Family of 5, appx $300K HHI - would you do anything different?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Here are kids activity expenses which I guess you can tell me is crazy and you all don’t spend this much for kids activities.

Kid 1: $275/mo. swim, plus appx. $200 each fall and spring for rec sport. (May not continue swimming next year for interest reasons)
Kid 2: $275/mo. swim, plus appx. $1000 each fall & spring for travel sport (but seriously considering switching back to rec only next season for not being worth it for talent reasons)
Kid 3: $300/mo. dance; $160 mo. gymnastics

There is also an $50/mo. instrument rental for a kid.

So this is $16,320/year for kids' activities, *not* including camps. That is a lot. If you've got plenty of money then have fun, but if you're feeling the pinch like you say, then this is an easy place to cut back. If you take Kid 1 out of swim, Kid 2 out of travel, and Kid 3 picks a sport, that's a decent chunk of change that could be directed to 529s.

Once you get all of your numbers lined up, I would pause the mortgage pre-payment and use that $1600/month to pay off one or both cars and possibly your student loan. Then DH can go back to prepaying if he must (you shouldn't be doing this, but people who like to prepay their mortgages don't listen to reason) and you will have freed up ~$1k/month to use for other purposes.

It's irresponsible and indicates an overly simplified way of thinking to make blanket statements either for or against something like mortgage prepayment.

We paid our mortgage off well in advance when rates were above 5%. We also invested heavily in stocks. Popular advice was to also invest some portion of retirement or other investment savings into bonds, or bond funds, for "balance." A lot of advisors and regular people will simultaneously preach that mortgage prepayment is dumb, but holding some bonds for balance is a wise move.

I figured that it did not make a lot of sense to buy an index fund of bonds that were paying less than the interest rate of our mortgage. Prepaying our mortgage years ago is the hedge that, then and now, makes us comfortable with a 100% stock portfolio.

No one is quibbling about OP's bond position. They have two car loans and a student loan - all things that should be paid off before a mortgage. But if you thought I needed an example of people who prepay their mortgage not listening to reason, then thanks for the assist I guess.

Nice try, but no.

your comment was "but people who like to prepay their mortgages don't listen to reason".

That was not specific to OP's situation.

Actually, my comment was "you should not be doing this, but [line you truncated]". I was talking to OP about her and her husband's position. I also find you to be unreasonable and silly, but I didn't know you yet when I wrote that comment.

So you're dumb financially, and you can't write clearly. Got it.

That wasn’t OP though and let’s be real that I’m the dumb one financially in this convo. But you are all helping me!!!!

[Anonymous]

Anonymous wrote:OP again - everyone is being very helpful. What is a normal amount of cash to have in your bank checking? I probably have a higher amount (but dwindling). For example would you balk at $50K. What do you all have?

Common advice is to have 3-6 months of expenses as an "emergency fund." I haven't had this in years, though, since we have well over a million in non-retirement Vanguard index fund investments. Yes, they can drop in value, and they have in the past year or so, but they're still there in case of any emergency. In the mean time, they can earn some more money than a savings account.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Here are kids activity expenses which I guess you can tell me is crazy and you all don’t spend this much for kids activities.

Kid 1: $275/mo. swim, plus appx. $200 each fall and spring for rec sport. (May not continue swimming next year for interest reasons)
Kid 2: $275/mo. swim, plus appx. $1000 each fall & spring for travel sport (but seriously considering switching back to rec only next season for not being worth it for talent reasons)
Kid 3: $300/mo. dance; $160 mo. gymnastics

There is also an $50/mo. instrument rental for a kid.

So this is $16,320/year for kids' activities, *not* including camps. That is a lot. If you've got plenty of money then have fun, but if you're feeling the pinch like you say, then this is an easy place to cut back. If you take Kid 1 out of swim, Kid 2 out of travel, and Kid 3 picks a sport, that's a decent chunk of change that could be directed to 529s.

Once you get all of your numbers lined up, I would pause the mortgage pre-payment and use that $1600/month to pay off one or both cars and possibly your student loan. Then DH can go back to prepaying if he must (you shouldn't be doing this, but people who like to prepay their mortgages don't listen to reason) and you will have freed up ~$1k/month to use for other purposes.

It's irresponsible and indicates an overly simplified way of thinking to make blanket statements either for or against something like mortgage prepayment.

