Guess what day it is? Guess what day it is??
Never gets old… :)
It’s also the day we play a new game called, “Things I can afford when ____ is gone!” Woop woop! Right after, “My biggest expense costs me WHAT now?”
But first, let’s backtrack…
Last week I asked all the smart readers of this blog to download a new phone app so I could poll y’all on some sexy money questions. It looks like over 250 of you listened (I thought I had at least 2,000 smart people here, but guess I was wrong…) and the results of our first question was surprisingly shocking!
I asked how many of you guys will be taking on a “No Shopping” challenge with me for the next month, and over HALF of you agreed to join me. Half! That’s incredible! And only proves to me again how smart you guys really are! ;)
Here’s the results of that question so far:
I genuinely thought the numbers would be reversed, with “No ways” being in the 50-70% range and the “in spirits” being in the 20% range. And then of course we have the nerds who actually enjoy having a life, pshh…
We had some pretty cool comments being sent over through the app too:
“Just paid off all my plastic and 2014 taxes owed, now everything except utility bills and some grocery $ is going right to savings and Roths!! Bring on a spending ban!” – Anne Marie
“Hey J $ Uggghhhh, I will be joining you! Just paid off alot of debt. And trying New things to save $. This will be a bonus to my plan. Let’s Go!” – Tawana F.
“I’ll try but I’ll donate $1 to an animal rescue every time I slip.” – Crystal S.
“Just paid off the last debt besides mortgage – can’t wait to fatten my savings/investing by not spending!” – Dude on a Mission
“Don’t think I’m quite that hardcore yet, but going to work on cutting back some on the unnecessary spending.” – Ange C.
“I just set up a reward system for my 7 & 4yr old for showing responsibility and a good attitude they get a milk shake at the end of the week. Bad attitude or dont do their responsibility money is deducted. So hey, I’m teaching money lessons!” – Melissa M.
“Today’s my birthday and I’m def going out to eat/drink tonight and tomorrow… Just saying ;-)” – Joseph G.
Very very impressive… And if you notice the trend, those who are heavy on paying off debt – and accomplishing it – seem to be those who are gladly accepting the mission to keep the momentum going. They’re already used to “living on less” and now turning those debt payments into savings and want even MORE of that juicy $$ to hit their goals! What a beautiful thing!
And I send love to all y’all who answered the poll too regardless of how you answered :) Just the fact you’re interested in continuing the $$ talk offline shows you’re in it to win it. It’s been a fun experiment so far, and would love for more of you to join us.
Now I don’t know how y’all are doing w/ the ban so far, but I’ve already slipped up twice:
- I got free coffee at an entrepreneurship meetup (score!) but then turned to find a strategically placed tip jar (Uh-oh…). I instinctively reached into my money clip to pull out a dollar as is customary, and as I’m literally dropping it into the jar I suddenly remember about the ban! ACK!!! “Does this count?” I ask myself real quick. “Is anyone looking at me right now??” I then think as I’m scanning the room… Ultimately I decide that yes, that dollar is going to be dropped into that jar so remove your grubby hands, please!, and no – I don’t think it should count towards breaking my ban because a) I find it’s important and respectable to do, and b) technically it would be a business expense as I’m there to network and grow my biz/etc. Think that’s the right call?
- I drove to McDonald’s as carefree as could be to buy my son his first Happy Meal. We had visitors in our house for the first time in probably 6 months, and after the kids worked up an appetite after running around our house 1,800 times, I was put in charge of take out. It never crossed my mind until late that night that I just broke the ban as I was so caught up in what a father I now feel like getting a Happy Meal for someone other than myself! Hah! So this one DEFINITELY broke the ban and I deserve a hard slap on the ass for it (also interesting to note – it’s the first time I’ve eaten there in maybe a year?)
All things considered, 1-2 breaks in almost a full week is actually pretty good. I won’t be winning any Perfect Awards anytime soon, but it’s important to remember that our brains take a while to adjust to such a new – and sometimes drastic – mindset when its so used to humming along status quo. That doesn’t mean we should get lax in our No Shopping mission here, but just to keep in mind we’ll screw up and to try and be more conscious about it in the future.
So don’t any of you give up just yet!! Still got a handful of weeks left! :)
My biggest expense costs me WHAT now?
