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August 06, 2013

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Well, your situation isn't great today, but it's not too hard to recover. You've still got a few expenses that you can cut (at least temporarily) to balance the budget, and your debt situation appears like it can improve relatively quickly.

To balance your budget for now I recommend dropping the $250 a month allocated for vacations (basically plan to spend your vacation time relaxing at home, rather than traveling, etc.) Also cut your spending on eating out by at least $91 (you say you are spending about $165 a month between restaurants and fast food). This will just balance your budget. It's not pleasant, but it's not forever. Once you pay off the credit cards next May, you'll free up over $1,600 a month, which is over 25% of your total budget.

At that point you can choose to focus on paying down the remaining debts (you can probably have them all paid in less than 10 years if you use a "debt snowball" type approach) or you can look into preparing to start the family you mention that your wife wants.

Hello KW,
Congrats on getting married. These debts you have can be eliminated in 3 years or less if you attack it and are really serious about getting out of debt. I see a lot of expenses that you have to cut out. With your shortfall, you have only two options: Make more money or cut out expenses. E.g eliminate gift. You are essentially giving that which you don’t have. It’s the little changes that add up to big success. I have listed below the changes you can make and the overall savings. You just have to determine what your priorities are and if you want to sleep well at night. Plus you probably need more life (term) insurance on you and some on your wife.

Are you contracting the lawn work out to a company? What sort of pest control and lawn service do you need almost $70 for monthly? You need to start doing the work yourself. Look up DIY websites online. Savings of at least $50-S70.
Why do you need to pay for Ipad 3G when you have smart phones and WiFi in the house? Am sure you can save extra $25-$50. Plus you phones bills should not be more than $120. Savings of $50-65.
What electronics are you using $30 for? Need to go. Savings of $30
Monthly vacation of $250. You simply can’t afford it. Maybe $250 every 3months. Savings of $2000/yr or $167/month.
Clothing, eliminate it. Continue to wear old clothes until you get some free money like tax refund. Savings of $25
Your food expenses are way too much. Your grocery shouldn’t be more than $250 for 2 people plus you can’t afford to eat out more than once. Overall, your restaurant and fast food should be like $80 considering you have debts. Savings of $100 + $85
When you add all these up, you are looking at anywhere from $500 - $600 monthly.
In Dave Ramsey words, “you can live like no one else now, so you that you can live like no one else later”. It can be applied to both extremes of frugality and wastefulness. The key is balance. Knowing when you need to save and when you need to spend.

Your problems are totally understandable. My best advice to you is, get out of the rust belt! You are young, just starting your careers, your careers are portable, and arent tied down by owning a home. The next 3-5 years are going to be a period of belt tightening for your family anyway....so why not do it while establishing yourself in a place that holds more potential for long term economic viability? Go where the jobs are, and are going to be in the next 30 years. The higher cost of living will be more than offset by the higher number of higher paying jobs available to you over the rest of your lives. I think you should look more at the long term, instead of worrying about paying down student debt asap. It is true that debt is bad, but think about how you would feel about your future even if you had zero debt but were still living where you are currently: you would still only have few white collar jobs available nearby, your raises would continue to be meager, local government and public schools and medical care would still be underfunded and not high quality, if you buy a home yes it will be cheap but then it will be very hard to sell it later if you want or need to. Think about what you want the rest of your life to look like, and then make a plan to get there. think long term. if it involves carrying some debt for 5 extra years probably it would be worth it to improve your overall career prospects.

What's in this bucket?

Collectibles/Physical Investments $12k

That's an awful lot of $ to be tied up in non-liquid, non-RE assets. Is this something that can be sold to free up some cash to pay down debt?

Also - your wife shouldn't work Retail at $8/hour but she should definitely be working part time if she wants to have kids sooner than later. Can she tutor at $20/hour?

I agree with a lot of the comments that have already been made. You're in a tough spot but you seem like a smart guy so try to stay positive and create goals - short, intermediate, and long-term. And make sure you and your wife are on the same page with those goals.

It's hard for me to tell you to move but MC makes a good argument. And BJ and Bob both offer good ideas for cutting expenses. And I agree with you that paying of your credit cards before the interest rate goes above 0% makes a lot of sense.

