Bought house six months ago - now feeling like we're treading water and can't save money

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LiterallyIronic
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Bought house six months ago - now feeling like we're treading water and can't save money

Post by LiterallyIronic » Sat Mar 17, 2018 2:02 pm

We bought our first house last year. And we had a baby last year. Before that, I felt like I was rolling in the dough. Now I fee like we're struggling to stay even. We track all our expenses, and here's where things stand since the house purchase (averages used when applicable):

Gross Income: $5,291.66
Taxes: $911.06
401k: $300
Pre-Tax Health Insurance: $6

Net Pay: $4,074.60
Roth IRAs: $916

Discretionary Income: $3,158.60

Mortgage Expenses
Mortgage Principal: $225.711
Mortgage Interest: $474.952
Mortgage Escrow: $108.07
Mortgage Principal Pre-Payment: $2493
*Note: For ease-of-access: Our PITI is $808.73

Utilities Expenses (uses averages)
Electric: $40.6
Water: $28.97
Sewer: $45.614
Storm Water: $9.754
Trash: $15.844
Yard Waste: $5.304
Recycling: $6.364
Transportation Fee: $3.504
Gas: $110.855
Cell Phone: $40.106
Netflix: $8.54

All Other Expenses (in descending order)
Charitable Donations: $400
Groceries: $225
Wife's Personal Trainer: $160
Health Insurance: $101.327
Stratus Gasoline: $79
Personal Care: $60
Furniture: $608
Corolla Maintenance: $57
Auto Insurance: $469
Gifts: $5110
Holiday Expenses: $4911
Yard Maintenance: $482
Snacks: $4312
Tools: $32 13
Wife's Clothes: $26
Corolla Gas: $25
Movies: $22 14
Wife's Hobbies: $18
House Maintenance: $17
Other (unknown): $15 15
Baby Supplies: $10
Health Expenses: $10 16
Restaurants: $7
Video Game Hardware: $5
My Clothes: $5
Steam Video Games: $4
Office Supplies: $4
Paperwork/Shipping: $4
Baby Toys: $3
Baby Clothes: $2
Cleaning Supplies: $1

Total Expenses: $2,963.37

Savings: $195.23

1 Trending upwards
2 Trending downwards
3 Trending downwards. We always pay enough extra toward the mortgage so principal payments keep up with interest payments. This lowers our pre-payment every month, but we've put a floor of $200, so we'll always pay at least $200 extra, even if interest minus principal is less than $200.
4 Fixed amount
5 Most of the time we've owned the house has been the Winter. Should go down when the weather warms up.
6 Two lines
7 My wife is not on the same plan as our baby and me. It's not through an employer. If I were to lose my job, we could put our baby on her health insurance. It's "insurance insurance," if you will.
8 Just bought a house - needed more shelving, etc. Hopefully trending downward.
9 Two drivers; two cars. State minimum liability only.
10 Christmas, birthday, anniversary
11 Stuff like costumes, Halloween candy, Valentine's day romantic dinner, etc
12 Super Bowl party is the annual heavy hitter
13 Just bought a house - needed a ladder, etc. Hopefully trending downward.
14 We're working on building up a collection of Disney movies while our baby gets old enough to soon watch them.
15 We've done away with the "Other" category, so those expenses will be sorted properly in the future.
16 Cough syrup, humidifier, etc.

We're only saving less than $200/month. It's making me feel like we're treading water and can't get anywhere. I just feel poor when before we bought the house, I felt rich. Utilities, for example, are way higher than I anticipated.

* We've already turned the heater down from 66F to 64F.
* We also only have Netflix temporarily - for my wife to have something easy to watch while she's feeding the baby in the middle of the night. We'll cancel when the baby starts sleeping through the night.
* My wife is using a personal trainer for six months in order to lose the baby weight, so that expense will go away soon.
* I've agreed to buy no video games this year. And no clothes unless necessary.
* I feel like we're spending way too much on "gifts", "holiday expenses" and "snacks."

Any other ideas or suggestions?

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dm200
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by dm200 » Sat Mar 17, 2018 2:05 pm

Mortgage Principal Pre-Payment: $249
Based on your situation, I would not do any prepayment of mortgage beyond the required monthly payments.

sambb
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by sambb » Sat Mar 17, 2018 2:07 pm

do very well at work and increase income.

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dm200
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by dm200 » Sat Mar 17, 2018 2:09 pm

* My wife is using a personal trainer for six months in order to lose the baby weight, so that expense will go away soon.
Look for low cost gym/community center membership. Your (both) health is important. I would focus on learning to do things myself - become my own "trainer". We get a bargain senior discount, but before that (younger folks) get full jurisdiction community centers membership for about $200/year per person.

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dm200
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by dm200 » Sat Mar 17, 2018 2:11 pm

Mortgage Escrow: $108.07
Seems low? Does that cover Taxes and Insurance?

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Soul.in.Progress
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by Soul.in.Progress » Sat Mar 17, 2018 2:12 pm

OP, may I ask why you are putting so much more into Roth rather than 401k?

Also, for clarification, are you saving $300 (401k) + $916 (Roth) + 195 (other) each month? So total monthly savings is about $1400?
Start by doing what is necessary; | then do what is possible; | and suddenly you are doing the impossible. | -- Francis of Assisi

blueman457
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by blueman457 » Sat Mar 17, 2018 2:13 pm

How much were you saving pre house?

Blue Man

HongKonger
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by HongKonger » Sat Mar 17, 2018 2:14 pm

Drop the charitable donations.

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dm200
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by dm200 » Sat Mar 17, 2018 2:16 pm

Two drivers; two cars. State minimum liability only.
You may want to increase liability limits - probably not much more -- but will reduce risk.

