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

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mhadden1
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by mhadden1 » Sat Mar 17, 2018 6:42 pm

onourway wrote:
Sat Mar 17, 2018 2:35 pm
Charity is good, but perhaps you could consider donating your time rather than money.
Church doesn't accept in-kind.

I would tell OP not to worry though. Your incomes will go up, babies start school, maybe DW earns income. I would not prepay the mortgage for a while, probably slack off the Roth for a while.
Oh I can't, can I? That's what they said to Thomas Edison, mighty inventor, Thomas Lindberg, mighty flyer,and Thomas Shefsky, mighty like a rose.

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

Post by tainted-meat » Sat Mar 17, 2018 6:44 pm

Your budget seems fine and I don't see anything too far out of line. See if there is a way to make more money.

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

Post by MnyGrl » Sat Mar 17, 2018 6:48 pm

Can you donate your time instead of money? Both are needed at charities.

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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 6:51 pm

I have some reflections from reading through the thread:

1) Your main problem is not your savings rate, it's your anxiety. What do you need to sleep at night? Larger emergency fund? Go camping?

2) I think you are over-withholding federal income tax.

3) The savers tax credit is low hanging fruit, though worth a mere $400 per year. All you would have to do is make sure you have enough deferred contributions (401k, tIRA) to drop you into the 10% phase out for the saver's tax credit, which is just a few thousand dollars away.

4) Roth contributions are overrated for someone in your situation. You have a cash flow problem now. Advice preferring Roth is given as a hedge that you might be wealthy 30 years from now. Perhaps a better strategy would be to pay as little tax now as possible, and trust your future smarter self to avoid as much tax then as well.

5) That being said, with a 401k with high fees, I'd only contribute to a 401k up to match and then do tIRA.

6) I am also 34, house currently worth $200k or so, make a 10% tithe from gross to church and other charities, and will start paying for religious private school shortly. Most people on this board think I'm nuts, but these are my priorities. For those that give a lot, charity planning should be a factor in retirement planning. You will be able to optimize your tax situation in retirement slightly with a donor advised fund or contributing from tIRA to reduce RMD. There are all sorts of tax games you can play to reduce liability. This all is also in favor of contributing to deferred now.

7) I recommend YNAB. Looks like you would have fun with a zero based budget. It might help you reduce anxiety.

8) I strongly agree with "happy wife, happy life." Maybe you need a personal trainer. Exercise reduces anxiety. I like my bike. A nice nest egg will be no good if you aren't well & able. Conversely, if you are well & able, your need for a big nestegg is reduced. Health is a more important asset than money.
Last edited by camillus on Sat Mar 17, 2018 10:03 pm, edited 5 times in total.

Olemiss540
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by Olemiss540 » Sat Mar 17, 2018 7:00 pm

camillus wrote:
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.
This. Switching to pre tax 401k will help loosen things up a bit. Also, check your withholdings!
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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 7:24 pm

Can you rent out a room in your house to your brother/sister in law? They are renting someone's basement now for $850, so a room for $500 would be a win/win? Do it on a month to month lease. If your wife would stay at home for a while, she could watch another baby or two to earn some spending money.

I agree the 529 college savings is unnecessary. A kid that wants to go to college will find a {cheap} way.

You are saving aggressively, and it's a good habit to develop. However, you have a family to care for today, so I would leave some elbow room on the spending front. Let the money flow a little to reduce the sense of deprivation. Also, you may want to place a $100 (or another suitable amount) into an envelope each month for your wife to spend no-questions-asked. This is a long march, so you want the family to enjoy the journey along the way.

As for life insurance, obviously it's up to you, but an amount around $250-350k would be sufficient in my opinion. It would pay off the mortgage and cover a few years of living expenses. Some people buy a huge policy, making them worth more dead than alive. That's just asking for trouble.

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

Post by denovo » Sat Mar 17, 2018 7:37 pm

OP, just to summarize what people have suggested.

1. Stop prepaying mortgage.
2. Drop the personal trainer.
3. Eliminate the charitable donations.


I'll add one. Time for wife to start part-time work, that can transition to full-time work when the kid starts going to school.

Oh, and you can't afford more kids IMO.
"Don't trust everything you read on the Internet"- Abraham Lincoln

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

Post by Quantumfizz » Sat Mar 17, 2018 8:28 pm

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

Carl53
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by Carl53 » Sat Mar 17, 2018 9:23 pm

A few decades ago we had a house payment that was a greater fraction of income than yours. House was cheaper but loan interest was 9.5%.

Didn’t save much until my income started climbing in my mid thirties. Wife went to school on scholarships and then made good money for two years until kids came along. After that she was mostly a stay at home mom. We tithed too.

