Household budget, savings, retirement, and Home Equity question

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Findourway1
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Joined: Tue Apr 02, 2019 8:18 am

Household budget, savings, retirement, and Home Equity question

Post by Findourway1 » Wed Apr 03, 2019 9:05 am

Hello all,

Long time lurker and first time poster. Thanks in advance for feedback.

For the past one year, we have now been trying to follow a budget of 50% (Fixed costs), 30% (Flexible spending) and 20% (savings) rule. So far it is not working out well. Please critique our budget below and hope to get good feedback on items I missed.

Family - 2 adults (Ages 42 & 32) + 2 kids (Ages 3 & 7 months) in DC Metro area (High COL)

Monthly net Income from my job after all deductions & taxes - ~$6,000
Wife is a stay at home mom & takes kids outside >4x/week to libraries, play-dates, & museums.So no preschool expenses at this time. But has some food, gas, parking, and other expenses.

Average monthly expenses (past year)
A. Fixed Expenses
Total $4,698 = ~77% of net income
-Mortgage (PITI) $2,740 (Paying $20 - $30 extra each month on a 15 year loan with 12 years left on the loan)
-Utilities (Gas, electric, water) $221
-Two Phones & Home Internet $135
-Car Insurance $105
-Netflix & Amazon $18
-College Fund#1 $30
-College Fund#2 $30
-Wife's Minivan (new & ~4 years left on loan) $530 (paying $5 to $10 extra each month to pay off quicker)
-My old car (paid off) - $0
- TSP (Retirement) loan payment $890
This will be paid off in May 2020. It was originally used for a family emergency & also pay down mortgage to eliminate PMI.


B. Flexible Spending
Total $1,695 to $1,795 = ~29% of net income

-Gas for cars $120
-Grocery $700
-Eat Out $175
-Assistance to parents $300 to $400
-Cleaning Lady $300
-Misc - Buffer $100

C. Goals/Savings (A fantasy at this point)
Total $1,350 = 22% of net income
-Travel $325
-Emergency $425
-Car Maintenance $100
-Kids expenses $150
-Invest $250
-House Maintenance $100

---------------

Our Emergency savings, debt and retirement situation is as below:
Emergency savings - 18k
Credit Card Debt - $6k (Mostly due to flight tickets for summer travel and home repairs)
Minivan debt - ~24k remaining
Mortgage debt - ~220k remaining on house appraised for 320k (I probably overpaid for this house 3 years ago which is another story)

TSP w/employer match - ~$140k
Roth IRA - ~$26k

----------------

Both of our families are outside the US in France & India. It is very important for us to travel & have kids spend time with grandparents, uncles, & cousins at least once a year. This is is the reason for our high travel costs.

In the past, I did side jobs (Uber and poker) that bought ~$800/month on average (mostly from poker). But both also took a lot of time. Recently I have been unable to do any of them and also had unexpected car & house repair expenses. I did not earn much from Uber due to location outside metro area & time and Poker is high risk requiring a stable bankroll.

From the expenses list, we are already spending ~106% of our income which makes it impossible to meet any of our financial goals. Eating out and cleaning lady are the only parts that are "luxury". That will result in ~3% savings per month. All other expense is necessary.

So that brings me to the set of questions:

1. Is our spending reasonable? What can we cut beyond eating out and cleaning if at all? My thinking is the only option is to earn more, not cut more which will impact our quality of life.

2. I am considering a Home equity loan to tide over until May 2020 when my retirement loan will be paid off. This loan will also be used for basic house maintenance, travel expenses and build up emergency buffer. Is that a good idea?
My concern is I am using another loan to paper over our expenses instead of improving the house. We still have to repair items in the house along with basic maintenance and I am trying to either fix on my own or do it cheaply. Am also concerned with paying for loan commissions unnecessarily and paying more down the line.

3. Is my situation (TSP balance, expenses, and savings) typical for a single income family? I was not well-educated about money growing up and as an immigrant to US, I probably made a lot of money mistakes (stock market and spending).