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dm200
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by dm200 » Sat Mar 17, 2018 2:16 pm

HongKonger wrote:
Sat Mar 17, 2018 2:14 pm
Drop the charitable donations.
No :)

German Expat
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by German Expat » Sat Mar 17, 2018 2:19 pm

You are still saving approx. 1400$ per month direct and you are paying down your house to the tune of 474$ per month as well . This is a very respectable savings rate. It looks like you are a frugal. With home ownership and a baby your expenses went up quite a lot and it is normal to have less savings. Over time you will get raises at your job and the house payments will go down relative to your income (and the interest part of it will go down as well).

So my suggestion is take a deep breath and congratulations, you are doing quite well.

furnace
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by furnace » Sat Mar 17, 2018 2:24 pm

LiterallyIronic wrote:
Sat Mar 17, 2018 2:02 pm
We bought our first house last year. And we had a baby last year. Before that, I felt like I was rolling in the dough. Now I fee like we're struggling to stay even. We track all our expenses, and here's where things stand since the house purchase (averages used when applicable):

Gross Income: $5,291.66
Taxes: $911.06
401k: $300
Pre-Tax Health Insurance: $6

Net Pay: $4,074.60
Roth IRAs: $916

Discretionary Income: $3,158.60

Mortgage Expenses
Mortgage Principal: $225.711
Mortgage Interest: $474.952
Mortgage Escrow: $108.07
Mortgage Principal Pre-Payment: $2493
*Note: For ease-of-access: Our PITI is $808.73

Utilities Expenses (uses averages)
Electric: $40.6
Water: $28.97
Sewer: $45.614
Storm Water: $9.754
Trash: $15.844
Yard Waste: $5.304
Recycling: $6.364
Transportation Fee: $3.504
Gas: $110.855
Cell Phone: $40.106
Netflix: $8.54

All Other Expenses (in descending order)
Charitable Donations: $400
Groceries: $225
Wife's Personal Trainer: $160
Health Insurance: $101.327
Stratus Gasoline: $79
Personal Care: $60
Furniture: $608
Corolla Maintenance: $57
Auto Insurance: $469
Gifts: $5110
Holiday Expenses: $4911
Yard Maintenance: $482
Snacks: $4312
Tools: $32 13
Wife's Clothes: $26
Corolla Gas: $25
Movies: $22 14
Wife's Hobbies: $18
House Maintenance: $17
Other (unknown): $15 15
Baby Supplies: $10
Health Expenses: $10 16
Restaurants: $7
Video Game Hardware: $5
My Clothes: $5
Steam Video Games: $4
Office Supplies: $4
Paperwork/Shipping: $4
Baby Toys: $3
Baby Clothes: $2
Cleaning Supplies: $1

Total Expenses: $2,963.37

Savings: $195.23

1 Trending upwards
2 Trending downwards
3 Trending downwards. We always pay enough extra toward the mortgage so principal payments keep up with interest payments. This lowers our pre-payment every month, but we've put a floor of $200, so we'll always pay at least $200 extra, even if interest minus principal is less than $200.
4 Fixed amount
5 Most of the time we've owned the house has been the Winter. Should go down when the weather warms up.
6 Two lines
7 My wife is not on the same plan as our baby and me. It's not through an employer. If I were to lose my job, we could put our baby on her health insurance. It's "insurance insurance," if you will.
8 Just bought a house - needed more shelving, etc. Hopefully trending downward.
9 Two drivers; two cars. State minimum liability only.
10 Christmas, birthday, anniversary
11 Stuff like costumes, Halloween candy, Valentine's day romantic dinner, etc
12 Super Bowl party is the annual heavy hitter
13 Just bought a house - needed a ladder, etc. Hopefully trending downward.
14 We're working on building up a collection of Disney movies while our baby gets old enough to soon watch them.
15 We've done away with the "Other" category, so those expenses will be sorted properly in the future.
16 Cough syrup, humidifier, etc.

We're only saving less than $200/month. It's making me feel like we're treading water and can't get anywhere. I just feel poor when before we bought the house, I felt rich. Utilities, for example, are way higher than I anticipated.

* We've already turned the heater down from 66F to 64F.
* We also only have Netflix temporarily - for my wife to have something easy to watch while she's feeding the baby in the middle of the night. We'll cancel when the baby starts sleeping through the night.
* My wife is using a personal trainer for six months in order to lose the baby weight, so that expense will go away soon.
* I've agreed to buy no video games this year. And no clothes unless necessary.
* I feel like we're spending way too much on "gifts", "holiday expenses" and "snacks."

Any other ideas or suggestions?
You could be saving $448 just by eliminating these 2 costs:
- Yard Maintenance: $48
- Charity Cost: $400

Your housing cost at $800-900 a month is already low. It's not the house that's squeezing you. You may keep your wife's Roth contribution if she isn't working (so she would have something in her own name) but your own Roth contribution should be eliminated. Redirect your Roth contribution to your 401k in order to save on taxes.

curmudgeon
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by curmudgeon » Sat Mar 17, 2018 2:28 pm

Your effective savings rate is quite high. $300 401K plus $900 Roth IRA plus $500 mortgage principal. Call it $1700 out of $4400 income. Cash on hand is going to be tight in that situation. Maybe cut down the prepayment for a few months until things smooth out a bit (your next raise, or the trainer expense goes away). Starting out in home ownership always has a lot of bits and pieces of expenses. Heating (and cooling) a house will always be more expensive than an apartment, though.

onourway
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by onourway » Sat Mar 17, 2018 2:35 pm

Your charitable giving is 13.5% of the money you spend every month. It's the second largest expense you list. Charity is good, but perhaps you could consider donating your time rather than money.

