Fred and Ethel Kindly Request that You Rip Their Budget to Shreds

magnifying glassOne of “Fred’s” last comments to me was “Very excited to get raked over the coals.”

Fred and Ethel have a great household income (Fred’s a computer worker and Ethel stays home with their two young kids), and after discovering budgeting a year ago, they’ve put themselves on a very healthy financial path.

But, having clarified that their unifying financial goal is to have the freedom to “be near, and enjoy family” (ie move to where their kids settle as adults, or live the mobile life and spend time with both kids’ eventual families) they’re wondering what they can do to accelerate.

They’re 35 years-old, looking to be free from the obligation to work by age 50 (both kids will be grown by then).

As a little background, Fred contributes 4% to his 401k, which is matched dollar for dollar by his employer. Health insurance is through the employer as well.

The Budget

Category Budgeted Category Balance Notes
Miscellaneous / Needs Based $400.00 $2,392.78 They have a goal to increase giving while also increasing debt payoff/savings.
Deductible / Automatic $126.00 $0.00
Groceries $500.00 $139.35 Two parents; two kids
Dining Out $500.00 $134.45 Mostly spent on weekly date nights at nice restaurants.
Fuel $380.00 $130.48  One-car family (2011 Ford Explorer).
Repairs/Maintenance (Rainy Day) $120.00 $1,183.08
Car Insurance $64.00 $91.95
Registration $28.00 $140.00
Car Payment $0.00 $0.00 Paid off the car a few months ago, planning to buy another within a year.
Cash – His and Her blow money $380.00 $0.00 Includes $150 for a housekeeper, babysitters, beers out with the guys, splitting dinner bills with friends.
Clothing $130.00 $58.66
Gifts $150.00 $153.99
Household Supplies $250.00 $38.44 Normal house cleaning and paper products, small furniture (items under $500).
Life Insurance $69.00 $0.00
Personal Care $180.00 $14.98 Haircuts, special health foods, supplements, exercise programs and equipment.
Bank Fees $7.00 $12.50
Mortgage – Home $1,390.00 $0.00 Balance is $309,000 at 3.375%
Utilities – Home $272.00 $381.11 Water is their costliest utility. Lots of lawn in a dry climate.
Cellphones $140.00 $0.00
Internet $50.00 $0.00
HO Insurance – Home $71.00 $420.00
Property Tax – Home $433.00 $694.54
Repairs/Maintenance (Rainy Day) $150.00 $292.01
Rental Property Rents for $1,550/mo. Rent raised annually. Property is rented to a friend.
Mortgage – Rental $1,215.00 $0.00 Balance is $159,000 at 3.375%
Minimum Home equity payoff $290.00 $0.00 Balance is $30,000 – this is the focus of the $1,500 per month extra debt payment.
Utilities – Rental $130.00 $55.70
HO Insurance – Rental $51.00 $202.00
Property Tax – Rental $92.00 $92.93
Gardener $60.00 $60.00
Repairs/Maintenance (Rainy Day) $150.00 $650.00
Doctor/Medicine/Vet (Rainy Day) $260.00 $890.00 Dr. co-pays, prescriptions, glasses/contacts, chiro/acupuncture, and vet bills.
Dental (Self Insurance) $135.00 $470.20
Activities – Dance lessons / Piano etc $150.00 $50.00
Miscellaneous – Spontaneous itunes / redbox $58.00 $9.07
Recurring Entertainment – Netflix / Spotify / Others $30.00 $0.00
Travel $250.00 $797.23
Preschool $300.00 $0.00
College Savings $50.00 $0.00
Supplies/Field trips $25.00 $150.44
Savings/Extra Debt Payoff
Home Equity $1,500.00 $0.00
Emergency Fund $0.00 $15,000.00
Budget Total $10,536 – $1,550 (rental income) = $8,986

It’s easy to grab a machete and start hacking away at this budget. Seemingly low-hanging fruit all over the place. My first pass at the budget freed up $825:

  • Save $350 by cutting Eating Out from $500 to $150.
  • Drop the house cleaner and save $150.*
  • Cut $50 from gifts ($100/mo should take care of family and close friends, right?).
  • Cut Household Supplies from $250 to $125.
  • Personal Care from $180 to $100.
  • Get a cheaper cell phone plan and save another $90 to $100.

*Fred works from home most of the time, as does Ethel (stay at home mom). Between the two of them, seems fair to say they can keep the house spotless without paid help.

Yeah – not hard to pull a quick $800 out of their current spending, but maybe that’s not the only – or the best – approach here. Maybe, instead of starting with answers, Fred and Ethel should start with a question:

How can we obtain the same value/happiness/satisfaction from our consumption while spending a lot less money?

This isn’t really a matter of deal-seeking (although getting good deals doesn’t hurt). It’s about starting a conversation where they ask each other what it is about each category that gives them real happiness.

What is it about the expensive meals out they enjoy so much? What’s the root feeling of satisfaction there? How could they replicate that experience while spending a lot less money?

Kate and I have found that we enjoy $12 meals at In n Out Burger almost as much as $60 sushi nights – if we go to In n Out at 3pm when the place is empty. Turns out it’s the quiet conversation that matters most to us.

That’s just one example. The opportunity Fred and Ethel have is to do a little “zero-based thinking” about their finances, putting every expense on the table and forcing every consumption decision to compete with their goal to be free by 50.

I wonder – just wonder – if they could turn that $1,500 accelerator into $2,500 or $3,000.

Fred, Ethel: do the math. If you were getting ahead at a rate of $3,000 per month, how quickly would you have the rental property paid off? And/or your own home? And/or a big chunk in the market to fund your freedom? The numbers are pretty exciting.

Thanks for your willingness to share, and your very cool attitude about getting “ripped to shreds” by the community. :)

91 Responses to “Fred and Ethel Kindly Request that You Rip Their Budget to Shreds”

  1. bob

    “rip their budget to shreds”…

    What exactly is the ‘giving’ category used for?

    If I had this much money I’d be putting 15% into retirement funds as it’s their major goal.

    • Fred

      Bob, thanks for your comment.

      We use this for planned spontaneous giving to people in the community: friends and neighbors alike, almost always anonymously. Imagine helping someone get a tow who is just out of range of their AAA. Paying a week of hotel costs for a family displaced by a fire. Helping a food bank with a month of their lease because their donations were lower this month. Nearly any situation you can imagine where you truly think to yourself: “if I had a little extra money I would have totally helped them out”.

      The goal is to be intentional about keeping our ears to the ground for emergencies that are not our own, and help where we can. Helping in the community both monetarily and by donating our time is so very important to us. In fact, we are unhappy with the amount we contribute already and we aim to continually increase this category at the same time we make increases to retirement contributions. We much rather sacrifice in other categories — after all, there are so many glaring excesses already, why sacrifice this one first ;)

  2. walkermamaof4

    Up their retirement savings to 20% at minimum. Read Mr Money Mustache’s blog from day 1 to now and that will give them the shove they need to really rethink happiness and what they can cut while not cutting out the joy. Think of every expense not in terms of a one time cost but in terms of how much it costs for ten years of repeating it as often as they do. Then question is that how they really want to spend the money for ten years or would they rather save it for better future use.