4. Our medium-term goals include wife finding a job when both kids start school. We would also like to continue to travel to see family on an annual basis and hopefully have them visit to take an RV trip across western USA when the kids grow up a little. Is this a feasible goal given our income and expenses?

Thanks!

onourway
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Re: Household budget, savings, retirement, and Home Equity question

Post by onourway » Wed Apr 03, 2019 9:36 am

Hi there. Welcome to the site!

You have some issues that are going to require some difficult choices. The #1 issue is the cost of your housing. The #2 issue is the cost of your vehicles. These are common places where people over-spend, so you are not alone, but realize that together, these items are consuming 58% of your take-home pay before you include any maintenance or updating/furnishing the home. This is simply not sustainable.

So, the first option would be to down-size to a smaller home or rent for a while until your financial situation gets under better control. What size place are you in now, and what is the outstanding balance of the mortgage vs. the value of the home?

In the meantime, there are other places to cut. I would stop paying extra on the mortgage and car loans. You need that cash now. I would stop saving for college while you aren't saving enough for yourselves. I would go to pre-paid phones which will cut that bill in half. You can't afford to assist your parents, so cut that. You can't afford a cleaning lady. You could cut groceries and eating out. Altogether that could increase your monthly cash by about $1000 which might be enough to allow you to keep the house (but it will be tough).

I would also pay off the credit card now with your emergency savings. It makes no sense to pay that interest you can't afford. Use the savings from paying the credit card bill plus a bit of the $1000 you cut above to rebuild your savings. Do not spend anymore on the credit card until you have enough breathing room to know you will pay it off every month.

Can your wife work, even part time now? Another $1000-2000/month would go a long ways towards making this work for you. Otherwise, you are going to have to down-size your lives in some ways that are going to be pretty painful. :|

magicrat
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Re: Household budget, savings, retirement, and Home Equity question

Post by magicrat » Wed Apr 03, 2019 9:45 am

Also consider refinancing to a 30 year mortgage and stop sending money to parents.

jharkin
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Location: Boston suburbs

Re: Household budget, savings, retirement, and Home Equity question

Post by jharkin » Wed Apr 03, 2019 9:46 am

#1 First thing - Refinance that mortgage into a 30 year fixed. You can get 3.99% right now with no points... you are probably not doing much better on the 15 and that monthly payment is killing you.

Later on as income grows you can always pay more than the minimum on the 30 and pay it off early, but right now you cant afford it. Today you would be better off just paying a 30 and getting rid of your high interest CC and consumer debt.

Other thoughts:

- Don't bother with Uber. You are probably making less than minimum wage and loosing valuable family time. Netting 6k from your day job tells me you have in demand skills. Invest in those instead.
- Do you really need a cleaning lady when one spouse is home full time? We dont have one and we both work....
- House maintenance of $100 is probably low. I'm guessing you are just counting the recurring stuff like lawn mowing and not amortizing for the periodic big things like a new roof every xx years. Work on building a decent EF for that.

KlangFool
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Re: Household budget, savings, retirement, and Home Equity question

Post by KlangFool » Wed Apr 03, 2019 9:51 am

OP,

A) You choose to spend first and save later. Hence, after you spend all your money, you have nothing left to save.

B) If you choose to save first and spend later, you would have savings. You cannot spend the money that you do not have.

C) On top of all that, you took out an additional loan to spend beyond your current income.

D) This is not sustainable.