Otherwise, I would cut out the mortgage pre-payment and sock that away as a rainy day fund. $17/month for home maintenance can't be remotely enough to sustain you for the long run. Better to have some liquid funds than home equity you can't easily access.

tetris55
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by tetris55 » Sat Mar 17, 2018 2:39 pm

You seem to be confusing saving for retirement and saving cash. You are saving well more than the hundred whatever you have left over. You are saving in the 401k and roth. If your point is that you want more wiggle room at the end of every month, hold off on the mortgage prepayment, the personal trainer, and maybe some of the retirement savings until you have an adequate cash reserve for emergencies. At the end of the year, take that lump some and make sure you get all your retirement space filled for the tax year.

It sounds like that charitable giving is a tithing of some sort, a religious charitable donation, so that likely isn't going to go away. You can also consider giving that at the end of the year to give yourself a buffer.

Alternatively, you can turn your attention to having a good offense and go earn some more money. Plenty of ways to earn even a few hundred bucks a month.

nura
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by nura » Sat Mar 17, 2018 2:42 pm

If you eliminate/reduce these 2 items, you will be saving more than 10% of your gross income excluding IRAs.
Mortgage Principal Pre-Payment: $2493
Charitable Donations: $400

If have no other debt and have 4-6 months emergency funds, you are doing just fine.
Enjoy quality time with the new baby.
Last edited by nura on Sat Mar 17, 2018 2:44 pm, edited 1 time in total.

H-Town
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by H-Town » Sat Mar 17, 2018 2:43 pm

curmudgeon wrote:
Sat Mar 17, 2018 2:28 pm
Your effective savings rate is quite high. $300 401K plus $900 Roth IRA plus $500 mortgage principal. Call it $1700 out of $4400 income. Cash on hand is going to be tight in that situation. Maybe cut down the prepayment for a few months until things smooth out a bit (your next raise, or the trainer expense goes away). Starting out in home ownership always has a lot of bits and pieces of expenses. Heating (and cooling) a house will always be more expensive than an apartment, though.
$300 401k + $900 Roth + $200 leftover = $1,400 saving on a $5,291.66 gross income. Saving rate is not great. It is what it is.

OP: money is going to be tight. No question about it. Living expenses for a family with one kid and a house would range from 40-60k if you are frugal and live in LCOL to MCOL. Understand your baseline expense will help you plan for saving for the future.

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randomizer
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by randomizer » Sat Mar 17, 2018 2:44 pm

Seems very tight. Just make sure you don't let lifestyle creep set in when you get raises and bonuses, and it will get less and less tight over time.
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CppCoder
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by CppCoder » Sat Mar 17, 2018 2:44 pm

This is why you are supposed to ask Klangfool before buying if you can afford this house. No, the answer is always no. :D

In all seriousness, your house seems to be a reasonable expense, you have a reasonable retirement savings rate, and you have room to cut if you had to (e.g., personal trainer, charitable giving, prepayment). My question is do you have an adequate emergency fund/taxable account? If so, you'll be fine. Otherwise, $200 extra cash flow per month could cause you problems in the event of an emergency or job loss.

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camillus
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by camillus » Sat Mar 17, 2018 2:45 pm

Take a look at your tax withholding. Per my mental calculations, you only owe something like $2300/yr or $200/mo of federal income tax. (You currently pay $900.)

In fact, it might be worth eliminating ROTH contributions and going all 401k to drop your taxable income to take advantage of EITC and the savers credit. You would have to look into the details.

$63000 income
- new $13000 401k contribution, eliminating Roth
- new TRADITIONAL IRA contribution of $2000 for wife
- $24000 standard deduction

$24000 taxable income, AGI $48000

$1905 in 10% bracket
$594 in 12% bracket

$2499 total tax liability
-$2000 child credit

$499 fed tax paid per year

I can’t look up the savers credit & EITC information at the moment, but it looks like with the above retirement contributions you would get $400 back in savers tax credit, meaning you could reduce withholding to zero, since you might pay less than $100 in fed inc tax in the end.

The 401k might be a better deal than pre paying your mortgage.
Last edited by camillus on Sat Mar 17, 2018 3:08 pm, edited 4 times in total.

JBTX
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by JBTX » Sat Mar 17, 2018 2:51 pm

You are actually saving around 35% or gross income which is very high.

401k+Roth +mortgage principle+extra mortgage payment + plus net cash flow savings = approx $1900+ per month.

I’d definitely stop the extra mortgage payment.

The charity is extraordinarily high for you income. Perhaps it is part of your faith and non negotiable otherwise I would cut it at least to half or 1/4. Ultimately taking care of kids and retirement savings come first.

The $160 a month personal trainer is a bit of a splurge but to each his/her own.

Annual super bowl party may be a bit much.

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dm200
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by dm200 » Sat Mar 17, 2018 2:56 pm

JBTX wrote:
Sat Mar 17, 2018 2:51 pm
You are actually saving around 35% or gross income which is very high.
401k+Roth +mortgage principle+extra mortgage payment + plus net cash flow savings = approx $1900+ per month.
I’d definitely stop the extra mortgage payment.
The charity is extraordinarily high for you income. Perhaps it is part of your faith and non negotiable otherwise I would cut it at least to half or 1/4. Ultimately taking care of kids and retirement savings come first.
The $160 a month personal trainer is a bit of a splurge but to each his/her own.
I support "charitable" giving, but I would look for possible alternate ways of doing so - such as appreciated stick donations, use of a donor advised fund, etc.

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dm200
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by dm200 » Sat Mar 17, 2018 3:02 pm

401k: $300

Are you maximizing the employer match? If not, I would shift some funds to make 100% sure to get all of the employer match..

I also assume you do not carry credit card balances either. That's good.

Also, be prepared if/when car(s) need replacement to afford purchase (or modest car loans).

mouses
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by mouses » Sat Mar 17, 2018 3:08 pm

You are saving a respectable amount. The 401k and roth count as savings. Is it that you worry about an adequate emergency fund? I didn't see what you have in savings, maybe I missed that.

