Money Question that is related to Mortgage Question but a bit different

[Anonymous]

Anonymous wrote:I'm really hoping somebody can help me figure this out. If any of you do this work professionally, I am willing to pay for it.

Here it is: I make 125K. My wife juggles with the kids and a writing career and is in charge of all the bills. Her income varies greatly from day today, and I am not really able to figure out a number that represents her monthly income. It's not a ton of money. Let's say it's 25K a year, a lot of which is written off aggressively (and then some). We have a part-time nanny. She costs $300.00 a week. Our mortgage is 2K a month. 5% of each paycheck goes to 401K. $10K is earmarked for an FSA (health and dependent care). We lease a car for $250/month. We own another one outright. We share a gym membership (basically, we cheat) that costs around $75/month. My wife goes to a yoga studio for $30.00/month.

Other than that, I really have no idea where our money is going. We have cable. Basic cell service. We take one vacation a year (not lavish). We have a dog. We eat groceries, usually purchased at Safeway. We do not often go out for dinner/entertainment (less than 1x/2 months). We subscribe to Netflix.

Your fixed expenses don't sound outlandish for your income. It seems to me that whatever your wife is earning is basically covering the cost of the nanny and probably a few other "extravagances" but not much more?

My guess is that you are spending more on the variable expenses than you realize or intend. Most people do. Groceries for instance. If you aren't paying attention a family of 4 could easily spend $1200 or more a month on groceries. Paying some attention, shopping sales, that can easily come down to $900 a month. By being frugal, more like $750. Some black-belt tightwads can get it down to $400. Keep track for a month of what your wife spends on groceries alone, and then try to cut it back by something easy, like 10%. Ask her to save the reciepts when she shops, and ask her to put all the "grocery" items onto the checkout belt first (before putting "household items" like toilet paper and diapers on.. that way you can ask the clerk to subtotal the food items.

Another place people underestimate food costs is in eating out. You say you eat out only once or twice a month -- does that include your wife during the week? Does she eat lunches at home or ever take the kids to McDonalds? Do you eat lunch out at work? What about takeout? Do you guys order in once a week? Just keep track and see what you are really spending. The mantra is "No shame, no blame". You just want to see what you are spending.

Safeway is an expensive store, unless you shop the sales. I recommend shopping at Aldi's for basic groceries for people trying to save money.

Dogs can cost a lot for food and medical bills. Don't forget to include dog food and supplies in your monthly expenses.

[Anonymous]

OP back.

I have to say that the support on this board at times just stuns me. That so many would spend so much time and provide such good ideas to a stranger is really -- touching?

I went to mint.com. I downloaded our debit card account. Then the software threw bunch a back of stuff that made no sense to me. Literally, I thought my eyeballs were going to fall out.

I have never heard of Albis.

Here's what I think I wanna do: sit down with wife. Do a detailed spending log (write down everything spent and on what) for 2 months. Then look at how much wife brings in in that 2 months, divide by 2, and call it a paycheck. Then figure out how much is coming in, how much is going out, and where it is going.

To the PP who asked which is more important: a salon cut or an emergency fund: a big part of life is being able to live it. I appreciate that my wife has always taken care of herself. I guess I figure the emergency fund could be our credit card (that has a zero balance), or my parents. No good?

And no. I do not go out for lunch while at work. Maybe 4x a year. I bring food and eat at my desk.

I would like more feedback and would be happy to provide more information. I'm feeling psyched -- like I can do this. I'll make that mint.com make sense if I have to learn Chinese.

Again, this can really be a great community. Thank you very much!

[Anonymous]

OP - We earn twice what you do and I would consider her salon bill to be far out of our budget. If that's the luxury you two want, fine. I really don't think you are being "that guy" if you two find her a way to get a cut for $50. You aren't saying "buy a scissors," but rather, we are both unhappy with our spending and need to make changes.

[Anonymous]

Anonymous wrote:

To the PP who asked which is more important: a salon cut or an emergency fund: a big part of life is being able to live it. I appreciate that my wife has always taken care of herself. I guess I figure the emergency fund could be our credit card (that has a zero balance), or my parents. No good?

