Ronstar
Moderator Emeritus
Nice breakdown. Really shows where cuts can be made. Rather than list my ideas for cuts, eyenitnoy ^^ (above post) has about the same ideas as I do.
Budget - How do you keep yours so low??
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I spend that in a year.
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I would say extra principal payments on the mortgage depend on the interest rate versus the alternative investments available. Mortgage prepayment is a zero risk, non taxable investment.
ivinsfan
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I think you know what the spending issues are and you literally typed I don't think we are prepared to fix it.What do you hope to gain from the replies to your post? Obviously your holiday/vacation spending is the first place to look. If you aren't willing to take a hard look at that number, there is no point in even asking for suggestions here. Also take a look at why you are spending. Your comment about your parents being gone..leading to the comment you don't want to sacrifice memories comes off as justifying some expenses that you know are excessive. You've somehow managed to spend 1800 a month on items that are 100% non essential. The choices are yours...
Most things are personal choice. For ex: I wash my own car and eat out at restaurants more.
The only thing that really stands out is your health insurance is outrageous. $35k per year for a family is way higher than even my family cobra payment when I was unemployed. Something is off there. You would do better with $1k per month premium and $20k deductible, so there has to be savings there. I would get an insurance broker or social worker who specializes in this to help you walk through it. Maybe a NY thing, but it just seems way out of line considering that you have additional copays also.
The only thing that really stands out is your health insurance is outrageous. $35k per year for a family is way higher than even my family cobra payment when I was unemployed. Something is off there. You would do better with $1k per month premium and $20k deductible, so there has to be savings there. I would get an insurance broker or social worker who specializes in this to help you walk through it. Maybe a NY thing, but it just seems way out of line considering that you have additional copays also.
Mark1
Full time employment: Posting here.
That is kind of what I'm thinking. If I add up the outflows it's ~$237,000/year. What kind of job(s) pay that kind of salary w/o some form of health insurance assistance (?). That seems kind of odd.
When you come to those spending situations, just remember that you might not always be able to work. You can't feel guilty about looking out for your future. You can always help others out later if you win the game.
5 people and an $18,900 deductible in the midwest is around $20K a year.
athena53
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I agree on the house although it sounds like the therapy pool and hot tubs are necessities and that may make downsizing difficult. I was also raised in a small house- it's been expanded and is now 2,200 square feet and 4 BR, 2 baths but when the 7 of us lived there it was 3 BR, one bath. We moved when I was 11 and it may have turned out to be unmanageable when we became teenagers!
Phone bill: I use Ting and my bill is under $20/month because I keep Cellular Data turned off and turn it on only when I need to be connected in an area with no Wi-Fi. $280 for 6 people sounds high.
Future car fund: that makes sense to me. It will save you from having to take on a massive 72-month car payment when replacement is needed.
Whole life insurance: I'd cash it in (if it has any cash value) and buy more term insurance, provided you can qualify for it with your medical condition.
And congratulations on taking a cold, hard look at your numbers. Few people (outside of this board!) do until they're in real trouble.
I agree with surewhitey on the monthly expenses. Go over them with a fine-toothed comb. They add up to hundreds of after-tax dollars in a year.
jollystomper
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While folks have given you individual suggestions, you seem to have many comments on the expenses along the lines of of "this is important to someone in the family so we do not want to cut it". I think you have to decide if boosting savings is more important than those type of expenses. You cannot have it all 
.
.
GenXguy
Thinks s/he gets paid by the post
LOL. Yeah, when I first started reading the OP, I was thinking "yearly" and thought that was pretty good. But then I quickly realized that was monthly!
Kudos to you for keeping a low budget. I can't even get mine below $20,000 if I was to remove all my discretionary spending!
Closet_Gamer
Thinks s/he gets paid by the post
You’re in the thick of it with four kids.
I understand and agree with the need to build memories/experiences but $1800/mo on holidays … that’s $21k/yr. Have to look hard at that. Particularly $600/kid for birthday. Cut that whole category by 1/3 and you get a 40% bump to savings.
Kill the whole life. Get term insurance. Put the reduced cost into savings.
Re-shop that cell phone plan and/or hold onto the phones for a LONG time once paid off.
Move the monthly massage into entertainment and see if you like that spend amount and the massage going there.