Just try to stay level headed. You're young (like me) so you want to get on the right path but you have to balance that with enjoying life and doing what you want to do in the area where you want to live. Good luck.

One things not mentioned by other commenters yet is your rental house. It's costing you $140/month to keep it. Can you get your tenants to pay the water bill? That's $55/month. Can you increase the rent? If you sold the house for $27K, you'd come out with $1,500 after paying off the mortgage and realtor commissions. Not a lot of money, but you'd also save yourself $1,700/year.

You're not in terrible shape. I completely agree with Dom - your rental is costing you money, and if you can't find a way to make it a good investment, you should look into selling. When your credit card debt is completely paid off, you'll jump to almost a 25% savings rate. This will give you enough breathing room to have children, and potentially take your mini retirements if you can travel extremely cheaply, but won't allow you to achieve financial independance until around a normal retirement age. The biggest key to achieving those goals quicker to me would actually be just avoiding lifestyle inflation. Over the coming years, keep your expenses flat as your incomes raise (which will exceed the rate of inflation with hard and smart work). Implement as many of the savings tips as you can from the other commenters and you can achieve it sooner. You just need to prioritize.

I see they've both already been touched on, but I agree:

Lawncare? As my dad used to say... are your arms broken?

And that's an outrageously high cellular bill. By looking at sales, it appears the vast majority of people can't afford 3g for their iPad... neither can you :)

Also you've got to get your rental property at least cash-flow neutral. If it's costing you money every month, you can't afford it.


Those mobile phone/iPad and internet line items are pretty brutal.

Any way to reign some of that in?

Also, do you NEED the weed and feed service?

What kind of student loans does your wife have? Any chance they could be or become the kind of loans that are eligible for income based repayment and public service forgiveness (Direct Loans and FFEL Loans)? If so, try to switch to IBR - it can substantially lower your student loan payments. Also if your wife continues to pay her loans while working in public service for 10 years, the balance of her loan will be forgiven.

I agree with the others - there are many areas in your budget you can cut (about $500 - 600 savings per month, not including student loan repayment changes) and if you can get your rental home from negative to positive cash flow, then you'll have some breathing room for planning how to grow your careers and family.

Savings:

1. ipad and smart phone service is excessive.
2. rental is losing money and probably should be sold
3. lawn service could be cut.
4. Vacations can be cut for a year or two if need be.
5. Eating out can be cut.

There are options there, you just have to decide if you are willing to do it.

However, your immediate budget crisis is somewhat of a manufactured crisis of your own making. It doesn't actually exist. $1618 to pay off your credit cards in less than a year prior to zero percent interest going off is a great goal. If you want it you need to start picking from the list of things above, because without it, you cannot achieve it. But the thing is it's just an arbitrary goal. You won't have to file bankruptcy if you don't achieve it. You won't ruin your financial future if you don't achieve it. You won't pay crazy amounts of interest for years to come if you don't achieve it. If instead you pay $1000 towards that bill every month. You will have it more than half paid off when the zero percent goes off and then you will probably pay some higher interest for another 8-10 months and then it will be paid off.

That would not be a bad goal. You are already paying interest on other things. I know credit card interest is painful. You know what, when you make mistakes they come with a little pain. It's ok. Minimize the pain but let yourself feel it a little bit and then when you get it paid off in 18 months remember that pain and never look back.

The credit card debt is responsible for most of your short term pain here.

The student loan debt is going to be long term pain. You will feel that for a long time and it will be more like a chronic ache. It's a classic tale of the education mistake that has been debated here on FMF countless times. It's unfortunate but luckily it will not be crippling.

Just pay the credit cards down at a reasonable pace and dig out of your credit card debt just a little slower and everything will balance just fine. Obviously pay as much as you can towards it but do not set up May 2014 as a necessary drop dead date because you might drop dead trying to reach it. Just make sure you keep paying it down aggressively and do not run it back up under any circumstances for any reason.

There is light ahead, you can make it out.

You're doing a lot better than you make it sound.

In short: sell your collectibles/physical investments for $12k sell your stock for $9k. That gives you $21k and you can pay off your credit cards. With the credit cards paid off you've got $1600 net difference in your monthly budget.

You can also cut the $277 and $200 housing allowances. You've got a $6000 emergency fund for the rental, that should be plenty to cover maintenance/repairs if needed.