Horrible segue, but over the weekend I also put together a bunch of numbers for a meeting come up with my accountant (that’s right – I pay a person to do our taxes and wouldn’t have it any other way!), and in doing so I saw that big scary number of how much we paid for daycare last year.
It pains me to even type the numbers out right now, but here goes… (holds back vomit). Last year we spent over $16,000! $16,951.00 to be exact, ugh… Now we’ve already covered all the reasons why we have our kids there so I don’t want to rehash that again, but the takeaway here is that it’s a large freaking number and you can do a LOT of other amazing things with it instead if you were fortunate enough to do so.
And this is where our “what can we afford instead?” game comes in.
It’s a chance to have some fun and play a little “what if” action so you don’t go and beat yourself up too bad. Even though, of course, you DO need to sit back and reflect on such spending to make sure it still makes sense in your current situation and you’re not just getting complacent. In our case it does right now, but only for another month or two until the wifey finishes grad school and we change up a huge chunk of our lives.
[FYI: this is partly why my early retirement spreadsheet says I can’t hit financial freedom until I’m 54! Daycare is strangling us! Imagine what the totals would be if we were still tracking all baby costs?]
But first, a shout out to fellow reader Hannah who inspired this game after chiming in on our post about living off 50% of your income over 3 months ago (which I apparently still think about :)). Here’s what she graced us with:
Here’s a blog post for you: Things I can afford to do when my youngest child starts first grade.
I’ll get you started:
1. Hand three people $100 every week
2. Buy a brand new bike every month
3. Max out someone else’s 401K (not quite for one kid, but for 2 almost guaranteed) every year
4. Pave my driveway in $20 bills
It’s funny because it’s true!! We pay ridiculous amounts of money for things that are important to us that could easily be sent elsewhere. Kinda reminds me of our Lifetime Wealth Ratio too – comparing all the money we’ve earned our entire lives vs that what we’ve since spent! Can never save it all, of course, but would still be nice to be able to save a majority of it…
Here are “all the things I can afford to do when daycare is gone”
(Based on the current $2,000/mo we’re paying, or $24,000/year, with baby #2 going full-time)
- Pay a whole year’s worth of mortgage/rent!
- Fully fund a 401(k)/Sep IRA
- Fully fund FOUR Roth Iras!
- Fully fund a 401(k) AND a Roth IRA and still have money leftover
- Put down a down payment on a house/condo/boat/benz/island
- Buy a brand new car (or two) in cash money
- Give $5,000 to every member of my family
- Invest it all into Vanguard’s VTSAX and make hundreds of thousands of dollars over time
- Start a new business from scratch (or 50 online businesses ;))
- Donate it all to a charity and get my name on a plaque
- Buy 24,000 scratch off lottery tickets (and make $5.00 in the process)
- Buy unlimited coffee for the rest of my life (except from Starbucks, that would only last 1.5 years)
- Pay for 1 year’s worth of daycare… oh wait.
How fun was that??? Hmm….
Your turn :)
But first, you have to know what your #1 biggest expense is
Not all of you fortunately pay for daycare, or at least *that much* depending on where you live and how many kids you have and who stays at home vs who doesn’t yada yada yada, but we all have our #1 money crusher. Perhaps for you it’s your mortgage or rent, or car payments, or debt/student loans, or even that scrumptious food you scarf down 3x a day.
Whatever it is, channel it, and then play our game!
And because I just couldn’t put on my patient pants, I already shot out another poll to my Reacht VIP’ers yesterday to get a glimpse into some of these categories.
Here are the top areas you smart people are spending on:
The results may look a bit different by the time you’re reading this (you can see the updated %’s here), but it’s apparent that we prioritize the roofs over our heads more than anything else… For some strange reason ;) If that’s you, just plug in “mortgage” or “rent” into the game instead.
Though, actually, why don’t we change the question to something more empowering instead. Like, say:
“Once my #1 expense of _____ is gone, I’ll be able to _____ instead!”
Yeah…. I like that one better.
Fill in and answer this question down below in the comments or by commenting within our new poll set up, and we’ll then see all the awesome stuff we’ll be able to do one day! Woohoo! :)
I’ll go first.
Once my #1 expense of DAYCARE is gone, I’ll be able to HIT FINANCIAL INDEPENDENCE 4 YEARS SOONER instead! Awesome!