Kids through college, one did have a couple of loans that that occurred when they lost their scholarship. Was able to retire at 55.

Basically you are doing ok in my eyes. I would look more into cutting your taxes as suggested by others. https://www.irs.gov/retirement-plans/pl ... ers-credit

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

Post by RudyS » Sat Mar 17, 2018 9:29 pm

Suggestions to cut "charitable" donations are not productive. Reading various details given by the OP, the tithe is a religious obligation which we are going to have to respect. Seeing he's in Utah, I have a good idea of his relation with the church. OP's financial situation can certainly stand that expense, although it does make things a bit tighter than they would be otherwise. The many financial suggestions should provide lots of food for thought. Especially cutting out the mortgage prepayment.

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

Post by jehovasfitness » Sat Mar 17, 2018 9:32 pm

Drop the trainer and charity. Ps- I'm a trainer lol

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

Post by jehovasfitness » Sat Mar 17, 2018 9:39 pm

Religious obligation?

One can donate time. Jesus appreciates that just as much. Maybe the church doesn't

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

Post by prairieman » Sat Mar 17, 2018 9:40 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?
That looks about like what our lives were like when we switched from renting to owning. We were like that for about five years before salaries bumped up and let us breathe a little more.
One difference, though, is that we never tracked expenses so carefully. We were too busy living and just left enough in checking to not have to worry about bouncing a check.

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

Post by Coco nuts » Sat Mar 17, 2018 10:10 pm

Hello

congratulations first off. I read lots of cases just for fun, rarely did I see one with such nicely notated footnotes and deep introspection... I see you and your family will go far in life...

I don't think I am offering anything new here. Just to say that it's good to have non negotiables in life (tithing, mortgage prepayment, high savings rate in general, gym membership if that's what is really valuable to your family). Just imagine how proud you'll be when you look back a few years and see a nicely colored coded excel with a tiny mortgage amount, a healthy retirement fund, and also know that you did not scrimp on things that are considered important to your family. Decide what's priority yourself rather than listen to random strangers on internet...

This random stranger from the internet would like to remind you to learn how to fix things around the house/ have friends to help. I was on an aggressive mortgage payment route plus I have other strict non negotiables. Over the 10+ years I own a place, if I did not have handy friends/ neighbors, I would have replaced my dishwasher twice, and the rest of my appliances once, plus upgraded hvac and fireplace... Luckily with help I was able to fix most things at a very reasonable cost, never touching my e fund.

OK, this random stranger on the internet also think kids outgrow their toys/ clothes too quickly. I frequently see items given away for free. Also, media (like DVDs) depreciate as new technology becomes avail. I would see what is available at the library before buying new from amazon.

Good luck. I am looking forward to your update in a few years (you joined the mortgage free club or the 2 comma club or something)

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

Post by jpa » Sat Mar 17, 2018 10:21 pm

OP,

If your charitable giving is driven by your faith, don't listen to the naysayers here on this thread.

Temporarily quit the extra mortgage payment until your emergency fund is what you want it to be. After it is at that level, you can aggressively pursue what you wish---401k, Roth, mortgage, etc. Also, check your taxes as mentioned above. Finally, consider 401k instead of roth for the increased present cash flow. You could always add in future raises to Roth. Just my 2 cents

You're doing a seemingly good job

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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 10:25 pm

stan1 wrote:
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.
You can make up whatever personal accounting system that suits you. But reducing debt is a form of savings, and the principle portion of mortgage is a reduction of debt. Any economist, accountant or financial advisor worth his salt would tell you that. This is not really debatable.

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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 » Sun Mar 18, 2018 3:47 am

RudyS wrote:
Sat Mar 17, 2018 9:29 pm
Suggestions to cut "charitable" donations are not productive. Reading various details given by the OP, the tithe is a religious obligation which we are going to have to respect. Seeing he's in Utah, I have a good idea of his relation with the church. OP's financial situation can certainly stand that expense, although it does make things a bit tighter than they would be otherwise. The many financial suggestions should provide lots of food for thought. Especially cutting out the mortgage prepayment.
With this new knowledge re religious obligations then I change my advice (respecting that this is a financial forum).
1: Ditch the groceries and eat the 12 month stash that's under the bed.
2: Ditch the extra mortgage payment.

$500 a month saved right there.
Last edited by HongKonger on Sun Mar 18, 2018 4:35 am, edited 1 time in total.

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

Post by craimund » Sun Mar 18, 2018 4:13 am

Reducing charitable and mortgage prepayment would appear to be the best options.

