mid 30's, married, 2 kids, one in daycare, one in public school

Debts:

House - $338,533 owed, 2/2 ARM 4.25%, next reset is 7/2010, 1 month paid so far.
Car - $6,978 , %5.25 paid off in 2/2010
Car - $8,218 , %2.9 paid off in 10/2009
CC's - $42,000, all at 0%
Student Loan - $1,273

Assets (roughly)

House - $400,000
Car - $8,000 NADA
Car - $11,000 NADA
MM - $11,000 , %3.25 APR
401k - $22,000
401k - $23,000
Stock - $3,000

Income, after taxes, deductions, etc

me - 4140/mo
wife - 3400/mo
Bonus - $3,000 after deductions
ESPP - ~$3,000 profit/yr

Expenses (mo)

$2050 for mortgage/property taxes/insurance
$130 for car insurance
~$450 for Nat Gas, Electricity, Water, Sewer, Trash
$60 for cable
$25 for sat radio
$25 for Tivo
$968 for car payments
$920 for daycare
$177 for cleaning service
~$400 gas for cars
$120 gym memberships
~$1500 misc (groceries, pizza, conspicuous consumption)

I realize my expenses are high, but trust me, I've managed to cut $500/mo out in 3 months. I could obviously do more, but I'm pretty OK with where we've gotten. In April, we were paying about $2400 on our mortgage, and $600/mo in CC interest was accruing. I refied to a better mortgage (cost was 3,000 rolled in), moved all interest bearing CC balances to 0% cards, and put a serious lock down on spending. Not sure how we managed to spend more than we made, but we were doing it for a few years. We've also had about 20K in medical bills the last 18 months, and that's all on those CC's.

Goals:

Get CC paid off
Get Frugaler
30K in cash
Fund RothIRAs for each of the 4 family members, $2K/year ($8K total)


Short term targets

11,500 of CC paid 9/1
Student loan paid 9/15
6400 of CC paid off in Feb 09
7500 of CC paid off in March 09
12,100 of CC paid off in Sept 09
4,000 of CC paid off in July 09

2013 goal

I'll be 40. Would like to be in position to pay house off by 2028.
Putting 30K/yr to savings/retirement
Buy a used 2011 hybrid Audi A6, pay cash
Would really like a boat, too.

Not sure WTF to do with all that cash, though. T-bill ladder, probably.[/b]

11,500 of CC paid 9/1
Student loan paid 9/15
6400 of CC paid off in Feb 09
7500 of CC paid off in March 09
12,100 of CC paid off in Sept 09
4,000 of CC paid off in July 09


I don't understand your payment plans. If you can pay 11,500 towards your CC in a few weeks, how come you can't always apply that to your CC and get the debt paid.

Also, before someone else says it (ha ha), get your emergency fund started. Maybe you can pay off 6500 on your CC and put 5000 in an emergency fund in case one of the babies gets sick. You don't want to keep putting medical expenses and other 'emergencies-to-you' on your credit card. Keep some cash handy.

After moving things to 0% cards, we give ourselves a year to pay them off. Instead paying them off, we put the money in our interest-bearing MM for a few months, and make a few extra bucks. The CC coming due in Sept is 11,500. Between savings and ESPP cashout in Dec, I'll have enough to pay the others off.

I agree in principle that having the savings is important. But the CC debt is a higher priority, simply to avoid interest. Taking a bit of a long view, and certainly incurring some risk, I know. But we should enter 2010 ready to at least run a 10K.

So you're telling me that in a year and a half, you're not going to have one emergency? Must be nice.
Check back with me in 2010 and let me know how that worked out for you.

I would start with a 5k fun run if I were you instead of jumping into a 10k right off the bat. Training, discipline and hard work are important before jumping into something feetfirst.

Anyway, you may also want to track your spending to find out where your miscellaneous spending is going. You may be able to find somewhere to save at least 50 bucks to start your emergency fund.

Wow, your utility bill seems awfully high (almost three times what we pay for those services), but it also sounds like you might have a big house. Any steps you can take to reduce your energy and water consumption? Efficient appliances, low-flow showerheads, water-efficient toilets, motion sensors to turn off the lights when nobody's in the room, etc.?

What about doing away with the cleaning service and cleaning the house yourselves? Unless it's a mansion you should be able to handle it even with two jobs and two kids. If you use the time you'd spend watching television and clean the house instead, you could save on the cable and TiVo bill as well.