——
PS: I know what you’re thinking now, you want to see how many years you can shave off from working too. Here’s the link again to find my Early Retirement Spreadsheet – let ‘er rip!
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My biggest expense is rent
It’s rent. Some people will totally freak out that I spend 52.7% of my income on rent. No, I don’t want a room mate. I can’t move because I will end up paying more. A tiny condo (along with the $300-400 monthly fees +mortgage) are out of reach for anyone with an income below 50K. I have a side hustle (I wrote a book, and that is generating a bit of income) and I hope one day it will begin to generate more income, but until then, I live a very minimal lifestyle. The benefit of this self imposed minimalism, is that I don’t have much money to spend so I do other things in my spare time. I work on the side hustle, read, ride my bike, watch free documentaries on the internet, take my mom’s dog to the park to play. It’s not bad.
I say you rock that with your bad self :)
Mortgage here! With all that money, I can probably take my dream vacation ’round the world.
“Once my #1 expense of mortgage is gone, I’ll be able to retire!” Because by that time my son will be in school – free hurrah – and then I’ll only need to pay for things like food and electricity. Which of course will be covered by my myriad of income producing investments – because this is a dream, right? I’ll likely have a little freelance business as well, but it’ll all be on my own terms.
Sometimes I just put a big fat zero in the mortgage column of my nerdy excel spreadsheet budget and look at how low our costs will be once that $1200+ per month is gone. It’s super-motivating just to pretend.
YES!! Haha.. .I do that too – so much fun! :)
Mortgage. Definitely the mortgage. But, I can’t fill in the blanks because we’re not paying it off early (thanks to a 3.8% interest rate), however, we will be renting it out. So once we rent out our house (and effectively neutralize our mortgage), we’ll be buying a homestead! More housing! Geez, some people never learn…
That’s a helluva motivation to have! HomesteadingIsSexy.com!
Commented in app — and to the gentleman who asked who pays more on anything than their house? Let’s say you have two kids in child care at — what is it, J? 2000 a month? and your rent and/or mortgage is 1500. :) Or, you are a house sitter and actually get paid to live where you do – that is a side hustle of a friend of mine. Almost her main gig since she works part time. All SORTS of reasons why mortgage is not your highest bill. Or that got paid off. woo!
Agree :) Our daycare is DEF higher than our mortgage, at least without extra payments towards it. It’s a really crappy position to be in too but such is life… (just gotta keep in mind it’s temporary!!)
I’ll chime in here too! We kicked our mortgage to the curb, so now housing (condo fees/insurance/taxes) is probably only our fourth highest cost or so.
Our #1 expense is FOOD. By a lot. *sigh* If I could stop eating, I would both lose weight and have a boatload more money to put toward early retirement! (And traveling… that’s a pretty big line item for us, too.)
Like most people my home payment is my biggest bill…the two biggest actually. First is the mortgage followed next by our crazy NJ property taxes. I don’t pay them together because I hate escrow so I every month I set aside 1/12 of our tax bill and put it in our online savings account so at least I earn a few bucks off it.
You’ve got more patience than I :)
Our mortgage is our biggest expense. Once our mortgage is paid off we will be paying ourselves that money until we can retire earlier than planned. It puts us into our early 50’s instead of early 60s. So “early” is only relative I guess.
Daycare…. Using the dependent care FSA has at least allowed up to pay $5K of it tax free, but that we still pay another $15K with after tax dollars.
That is true – you can get some benefits to help lower the cost, but still a huge ass chunk at the end of the day :( I just got back from meeting with my accountant who actually made me feel better. She said many folks she handles taxes for pay $50,000+ for a personal nanny every year! That’s some $$$ right there!
Definitely the mortgage for us.
I have friends that pay for daycare and know how expensive it is, but even when I hear or see the number, it still turns my stomach. My wife and I want to be in a situation where we can avoid daycare. This just reinforces the drive in me to up our income/savings so that when kiddos do come along we have the option of one of us staying home to raise the kids.
RENT by far, but I don’t see that expense going anywhere any time soon :( Those day care numbers are terrifying. My mom was bugging me last night about grandchildren. I told her AT LEAST 7-10 years. Esp seeing those numbers!
Haha… well the plus side is it “only” lasts for a few years until they go to school, but even more so THEY’RE SO CUTE AND CUDDLY!!!
