Hi, i'm new.

recent developments in my home
hubby lost his high paying job and we have decided to make budget cuts so that we may live on my teacher's salary/benefits (45,000 in houston) while tries to make a go of his furniture making business. I am a big dave ramsey fan and we live debt free although spoiled rotten by his high salary.

situation 1 :
home is within 9k of being paid for.
we have 10 k in our emergency fund.
no other debt of any kind.
question: should we go ahead and pay for mortgage and be done with it?

situation 2:
with my salary there will be a roughly 1000 dollar shortfall in monthly expenses, if you include things like clothing, teeth cleaning, vet bills, cable, cell phones, housekeeper, orkin pest control, etc. he is willing to accept a half time job somewhere like home depot to make up the shortfall.
question: my instinct tells me to cut off the housekeeper, cable, the cell phones and all that is not necessary for life. my friends give me weird faces when i say that. what is your opinion?

situation 3:
i have dropped my 403B contributions to 150 a paycheck for right now. there were at 700 a oaycheck.
queston: should i stop contributions totally for right now until house is paid for? and emergency fund topped out at 10k?

thanks for your opinions.

my .02 cents

If you pay off your house you leave yourself with a skimpy EF. I wouldn't do it. If you have that little left on the mtg, you should be paying mostly principal anyway. I'd pay a year or so's worth of intrest for the safety of a decent EF.

The housekeeper would be the first to go. And I'd reduce cable and cell phones to the bare minimum. You can drop them all together later if you don't really use them. Who cares what your friends think. Are they paying your bills? It doesn't sound like these friends are your teaching buddies. Few teachers I know have housekeepers. It may be time to cultivate friendships with people in a similar income bracket.

I wouldn't stop contributions to a 403b.

It sounds like a big lifestyle change is in store for you guys. Good luck! It can be done.

wow thanks for the kind reply.

i have already told the excellent housekeeper that aug 30 will be her last day. I have already cancelled orkin pest control.
my gut tells me to drop everything that is not necessary for life ( in spite of the fact that i have people tellling me not to) . i wish to drop cell phones to bottom line basic or nothing, cable gone, live on this year's clothes (not a problem), any other thoughts?

we do have hobbies that will stave off feelings of deprivation, i hope. i don't want to go into deprivation mode. i do want to save bigtime for retirement.

more opinions please? i know how to live frugally from college days. WIC cheese and potatoes anyone? it's amazing what people think is absolutely necessary these days.

If your husband is home half-time looking for work, perhaps he could spend 1 hour a day cleaning the house. Keep an eye on the pest control and see if you need it. Drop down your cell phones, but don't cancel if you have one of those plans you have to buy out.

I would not pay off the mortgage yet. You might run into an unexpected expense. Your mortgage is deductible and likely cheaper than any other credit.

Will your employer change tax withholding to reflect your new situation? Not sure how this works in the US.

How many cars do you have? Could your husband focus on finding a job to which you could drive him or he could take transit? THis is a good opportunity to drop to one car, if you have two.

No. Your emergency fund is important to keep, especially when you're in transition. Keep plugging away monthly on the mortgage, and wait until things have settled to pay it off.




These things are the expenses I call "quality of life" expenses. yes, give up the housekeeper. If your husband will be home working on his business, or working part-time, he can take an hour or half-hour a day to keep clutter tidied up. When you get home the two of you can tackle heavier cleaning projects together, and get them done quickly. (My SO and I can transform the kitchen from dirty to spotless in 20 minutes, working together.)

Yes, get rid of the pest control UNLESS you have to buy out the contract. If you have a contract, call and let them know you do not want automatic renewal when it is up.

Those monthly expenses, like dentist, new clothes, vet bills, etc., are what your emergency fund (above) is meant to cover. That's why I suggested you not pay the mortgage off with it. If you have 10K in the fund, look - you've got 10 months of expenses covered while your DH builds his business and/or works part time. Take a reasonable look at what you can postpone or cut out completely. Do you really need new clothes? Can you shop at consignment stores instead? Instead of canceling the cell phone, can you switch to a cheaper plan? Get creative!



I think you made a wise move here and I wouldn't change a thing. You are still contributing to your retirement, which is important. Though the amount is smaller, you've put a significant amount of free cash back into your budget, which will help you get over the financial hump. I would leave this just as it is, until you feel comfortable increasing it back -- even incrementally -- to the previous levels.

you've gotten some great feedback but I'll still throw my $.02 in.

1 - you're already dumping the house keeper which is great.
2 - I'd definitely dump the cable and take the cell phone to at least minimum. However, if this means you have to start a new 2 year contract and your current one is almost up, I'd consider keeping it and switching to a pre-pay plan if you can.
3 - I would not pay off the house. it's not going to save you much money and you don't want to kill off your emergency fund.
4 - do you have access to a HELOC? I'm not a big fan of raiding your home equity but it's possible your husband will need seed money for his business so having that open that you can tap for a small business loan wouldn't be a bad thing.
5 - I'm not thrilled with the 403b reduction though I see why you've done it. Make sure you're at least getting the full match and if you don't get a match at all, consider stopping those contributions and doing a Roth. But I wouldn't stop saving for retirement entirely.