Between paying off the CC's and deleting the housing allowances you've got a $2100 reduction in expenses.


As others have said the weed/feed service and phone/ipad bills are too high and can be cut.

$20/mo for $100k insurance sounds quite high. Is that whole life? Drop that policy and shop around. You should be able to get more like $500k/20 yr for $20/mo at your age. (I'm assuming you are in good health, but if not then that could explain high rates)
Yes your wife can afford insurance. You should buy her some. Why can you afford insurance and she can't?

Does your wife not have a pension via her job? Its rare for public school teachers to have no retirement at all. Normally public schools have pensions still.


You brought it up so... :
Shadowstats is silly rubbish. If you believe their claims then the price of EVERYTHING has double in the past 10 years. That is clearly not the case. Hope you aren't paying for their newsletter. Sorry to be nitpicky but your Medicare didn't go up 2%. Social security returned to the normal rate after the temporary 2% reduction stopped.

The above comments are great. Follow this advice and you will be in better shape.

I have a question- what is the non-home debt service for ($2318/mo) ??

I agree with Apex as well-- the credit card payoff sprint is a manufactured crises. You very well may get another 0 Percent transfer deal come next may...... It needs to be paid off, I agree-- but don't kill yourself because of the May 2014 self imposed deadline.

Have you thought about a refi on your house or on the rental? Maybe a refi would lower your costs enough to get the rental to be cash positive? Have properties like yours appreciated in the last 10 years? Have rental rates increased as much or more than inflation? Think hard--- do some analysis and consider if you might be better off without it.

Property taxes in my expensive east coast location are about the same as yours---- seems high. Have you looked into it? Maybe think about an appeal?

Follow the great advice above and you guys will be fine. And don't put off the kids for too long--- they are not THAT expensive and life is not really worth living ( in my book anyway) without them.

Best, JNEW

Oh, one more note to my last comment (if it got posted).
If her loan is forgiven, make sure you have money for taxes saved up. She'll have to pay income taxes on the entire amount of the forgiven loan, since the IRS considers it "income" at that point. Still, that's cheaper than paying the entire thing off.

Hmm. I think my comment didn't get posted due to the link I provided for the loan forgiveness program.

Comment repeated:

Oh yeah! Angela is right.
If your wife can land an approved public job (shouldn't be too hard, given that she has a degree in early childhood), then she only has to make 120 payments on the loan, and after that, her loan is forgiven, if she remains in service full-time to the public organization.

Essentially, she'd be working the rest of her loan off, instead of paying it off.

Something to definitely look into. http stuff goes here first, then: studentaid (DOT) ed (DOT) gov/repay-loans/forgiveness-cancellation/charts/public-servicestudentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service

And, it looks like I messed up that link too. Argh. Just google it.

Switch your mobile phone to T-Mobile or whatever you can find that is the absolute cheapest. Drop the Ipad add-on too, right now it's a luxury you can't afford. I've got unlimited talk, text and data on two smart phones for $85.

Drop the pest control and the lawn care. These are items that you can do yourself. Put in an hour a week and you're effectively paying yourself $15/hour, better than your wife can find for part time work.

Cut the vacation budget in half. Go on vacation every other year instead of every year. Schedule a camping trip if you can't stand not getting away every year.

Ditch the fast food budget. It's not doing you any favors. Pack yourself a PB&J and an apple when you're going to be rushed and would ordinarily pick up fast food.

Monthly savings would be $360.

Long term, I would sell the rental. There are times when a rental is a good idea... but when you're losing money on it and you're already broke, now is not the time. My husband and I did it when we were struggling financially, and having those extra few hundred dollars a month made a big difference. Don't make the mistake of throwing good money after bad.

Long-time reader. First time poster.

At the risk of not being as delicate as the other posters, you've got a "MY HAIR IS ON FIRE" emergency going here. You've self identified your lifestyle inflation and just now seem to be coming to the reality of your situation. You have a major cash-flow problem and a minor accumulation of assets problem. That a financial analyst finds himself in this position just adds to the irony.