Once my #1 expense of mortgage interest is gone, I’ll be able to buy a whole new wardrobe instead! But I probably won’t. We’ve been paying off our mortgage, so this expense is getting less and less each year. It’s pretty awesome.
I’m lucky in that our only major expense is our mortgage. Shoooooot, if we didn’t have that we could:
Take weekend trips every weekend.
Take five cruises a year
Hmmm. Have a personal chef (I think, who knows what they cost? We don’t live in a mansion)
Buy J$ a new gold grill – you like those, right? :)
Then after the fantasizing is done, probably take two mortgage payments and have fun and save the rest.
I would not turn down a gold grill, you’ve got that right ;)
(but only if you mean grill to bling out my teeth! I could care less about a grill-grill for grilling unless you’re going to come with it to make me stuff :))
Once my #1 expense of mortgage is gone, I’ll be able to invest almost $13,000 in dividend stocks instead!
This number is easily and by far our mortgage payment; however, the scariest thing is that our taxes are almost equal to our monthly mortgage payment. Thankfully the daycare days are behind us and when it stopped we immediately thought we would get wealthy; however, we realized (because we are a two parent working household) that we STILL needed childcare after school because most people’s days don’t end at 3pm when school does. So while we paid less than daycare per month, we still paid a pretty hefty monthly childcare cost post daycare. Like I always say, children are the death of net worth. Thank God they are cute!
Dang – forgot about that too! Haha…
But you’re so right on taxes – didn’t even think about making that one of the options… I feel like only those who work for themselves actually feel the sting more and pay attention to it cuz we have to send in the dreaded checks ever 3 months vs auto deduction?
It is the mortgage for us too. At 2.58% with a 30 year fixed, it is hard to justify paying it off early – but we may start trying soon. If we had no mortgage, work hours could be cut dramatically!
It really is insane how expensive daycare is. We are dreading the 15k pprice tag as soon as the little one arrives, but for us it is either pay it or give up a full time income. That is more than the cost of a college education in many places. I could get my MBA over 2 years for less than ONE year of daycare. It hurts, my man,,,and we feel ‘ya.-
Yup. Always a nice set of pros and cons with daycare vs staying at home/etc. I’ve seen some mothers just totally give up their careers and want to be at home 100% regardless of the money, and then others (like my wife) who wants to get back to having a career again as it’s important to her. Just a matter of finding that good balance and trying not to go broke in the meantime, haha..
We spend the most money each month on our mortgage. But we are paying aggressively so that we can smush it in just six years. Then comes day care for the two Mini Maroons. It’s more than the scheduled payment on our mortgage. And we just changed to a new place, which drastically cut the expense. We’ve timed it so that the mortgage should be gone at the same time we reach financial independence, so then we will drop the day care too. Watch those spending numbers plummet! And move out to a farm!!
Well that’s a helluva sexy game plan! Work it!
We’re in the mortgage camp as well. It’s hard to justify paying it off early, though as the business grows it becomes much more of a possibility. :) That said, if that were gone we’d probably be boring…well not boring in my eyes :) and invest that money likely in a solid index fund or maybe in some real estate. We’d likely throw a little more at the 529 accounts, but other than that we’d just seek to invest it.
I hear you about the daycare. Looking at our biggest cost, it’s the second one to mortgage coming in at, wait for it… $18k last year… Uggg…. On the bright side, when the kids get out of daycare, that’s $18k slashed from our living expenses. Yeah! That totally helps our FIRE plan out!
When we buy a house outright and have no mortgage, we cut even more expenses out. Those two things alone are key for us to be able to retire in 3-4 more years and we won’t have to adjust our lifestyle to achieve FIRE. By already focusing on tracking spending, being frugal’ish, and saving heavily, we will just get to say, “Adios work, hello family!” Or something like that.
Is it bad that you just made me feel a lot better? ;)
My biggest expense is rent, which eats up a huge chunk of income. But there isn’t TOO much I can do RIGHT NOW. But secondary is just general life expenses. It’s a category I CAN do something about and even though I won’t be doing a shopping ban, I’ve gotten lazy about buying stuff like coffee out and about. Just little things I need to tweak here and there.
I was one of the very few who voted that my biggest expense was “Yummy Food”, and that is for the awesome reason that WE PAID OFF THE MORTGAGE LAST YEAR! Woo hoo!
