Feel Like I Failed [Trouble keeping up with finances]

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Mrtrex
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Feel Like I Failed [Trouble keeping up with finances]

Post by Mrtrex »

So the past 12 years I ran finances pretty tight, no debt except the house and daily living expenses. Making about 110k per year. Now when I mean tight it was to save more I put away 19% in my 401k and still had enough to do what I wanted but nothing out of the norm. So back up about 2 years ago in the heart of Covid. Pay got cut 25% for 6 months, there was the stimulus checks and that was used to pay off the rest of a new car so I would not of had a monthly payment. Now I drive for work and have three kids so I need an SUV and got a Subaru nothing crazy. So as the months go on monthly bills creep higher and higher, food cost went from $250 a week to now like $400. Dishwasher broke, washing machine broke, furnace broke and now I’m looking at around $25k backed up in debt that I tossed on 0% credit cards for a year or so hoping my bonus could cover a big chunk. Then the bonus gets cut 90% and my expense package $300 a month eliminated what luck huh. Now I do budget and with no income increases each year since that was cut also it’s underwater every month now by around $400. Now I do have a cash emergency fund sort of. It’s tied up in gold coins that I hold for a certain reason and in this point of my life I really can’t touch it for a reason I can’t discuss so that’s out. My wife doesn’t work and can’t right now so that is also not an option again can’t really get into detail about why but figure 0 income from her. So today cash was so tight I could not pay the mortgage that’s due within the next week or so. This is what I did I bailed myself out with my 401k. I’m 41 and now I’m down to about $200k after the withdrawal took out around 30k. Was going to do a HELOC but the just wasn’t enough equity to do it. I also decreased my 401k from 19% to 12%. After this I should have 1k extra in my account and should come out even each month on expenses. Now I’m sure people will say sell the house and get a cheaper one and so on. That’s just really not an option for me at this point. My goal was to have 1million in savings with the mortgage paid off by 60 but damn seems impossible now. Anyway so there it is.
aristotelian
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Re: Feel Like I Failed

Post by aristotelian »

Either make some changes or lower your goal. If you don't hit $1M by 60 that just means your savings goal was too big for your lifestyle.
an_asker
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Re: Feel Like I Failed

Post by an_asker »

I think you need a budget and you need Dave Ramsey.
Katietsu
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Re: Feel Like I Failed

Post by Katietsu »

If you start from a place that there are no options for change then there will be no change for now. I am not being critical. It just is what it is. Maybe right now, just treading water for a time is OK. Consider using a food bank for a few months while you get stabilized.

Should you be looking for a new job? The kind of cuts you described can precede lay offs or even worse.

Have you listened to Dave Ramsey? He says some questionable things about investing and has some questionable personal beliefs, but overlook those aspects and he can be inspirational to people who are being squeezed as you are.
KlangFool
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Re: Feel Like I Failed

Post by KlangFool »

OP,

1) What was the price of the house?

2) What is the size of your mortgage?

It is very simple.

You are "House Poor".

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galawdawg
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Re: Feel Like I Failed

Post by galawdawg »

Mrtrex wrote: Thu Aug 04, 2022 3:44 pm So the past 12 years I ran finances pretty tight, no debt except the house and daily living expenses. Making about 110k per year. So back up about 2 years ago in the heart of Covid. Pay got cut 25% for 6 months, there was the stimulus checks and that was used to pay off the rest of a new car so I would not of had a monthly payment.

So as the months go on monthly bills creep higher and higher, food cost went from $250 a week to now like $400. Dishwasher broke, washing machine broke, furnace broke and now I’m looking at around $25k backed up in debt that I tossed on 0% credit cards for a year or so hoping my bonus could cover a big chunk. Then the bonus gets cut 90% and my expense package $300 a month eliminated what luck huh. Now I do budget and with no income increases each year since that was cut also it’s underwater every month now by around $400.

Now I do have a cash emergency fund sort of. It’s tied up in gold coins that I hold for a certain reason and in this point of my life I really can’t touch it for a reason I can’t discuss so that’s out.

So today cash was so tight I could not pay the mortgage that’s due within the next week or so. This is what I did I bailed myself out with my 401k. I’m 41 and now I’m down to about $200k after the withdrawal took out around 30k. Was going to do a HELOC but the just wasn’t enough equity to do it. I also decreased my 401k from 19% to 12%. After this I should have 1k extra in my account and should come out even each month on expenses. Now I’m sure people will say sell the house and get a cheaper one and so on. That’s just really not an option for me at this point. My goal was to have 1million in savings with the mortgage paid off by 60 but damn seems impossible now. Anyway so there it is.
So your pay dropped to about $96k in 2020 but went back to $110k per year? And you live in PA...so why exactly can't you pay your mortgage??

Emergency fund in gold coins that you can't touch for reasons you choose not to share?? That's not an emergency fund.