Let's take a constructive look at your situation. First, the cash flow issue. You overspend your income by ~$350/mo. But yet you contribute ~$80 to lawn and pest services for both houses, $250/mo to vacations, $75/mo to pets, $50/mo to miscellaneous (which means we just throw $50 out the window? Why isn't that tracked?), an unknown amount to keep your IPad on 3G service, $165/mo to food from restaurants (fast food and restaurants), $30/mo to electronics, and $25/mo to gifts. That's $675/mo! No. Your issue isn't that you don't make enough or that you spend to much. Your issue is much deeper than both of those. The problem with your scenario is simply priorities. You find $80/mo for lawn service to be a bare necessity. You find $165/mo for restaurants a bare necessity. You find 3G service for an Ipad (which you couldn't afford in the first place as evidenced by the credit card debit) a bare necessity. Remember, you said you already cut this budget down to the minimum.

Simply put, your income does not support the luxuries that you want to enjoy. By that, I mean it's time to get serious and CUT the expenditures that are hampering your situation. Vacations? Gone. Pets? Gone. Electronic upgrades? Gone. Dining out? Gone. If you don't make these sacrifices now, you will find yourself in a world of hurt soon. You have a minimal amount of savings that will propel you through the next couple of months if you choose to ignore this advice. But eventually that will evaporate. Then you'll tap the amount that you are paying to credit cards. And those balances will go up. And you'll dig a deeper hole than you are in now.

I could sit here and tell you to sell the rental, refinance the rental, sell the collectibles, transfer the 0% CC debt, yada yada. But that will just free up cash that you spend on your next meal at a restaurant or next smartphone purchase. You'll inflate your lifestyle to counteract those temporarily found assets. Until something inside of you changes to realize the choices you have made and are still making simply aren't supported, you are doomed to keep spending and consuming.

You are at the proverbial fork in the road. Either you and your wife get serious and make the hard choices now to have a comfortable future, or you continue to limp along at the edge of your income.

When you make the choice to dig your way out (you rework this budget to show a positive cash flow by cutting the BS expenses), I'll show you how to keep the rental, contribute to retirement, contribute to savings accounts, add life insurance for your wife, and be able to afford the finer things of life legitimately.

(I fully expect to get flamed for this, but $80 because we can't mow our own lawns and we are $350/mo in deficit? Really!?)

SJ: Why would anyone flame you for what you said? All the other posters essentially said the same thing too, and addressed those issues. You just happened to say it again, and with emphasis. I agree...they're spending a lot of money on non-essential, totally frivolous stuff, and need to quit that spending, ASAP.

I'd like to address a more important psychological issue. It sounds as if you and your wife aren't really working as full partners financially right now. She had no idea about the extent of her student loans. You had to "tell her" you can't have kids for a while, which upset her. This reads as though she is taking a very passive role when it comes to finances, and you are happy to be in charge--but ultimately it's leading to conflict. (Does she even know you posted here?) You guys need to sit down for a series of joint discussions in which you set SHARED goals and determine TOGETHER how to reach them. It's hard enough to get out of debt if your partner is on the same page with you. It'll be a nightmare if you can't act together. But that requires your ceding some control and her stepping up to accept some.

Just one quick comment. I noticed that you have a $100,000 30-year policy spending $22/mo. and the wife can't afford any policy at all, so why don't you switch around some #'s to make you both be able to have a policy; if $22 is the most you want to spend per month on life ins., such as drop the 30 year policy to 10 years, and now the monthly cost drops by $10, then sign up the wife for an $11/mo. 10-year policy too; then at the end of 10 years if you still want a policy, buy one at that time. You aren't locking in a significantly lower rate by buying a 30 year policy.

JNEW: Non-Home Debt Service of $2,318.60 is the total of the monthly student loan debt ($700.60) and the credit card debt ($1,618.00)

Poster has fairly cheap mortgage cost for himself and wife but why have a rental house with negative cash flow?

First of all, as long as your expenses on your rental home cost more than rent it's not an investment. It's a money pit. I think you either need to raise the rent to at least cover your expenses or sell it.
Also, I would suggest that your wife call her student loan manager and find out if there is a way to lower her monthly bills. Once you've paid off your credit card you can go back to paying it to play catch up.
One more thing, as long as you're in the red you can't eat out, including fast food. It's cheaper to eat dinner at home and there is food you can take to eat for work days even if you have a long commute. Your grocery bill might go up a bit but not as much as your entire food bill go down. If you have to eat out for lunch meetings leave it at that.