Curious about the charge for "Storm Water" of $9.754. Is this a surcharge on your water/sewage bill? I realized some municipalities were charging commercial tenants for runoff from impermeable surfaces (i.e., roofs and pavement) but are these types of charges now showing up on residential water bills?
"When you ain't got nothing, you got nothing to lose"-Bob Dylan 1965. "When you think that you've lost everything, you find out you can always lose a little more"-Dylan 1997

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

Post by MossySF » Sun Mar 18, 2018 4:28 am

jehovasfitness wrote:
Sat Mar 17, 2018 9:39 pm
Religious obligation?

One can donate time. Jesus appreciates that just as much. Maybe the church doesn't
Certain churches -- especially the big one in Utah -- get their donations from you via payroll deductions. It's an automatic minimum X% of your income -- you can only opt to increase the amount -- if you wish to stay a part of the church.

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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 » Sun Mar 18, 2018 6:41 am

If your charitable giving is driven by your faith, don't listen to the naysayers here on this thread.


Yes.. You are doing well, on balance.

Investigate whether donating (if you have them) appreciated securities to charity could give you more "bang for the buck". When you donate appreciated securities, the charity gets the full value and you get the full tax deduction - but you do not pay income tax on the gain.

Check out whether donations through a donor advised fund could allow more flexibility in your tax deductible donations and have different timing of your donations and the receipt by the destination charity.

We use fidelity www.fidelitycharitable.com

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

Post by jharkin » Sun Mar 18, 2018 6:52 am

I have not read every line of every response yet but I agree with the consensus:

1 The House is actually very reasonable on your income. Drop the prepayment and PITI is less than 15% of gross.

2 loose the prepayment and charitable donations. Problem solved. Done.

3 You are probably underinsured, especially on the cars. And do you have term life?

4 If an adequate emergency fund is worrying you, remember Roth contributions can be withdrawn for that purpose if need be before you build up good taxable savings.


Other thoughts.... All those single digit expenses, are you sure? Especially the child care expenses seem extraordinarily low to me....

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

Post by jharkin » Sun Mar 18, 2018 6:59 am

MossySF wrote:
Sun Mar 18, 2018 4:28 am
jehovasfitness wrote:
Sat Mar 17, 2018 9:39 pm
Religious obligation?

One can donate time. Jesus appreciates that just as much. Maybe the church doesn't
Certain churches -- especially the big one in Utah -- get their donations from you via payroll deductions. It's an automatic minimum X% of your income -- you can only opt to increase the amount -- if you wish to stay a part of the church.
“Donations” are by definition something you do voluntarily out of the goodness of your heart. They can still charge that amount as a nonprofit I believe....but let’s be clear what it really is.... a mandatory membership fee.

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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 » Sun Mar 18, 2018 7:07 am

jharkin wrote:
Sun Mar 18, 2018 6:59 am
MossySF wrote:
Sun Mar 18, 2018 4:28 am
jehovasfitness wrote:
Sat Mar 17, 2018 9:39 pm
Religious obligation?
One can donate time. Jesus appreciates that just as much. Maybe the church doesn't
Certain churches -- especially the big one in Utah -- get their donations from you via payroll deductions. It's an automatic minimum X% of your income -- you can only opt to increase the amount -- if you wish to stay a part of the church.
“Donations” are by definition something you do voluntarily out of the goodness of your heart. They can still charge that amount as a nonprofit I believe....but let’s be clear what it really is.... a mandatory membership fee.
There is (and has been) a "continuum" of how "mandatory" tithing and donations are dealt with. It fascinates me.

I recall from my childhood that the place of worship there published (including children) details donation/collection lists in a book every year. Made good reading on those cold winters. My two great aunts would rush in the week between Christmas and New Years and put some money in (nice round number) so they would not show zero. Then, they got a pastor who thought this was terrible and stopped it. Collections went way down.

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

Post by Olemiss540 » Sun Mar 18, 2018 7:29 am

I am going to go a different route. You seem to be so structured, I have ZERO doubt you will be fine in the long run regardless.

- STOP ROTH IRA CONTRIBUTIONS!
- STOP MORTGAGE PREPAYMENTS

Do the above until you slim 7k efund gets comfortably into a range that reduces your personal anxiety. You are saving a large amount per month for a young family that just purchased a house and had a baby, yet you are still having anxiety (been there done that). If you had 15k cash on hand, do you think it would make the difference? Then stop the above for 5 or 6 months and then you can go back at it full speed.

Having a young family adds a whole new perspective to personal finance. While cutting retirement contributions is never a great idea, you are not reducing your savings just redirecting them for your own mental health.