I would dump the personal trainer. There is no reason why your wife can't exercise on her own. She already knows what he or she has been teaching her, plus the web is full of exercise advice. She does not need access to gym equipment to exercise.

$48 a month for yard maintenance is quite low. What is that actually paying for? Surely not four lawn cuttings. Whatever it is, can you do it yourself?

The yard waste item - what are you getting rid of? Can you put it in a compost pile instead? Cold composting is zero work compared to hot composting. Just toss the leaves or whatever into a pile in the backyard and eventually they turn into compost.

I do understand your commitment to charitable donations, good for you. But you might look into contributing work vs. money.

I would stop buying Disney movies. The kid is just one year old. By the time he or she is sentient :-) enough to watch movies, you may have cheaper options. You probably can buy used ones on ebay or something also. You can check them out of the library. Besides, I think research shows that small children get better brain development if they are not exposed to videos for some years. The library in my area sells used kids books for like $1 if you want ones you can keep instead of check out.
Last edited by mouses on Sat Mar 17, 2018 3:19 pm, edited 4 times in total.

stan1
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by stan1 » Sat Mar 17, 2018 3:09 pm

You need to take credit mentally for the retirement savings and the mortgage principal prepayment as savings. I'd stop the mortgage prepayment for the time being. I personally don't count mortgage principal as savings because I'd have to live somewhere so it's an expense as rent would be. You won't get the benefit of those "savings" until the mortgage is paid off in 15-30 years. Based on the amount of your mortgage I would not say that you overbought. I'm guessing the purchase price of the house was under 2x your annual income?

It sounds like you have a plan for the personal trainer. If your wife can use the opportunity to learn the skills to carry on the fitness program it should be worthwhile. There are also plenty of lower cost, community resources for her as well if especially if she has time during the day. Lots of moms with young babies out there who get together to stay fit.

Then there's the charitable contributions which are high. Perhaps you are tithing around 10% (math doesn't quite work out but its close) in which case you've already made a decision and it is just a fact of life you'll have to work with.

Also agree I'd be working to increase income if you can. Your expenses aren't high, I'm assuming taxes include social security, medicare, federal, and state. If anything your savings rate is high for a family with your income and you should pat yourselves on the back for that.
Last edited by stan1 on Sat Mar 17, 2018 3:22 pm, edited 1 time in total.

JBTX
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by JBTX » Sat Mar 17, 2018 3:12 pm

I agree the taxes look somewhat high even including fica.

H-Town
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by H-Town » Sat Mar 17, 2018 3:15 pm

I don't understand how would anyone think mortgage payment is a form of saving? You already bought the house and you are paying off the debt.

JBTX
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by JBTX » Sat Mar 17, 2018 3:25 pm

thangngo wrote:
Sat Mar 17, 2018 3:15 pm
I don't understand how would anyone think mortgage payment is a form of saving? You already bought the house and you are paying off the debt.
Saving is the building of equity. Mortgage principle is equity. Debt is negative saving. Reducing negative saving is positive saving.

By your logic they could pay an additional $1000 a month on mortgage and still not be saving anything.

stan1
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by stan1 » Sat Mar 17, 2018 3:31 pm

JBTX wrote:
Sat Mar 17, 2018 3:25 pm
thangngo wrote:
Sat Mar 17, 2018 3:15 pm
I don't understand how would anyone think mortgage payment is a form of saving? You already bought the house and you are paying off the debt.
Saving is the building of equity. Mortgage principle is equity. Debt is negative saving. Reducing negative saving is positive saving.

By your logic they could pay an additional $1000 a month on mortgage and still not be saving anything.
I prefer a more conservative approach. If I didn't own a home I'd have to pay rent so I treat mortgage principal on my loan as an expense not savings. Paying that mortgage principal is mandatory not discretionary. When the house is paid off I can celebrate and change my accounting system. I'm more comfortable with considering discretionary mortgage principal prepayment as savings because it's a deliberate decision to pay down debt early instead of savings. People can do what they want but be honest with yourselves.

Mingus
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by Mingus » Sat Mar 17, 2018 3:38 pm

Well, you're spending an extra 249 dollars a month on the mortgage, and an additional 400/month on charity. That's $7,778/year right there that could be used for saving money.

Your utilities are dirt cheap. I wish where I lived had those low costs.

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dm200
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by dm200 » Sat Mar 17, 2018 3:39 pm

I would dump the personal trainer. There is no reason why your wife can't exercise on her own. She already knows what he or she has been teaching her, plus the web is full of exercise advice. She does not need access to gym equipment to exercise.
Not necessarily - marital happiness is worth a lot..

I would not or could not do anything successfully like I and DW do without our wonderful community gym access.

Nate79
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by Nate79 » Sat Mar 17, 2018 3:39 pm

I think you are doing great. Do you have a healthy emergency fund?
I assume the charity giving is a tithe based on 10% of take home?

Sure your budget could easily be trimmed down but your saving rate is such I wouldn't worry about it.

A lot of the line items seem like you are either saving up for a future expense or have debt like furniture. May want to list out all your debts to give a better overall picture.

How about kids college?

delamer
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by delamer » Sat Mar 17, 2018 3:45 pm

JBTX wrote:
Sat Mar 17, 2018 2:51 pm
You are actually saving around 35% or gross income which is very high.

401k+Roth +mortgage principle+extra mortgage payment + plus net cash flow savings = approx $1900+ per month.

I’d definitely stop the extra mortgage payment.

The charity is extraordinarily high for you income. Perhaps it is part of your faith and non negotiable otherwise I would cut it at least to half or 1/4. Ultimately taking care of kids and retirement savings come first.

The $160 a month personal trainer is a bit of a splurge but to each his/her own.

Annual super bowl party may be a bit much.
Agree with all of the above.