  3. Al

    They spend way to much money on food $1000 a month for 4 people!! Holy Crap!! I have a family a 4 we spend about $350 a month on grocery’s and max of $50 on eating out. They are eating their retirement! :)

    • Cara Convery

      This is one area where I see differences that make me wonder about how location is a factor. We spend what this family spends or a bit more. There are three of us, granted our daughter is a teenager which means friends are over quite a bit. However, I use coupons and a store discount card, don’t buy particularly expensive produce, buy in bulk when I can and cook most of our meals. What other strategies are people using to lower food bills?

      • Ella

        My husband and I started to sit down every Sunday afternoon and plan our meals for the whole week, and do the shopping once at the start of the week, WITH A LIST AND STICKING TO IT. We found that we were saving about $50 a week on groceries by doing this instead of shopping each day. We also rarely buy meals out when we are working, by taking sandwiches or leftover meals and reheating them.

      • Heather

        Same, Cara. We spend more than that. I have three sons — I buy high quality, healthy food (not gourmet), and I belong to multiple co-op/buying clubs to help bring down the cost of eating well. Also, we almost never eat out, and my husband takes a bagged lunch to work every day. But food remains one of our biggest expenses, and I must say, it’s a priority. We are in Ontario, Canada.

    • CW

      My family of 4 with 2 teens spends at least that. It is our biggest expense. I am astounded to see how little others can spend. I’d love to lower that part of our budget. I never eat out because I cannot due to medical stuff. I only eat vegetables, fruits, meat, nuts, and spices. I can’t eat filler food like beans and rice. I cannot eat cheap meats with fillers or antibiotics or anything but pure meat. So, I really can’t lower my bill any more except to buy animals for our own meat and to have a garden – neither of which is possible at this time. I am thin and don’t over-eat. Our family is very healthy. The others do eat out some to the tune of maybe $125/mth on average. I’d like to lower that – and I’m working on my daughter about that. I’d love to use coupons – but they are never available for these foods. My only splurge of any processed food for myself is one brand of potato chips that has no corn oil that I eat when I have forgotten my own food and am starving. We do not buy junk food of any kind and cook from scratch, except bread, which they only use one loaf a week, and a handful of canned goods like tomato sauce.

      I’d love to look at the fridge and grocery cart of others who can spend so little and see if I can learn anything. I just don’t see how. A zucchini is a zucchini. It only stays good for so long. We do buy organic milk for the others and the occasional other organic items. A freezer might help. We do dehydrate some things when I find them on sale – but mostly for camping.

  4. Julie

    Can they sell the rental property? Their budget for it is $1988, but they are only generating $1550 in income from it. That means it is costing them $448 per month or $1948 per month if you include the increased debt payment. Even if they have to sell it at a loss and get a loan to cover the balance, they will end up with less debt that needs to be paid off and less hassle or worry while paying it off (A major plumbing, heating, or cooling failure, could really set them back while they own the rental). It just seems like way to much of a drain, and definitely counter to their main goals.

    • Susan C.

      Of course, but how do people part with their “tax deductions.” They think they are saving so much with “write-offs” but instead of paying down a home mortgage, and not having equity mortgages, they want forever their tax deductions. How much would people save if they didn’t get all these tax deductions, at the expense of tax payers who do pay off their mortgages.

      • Fred

        I had considered, if only briefly, selling the rental property. We went into this purchase (when it was our primary residence) very carefully and mathematically prepared. I personally always run ROI calculations excluding tax deductions; pretending that those can go away (sometimes they do); it makes those a sort of bonus coupon later on.

        In fact, our to-date ROI on this investment is 42% if I add in all of the expenses and completely *exclude* depreciation and interest write offs (include taxes paid out, HOI, HELOC, monthly rental income loss, several years of having NO rental income while it was our home, lifetime maintenance etc vs. the appropriate comparison to the value of and current equity in the home).

        I agree that it is a bad idea to hold onto a tax deduction. I heard a Dave Ramsey-ism once that went something like this: “Why pay the bank 10000 a year so that you can save 2500?”. Certainly some people have bought into this lie that you’re saving money by keeping a loan.

        Anyhow, tax deductions aside, a very wise real investor friend of mine wisely posited that all of the money you make in an investment property is made AT THE SALE of the property; translation, get a smokin’ deal on the house, put in some elbow grease yourself, don’t be in a hurry (hint: this is harder than it sounds), buy as under market as you can, and make sure there are no huge hidden expenses. That is where you make your money on an investment property: at the point of purchase. We got a stellar deal on this property; starting with nearly 30% in loan-to-value ratio right out the gate in a down market in an area of fast property value appreciation. Luckily for us we completely missed that absolutely crazy housing bubble.

        People should certainly think twice about what their tax deduction really represents. I understand you’re looking at our numbers blindly so it is hard to see where to crop without having the whole photo.

        Thanks for the wise advice not to hold onto an investment purely for it’s tax write-off. Fortunately for us, this is a non-issue. That write-off often comes at great cost; more often than not it means being leveraged by a bank and sometimes a dependence on the tax write-off itself in order to make it month-to-month.

  5. Jeff

    Given that they have life insurance, car insurance, home owner’s insurance on their own home and the rental, do they really need $15K in the emergency fund. Slash that to $5 and immediately pay off $10K of that $30,000 balance on the home equity loan.

    I’d also investigate xeriscaping to cut down on the water bill. If it’s as much as they say it is, the cost of the xeriscaping might pay for itself in a year or two.

    Is it necessary for two people who stay at home all day to need $130 a month in clothing expenses. That’s a lot of new clothes for the kids, or a big shoe collection for somebody in the family.

    • Susan C.

      That is what I was thinking. Don’t give me the excuses of a dry climate area, therefore you need to have your sprinklers and what not. If you choose to live in a desert environment, then you should not be allowed to waste water on your lush green lawn. Get over the idea that beautiful is equal to green.

    • Travis

      I recently moved from Colorado where not only does the government ask you to xeriscape, but sometimes they offer rebates for the effort.

    • Fred

      As Dave Ramsey says, there is something that relaxes in you when you have that emergency fund. The 15k gives me that feeling so it’s in that FWI (Fred Wants It) category.

      I’m loving the idea of doing a low-water scape. Actually, it is very surprising that nearly every house in the subdivision has lawn and not native plants since water is such a huge deal here; fellow neighbors complain about the water prices to boot. No sense in keeping that grass. We’re planning on ripping the lawn out sometime next year. Water runs between $90-140 a month which is flipping crazy so Ethyl and I need to sit down and start drawing up plans, researching plants, and putting together a budget for native landscaping.

