$155K HHI and broke - any tips?

[Anonymous]

Anonymous wrote:No groceries?

Yeah, the fact that groceries didn't come up in the original post or the two follow ups tells me the big sinkhole is food: eaten out.

[Anonymous]

1. Cell phones - switch to cheaper ones
2. Credit card - pay off ASAP

The Childcare line item is painful but we all go through it and it will come to an end, as will the diapers expense. Hopefully your kids will go to public school. Your $2500/month for the mortgage will look great if it gets you into good schools.

[Anonymous]

Dude, change your witholdings. I have the same HHI and take home is around $9K (and I contribute 10% to 401k).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We have $155K HHI and we are broke. I need advice - maybe I can cut spending somehow? Here are some of our bills:

$2500 - mortgage
$1600 - childcare
$450 - 2 cars
$45 - internet (no cable here)
$200 - 2 cell phones (no land line)


I should have added:

$725 - student loans

and

$350 - elec, gas, water/sewer, trash collection
$100 - life insurance
$80 - car insurance
$200 - credit cards ($5K)
$80 - diapers, wipes, paper goods
$120 - work parking

This is very bad. I would pay this down before you do anything else. If you save 150 on your cellphones you should put the extra into paying down your credit card. What rate are you paying on it? Any chance you could get a HELOC to pay it down? Interest rates are extremely low, e.g. 2.5 with penfed for 5 yrs.
Can you refinance your student loans? What rate are you paying on them?
What life insurance do you have? You should just have one 10-year and one-20 year term for an appropriate amount (e.g. 500k each).
personally I would lose the gym and take up cycling or some other form of exercise like body weights that you can do at home, at least till you have dealt with the credit card debt.
1600 seems a little high for childcare - have you looked into cheaper options?
I get your foot problems, but why do you need two cars?

I agree with this poster, OP. We are in a similar boat income and expense-wise and our CC debt is what's killing us. A lot of that debt was racked up through emergency home repairs that also depleted our savings (damned insurance NEVER pays out enough to cover things). I used my bonus to pay off a big chunk but we have a long way to go. We are paying WAY more than the minimums each month, and as other things like student loans and smaller CC balances are paid off that money gets rolled into the next card, starting with the highest interest rates first. Once we get these paid way down, sell our home and move to a lower COL area, I think we will finally be in a much better position. We'll have enough in equity to pay for the move, a down payment, pay the CC's way down AND have some left over in savings and/or to put into a brokerage account so we can build liquid wealth as a cushion. Once we get there, we are NEVER racking those damned CC up again!

[Anonymous]

^^By the way, I should add that we have worked up a VERY strict household budget that we follow religiously. We allow only $100 per month for eating out, which basically covers unexpected times when we are caught with hungry kids, the commute is much longer than expected, somebody has to stay late at work, etc. We also have limits on things like dry cleaning (major money suck) and CVS (no darting in for this and that constantly). Discipline is what's working for us. Good luck, OP.

[Anonymous]

Anonymous wrote:Here's what I did last year:

Pay off the cars, it'll free up a large amount of cash. Your problem seems to be cash flow more than income per se.
Hulu - no cable
Does your office offer a work cell phone? Ditch the personal one
Lose the gym. Go for a jog.
Thermostat programmable .. worthy investment
reuse tampons (just kidding)

lol!

[Anonymous]

Anonymous wrote:You are just guessing at your bills. Register with mint.com or YNAB (google it) and tie your accounts to it. It will log every transaction which can then be categorized (it does most of that automatically -- Safeway = groceries, etc.). After a month you will see places where you can lower expenses. Then tackle everything like insurance, cell phone plans, extra monthly draws that you have on your account that you really weren't thinking about (fee for on-line banking for example, subscription to Angies list, or Tivo, stuff like that). Lower your standing bills, and then reduce your discretionary expenses by buying cheaper or postponing gratification.

See if you can lower your student loan payments if they are Federal loans through the program that ties the payments to your income. GL!

Another vote for mint.com - when we went to one income, it was the only way to really track our expenses, and also get both of us on the same page (literally) to see exactly where every penny went. It's worth spending your weekend getting this set up and start to really see where expenses go. It also has a bill reminder feature so you can set up your repeating monthly expenses; it's a great way to look ahead and see what has to get paid out of the next paycheck, so you can more closely monitor cashflow.

Also, as another PP suggested, check your tax withholdings. Did you owe any taxes for 2012? Did you get a refund? If the latter, then you definitely need to adjust withholdings. Use the IRS W-4 calculator to try and get a read on your 2013 tax liability. Now's a good time to do this as you're partly through the year and have time to see a real difference from withholdings, both federal and state.

[Anonymous]

Anonymous wrote:

Anonymous wrote:No groceries?

Yeah, the fact that groceries didn't come up in the original post or the two follow ups tells me the big sinkhole is food: eaten out.

No, I cook everyday and we eat frugally, like lots of beans and rice and pasta and foods from ethnic groceries. And maybe pizza 1x/week.