Which also means I can’t really play that game of what I will do when X is gone, because all our expenses we have now (no debts) I can’t really see ever going away, i.e. food, utilities, gas money, taxes, dog food, etc. None of them are going anywhere, probably ever. Just the cost of living!
HOT DAMN! I was wondering about those “yummy” selectors haha…
You’re killing it – way to go! (So why are you reading my blog? ;))
My mortgage is my biggest expense (still less than i’d pay for an apartment anywhere near where I live though, so I’m OK with it). Once that is gone I’d hit FI 5 years sooner! I wish I could just pay the darn thing down an be done with it, but thats still 22 years away… :)
As far as the shopping ban, I’m (mostly) on board. I sort of started this for myself at the beginning of the year because I know I was just bored and going out to spend money, but there are also things I really do need, so I’m not counting those purchases in the ban. Last month I already “saved” myself about $250 dollars, but honestly, those savings went to pay off the CC’s from all the Christmas shopping! This month the cards are back to zero so any money I don’t spend will really be savings!
GOOD! And to double make sure savings = savings, physically put it into a new savings account or invest it! Then you won’t be tempted too! :)
https://budgetsaresexy.com/2014/09/the-new-challenge-everything-savings-account/
mortgage! however i am still on track to pay off my 30 yr mortgage in 10 yrs (or less!) and at that point it will be like i got a 6,000 a year raise……
A bit off topic but my challenges recently have been in repair/construction materials. Prices are “off the chain” for materials…..recently I paid over $11 for an 8 foot length of flex duct work to repair a dryer connection in a rental unit and $2 EACH for clamps…It seems back a few years ago this was $2/3… To be clear this comes in a box and looks like a “giant slinky” wrapped in aluminum foil and fits in the palm of your hand.I understand this blog is about the BIG stuff, but MAN this “little stuff” is painful as well….
I’m so close to paying off my student loan, it will be an extra oh I don’t know $199.85 a month in my pocket. What will I do with it? Probably start building my wardrobe for early retirement with old school classic NBA jersey’s, start with Jordan, then Bird, who knows maybe mix it up with a Lew Alcindor.
The above may not be true. I’m doing one of 2 things, contributing more to my 401k or starting my little Dividend Empire……….
I’ll have to sell you my Jordans I picked up over the Summer to go w/ those jerseys ;) Turns out I like looking at them way more than I do wearing them!
Once my #1 expense of PAYING MYSELF FIRST is gone, I’ll be able to DO ANYTHING I WANT!
Zut, you beat me to it!
It deserves repeating. :)
Once our #1 expense of PAYING OURSELVES FIRST IS GONE, We’ll be FI !!! :))
Maybe 1.5 to 2 years. We’ll see. It is so exciting to get near the finish line. But, the anticipation of it seems to have increased immensely. Ahh!
Huzzahhhhh!
Yeah, I should add though, we will be 55 and, 57 when we reach FI. We were just skipping along without considering early retirement as the thought had never occurred to us. :) Thankfully, we didn’t have any debt. Our home had been paid off a few years. But, we were wasting funds on frivolous stuff..
Then, I became too sick to work. Long story. Since I was now home all day long I started reading blogs for entertainment. I found MMM one day in the fall of 2011. Changed my life!
I even found blogs on the very health issues I faced. This too changed my life. I am in such a better place physically and, financially since being forced to quit.
GRATEFUL FOR THE INTERNET! And, all the wonderful people who take the time to share their knowledge. :) That includes you J.Money.
Whoaaa! When will you be done paying for daycare!? Like 4-5 more years!? (And it’ll go down, as your kids get older and start going to school?) It’s pretty cool to think that being done with that will help you reach financial independence 4 years sooner. Hurts your wallet now, but eye on the prize! We’re all in this for the long haul ;)
My biggest expense is rent. Since I don’t own, I can’t say I’ll be getting rid of it anytime soon, haha. But I only spend about 22% of my take-home income on rent, so it doesn’t hurt *too* much. Besides rent, my next biggest expense is travel and then food. I just realized how awesome that is… wow. No complaints over here, my friend.