      We are already hippies and don’t take long showers or use toilets (I kid I kid but we are cognizant of these items already).

      Excellent take-away. Thanks Jeff.

      We’ll certainly look into clothing expenses. I’ll have to be honest, I really enjoy how Ethyl looks in her clothes. She has been working so hard and successfully at taking off the baby pounds and keeping them off (there is that boiling frog analogy again) that I’m quite alright as she slowly replaces her entire wardrobe of ever-increasingly-sized clothing. It won’t hurt to review where those clothes are coming from — I just love how she is looking (Hi Ethyl, I know you’re reading).

  6. Paul

    Is the $380 for fuel per month or per year? That seems like quite a lot if it’s a monthly sum. While our kids were young, we bicycled everywhere. When our oldest got into a charter middle school, we had to buy a car because the school is about an hour bike ride away, and we didn’t want her having to do that in the winter. Still, our gas costs are about $45 a month. I was an at-home-dad for twelve years. It’s easier to get by with just bicycles if you have one parent who can bike the kids around and grocery shop, etc. We hope to get rid of the car again when the kids are in college. I would skip getting a second car if I were you, but we live in Santa Fe, NM, which is small and very bicycle friendly.

    $500 for groceries is commendable. We spend about $900 for groceries for a family of four. Our restaurant budget is $100 a month, so we come out about even with you there.

    I use a Kroger iWireless cell phone. That’s $10 a month times two, and we keep some old ones around we occasionally put time on if we want to give one to one of our kids to call us if they need a ride.

    Everything else seems similar to our budget. I congratulate you on your rainy day funds. As we get closer to paying off our house, (about $9000 to go), I funnel more money into the principle each month, and our emergency fund is lacking. Our mortgage payment is $900 a month, and we usually pay an extra $700.

    • Paul

      I’d add on the cell phone that it’s their Sanyo Taho refurbished model. I don’t see a need for a smartphone because I use the iPod Touch for smartphone type things, and I can call over our Google Voice number if I’m in a wifi area. My wife and I almost never use our cell phones, so the $10 a month just provides the capability in case we need them. Why do people talk on cell phones all the time? I’ve tried to make more use of mine because the time I purchase for that $10 runs out each month. In spite of my efforts, I probably only spend ten minutes a month on the cell phone.

      I also inherited some money that helped get the mortgage down.

      I’d second Mr. Money Mustache. If you can bicycle, cut everything to the bone, and sock away 70% of your income, you can retire early. I don’t think 4% to a 401K is going to do much. Starting next year, after we pay off the house, we should be saving about 40% of our income. (We make somewhere around $52,000 a year).

      I also listen to Dave Ramsey’s podcast on my iPod when I walk to the elementary school to pick up my son in the afternoon. While I’m a liberal Buddhist rather than a conservative Christian, there’s no one like Dave Ramsey to light a fire under your butt.

      • mark

        Great comments, Paul. Inspirational (to me – hopefully also to Fred and Ethel).

      • Susan C.

        Nice to have put the inheritance to good use – paying down debt. I’m using mine, once the house sells, to invest. I will not be using it for spending purposes. That is where my regular income comes in handy.

  7. Dan McCurry

    I add a couple of suggestions based upon the stated importance of family and what I assume is your pretty nice home.

    1. Mom, work part time at the preschool during the time your kids are there. We put our kids (7 of them) through preschools and private K-8 school for free using this method.

    2. Assuming much of your travel is to visit relatives, invite them to visit you. Offer to subsidize their travel allowing them to go on a vacation when they may otherwise not be able to afford it. Then you come out ahead financially and they are grateful for your financial help. For us, it was always much easier to bring family to us rather than haul our seven kids to their place.

    • mark

      Great thoughts. I think I had a kid in that same preschool. :)

  8. Susan C.

    In general, after looking at these budgets of many people, I’ve concluded, “The more you make, for a good number of people, the more you think and feel you need to spend.” Housekeeping and the wife stays at home? Why not have the extra expense of having a nanny, too, since the stay at home mother can’t do the cleaning, too? Food budget? Yea, I’d cut that way down. I wish I had the luxury of staying at home more often, not having to work, (I’m single with no kids) so I could just cook all day. If a spouse is staying at home, there is no need to be spending money out at restaurants. A 2011 SUV? Does everyone need their high maintenance and high fuel costs SUVs? And, they want to buy another vehicle? Why? College savings – $50/month? That’s miserable. But, after 50 years on this earth, and coming from a family that has spent lots of money – not on trips, not on cars, not on “equity” mortgages – on school tuition BEFORE THE KIDS WENT TO COLLEGE, I’ve also concluded that many people expect college tuition to be free, too, like their public education, with all its free books, where what you want clothing, free tuition, and free everything else. Many people pay property taxes and don’t have children, so don’t give me that excuse. Instead, people spend hundreds of dollars a month on their car payments, their eating out bills, their “blow money” and then say, “We can’t afford college tuition.” Perhaps if people were forced to pay for some of their children’s elementary and secondary school costs (property taxes don’t count), then they would realize they don’t need all the extra stuff they spend on during the month.

    • mrsf15e

      If she is staying home all the time and cooking, going out is a nice treat. I suggest just cutting down the number of times you go out in a month, instead of weekly, try twice or once. Housekeeping on the other hand is easily done in 15 minute segments here and there, no need for someone to come in.

      I didn’t notice a car fund for the second car they are going to buy next year.

      Why are they paying utilities and a gardener on their rental?

      Bank fees should be non-existant.

      • Susan C.

        Perhaps this couple likes others to think they are “rich” and can afford the gardeners for their rental. As I’ve said before, couples like this will find ways for their “tax deductions” instead of just paying their fair share (and not having others in the U.S. subsidizing their mortgages), and then save a measly $50 for a college fund. Yes,the bank fee I found to be a waste, too. Certainly not expending a little extra time getting cash for free at their bank or before they take a trip somewhere.

      • Susan C.

        Still, whether this is a real couple or an example (think of the names of this couple – Fred and Ethel? – remember Lucy Desi’s neighbors), eating out as often as they do – weekly – is unnecessary. When one eats eat home, and not at a restaurant where the platters are expensive and contain way too many calories, then the couples are certainly going to put on the pounds, having babies or not. Besides, I find that always an excuse – baby fat. Yet, it happens quite often; women get married after the men fall in love with someone “attractive and skinny” then when they’ve gotten their man, they let it all go to hell.

      • Kindness :)

        It’s easy to scrutinize someone else, especially when they put their “dirty laundry” out there. However, I thought this was supposed to be a place of constructive criticism and supportive neighbors sharing creative ideas to save and budget.

        There is no need for rude comments, or comments outside of their budget, in my opinion anyways.

        I’m sure, Susan C, that you would most likely not put your budget out their to be “ripped to shreds.”

        KINDNESS TO ALL :)

      • Susan C.

