So I've been fretting about refinancing our mortgage.  It's a very good deal.  To save $700/month for the first 84 months is a good deal but it's beacuse it's less principal and less interest.  The cap is 7% over the lifetime of the loan.  But I am moving from a fixed rate 2.875% to a 2% ARM.  So the question is what do I do?  Being analytical my DH said to break down all parts of the refinance. 

First let's start with over the 84 months we will save $47,005.08 interest over that time.  That's a lot of money.  If we assume 5% interest after 7 years on the balance the difference in interest is $1253/month and it will be 38 months to break even at 5%.  This is assuming we do not refinance before the end of 7 years.  So we definitely at 10 years and 2031.  This makes things interesting.  I'm not sure we plan on staying in this house long term.

Second part of the equation is the refinance will bring us to a savings of $700/month.  What would happen if I actually invested that $700/month into and SP index fund or maybe even a riskier stock?  Using the 5% assumption after 7 years I will have $70,230.60.  That's a lot of of money to use for the higher interest.  In fact it buys me another 56 months before I will lost money if the average interest rate is 5% or higher.  That is 4.5 years and brings me to 2035.  

I guess it makes sense to do the refinance.  But I have to commit now to saving that $700 month and investing it.  Maybe this is the challenge? Every month I write about if it's growing and how it's doing?  I track my $700/month savings.  I am thinking maybe Robinhood and then buying fractional shares and just investing $700/month. What will happen?  

Want to weigh in?  I am sort of excited after writing this about the challenge.  

We spent a lot this month so far on everything.  I also did a rough breakdown of our 2021 taxes and we appear to be getting a too large refund of $10,158.  This is because DH is paying double SS and it will come back to us when we file.  I guess that takes care of me saving for Roth IRA next year. I don't know whether to count it as this year or next year savings.  Suggestions?

Groceries $533.20
Eating out $206.34
Alcohol $103.09
Dog $137.70 (will pay $250 at vet tomorrow)
Travel $759.03 weekend trip expenses of eating out and stuff
Fuel $144.81
Utilites $697.88 (water bill bimonthly and late)
Home Maintenance $1400.06 (yard, fence, Gutters)
Home Good $205.27
Gifts $121.89
Refinance $500
Services (cleaner/yard) $390
Amazon $105
Kids $898 (camp and extracurricular)
Entertainments $93 (bought a couple of living social paddleboard rentals)
=$6702 month.

What a very expensive month.  So I'm trying to run lean. But on the plus side our savings.

Moved $10k to Brokerage account this month and paid $5353 for our property taxes.

Roth IRA  $10,600 - moved $10k so $600 left in account.
Sink Funds $4450
Property Taxes $3100

With the refinance we are moving our payments down $700.  I am going to try and save it.  It will certainly be enough to cover our sink funds.  I'm not even sure I am saving the right amount for sink funds.  I guess at the end of the year I'll figure it out and move what excess we have.  My goal for the year was 20% savings with 15% to retirement and 5% savings.  That is $49,061 = 20%.  I currently have saved $53,633 so we have exceed that goal.  The 5% stretch is $61327.21 while the 10% stretch or 30% of our gross salary is $73592.65.  I wonder if we'll hit it?  $19959 is need to hit 30% saved.  If we count the tax refund of $10,158 I bet we would hit it. I have 7 months to save $20k.  

Either way I think we'll be successful.  We are getting on a budget and working it. 

Can you be financially independent retire early (FIRE) with kids?  Yes I believe you can. I think the easy part is FIRE when they are young.  You can budget for health insurance, budget for living, travel, fun, etc.  But the unexpected/unpredictable part?  College.  I mean you can easily homeschool your children. You can say no to private schools.  But college or even trade school?  How do you budget for that?  