For a PT job, your husband might consider getting one at somewhere like home depot or similar so he can get an employee discount on the materials he'll need for his furniture business. I'm a fan of having your 2nd job work for you in more ways than one...

Good luck!

I would definitely look into changing your tax withholding. If done wrong you could leave yourself with a tax bill at years end but I managed to free up quite a bit of money in our monthly budget by sacrificing the gigantic tax returns I have been getting every year.

Other than that everyone else seems to have this covered so I wish you the best of luck with your situation. I'm sure its seems tough but you seem to be handling it quite well. I'm sure everything will work out fine in the end.

Thank goodness you were ahead of the game and already working the Dave Ramsey TMM.
(1) Since you only have one income now, the emergency is fund is even more important. I wouldn't cut into the e/r fund to pay off the mortgage.
(2) I would cut out the services that you and your husband (and kids if you have them) could take care of yourself - housekeeping, pest conrol, etc. I would cut out the cable and reduce the cell service to the bare minimum (its good to have a cell in case of an emergency). Husband should take some type of work to help cover expenses and expenses related to his start up furniture business. Home Depot sounds like a great idea b/c he could get discounts on tools and wood, etc. Real friends will understand that you have to cut back due to your husband's job loss.
(3) You don't say how far you are from retirment. The closer you are to retirement the more important it is to keep up your contributions if at all possible.

Finally is there anyway you could take on extra work during the summer or evenings to help (1) speed up the mortgage pay down and (2) up the emergency fund?

Good luck and let us know how it goes.

ok
1. we (the house) have had termites in the past so we cut the "regular service" but are keeping the termite service.
2. we are dropping my cell phone but he wants to keep his phone for his job search. i have a work phone, a home phone and email, people can find me.
3. not paying off the mortgage.
4. tax withholding is at "single" rate. is this right?
5. in houston texas, one cannot get by without a car, however spoke to USAA and got the insurance rates dropped. very agreeable and helpful telephone associate. alas, there is no public transit.

pf101 said: do you have access to a HELOC? I'm not a big fan of raiding your home equity but it's possible your husband will need seed money for his business so having that open that you can tap for a small business loan wouldn't be a bad thing.

i do not think we will need to do a home equity loan. he has a garage full of "norm abram quality" tools and a large stockpile of rather nice wood. thanks!

ok
retirement: we are 44 years old. we had been socking away half of my salary in 403b and huby was socking away the max in the 401k we never did do IRA's but we should have. oh well, live and learn.

extra work: after a day of teaching two lab intensive subjects (chemistry and physics) to high schoolers, i do not function after 4 pm, but am considering teaching summer school. i can earn 6K teaching both sessions of summer school.

we still have not pulled the cable. hubby has asked to hold off for one month. i admit that i, too, am addicted to cable. he is actively seeking work, both professional and non professional.

I know teaching can be stressful, especially lab-based subjects. One on one tutoring might be bearable, especially if student is an enjoyable person, or if it is a subject that you do not currently teach so you don't get burned out. The rates you can charge are probably pretty good.

For the cable, during that month see if you can find some other alternatives that would suffice if you do decide to cut it out entirely. I'm a huge fan of Netflix. Any of the really good shows (and plenty that aren't) come out on DVD, and you can rent them that way. We have the 3 disc at a time plan, and it works out to around $1.50 per disc over the course of the month, but we also try to watch them and send them back as soon as possible to get our money's worth. You could also check your library. Being a pretty major city, they probably have DVD's to borrow, and they should be free! Depending on your computer knowledge, there's lots of place to download free (and legal) movies, such as Internet Archive. And depending on your moral compass, there's lots of legal-gray-area movies other places too.

I have a friend who makes $30/hour tutoring kids for the SATs and she's not even a teacher.



I 2nd this entire paragraph. Getting rid of cable is very freeing. I haven't chosen to have it (though some places I lived it was already on) in over 5 years and have never missed it. You can also download or watch a lot of shows online legally (or not so legally if that works for you). I'd be surprised if there are any major shows you watch that you couldn't find other ways to access if you got creative.

I would think you'd want the withholding at married unless you have a reason to over-withhold.

I found a great tool here that allows you to put your paycheck info in and see what the net take-home result would be. Another tool let's you setup your W-4 withholding sheet.

http://www.paycheckcity.com/NetPayCalc/ ... ulator.asp

You only owe $9,000 on your house, sounds to me like you have a very level head on your shoulders, cut the excess "stuff" out and ride it out, it is a very good feeling having your home paid for but you are so close and have the funds to do so if you choose