        Yes, perhaps I was being a bit critical and judgmental. I just don’t know how it would feel to have not to worry about expenses, food, car insurance, and other budgetary matters when married to someone who allows me to stay at home, only to end up at restaurants most days of the week. Perhaps I’m just have a little of that Midwest thrift ingrained in me. I’ve thought about posting my budget, but there isn’t much for people to analyze. You’d see quite a few categories, including what I pay for my business taxes and estimated taxes. Perhaps I spend too much time on the budget, but then again, I don’t make tens of thousands per year, don’t have a six figure income (probably more like today’s poverty class) and I still get my bills paid. I could use inheritance money – once the father’s house sells after 55 years of living in it – and blow it. But, I’ll use that to invest on a monthly basis. I often wonder how my life would have been had I had the opportunity to marry in my 20s and just get to stay at home.

      • Barbara

        Maybe I need help with my reading comprehension because I could of swore I read that they don’t go out most nights. They go on very expensive date nights. Back in the day, when we weren’t so broke, we could easily drop $200+ at The Melting Pot for date night dinner.

        I can’t understand all these rude comments. Do I wish we had Fred and his wife’s problems, HELL YEAH! I doubt we will ever make that kind of money, but I can’t be mad at Fred for that. I can’t wish he had less, I can only wish we had more. But NEWSFLASH, more money doesn’t really fix it. I know this for a fact. Fred, you know where to make cuts if you want to make them.

        People tell me “you’re so lucky you guys can afford for you to stay home” and it makes me mad. It’s not luck! We do without a lot to make it happen! And right now it sucks. I’m glad Freda wife can stay home. I’m glad she has a housekeeper to help too cause it’s a lot of work. I’m glad Fred can take her out to a fancy resturant. I can’t believe how snarky some of you are being.

        Keep up the good work Fred! I’ve no doubt you’ll reach your goals.

      • Jess_Esq

        There has been no hiding the fact that these names are fake – Mark chooses names to help hide the identity of those brave enough to submit their budgets. Your rude comments are actually attacking real people, not figments of Mark’s imagination.

      • Susan C.

        I guess this is my final comment keeping my rude comments in my head instead, and using my time more productively than on these blogs. But, I’ve seen it so often in my years and find it quite a good gig if one can stay at home, not have to deal with office politics, not have to deal with commuting, and doesn’t even have to cook meals, only spending more of the husband’s money at a restaurant. So, how’s that for rude comments. I’m done wasting my time on this blog and will spend the time more constructively on my single income, tight budget.

    • sonflowerjess

      As far as the housekeeper goes, I wouldn’t be quite so harsh. Having a “housekeeper” sounds rather posh and excessive, but it doesn’t have to be. I have had a once-a-week housekeeper three times in the past three years, after the birth of each of our children. We are not a “wealthy” family, but the added value of stress relief for me was worth the budget hit. Maybe their housekeeper is a young neighbor, like mine was.

      And college…Paying for my children’s higher education isn’t even in my budget. If they want it bad enough, they will pay for it themselves/apply for grants.

      I loved the advice about “zero thinking” about what it is they love about their more expensive dates. My hubby & I also go on a weekly date, and we’ve discovered the same thing as Mark–it’s really the conversation, not the food.

      Your groceries and gas are only a little higher than what we spend (two adults, three kids). We bought a minivan to replace our SUV when it got totaled, and that’s only helped a little on the fuel. I do find that if I spend a little more time planning my week, I drive a lot less. I’m not real willing to cut back on the groceries–quality food is worth it.

      Definitely could cut the cell phone bills, particularly with internet available at home. Even if you have a smartphone, you can run it almost anywhere on free (or already installed, such as home) wifi; unlimited talk & text plans with Page Plus Cellular (my current provider) are right around $40/month. Mark’s post about Ting cellular was pretty informative on that kind of thing.

      Good luck!

  9. Eric Williams

    I love Mark’s questions of scrutinizing every budget category and finding the root of happiness and trying to replicate that on a smaller budget. However, this is very exhausting and overwhelming to do all at once.

    Try focusing on a few categories a month until you’ve gone through your entire budget. And over the next year, perhaps you can ramp up to the $2,500 or $3,000 per month.

    But if you do want some low hanging fruit to get an initial push, look at Mark’s list at the beginning of the post. A lot of dough there!

    Also, is my math correct? Rental property expenses total $1,698 per month and their only charging $1,550 per month? Time to get rid of the rental?(obviously a lot more that goes into that decision) Seems to be bleeding money.

    • mark

      Agreed, Eric. Fred himself said none of the suggestions seemed very hard if taken on in a “slow-boil the frog” kind of way.

    • Fred


      You’ve hit the nail on the head. Ethyl and I are looking to tackle one thing at a time. We want to make our changes stick forever and not shock us into relapse.

      One really exciting thing for Ethyl and I, was to look back at the monthly , automatic expenses that we were able to cut over $900 a month over the past 18 months. To completely crash metaphors together: Slowly boiling that frog has kept the fat off.

      The housekeeper and dining out seem to be hot topics ( so Ethyl and I will be chatting about those at our next expensive dinner ;) )

      About the rental property, you are correct. The rental property expenses are right around the $1700 range (the HELOC is not included because that is consumer debt incurred while this was our home). However, at just under $150 a month, it is not our loss-leader and, as you mentioned about low hanging fruit, I would rather start with the fruit. I’m just guessing (and I’m going out on a limb *sarcasm*) our loss-leader starts with “Restaur”.

      With estimated locale-appropriate cost of living increases to rent each year, we will be break-even in 3-4 years. This is just around $6000 of loss invested — or just 1 year of dining out. I *could* probably cut a lot of the maintenance budget. Most of the expensive maintenance that could be expected is represented already in our home equity line of credit.

      Thanks a ton for your comments Eric.

      • Eric Williams

        I love eating at them, but can never spell restaurant correctly anyway. ;)

        I didn’t knock your housekeeping, because my wife and I are actually contemplating adding this to our budget.

        We are debt-free, have an emergency fund, and have a retirement plan in place, and working that plan.

        We also, do quite a bit of blogging on the side, it takes up our free time, and having someone else clean our house seems like a value add for us at this point in our lives (we have a 19 month old running around).


    $150 for a housekeeper keeps drawing slot of attention…you may be getting a limited amount of targeted help for that figure, and I say if that works for you, Don’t be Penny Wise and Pounds Foolish, keep the help! :) (Wish I had kept my Trusted Help instead of those dollars in my budget, years later) I think the clothing budget is reasonable, too, this is a family, not an individual. With plans to buy a new car (2nd, or replacement?) next year, best financial advice I can share is never take on a contract for a payment without having test driven that payment deduction for a substantial period of time. A year is a good test of the typical car loan duration of 48 to 60 months. So you should be making that payment no matter how you plan to fund it, in your budget now. The rental is also an investment, how are properly values going in your part of the world? After reading everyone’s blind feedback based on numbers…and our own biases, are there vanity items you now know that you can reduce or remove? Good luck……with your goal for early retirement.