First, I want to say that I don't think in youre in dire straits. You're both employed and if you cut out the stuff people have identified (as noted above) you guys are going to be fine! YOU have a solid financial foundation and determination and I think you can do alright.

Sarah posted that you need to sit down and partner with your wife. I think she's spot on here. I think you're right to suggest waiting on kids for a bit, but rather than making an indefinite "We can't afford kids" (stress the wife, stress the marriage) maybe it would be beneficial to sit down with your wife and redefine your marriage goals TOGETHER. Not to say you don't include her already but making a plan together makes it easy for both of you to ask when spending decisions/saving decisions come up "Does this align with OUR Plan?" and then nobody has to be the money police.

So, for example, you tell her how you have trouble sleeping at night because you worry about the credit cards. You know they're evil. She already brought in a lot of student loan debt. You tell her how good it felt to be debt free. You make that a marriage priority because its so important to you.

Then she says she wants kids, and maybe she plans to work part-time or stay home. So then the next goal on your list is "Be able to thrive on one income so my wife can stay home with our children" and you guys work out what that financial plan would have to look like.

Thus, when you're going crazy this year saving EVERYTHING she makes (and some of what you make because you know kids are going to cost some more than youre already spending) you can plunk it all to that credit card and student loan debt and knock those suckers out. Once the debt is gone and the two of you are thriving on one income, she can work on getting pregnant and stay home with the kids.

Then you can sit down and redefine your next 5 years of goals. I hope that's helpful. My husband and I regularly work to keep one another in check and remind each other about whether stuff fits into our goals, helps our assets grow, and ask whether even the small purchases are worth delaying the big goals which is what we've stated we truly want. Since we're both really invested in the long-term plan, it makes the day to day finances less stressful.

Best of luck! (Keep your chin up, I don't think you're doing that bad! I think you're just being hard on yourself. We've all made silly financial choices even when we knew better- trust me)
Jenny

I'd like to add on to what Sarah and Jenny are saying.

Sarah: You + wife aren't working as full partners financially, and your wife is upset you can't have kids for awhile.

Jenny: Next goal on your list could be Thrive on one income so she can stay home with the kids.

Going further, it's not just that you and your wife aren't on the same page financially. Your wife may not be taking any responsibility on herself to do something about it, and seeing it as entirely your burden.

It's her debt. She's also the one pushing for kids sooner than later. How is she stepping up to handle the situation?

You can definitely contribute toward it, but your wife should be taking a much bigger role in figuring out how to pay down her student loans and making the necessary tradeoffs (giving up wants, finding ways to cut costs, and finding ways to earn more).

I agree with Apex in that you have created your own crisis in needing to pay the credit card off by May 2014. I'd suggest dropping the payment (to approximately $1200) so you balance your budget and using the emergency fund or sell some stocks now while the market's high to have money to pay off the bulk of the debt in April 2014. Then after that's paid off you'd have $1000+ a month to replenish with an additional few hundred from many of the suggestions here to beef up again. This should give you some breathing room. Keep in mind your cuts are not, truly, draconian. You are not down to beans and rice yet.

I also agree with those that say you're rental is a money pit and unless it's got greater potential in the near term you'd likely be better off without it.

I really feel for you if your wife isn't wanting to get on board. It sounds like she went from having her parents deal with her major financial issues to having you deal with them. If that is the case she's never really faced her issues head on, and is likely to do everything in the book to resist your efforts to include her in the financial planning. Keep working on it, there are books that can help, until you get something that you can both live with. It only took me twenty years or so to work something out my wife and I can live with and it still gives me headaches :-)

Finally, if you share your wife's goal of having children please keep in mind that very few balance sheets will make you comfortable with the financial numbers unless projected to when you are 50 years old. Yet many manage this much sooner. I would offer that once the credit card bill is paid off, and you have settled the budget a bit, you guys pick something, like X dollars in the emergency fund as the target to start having kids. I would suggest something you could expect to accomplish by late 2014 or early 2015. As already suggested this could be a practical positive in getting the wife on board.

In the end your money should be your means of meeting your goals. Not the goal itself.

Best of luck.

Hi,
Check into loan forgiveness/cancellation for teachers. My friend successfully did it. This is our NJ website but maybe it has some federal sites to check. Good luck!


http://www.state.nj.us/education/educators/rpr/preparation/aidandloans/

Don't wait to have kids. You're never ready, fertility treatments because you waited are expensive, and they don't always work. Also, divorce is expensive and your wife wants kids. Don't wait to have kids.