I guess if you are super FAT fire where you saved a ton like 5M by age 40 and saved $100k by the time you retired and your kids were 7 and 5 for each of them then no problem.  But I feel like there are a lot of people who "FIRE" who had nothing saved for their kids or they FIRE super lean.  Then they think we'll my kid can take out loans and live at home.  But what if part of the fire plan was downsizing the house and using that equity to help FIRE?  What if your kid doesn't go to college and instead just works and lives with you?  How does that affect the budget?  And you didn't expect to keep hanging on and living in your expensive home?  And expected to FIRE maybe abroad or relocate even domestically somewhere cheaper?  What if your 4 bedroom house you thought you'd move 30 miles outside the city instead of the great school district?

I think that kids can throw a wrench quickly ino the best FIRE plans.  I read a lot of blogs about FIRE.  But most don't have kids.  Most are couples without kids.  The few who do don't have kids as old as mine 8 and 11.  Their kids are younger and they haven't gone through college and after while being FIRE.  I do read about couples FIRE after the kiddos are gone or left for college or in high school.  I feel like by the time they are 16 or 18 you have a lot of question markets about college and future expenses sort of answered.  Like you know if they are going to college and how your investments did and if you are helping, if they need loans.  So a lot of uncertainty is gone.

I am curious since my kids are finally getting older and I'm thinking a lot about paying for college.  My DKs both have asked me if we have saved for college.  I said yes we're working on it.  My DH teased them though this week and said if the startup is an epic failure then we'll need their college savings.  But the truth is that I believe our kids will be fine.  We'll figure it out.  I am thinking it's time to start educating my kiddos on not just saving and speding but also investments and how they work at least for my 11 year old.

Do I want to budget?  No. Do I have to budget?  Maybe.  Should I budget?  Yes.  But can I budget? Yes.  How does it work?  Well you are right now on this blog seeing an evolution of a non-budgeter. You will see if it happens or not.

Why?  Because there are a couple of things at play.  First off I have never budgeted. I hate budgeting. I keep a rough budget by "pay yourself first" and then spend the rest.  I never actually tracked categories but rather had I could spend $3500 on CC and that was it.  So a rough budget but I wouldn't be able to tell you categories.

Now I am trying to see where my money goes and how I spend it. I am keeping a rough budget in the sense that I am trying to curb my eating out and groceries.  But I know that many places say before you can keep a budget you need to track your spending for 3-4 months to get a feel for what you are spending on.  That I think is a key thing.  I have a general idea and rough feeling for spending I did.  But for us we are doing this because our income change dramatically and we need to live differently.  So I think this will be an evolution for us.  As we learn how we spend and rein it in becuase of our income.

Also now that we are taking over escrow and refinancing things are going to change more.  I dont' know if others struggled or worked this hard but I will say it's harder than it used to be.

No breakdown of groceries but a bigger deeper dive into our spending.  I so far put down at $500 deposit on our refi so that was unexpected. I also traded our American Girl $140 e gift card for $99.96 Home Depot gift card.  Unfortunately we got the american girl gift card last year from girl scouts. Well the store closed down during covid and we never had a chance to go and use it.  So rather than hanging I took the advice of everyone here.

Spending so far this month has been a lot. I'm a bit stressed out but what can be done?

Groceries $344.70
Eating out $174.60 (brunch was $93.90)
Alcohol $77.18
Dog $120.09
Travel $759.03
Gas $45.57
Utilities $557.31
Home Maintenance $600.06 ($200 gutters, Fence $345)
Personal Care $35.27
Auto $12.60
Home Goods $77.13
Gifts $121.29 (unsure if I am returing one to amazon)
Misc $509.61 (refi $500 deposit)
Services $180
Amazon $154.20 (mostly home maintence DH buys stuff for house)
Kids $778 ($610 camp, $135 piano)
Activities $80 (living social paddleboard rentals)
Clothing $99.15 (will return 2 out of 3 jeans)

Total so far $4726.11 for the month.  We have $800 for our mulch and stuff for our yard is on the books for next weekend.  Ugh.