    • Susan C.

      I worked in taxation for a number of years, and still do on a limited basis. I heard 13 years ago about all these couples saying, “I want to retire at 50.” Is this a Scottsdale, AZ, couple by any chance? And, what does one do with the rest of their life after “retiring” at 50. Travel, play with grandkids, golf? I don’t work full time at one job at 50 now, and intend not to again. I have my own clients in legal and admin services. I manage and my needs are met. I finished a master’s in history (a full fledged masters, not some expedited degree) in my 50th year. And, I have no intention of “retiring” at 50, to do what? And, where are these people now who said in 2000 they will be retiring at 50? Working again. But, the rate this couple goes, they will not be retiring at 50.

    • Fred


      Yes the 10 hours a month that the $150 buys is quite nice, I won’t lie. We’ll have to weigh the 10 hours a month against the $150. Though it could be that the time that Ethyl and I have together while cleaning together ourselves is just as valuable as the time we gain with that 10 hours in the first place. After all, our #1 goal is to be with and near family. Retirement at 50 is so far down the list as number 2 that I’ll work until I die if I can only attain #1.

      Great idea for the car. The budget for the second car is $3500 so saving $300 a month is a great idea and will get us there quickly; and instead of lowering the car maintenance rainy day fund, as Travis suggested, keep that going since I expect an older car will need more TLC.

      Thanks again for the comments and advice.

  11. Emily Moothart

    So, I have a lot of experience cutting down budgets, having cycled through various “feasts” and “famines” in my 10 years of marriage. :) Here is my take:

    Dining out is definitely a place to cut, if you’re serious about being free by 50. Hubby and I have found that getting coffee at starbucks, combined with good conversation and/or good books, makes us just as happy as going out for a big meal. Might the same be true for you? When we go out every week, we budget $80 for the month.

    I’m wondering why your fuel costs are so high, if you’re both working from home and you only have one car? We live in SoCal (home of the high gas prices) and only spend about $225/mo with two cars.

    That is a lot of blow money. :) Cutting the housekeeper, if not completely at least down to once a month for deep cleaning, would be first on my list. Maybe cut down to $200 for this category?

    Clothing does not need to cost this much for a family of four. We spend that much about once a quarter, and we have a family of six. I’d cut that down to about $40.

    Household supplies also seems quite high. How much small furniture can you need every month? If you’re careful, I’d guess you could keep this closer to $50/mo.

    Why are you paying monthly bank fees?

    Do you need to keep all your lawn? There are some beautiful ways to landscape with rock, grasses, dry climate flowers, etc. It would be an initial investment of a few hundred to change it, but might really pay off in your lowered water bill.

    $58/mo is an awful lot to spend on itunes and redbox. Especially since you are also paying $30/month for netflix etc!

    Travel is fun, but would you prefer to travel now or have lots of travel freedom later? $250 paid toward the house or invested would yield an awful lot of freedom in the future.

    Wild and crazy, I know, but it is SO easy to do “preschool” at home. I have personally loved doing it with my kids. Anything and everything you can dream of needing is available on the internet. Something to think about? (and that would be another $300/month towards freedom…)

    So if you did everything I suggest here, you would find you had an extra $1700 per month to throw at your mortgages and/or retirement. That is $20,000 per year! Wow!

    • Fred

      Wowzers. Read from the bottom up and this is very compelling. $1700 a month? You must have been in sales because Fred is sold.

      Thank you for the excellent and well itemized feedback. There is a lot for Ethyl and I to chew on.

    • Renaité

      Very thorough! I would just add that MMM would calculate it as almost $300k over ten years ($1700*173 to account for fancy compounding and such if you invested that money instead: http://www.mrmoneymustache.com/2013/06/24/when-the-back-of-the-napkin-can-be-worth-millions/)

      Also, I recently cut my “household” budget way down by imagining having to pack all those little things every time I want to move. If I think of the item as a ten year burden, I generally don’t want it anymore at all!

      Thanks for sharing your budget, and I hope we get to hear from you again along the way to see how it’s going!

    • Janet

      I want to chime in about the preschool expense. Since the #1 goal is to “be with and near family” that $300 is going directly against that goal as you are paying to separate and not be with your child. Doing it at home is much cheaper and you get to build that relationship and be there for the milestones. Watching reading click for your child it just as amazing as watching their first steps. Same with understanding a difficult math concept. You can add that $300 to college savings.

      I pay a housekeeper to come in once a month for 3 hours to deep clean the bathrooms, which I hate, and kids maintain during the month, and whatever else she can do in the 3 hours (her minimum.) I love the days she comes, I’m a SAHM because she is doing the specific job that I dislike. So maybe cutting hours for housekeeper, but not all.

      Most of the other things I would say have already been said. Find cheaper restaurants and only do the “nice” ones once a month. We like going to get BOGO Blizzards, or 1/2 price Sonic Shakes for most of our date nights. For us, it’s the time together without kids that matters, not the fancy atmosphere or food. Also for clothing, you can get nice stuff at consignments shops. I spent $450 last year total for a family of 10, plus a little that would have fallen under gifts and Christmas, and my kids usually look nice unless they are outside in “play clothes.” We do get quite a few hand me downs sent our way and I take out what I want and pass on the rest along with things my kids have outgrown. Over the years, we’ve built a pretty good network with friends who have kids at different sizes than mine. I have several friends who are also doing the regular size changes post-baby, and we occasionally have clothing swaps. We all bring everything that we would send to a thrift shop, sort it by size, and “shop” from each other’s clothes. It is a blast! A fun night out and a new wardrode all for the cost of some munchies to share. It’s fun to see something you loved that no longer fits be loved again by a good friend. (We usually have 10-20 women gathered and sort the clothes by size as people arrive.)

      • Ethel

        Janet, I hear ya on the cleaning the bathrooms!

        I wanted to address the preschool topic, since it’s been brought up several times. Several years ago, we made the personal decision to send our children to a church based preschool. While it may seem counter productive to our “stay together as a family” goal, we have also chosen to homeschool once the preschool years are over. Right now, we have one loving the time in preschool, and the other loving the one on one time with mom for homeschool. (and those who homeschool an elementary student with a preschooler at home? yeah, mad props to you, I’m not that good yet!) ;)

        And onto clothing…. (my once achilles heel) Over the last 18 months since Fred and I have buckled down on this budget thing, I’ve discovered that hand me downs are not only awesome for kids, but for me as well. I’ve also have the absolute elation of joining in on a friends clothing swap- you’re right, it’s a blast! LIke Fred said, it’s a process, and we’re slowly boiling the frog here.

        Thank you for the encouragement and suggestions!