But I (OP) do really appreciate everyone's suggestions. I am going to think hard about them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You are just guessing at your bills. Register with mint.com or YNAB (google it) and tie your accounts to it. It will log every transaction which can then be categorized (it does most of that automatically -- Safeway = groceries, etc.). After a month you will see places where you can lower expenses. Then tackle everything like insurance, cell phone plans, extra monthly draws that you have on your account that you really weren't thinking about (fee for on-line banking for example, subscription to Angies list, or Tivo, stuff like that). Lower your standing bills, and then reduce your discretionary expenses by buying cheaper or postponing gratification.

See if you can lower your student loan payments if they are Federal loans through the program that ties the payments to your income. GL!

Another vote for mint.com - when we went to one income, it was the only way to really track our expenses, and also get both of us on the same page (literally) to see exactly where every penny went. It's worth spending your weekend getting this set up and start to really see where expenses go. It also has a bill reminder feature so you can set up your repeating monthly expenses; it's a great way to look ahead and see what has to get paid out of the next paycheck, so you can more closely monitor cashflow.

Also, as another PP suggested, check your tax withholdings. Did you owe any taxes for 2012? Did you get a refund? If the latter, then you definitely need to adjust withholdings. Use the IRS W-4 calculator to try and get a read on your 2013 tax liability. Now's a good time to do this as you're partly through the year and have time to see a real difference from withholdings, both federal and state.

I meant to do mint.com like 3 years ago. I am definitely going to try that!

As for taxes, we cannot lower our withholding.

[Anonymous]

Losing the gym is easy. It's a luxury.
The cell phone plan is way too high. We have four phones on ours and pay only $100. That's $200 right there.

The car with free gas is worth it I guess, but only because you'd have to pay out to get a replacement. One of my family's worst line items is gas because our Acura MDX is the suck on gas mileage -- but we barely spend $200 per month. The second car payment has to go. It was a big mistake to take on debt for it. Sell it and buy a used Honda or Toyota with >70K miles. You will probably be able to find one for less than $5K, it will be reliable, the maintenance is cheap, and you can reduce your insurance coverage because you don't need comprehensive on the POS you're going to be driving.

Are both of you working or just one? Because if only one spouse is working and he uses the company car and also pays $120 for parking, then it's not worth it. He can get up earlier and take public transportation and save you $320/month. Add that to the $250 once you get rid of the car loan and $200 from your cell phone and gym membership and you've got nearly $800 extra per month.

[Anonymous]

^^which you should use to pay of your credit cards ASAP.

[Anonymous]

Quit the gym, work out at home/walk/jog
Eat less meat
Don't eat out, plan your meals, brown bag your lunch
Don't drink alcohol (expensive)
Don't use your credit card anymore if you can help it.
Use the library
Don't spend more money for gifts for people.
Be careful of little things, they add up- magazines, toys for kids, etc.
Good luck

[Anonymous]

Anonymous wrote:Losing the gym is easy. It's a luxury.
The cell phone plan is way too high. We have four phones on ours and pay only $100. That's $200 right there.

The car with free gas is worth it I guess, but only because you'd have to pay out to get a replacement. One of my family's worst line items is gas because our Acura MDX is the suck on gas mileage -- but we barely spend $200 per month. The second car payment has to go. It was a big mistake to take on debt for it. Sell it and buy a used Honda or Toyota with >70K miles. You will probably be able to find one for less than $5K, it will be reliable, the maintenance is cheap, and you can reduce your insurance coverage because you don't need comprehensive on the POS you're going to be driving.

Are both of you working or just one? Because if only one spouse is working and he uses the company car and also pays $120 for parking, then it's not worth it. He can get up earlier and take public transportation and save you $320/month. Add that to the $250 once you get rid of the car loan and $200 from your cell phone and gym membership and you've got nearly $800 extra per month.

Please everyone tell me about your phone plans! What company?

[Anonymous]

Anonymous wrote:As for taxes, we cannot lower our withholding.

Then I don't understand why your take home is so low for $155K (with kids and a mortgage). What am I missing?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Losing the gym is easy. It's a luxury.
The cell phone plan is way too high. We have four phones on ours and pay only $100. That's $200 right there.

The car with free gas is worth it I guess, but only because you'd have to pay out to get a replacement. One of my family's worst line items is gas because our Acura MDX is the suck on gas mileage -- but we barely spend $200 per month. The second car payment has to go. It was a big mistake to take on debt for it. Sell it and buy a used Honda or Toyota with >70K miles. You will probably be able to find one for less than $5K, it will be reliable, the maintenance is cheap, and you can reduce your insurance coverage because you don't need comprehensive on the POS you're going to be driving.

Are both of you working or just one? Because if only one spouse is working and he uses the company car and also pays $120 for parking, then it's not worth it. He can get up earlier and take public transportation and save you $320/month. Add that to the $250 once you get rid of the car loan and $200 from your cell phone and gym membership and you've got nearly $800 extra per month.

Please everyone tell me about your phone plans! What company?

AT&T
3 regular cell phones, no data, limited texts (200/month)
I'm not sure how many minutes--but we NEVER use them all.
We pay $80 something per month