Major financial and lifestyle decision

[jpg7n16]

Okay, I guess I'll be the one to ask. Can you post a budget of your expenses?

600k-180k(taxes)-75k(savings)-50k(retirement)= 295k/year = $25k/month

$1.2 mil mortgage = $5500-6000/month + taxes/insurance = maybe $8,000 or so.

That leaves $17k month. Some of that is for the payments on your car and SL's. Let's call that another $3k. That still leaves $14k unaccounted for. What's going on there?


As a matter of preference, I do not like having a ton of assets tied up in real estate. It's volatile, illiquid, and you typically can't live off it in retirement.

However, based on your income, you can technically support the size of that property. You have ample room in your budget to cut back and make it work, assuming that all is well with your job and income going forward.


Here are some things to consider in your plan:
- What if he doesn't make $70k as he currently does? What's your plan?
- Say he makes $70k again, how much of that will be devoted to the expenses of running his business? How much are the startup costs for his business? Where is that money coming from?
- $200k out of pocket for downpayment, how much for repairs? Where is that coming from?
- What if something happens to YOUR job security?
- What if you are disabled, have an extended job absence from sickness, pass? What coverage do you have there?
- Even if the property works out, what is your plan for retirement income?

Just things to consider.

[AnneK4254]

Good questions. jpg, and thank you for prompting me to do this. I can tell you we definitely don't have an extra 14k/month. I need to go back and track much better as we go. Here are some estimates, and it comes pretty close to 14k per month when divided up this way:

Annual in 2012:

Another 28k annually goes to a firm after-tax retirement plan - forgot to mention that one earlier. So that's about 2300/month.

Vacations: about 10-12k/year, so 1k/month.

Patio: 22k one-time project in 2012, 1830/month

Landscaping/gutter cleaning - about 4k - 330/month

car insurance - 1400, 120/month
home insurance 1200, 100/month

Charity/political 12,000 - 1,000/month

Holiday and other birthday gifts: 15k - 1250/month.

Various house maintenance expenses 2000 - 170/month

Medical/dental/eye visits not covered 2000 - 170/month

TOTAL: about 8,300/month goes to annual expenditures


Monthly:

medical ins 600
life ins 300
parking 300
groceries 1200
lunches/coffee 150
take-out/restaurant dinners 400
dog care (walker, vets, food) 600
housekeeper 300
gas 300
water 60
power 350
cable/internet 300
clothes 300
wine 300
haircuts 200

Total: 5,660

I can tell you that all of this discussion is making us really re-think our plan. It seems like it will be too risky, and the stress of that may just be too much to allow us to even enjoy it.

I have a feeling that posting this budget may bring a lot of criticism. Especially the wine and all the services we pay others to do. I am just trying to be honest. So, have at it - maybe I need that.

[AnneK4254]

One more thing - I do have good disability insurance and job security. As for husband's income post-move, I'd like to be able to avoid relying on it at all, if we could afford that. The biggest issue is start-up costs and ongoing business expenses, I think. Another factor here is that our taxes are about to increase by about 20-30k, depending on what Congress does. Thanks again for all the help and insights!

[kaleida]

I have a feeling that posting this budget may bring a lot of criticism. Especially the wine and all the services we pay others to do. I am just trying to be honest. So, have at it - maybe I need that.

Well I for one don't feel critical of you for hiring other people to do things. I make a lot less money than you but I still hire someone to clean my apartment once a week! Joy/cost ratio is important.

[scfr]

Are there risk-free alternatives that would satisfy whatever it is that your husband hopes to accomplish? For example, if he simply wants to do more hands on physical labor while he is still young, could he be satisfied by continuing to do the same paid work but volunteering doing something like building houses with Habitat for Humanity one or two weekends a month?

[feh]

No way would I buy a more expensive residence. In fact, I'd be looking for a much less expensive place to live.

You may or may not realize it, but you're spending a ton of money. You're able to given your income, but your retirement savings are lacking as a result.

If you live frugally for a few years and simply save all that you can, you'd be in position to retire early.

[Gailete]

I can see that you have at least a dog, but no mention of kids which makes your food budget unbelieveably high (unbelieveable for me not you). Interesting to see how the other half lives! that being said, since you seem to be going through most of your income, I too would suggest trying to decrease a few things like the food budget--you are spending close to $1600 month on eating! If you look through some of the other posts here you can see what others spend for the same amount of people in their home. Just because you are making that money, doesn't mean you have to spend it all. If you contniued to save for say another 10 years, you could probably move to a part of the country where land with houses is a whole lot cheaper and be able to pay cash then hubby can have the time of his life doing whatever it is that he wants to do and you can maybe find a way to continue your job, or start your own business or whatever. I looked in our local homes magazine a few weeks ago and one of the most expensive pieces of property in the county was up for sale for less than half a million. You could most likely buy 100 acres out here and build a reasonable house all for about that. So there are many ways to think this through and come about to what you really want to do. I don't think you actully would want to sink that much money into a house just so hubby can quit his job and join the Green Acres bunch. I suspect that you both could save more money if you had hubby quit his job anyhow and take up the dog walking, housecleaning, and cooking. As it is most of his earned income is being eaten up by taxes I suspect and the rest is just basically going into the things neither of you have time to do so you are hiring it out. Other than that, no comment as I can't even comprehend having that much money to deal with monthly and these kinds of decisions to make.

[disneysteve]

I can see that you have at least a dog, but no mention of kids which makes your food budget unbelieveably high (unbelieveable for me not you).

you are spending close to $1600 month on eating!