Most people feel a bit squeezed when they buy their first home, and especially if their regular monthly costs (PITI and utilities) are higher than their rent was. That does not mean that you bought a house that was too expensive.

This is probably compounded in your case since it sounds like your wife is no longer working.

I can’t understand the $22 for DVDs for the baby. How many DVDs do you think one kid will watch?!
Last edited by delamer on Sat Mar 17, 2018 4:13 pm, edited 1 time in total.

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BL
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by BL » Sat Mar 17, 2018 3:47 pm

I suggest you look at federal income taxes withheld. As mentioned above, I suspect you would owe very little if any if you instead max your 401k (skip extra mortgage) and perhaps 2k to trad IRA for spouse. It makes sense for most to avoid large refunds if money is tight during the year. Especially consider 24k standard deduction, no exemptions, 2k child tax credit, EIC (earned income credit) and perhaps Saver's Credit if you still owe some tax. Perhaps you can find a tax estimator to check out numbers.

How much per month goes into withholding? Perhaps most of that can go into 401k to reduce taxable income. It is hard to tell just where you are with taxes and credits. $46,010 is the upper income limit for EIC with one child. If you max 401k you just might make it. Not sure if any IRA would help because you might not have enough taxes owed for Saver's Credit on it if you put 18.5k (maybe less) into 401k. (If you can't put enough into 401k for EIC, then you might want IRA for Saver's Credit. It gets complicated, so you need to play "what if" with a tax program.)

Build up emergency account and savings for expected costs.

What debts + interest rates do you have outside of mortgage?

DVDs may go the way of the VCRs in a few years.
Last edited by BL on Sat Mar 17, 2018 4:12 pm, edited 5 times in total.

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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by fposte » Sat Mar 17, 2018 3:48 pm

I am going to take a guess from the fact that you have 16 footnotes that you are not a "what, me worry?" kind of guy :happy . A quick look at your post history supports that theory.

We're Bogleheads, so we can always tell you ways you could spend less money. But you have a respectable savings rate in what seems to be a LCOL area (I live in one of those too--lots of upside to that!). You have also had two major life and financial events in the last year that are commonly sources of stress even as they provide joy; your responsibilities have gone up considerably. I'm also not seeing what exactly you think you're falling short *on*--there's no planned rate of savings for a retirement goal, for instance, just a general worry (even your thread on savings rates seems to be about a round number target rather than a life target).

So consider the possibility that you are actually doing okay, and that it's pretty common for changes like that to make people feel more precarious no matter where they are financially. Also consider working with your wife to plan out not just a plan for what you're saving for but an idea of what "enough" would look like in the mean time. It may be that giving up the Super Bowl party would allow you to sleep better--or it might just mean that you lose something you enjoy and still worry. There's no way to guarantee the future, so it makes good sense to be prudent, but you have a present to take care of as well; it's important to keep both in mind.

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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by LiterallyIronic » Sat Mar 17, 2018 4:12 pm

sambb wrote:
Sat Mar 17, 2018 2:07 pm
do very well at work and increase income.
This is my first job out of college - I'm hoping that next year, when I have three years of software development under my belt, I can jump ship and bump my pay up to $70k.
dm200 wrote:
Sat Mar 17, 2018 2:11 pm
Mortgage Escrow: $108.07
Seems low? Does that cover Taxes and Insurance?
Property tax is $900/year. The rest of it is homeowners insurance through Geico (where we also have our auto insurance).
Soul.in.Progress wrote:
Sat Mar 17, 2018 2:12 pm
OP, may I ask why you are putting so much more into Roth rather than 401k?

Also, for clarification, are you saving $300 (401k) + $916 (Roth) + 195 (other) each month? So total monthly savings is about $1400?
Correct. I have very little left over after the 401k and IRA contributions. I have been considering whether Traditional IRA would be better than Roth (I asked about it here: viewtopic.php?f=1&t=241112), but people were saying to stick with Roth. My 401k itself is really bad, the expense ratios are around 1.5%.
blueman457 wrote:
Sat Mar 17, 2018 2:13 pm
How much were you saving pre house?
So, the same income, with the same 401k and Roth IRA contributions. The major difference is we had $400 rent instead of $808 PITI + $250 pre-payment and about $150 utilities instead of $300, for a difference of $800/month higher expenses. Then throw in the fact that my wife stopped working when we had the baby (although she was only grossing about $23k), and the fact that having the baby cost of $12,000 in pregnancy/delivery costs.

We were renting a basement from a family member for way below market value. My sister and her husband are currently renting a basement pretty close to here and they're paying $850 (which is more than our mortgage).
dm200 wrote:
Sat Mar 17, 2018 2:16 pm
Two drivers; two cars. State minimum liability only.
You may want to increase liability limits - probably not much more -- but will reduce risk.
I'm not really concerned.
German Expat wrote:
Sat Mar 17, 2018 2:19 pm
So my suggestion is take a deep breath and congratulations, you are doing quite well.
Thank you.
furnace wrote:
Sat Mar 17, 2018 2:24 pm
You could be saving $448 just by eliminating these 2 costs:
- Yard Maintenance: $48
- Charity Cost: $400

Your housing cost at $800-900 a month is already low. It's not the house that's squeezing you. You may keep your wife's Roth contribution if she isn't working (so she would have something in her own name) but your own Roth contribution should be eliminated. Redirect your Roth contribution to your 401k in order to save on taxes.
The yard maintenance isn't an ongoing subscription or anything. After buying the house, we needed to have some sprinkler work done and we needed an exterminator to come in and take care of a bee problem. That average should fall. However, we still need to buy a lawnmower.