Move the mortgage extra payment into savings and see if that’s the best way to use that $185 from a savings perspective.
My $0.02.
I understand and agree with the need to build memories/experiences but $1800/mo on holidays … that’s $21k/yr. Have to look hard at that. Particularly $600/kid for birthday. Cut that whole category by 1/3 and you get a 40% bump to savings.
Kill the whole life. Get term insurance. Put the reduced cost into savings.
Re-shop that cell phone plan and/or hold onto the phones for a LONG time once paid off.
Move the monthly massage into entertainment and see if you like that spend amount and the massage going there.
Move the mortgage extra payment into savings and see if that’s the best way to use that $185 from a savings perspective.
My $0.02.
SecondCor521
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I'm going to echo what an earlier poster mentioned and that is to downsize your house.
We had a big house once, and what I noticed was how much a bigger house made a lot of expenses bigger. There was a bigger mortgage, which came with paying more interest. It was a more valuable house, so our property taxes were higher. I mowed my lawn, but that took more of my time away from my kids because it was both a larger area and we had fancy landscaping that required me to mow around more stuff and edge more stuff.
Bigger houses generally cost more in utilities - more square feet to heat in the winter and cool in the summer. They take more time to clean because you have more square feet to vacuum or dust.
Almost everyone can't resist filling their space to a certain level of fullness with stuff, so bigger houses mean more furniture and decorations which cost money to acquire and maintain.
Even my sprinkler blowout in the fall was more, because my sprinkler system had 8 valves and the basic blowout price only included up to six valves.
And of course repairs and maintenance cost more as well. Some people assert that people should budget 1% of the house value per year for this and I think that's probably in the ballpark. Carpet cleaning and replacement, painting, roofing, HVAC replacement, vent cleaning, etc. all are going to cost you more money or take more time.
Obviously with a large family and some with medical needs you may want or need a larger space than average. That being said, if I had a family your size I think you could get by in something in the 2500 to 3000 square foot range. If everything scales (and it does IME), that would cut your house budget by perhaps a third. And give you more time as well probably to spend with the family.
And a third of ~20% of your budget is cutting your overall expenses by 7% or so.
We had a big house once, and what I noticed was how much a bigger house made a lot of expenses bigger. There was a bigger mortgage, which came with paying more interest. It was a more valuable house, so our property taxes were higher. I mowed my lawn, but that took more of my time away from my kids because it was both a larger area and we had fancy landscaping that required me to mow around more stuff and edge more stuff.
Bigger houses generally cost more in utilities - more square feet to heat in the winter and cool in the summer. They take more time to clean because you have more square feet to vacuum or dust.
Almost everyone can't resist filling their space to a certain level of fullness with stuff, so bigger houses mean more furniture and decorations which cost money to acquire and maintain.
Even my sprinkler blowout in the fall was more, because my sprinkler system had 8 valves and the basic blowout price only included up to six valves.
And of course repairs and maintenance cost more as well. Some people assert that people should budget 1% of the house value per year for this and I think that's probably in the ballpark. Carpet cleaning and replacement, painting, roofing, HVAC replacement, vent cleaning, etc. all are going to cost you more money or take more time.
Obviously with a large family and some with medical needs you may want or need a larger space than average. That being said, if I had a family your size I think you could get by in something in the 2500 to 3000 square foot range. If everything scales (and it does IME), that would cut your house budget by perhaps a third. And give you more time as well probably to spend with the family.
And a third of ~20% of your budget is cutting your overall expenses by 7% or so.
njhowie
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Well, let me start off by saying you've done a great job of documenting where your monthly money goes. At first glance, for a household of 6, none of the amounts seem truly outlandish. But, $180k to $200k annual budget is a big total.
All that being the case, I think you initially need to cut/trim where you can.
$280 for family cell phone - is that total just for plan costs or does it also include some amount for paying off phones? If that's just plan costs, then look into switching to Mint (now part of T-Mobile). 5GB/month is $15. If you absolutely need unlimited data, you can do that for $30/month. Me/DW, we get along just fine with the 5GB plan, using wifi in the home, or when DW is at work. DD is out and about all day long and her iPhone sucks data so she gets the unlimited.