First, thank you all for taking an interest in our situation and providing constructive feedback. Here are some follow-up comments

@Bob

Cutting the restaurant budget is difficult, but do-able. However because it is food, we will probably need to take that $91 and add some portion of it into either into groceries or fast food (in some cases, fast food is cheaper than the grocery store for just the two of us). On the vacations, we are reluctant to cut it all together because we think vacationing now when we are child-free is actually cheaper than putting those trips off when we have kids. We figure we would stay closer to home after having children, but get the bigger more exciting/expensive trips out of the way now in a cost savings strategy.

@BJ

The only lawn service we have right now is 6 weed & feed applications by Scott's lawn service at both my home and the rental home. I do all the grass cutting myself. In past years, I tried to do my own weed & feed, but it was not effective. Scott's service includes unlimited/free call-backs. The Scott's service works better than when I did it myself and if I got rid of this service, I'd have to increase my budget elsewhere to include the cost of buying the chemicals that are otherwise included in Scott's Lawn Service's price.

For pest service, we use Ready Pest. We had a box elder bug infestation where I was killing about 50 bugs per day instead the house. The service was extremely effective to the point that now I only see 1 or 2 bugs in a month. They mentioned that the best way to treat box elder bugs is to treat the exterior of the house as a preventative measure because once they get inside, it's nearly impossible to solve the problem immediately. I tried spraying the side of my house down with soapy water, but it was not effective. The service also covers other sporadic issues like wasp's, mice, etc. The cost of chemicals is included in the price I pay.

Regarding gifts, it's mainly the monthly average cost (spread out even over 12 months) for Christmas gifts to our close family and birthday's for children (a card with some money). It comes to about $300 total and that includes birthday/anniversary gifts to my wife and I between each other. Is this something you really think we should eliminate all together?

Clothing we can cut a little (we already buy at the thrift shop), but a good chunk of that goes towards shoe's. I buy 1 professional pair of shoes for work and 1 pair for at home and need to replace both pairs about once a year on average. I haven't found shoes that last multiple years or come with a warranty, so if you know of any, let me know. On average, we're spending $150/year per person for both shoes and clothing.

@MC

Your comments do make sense, but we already do own our home and rental home. So, any strategic advice on how to deal with that and relocating would be appreciated. To further complicate things, my wife is a public school teacher and she’s 3 years into the 5 she needs to earn tenure. If we leave, she not only loses the progress towards tenure, but she may lose the progress she has on partial debt forgiveness (about $5k) for teaching in a low income school. She is also only licensed to teach in 1 state and obtaining additional licensing would require spending another $5k out of pocket to take more required courses to be licensed in our home state (we live right on the border between two states).

@Margo

Collectibles/Physical Investments represents precious metals stored offsite in a hidden location – about half silver and half gold. It’s my insurance policy against inflation, so I’m not comfortable selling it to pay down debt (just my personal decision). Regarding tutoring - maybe. She teaches elementary education and most parents in our area are poor (like a mini-Detroit) and have enough knowledge themselves to teach their own children the elementary school basics.

@Dom
The rental house is cash flow negative (because a portion of my 15-yr mortgage expense goes toward principle), but profitable. It’s actually cash flow positive when there are no repair issues and non-vacant too. The current tenant is unemployed on section 8 housing; to earn $552/mo I’m required to include the water bill (which also includes trash and fire prevention fee). If I do not include the bill, rent drops by $60 AND I’m still on the hook for the bill if the tenant refused or couldn’t pay it because it gets added to my property tax bill. It seems like a no brainer to include the water bill with the cost of rent. Also, the rent by law cannot be increased to this specific tenant. I can get a non-section 8 tenant and charge more (like I did before), but that was a worse experience because that tenant broke the lease and moved out resulting in vacancy and non-payment of rent. Section 8 is guaranteed government income. All in all, I think the rental helps my situation.

@Paul
We don’t actually have lawn service, but rather just somebody to fertilize 6x a year which costs only slightly more than if I bought all the supplies and did it myself. I cut all my own grass.