KlangFool

dsmil
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Re: Household budget, savings, retirement, and Home Equity question

Post by dsmil » Wed Apr 03, 2019 10:02 am

I don't think that your spending is unreasonable. The cleaning lady seems like an obvious $300 cut and once you knock off that and the TSP loan, you'll see a $1,200 difference. Your house seems like a reasonable price for your income, but the 15 year loan is killing you. I'd see if you could refinance for a 30 year loan. You could refinance with 20% down and should receive some money back which you could use to possibly pay off the TSP loan and credit card debt. If you do those things, you could be looking at a $2k difference per month, and you'll exceed your savings goals.

onourway
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Re: Household budget, savings, retirement, and Home Equity question

Post by onourway » Wed Apr 03, 2019 10:26 am

Yes, the switch to a 30-year is a good option that I missed. However my back of the napkin math doesn't see it saving you enough to be the cure-all. I see maybe a $700/month savings depending on the exact numbers. Remember the interest rate is likely to be higher both because of the extended mortgage term and because rates have generally risen as of late (although they are now trending down again). That gets you to about $5800 in expenses before covering the credit card, before budgeting anything other than that $100 for maintenance on the house and cars, before travel or clothing or kids expenses or anything else.

However, once the TSP loan, credit card, and car loans are paid off, you will be fine. The trick is to stop spending money before you have it.

Topic Author
Findourway1
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Joined: Tue Apr 02, 2019 8:18 am

Re: Household budget, savings, retirement, and Home Equity question

Post by Findourway1 » Wed Apr 03, 2019 11:34 am

Thanks for all the feedback.

Will look into eliminating cleaning costs and reducing eating out. I can also reduce the extra car and house payments a bit.

As for the switch to 30-year to a higher rate, that will increase interest paid to banks while reducing monthly payments a little. Seems like a wash?

True, the house maintenance allocation is very low - I try to do most repairs myself or ask friends for help. Pretty soon some big thing may come along. Already having water issues due to below-grade window, so researching how to close up windows myself. However, researching and doing the work myself keeps costs low for now.

What about getting a home equity loan to tide over all expenses till next May without switching to 30-year loan? Is it typically a bad idea to get a Home equity loan and use it for things other than home improvement?

GT99
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Re: Household budget, savings, retirement, and Home Equity question

Post by GT99 » Wed Apr 03, 2019 12:10 pm

Findourway1 wrote:
Wed Apr 03, 2019 11:34 am
Thanks for all the feedback.

Will look into eliminating cleaning costs and reducing eating out. I can also reduce the extra car and house payments a bit.

As for the switch to 30-year to a higher rate, that will increase interest paid to banks while reducing monthly payments a little. Seems like a wash?

True, the house maintenance allocation is very low - I try to do most repairs myself or ask friends for help. Pretty soon some big thing may come along. Already having water issues due to below-grade window, so researching how to close up windows myself. However, researching and doing the work myself keeps costs low for now.

What about getting a home equity loan to tide over all expenses till next May without switching to 30-year loan? Is it typically a bad idea to get a Home equity loan and use it for things other than home improvement?
Paying a low interest mortgage (even if it's slightly higher than your 15 year rate) isn't always a bad thing, ESPECIALLY if you have higher rate debt like credit cards and you're not maxing out tax advantaged space. I'd refi and pull enough out to pay off the credit card debt (and the car loan if it's higher than the mortgage rate). You also shouldn't be paying extra on your mortgage, even if it's only $20-30 per month, until you pay off all higher interest debt and max out tax advantaged accounts.

Key concept - if you have multiple debt streams, you should only be paying more than the minimum payment on 1 of them. That 1 should either be the highest interest rate or the lowest balance (i.e. quickest to pay off). My personal opinion is highest interest rate.

Doing some back of the napkin math, refinancing and incorporating your credit card debt into the refi will probably free up over $700 per month.

KlangFool
Posts: 14167
Joined: Sat Oct 11, 2008 12:35 pm

Re: Household budget, savings, retirement, and Home Equity question

Post by KlangFool » Wed Apr 03, 2019 12:15 pm

Findourway1 wrote:
Wed Apr 03, 2019 11:34 am

As for the switch to 30-year to a higher rate, that will increase interest paid to banks while reducing monthly payments a little. Seems like a wash?
Findourway1,

Versus paying other higher interest debt. How is that a wash?