Something doesn't make sense here. But, there are only two options. Increase income and/or reduce spending. I'm sure if you posted a detailed budget, you'd get many good suggestions. But that is probably something else you can't discuss... :wink:
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arcticpineapplecorp.
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Re: Feel Like I Failed

Post by arcticpineapplecorp. »

Mrtrex wrote: Thu Aug 04, 2022 3:44 pm Now I do have a cash emergency fund sort of. It’s tied up in gold coins that I hold for a certain reason and in this point of my life I really can’t touch it for a reason I can’t discuss so that’s out.
just curious if this is an emergency fund (sort of) what sort of emergencies would these coins be used for?

depending upon the amount and reason they're to be used for, it might have been better to use the coins instead of the 401k.

with the 401k you have the potential for growth. with the coins, maybe maybe not.

not only that, you probably sold from the 401k at a loss considering stocks and bonds are down ytd.

on top of that, won't you have a taxable event as a result of the withdrawal from 401k?

if so, are you planning on making estimated quarterly payments based on the taxes that will be owed on the $30k you withdrew from 401k? Or are you willing to have a penalty owed on the underpayment of estimated taxes owed?
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squirrel1963
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Re: Feel Like I Failed

Post by squirrel1963 »

I don't think you failed, you have a nice nest egg that most Americans don't have, so you are ahead of the game than most. But I also think that, unless this is a temporary situation, you need to adjust your lifestyle.

For the vast majority of people its a lot more important how much you save than how much you make.

I would highly recommend reading "the millionaire next door", I found it very useful, and hopefully you will too.
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smitcat
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Re: Feel Like I Failed

Post by smitcat »

Mrtrex wrote: Thu Aug 04, 2022 3:44 pm So the past 12 years I ran finances pretty tight, no debt except the house and daily living expenses. Making about 110k per year. Now when I mean tight it was to save more I put away 19% in my 401k and still had enough to do what I wanted but nothing out of the norm. So back up about 2 years ago in the heart of Covid. Pay got cut 25% for 6 months, there was the stimulus checks and that was used to pay off the rest of a new car so I would not of had a monthly payment. Now I drive for work and have three kids so I need an SUV and got a Subaru nothing crazy. So as the months go on monthly bills creep higher and higher, food cost went from $250 a week to now like $400. Dishwasher broke, washing machine broke, furnace broke and now I’m looking at around $25k backed up in debt that I tossed on 0% credit cards for a year or so hoping my bonus could cover a big chunk. Then the bonus gets cut 90% and my expense package $300 a month eliminated what luck huh. Now I do budget and with no income increases each year since that was cut also it’s underwater every month now by around $400. Now I do have a cash emergency fund sort of. It’s tied up in gold coins that I hold for a certain reason and in this point of my life I really can’t touch it for a reason I can’t discuss so that’s out. My wife doesn’t work and can’t right now so that is also not an option again can’t really get into detail about why but figure 0 income from her. So today cash was so tight I could not pay the mortgage that’s due within the next week or so. This is what I did I bailed myself out with my 401k. I’m 41 and now I’m down to about $200k after the withdrawal took out around 30k. Was going to do a HELOC but the just wasn’t enough equity to do it. I also decreased my 401k from 19% to 12%. After this I should have 1k extra in my account and should come out even each month on expenses. Now I’m sure people will say sell the house and get a cheaper one and so on. That’s just really not an option for me at this point. My goal was to have 1million in savings with the mortgage paid off by 60 but damn seems impossible now. Anyway so there it is.

It is unclear what your current income is now - is it $100K or maybe $110K per year?

It is unclear where your current income is spent now - where do the funds go by category each month?
Ie - Home mortgage and taxes, utilities, insurances, medical, food, transportation, etc.
exodusNH
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Re: Feel Like I Failed

Post by exodusNH »

Mrtrex wrote: Thu Aug 04, 2022 3:44 pm So the past 12 years I ran finances pretty tight, no debt except the house and daily living expenses. Making about 110k per year. Now when I mean tight it was to save more I put away 19% in my 401k and still had enough to do what I wanted but nothing out of the norm. So back up about 2 years ago in the heart of Covid. Pay got cut 25% for 6 months, there was the stimulus checks and that was used to pay off the rest of a new car so I would not of had a monthly payment. Now I drive for work and have three kids so I need an SUV and got a Subaru nothing crazy. So as the months go on monthly bills creep higher and higher, food cost went from $250 a week to now like $400. Dishwasher broke, washing machine broke, furnace broke and now I’m looking at around $25k backed up in debt that I tossed on 0% credit cards for a year or so hoping my bonus could cover a big chunk. Then the bonus gets cut 90% and my expense package $300 a month eliminated what luck huh. Now I do budget and with no income increases each year since that was cut also it’s underwater every month now by around $400. Now I do have a cash emergency fund sort of. It’s tied up in gold coins that I hold for a certain reason and in this point of my life I really can’t touch it for a reason I can’t discuss so that’s out. My wife doesn’t work and can’t right now so that is also not an option again can’t really get into detail about why but figure 0 income from her. So today cash was so tight I could not pay the mortgage that’s due within the next week or so. This is what I did I bailed myself out with my 401k. I’m 41 and now I’m down to about $200k after the withdrawal took out around 30k. Was going to do a HELOC but the just wasn’t enough equity to do it. I also decreased my 401k from 19% to 12%. After this I should have 1k extra in my account and should come out even each month on expenses. Now I’m sure people will say sell the house and get a cheaper one and so on. That’s just really not an option for me at this point. My goal was to have 1million in savings with the mortgage paid off by 60 but damn seems impossible now. Anyway so there it is.
Did you do a 401k loan or a hardship withdrawal? If the former, you need to budget for paying that back in 5 years, or by the tax filing deadline of the year you leave your employer -- even involuntarily. If the latter, this counts as income for this year (with taxes due) as well as a 10% penalty.