If I am misreading the situation, and you will never feel any different (due to your personality) with a reasonable amount of cash on hand then ignore the above. Alternatively to the above, you could hold 10k of your Roth funds in bonds and consider them a second level of emergency funds. You are doing great, and I promise by the time the little one is 3 you will feel much more in control.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

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

Post by ddurrett896 » Sun Mar 18, 2018 7:39 am

LiterallyIronic wrote:
Sat Mar 17, 2018 2:02 pm
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

Any other ideas or suggestions?
If you want to save more money, you have to either..
1) Make more money
2) Spend less money

I think spending less would be easier to execute right away. Looking at your expenses, there are wants and needs. When I think needs, I think food/shelter/clothing/even cell - everything else is a want and in red ink and amounts to $842.54.That's a decent chunk of $ - cross off what is less important than saving.

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

Post by Meaty » Sun Mar 18, 2018 7:40 am

dm200 wrote:
Sat Mar 17, 2018 2:16 pm
HongKonger wrote:
Sat Mar 17, 2018 2:14 pm
Drop the charitable donations.
No :)
Yes.
"Discipline equals Freedom" - Jocko Willink

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

Post by welderwannabe » Sun Mar 18, 2018 7:59 am

ny_knicks wrote:
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.
I am not a tither, but a tithe by definition is 10%. A Fundamentalist Christian isn't going to bend on that.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

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

Post by cherijoh » Sun Mar 18, 2018 8:17 am

Since you have a perceived cash flow issue, you should NOT be saving in a Roth IRA. Since you don't get a match on your 401k and it has high fees, you should be making deductible traditional IRA contributions and reducing your taxable income. Even though you are covered by a retirement plan, your income is still low enough to deduct your contributions. MFJ with modified AGI < $99K is fully deductible for 2017 for taxpayers with a workplace retirement plan. See this IRS article.

You also need to make sure your tax withholding is properly adjusted. It seems odd to me that you are withholding almost as much for state taxes as for federal. My federal tax is almost 3x what I pay for state tax. But I can't tell if your federal withholding is too low, state withholding is too high, or Utah is a just a very expensive state. But you should definitely revisit your W-4 forms. If you do it now, you will still have time to adjust it later this year to fine tune your withholding.

Finally, if you feel cash-strapped, the easiest way to free up cash flow is to stop pre-paying you mortgage. However, I'm going to assume that based your posts on this thread that this is a non-starter because of your extreme feelings about your mortgage:
LiterallyIronic wrote:
Sun Mar 11, 2018 5:44 pm
" I'm waking up thinking, "Oh, no, I owe someone $146,600."
You have gotten good advice on your situation, but unless you are willing to follow it your situation will remain the same until you can increase your income down the road.

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

Post by capsaicinguy » Sun Mar 18, 2018 8:22 am

OP, it seems your anxiety is from feeling like you had money pre-purchase to feeling squeezed now that your emergency fund is down to 7000. Buying a house and having a baby in a year is a lot of big changes to your life! I would feel pressure in that case too. IMO getting that emergency fund built up is going to change your outlook. You are already saving a respectable proportion of your income so good job on that. As people have noted the fastest way to cutting expenses would be to reduce the charitable/tithe amount but you don't seem willing to do that. As others have said, either reduce expenses or increase income. The items highlighted in red by ddurrett896 is where I would be looking to trim the fat. Also, look around and sell anything you don't really need or use anymore. When you start looking you start finding things, have a garage sale, put it on CL, go crazy. Ditch the prepay on the house and change to pre-tax 401k. Adjust your witholding, my goal is always to owe just a tiny bit so I'm not giving the government a free loan. I would also add, maybe get a bike. See if you can ride to work. Reduce expenses and get exercise at the same time. I think you could make up some ground fast on the emergency fund in 6-12 months with a budget blitz like that. Make your hobbies spending time going for walks/etc with your kid. Remember, it's only temporary! You guys are doing fine, just build up that EF and you will probably shift your mindset.

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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 » Sun Mar 18, 2018 8:27 am

This all comes down to your own choices. You've made the choice that you would rather spend $400 a month on the church than putting it in a 529 which after 18 years with no gain would grow to $86,400. You've made the choice about how much you save in the 401k/Roth/extra mortgage payment. If you're happy with the choices that you've made, then I don't see a problem. Having no extra spending money isn't a problem....it means that you are efficiently designating money towards things you deem important. If you want more spare money, many ways have been pointed out in this thread. But you need to decide how to use your money.

A friend and coworker of mine years ago also paid a set % of his gross pay to his church. He made the added commitment that he would pay every raise to the church. This was in the late 70's, early 80's when 10% raises were commonplace. Pretty soon, he had designated so much to the church that he literally could not pay his rent and was begging for overtime and looking for a second job.
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by Marketman » Sun Mar 18, 2018 8:28 am

Paying off your mortgage is a savings fund in and of itself. Building equity is like money in the bank (but obviously less liquid). Holding real-estate and a mortgage is a good hedge against inflation.