OP -- that was me. (I also wrote a later post.)

"No shame, no blame" is my motto. (And the motto from "Your Money or Your Life".)

http://www.yourmoneyoryourlife.org

What works for you guys, works for you. The key is to look realistically at what you are spending each month, and see if that aligns with your values. If you value organic food and natural living but find you are spending 25% of your food dollars on McDonalds takeout -- well - that is asign that your spending might not be in line with your values. Only a problem if you are saying that you can't afford organic food.

If you find that you can't afford even $100 a month for an emergency fund... I'd start looking at cutting back on some of the extravagances in your budget, however you define that to be. Yeah, credit cards are America's emergency fund... but... that's not a good position to be in.

[Anonymous]

Just wanted to pitch in: I make over twice as much as your household income is and take care of myself quite well...Still, my hair salon bill is about $200 every two months.

[Anonymous]

Wait a sec. Let's break this hair thing down. My wife goes to the salon about once every 8 weeks. She gets a cut, highlight, and some eyebrow and lip waxing (if I have that right) and with tip she spends 300. I have seen her through many stylists and have to say that she looks best by far with this one (and yes, I notice such things). Still too much? Where should I tell her to go?

[Anonymous]

Anonymous wrote:Just wanted to pitch in: I make over twice as much as your household income is and take care of myself quite well...Still, my hair salon bill is about $200 every two months.

Where do you go and what do you have done?

[Anonymous]

Anonymous wrote:Wait a sec. Let's break this hair thing down. My wife goes to the salon about once every 8 weeks. She gets a cut, highlight, and some eyebrow and lip waxing (if I have that right) and with tip she spends 300. I have seen her through many stylists and have to say that she looks best by far with this one (and yes, I notice such things). Still too much? Where should I tell her to go?

No, it's not too much. It's rather average to inexpensive comparably, for DC. If she is happy with how she looks going there, try to make it work.

My husband sounds a lot like your wife. I tried to figure out where the money was going so we tracked everything through debit/credit cards, and he kept track of his cash expenditures through the notes part of his cell phone. We spent a lot more on cash and crap than we thought.

[Anonymous]

Anonymous wrote:Wait a sec. Let's break this hair thing down. My wife goes to the salon about once every 8 weeks. She gets a cut, highlight, and some eyebrow and lip waxing (if I have that right) and with tip she spends 300. I have seen her through many stylists and have to say that she looks best by far with this one (and yes, I notice such things). Still too much? Where should I tell her to go?

I wouldn't tell her to go anywhere different. If she's happy and you are happy, that's great. Cut back on something else instead. Maybe look at clothing expenses.

Or don't cut back on anything. BUT -- you said that your wife was saying that you guys had to spend less money, she is stressed about money and how much you are spending. So at some point, you will have to decide -- do we want to cut back on spending money? Or do we want to keep spending as we are ... and keep the stressful feeling that we are spending too much?

Side note -- if you really like the place you get a haircut done, but want to spend less -- go every 10 weeks instead of every 8 weeks.

[Anonymous]

Really, really, your emergency fund needs to be cash. If God forbid you should lose your job, can you put 3-6 months living expenses on your credit card? You'd probably need to take a huge cash advance each month for bills, since most people can't pay their mortgage with a credit card. And if you change your patterns on your card, the bank may notice and change your terms, even cutting your limit (yes, they can do this).

When my husband was laid off from his $200K job this fall, we were so thankful our financial advisor had hammered us to have a cash emergency fund. We have friends whose fund shrunk by 40% because they had put it in the stock market. We were very lucky, and he was able to find a job that paid the same in ten weeks - but he has former co-workers who can't even get interviews months later.

Also, I understand you have difficulty getting life insurance, but that means it's doubly important that your wife has a good policy. What if God forbis something happens to both of you? You don't want to put your kids in that position.

I'd find a good Dave Ramsey or Suze Orman book and then have a sit down with your wife. Maybe the cash envelope system would be helpful for you guys.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Side note -- if you really like the place you get a haircut done, but want to spend less -- go every 10 weeks instead of every 8 weeks.