  12. Emily Moothart

    Oh, and I forgot to mention one of the most important things: DON’T buy a new car! What on earth could be wrong with a two year old car when you both work from home?? You really really really don’t need that extra payment. :)

    • Ethel

      Nope! no more new cars here- this will be a beater jalopy for Fred to commute to the home office (several hundred miles away), a commute he does make on a monthly basis.

    • brad

      Thanks for the clarification on the car — I thought the new car was a replacement for the Explorer, but I see it’s a supplement (a commuter car). At some point, too, you could ask yourselves whether the Explorer is really necessary for a family of four. I’m friends with a family of four who drive a Honda Fit, and they even use it for three-week camping vacations where they can fit all their gear in the back and four bikes (two on top and two on the back). I’m 6’4″ and fit in the Fit just fine ;-) Their two kids are 10 and 13. I really think families of four could benefit big-time by reconsidering the need to buy an SUV or van — those things are expensive.

  13. Travis

    The first thing that struck me was congratulations on only paying 3.375% on both mortgages! The eating out and grocery budget is insane. For a family of three we average $400 a month and no more than $150 eating out. Back when I was getting Quiznos every day for lunch and pizza three times a month we rarely went over $300 a month. Part of their fun money category includes beer and restaurants which hides more eating out expenses. A 2011 vehicle shouldn’t require $120 a month for maintenance. Cut that in half, but let the balance ride. Unless their kids are joining the military or getting loans, $50 a month for two kids for college might get one of them through their first year. I agree with getting rid of the housekeeper with both parents spending so much time at home. Also, what household items are totaling $250 a month?

    It’s good that they’re aggressively paying down the home equity loan on the rental. Whatever they can make up in the budget should be applied towards increasing retirement savings and their various real estate loans (especially since the rental is operating at a loss). They will be much more secure in their retirement plans if they don’t have that debt to worry about.

  14. tmb2

    The combined 8% he’s putting into his 401K will not be enough to retire at age 50 unless they’re looking at a significant reduction in standard of living.

    • Susan C.

      Yep, for sure. As I’ve written earlier, having seen and heard this for years. These folks have visions, love to brag about their incomes and the fact their wives don’t have to work, but they don’t live a Warren Buffett lifestyle either, who does not believe in equity mortgages and refis. Plus, Buffett is known for his cafeteria eating, not some Four Season’s kind of guy. And, what about all those people before this couple who put money into their 401Ks to retire at 50. As I wrote earlier, they are still working, having nothing in the bank. I’m so glad I don’t need a six figure income to make a living or need an $8000/month budget to survive. And, many families do it on lots less.

      • Barbara

        Nothing in the bank? I’ve read all your comments an I must say, why are you so upset here? You seem to be taking this very personally. I’m broke as a joke and probably won’t be able to even buy Christmas gifts for the kids, yet I don’t begrudge Fred and his wife their lifestyle. You are rude and insulting. You really owe them an apology for your attitude and tone.

        If you can’t be constructive then just be quiet.

  15. Celia

    I think your great Fred and Ethel to lay yourselves open to some of these comments. I love YNAB and enjoy the feedback but some comments are more about the sender than the receivers….
    Good luck with your saving for 50 :-)

  16. Susan C.

    Hey all, maybe I ripped this one to shreds because if this a real couple – Ethel and Fred. Sounds like a 1950s couple to me in some way, particularly one on TV. I’m curious; did you guys at YNAB make this up just to get us razzled and see what we can come up with – positive, critical, or somewhere in between?

    • Julie

      You need to read yesterday’s post. Mark frequently post real people’s budgets, but alway’s changes their names.

  17. Fred

    Funny story. My wife, “Ethel” is an I Love Lucy junkie. When I told her about our pseudonyms on here (haha Mark) she immediately saw the connection. It was lost on me completely.

    • Susan C.

      OK, so you are real. And, I apologize for being too blunt. But, if you want to retire at 50, then do some paring now. There’s room for it. And, honestly, I don’t see that much of a problem with $15K in cash. I’ve seen many people lose tons in their 401Ks. Perhaps invest some of the money you have in your own mutual funds – doing it yourself – instead with some unknown administrator who really doesn’t care that much about your money. That’s what I’m doing with my inheritance once the now deceased father’s house sells.

  18. Sophia Chester

    Okay nothing personal to my suggestions. But they asked for shredding. It might be painful to hear and even harder to do. I noted they seemed to be fans of Dave Ramsey from comments, and if you’ve ever heard him you know he spares no feelings with his honesty. I’ve attended his FInancial Peace University class and highly recommend it, and some of my advice comes from Dave’s detailed teaching on the subject of financial peace. Dave’s motto is Live like no other so SOMEDAY you can live like no other. This budget is nowhere near that kind of living. It means doing without a lot of luxuries to cut costs until a future date when finances allow it. It could mean living in a shack of a house paying for ONLY necessary expenses like food, and heat. It could mean moving to a less expensive area. Anyhow that is Dave’s philosophy. So here it goes.

    1. cut spending on eating out. Fix more food at home from scratch rather than pre-prepared food. It’s more healthy and more affordable. (I have family of 5 on a grocery budget of 700 this includes household products, eating out, purchase of alcoholic beverages, and food)
    2. scratch the housekeeper do it yourself, if the house is too much downsize!
    3. cut all forms of non essential expenses, like netflix, spotify, etc.
    4. sell rental property it’s very upside down and not at all worth the measly tax deduction. Go back to the drawing board on this one.
    5. use some of emergency fund to pay off debt, $10k or so this is actually one of last steps in Dave Ramsey plan for financial peace. You’ve got funds for both home repairs and vehicle repairs so $15k seems overkill at the moment.
    6. temporarily cease all investments in college funds and retirement. Again this is a final step according to Dave Ramsey. Pay off all debt first! Then later hit investments hard.
    7. can you save on fuel and groceries and household expenses? Both are stay at home workers/parents. So why so much money for gas on one car? Cut coupons, consolidate trips out to accomplish more tasks in one trip. Buy groceries in bulk to keep from making multiple trips to store. Make meals ahead, and freeze to save on pre-prepared freezer meals. Make food from scratch from fresh ingredients rather than boxed, or frozen. Compare prices at different stores and price match at stores like walmart.
    8. Cut out the gym for now, workout at home; swim, bike, run, walk, free weights, kettlebell are all examples of stuff that can be done at home free of charge.
    9. save on water by xeriscaping.

    These are just a few example of deep cuts that can be made. It’s all a matter of being willing to make the sacrifices for a little while until you pay off debt. Which reminds me don’t add new debt. Pay cash only for everything, with money you have already budgeted.

  19. Ethel

    This is Ethel. One thing to consider for us is that for our grocery, dining out, clothing, household supplies are filled with purchases and products from mom-and-pop as well as individual-owned business. These products are made using sustainable local and environmentally friendly means. They are more expensive then the bargain products that we do not like to support. We like to support the local organic farmers and buy direct from them and it is more expensive than the non-organic offerings at the grocery store. I am also trying to learn how to make my own organic cleaning products and this will reduce the price.