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

Post by bottlecap » Sun Mar 18, 2018 8:31 am

To some extent this is life. I think it's great to have mom home with the child, but the reality is that having a SAHM mom just makes things tight. Wait until you have 3 kids...

You seem to be saving. If you can afford a mortgage pre-payment and retirement, you are saving.

My big take away is that you seem to be over-withholding on your taxes.

I understand that the personal trainer is short term, but that's your easiest reduction. I'm not an exercise guy, but if I was, I could figure out how to do it without a personal trainer...

Good luck and congrats on the baby and home.

JT

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

Post by Marketman » Sun Mar 18, 2018 8:34 am

Excuse me if it has already been asked, but what is the interest rate on your mortgage? If you pay extra principal amounts you are investing risk free at this rate.

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

Post by leftcoaster » Sun Mar 18, 2018 9:05 am

dumo the trainer and the yard service. The yard work is free personal training! Get a reel mower instead of a power one - boom! Cardio!

Volunteer instead of $$ tithing. Also, the scriptural basis for tithing comes from a time when social safety nets from taxation weren’t there. You are paying double.

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

Post by 986racer » Sun Mar 18, 2018 9:07 am

LiterallyIronic wrote:
Sat Mar 17, 2018 4:40 pm
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%)
Definitely check out your expected tax liability with the 2018 tax law changes.

The basic math looks like this
  • Annual gross salary : 63500
  • Standard deduction: 24000
  • AGI (63500 - 24000): 39500
  • Tax on 39500 (1905 + 12% of amount over 19050): 4359
  • Child tax credit: 2000
  • Total due: 2359
  • Amount that should be withheld each paycheck: 98.29
I think you could be seeing an extra 44.22 each paycheck, for a total of 1061 for the year. To be fair though, you would see this money anyhow when you file taxes next year.

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

Post by jehovasfitness » Sun Mar 18, 2018 10:17 am

As a personal trainer this reminds me of when I tell people to move more and eat less and they refuse to follow advice.

If you want to save more you gotta earn more and/or spend less. Choice is yours.

Just be honest with yourself

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

Post by Shikoku » Sun Mar 18, 2018 10:26 am

MossySF wrote:
Sun Mar 18, 2018 4:28 am
jehovasfitness wrote:
Sat Mar 17, 2018 9:39 pm
Religious obligation?

One can donate time. Jesus appreciates that just as much. Maybe the church doesn't
Certain churches -- especially the big one in Utah -- get their donations from you via payroll deductions. It's an automatic minimum X% of your income -- you can only opt to increase the amount -- if you wish to stay a part of the church.
I am shocked to know that something like this exists in the United States. Everyday is a day of learning!
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Re: Bought house six months ago - now feeling like we're treading water and can't save money

Post by cutehumor » Sun Mar 18, 2018 10:30 am

OP,

Who will watch the baby? daycare? I pay 1165 per month for my 3 year old son. 13,980 per year. So, either your wife will cut down on her income/job to watch the baby at home. or you pay daycare or you have a family member to watch your baby for free?

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

Post by blastoff » Sun Mar 18, 2018 10:37 am

dm200 wrote:
Sat Mar 17, 2018 2:16 pm
HongKonger wrote:
Sat Mar 17, 2018 2:14 pm
Drop the charitable donations.
No :)
Then increase the charitable donation?

Or, is $400 the absolute perfect amount?

It seems to me like this is a case of 10% of net pay.

As food for thought, how much would the original poster feel like they should contribute if they had a syper generous pension at work and got paid less? Or what if they contributed the max amount to their 401k and didn't do any Roth?

I'm not against the charitable contribution. But I think it's worth thinking about.

In any case I think they'll feel fine in a couple years when they are aking more money and they're not even doing bad right now.

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 » Sun Mar 18, 2018 10:41 am

craimund wrote:
Sun Mar 18, 2018 4:13 am
Curious about the charge for "Storm Water" of $9.754. Is this a surcharge on your water/sewage bill? I realized some municipalities were charging commercial tenants for runoff from impermeable surfaces (i.e., roofs and pavement) but are these types of charges now showing up on residential water bills?
Yeah, they say it's a calculated figure based on size of roof. I didn't know that some places were only charging this to commercial buildings, but we've got it on residential buildings here.
MossySF wrote:
Sun Mar 18, 2018 4:28 am
Certain churches -- especially the big one in Utah -- get their donations from you via payroll deductions. It's an automatic minimum X% of your income -- you can only opt to increase the amount -- if you wish to stay a part of the church.
Assuming we're both talking about the big one in Utah, there are no payroll deductions - it's all voluntary and they never see what your actual income is.
dm200 wrote:
Sun Mar 18, 2018 6:41 am
If your charitable giving is driven by your faith, don't listen to the naysayers here on this thread.