Hope I keep spending under control the rest of the month.  I have a plans for maybe another $200 for groceries and no more eating out.  Since we are tracking our spending so closely it's weird how I predicted $100 for brunch and spent $93.09.  And how much it hurts now to see that 1 meal out for us which did last us until dinner and we had lots of leftovers, could cost $100.  

Maybe I should have a budget.  I should allow us to eat out a set amount.  The truth is that I am just trying to be "normal" and not tell my family the budget. It makes my DH feel constrained and he hates that.  He's hated it since the days of us making very little money.  Now he still makes 5x what we made and are back on a "budget".  I think it better being 20 years wiser instead to carefully watch our spending and not say budget but "spending" plan.  He'd tell you that he barely spends anything.  He buys nothing.

But the truth is that he spends a lot on the house and things for the house.  There is no budget monthly I'd say he's more an annual person.  That there is a certain amount of spending to be done on the house.  And this is why homes are money pits.  Kids are money pits too!

So I rate locked a refi today with JPMC.  Did you know that I could qualify for a mortgage up to 43% of our gross income?  Yeah that's right. I think my mortgage is already too much for what we make and here we are totally being told that we could easily borrow way more than our current mortgage.  Um okay sure sounds like a plan.  No it really isn't.  

Currently we are at 2.875% for 30 year fixed with 26 years left.  Our payment is $3838/month + $1000 Property taxes/Insurance.  We are getting a 7/1 arm for 2% and our payment will be $3142 + $1000.  So we are saving about $700/month.  That will give us a bit of breathing room right now on our budget.  The actual numbers are our current loan is $2039/month interest and $1804 principal.  Our new mortgage is $1416 interest and $1725 Principal.  So we are saving $623 interest actually a month.  

Our closing costs are about $1500 out of pocket.  I'm unsure if it'll flex depending on when we close the loan. So a little more than 2.5 months of interest is our breakeven point. I think it'll be worth it.  

I was saving money to invest in our Roth IRA next January but decided I might as well dump it into our taxable account now.

So far this year we've saved $23k of DH's bonus in feb.  We just didn't sell the stock we got.  Technically it was $34k of gross but $23k after taxes.  Now I moved $10k into our taxable account.  Assumign we make around $240k and need to save 20% we need to save $48k.  That puts us I guess at $33k unless you count the Roth and ESA contributions of $16k I did in January. 

Either way I'm just going to keep on saving and figure it out along the way.  This budgeting is a lot hard than it looks.  I'm still thinking I need to save at least $16k by january because I prefer to do a lump sum investing.  Maybe save $16k and call it savings from this year?

So I may not go out and spend money and it's super easy to do that during covid.  But I still find NSD hard.  Why?  Because I notice a lot of little things pop up here and there.  Like I have two medical copays that came in and I should pay today.  I already paid $610 for 2 summer camps for the kids today.  I also had to give a neighbor a check for $345 for our share of the fence repair.  So in one day I jsut spend about $955 without leaving my house and getting anything to show for it.  Yesterday I spent $54 at the vet for another blood test for the dog. 

So I haven't grocery shopped since Saturday when I spent $46 on veggies for the week. I am eating out of the freezer.  It's overly full because of our trip and we have too much bread so the kids and I are going to be eating sandwiches.  I also bought 1 week ago a $61 rib roast and it was enough for 1 meal (we invited our covid family over) so 4 adults and 4 kids ate the smoked bone in rib roast.  That brings our grocery total to $298.40 for the month so far.  The alcohol is $77.18, and the eating out is $26.69.  We plan on going to brunch on Sunday and I'm expecting $100 for that.  Then another $50 for veggies for the week and trying desperately to eat our freezer.  

I think what happened is that I overbought on meat last month because February we had used everyhing up.  Then I stocked up too much and now I don't need to buy meat for awhile. I also stocked up on toiletries and paper products and cleaning supplies so that will also be awhile.