It sounds like you need to stop contributing to your 401k until your debt is cleared. There's no point in accumulating credit card interest at 20%+ (once the zero interest is over) and saving for retirement.

I'm not sure why you can't sell the coins, but, again, it seems pointless to have an "emergency fund" that you can't even use.
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arcticpineapplecorp.
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Re: Feel Like I Failed

Post by arcticpineapplecorp. »

Mrtrex wrote: Thu Aug 04, 2022 3:44 pm Making about 110k per year.
I’m 41 and now
I’m down to about $200k after the withdrawal took out around 30k.
I also decreased my 401k from 19% to 12%.

My goal was to have 1 million in savings with the mortgage paid off by 60 but damn seems impossible now. Anyway so there it is.
You don't say how long you'll work. Let's say 67 (full retirement age for SS).
you're contributing 12% of $110k, that's $1100 a month.
you still have $200k in 401k.

run the future value calculation assuming you earn 4% per year on your future contributions and the $200,000 currently in 401k):

either yearly calculation (assuming earning 4% for 26 years on $13,200 annual contributions and the $200,000 current):
=FV(.04,26,-13200,-200000)
you get $1,139,408.99

or monthly calculation (assuming earning 4% per year, compounding monthly for 26 years on $1100 monthly contributions and the $200,000 current):
=FV(.04/12,26*12,-1100,-200000)
you get $1,166,893.91

do better than 4% and have more. do less or keep pulling from 401k/and or decrease contributions and you'll have less.

granted a million dollars 26 years from now won't be worth what it is today. but that's the problem of inflation which is always and everywhere a monetary phenomenon.

paying off the house is another matter. what interest rate on your mortgage are you paying?
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arcticpineapplecorp.
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Re: Feel Like I Failed

Post by arcticpineapplecorp. »

exodusNH wrote: Thu Aug 04, 2022 4:32 pm
Did you do a 401k loan or a hardship withdrawal? If the former, you need to budget for paying that back in 5 years, or by the tax filing deadline of the year you leave your employer -- even involuntarily. If the latter, this counts as income for this year (with taxes due) as well as a 10% penalty.
good point about the penalty (forgot that). I was going to ask if it was a withdrawal or loan. If there are layoffs/recession and job loss even if intend to pay back, that's moot then and the "loan" becomes fully taxable with penalties. risky to take a 401k loan during a slowdown.
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JoeRetire
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Re: Feel Like I Failed

Post by JoeRetire »

Mrtrex wrote: Thu Aug 04, 2022 3:44 pmNow I do have a cash emergency fund sort of. It’s tied up in gold coins that I hold for a certain reason and in this point of my life I really can’t touch it for a reason I can’t discuss so that’s out.
Unfortunately, that would not fit any definition of cash emergency fund that I know of.
So today cash was so tight I could not pay the mortgage that’s due within the next week or so. This is what I did I bailed myself out with my 401k.
Sometimes you do what you have to do.
fter this I should have 1k extra in my account and should come out even each month on expenses.
That's good!
My goal was to have 1million in savings with the mortgage paid off by 60 but damn seems impossible now.
Time to set a different goal. Meanwhile, work on a real emergency fund.

I'm sure this feels bad, but it's not "failure". Things could have been far, far worse.

Good luck.
Last edited by JoeRetire on Fri Aug 05, 2022 8:44 am, edited 1 time in total.
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Nate79
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Re: Feel Like I Failed

Post by Nate79 »

$25k on credit cards is a lot. Where did it all go? A new washing machine, dishwasher and furnace? Hard to believe unless you bought expensive models. And you bought a new car? Sounds like living above your means with a spending problem.
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Re: Feel Like I Failed

Post by BarbBrooklyn »

This is from 8 years ago:

have been saving in CD's for a while and I'm looking to increase my retirement wealth. This is what I have going all between vanguard and a local bank. I kind of need to be pointed in the right direction. Keep in mind that I am very much new to this and I am currently trying to learn as much as possible but some is way over my head. Salary: 75k average I'm full commission in Sales. Debt: Car Loan $18,000 at 3% use 100% for work Mortgage $168,000 at 4% Tax Filing: Married Filing Jointly Wife does not work. Stay at home mom of 2. Tax Rate: Fed: $15% State 3.07% Residence: PA Desired Asset Allocation: Not quite sure yet 80% Stock 20% Bond?? Desired International Allocation: ??? Age:36 Taxed: $16,000 in vtinx (Emergency Fund) $1,200 in vforx ...

Besides having an additional child (congratulations!), what's different?

It feels to me like what we are looking at is lifestyle creep.

Making 100k these days (unless you live in a VLCOL area) is not "new car" income territory.