I do feel like I'm getting killed on taxes, though.
curmudgeon wrote:
Sat Mar 17, 2018 2:28 pm
Starting out in home ownership always has a lot of bits and pieces of expenses. Heating (and cooling) a house will always be more expensive than an apartment, though.
Yeah, there's a lot of getting nickel-and-dime'd that's adding up. I'm going to try to get by without cooling the house come Summer. Just open the windows in the morning. It's a north-facing house, so we don't get a lot of direct sunlight through windows. We don't have A/C, just a swamp cooler, so unless/until I refill it with water, it can't be used. 8-)
onourway wrote:
Sat Mar 17, 2018 2:35 pm
I would cut out the mortgage pre-payment and sock that away as a rainy day fund. $17/month for home maintenance can't be remotely enough to sustain you for the long run. Better to have some liquid funds than home equity you can't easily access.
You make a good point. We have an emergency fund we could tap, but I'd rather only have to use that in the event of job loss, not in the event of a large house repair.
tetris55 wrote:
Sat Mar 17, 2018 2:39 pm
You seem to be confusing saving for retirement and saving cash. You are saving well more than the hundred whatever you have left over.
Yeah, because it doesn't feel the same. Before buying the house, we had $60,000 sitting on-hand, ready to be used as a down payment. Now we don't have it and I feel poor.
tetris55 wrote:
Sat Mar 17, 2018 2:39 pm
It sounds like that charitable giving is a tithing of some sort, a religious charitable donation, so that likely isn't going to go away. You can also consider giving that at the end of the year to give yourself a buffer.
Nail on the head.
tetris55 wrote:
Sat Mar 17, 2018 2:39 pm
Alternatively, you can turn your attention to having a good offense and go earn some more money. Plenty of ways to earn even a few hundred bucks a month.
I've considered this. Maybe an evening job a few nights a week in order to help rebuild the supply of cash-on-hand.
JBTX wrote:
Sat Mar 17, 2018 2:51 pm
The $160 a month personal trainer is a bit of a splurge but to each his/her own.
Agreed. It's got to go.
dm200 wrote:
Sat Mar 17, 2018 2:56 pm
I would look for possible alternate ways of doing so - such as appreciated stick donations, use of a donor advised fund, etc.
I'm not familiar with those.
dm200 wrote:
Sat Mar 17, 2018 3:02 pm
401k: $300

Are you maximizing the employer match? If not, I would shift some funds to make 100% sure to get all of the employer match..

I also assume you do not carry credit card balances either. That's good.

Also, be prepared if/when car(s) need replacement to afford purchase (or modest car loans).
There is no employer match. No debt, aside from the mortgage. Cars are always $1,000 clunkers. Mine doesn't even have A/C, radio, or a front bumper and not all the windows can roll down. :!:
mouses wrote:
Sat Mar 17, 2018 3:08 pm
You are saving a respectable amount. The 401k and roth count as savings. Is it that you worry about an adequate emergency fund? I didn't see what you have in savings, maybe I missed that.

I would dump the personal trainer. There is no reason why your wife can't exercise on her own. She already knows what he or she has been teaching her, plus the web is full of exercise advice. She does not need access to gym equipment to exercise.

$48 a month for yard maintenance is quite low. What is that actually paying for? Surely not four lawn cuttings. Whatever it is, can you do it yourself?

The yard waste item - what are you getting rid of? Can you put it in a compost pile instead? Cold composting is zero work compared to hot composting. Just toss the leaves or whatever into a pile in the backyard and eventually they turn into compost.

I do understand your commitment to charitable donations, good for you. But you might look into contributing work vs. money.

I would stop buying Disney movies. The kid is just one year old. By the time he or she is sentient :-) enough to watch movies, you may have cheaper options. You probably can buy used ones on ebay or something also. You can check them out of the library. Besides, I think research shows that small children get better brain development if they are not exposed to videos for some years. The library in my area sells used kids books for like $1 if you want ones you can keep instead of check out.
Yeah, I guess it's the emergency fund that's causing me worry. We have one - around $7,000. But we're having a hard time building more cash-on-hand than that.

Definitely needs to dump the personal trainer.

The yard maintenance isn't actually a subscription or anything. When we bought the house we needed some sprinkler work done and we needed an exterminator to come take care of a bee problem. That $48/month is the price of those divided by the six months we've had the house, so that number should keep falling. Of course, when we buy a lawn mower, that'll bring the average back up.

Good idea on the yard waste. It's just leaves, trimmed branches, etc. We could just throw it in a pile and let it compost into nice soil for a garden.

Library is a good idea. I will look into what that situation is. We have no intention of letting her watch TV until she is two.
stan1 wrote:
Sat Mar 17, 2018 3:09 pm
You need to take credit mentally for the retirement savings and the mortgage principal prepayment as savings. I'd stop the mortgage prepayment for the time being. I personally don't count mortgage principal as savings because I'd have to live somewhere so it's an expense as rent would be. You won't get the benefit of those "savings" until the mortgage is paid off in 15-30 years. Based on the amount of your mortgage I would not say that you overbought. I'm guessing the purchase price of the house was under 2x your annual income?

It sounds like you have a plan for the personal trainer. If your wife can use the opportunity to learn the skills to carry on the fitness program it should be worthwhile. There are also plenty of lower cost, community resources for her as well if especially if she has time during the day. Lots of moms with young babies out there who get together to stay fit.

Then there's the charitable contributions which are high. Perhaps you are tithing around 10% (math doesn't quite work out but its close) in which case you've already made a decision and it is just a fact of life you'll have to work with.

Also agree I'd be working to increase income if you can. Your expenses aren't high, I'm assuming taxes include social security, medicare, federal, and state. If anything your savings rate is high for a family with your income and you should pat yourselves on the back for that.
The price of the house was way more than 2x my income. I make $63,500, the purchase price of the house was $209,000 (3.3x my income). Houses don't come much cheaper than the one we bought. But we had a $60,000 down payment, to make the loan $149,000.

Yeah, it's suppose to be 10%. The math doesn't work out because of a push-and-pull between my wife and I in which one feels the other is overpaying and one feels the other is underpaying. It's a problem.