Yes.. You are doing well, on balance.

Investigate whether donating (if you have them) appreciated securities to charity could give you more "bang for the buck". When you donate appreciated securities, the charity gets the full value and you get the full tax deduction - but you do not pay income tax on the gain.

Check out whether donations through a donor advised fund could allow more flexibility in your tax deductible donations and have different timing of your donations and the receipt by the destination charity.

We use fidelity www.fidelitycharitable.com
Interesting. I'll look into that. Thanks.
jharkin wrote:
Sun Mar 18, 2018 6:52 am
3 You are probably underinsured, especially on the cars. And do you have term life?

4 If an adequate emergency fund is worrying you, remember Roth contributions can be withdrawn for that purpose if need be before you build up good taxable savings.
Other thoughts.... All those single digit expenses, are you sure? Especially the child care expenses seem extraordinarily low to me....
There's definitely no reason for us to have comp/coll on our cars - we have a 2001 Dodge Stratus and a 2001 Toyota Corolla. We could run into problems if we caused an accident that totaled a Ferrari or something, because our liability limits are something like $25k PD, $50k BI. But I'm under the impression that they can't take 401k and IRA money? We have no life insurance. We looked into it briefly awhile ago, but it seemed like the insurance agent wanted to take a sample of my blood? So I declined. Ideally, yeah, we'd have both my wife and I covered.

As for the figures, that everything we've spent since September, divided by the number of months. Most of the baby's clothes are hand-me-arounds from my siblings, which will be going to another sibling after we're done with them. Most of the baby's toys were from Christmas or her birthday.
cherijoh wrote:
Sun Mar 18, 2018 8:17 am
You also need to make sure your tax withholding is properly adjusted. It seems odd to me that you are withholding almost as much for state taxes as for federal. My federal tax is almost 3x what I pay for state tax. But I can't tell if your federal withholding is too low, state withholding is too high, or Utah is a just a very expensive state. But you should definitely revisit your W-4 forms. If you do it now, you will still have time to adjust it later this year to fine tune your withholding.
This is correct. I need to go back to my W-4. I recently learned that it's wrong. It asks how many "eligible children" you have, but it didn't explain what made a child "eligible" or not. The HR guy didn't know. So I put 0, to be safe. But I found out later that it's any child under 18 that lives with you. So we should have a 1, not a 0, on that line. I will make the adjustment this week at work.
Marketman wrote:
Sun Mar 18, 2018 8:34 am
Excuse me if it has already been asked, but what is the interest rate on your mortgage? If you pay extra principal amounts you are investing risk free at this rate.
It's 3.875%.
leftcoaster wrote:
Sun Mar 18, 2018 9:05 am
dumo the trainer and the yard service. The yard work is free personal training! Get a reel mower instead of a power one - boom! Cardio!

Volunteer instead of $$ tithing. Also, the scriptural basis for tithing comes from a time when social safety nets from taxation weren’t there. You are paying double.
I couldn't do the sprinkler work myself and I didn't want to try to remove a bees nest, so we paid someone to do those things.
jharkin wrote:
Sun Mar 18, 2018 6:52 am
If an adequate emergency fund is worrying you, remember Roth contributions can be withdrawn for that purpose if need be before you build up good taxable savings.
jpa wrote:
Sat Mar 17, 2018 10:21 pm
Temporarily quit the extra mortgage payment until your emergency fund is what you want it to be.
Olemiss540 wrote:
Sun Mar 18, 2018 7:29 am
- STOP ROTH IRA CONTRIBUTIONS!
- STOP MORTGAGE PREPAYMENTS

Do the above until you slim 7k efund gets comfortably into a range that reduces your personal anxiety. You are saving a large amount per month for a young family that just purchased a house and had a baby, yet you are still having anxiety (been there done that). If you had 15k cash on hand, do you think it would make the difference? Then stop the above for 5 or 6 months and then you can go back at it full speed.
capsaicinguy wrote:
Sun Mar 18, 2018 8:22 am
OP, it seems your anxiety is from feeling like you had money pre-purchase to feeling squeezed now that your emergency fund is down to 7000. Buying a house and having a baby in a year is a lot of big changes to your life! I would feel pressure in that case too. IMO getting that emergency fund built up is going to change your outlook.
This seems to be right. I would feel less anxious if we had $10,000 instead of $7,000. So we're going to focus on that and see how I feel then.
ddurrett896 wrote:
Sun Mar 18, 2018 7:39 am
Netflix: $8.54
Charitable Donations: $400
Wife's Personal Trainer: $160
Furniture: $608
Gifts: $5110
Holiday Expenses: $4911
Snacks: $4312
Tools: $32 13
Movies: $22 14
Wife's Hobbies: $18
Other (unknown): $15 15
Restaurants: $7
Video Game Hardware: $5
Steam Video Games: $4
Baby Toys: $3
We've decided on the following so far:

