]

Originally Posted by PauletteGoddard

I'm envious of your low daycare costs, and that you can afford a boat, cellular phones, and satellite television.

Perhaps I define "afford" differently than you. As I read this, the OP has $47,800 in consumer debt (truck, boat, student loans and credit cards) plus a $207,000 mortgage for a total of $254,800 in debt on an income that will shortly rise to $107,000 but has been something less than that until now. They were only "affording" all that stuff by taking on significant debt to have those things.

Fortunately, it sounds like they are now taking on those problems and getting serious about living within their means from now on which I think is terrific. Start paying down that debt and building savings for the future and you'll never regret it.

[Tree0164]

I am seeing lots of debt. Your looking to trim some bills. You have lots of big things standing out.

I would get rid of the extra car. Your paying extra for insurance etc etc.

A boat is a luxury if you are looking to get out of debt. My parents have a house on the lake and we never had a big boat. We had some row boats, and played in the sand and swimming. Maybe everyone in while rent a boat for the day-we did that several times a summer if you have the urge to go boating

[Homebody]

Gosh it's really hard to work on this by yourself. Believe me I know of what I speak. DH sounds like he may have been a bit like yours. About 5 years ago he started getting on board with being more frugal. We have made a lot of progress, but we still have a ways to go.

You have plenty of money to have your truck, boat AND pay for your son's college if you manage your money.

We also purchased a 2005 truck and will probably keep it 10+ years.

I am still driving the 1994 Plymouth Voyager we purchased brand new. We also have DH's old truck. You are right, it is very convenient to have three cars. My van and DH old truck cost about $40.00 (that's together, not each) to insure.

Really if DH won't give up the boat or the truck OR the cable (miine wouldn't either), then you have got to get a grip on eating out costs.

Learn to cook in the crockpot. Freeze casseroles, get a George Foreman grill. If you need ideas I frequent organizedhome.com and check in on the planning kitchen table where people list their monthly menus on the discussion boards.

Good luck.