We paid our mortgage off well in advance when rates were above 5%. We also invested heavily in stocks. Popular advice was to also invest some portion of retirement or other investment savings into bonds, or bond funds, for "balance." A lot of advisors and regular people will simultaneously preach that mortgage prepayment is dumb, but holding some bonds for balance is a wise move.

I figured that it did not make a lot of sense to buy an index fund of bonds that were paying less than the interest rate of our mortgage. Prepaying our mortgage years ago is the hedge that, then and now, makes us comfortable with a 100% stock portfolio.

No one is quibbling about OP's bond position. They have two car loans and a student loan - all things that should be paid off before a mortgage. But if you thought I needed an example of people who prepay their mortgage not listening to reason, then thanks for the assist I guess.

Nice try, but no.

your comment was "but people who like to prepay their mortgages don't listen to reason".

That was not specific to OP's situation.

Actually, my comment was "you should not be doing this, but [line you truncated]". I was talking to OP about her and her husband's position. I also find you to be unreasonable and silly, but I didn't know you yet when I wrote that comment.

So you're dumb financially, and you can't write clearly. Got it.

That wasn’t OP though and let’s be real that I’m the dumb one financially in this convo. But you are all helping me!!!!

I know it wasn't you, OP. I'm the one who told you about the common thinking for emergency funds just now, and the one defending attacks against you for prepaying your mortgage.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Here are kids activity expenses which I guess you can tell me is crazy and you all don’t spend this much for kids activities.

Kid 1: $275/mo. swim, plus appx. $200 each fall and spring for rec sport. (May not continue swimming next year for interest reasons)
Kid 2: $275/mo. swim, plus appx. $1000 each fall & spring for travel sport (but seriously considering switching back to rec only next season for not being worth it for talent reasons)
Kid 3: $300/mo. dance; $160 mo. gymnastics

There is also an $50/mo. instrument rental for a kid.

So this is $16,320/year for kids' activities, *not* including camps. That is a lot. If you've got plenty of money then have fun, but if you're feeling the pinch like you say, then this is an easy place to cut back. If you take Kid 1 out of swim, Kid 2 out of travel, and Kid 3 picks a sport, that's a decent chunk of change that could be directed to 529s.

Once you get all of your numbers lined up, I would pause the mortgage pre-payment and use that $1600/month to pay off one or both cars and possibly your student loan. Then DH can go back to prepaying if he must (you shouldn't be doing this, but people who like to prepay their mortgages don't listen to reason) and you will have freed up ~$1k/month to use for other purposes.

It's irresponsible and indicates an overly simplified way of thinking to make blanket statements either for or against something like mortgage prepayment.

We paid our mortgage off well in advance when rates were above 5%. We also invested heavily in stocks. Popular advice was to also invest some portion of retirement or other investment savings into bonds, or bond funds, for "balance." A lot of advisors and regular people will simultaneously preach that mortgage prepayment is dumb, but holding some bonds for balance is a wise move.

I figured that it did not make a lot of sense to buy an index fund of bonds that were paying less than the interest rate of our mortgage. Prepaying our mortgage years ago is the hedge that, then and now, makes us comfortable with a 100% stock portfolio.

No one is quibbling about OP's bond position. They have two car loans and a student loan - all things that should be paid off before a mortgage. But if you thought I needed an example of people who prepay their mortgage not listening to reason, then thanks for the assist I guess.

Nice try, but no.

your comment was "but people who like to prepay their mortgages don't listen to reason".

That was not specific to OP's situation.

Actually, my comment was "you should not be doing this, but [line you truncated]". I was talking to OP about her and her husband's position. I also find you to be unreasonable and silly, but I didn't know you yet when I wrote that comment.

So you're dumb financially, and you can't write clearly. Got it.

That wasn’t OP though and let’s be real that I’m the dumb one financially in this convo. But you are all helping me!!!!

I know it wasn't you, OP. I'm the one who told you about the common thinking for emergency funds just now, and the one defending attacks against you for prepaying your mortgage.

OP is not prepaying her mortgage. Her husband is, for reasons she does not know, and she's indicated he doesn't even know what the interest rates are on all their debts while doing so. Given the actual facts and what's been written so far, "attacks" is pretty hyperbolic, just seems like a single hit dog is hollering in this thread and it's not OP.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Here are kids activity expenses which I guess you can tell me is crazy and you all don’t spend this much for kids activities.