As far as electricity, do what you can. Do not light up the house like a Xmas tree at night. If you leave a room, turn the light off. During the day, try not to use the lights at all...open the curtains and use natural light. As far as A/C, which is a big draw, try to minimize use while staying comfortable - try to use it only at night, during the day, use fans as much as possible. When you do use the A/C at night, don't set the temp to freezing - set it just below where you would be uncomfortable and use in conjunction with your (ceiling) fans - the key is to get cool air circulating.
Now, one thing which is sticking out as I look closer - Subscriptions + Entertainment + Holidays/Vacations. You have somewhat hidden the magnitude of the Holidays/Vacations by making it a monthly amount. However, if we look at the annual total between these three, we're looking at $26,000/year. That's an after-tax amount, so you're looking at probably close to $40,000/year of your gross pay going towards those, which is hefty. In my view $600/child/year/birthday is a bit much. I see three trips a year in there at about $3500/trip. Then there's $375/month allocated to Xmas - that's $4500/year. These are all a bit much in my view. Certainly you could trim some in this area.
I think you need to be saving more considering your lifestyle. Considering where the savings is currently directed, you really aren't saving anything - you have a car fund, and kids 529 funds. You have a funded emergency fund, however, I'm not seeing an actual taxable savings/investment fund.
Anyhow, again, look for places to cut/trim and redirect that to savings, you'll be in a better position.
All that being the case, I think you initially need to cut/trim where you can.
$280 for family cell phone - is that total just for plan costs or does it also include some amount for paying off phones? If that's just plan costs, then look into switching to Mint (now part of T-Mobile). 5GB/month is $15. If you absolutely need unlimited data, you can do that for $30/month. Me/DW, we get along just fine with the 5GB plan, using wifi in the home, or when DW is at work. DD is out and about all day long and her iPhone sucks data so she gets the unlimited.
As far as electricity, do what you can. Do not light up the house like a Xmas tree at night. If you leave a room, turn the light off. During the day, try not to use the lights at all...open the curtains and use natural light. As far as A/C, which is a big draw, try to minimize use while staying comfortable - try to use it only at night, during the day, use fans as much as possible. When you do use the A/C at night, don't set the temp to freezing - set it just below where you would be uncomfortable and use in conjunction with your (ceiling) fans - the key is to get cool air circulating.
Now, one thing which is sticking out as I look closer - Subscriptions + Entertainment + Holidays/Vacations. You have somewhat hidden the magnitude of the Holidays/Vacations by making it a monthly amount. However, if we look at the annual total between these three, we're looking at $26,000/year. That's an after-tax amount, so you're looking at probably close to $40,000/year of your gross pay going towards those, which is hefty. In my view $600/child/year/birthday is a bit much. I see three trips a year in there at about $3500/trip. Then there's $375/month allocated to Xmas - that's $4500/year. These are all a bit much in my view. Certainly you could trim some in this area.
I think you need to be saving more considering your lifestyle. Considering where the savings is currently directed, you really aren't saving anything - you have a car fund, and kids 529 funds. You have a funded emergency fund, however, I'm not seeing an actual taxable savings/investment fund.
Anyhow, again, look for places to cut/trim and redirect that to savings, you'll be in a better position.
RetiredHappy
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I don't see anything as being out of line with your spendings. We all make choices as to how we live and what we spend on. If you feel that you cannot afford it or that you want to reduce expenses, you will know where to cut.
We spend alot more than you and it's just 2 of us. We never LBYM, but we also make sure that we can afford our lifestyle. Our medical expenses are $40K a year and it includes concierge PCP fees and LTCI premiums, no ACA subsidies and I am pre-Medicare age. When I reach Medicare age, it will feel like we have a bonus every year.
We spend alot more than you and it's just 2 of us. We never LBYM, but we also make sure that we can afford our lifestyle. Our medical expenses are $40K a year and it includes concierge PCP fees and LTCI premiums, no ACA subsidies and I am pre-Medicare age. When I reach Medicare age, it will feel like we have a bonus every year.
Last edited:
Romer
Recycles dryer sheets
The first part of laying out a plan is to identify spending, which you have done. That is the hardest and best step to move forward. Having kids at home makes everything more expensive. I didn't go into high gear saving until they moved out.
It then becomes the little things
In my early 30's I took my car payment and made it a savings contribution. Always paid cash after that. Then every raise I used half to increase my savings contribution.