25k in debt, even with exploding appliances, is a lot. Never do a 0% finance unless you have the money saved or are CERTAIN you can cash flow it by the end of the term.

So now you've borrowed 30k to pay this month's mortgage and the 25K, right?

What is your plan for how to deal with the reduces cash flow that causes?

Start by selling the gold. Get a budget app and figure out where your money is going and start looking for a new job.
Last edited by BarbBrooklyn on Thu Aug 04, 2022 5:15 pm, edited 1 time in total.
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AnnetteLouisan
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Re: Feel Like I Failed

Post by AnnetteLouisan »

Well you’re married, employed, young at only 41, have a home, kids, a 401k, gold coins, a new car, a reasonable tax bracket and at least three tax deductions. Things will get better, hang in there.
Last edited by AnnetteLouisan on Thu Aug 04, 2022 6:53 pm, edited 3 times in total.
dboeger1
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Re: Feel Like I Failed

Post by dboeger1 »

I'll pile on to the obvious recommendations of earning more and spending less. It really is that simple. Not easy, but simple.

As for feeling like a failure, I know that's a natural response to things like this, but understand that the goal of saving money is to eventually cover expenses anyway, and there's a certain amount of mental accounting going on. For example, you maintained a respectable savings rate into your 401k, but then in the end, you had to withdraw from it to cover shorter-term expenses. That's okay! This is functionally equivalent to having contributed less to your 401k and just spent that money out of your savings account or taxable brokerage. Yeah, the 10% penalty is not ideal, but you also got to take advantage of non-taxable rebalancing, trades, dividends, etc. in the meantime, so there is a silver lining.

As for the emergency fund in precious metals, I know you didn't want to divulge too much detail, but I still think it's worth reconsidering. There's a saying, "you can afford anything, but you can't afford everything". I'm just going to throw out a completely hypothetical justification for the metal coins, don't take this the wrong way like I'm saying anything about you because I honestly don't know your reasoning and it doesn't entirely matter. Let's say you're saving these coins for the zombie apocalypse, and in this zombie apocalypse, all fiat currencies become toilet paper and these gold coins are the only widely accepted currency. Okay, that's cool, you're prepared for that outcome. But you're also doing it at the expense of carrying a credit card balance, missing mortgage payments, etc. prior to this zombie apocalypse. So by the time the zombie apocalypse comes around, you've lost your house, your family has left you, you've sold your vehicles to pay for food, etc. So do you think you're better off with the coins, or those things? The simple truth is, you can afford these coins, or you can afford to take care of your non-apocalyptic financial life, but you're not really in a position to do both, so you need to prioritize. I had a friend who used to collect silver coins because he was convinced the US dollar was going to collapse any minute. He held them for a few years, until he got a girlfriend, bought a car, started renting in a more expensive city closer to work, etc. Eventually, he came to the conclusion that he could use the money more now, and the collapse of the USD that would justify holding the silver coins was unlikely enough in the near future that he'd be willing to revisit that idea later in life or whenever it became more relevant again. He sold his coins. Since then, he has gotten promotions and raises at work and improved his overall finances to the point that he could probably more comfortably afford to just hold on to silver coins now, but he's working towards saving for a house and retirement, so he hasn't done it again. The point is, yeah, it's cool to have things like silver coins as part of a healthy, well-diversified portfolio, but if you were starving in rural Africa or being bombed in Ukraine, you almost certainly wouldn't prioritize coins over putting food on your table or a roof over your family's head. Your situation isn't quite as bad, but you're paying early withdrawal penalties to use your 401k funds to make mortgage and credit card payments while holding these coins that are doing nothing for you. I just don't see it, unless you're like a comic book superhero and these coins are the source of your ultimate power or something. I think you would give your family and yourself a lot of peace of mind selling the coins and paying off your debts.
MDivision
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Re: Feel Like I Failed

Post by MDivision »

Hang in there. You will come out of this.
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Re: Feel Like I Failed

Post by Jack FFR1846 »

Certainly a Dave Ramsey type plan will help you.

I understand working and getting bonuses and expenses. I get a bunch of those from cell phone, internet, car plan to quarterly bonus, RSUs, and I participate in ESPP.

However.....I only COUNT on my base pay. Everything else is extra and goes towards retirement savings. I know you're a family of 5, but a family of 4 in the US on average makes barely more than half of what you do. Time to evaluate where the spending is.

Some easy ones:

Cell phones. Personally, I pay $25 each for 4 of us on Cricket which uses the AT&T network. Not a single added fee. When they say $25 a line, it's not like the big boys like Verizon and AT&T who charge $50 a line and with the fees, another $20 a line.

401k: Stop contributions. Don't borrow from it, but stop contributing till you get things back in line.

Do a full list of everything you're spending. If you list here, we can certainly point out things that are luxuries.

Your gold might as well be air. If you can't sell it right now, it is not an emergency fund. It is a luxury you can't afford to hold.
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WingsFan4Life
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Re: Feel Like I Failed

Post by WingsFan4Life »

It sounds like you need a budget to understand how to correct your situation. Start tracking your expenses. I suggest using YNAB.
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Beensabu
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Re: Feel Like I Failed

Post by Beensabu »

Mrtrex wrote: Thu Aug 04, 2022 3:44 pm Anyway so there it is.
You haven't failed. Not by a long shot.