Kid 1: $275/mo. swim, plus appx. $200 each fall and spring for rec sport. (May not continue swimming next year for interest reasons)
Kid 2: $275/mo. swim, plus appx. $1000 each fall & spring for travel sport (but seriously considering switching back to rec only next season for not being worth it for talent reasons)
Kid 3: $300/mo. dance; $160 mo. gymnastics

There is also an $50/mo. instrument rental for a kid.

So this is $16,320/year for kids' activities, *not* including camps. That is a lot. If you've got plenty of money then have fun, but if you're feeling the pinch like you say, then this is an easy place to cut back. If you take Kid 1 out of swim, Kid 2 out of travel, and Kid 3 picks a sport, that's a decent chunk of change that could be directed to 529s.

Once you get all of your numbers lined up, I would pause the mortgage pre-payment and use that $1600/month to pay off one or both cars and possibly your student loan. Then DH can go back to prepaying if he must (you shouldn't be doing this, but people who like to prepay their mortgages don't listen to reason) and you will have freed up ~$1k/month to use for other purposes.

Don't take the kids out of their activities but those activities seem very high, especially for swim except if they are on a high level swim team.

[Anonymous]

Anonymous wrote:OP again - everyone is being very helpful. What is a normal amount of cash to have in your bank checking? I probably have a higher amount (but dwindling). For example would you balk at $50K. What do you all have?

If you are averaging 50k in checking month in and month out, the whole premise of your initial post " I feel like we are hemorrhaging cash" is completely false.

That is not to say that you might not be able to better manage and track your expenses but with that amount on hand, you're not hemorrhaging - not even close.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP again - everyone is being very helpful. What is a normal amount of cash to have in your bank checking? I probably have a higher amount (but dwindling). For example would you balk at $50K. What do you all have?

If you are averaging 50k in checking month in and month out, the whole premise of your initial post " I feel like we are hemorrhaging cash" is completely false.

That is not to say that you might not be able to better manage and track your expenses but with that amount on hand, you're not hemorrhaging - not even close.

Well that’s what I meant by dwindling - it used to be more than that, fwiw. I meant hemorrhaging by flying out and not stopping and I’m trying to stop that. Everyone is helping me though !!! Thanks again

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Here are kids activity expenses which I guess you can tell me is crazy and you all don’t spend this much for kids activities.

Kid 1: $275/mo. swim, plus appx. $200 each fall and spring for rec sport. (May not continue swimming next year for interest reasons)
Kid 2: $275/mo. swim, plus appx. $1000 each fall & spring for travel sport (but seriously considering switching back to rec only next season for not being worth it for talent reasons)
Kid 3: $300/mo. dance; $160 mo. gymnastics

There is also an $50/mo. instrument rental for a kid.

So this is $16,320/year for kids' activities, *not* including camps. That is a lot. If you've got plenty of money then have fun, but if you're feeling the pinch like you say, then this is an easy place to cut back. If you take Kid 1 out of swim, Kid 2 out of travel, and Kid 3 picks a sport, that's a decent chunk of change that could be directed to 529s.

Once you get all of your numbers lined up, I would pause the mortgage pre-payment and use that $1600/month to pay off one or both cars and possibly your student loan. Then DH can go back to prepaying if he must (you shouldn't be doing this, but people who like to prepay their mortgages don't listen to reason) and you will have freed up ~$1k/month to use for other purposes.

Don't take the kids out of their activities but those activities seem very high, especially for swim except if they are on a high level swim team.

Ncap of course LOL

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP again - everyone is being very helpful. What is a normal amount of cash to have in your bank checking? I probably have a higher amount (but dwindling). For example would you balk at $50K. What do you all have?

If you are averaging 50k in checking month in and month out, the whole premise of your initial post " I feel like we are hemorrhaging cash" is completely false.

That is not to say that you might not be able to better manage and track your expenses but with that amount on hand, you're not hemorrhaging - not even close.

Well that’s what I meant by dwindling - it used to be more than that, fwiw. I meant hemorrhaging by flying out and not stopping and I’m trying to stop that. Everyone is helping me though !!! Thanks again

Ok, what was it a year ago? What is the rate at which it is decreasing over time that you think your "hemorrhaging"?