    • f0xfire13

      This is great and I think it’s important to shop local but the grocery, dining out, clothing, household supplies spending is still really high. I shop at local grocery stores, the occasional farmers market and eat at small, locally owned restaurants and our grocery budget is $400 dinning out is $100

      That grocery budget includes food and all of our household and personal supplies such as paper towels, shampoo, toilet paper, dish detergent, etc.

      • CW

        Have no idea how you can do that. I’ve seen people say that, but I try to scrape by and there is no way, eating healthy foods, that we can get to a total of $500 for food alone. At my very best month, and eating at my mom’s for a week, we got it down to $750. I think it’s true, it must be where you live. I know single people here who are excessively rail skinny and have gardens that still spend $200/month.

      • Fred

        I’m confident this is the case as well. We are diligent with our grocery shopping and make a ton of things from scratch instead of canned or bagged (rice, beans, bread, tortillas, etc). We recently had guests from out of state and they were in shock at the cost of food where we live. They (anecdotally) said it looked to be nearly twice as much — and this is at a “regular” grocery store including the warehouse stores; not one of those fru-fru grocers.

        There is no excuse on the lazy dining out budget.

        Since cost of food seems to be such a regional issue, I think cost of food for a given location would make a great financial article, here, on MMM, or elsewhere. I suspect it would take a bit more research than a quick Google. I was unable to find a good “food price geographic heat-map” online with a lazy Google. Food is such a great expense, it could even be cause for a family to move if they are could get armed with the right information.

        I did run across this tho; U.S. only:


        If you select a different map and choose the food prices / low fat gallon of milk portion you can see that where you live has great impact on the price of milk**:


        ** too bad other geo-focused pricing of foods such as meat (reg vs organic?) / veggies (reg vs organic) etc are not super easily available

      • CW

        Well, that chart can’t be right. Our organic milk is $4! That’s way off the scales.

  20. Thomas Nichols

    Why a second car? You both work at home, how much driving do you do? Groceries, and children shuttling. Can you sell the expensive car, get a reliable gas efficient car, and live with just the one? Is the 2 car luxury worth the maintenance, gas, and insurance? We didn’t think so and sold both of our cars, and are buying a somewhat older, cheaper, reliable, and efficient car. We are much happier. Just something to think about.

  21. Thomas Nichols

    Also, I would think very seriously about selling the rental. A tax deduction is no reason to keep something that operates at a loss. It’s something that requires your attention, and I’m sure there’s a nice maintenance anvil hanging over your head. Sell the rental, pay off the mortgage, and most of or all of the home equity. Sure you will lose the income, but you will also lose the expenses, and the stress/worry.

    • Susan C.

      Agreed. I see some rentals as nothing but an albatross.

  22. Molly

    We are new to YNAB (on month 3). But we have always been pretty frugal but want to make sure we don’t have more expenses creeping in as we feel like the water is boiling in a few areas. I can relate in that we have a higher income like yours and can also relate to the frog in the boiling water- we pay $300/month for ice skating for our daughter!!!! HOW DID THAT HAPPEN? I get how it happens!!!! My suggestion is to sell the rental property because 1) it is a money loser 2) your annual expenses will likely go up more than the cost of living and 3) there is high risk/low reward in the grand scheme of things even after tax benefits (we are experienced former rental property owners). Pick 1 thing at a time and work on it-ride the paying extra debt of $1500/month and then tackle the next thing. I think it is hard to work on everything all at once and your opportunity for failure is high. We eat at home almost every meal with teens but I can understand and remember with small kids it isn’t fun having chicken nuggets and mac n cheese and listening to crying but I would suggest going out for lunch (usually cheaper and more fun to be away from the kids when they are awake vs. sleeping anyway), eating somewhere more casual or something nice after the kids go to bed(expensive steak from the store is still less than a restaurant). Find ways to get the same value you want and enjoy but not the $. If you trimmed 10% off some of your categories you’d see a difference without a big sacrifice. Best of luck.

  23. Barbara

    In regards to college for the kids, and how they pay for it, you have to remember that there are loans for school but there are not loans for retirement. My kids know we will fund our 401k and other retirement accounts before we even consider putting away for college. We hope we’ll be able to help them pay for school but it’s really something they will have to work out.

  24. Ellen

    Just wondering: why is the mortgage payment on the rental property so high? That doesn’t even include taxes! Is this a 15-year loan? Because if it isn’t, it ought to be! Maybe consider refinancing?

      • Ellen

        Oh! Good job! Some of the commenters may not realize that when they refer to your negative cash flow regarding your rental property. At least when and if you do sell, you’ll have a fair amount of equity.

        Have you considered having your tenants pay the utilities? That’s standard where I live.

        Also, I commend you on having such low interest rates on your mortgages!

      • bareheadedwoman

        keep the rental. you’re deciding whether to pay into a long term investment; not whether to liquidate an asset in the short term and property tax is less than capital gains. at a 15 year mortgage, when you retire at 50, that’s a continuous income. THAT is how you make real estate pay in your golden years, not equity and sale price (especially since at 50 you’ll be paying taxes if you don’t roll that over into another property). been there, done that; seen that system pay two generations of retirement; and no, not inherited property… bought property where there WAS no 401k AND where there was, the incoming rent out performed the dividends. Markets don’t always go up and you can bet taxes on 401K are gonna happen in our lifetimes. and college? i know at least 20 people who either paid kids tuition, or had tuition paid by, the flat income from outright owned rental property. besides, if the kids boomerang, you have a spot to help them get on their feet without having them in your basement.

  25. Kurt

    I have seen a lot of good suggestions, but also a few personal attacks which are not really in order here. Everyone needs to determine what is important for them, such as date nights, etc. My suggestion really goes back to the unifying goal and the basic assumptions. Is it possible to work, at least part time, after the age of 50 and still be quite mobile to meet the goals? With computer work and the internet and mobility, I suspect that something could happen. Also, education issues for kids in the future could impact the budget, as well as medical insurance and medical cost issues after retirement. I didn’t see a lot of mention as to what the expenses would be after the age of 50. This, of course, is impossible to predict with any certainty, but they will be issues.

  26. Christina

    I am not able to read all of the replies right now, but I do have a suggestion. My husband and I have made spending as little as possible into a game. Our goals are big enough that we are willing to do less now to reach them. So, each month we try to spend as little as possible in each category. At the end of the month we zero that account and add it as extra to our goal. If we consistently spend less in one area then we reduce that budgeted amount. It’s fun and helps us be reasonable about budget changes.
    I must say that you eat out a lot. That might be a good area to try this and you will probably be healthier too:)

    • Fred

      This is a really fun idea. Ethel and I did this once when we had just under 2 weeks left in the month and had only 10% of our grocery budget left. In fact, we even had guests coming. By the end of the month our cupboards, refrigerator, and freezer were *literally* empty – our friends were absolutely amazed that it could be done. If memory serves, we went over budget by something like 40 cents (I seem to also remember joking that we now needed to go pick up nickels off the sidewalk to cover the overage) . It was a great challenge and a lot of fun (but only because we were doing it *together*).