KlangFool

majiaknight
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Re: Household budget, savings, retirement, and Home Equity question

Post by majiaknight » Wed Apr 03, 2019 2:44 pm

I agree w/ the other replies that you should first refi to a 30y fixed (or 7/1 ARM if you plan to move within 7 years).

15Y fixed mortgage is generally recommended but you can't afford it now. Once you get a big pay raise or your wife goes back to work you could choose to accelerate the payment to principal each month (just like a 15Y) or refinance to a 15Y fixed later if your financial situation gets improved.

Use the following calculator to compare the benefits of extra monthly payments and interests savings in different scenarios:
http://www.mtgprofessor.com/calculators ... tor2a.html

For the budget, I still see several places like cleaning lady, eat out and travel which could be easily cut as they belong to things you want vs. need. There are various ways to interact w/ your oversea family using social networks and video chatting (buy them a $300 iPad as a gift) on a regular basis and festivals so you could reduce the frequency of traveling back. Stop the contribution to college fund until you pay off all non-mortgage debt and could max the retirement saving benefits (e.g. getting all the employer 401K match, fully fund HSA and IRAs).
https://www.bogleheads.org/wiki/Priorit ... nvestments
Last edited by majiaknight on Wed Apr 03, 2019 3:14 pm, edited 1 time in total.

delamer
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Re: Household budget, savings, retirement, and Home Equity question

Post by delamer » Wed Apr 03, 2019 3:12 pm

I’ll be the contrarian and say keep the current mortgage. Being in your mid-50’s with a paid off mortgage will make your financial life easier.

Get rid of the cleaning lady, eliminate your extra loan payments, and reduce your eating out so you aren’t running a current deficit. You also could eliminate the college savings.

In one year, you’ll have an additional $890/month to put toward your savings goals, and things will look a lot different.

Don’t take out a HELOC for a temporary problem.

I assume you are contributing enough to the TSP to get the match?

FoolMeOnce
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Re: Household budget, savings, retirement, and Home Equity question

Post by FoolMeOnce » Wed Apr 03, 2019 3:38 pm

Findourway1 wrote:
Wed Apr 03, 2019 11:34 am
As for the switch to 30-year to a higher rate, that will increase interest paid to banks while reducing monthly payments a little. Seems like a wash?
Extra money paid 20 years from now is not as valuable as extra money saved now. Plus, as others have said, once your finances are in order and savings are on track, you could consider paying it down early anyway.

I would absolutely cut the cleaning service. You are spending $400 more than you take in right now and the cleaning is $300 of that. But please don't expect your wife to take care of all the cleaning just because she stays at home. As you must know, caring for a toddler and infant is exhausting.

ajg189
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Re: Household budget, savings, retirement, and Home Equity question

Post by ajg189 » Wed Apr 03, 2019 3:53 pm

Your house payment and car payments are killing you right now. Luckily, the retirement loan will be done in a year, which will free up some room in your budget.

As such, I would do the following:
-Stop the $20-$30 prepayments/college funds in a few separate places. These are drops in the bucket for each respective loan or savings plan. What I would do is take all of your prepayments, combine it with the cleaning/car savings, and throw that at the retirement loan. You'll be able to allocate at least a couple hundred bucks more per month this way, and knock out the loan a couple months faster. This will free up precious space in your budget.
-Cut back cleaning expense to half or less. $300/mo in cleaning is like a car payment. Try to limit to once per month if you can.
-Get rid of that van ASAP. I can understand wanting something reliable/safe, but a $530/mo payment plus insurance plus maintenance is costing you well over 10% of your take home pay.
-As others have said, refi the house to a 30 year

The car and house refi can't be done overnight, though will help your overall situation. However, the cleaning expense and prepayments can immediately be combined to put towards the debt.