I don't think you're "hemorrhaging" if you have a consistent liquid 50k on hand in checking w/ a 300k HHI.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP again - everyone is being very helpful. What is a normal amount of cash to have in your bank checking? I probably have a higher amount (but dwindling). For example would you balk at $50K. What do you all have?

If you are averaging 50k in checking month in and month out, the whole premise of your initial post " I feel like we are hemorrhaging cash" is completely false.

That is not to say that you might not be able to better manage and track your expenses but with that amount on hand, you're not hemorrhaging - not even close.

Well that’s what I meant by dwindling - it used to be more than that, fwiw. I meant hemorrhaging by flying out and not stopping and I’m trying to stop that. Everyone is helping me though !!! Thanks again

I third the recommendation for YNAB. If your husband isn't comfortable with it for security reasons, set up a spreadsheet and track your spending that way. I've found it really, really helpful to be able to make better decisions about where I spend my money. For example, I'm also spending lot of money this year on kid activities, but since I am hitting my retirement and college savings targets, have a solid emergency fund, have home maintenance savings and savings for a new car in a couple of years, etc., I am comfortable doing it.

If your checking account balance is dropping (and you haven't just shifted the money to another savings account, etc.), then you are likely spending more than you are bringing in, so it's a great time to get more knowledgeable about your finances.

[Anonymous]

OP same income and 3 kids. We don’t have a mortgage or car payment though. I still feel like we spend a lot each month and don’t live extravagantly. Life is just expensive. We cut out a cleaning person regularly, and just randomly have someone clean maybe 4 times a year. We also really try to limit takeout/restaurants, and try to make use of all the food in our house before going back to grocery store. We also cut out fancy gym memberships. I think these three things alone have saved us $1k a month.

[Anonymous]

have you watched the new netflix show, "How to Get Rich" on Netflix yet? It's actually very helpful to start a conversation about financial strategies and priorities, discussions with spouses, and get a sense of how to allocate/reallocate funds. (My finance-averse partner and I watched some this weekend, and it was actually fun--and very helpful motivation to get thinking clearly about some of the questions you are asking.)

[Anonymous]

Here are the interests rates:

Car and mortgage appx 3%
Student loans appx 6%

I said why don’t we pay off my student loan at 6% rather than mortgage at 3%? And fwiw, he said it’s because it’s $30K (student loans) vs $150K (mortgage).

And then he said I should start by learning my logins for all of my various accounts. I said I would take it under consideration.

[Anonymous]

Anonymous wrote:Here are the interests rates:

Car and mortgage appx 3%
Student loans appx 6%

I said why don’t we pay off my student loan at 6% rather than mortgage at 3%? And fwiw, he said it’s because it’s $30K (student loans) vs $150K (mortgage).

And then he said I should start by learning my logins for all of my various accounts. I said I would take it under consideration.

The balance answer isn't terribly logical. (And I'm good with prepaying mortgage in most cases.) Mathematically, you'd pay the higher interest rate. Behaviorally -- the Dave Ramsey philosphy -- you would pay the lowest balance to eliminate something and get a mental win. In either school of thought, that points to the student loans.

You're making progress, though, so good job.

Now figure out at least how much is going into retirement investments every month, between the two of you. And, if you can, where (what kind of investments) and what's the balance?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP again - everyone is being very helpful. What is a normal amount of cash to have in your bank checking? I probably have a higher amount (but dwindling). For example would you balk at $50K. What do you all have?

If you are averaging 50k in checking month in and month out, the whole premise of your initial post " I feel like we are hemorrhaging cash" is completely false.

That is not to say that you might not be able to better manage and track your expenses but with that amount on hand, you're not hemorrhaging - not even close.

Well that’s what I meant by dwindling - it used to be more than that, fwiw. I meant hemorrhaging by flying out and not stopping and I’m trying to stop that. Everyone is helping me though !!! Thanks again

Ok, what was it a year ago? What is the rate at which it is decreasing over time that you think your "hemorrhaging"?

I don't think you're "hemorrhaging" if you have a consistent liquid 50k on hand in checking w/ a 300k HHI.

$36K more a year ago which is what I am trying to get a handle on. I guess $15K of that went to the house repairs noted.