You paid your stuff off before it spiraled out of control. Good for you.

You have a family.
You have a home.
You have a job that pays well.
You have a paid off car.
You have working appliances.
You have a 6-figure 401k balance.
You have no debt besides the mortgage.

Shoebox the credit cards (one in each wallet for true emergency only) until you get used to your current means and establish a new spending routine that's within that.

Get back to $250/week for groceries. You can. You just have to make some different selections than what you're used to. That will make a difference.
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bob60014
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Re: Feel Like I Failed

Post by bob60014 »

Budget and keep any lifestyle creep under control.
Last edited by bob60014 on Thu Aug 04, 2022 6:51 pm, edited 1 time in total.
faanger101
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Re: Feel Like I Failed

Post by faanger101 »

Mrtrex wrote: Thu Aug 04, 2022 3:44 pm My goal was to have 1million in savings with the mortgage paid off by 60 but damn seems impossible now. Anyway so there it is.
Your goal is to have 1mln by 60 with 3 kids, non-working wife and like 120k income? Good luck :annoyed
SnowBog
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Re: Feel Like I Failed

Post by SnowBog »

squirrel1963 wrote: Thu Aug 04, 2022 4:29 pm I don't think you failed, you have a nice nest egg that most Americans don't have, so you are ahead of the game than most. But I also think that, unless this is a temporary situation, you need to adjust your lifestyle.

For the vast majority of people its a lot more important how much you save than how much you make.

I would highly recommend reading "the millionaire next door", I found it very useful, and hopefully you will too.
+1

Even after your withdrawal, you have over 2x the 401k balance as the average 40 - 49 year old in the US, which is only $93.4k. https://communications.fidelity.com/wi/ ... -stack-up/

No idea where you live, but comparing to those 40 - 49 who live within 17814, you have over 4x their average 401k balance ($50k).

You clearly prioritized savings far more than your peers! So don't beat yourself up too bad, you are most definitely not a failure!!!

What matters now is "what you do from here." What's happened has happened, you can't change it.

Sounds like you've wiped out your debt, which might have been painful - but it's done. Now you need to work on where you go from here.

Cutting your 401k contributions may be temporarily required, and if so - again remind yourself you are ahead of your peers and once these temporary setbacks are over, you can return to your savings plan.

If you don't currently have a budget and/or understand where the money goes, highly recommend starting to use a tool like Mint.com (or similar). Connect all your accounts, especially those where money is flowing in and out (checking, savings, credit cards, etc.). Even if you do nothing else with this for now, just start getting the data... After several months (for sure by 6 months), you'll have a much better view of where your money is going.

Between now and then read "your money or your life" (https://www.amazon.com/dp/0143115766/re ... UTF8&psc=1). The "nextdoor" book recommended above helped me realize that "wealth" wasn't what I thought it was - and definitely not "what I saw". But the "your money or your life" book really drove home the idea that money is the currency by which we trade our time. For example, instead of thinking of something as being worth $x, we can think of it was being worth y hours of my life (aka that's how long I need to work to pay for that thing).

When we did this, that adjustment to our perspective, armed with 6 months of data of our expenses, helped us go through and critically exam where we spent our money. Some of that was just stupid/lazy things - like not spending a few minutes to get a better deal on a cellphone or internet access, or having money sitting around in banks paying next to nothing (or gold coins perhaps :wink:) instead of moving those funds into higher paying bank accounts and/or other investments. Some were a little harder, like did we really "need" more than 1 streaming service - we could comfortably live without. And some were much harder, like realizing that we couldn't do/buy the thing we really wanted... (And if needed, we were prepared to go further - like do we need to trade down a car, etc.)

Since then, it's also helped to improve our earning potential (or at least the amount of time we trade for money). While it would be great to earn 20% more at my job, if it takes 200% more time to do so - that's a high cost on my "life" (aka hours worked). That leads to thinking about other jobs, other employers, other opportunities for you to increase your earning potential - or minimally to be more "profitable" (in the sense of trading less life for money).

Just remember - while it might not feel like it - you've been more successful most of your peers. (This may not be reflective of those on BH, but again look at the data from Fidelity and others - you've done well on your savings thus far!) And you are in control to make the changes necessary to continue having that success. The changes might not be easy - but if you could get yourself to where you are - then you can keep going! :beer
Last edited by SnowBog on Thu Aug 04, 2022 6:55 pm, edited 1 time in total.
BV3273
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Re: Feel Like I Failed

Post by BV3273 »

Kind of tough to come up with some recommendations without having the whole picture.

Was the 401k money a loan or hardship withdrawal?

I’d like to hear more about these gold coins. Are they graded (numismatic value) or just bullion coins?
mary1492
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Re: Feel Like I Failed

Post by mary1492 »

Well, there are things you could do, and you know what they are, but you have excuses of why you cannot do them. So you are stuck with where you are. You're looking for additional ideas besides selling some gold coins and having your wife do some work? If your wife isn't going to do some work, even remotely from home, then you need to get a part-time job on the side to bring in more. Don't make an excuse why you cannot, you have a major cash flow problem, and you need more income and/or cut expenses. Why $400/week for food? That's a pretty hefty budget for 5. That's $80/person per week. Spouse and I spend $40/person per week at most.