No furniture, gifts, holiday expenses, snacks, movies, hobbies, restaurants, video games, baby toys, or tools (except a lawn mower) until we get our emergency fund from $7,000 to $10,000.

I'm going to have a talk with her about if she really thinks she needs the personal trainer for the full six months for motivational purposes or what-not, or if she thinks knows enough to lose the weight on her own. She wants to drop 50 pounds and "be able to do a pull-up."

And we'll have a long talk about whether the methods and/or amount of charitable contributions are causing us undue hardship, but I wouldn't hold my breath on it.
Last edited by LiterallyIronic on Sun Mar 18, 2018 10:51 am, edited 1 time in total.

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

Post by blastoff » Sun Mar 18, 2018 10:45 am

Regarding charitable contributions: The spirit of my comment is to view them for what they are.

Charitable contributions are charitable contributions. They aren't taxes.

You shouldn't try to reduce your charitable contributions by contributing more to a 401k.

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

Post by Leemiller » Sun Mar 18, 2018 10:48 am

I would lower retirement savings and drop the pre-pay on the mortgage. I think you have an unrealistic view of savings given your income and lifestyle expectations. Focus on increasing your income and consider as your child gets older if your wife can go back to work at least part-time. Also, is your mortgage a 15 or 30 year?

Some of your expenses look unfeasibly low to me, in particular food, baby expenses, your clothing, etc. I would drop Disney movies and add books as a line item for your child. My kid never watched even a favorite movie
more than 3x.

Please leave your wife’s personal trainer alone. I can afford one and don’t have one (and need one) post baby. You have no idea what being pregnant and childbirth does to a woman.

Your tithing is a matter of faith. Unlike some others, I don’t see much to trim, and I think you will see expenses rise as the kid gets older. I have a six year and and a one year old that will eat as large a piece of steak between them as I eat. I think easing up on pre-pay and retirement now will allow you a bigger cash cushion which will reduce stress when you can’t keep kid expenses under $10 a month.

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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 » Sun Mar 18, 2018 10:50 am

cutehumor wrote:
Sun Mar 18, 2018 10:30 am
OP,

Who will watch the baby? daycare? I pay 1165 per month for my 3 year old son. 13,980 per year. So, either your wife will cut down on her income/job to watch the baby at home. or you pay daycare or you have a family member to watch your baby for free?
My wife watches the baby. She was only making $12.50/hour at a job that caps their employees at 37.5 hours/week so they don't have to provide any benefits (no paid time off, no 401k, no health insurance). So her gross income was in the vicinity of $1875 per month. After taxes would only just be enough to cover daycare. So she's staying at home instead until the baby starts school in a few years. We're also looking into the possibility of her becoming a school crossing guard this next school year, so she can work a few hours per day while the baby hangs out in a stroller.

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

Post by BolderBoy » Sun Mar 18, 2018 10:57 am

LiterallyIronic wrote:
Sat Mar 17, 2018 2:02 pm
Charitable Donations: $400
"Charity begins at home..."
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

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 » Sun Mar 18, 2018 10:57 am

Leemiller wrote:
Sun Mar 18, 2018 10:48 am
I would lower retirement savings and drop the pre-pay on the mortgage. I think you have an unrealistic view of savings given your income and lifestyle expectations. Focus on increasing your income and consider as your child gets older if your wife can go back to work at least part-time. Also, is your mortgage a 15 or 30 year?

Some of your expenses look unfeasibly low to me, in particular food, baby expenses, your clothing, etc. I would drop Disney movies and add books as a line item for your child. My kid never watched even a favorite movie
more than 3x.

Please leave your wife’s personal trainer alone. I can afford one and don’t have one (and need one) post baby. You have no idea what being pregnant and childbirth does to a woman.

Your tithing is a matter of faith. Unlike some others, I don’t see much to trim, and I think you will see expenses rise as the kid gets older. I have a six year and and a one year old that will eat as large a piece of steak between them as I eat. I think easing up on pre-pay and retirement now will allow you a bigger cash cushion which will reduce stress when you can’t keep kid expenses under $10 a month.
Maybe I do have an unrealistic view. If anything, I want to increase our retirement savings from 23% of gross to 25% of gross. It's just that we used to make a lot less money. And now we make a lot more. And yet it still just all goes away. First paycheck of the month? Well, half of it is going to Vanguard. Second paycheck of the month? Well, half of it is going to the mortgage.