MI_bogle
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Re: Household budget, savings, retirement, and Home Equity question

Post by MI_bogle » Wed Apr 03, 2019 3:56 pm

dsmil wrote:
Wed Apr 03, 2019 10:02 am
I don't think that your spending is unreasonable. The cleaning lady seems like an obvious $300 cut and once you knock off that and the TSP loan, you'll see a $1,200 difference. Your house seems like a reasonable price for your income, but the 15 year loan is killing you. I'd see if you could refinance for a 30 year loan. You could refinance with 20% down and should receive some money back which you could use to possibly pay off the TSP loan and credit card debt. If you do those things, you could be looking at a $2k difference per month, and you'll exceed your savings goals.
I would disagree... much about it is unreasonable given they have 6K in credit card debt

Paying extra on a mortgage which is almost certainly lower interest rate than credit card debt is unreasonable

Paying extra on a cay payment which almost certainly has a lower interest rate than credit card debt is unreasonable

$300 monthly for a cleaning service is unreasonable when you have credit card debt, auto debt, taken out a retirement loan

Spending 1000 monthly on food and dining is unreasonable given the above

Once the CC debt is paid off and the retirement loan is paid off... yes the above spending is reasonable. But not until then!

Topic Author
Findourway1
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Re: Household budget, savings, retirement, and Home Equity question

Post by Findourway1 » Tue Apr 16, 2019 3:45 pm

Hello all,

First, thank you for all your responses. I was traveling which gave me time to think about the advice on this board as well.

I realize now that it was a bad idea to pay more to low-interest loans while neglecting other funds. I am considering the below steps and would appreciate some feedback:

1. Refinancing - I am leaning towards a 20 year loan since we can pay extra when flush & pay it off by 2035 by my calculations. The closing costs are also discounted as long as we keep the loan for 2+ years at our Credit Union. The 30 year loan seems too long and we may end up paying too much in interest (that is my top concern).

The 20 year loan has 4.125% rate (no points) = paying ~$650 less each month.

Will pay more in interest over the life of the loan and we will never break-even from the refinance. But this will give us breathing room.

Is this a good idea?

2. As for credit cards, I pay all credit card balances off every month. The last time I failed to do that was 3+ years ago and I did a balance transfer for 3% fee & 0% APR for 1 year.

I am now considering the same offer for a balance transfer of 6k with $180 in fees and pay off within 1 year. This is a stop gap measure while we get back on track.

3. As for cleaning, unfortunately I cannot persuade my wife so we are temporarily using this service and considering cutting back till the kids a bit older.

---
The revised expenses sheet with 20-year refinance below:
Net Income = ~$6,000

A. Fixed Expenses
Total ~$4,030
-Mortgage (PITI) ~$2,030 (After refinance into 20 year loan)
-Utilities (Gas, electric, water) $221
-Two Phones & Home Internet $135
-Car Insurance $105
-Netflix & Amazon $18
-College Fund#1 $30
-College Fund#2 $30
-Wife's Minivan (new & ~4 years left on loan) $530 (paying $5 to $10 extra each month to pay off quicker)
-My old car (paid off) - $0
- TSP (Retirement) loan payment $890
This will be paid off in May 2020. It was originally used for a family emergency & also pay down mortgage to eliminate PMI.


B. Flexible Spending (Unchanged)
Total $1,695 to $1,795

-Gas for cars $120
-Grocery $700
-Eat Out $175
-Assistance to parents $300 to $400
-Cleaning Lady $300
-Misc - Buffer $100

C. Goals/Savings (A fantasy at this point)
Total $1,350 = 22% of net income
-Travel $325
-Emergency $425
-Car Maintenance $100
-Kids expenses $150
-Invest $250
-House Maintenance $100

bloom2708
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Re: Household budget, savings, retirement, and Home Equity question

Post by bloom2708 » Tue Apr 16, 2019 3:59 pm

With the TSP loan and re-payment, are you saving anything for retirement currently?

I don't see pre-tax savings or Roth for either.

Even with the re-finance, it looks like a break even scenario with zero to little savings.