So, do a hatchet job on your expenses. Don't buy brand name foods - buy the store brand. Don't buy expensive cuts of meat and chicken, only buy when they are on sale. Dinner out is history - your wife cooks every meal going forward, you brown bag lunch every day and do not spend any money during the day at work. You pay your commuting expenses and nothing more. Drop the cable TV, go with dry internet, drop your cell phone plans and sign up for Mint at $15/month/person. The kids don't get all their expensive extra-curricula activities. Have them do intramural at school and take advantage of clubs at school. You're paying taxes, get some of what you pay for. Vacations are history until your pay rebounds.

Again, you have a serious problem and I don't see how you're going to recover from it without taking some drastic action now. If anything, you're going to continue going negative each month and it's only going to get worse.
SnowBog
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Re: Feel Like I Failed

Post by SnowBog »

faanger101 wrote: Thu Aug 04, 2022 6:36 pm
Mrtrex wrote: Thu Aug 04, 2022 3:44 pm My goal was to have 1million in savings with the mortgage paid off by 60 but damn seems impossible now. Anyway so there it is.
Your goal is to have 1mln by 60 with 3 kids, non-working wife and like 120k income? Good luck :annoyed
It all depends on their expenses... If they save $50k/year and would spend $50k/year in retirement (aka KlangFool's approach to save 1x expenses every year), before adjusting for any income (like social security) or other savings, Firecalc gives them 100% chance of retiring in 2036 (ahead of schedule). https://firecalc.com/index.php?wdamt=50 ... rsion=3.0&

But if all they can save is $12k/year and spend $88k/year, the numbers don't work, with only a 2% chance of success retiring in 2041. https://firecalc.com/index.php?wdamt=88 ... rsion=3.0& With only $12k savings and $88k expenses, they'd need to work until 2054 (they'd be 73 I think).

Control the expenses, and the goal is entirely possible. (Especially if you care less about the $1M and care more about being able to retire on "enough" to cover your expenses.) The more you can control your expenses, the more you can save and the less you need to save (as you have less expenses you need to cover during retirement).
delamer
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by delamer »

About 3 years ago, you posted that you had incurred about $74,000 in unexpected expenses and that you were having trouble making payments on that debt.

Now you are saying that you’ve run a tight ship for the last 12 years, and have only recently run into trouble due to general inflation and several unexpected expenses.

Those two stories seem to be contradictory. Maybe you’ve gotten things straightened out regarding the three-years-ago debt. But the fact that it’s happened again points to a history of money mismanagement rather than a new problem.
Last edited by delamer on Thu Aug 04, 2022 8:08 pm, edited 1 time in total.
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Kenkat
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by Kenkat »

I would drop my 401k down to the minimum contribution to get the company match. If there’s no match, drop it to zero until you get expenses under control. Pay off the debt, it won’t be at 0% forever. Build an emergency fund you can actually use. Sharpen the pencil, and I mean really sharpen it and start cutting unnecessary expenses. Every dime you spend, ask yourself, is this a necessary expense?

Once you get yourself back to saving some money every month, then you can re-evaluate where you are at. Having a savings goal by 60 is great but sometimes you need cash flow now. Get your income > expenses now and I mean right now; eventually your income will increase (hopefully) and if you can keep living at your current expense level, you can resume building wealth as you approach retirement. I remember feeling a crunch in my early 40s. They are expensive years. It can be tough but you get through it eventually.
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by BarbBrooklyn »

From Aug 2019:

Age 41

-Income $100k, bonus $6-14k paid once a year in March if numbers are hit. 2020 payout looks to be on the lower end.

-Tax bracket 15% PA

-Wife stays home with 3 kids self employeed income goes to kids clothes and stuff for them. It’s not much.

-401k 170k in Fidelity

-Savings/Emergency fund 20k cash

-Mortgage $3,500 including escrow a month $425k debt at 4.25% $54k debt heloc at 5% roughly 480k total, House valued at $570k

-car loan $0

-credit card 20k interest free until March 2020

-19% of pay going into 401k

-no other monthly debt other than utilities, gas and food.

We just got done building the house and ran into some unforeseen expense with the lot and a few other issues. This resulted in 74k additional expenses. The way I had everything budgeted to be comfortable did not include the extra 74k. This is now costing me $650 extra per month. I need to eliminate this or cut it drastically down so I can be comfortable again. Anyone have suggestions on what I could do?

You make 100k a year and have a 425k mortgage and a Heloc?

You are WAAAAAAY over-extended on your housing costs.

What percentage of your income goes to your P&I?
BarbBrooklyn | "The enemy of a good plan is the dream of a perfect plan."
mnnice
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Re: Feel Like I Failed

Post by mnnice »

faanger101 wrote: Thu Aug 04, 2022 6:36 pm
Mrtrex wrote: Thu Aug 04, 2022 3:44 pm My goal was to have 1million in savings with the mortgage paid off by 60 but damn seems impossible now. Anyway so there it is.
Your goal is to have 1mln by 60 with 3 kids, non-working wife and like 120k income? Good luck :annoyed
We had a million by 44 but no house and a million and a paid for house by 46. Our maximum combined income was only about 110k and we had some childcare that the OP wouldn’t have. We were above average earners and saver’s but not exceptional. We have two healthy offspring with no special needs and no disability. We have had layoffs, new furnaces, and kitchen appliances die.