It's a 30 year mortgage.

We try very hard to keep our expenses like food low. :D

You're probably right. She can just roll with the personal trainer. Doesn't really matter, financially, in the long run and it's making her happy.

We've decided to stop buying movies for awhile and instead borrow from the library when we want to watch something. And we've decided to take the baby to the library to read books twice a week.

We'll consider lowering the mortgage pre-payment, but I feel like it needs to be second priority after retirement funding.

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

Post by CurlyDave » Sun Mar 18, 2018 11:14 am

I would stop making the extra principle payment on the mortgage. You are young and your salary will increase over time. If you want to go back to making it as your salary increases over the years, go ahead. But, at the age of 72 I can tell you that over my life I have bought and sold many houses. Whenever I sold one and bought another the total of any extra principal payments I had made was lost in the noise on the equity in the old house.

Put the money in a CD or high interest savings account for the next few years until you have a comfortable EF. Or even invest it in having a date night every week or two weeks. Your marriage is an investment -- don't neglect it.

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

Post by dknightd » Sun Mar 18, 2018 11:49 am

CurlyDave wrote:
Sun Mar 18, 2018 11:14 am
I would stop making the extra principle payment on the mortgage. You are young and your salary will increase over time. If you want to go back to making it as your salary increases over the years, go ahead. But, at the age of 72 I can tell you that over my life I have bought and sold many houses. Whenever I sold one and bought another the total of any extra principal payments I had made was lost in the noise on the equity in the old house.

Put the money in a CD or high interest savings account for the next few years until you have a comfortable EF. Or even invest it in having a date night every week or two weeks. Your marriage is an investment -- don't neglect it.
+1
Build up your "just in case" fund

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

Post by cutehumor » Sun Mar 18, 2018 12:13 pm

LiterallyIronic wrote:
Sun Mar 18, 2018 10:50 am
cutehumor wrote:
Sun Mar 18, 2018 10:30 am
OP,

Who will watch the baby? daycare? I pay 1165 per month for my 3 year old son. 13,980 per year. So, either your wife will cut down on her income/job to watch the baby at home. or you pay daycare or you have a family member to watch your baby for free?
My wife watches the baby. She was only making $12.50/hour at a job that caps their employees at 37.5 hours/week so they don't have to provide any benefits (no paid time off, no 401k, no health insurance). So her gross income was in the vicinity of $1875 per month. After taxes would only just be enough to cover daycare. So she's staying at home instead until the baby starts school in a few years. We're also looking into the possibility of her becoming a school crossing guard this next school year, so she can work a few hours per day while the baby hangs out in a stroller.

With the loss of $1875 per month from your wife's job you are forced to make cuts in your budget you listed. There is no way around this. It wasn't that you bought a house. It was when your wife quit her job when the baby was born, the loss of $1875 per month from her income is eating away at your emergency fund/ savings.

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

Post by gotester2000 » Sun Mar 18, 2018 1:30 pm

onourway wrote:
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.
+1. You can drop or reduce charity amount at least till you get an income hike.

Read - The millionaire next door.

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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 » Sun Mar 18, 2018 1:47 pm

LiterallyIronic wrote:
Sun Mar 18, 2018 10:57 am
Leemiller wrote:
Sun Mar 18, 2018 10:48 am
I would lower retirement savings and drop the pre-pay on the mortgage. I think you have an unrealistic view of savings given your income and lifestyle expectations.
Maybe I do have an unrealistic view. If anything, I want to increase our retirement savings from 23% of gross to 25% of gross. It's just that we used to make a lot less money. And now we make a lot more. And yet it still just all goes away. First paycheck of the month? Well, half of it is going to Vanguard. Second paycheck of the month? Well, half of it is going to the mortgage.

We'll consider lowering the mortgage pre-payment, but I feel like it needs to be second priority after retirement funding.
I can remember feeling really stretched with a single income, young family, and buying a house. Just like some folks get on the consumption treadmill, others of us can get obsessed with savings and investment. But life is a marathon, not a sprint, and you need to keep balance. Remember the biblical admonitions about the "love of money". Strike a balance. The days of having a young family at home are special.

One thing that might help would be to play with a mortgage amortization calculator for your home loan. Figure out what it would take to pay off your mortgage at, say, age 55. Look at the difference in principal payments, and set the difference as your target (not requirement) for the additional payment amount. It is another form of retirement savings; having a paid-off house is a strong base for retirement.

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