That being said I wonder if I can ge back to complete no spend days.  Tomorrow DH is paid and I am deciding between moving $1000 to Property Taxes or Sink Funds or savings.  Unfortunately we have to wait until the next paycheck to put the rest of the money somewhere.

I don't know if others find it hard to plan spending for the year.  I guess because I don't have a straight budget plan yet.  I also am unsure how disciplined I want to be with "savings".  I definitely want to save for things like property taxes and sink funds but the retirement?  

So here's our basic budget and I need to figure out how to make things work.

$10914 Income

-$3850 Mortgage

-$1000 Property Taxes (Savings account)

-$725 Sink Fund

-$1500 Roth IRA

= $ 3839 leftover.  

That should be enough but I am worried it's not.  Mostly because it's supposed to cover our travel expenses and just overall expenses.  If we spend $800/month groceries and $200 eating out that leaves $2800 for utilities, gas, etc.  Right now it doesn't seem like we can get a handle on spending, but we'll have to see.

Sadly this month we are $298.40 Groceries, $26.69 eating out, $77.18 Alcohol, $120 Dog, $759 Travel, $45 gas, $557 utilities, $55 Home Depot, $35 personal care, $6.60 Auto, $77.13 Home Stuff, $112 Gifts, $180 services, $9.61 Misc, $154 Amazon (sound channel), $168 kids, $99.15 Clothing (will return 1-2 jeans) = $2781 to date for the month.  

We plan on going out to brunch on Sunday with friends so there is that.  Also we do have t osome shopping more for groceries.  I'm hoping to have many NSD the rest of the month.

Well so for the 4 day weekend we spent $759.03 total.  That includes gas, groceries, and eating out.  The VRBO our share was $710.  That means for four days we spend $1470.  Ouch.  Well that's how the cookie crumbles.  Mostly it was staying with people who spend like there is no tomorrow.  Like I told DH it solidified why I normally don't stay in VRBO with people.  First time and probably last time.  Our sleeping habits has always been the reason and it still was a problem.  We like to stay up late and wake up late and roll on out of the house late.  So I'm good.  We spent $562 on food for 4 days and came home with a ton of food that we would never have bought and wasted at that price.  It's fine I'm okay but I would not have been buying foil, saran wrap, paper towels, paper plates, etcs all stuff we paid top $ for from the grocery instead of bringing from bulk from costco at home.  Like I said I am not cool with wasting money or food.  Lesson learned.

So our spending for the month. This month we aren't doing as detailed grocery posts but I am tracking overall spending.  

Groceries $252
Eating out $26.69
Alcohol $70.92
Dog $66.09
Travel $759.03
Gas $45.57
Utilities $427.31
Home Maintenance $14.90
Personal Care $35.27
Auto $6.60
Home Goods $77.13
Gifts $75.57
Misc $9.61
Services $180 (cleaner $120, Yard $60)
Amazon $211 ($121 sound channel, $36 Birthday Presents, $54 Battery pack and chargers)
Kids $173.49 ($135 piano lessons, bike helmet)
Clothing $99 (3 lucky jeans will return 2 after they come)
=$2526.19, trying to keep our spending under $4000 for the month.

Our rough budget is
$10,900 Net Income
-$3843 Mortgage
-$1000 Property Taxes
-$1000 Roth IRA
-$750 Sink Funds
Leftover $4307

While saving the extra 2 paychecks a year. That's what we did with the extra paycheck.  Considering we are 8 days in and we've spent 58% it's not looking good.  Goal is to not spend more than $100 on groceries and I need to rein in DH from spending on amazon and online on crap he wants for shed and house.  We have another $100 next week for Dog Vet Visit.  And registering kids for a summer camp.