Luke Combs would say "Houston, we have a problem". Spending too much or not making enough. No easy solutions. Cutting spending is easier than raising income in most cases.

Others have given some good ideas.
"People want confirmation, not advice" Unknown | "We are here to provoke thoughtfulness, not agree with you" Unknown | Four words. Whole food, plant based. Bing it.

spammagnet
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Re: Household budget, savings, retirement, and Home Equity question

Post by spammagnet » Tue Apr 16, 2019 4:26 pm

Findourway1 wrote:
Tue Apr 16, 2019 3:45 pm
1. Refinancing - I am leaning towards a 20 year loan ... Is this a good idea?
In my opinion, no. You should lean towards a 30 year loan. Rates aren't significantly different and you need the cash now. Nothing prevents you from paying it at a 15 (or even 10) year rate when more cash is available, but you shouldn't even do that if you still have other loans bearing higher interest. (The car loan, for example.)

Also, eliminate college savings for now. Sending your kids to college may be important to you but you simply don't have the money. You can resume and maybe catch up later.

Regattamom
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Re: Household budget, savings, retirement, and Home Equity question

Post by Regattamom » Tue Apr 16, 2019 11:22 pm

spammagnet wrote:
Tue Apr 16, 2019 4:26 pm
Findourway1 wrote:
Tue Apr 16, 2019 3:45 pm
1. Refinancing - I am leaning towards a 20 year loan ... Is this a good idea?
In my opinion, no. You should lean towards a 30 year loan. Rates aren't significantly different and you need the cash now. Nothing prevents you from paying it at a 15 (or even 10) year rate when more cash is available, but you shouldn't even do that if you still have other loans bearing higher interest. (The car loan, for example.)

Also, eliminate college savings for now. Sending your kids to college may be important to you but you simply don't have the money. You can resume and maybe catch up later.
+1
30 year loan and pay off early if you are able.

I would get rid of the cleaning lady today. I know you say that your wife wants to keep the service, but there is no reason for it. You need the money and she wants a cleaning lady? Tough luck.

IMO
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Re: Household budget, savings, retirement, and Home Equity question

Post by IMO » Wed Apr 17, 2019 2:22 am

OP:

I`m getting the sense there are some cultural issues that are significant issues that you/spouse have that are getting in the way of some commonsense judgements on your budget. I wonder, have you really had the hard discussion with your spouse to sit down and go over the budget?

A. You can continue to send money to your parents but that comes with significant consequences. Until your income exceeds your expenses, time to be honest and advise your parents that at the present time things are much more expensive in America despite what may sound like an extravagent income to a foreigner.

B. Maids are not commonly used in America, with the exception of bogleheads. It doesnt matter if your spouse says no, time for you to come home, get out the vacuum and the toliet scrubber. No bs excuses.

C. Refinance, ideally to 30 yr and when you get your finances together, then you can pay more principle.

D. Two cars and a stay at home with your budget now? Time to sell that fancy new car and find something used for the time being or go to just your car.

E. Eating out? Sure if you can afford it, you cant now.

F. Paying extra low interest loans, same thing maybe in the future.


On the positive, you are building a retirement now on your federal pension time and your social security time. Whats missing is your tsp buildup.

You may need to go the route of Dave Ramsey. Call his show he will give it to you straight. He's means are not 100% supported on this site, but with the cultural issues I suspect you have, his method might be needed in your case. Maybe he`ll send/comp you "financial peace university class". You need something to be done because either you and/or your spouse are unlikely to take advice seriously from many on this site.

Anyway best of luck.

Nutmeg
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Re: Household budget, savings, retirement, and Home Equity question

Post by Nutmeg » Wed Apr 17, 2019 11:18 am

What are your current interest rates on your various loans? It seems that you have a car loan, a mortgage, a TSP loan, and credit card debt.

How does your current mortgage rate compare to the potential rates on a 20 or 30 year refinanced loan?