Always made sure I did the 401K match and then slowly increased by 1% every other year
Look at things you can do the same for less. For example, I was spending $200 a month at Verizon for cell phones. I now pay $82 a month for the same service on the same network through Xfinity. I was paying $8 a month on each cable box and I had 4. Figured out I could get the Fire stick and run the xfinity app and have the same service. Bought my own modem and stopped paying their fee. Those simple changes gave me the same service for less
Then go through your expenses one by one to see if you can adjust anything. I do that every year. BUT don't go so tight you can't enjoy your time with your kids while you have them at home. That is just as important as financial security
The fact you are looking at it and asking questions is a big step up. This tells me you will be fine. I wasn't that smart until later
It is a long process that builds wealth. Keep asking questions and making adjustments
There are big projects you can do and lay out for the future. 5 years ago I wanted to get solar, replace aging AC with Heat Pumps and get one EV. We just completed that. As a result, I haven't paid for Electricity in 3 years and the Heat Pumps reduced usage enough to cover an EV. No Electricity and one less car to pay gas for, but bigger up front cost. I saw it as a way to hedge one component of inflation. Electricity rates have gone up over the last few years and that doesn't effect me at all. I don't plan on moving again, so this may not work for you
It then becomes the little things
In my early 30's I took my car payment and made it a savings contribution. Always paid cash after that. Then every raise I used half to increase my savings contribution.
Always made sure I did the 401K match and then slowly increased by 1% every other year
Look at things you can do the same for less. For example, I was spending $200 a month at Verizon for cell phones. I now pay $82 a month for the same service on the same network through Xfinity. I was paying $8 a month on each cable box and I had 4. Figured out I could get the Fire stick and run the xfinity app and have the same service. Bought my own modem and stopped paying their fee. Those simple changes gave me the same service for less
Then go through your expenses one by one to see if you can adjust anything. I do that every year. BUT don't go so tight you can't enjoy your time with your kids while you have them at home. That is just as important as financial security
The fact you are looking at it and asking questions is a big step up. This tells me you will be fine. I wasn't that smart until later
It is a long process that builds wealth. Keep asking questions and making adjustments
There are big projects you can do and lay out for the future. 5 years ago I wanted to get solar, replace aging AC with Heat Pumps and get one EV. We just completed that. As a result, I haven't paid for Electricity in 3 years and the Heat Pumps reduced usage enough to cover an EV. No Electricity and one less car to pay gas for, but bigger up front cost. I saw it as a way to hedge one component of inflation. Electricity rates have gone up over the last few years and that doesn't effect me at all. I don't plan on moving again, so this may not work for you
anothercog
Recycles dryer sheets
If you think insurance is bad now, wait until your kids start driving.
I don't think your budget is out of whack for where you live and the number of kids and pets you have. They are expensive.
My budget is similar give or take various categories. I was feeling the same way and can't believe how low people's budgets on this board, but many of those folks aren't supporting kids, paying private health insurance and a mortgage.
I don't think your budget is out of whack for where you live and the number of kids and pets you have. They are expensive.
My budget is similar give or take various categories. I was feeling the same way and can't believe how low people's budgets on this board, but many of those folks aren't supporting kids, paying private health insurance and a mortgage.
EastWest Gal
Thinks s/he gets paid by the post
A few expenses you may be able to reduce:
Electricity bill: Two refrigerators. Maybe downsize to a refrigerator/freezer and a freezer.
Hot tub/therapy pool. If this is one item, it makes sense. Is it indoors or outdoors, and what do you do in the winter? Any possibility of adding a solar system, with subsidies? Our summer electric bill dropped from >$300/mo to $90/mo tops with solar. Of course there is a cost, and that's why you could investigate the subsidy possibilities. We paid for ours with a HELOC four years after our house was paid off, and got a huge tax benefit.
Phone: Landline-can you ditch it, or switch to a voice over internet system, such as Ooma, Magicjack, Google voice, or others? Worth investigating. We save over $600/yr with Ooma, and get better service.
Health insurance: I'm surprised that there is no subsidy, which means your income is pretty darn good. But, you said you have a child with a physical disability. It is possible that your child may qualify for medical assistance (AKA Medicaid) as secondary insurance, regardless of your income.