More mindful spending seems to be the solution.

I just saw Brooklyn Barb’s post. That’s a lot for housing. We have owned three houses and the purchase price of all three wouldn’t total 475k.
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Re: Feel Like I Failed

Post by SnowBog »

mnnice wrote: Thu Aug 04, 2022 8:08 pm That’s a lot for housing. We have owned three houses and the purchase price of all three wouldn’t total 475k.
It really depends on the local housing prices, and when they bought...

Our house has basically doubled in value in the last 20+ years, other areas have gone up even more...

As I don't know what the PA housing market looks like, I'll reserve judgment there.

But ultimately, how much one saves and how much one needs to save are both driven by ones expenses. Finding ways to lower expenses always opens more opportunities.
koozie
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by koozie »

Do you discuss finances with your wife? This situation seems very fixable, but not by yourself.
randybobandy
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by randybobandy »

Thank you to BarbBrooklyn and delamer for posting the older and conflicting posts. It's hard to help or set an actionable plan forward when the information isn't consistent.

-RbB
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KlangFool
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Re: Feel Like I Failed

Post by KlangFool »

SnowBog wrote: Thu Aug 04, 2022 10:52 pm
mnnice wrote: Thu Aug 04, 2022 8:08 pm That’s a lot for housing. We have owned three houses and the purchase price of all three wouldn’t total 475k.
It really depends on the local housing prices, and when they bought...

Our house has basically doubled in value in the last 20+ years, other areas have gone up even more...

As I don't know what the PA housing market looks like, I'll reserve judgment there.

But ultimately, how much one saves and how much one needs to save are both driven by ones expenses. Finding ways to lower expenses always opens more opportunities.
SnowBog,

OP built the house in 2019.

OP's income at most is 114K per year. The house is at least 500K.

<<From Aug 2019:

Age 41

-Income $100k, bonus $6-14k paid once a year in March if numbers are hit. 2020 payout looks to be on the lower end.
....

-Mortgage $3,500 including escrow a month $425k debt at 4.25% $54k debt heloc at 5% roughly 480k total, House valued at $570k
....

We just got done building the house and ran into some unforeseen expense with the lot and a few other issues. This resulted in 74k additional expenses. >>

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mnnice
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Re: Feel Like I Failed

Post by mnnice »

SnowBog wrote: Thu Aug 04, 2022 10:52 pm
mnnice wrote: Thu Aug 04, 2022 8:08 pm That’s a lot for housing. We have owned three houses and the purchase price of all three wouldn’t total 475k.
It really depends on the local housing prices, and when they bought...

Our house has basically doubled in value in the last 20+ years, other areas have gone up even more...

As I don't know what the PA housing market looks like, I'll reserve judgment there.

But ultimately, how much one saves and how much one needs to save are both driven by ones expenses. Finding ways to lower expenses always opens more opportunities.
The 475k is what he owed at the time and he had $3500 monthly housing payment. We are in agreement that the actual value of the house isn’t that important.

Based of other stuff he has said after FICA, 401, and the house payment he has about 40k left. That needs to cover food, clothes, transportation, utilities, healthcare, state and federal taxes. No wonder a new water heater is stressful.
CaptainT
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by CaptainT »

Stop the 19% 401k contribution go down to only match%.
Sell gold coins
Start using a budget I like YNAB

Have a no spend month , cancel all subscriptions, eat food already in house, no new clothes , no spending on anything that isn't a absolutely need. This will do two things 1. Save you a ton of money and 2 teach you and your family that not everything is a need. And maybe there are things you don't even use.

Pay back credit cards and 401k loan

You need to as a family start living within your ample means.

A budget will help a ton but controlling spending is key.
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mhc
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by mhc »

Have you looked at changing jobs to get more pay and more consistant pay?
tashnewbie
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by tashnewbie »

OP, you don't have a question in your post.

What are you asking for in this thread?

It looks like you're venting more than anything, which can be fine and needed at times, but it's not actionable for this forum.
manuvns
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by manuvns »

Figure out a way to increase your earnings and cut your spending . do you have spare room in your house to rent on airbnb , can your wife do side hustle like Uber or doordash ?, put every dollar you have saved to work , negotiate your bills .
Last edited by manuvns on Fri Aug 05, 2022 8:53 am, edited 2 times in total.
Thanks!
exodusNH
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by exodusNH »

mhc wrote: Fri Aug 05, 2022 8:20 am Have you looked at changing jobs to get more pay and more consistant pay?
While this is a reasonable suggestion, if the 401k money was a loan, this could put him in a bind.
sailaway
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by sailaway »

Based on the history, you are not running a tight ship, because a tight ship includes regular maintenance to keep it shipshape and Bristol fashion.