As for your shopping ban slips, don’t beat yourself up. Is your habit of being a nice person who leaves tips one you’d ever want to rid yourself of? I’m guessing not! So, I’d take that off the list of things you’re not allowed to spend money on. A few $1 bills never hurt anybody. The restaurant thing though, holy jeez, do I know what that’s like. I have a restaurant budget, but I haven’t been allowed to buy takeout coffee for 8 months, and I *still* crave it often! I live above a Starbucks and walk by it daily, and almost always get the urge to walk in. It takes a long freaking time to break habits you’ve spent years and years building… but the fact that you’re trying for 40 days is great (and your wallet *will* thank you).
Happy Hump Day!
You live above a Starbucks???
HOW DO YOU SURVIVE!!!! Haha… That’s the devil tempting you!! :)
Commented in app, but short and sweet: medical insurance premiums. Over $800 for me, over $400 for hubby, before we spend a dime on actual care. No mortgage (as of TODAY), but these expenses will take the place of a mortgage for seven more years. When you retire before age 65, your medical insurance is paid 100% by you. Never thought the numbers would be this high years ago when we started planning to retire early. Regardless, I’ll gladly pay the premiums to protect our health, since we are now both officially retired, mortgage free and debt free. Every day I don’t work making someone else wealthy is a great day, medical expenses or not!
Oh wow, something good to consider too! Especially in our Early Retirement spreadsheet calculations, dang…
Though of course it’s better than the alternative: working forever :)
My biggest expense is my mortgage, although it is fairly cheap compared to most mortgages at $785 a month. Although if you add my car payment in with how much we spend in gas per month, that would be $850 or so, so I suppose our vehicles might be ourmost expensive monthly budget item. If we didn’t drive anywhere (spending 0 in gas) and didn’t have a car payment, we would have an extra $10,200 a year. That money could:
Pay off my husband’s student loans and still have $2000 left to put towards the mortgage
Build up a big emergency fund for unexpected expenses
Buy a new furnace and a/c for our house (Our current one is close to 20 years old)
Buy a decent used vehicle or put towards a slightly new but still used vehicle to replace our 20 year old Honda when it finally craps out.
Buy a used camper for family vacations
Pay for daycare when we have kids (or apparently pay for some of the year of daycare)
Take a sweet vacation like a cruise or tropical vaca.
Also, on a side-note, my spending freeze for Lent is on Starbucks. I don’t usually participate in Lent, but my Starbucks spending is getting crazy. I have been good so far, haven’t gone since the beginning of last week, so we’ll see how long I can stick to it.
Awesome! Always fun to challenge yourself every now and then and hopefully help you curb so much spending in future (though of course you prob don’t want to cut things like Starbucks out forever – they’re nice joys in life!).
Haha! I totally forgot about that comment.
In reality, we hope to have a pile of kids, but once my husband starts working (he’s in school right now), I hope to be able to stay home with the kids and build my catering business.
So, this is my statement:
Once we eliminate our #1 expense of daycare, I’ll take on entrepreneurial risk instead.
I like it :)
And like the idea you gave me for this post even more!
My biggest expense is rent after that it’s “savings”. I treat savings as an expense as in I pay myself first. After that I’ve got a healthy travel budget since that’s what keeps me happy.
Our mortgage and taxes is my biggest expense, upwards of $24k a year. I could do I lot with that free cash! Fund college for my kids, build a lot of wealth, reach financial Independence, you get the picture.
My highest “expense” is toward student loans, because I’m paying them off as fast as possible, about $1000 per month. Plus, I’m super lucky to have low rent because my boyfriend and I have a great landlord who keeps the rent reasonable for us. I think if I only paid the minimum on my loans it would still be higher than my rent.
Once my #1 expense of car payment is gone I can finally make real payments to my student loans! Yeah!
You know what…this was a lot closer than I thought at first….mortgage including escrow is the highest, take out escrow and it’s lower than my #2 which is TAXES! Ouch.
oh and if I didn’t have to pay my mortgage I guess I could afford another daycare payment? HA…other options would be a frivilous $80k car payment (over 5 yrs), to layer my entire house floor with $1 bills each year….if I didn’t pay my taxes I wouldn’t have an income in jail :(.
yes, probably important to continue paying taxes, haha… I agree they’re a large item!
Rent & associated utility bills are my biggest expense.
Not sure you could eliminate those, but if it were possible… who knows? Full-time travel in Asia!