Assuming that she's covering gray, that may not be a solution she's interested in. Even waiting 8 weeks to do the waxing sounds like remarkable forbearance.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Side note -- if you really like the place you get a haircut done, but want to spend less -- go every 10 weeks instead of every 8 weeks.

Assuming that she's covering gray, that may not be a solution she's interested in. Even waiting 8 weeks to do the waxing sounds like remarkable forbearance.

Yeah, you're probably right. So just cut back somewhere else.

[Anonymous]

These are great ideas. I'll talk to her about stretching to 10 weeks.

About life insurance on my wife: I never thought about doing that, because her work is free-lance part-time and I therefore thought I wouldn't get a lot of "insurance" on her life -- financially speaking. Am I wrong about that? Because it may be something worth looking into.

If something happened to both of us, my sister will adopt them and probably take better care of them than we do. My parents would never walk away from them financially -- they would take care of it. These are not assumptions they are 100% guarantees, so I view it as life insurance, in a way. If my parents die before we both do, my sister won't have to split her inheritance, and she'll use that and whatever else she has (which is quite a bit) to raise them. She loves them.

I spent quite a few more hours on mint last night and I think I am started to get the hang of it. Actually, I'm starting to get really into it. I realized though that the budgeting software really wasn't going to work for us based on the limited information we had (downloaded our bank statement). So I asked her to write down everything she spends for the next 3 months and said I would do the same and then we could sit down and figure out how to build more wealth as a couple. She wanted to do it, too. So we both have our pads, and meanwhile I working the software when I can.

And thinking about priorities and having your spending reflect that. Who can argue with that? And yet it is so hard to do. We all want that car, that trip to Bermuda, the womenly stuff women do to feel good about themselves. But no, an emergency fund should come first. And we should have some savings beyond the 401K and the equity in the house (if that even counts).

Again, I am really appreciative of everyone's ideas. I wish I knew who you were so I could thank you personally, but that's something I'm not going to be able to do. Please know that you have made a difference here. I don't even mind when you give it to me straight and hard.

I wish I made more money.

[Anonymous]

Anonymous wrote:These are great ideas. I'll talk to her about stretching to 10 weeks.

About life insurance on my wife: I never thought about doing that, because her work is free-lance part-time and I therefore thought I wouldn't get a lot of "insurance" on her life -- financially speaking. Am I wrong about that? Because it may be something worth looking into.

If something happened to both of us, my sister will adopt them and probably take better care of them than we do. My parents would never walk away from them financially -- they would take care of it. These are not assumptions they are 100% guarantees, so I view it as life insurance, in a way. If my parents die before we both do, my sister won't have to split her inheritance, and she'll use that and whatever else she has (which is quite a bit) to raise them. She loves them.

I spent quite a few more hours on mint last night and I think I am started to get the hang of it. Actually, I'm starting to get really into it. I realized though that the budgeting software really wasn't going to work for us based on the limited information we had (downloaded our bank statement). So I asked her to write down everything she spends for the next 3 months and said I would do the same and then we could sit down and figure out how to build more wealth as a couple. She wanted to do it, too. So we both have our pads, and meanwhile I working the software when I can.

And thinking about priorities and having your spending reflect that. Who can argue with that? And yet it is so hard to do. We all want that car, that trip to Bermuda, the womenly stuff women do to feel good about themselves. But no, an emergency fund should come first. And we should have some savings beyond the 401K and the equity in the house (if that even counts).

Again, I am really appreciative of everyone's ideas. I wish I knew who you were so I could thank you personally, but that's something I'm not going to be able to do. Please know that you have made a difference here. I don't even mind when you give it to me straight and hard.

I wish I made more money.

hi. i suggested the mint idea, so i'm glad it's making more sense. it is really so easy for me to track spending using the site and it comes highly reviewed. the only thing that can't really be tracked is where the cash goes after atm withdrawals. remember to double check the "category" section of each transaction because occasionally it automatically categorizes things wrongly. but really, the first step is figuring out where the money is going and then deciding where to cut back i think. mint helps a lot, and is a lot more easier than busting out a calculator or having to buy software at the store.

[Anonymous]

also, you can add savings accounts, credit cards and loans to mint too... not just your checking account.