Actually, it is $1,750, not counting another $300 on wine, so a total of $2,050 on food and drink.

groceries 1200
lunches/coffee 150
take-out/restaurant dinners 400
wine 300

I was going to comment on that also. That is really a very high amount, especially if only for 2 people. I don't care how much you earn. Expenses shouldn't all scale up with your income.

[Gailete]

Actually, it is $1,750, not counting another $300 on wine, so a total of $2,050 on food and drink.

I don't 'drink' so that one went right over my head as part of a grocery budget.

[AnneK4254]

Thanks all for the comments and perspectives, and particularly how non-judgmental people are on this forum. This has been a really helpful exercise for me.

It seems that we have gotten very sloppy with our spending, and there is a lot of waste and room for saving. So, that's the good news. We clearly need to stay on top of our numbers much better than we have to date. Maybe we will also lose some weight if we stop eating and drinking so well!

I'm still not sure exactly how we are going to handle finding a way for my husband to get into the kind of farming/ranching lifestyle he wants - while he's still young enough to get started, and in a place where I can continue working at my job - but I am now convinced that I want to find a different way than a super-expensive property.

Thanks again.

[gostumpy]

I spent ~$1360 last month on those things...Groceries (612) Restaurants (445) and Booze (310)

My goal is to reduce the Restaurants & Booze by at least 25% in January, and try to get Groceries down to ~$500... This is just for me/wife, no kids...

What do you think the biggest expense grocery-wise is for you two?

[TurningColorz]

I know this is a "frugality" based forum, but Anne has a dream.
Anne also has a solid career, Seems to have a well rounded retirement portfolio,and a firm grasp on her present, and future.
You gotta live somewhere, and real estate prices are pretty relative as an investment, plus we're at the bottom of a cycle here. I see no problem spending a bit more on a property that brings extra value to Annes Life. Retirement is only ~15 years away, and Anne has already paid her life's dues by saving all these years, making wise choices, and successfully building a little empire.
Anne, If you pass on this dream opportunity, when will the next one arise?
Will you be happier waiting until you're 65 instead of now?


Again, I'm all in on the frugality ethos, thats why I'm here, but I also know life is short, so I'm working on the bucket list while I can...
If a Ranch in the country was on my list, and it presented itself to me at this age,
I would be a happy camper for the next 15 years.

....or I could wait.

I'm on your side Anne, Good Luck!

[Gailete]

I know this is a "frugality" based forum, but Anne has a dream.

The problem as I see it is that this seemes to be more her husband's dream than her's

Why would we do this? For a completely different life- the new house is on 100 acres, and my husband would start several businesses - timber, cattle. There are significant tax benefits to be had, in addition to the fact that he really wants this change of lifestyle and profession. We think he could make up his income at least. He really wants to get going with a job requiring physical labor before he's too old to do so.

And as the one that earns the lions share of the money in this family she doesn't seem nearly enthusiastic to take on the role of completely financing this dream which she would be doing until her hubby actuall starts turning in a profit. He is contemplating working this land for money with basically no experience. I was married once to a guy with such a dream (but at much lower cost) and then I saw that when things needed done he always needed help for harvesting the crop he had planted, selling what grew, etc. I was also expected to take a very pregnant body (I had a 10.5# baby in August) into a corn field with toddler son and the children I did daycare for presumeably and pick sweet corn to help him out--I refused by the way, so in many ways I would get blamed for his non-success. But it all laid squarely on his shoulders. He couldn't do it on his own. Making money off the land is a wonderful dream for many and in this instance maybe viable, but to plunk down that kind of money is nuts. I would look for the same amount and type of land if that is what is needed, but buy a mobile home drill a well and a septic and be inbusiness without putting close to 2 million into the enterprise. Most farmers dont' start out with a 1 -2 Million dollar morgage for the land and house because then they have to buy the tools, machines, cattle needed for their work. This is a huge expensive dream that could be done or tried in a much cheaper context,

[Gailete]

I spent ~$1360 last month on those things...Groceries (612) Restaurants (445) and Booze (310)

What do you think the biggest expense grocery-wise is for you two?

Restaurants we just went out and used a gift card we got for Christmas and ended up spending $10 more than the card (mostly for the tip)which was our first time out for dinner in months and I stop in ocassionally for a sandwich when running errands so maybe a high of $30-40 a month, groceries maybe $200-300 which includes everything like toilet paper, etc. I also stock up when I can on everything as I never know when I will be able to get out again. Due to my illness we also buy bottled gallons of water as we don't trust our well, so that takes huge chunk of our food budget. Because it is hard for me to cook many days, I get more prepped food than I ever used to, hubby has discovered that he likes yogurt so I get those for him in quantity as he will eat them and they are good for him. He is a grazer so I try to have things available for him to eat when he gets hungry. So I guess our groceries/food budget is:

Groceries $200-300, Eating out maybe $40, booze nothing. So the top amount we spend is $350 and couldn't afford to spend more if we wanted to as we just don't have the money. I'm not sure I could spend $600 a month plus eating out consistently every month even if I was feeling well and had the energy to cook all the time.

[jpg7n16]

I know this is a "frugality" based forum, but Anne has a dream.

I agree with you on two counts, 1 they have a dream, and 2 they technically have the income (currently) to support that dream (as I stated in post above).


The trouble is, they do not have a plan to get to that dream. A plan that asks a few "what ifs" about putting that dream into action. Taking him out of the workforce to run a farming property is a dream. Having a sound business plan that accounts for the necessary costs, and projects realistic expectations of what life will be like on the farm (financially speaking) is just good planning.

Having a dream isn't enough.

"For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it? Otherwise, when he has laid a foundation and is not able to finish, all who see it begin to mock him, saying, ‘This man began to build and was not able to finish.’ "
Luke 14:28-30