My biggest expense is rent, however my second is Daycare. But we got lucky, my wife and I are teachers and we were able to pull both kids out last summer and my oldest started ALL DAY KINDERGARTEN in September. So , that was awesome. But even with no summer and only one kid full time since September, we still ended up paying over $9,000 in daycare. My wife and I decided to cancel cable and slim down our phone bill, and slam our student loans out the door. We are on track to pay off everything in 10 years. Sounds bad but my wife has a PhD. Sacrifice now, enjoy later.
I don’t think you can ever go wrong nixing debt :)
Crap. We spent 8k on our daughter last year and that wasn’t a full year. UGHHHHH
House related expenses like mortgage, property tax, utilities, etc. We can probably reduce utilities a little bit but other ones might be harder.
I’m new to your blog, so maybe I missed the answer to my question.
Yes, daycare is a bloodsucking expense. Don’t you work from home? Why can’t your beautiful little creations stay with you, at least part time?
They could, if I didn’t have any work to do :)
Watching kids their ages requires eyes on them all the time. I could work in theory when they nap (provided they both nap at the same time (hah!) AND they stay asleep for a long time (double hah!)) but even then it’s 30 mins – an hour a day. I work 40-60 hours a week and still can’t get everything accomplished I would like to.
Mortgage, definitely!
My daughter is in full-day kindergarten now, which means no more childcare expenses, but it also means more limitations on parent work hours. Someone has to be home for all the school holidays, snow days, two-hour delays, half days, etc. I guess nothing is all good, or all bad…
Once my #1 expense of the mortgage is gone, I’ll be able to save up F-You Money” approximately 4 years earlier instead! Haha I’ve always loved the concept of f-you money. Not that I’d actually say that to anyone…ah who am I kidding – I have a fairly solid idea of who I’d say it to :)
My biggest expense is the same as yours and my answers would be to except the last line would be “Pay for private school” which is also the most likely option
Rent for us. Fortunately I make enough so my wife can stay home with the wee babe. Someday we’ll convert that rent into a mortgage and then start working toward eliminating it :)
Ugh right now.. my biggest expense is my paying off my car loan… $683 a month… Once I pay that off.. I’ll be able to give into the 401K 75% contribution and Contribute towards my Roth and have plenty left to put into my E-trade accounts.. one day…. one day
Holy moley!
Tell me you drive a pimp daddy car please? :)
If our mortgage were paid, I would put half in savings and investments and my wife would probably use the other half on the kids and house. I dream of freeing that $ up… That being said we got an amazing deal on a foreclosure at 3.5% interest, paid 23% down, and have paid $9k in principal in 2.5 years, including regular payments!!
nice! our situation is pretty much the opposite of that – had 7% interest (since refinanced to 5.5 which still blows), put $0.00 down and paid off, well, I guess now $60k but it’s been 8 years too… though I am happy with that part which is the only thing we can really control, haha…
My biggest expense by far is my federal income tax. Next, my mortgage (principal, interest, taxes, and insurance) is about half that amount. I guess it’s a toss-up whether I plan to pay off my mortgage or stop working so much first!
Not counting my mortgage, my biggest expense is my auto loan. Which should be paid off this week!! (2.5 years early!) This will allow me to focus on my next goal of beefing up my “oh shit fund” or emergency savings.
Awesome!!
Childcare is our biggest expense by far at $15K. We’re nullifying that come September by having my mom move in with us. She’ll do the after school/preschool care in exchange for rent & utilities! Plus another adult around is a massive bonus, and her quality of life will improve as well.
I’m excited to see that my next highest expense is groceries at $7200/year. But right after that is student loans (mortgage is really low for us!). I can’t wait to finish those bad boys off!
That is so cool!! I was just telling my wife I’d totally be cool with living with her mom which would be win win for everyone as well. Sadly, she doesn’t share in the excitement :)
Way to get creative!
Mortgage. 5 years left on a 15 year mortgage. Can’t wait!
I will take the extra $1000 a month and put half towards even more in savings and half towards working on bucket list. Lots of places to visit around the world.
How sad is this: we pay a bit under $2,000/mo and have a 30 year loan.
If only I knew then what I know now!
My biggest expense is property taxes of ~$200 a month. Or restaurants. Or vehicle fuel. Or utilities. My house is paid off already.
Perhaps my 401K or after tax savings is my largest?