@No Waste
Regarding the cell phone bill, it’s the Verizon Shared Plan. We went with that option because it’s the only company that offers LTE (4g) service in my area. It includes service on our 2 iPhone 5’s and one iPad2. The cost breaks out as follows:

$40 iPhone 5
$40 iPhone 5
$10 iPad 2 (3g service)
$80 6GB of shared data
$? Taxes/fees/surcharges

I’m locked into a 2 year contract and the only way to save any money on this plan is drop the $10/month charge for the iPad. I previously had:

$25/month+tax/fees Android 300 minutes, unlimited data – Virgin Mobile
$45/month+tax/fees Blackberry 400 minutes, unlimited data – Virgin Mobile
$30/month+tax/fees iPad2 2GB Data – Verizon

The phones were terrible as was the service; you get what you pay for. What I have now is more expensive, but a much better experience.

KW, I would recommend re-reading all of the posts and your responses. As an outsider looking in, I think your responses are a whole bunch of excuses. (Sorry to be blunt).

A few of your responses really irritated me and suggest you're not serious about any of this.

@ @Bob: You can't afford $250 per month for vacations. Re-read your sentence, "...get the bigger more exciting/expensive trips out of the way now [is] a cost savings strategy." If that doesn't sound ridiculous to you, you need to read it again. With that attitude you're not going to have much success in turning this around.

@ @BJ: You seem to think that weed control in your yard is a bare necessity. That's also crazy. Most homes in the U.S. don't have this service (um, because they can't afford it). Drop the weed and feed service for now. Or do it yourself.

@ @Margo: Do you think inflation is out-pacing the interest rates on your debt? Is this a decision you and your wife agree on? (It sure sounds like the finances are not a discussion, but are your decisions). If you absolutely won't sell these then you need to sell your stocks. Today. The market is good.

@ @No Waste: You are mistaken about your Verizon contract. You can switch around the amount of shared data at any point without affecting your contract. Look at how much data you really need. 6 GB is a lot. WiFi is everywhere now. You should be able to drop that $20-30. Look above at how many people said you can't afford the iPad 3G. I completely agree. You can't afford it.

Again, I suggest re-reading all of the helpful posts above and seriously re-evaluating your responses. Try to look at it from the point of view of an outsider. Get your wife involved. You're really not that far off. Get the debt under control and you can have kids and your vacation budget back too. Good luck!

Oh, and I agree that your life insurance premiums are too high (unless there are health issues).

I almost stopped reading after your first few excuses. "...vacationing now when we are child-free is actually cheaper than putting those trips off when we have kids." Yeah except YOU CAN'T AFFORD IT NOW. From your post I thought you were serious about wanting to reach financial independence but like others have said, you may have a deeper issue.

There is still a lot of room for you both to be making cuts and although some may seem like small cuts - they DO add up. The two "smaller" cuts that stood out to me were the vacationing budget and eating out. Cooking at home can be WAY cheaper than eating fast food.

If you aren't ready to make these changes then unfortunately I think you are going to have to hit rock bottom to see things for how they really are.

I don't mean to sound super negative - but if you read what everyone is saying - you CAN get out of all this debt but you have to be willing to realize you are living way above your means.

I would say your current phone and data bill is a much, much worse experience for your finances.

Figure out how much data you actually NEED. Not how much you currently use. Get the iPhones unlocked and sell them. They will generate way more than enough money to pay your ETF. Drop the iPad data plan. Pick up GSM-based, cheap and simple phones. The goal is communication, not mobile entertainment. Sign up with a prepaid MVNO (Ptel or Airvoice recommended). Save yourself at least $130 per month. See more here: http://www.techmeshugana.com/2013/01/are-iphones-worth-it/

Improving your financial situation is impossible if you're unwilling to actually change anything.

Yeah, this is kind of sad to read.

For someone who claims to be financially educated, it sadly appears as if you have no clue. You seem to be stuck in the cycle of "must have stuff" and justifying this stuff.

Taking vacations isn't your birth right. Having a 4G cell phone isn't a birth right. Eating at restaurants isn't a birth right. These are luxuries, plain and simple. People who do and have these things should be able to afford them. You can't. Simple as that.