The taxes were everything - federal and state income tax, social security, and medicare. I feel like I'm always getting ripped off on taxes, based on what I hear other people paying.

But you're right, I need to take mental credit for the money we're sending to retirement accounts.
dm200 wrote:
Sat Mar 17, 2018 3:39 pm
Not necessarily - marital happiness is worth a lot..

I would not or could not do anything successfully like I and DW do without our wonderful community gym access.
That's why I agreed to six months of personal trainer and six months only. Happy wife, happy life.

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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by dm200 » Sat Mar 17, 2018 4:18 pm

Happy wife, happy life.
:happy

LiterallyIronic
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by LiterallyIronic » Sat Mar 17, 2018 4:40 pm

Nate79 wrote:
Sat Mar 17, 2018 3:39 pm
I think you are doing great. Do you have a healthy emergency fund?
I assume the charity giving is a tithe based on 10% of take home?

Sure your budget could easily be trimmed down but your saving rate is such I wouldn't worry about it.

A lot of the line items seem like you are either saving up for a future expense or have debt like furniture. May want to list out all your debts to give a better overall picture.

How about kids college?
Thanks. We have about $7,000 on-hand, which should get us through a number of months of job-loss (given that our expenses would be cut to the bone). The charity is supposed to be a 10% tithe, yes. The line items like "Furniture: $X" aren't supposed to indicate that we are paying off furniture to the tune of $X/month. It just means that we bought a dresser or whatever and I'm dividing the cost of it over the six months we've had the house.

We have no debts, aside from the mortgage.

As for the kid's college, unfortunately she'll have to be on her own. I can't come up with money to fund a 529 and there are scholarships/grants/loans for college but not for retirement.
delamer wrote:
Sat Mar 17, 2018 3:45 pm
I can’t understand the $22 for DVDs for the baby. How many DVDs do you think one kid will watch?!
Heh, it's not all for the kid - there's certainly some selfishness in acquiring movies. But I have fond memories growing up of me and my siblings each picking a movie and then everyone votes and we watch a movie as a family. Just trying to give my kid the kinds of experiences I enjoyed in my youth. Not to mention that my siblings and I pretty much just quote movie lines to each other, whenever there is a relevant situation. We're a movie-watching family, I guess. Our DVD collection is coming up on 200 discs.
BL wrote:
Sat Mar 17, 2018 3:47 pm
DVDs may go the way of the VCRs in a few years.
I'm sure they will. But I'm an old-school kind of guy. Physical media over streaming.
BL wrote:
Sat Mar 17, 2018 3:47 pm
I suggest you look at federal income taxes withheld. As mentioned above, I suspect you would owe very little if any if you instead max your 401k (skip extra mortgage) and perhaps 2k to trad IRA for spouse. It makes sense for most to avoid large refunds if money is tight during the year. Especially consider 24k standard deduction, no exemptions, 2k child tax credit, EIC (earned income credit) and perhaps Saver's Credit if you still owe some tax. Perhaps you can find a tax estimator to check out numbers.

How much per month goes into withholding? Perhaps most of that can go into 401k to reduce taxable income. It is hard to tell just where you are with taxes and credits. $46,010 is the upper income limit for EIC with one child. If you max 401k you just might make it. Not sure if any IRA would help because you might not have enough taxes owed for Saver's Credit on it if you put 18.5k (maybe less) into 401k. (If you can't put enough into 401k for EIC, then you might want IRA for Saver's Credit. It gets complicated, so you need to play "what if" with a tax program.)

Build up emergency account and savings for expected costs.

What debts + interest rates do you have outside of mortgage?
Emergency fund is at $7,000.

No debts aside from the mortgage.

Breaking down my semi-monthly paycheck:
Gross: $2,645.83
Federal Income Tax: $142.51 (5.4%)
Social Security: $163.86 (6.2%)
Medicare: $38.33 (1.4%)
Utah State Income Tax: $110.84 (4.2%)
fposte wrote:
Sat Mar 17, 2018 3:48 pm
I am going to take a guess from the fact that you have 16 footnotes that you are not a "what, me worry?" kind of guy :happy .
LOL. Yeah, I'm pretty stressed out.
fposte wrote:
Sat Mar 17, 2018 3:48 pm
We're Bogleheads, so we can always tell you ways you could spend less money. But you have a respectable savings rate in what seems to be a LCOL area (I live in one of those too--lots of upside to that!). You have also had two major life and financial events in the last year that are commonly sources of stress even as they provide joy; your responsibilities have gone up considerably. I'm also not seeing what exactly you think you're falling short *on*--there's no planned rate of savings for a retirement goal, for instance, just a general worry (even your thread on savings rates seems to be about a round number target rather than a life target).

So consider the possibility that you are actually doing okay, and that it's pretty common for changes like that to make people feel more precarious no matter where they are financially. Also consider working with your wife to plan out not just a plan for what you're saving for but an idea of what "enough" would look like in the mean time. It may be that giving up the Super Bowl party would allow you to sleep better--or it might just mean that you lose something you enjoy and still worry. There's no way to guarantee the future, so it makes good sense to be prudent, but you have a present to take care of as well; it's important to keep both in mind.
I would consider Utah to be LCOL, mostly. Property values are pretty high. My sister in Oregon just bought a house that is 50% bigger than ours (1800 square feet vs 1200 square feet) for only $16,000 more. However, they're the ones that should be worried - they bought a more expensive house with a smaller down-payment and have less income than us.