Read here to start investigating:
https://www.phlp.org/uploads/attachments/ck70i90ve0007x8u8d07hx2ok-ph-95-guide-update-april-2019.pdf
Whole life insurance: This is a profit vehicle for the insurance agent, not you. If needed, increase your term insurance amount. Invest the money you save in an after tax account. Anything other than a term insurance plan is a drag on your investments, since the insurance agent is getting some of that money for their own income, not yours. If you think someday you will be FI, at that point you no longer need life insurance.
Personal trainer for adults: A personal trainer is a teacher, a motivator. Once you've been trained on what to do, graduate and do it. You don't pay for school after graduation-do the same with a trainer. You can reduce that cost and maintain your fitness level with just a gym membership.
Charity: Good for you, supporting your kids band and athletic activities. Music will improve their SAT scores and provide an activity they can do for the rest of their lives. Sports, not as much, but the goal of maintaining fitness for sports will prolong their (and your) life and and healthy life. Do not ever be ashamed of the amount you donate to charity. Compared to many, you are probably donating more than you think.
Electricity bill: Two refrigerators. Maybe downsize to a refrigerator/freezer and a freezer.
Hot tub/therapy pool. If this is one item, it makes sense. Is it indoors or outdoors, and what do you do in the winter? Any possibility of adding a solar system, with subsidies? Our summer electric bill dropped from >$300/mo to $90/mo tops with solar. Of course there is a cost, and that's why you could investigate the subsidy possibilities. We paid for ours with a HELOC four years after our house was paid off, and got a huge tax benefit.
Phone: Landline-can you ditch it, or switch to a voice over internet system, such as Ooma, Magicjack, Google voice, or others? Worth investigating. We save over $600/yr with Ooma, and get better service.
Health insurance: I'm surprised that there is no subsidy, which means your income is pretty darn good. But, you said you have a child with a physical disability. It is possible that your child may qualify for medical assistance (AKA Medicaid) as secondary insurance, regardless of your income.
Read here to start investigating:
https://www.phlp.org/uploads/attachments/ck70i90ve0007x8u8d07hx2ok-ph-95-guide-update-april-2019.pdf
Whole life insurance: This is a profit vehicle for the insurance agent, not you. If needed, increase your term insurance amount. Invest the money you save in an after tax account. Anything other than a term insurance plan is a drag on your investments, since the insurance agent is getting some of that money for their own income, not yours. If you think someday you will be FI, at that point you no longer need life insurance.
Personal trainer for adults: A personal trainer is a teacher, a motivator. Once you've been trained on what to do, graduate and do it. You don't pay for school after graduation-do the same with a trainer. You can reduce that cost and maintain your fitness level with just a gym membership.
Charity: Good for you, supporting your kids band and athletic activities. Music will improve their SAT scores and provide an activity they can do for the rest of their lives. Sports, not as much, but the goal of maintaining fitness for sports will prolong their (and your) life and and healthy life. Do not ever be ashamed of the amount you donate to charity. Compared to many, you are probably donating more than you think.
Yoheadden
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Congrats on doing one of the things most people can’t do, figuring out where the money goes.
There are already lots of great ideas and things to consider mentioned.
The only thing I could suggest would be to go back through your list of expenses and make two lists. One for fixed expenses and one for discretionary spending. Be brutally honest about what you can cut or reduce. Good luck
There are already lots of great ideas and things to consider mentioned.
The only thing I could suggest would be to go back through your list of expenses and make two lists. One for fixed expenses and one for discretionary spending. Be brutally honest about what you can cut or reduce. Good luck
bobandsherry
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Others have already given very good feedback already. I took a look and found about $25K in annual savings opportunities, and that's without even considering holiday and vacation expenses - there's definitely more potential there. The key is to adopt a mindset of reducing your spending. Start by categorizing your expenses into "musts" versus "wants." Once you see the breakdown, it will likely become clear where you can make cuts. As others already given feedback, I'd just conquer.. Take your savings and put into investments to let it grow for the future. Good luck.
Wow, thank you everyone for your responses. It's been a busy week at w*rk and a full lineup this weekend, but I will try to comment back to everyone who took the time. DW is not as favorable toward sharing, so some detail I may need to restrict, particularly regarding DS.
Koolau
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
One thing is certain. You and DW must make the decisions on your own. We're glad to offer suggestions but only you two know how changes will affect you.
All the best in your review of expenses.
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