@Angela,

My wife's student loans are both public and private. I'm not sure they could be eligible for income based repayment because our combined income is above $90k annually (gross). The funny thing is that I believe she would become eligible for income based repayment if we were not married, but she's not willing to divorce for just financial reasons. Do you have some information for me on how to verify if she qualifies for total loan forgiveness after working 10 years in a public school? If that is the case, would you recommend trying to defer these loan payments and let the student loan debt grow (accumulated interest) while we pay down other loans?

@Apex & KTB

My worry with cutting the lawn service is that my lawn is being taken over with weeds without it. Isn't doing something about my weed problem today cheaper than having to re-seed the entire lawn later? I personally do not care if the lawn has some weeds, but I'm worried that it's going to kill the resale value of my home when I do move (perhaps sometime in the next 2-4 years). Doing it myself is what I have been doing, but for whatever reason it's not really effective and it's not that much cheaper.

@Jim & Tim

The housing allowance is not a real out of pocket expense each month, but rather my estimate of how much I need to be putting away. The roof on the rental house is near the end of it's useful life and that's going to be very expensive. My $20/mo insurance for $100k coverage is TERM (not whole life). It might be high because it's valid for 30 years - I wanted to lock in a low price when I was still young. At the time, my cholesterol was high and I was about 20 lbs overweight. Now, I'm 100 lbs overweight just 4 years later (last year I was 130 lbs overweight, so I'm headed in the right direction). Changing insurance now would be more expensive, not less. I do have another $100k worth of coverage through my employer as a benefit (no cost to me), so that gives me $200k total coverage, but of course that coverage is gone when I change jobs. My plan is to continue losing weight so I can get a better policy in the future. My wife does have a pension (in theory), but I doubt it will be there to collect in 40 years from the State of Illinois. I also do not know if she can still get her pension if she quits before retirement (trigged by a geographical relocation for my job).

@JNEW

I can't do anything about the property tax rate. I have challenged my home's assessment (for both the rental and my personal home), but with little success. My assessment is about $15k too high on the personal home and $10k too high on the rental home. Unfortunately, it is not over assessed enough to appeal a decision to the court system and pay the related legal bills, as there is no guarantee of success and my legal bills would likely exceed any savings if I was successful. According to Zillow, my rental property is appreciating ever so slightly - but that's because I got it for so cheap ($27k). My main home is depreciating even in today's mini-rebound of housing prices. I bought it for $111k. It's assessed at $117k. It's current value is around $102k per Zillow. The house next to me has been for sale sometime now for $89k and there's no offers yet.


@Jennifer

I'm in a 2 year contract, so changing cell phone providers is not an option right now. Additionally, there are no other choices to switch to that offer a decent data plan for my geographical area. the pest and lawn care is something I DID try to do myself and failed miserably. It just didn't work out. I don't think I'd save any money from cutting the fast food budget being only 2 people in a household. For example, 2 or 3 items off the dollar menu @ McDonald's is hard to beat when you buy all the supplies needed to make sandwiches yourself at the grocery store.

@SJ

Yes, we will have to cut the vacations. On the pet budget, I choose to not get rid of our cats - it's just not negotiable for me and they're not all t hat expensive anyway. We don't take them to the vet or anything and they are perfectly healthy. The real cost driver in that "pet expense" category is chicken feed. Right now they are too young to produce eggs, but in a few months we should be getting some eggs out of them and that will help drop our food budget...so I don't want to stop buying chicken feed for them because they would starve to death (and I wouldn't get any eggs).

@Sarah & Jenny & Margo &getagrip & Carl

You're right. This is causing marriage conflict. I plan to sit down with her and go over all these comments in the very near future. We did jointly sit down a month ago to come up with our budget (listed above in this posting), so now it's a matter of adding up my receipts to see where we actually came in relative to the budget. You may be shocked to know that before we created the above budget, our monthly deficit was ranging $1-2k per MONTH.

@KTB & Freedom Fighter

Yes, you're right on the vacations. I cut my data plan to 4GB this month, so I'll have to see if I can manage to stay within that range (down from 6GB, $10/mo savings). Last month we actually went over to 8GB, but that is because we cut our home Internet. I couldn't deal with that, so I added home Internet back on. The local wifi is only McDonalds or the Library. McDonalds wifi is way too slow to be useful and the library does not have very good hours considering our work schedules. I plan to drop the $10/mo iPad plan too. I'll look into a perpaid MVNO.

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