With my debt repayment gone (averaging $1000/month), I’d be able to max out my RRSP yearly (18% of my gross income – currently saving 15%) AND my TFSA ($5,500/year), plus still save for a nice yearly (or bi-yearly) vacation! That’s gross, right? If I did forgo the vacation for another year or two (or decrease the frequency), I’d be able to back-fill (us Canadians don’t lose contribution room in our RRSP and TFSA’s similar to your 401k and Roth IRA) at least another 2 years of my TFSA room. It would only take me about 7 years to get it completely backfilled (room is $36,500 right now +$5,500/year added)… Balls, sometimes I just shake my head :)
Balls, haha… haven’t heard that expression in quite some time – thanks for bringing it back!
My biggest expense is rent, and it will stay there until I can one day pay cash for a house. I don’t want a mortgage even at 3%. My next biggest expense is student loans, and when that’s gone, I can buy more dividend paying stocks, sneakers, and vacations. IM paying about 6-7K a year repaying student loans.
House with cash! YES!!!! That would be quite impressive and set you a part from 99.999999% of the world :)
Which is crazy if you think about it – 50-100 years ago everyone paid cash more or less
New reader here. Our biggest expense is the mortgage and car payment, which together amount to about $1,000/month. If I didn’t have that expense, I’d save that money for future investments, like a rental property or some stocks. We also like to travel to Europe and that’s one of our biggest expenses too, but not willing to give that up at all. Traveling is what brings us joy.
I’m a big believer in keeping the joy and just cutting back more of the non-joys we pay for :) So way to prioritize! (And thanks for stopping by the site!)
Once my #1 expense of a mortgage to the tune of ~$1,600 (plus a ton of extra payments) is gone, I’ll be able to
– Waste it on a similar house 10km closer to Copenhagen
– Buy a lot of delicious index funds! ☺
Mmmmmm… that would be tasty!
On a regular basis, it’s rent, although if I had a big car repair bill or had to replace my computer in a given month, it might be that. It’s only $400 a month, so I’m not wasting a lot of time worrying about it, but if it were gone, I could max out my Roth IRA.
When my debt is gone! I am paying about $1400 for all my consumer debt, student loan, and mortgage payment each month. I can’t wait for some of that to be gone!
You’re gonna have a LOT of fun with $1,400 extra every month!! And you’ll already be so used to it going out the window that you should be able to hang onto the habit pretty well :)
We have jokingly told our daughter when she graduates in 6 more years we are going to buy a lake house and a boat with her private school tuition! We tease her about being in college studying all the time while we are sitting somewhere on a boat….but honestly, I’m starting to consider it more and more :)
I’d gladly come out and join you on that water too :)
Read this blog for even more motivation!
http://savingtosail.com/a-blog-is-born/
Biggest Expense is $458 per month for my Roth IRA and $684 per paycheck for my Roth 401(k).
While I like contributing the maximum to these plans I should start saving for a down payment soon. Currently pay $750 a month for rent, all-in.
$1,000+ towards investments every month is killer! That $hit’s gonna add up FAST as the years go by, way to rock that.
Our biggest expense is my husband’s student loan payment at $1205/mo. We could go on a NICE vacation every.single.month. if it was gone (not that we will, but, hey, we could!). His loan is really 16 smaller loans combined, so we started picking off the highest interest ones and paying them off as we can. Having the monthly payment go down 30-50 dollars when we pay on off is really motivating! Our goal is to pay off all non-mortgage debt (2000 left on our car loan and still 100k in student loans) in 5 years!
Damn good goal!! And I agree w/ that motivation too – seeing those amounts owed go down like that. Keep on going!! you can do it!!
When Tim’s teeth are done! We just got the estimate on his dental implants: $14,200. Then there’s the cost of the new dentures. We’ll find out how much that is on the 12th, when we have a consultation. All I know is that they’re more expensive than normal dentures, which run $1,000 – 3,000 for a set.
So we’re on a plan to sock away $1,200ish a month until October, which (added to our total savings) should leave us with enough money to pay everything in cash.
We’ll relax a little once that’s done. Then we can save for double pane windows and put a *lot* more into the IRA/have me open a SEP.
Ouch! Hurts in the teeth and the wallet, sorry to hear friend :( Pretty incredible that you can stash away $1,200/mo though towards it! That’s bad ass!