As you build a new budget, you need to build in sinking funds for house maintenance and car and appliance replacement. This is above and beyond the emergency fund that should be in place to cover unknown unknowns.
KlangFool
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by KlangFool »

Folks,

The simple answer is OP bought/built a house that he cannot afford to keep. Unless and until he change that, nothing would improve. And, if he is unemployed in the coming recession, he would lose it all.

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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by LadyGeek »

Mrtrex - Do you know what to do first? What questions do you have?

Please reply in this thread. Without additional information, I don't see how we can help you further.
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by CoastLawyer2030 »

KlangFool wrote: Fri Aug 05, 2022 9:37 am Folks,

The simple answer is OP bought/built a house that he cannot afford to keep. Unless and until he change that, nothing would improve. And, if he is unemployed in the coming recession, he would lose it all.

KlangFool
Yep.

OP, a book that really changed my outlook on things was Set for Life. There are a lot of points in it but the main takeaway is that if you get your big expenses right (taxes, housing, and cars), the rest is pretty much irrelevant, and you are thus "set for life."

The flipside of this coin is that if you screw up any of these big categories, you can be in a world of financial hurt.

FYI, my wife and I tapped into this hot real estate market by selling our 3,200 square foot home in one of the most desirable neighborhoods in our little town to a 1,600 square foot ranch on an acre of land. Trust me when I say that I think my wife loved that house beyond measure; but for reasons I've described in a previous post, we decided to sell.

We bought that house for $285,000 just two years ago; we sold the house for $451,500 and bought the new one for $258,000. We can almost pay for the new house in cash. This single move will allow my wife to not have to work for 3-4 years and probably forever if she so chooses.

Again, get the big things right and you won't really have to care about not being able to buy meat at the grocery store.
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AnnetteLouisan
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by AnnetteLouisan »

My family does that - lives WAY below our means. So we don’t have too many money worries but we don’t have a quality of life either, and that has many costs, some subtle and others not, but they are cumulative and add up to a terrifying negative over time. So it’s a trade off that may not be worth it. Saving money is good but one can overdo it.

In other words, the immediate cost of doing a thing is clear but you also need to understand the cost of not doing it, and that can be opaque.
Last edited by AnnetteLouisan on Fri Aug 05, 2022 12:02 pm, edited 1 time in total.
smitcat
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by smitcat »

AnnetteLouisan wrote: Fri Aug 05, 2022 10:30 am My family does that - lives WAY below our means. So we don’t have too many money worries but we don’t have a quality of life either, and that has many costs, some subtle and others not, but they are cumulative and add up to a terrifying negative over time. So it’s a trade off that may not be worth it. Saving money is good but one can overdo it.
Extremely well put...
A great look at balance and a general breath of fresh air for this site.
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by BarbBrooklyn »

smitcat wrote: Fri Aug 05, 2022 10:35 am
AnnetteLouisan wrote: Fri Aug 05, 2022 10:30 am My family does that - lives WAY below our means. So we don’t have too many money worries but we don’t have a quality of life either, and that has many costs, some subtle and others not, but they are cumulative and add up to a terrifying negative over time. So it’s a trade off that may not be worth it. Saving money is good but one can overdo it.
Extremely well put...
A great look at balance and a general breath of fresh air for this site.
I think that a more complete overview of the OP's current situation--salary, savings, debts, spending--would be useful.

As Annette points out, those of us who aren't among the mega-rich can live comfortably, but with choices made rationally. Money spent should improve quality of life, not be based on impulse or false equations, i.e., "I have three kids, therefore I need an SUV". A used mini-van could have been another choice.

It may be that if you want a house this large and expensive (I assume this purchase/build was in order to get into an awesome school district) and an SUV for the non-working wife to shuttle the kids around in, the trade-off is going to be a lower savings rate. Decide if you can live with that and save 10% of your income and work longer. Or factor in the idea that at some point, your wife WILL go to/go back to work and earn a salary that can be largely saved.

You're overextended by trying to pay a huge mortgage, saving "too much" (for your desired spend rate) and having an EF that is untappable.

Wishing you well and hoping to hear more from you soon!
Last edited by BarbBrooklyn on Fri Aug 05, 2022 7:51 pm, edited 1 time in total.
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Jags4186
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Re: Feel Like I Failed

Post by Jags4186 »

faanger101 wrote: Thu Aug 04, 2022 6:36 pm
Mrtrex wrote: Thu Aug 04, 2022 3:44 pm My goal was to have 1million in savings with the mortgage paid off by 60 but damn seems impossible now. Anyway so there it is.
Your goal is to have 1mln by 60 with 3 kids, non-working wife and like 120k income? Good luck :annoyed
If he makes 120k/year, saves 10% (he’s doing more, 12% now) and earns 6% rate of return he’ll hit that $1mm

Problem is that you’ll see most of the gains in years 16,17,18,19. It feels like it’s going nowhere for a while.

OP, I’d take this opportunity to look for a better paying job. Heard they gave out 538,000 jobs last month.
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Re: Feel Like I Failed [Trouble keeping up with finances]

Post by MikeG62 »

OP, did not read all the replies, but if you've got your expenses screwed down, then the only solution I see is to look for a new (better) job. Sorry you are in this situation.
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