Can you tell us more about the "conspicuous consumption" that presumably accounts for most of your $1500/month misc expenses...unless you're eating an awful lot of pizza? That seems like perhaps the first place to target for "getting frugal."

Of course not. Not a month goes by that something unexpected comes up. But we're going 1 month without at least 1,000 in savings. By Dec it's back up to 5 figures, at least. Going to take a year to get it consistently above 5 figures. But I at least realize I have problem. That's important.

And the point of this thread is so you (and more importantly, me) CAN check back in 2010.



Giving myself 16-18 months to get in shape for a 10K is plenty of time.



Yep. That's the next step. Managed to cull as much out of the mandatory/fixed expenses as my wife and I could agree on (she won't let go of the cleaning service, I won't let go of Tivo, XM), but I think we have maybe 2-300 in avoidable discretionary spending.

Well, Electric bill is running around $210 with the AC on (3Kft^2 house), about $8 a day. This is a significant improvement over last year, before I audited the house and trimmed a lot of waste. Almost $2 a day in savings year over year. Water is pretty fixed at about 180ga/day. Gas (hot water mostly) runs about $50/mo, but I don't really track that. I suspect it's closer to $300, and my $400 was what it was last year.



I agree. Were I dictator, I would make it so. But alas, my marriage is a partnership.



Oh there is a lot of pizza, twice a week at least. But I also don't pack my lunch very often, and we need to forget iHop exists. And you'll note I listed "Get Frugaler" as a goal. Don't want to be Frugal, just less not Frugal.

I must point out, that you cannot legally fund your childrens' Roth IRAs unless they earn a taxable income. You may only apply up to the amount YOU earn for YOUR Roth IRA.

"There's no minimum age to set up a Roth IRA, and many IRA providers will accept accounts for minors. In most cases the only issue is whether the child has taxable compensation income."

"The major impediment to IRAs for children, especially young children, is the earned income requirement. An unmarried person must have earned income of his or her own to contribute to a Roth IRA."

http://www.fairmark.com/rothira/minors.htm

Hmm, I didn't realize that. Thanks!

I suppose a 529 would be the best option then. Welcome discussion on that issue.

That makes sense, we all have different priorities and goals. But it seems that cutting down more on your non-pizza "conspicuous consumption" even for just six months could go a long way toward eliminating your credit card debt and helping to stablize your financial situation. Our household income is higher than yours and yet I look at your monthly expenses (about $6400, or $77K per year) and think "there's no way I could afford all that." But we live pretty frugally and you don't want to live that way...I respect that, just trying to point out opportunities that may help you reach your goals.

You can open an IRA for kids as long as they have earned income (dog walking, baby sitting count) http://www.fool.com/taxes/2000/taxes000512.htm

My brother does this for his kids who are 11 and 13. Also, although the kids have to earn income the income doesn’t have to go into the IRA. If Junior earns $100 dog walking he can keep that money for himself and Mom/Dad can put their $100 into the IRA for junior.

Yeah, I don't really think I can afford it, either. I'm looking forward to the girl starting school in 2010, and those cars being paid off. That's ~2k/mo right there that I'm salivating over. The difference is now I salivate over the investment opportunities, not the consumption opportunities.

FTR, that's take home, gross is about 180K. We do flex-spending deductions for daycare (5K/yr) healthcare (1K), ESPP takes %15, 401k gets %5...actual income is a bit higher than the take-home, but I prefer to budget from the lower number.

Going to try and document every penny spent in Sept., and will post results. I might be way off on the $1500.

I thought you were talking about a 10k figuratively, not literally. My bad.

I think tracking your spending starting in September is a good idea. At least we'll all see where your money is going, and you may learn a thing or two about your spending that you didn't realize. Have you checked out some of the other journals? They are all very different and interesting (at least to me).

And don't necessarily forget IHOP exists if you like going there, you just have to try to go there less or try making pancakes/french toast/omelettes at home.

Good luck!

Oh, you understood correctly. I was following the analogy to physical fitness. My point was that I understand it will take time and training, but I think 1.5-2 years is enough time.



Yeah, last night was scrambled eggs and leftover sausage links.

$1,500 for miscellaneous? -- Groceries, pizza, other things?

Uhm, seriously?