      We tend to eat healthy when we dine out too. One of the reasons our eating out budget is so high is that we gravitate toward the healthy(er) eating out alternatives. Anything with vegan/vegetarian/local/organic in their menu *can* be quite expensive; in fact, if all four buzz words are there I’m certain we’re paying a small premium fortune to pay for that brilliant marketing department ;) Making these meals at home is a much cheaper alternative *for sure*.

      Amazing suggestions and reminders. I love games! We’ll be doing this again I’m sure. Thank you for your response.

  27. gpamerrittenneth

    Kudos to Fred and Ethel for graciously publishing their budget to be ripped to shreds, and then graciously accepting and thinking about the ideas given here. We can ALL improve our finances with only small losses in comfort and covenience, if any. Every month I think zero based budget thoughts on all my expenses, and try to find at least one little thing I can work on.

  28. CW

    I’m a little surprise no one has mentioned the “blow money”. Beers out with the guys costs quite a bit. Maybe you want to isolate that and really see how much you spend there. That can be 10 times higher with tips than buying at the store. Maybe think about buying it at the store and inviting the guys to your clean house. That would also keep your friends and family close. Or skip the beers and food and go shoot some hoops or ride bikes or something. Your waistline and budget would both thank you – and I think you would feel closer to your buddies.

    Another thing, it seems you have food in several categories, which kind of hides the true cost of your food and skews the budget. As far as I can tell, you have Food with 2 subcategories, which seems pretty normal. But, then you have food in “blow money” and “Personal Care”. I don’t consider power shakes or health foods as personal care. It is nourishment and feeds you, so it is food. So, I guess I’d like to see you round up that stray food and put it in the same category so you can see a true picture of what you spend.

    I believe in organic food, but not if you are going to eat at a restaurant and eat $500 worth. Much cheaper at home. I’d say try really hard to knock that down to at least $185 or less. And, definitely don’t do dinner. Or eat dinner at home and share one thing at the restaurant.

    On another train of thought, some of your categories seem like a hodge podge. How can you isolate potential bleeders if you combing things like housekeeping with beers with the guys or combine exercise programs with haircuts? I find these very different. It certainly doesn’t tell me how much the haircuts are or if the exercise program is really excessive. Have you looked at those?

    I cut my families hair. I have for 25 years. Sometimes my daughter wants to go to someone, just so she can. But, I’m now teaching her to cut her own. She’ll thank me later when she saves tons of money year after year.

    Household Items contains both paper products and small furniture??? That really needs separated. Those 2 things do not seem in any way related. Also, that amount seems extremely, extremely high for household products. Maybe you could cut down on paper products. We bought cloth napkins years ago and have never bought anymore paper towels. We use old stained wash cloths to wipe up messes on the floor. We never use paper plates. We bought plastic ones to use on the cement outside and wash them. My household budget for kitchen and bath items (toilet paper, sponges, dish soap, cleaners, shampoo, razors, laundry soap, and the like that get used up) is only $64, and I think that is too high. I’m looking into that and trying to lower it – thinking about making our own soap.

    The bank fee has to go! I’ve never understood why anyone would pay a bank fee. I’ve never paid one in all my years. In fact, the bank pays me to keep my money. Try switching accounts or switching banks or changing your habits to avoid that fee and find a nice credit union or bank that gives you rewards checking or savings. There are some that pay between 2-3% if you use there debit card 10-15 times per month and log into their online account or some other minor hoop.

    Call your internet provider and simply ask them to lower your bill. Sometimes they will.

    Man! Am I reading your property tax correctly? $433/month? That is a lot. Is that because your house is really fancy? If you plan on hitting the road when you raise your kids, have you thought about getting a cheaper home now instead of waiting?

    Why are you paying the utilities on the rental?

    Seems like you are spending a lot on iTunes, NetFlix, RedBox, Spotify, etc. How do you have time for them all? Is that really in keeping with spending time with your family? We only have iTunes and NetFlix for about $8, and I’m seriously thinking of getting rid of the NetFlix (I’d hear about it, though). Can you go through those and see if you really need all of them?

    Definitely ditch the water, but be careful not to spend too much on the xeriscaping. That can cost a house down-payment! And you might not get it back when you sell. You might want to research the cheapest ways to go about that.

    Doesn’t look like you have much of a buffer for repairs to the house or rental. Have you planned for the eventual roof or heat/ac replacement? You look to me to be in the hole $387/month on that rental already. A major repair could eat you up. Why is the renter not doing the yard? I vote for ditching the rental, but I’m sure I don’t have the entire picture. One bad renter can cost you $20,000 or worse, a meth lab. I’d be very, very careful.

    You do realize that as soon as the kids get a little older, those other expenses will kick in. My teen went to school for the first time last year. We have spent more in the first 2 months of school this year than a whole year of home-schooling! And, I’d be picking really quick exactly which classes she wants. All of them will be very costly.

    Cellphones – we use Net10. We found phones that will let us spend only about $18/month each. It buys us about 150 minutes per month. They’re cheap, but they keep us safer and in touch when we need to be. Some of the Net10 have different plans. You have to be careful.

    I know you said that giving is very important to you. Still, it seems very extravagant to me when you are still in debt and aren’t putting away more for your roof or investments or kids’ education. What about a computer or the replacement car? It does no good for anyone if you throw money away and later need help yourself – or another loan. I think I would try to get myself out of debt with that money. Then, in the long run, you will have more to give. I know you feel good about it now, but could it be a little bit of ego? Just asking ’cause you want to be raked over the coals. If you think about what it does for you now, maybe you want to think about what your future self will think about the you now when that future self has even more money to give (or live on) because of the decisions you make today. And, think about your own kids. Won’t they be eternally grateful if you are safe and sound in retirement and they don’t have to worry about you, and if you could possibly save that money for their education so they can start out life debt-free for their education? Just food for thought. I know others have very different views. As for me, as long as a person is in debt, I see no reason to be giving. As long as you aren’t on track for retirement, I see see no way to do that – not that much. Once the financial house is in order, that is the time to give. I know all about sacrificial giving. If that is what you want to do, that is your choice. But, I’ve seen that a lot, and those people are in the poor house still – and need others to help them. So, do what you want, but recognize what it will mean to your plans. Of course, that is assuming you are really trying to get the house in order, which I think you are.

    Take it or leave it – and good luck! Glad you are thinking about it all and actually taking steps to do something!

  29. Iron Mike Sharpe

    Only 4% to the 401K? Max that out!

    Look into getting rid of the 20MPG gas guzzler. Get something more fuel efficient.

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