You speak very reasonable things. Need to keep both in mind. I mean, I could get hit by a bus next Thursday (probably should get some life insurance :!: ) and I don't want to die without having lived.
Mingus wrote:
Sat Mar 17, 2018 3:38 pm
Your utilities are dirt cheap. I wish where I lived had those low costs.
Are they? I don't really have frame of reference. It does help that we don't have TV service and we get free Internet through Google Fiber. :D

IowaFarmWife
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by IowaFarmWife » Sat Mar 17, 2018 4:44 pm

You’ve gotten a lot of good advice you’ve been a lot of smart people, so I am not going to comment on the other advice. One thing I would tell you though is that instead of Purchasing all of your household and lawn equipment brand new, look on craigslist for these items. Another good source of household items are estate auctions. My husband and I have gotten many items in very good condition through craigslist and auctions. You just pay a fraction of the original price, and you don’t break the bank.

MindBogler
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by MindBogler » Sat Mar 17, 2018 5:04 pm

Drop the tithe or reduce it by at least half. You have to look out for yourself first, the church will do just fine either way. Ask yourself, if you fall on financial hardship, are they going to rescue you?

ny_knicks
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by ny_knicks » Sat Mar 17, 2018 5:10 pm

End the tithe...or make it more reasonable. A $200 check at the end of the year or something. 10% is crazy if you're treading water.

Scrolled through your estimates down to the penny. You seem fairly frugal and there really wasn't a lot of fat. Your house isn't the problem and neither is your spending. Just reasonably tight budget w/ savings in non-cash/accessible places and the excess going out the door to charity.

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Sandtrap
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by Sandtrap » Sat Mar 17, 2018 5:12 pm

Earn more.
Explore additional income streams.
Decrease debt.
Increase frugality. (what is needed vs what is wanted)
Substitute activities and things that cost money for things that don't.
Consider yourself, a charitable donation in need.

j :D

delamer
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by delamer » Sat Mar 17, 2018 5:15 pm

My experience with pre-schoolers is that they latch onto a couple of movies/videos that they love and watch them over and over and over.

I can still sing the lyrics to many of the Lion King and Toy Story songs, and my youngest kid is 23.

billfromct
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by billfromct » Sat Mar 17, 2018 5:20 pm

With a gross income of about $63.5k-$24k standard deduction, and $39.5k taxable income, you should be in the 12% marginal Federal tax bracket (2018).

If I were in the 12% Federal tax bracket, a 401k with 1.5% expense ratios & no 401k match, in my early/mid 20s with 35-40 years until retirement, I would fund my/wife's Roth IRA first.

You want to build up your Roth retirement accounts while in a low tax bracket & in your 20s. You can build up your tax deductible retirement accounts as you get older & into a higher tax bracket. I would think that you will want to have at least 25%-40% of your retirement assets in Roth retirement accounts when you retire.

Roth IRAs did not start until 1998. I was a single filer, in my 50s & in the 25% tax bracket when my 401k allowed Roth contributions, so it did not make financial sense to fund a Roth 401k when they became available. I have maxed out my Roth IRA since 1998.

I will start required minimum distributions from my traditional IRA next year. My retirement accounts are about 94% taxable/6% Roth now.

I wish Roth retirement accounts (IRAs and 401Ks) were available when I was in my 20s.

bill

GuyInFL
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by GuyInFL » Sat Mar 17, 2018 5:36 pm

probably should get some life insurance
I'd say definitely with a Stay at home mom and new baby. Probably something like 20-year level term. Just search online.

LiterallyIronic
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by LiterallyIronic » Sat Mar 17, 2018 6:00 pm

MindBogler wrote:
Sat Mar 17, 2018 5:04 pm
Drop the tithe or reduce it by at least half. You have to look out for yourself first, the church will do just fine either way. Ask yourself, if you fall on financial hardship, are they going to rescue you?
Not to make it religious or anything, but yes, they would. They would help with rent/mortgage, utilities, and groceries to get someone back on their feet.
billfromct wrote:
Sat Mar 17, 2018 5:20 pm
You want to build up your Roth retirement accounts while in a low tax bracket & in your 20s.
I'm 34. :(
GuyInFL wrote:
Sat Mar 17, 2018 5:36 pm
I'd say definitely with a Stay at home mom and new baby. Probably something like 20-year level term. Just search online.
I'll get on that.

IngognitoUSA
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by IngognitoUSA » Sat Mar 17, 2018 6:15 pm

Maybe SAHM can work from home and add to family income. Babies are expensIve.

jumppilot
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by jumppilot » Sat Mar 17, 2018 6:19 pm

HongKonger wrote:
Sat Mar 17, 2018 2:14 pm
Drop the charitable donations.

I agree. Right now your family is your favorite charity. Take care of them first and, when the time is right, write a check to a charity of your choice. I'd feel terrible if I was donating $400 a month to charity only to find out my child needed surgery that had a $5,000 out of pocket cost.


I'd also drop the mortgage prepayment. No need to do that when you are posting here wondering where your money is going.

Also drop the personal trainer. Over the last two years I've really got in to lifting weights. I learned everything I need from a couple books and Youtube.

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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by Jack FFR1846 » Sat Mar 17, 2018 6:23 pm

As you own the house longer, you'll figure some things out. Yard sales once it's warmer. Instead of buying disney disks, buy a box of 100 of them at a yard sale for $3. Bees? We got bees. Carpenter bees. Look around the house now and then. Easy enough to see where they nest or have bored into your house. A can of bee spray is cheap. If it's a big nest in a bush, get 2 cans and put on a big coat and gloves (I add a full face racing helmet) and go at it with a 2 can blast of chemical weapon goodness. This happened at my house after one of my kids (maybe 7 at the time) got stung. No bees survived the chemical attack.
Bogle: Smart Beta is stupid

madmartigan
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by madmartigan » Sat Mar 17, 2018 6:29 pm

I don't understand why your wife is carrying separate insurance from you, and for such a large sum? Surely combining all under your plan would increase your savings? Are you terribly concerned about losing your job? It sounds like you'd be marketable if you're thinkinking you'll be able to get a new job for a significant increase in salary in a year.

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