What are you earning on your emergency fund money?

If you are paying 18 percent on your credit card debt and earning 2 percent on your emergency fund money, I suggest paying off the credit card debt using part of your emergency fund money. I couldn’t find a monthly credit card payment on your list of expenses.

At least one commenter suggested selling your new minivan and buying a less expensive car. Given your financial situation, perhaps you shouldn’t have purchased a new minivan last year, but now that you have done so, it might not be financial prudent to sell it, as cars depreciate in value quickly.

It sounds like you are taking some important steps!

Topic Author
Findourway1
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Re: Household budget, savings, retirement, and Home Equity question

Post by Findourway1 » Fri Apr 19, 2019 2:07 pm

Thanks for the feedback everyone.

1. My original 15 year loan was for 3.25% (~$2,700/month PITI).
The car is 2.25% loan, TSP loan is based on G Fund rate (2% I believe) and Credit cards are always paid off in full.

This month this means my emergency funds shrunk to under 10k.

2. Am now working on refinancing with cash-out. Will use the cash to pay off TSP loan, repair house, & build up emergency fund,

I received the below offers:
- 4.49% 20 year rates and ~2.2k in total closing costs (~$2,210/mo PITI )

- 4.25% 20 year rates with points and ~6.5k in total closing costs (~$2,170/mo PITI)

- 4% for 30 year rate with 2.375% points and ~8k in total closing costs (~$1,810/mo PITI)

Am leaning towards the higher rate of 4.49% on 20-year loan since it requires less upfront closing costs and has no points.

Both 20-year refinance options will reduce mortgage payment by ~$500 and we have already made some cutbacks in expenses.
- Reduced cleaning to 1/month = $75/mo
- Cut eating out budget to $75/mo

Leaving rest as-is - parents, kids etc. By my calculations this will be comfortable enough for us.

I am basically refinancing into a higher rate for two loans (Mortgage and TSP). But this will reduce the financial strain and will spread the costs over time.
Last edited by Findourway1 on Fri Apr 19, 2019 2:52 pm, edited 1 time in total.

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MikeWillRetire
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Re: Household budget, savings, retirement, and Home Equity question

Post by MikeWillRetire » Fri Apr 19, 2019 2:41 pm

delamer wrote:
Wed Apr 03, 2019 3:12 pm
I’ll be the contrarian and say keep the current mortgage. Being in your mid-50’s with a paid off mortgage will make your financial life easier.

Get rid of the cleaning lady, eliminate your extra loan payments, and reduce your eating out so you aren’t running a current deficit. You also could eliminate the college savings.

In one year, you’ll have an additional $890/month to put toward your savings goals, and things will look a lot different.

Don’t take out a HELOC for a temporary problem.

I assume you are contributing enough to the TSP to get the match?
I agree with this. In one year, your second biggest expense ($890) goes away. Your mortgage will be paid off before your kids go to college, giving you a chance to pay for college . In the meantime, trim your travel expenses and parental support, if possible.

veindoc
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Re: Household budget, savings, retirement, and Home Equity question

Post by veindoc » Fri Apr 19, 2019 3:54 pm

OP

You need to get your wife on board. Does she know what you two are facing right now? I’m sure the house cleaner is immensely helpful but you can’t afford it. If the cleaner comes twice a month reduce it to monthly. And you need to start cleaning when you get home to pick up the slack.
I set a schedule. Friday laundry, Monday bathrooms etc etc. Show your wife you are committed to this.

Keep activities close to home. No museums or trips that require paying for parking. At 3 and 7 months they won’t miss them. As long as they are with their parents they are totally happy.

The money crisis is supposedly temporary but I think bad habits will lead you into another crisis if you do not get a handle on things.

Is all your family abroad? If it’s just parents try flying them in one year instead of the four of you traveling. We did that a few times. My MIL loves coming to the US. Not only do we save on tickets but we also save on presents to extended family members and their kids.

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