But I'm meal planning through the next week.  I bought $61 rib roast on tuesday that will be for Sunday.  I am making butter chicken tomorrow and pulled out my hambone soup to eat.  We are eating sandwiches for the next few days.  Monday I need to make 2 lasagna (giving one to DH's cousin when I pick her up from airport Monday night).  I plan on making japanese beef curry next wednesday with stuff we have.  I also have to make yogurt and beef keema next friday.  I'm thinking I just need $75 of fruits and veggies in the next week maybe.  I have so much bread right now that sandwiches are on the agenda for awhile for lunches for kids.  I also still have a lot in freezer to eat through.

So we went away this weekend and I haven't quite sorted out everything on that.  However I did manage to compile some.  So here is our spending for the month so far.

$252.40 for Groceries
$20.50 Eating out
$70.92 Alcohol
$66.09 Dog
$45.57 Gas
$427.31 Utilities (water, internet, xm subscription)
$14.90 Home Depot
$35.27 Haircuts
$6.60 Auto (windshield blades)
$77.13 Home Goods
$75.57 Gifts (Bought some stuff)
$9.61 Misc
$173.49 Kids ($135 piano lessons)
$71.56 Gas for road Trip
$494.79 eating out for trip/musuem/activities etc
Total $1841.39 so far for the month

So we are settling up the groceries for the VRBO with friends.  Personally I budgeted $1000 for the weekend and we will come in under.  I think the groceries and couple of meals out shared will be ~$250.  Also it doesn't include our share of the VRBO of $710 which I paid last month.  Personally I know we spent more on the weekend doing it with friends.  

I found it difficult to travel with one of the families and I won't be doing a VRBO again with them. I don't think we mesh well.  We haven't traveled together last summer in a road trip but we had our own rooms and kept food separate. I hadn't ever agreed to a VRBO before and now I know why I didn't.  They totally waste food and run up bills and don't care.  They have too much money and not enough time.  Even if we have money I can't stomach watching the food just get thrown away and wasted on such a large scale.  There is no scaling back excess.  I think it's better we keep things separate and try to separate out our eating.  

And example of the excess, the morning we left we got take out breakfast from a cafe they wanted to try.  LAL's family ordered 1 order of Eggs benedict came with side of 3 pancakes.  We shared that for 4 of us.  DH and I split eggs and kids ate the pancakes and fruit and yogurt at the VRBO.  2nd family (the shoppers) ordered 2 adult meals for the 4 of them and they mostly finished it.  The KUWJ family ordered 4 meals and threw away 50% of each meal if not more.  This is standard for them.  Even cooked meals they will serve their kids enormous portions then throw out whatever they don't eat.  There is no sensitivity that others probably want a portion.  I don't know that we can travel so up close and personal again.  I will also add that I realize I'm picky and this was my 1st and only trip we will be doing a VRBO with anyone again.  I suspect we'll only do hotels and keep things to ourselves.  

But otherwise it was fun.  FWIW we have traveled with Shoppers before multiple times and they are more along our lines of spending.  They do spend more than we do, but they are typically pretty thoughtful.  They realize they are traveling so they watch how they order so they don't waste food. They typically aren't just in excess of life and just throwing money around.  Everything is thoughtful.  Yes they spend money but they don't just waste it.  I can't explain the difference.  I

guess it's where they look for a good deal on a hotel "the shoppers" but the KUWJ just book the nicest place possible and to them $500-1000/night is normal.  The Shoppers will see $400 and be willing to ante up to stay but want to be sure it's a good "deal or value".  LAL's family?  $400?  No.  Don't want to spend that much even if we can afford it.  Goes against principals but will bend if we are traveling with other people to an extent.

Overall we had fun.  Next trip planned?  Camping at a family Camp May 21st Friday to Sunday.  Then a second camping weekend 6/4-6/6.  We are paying more than normal because we're "camping" in a cabin at a YMCA.  Basically renting a cabin they usually use for overnight summer camps.  Should be fun.  We are provided food and activities.  These are local camps and if our kids like it maybe they will want to do an overnight camp one day.

This month we are also booking 1 week of summer camp. 

So I spent some time teasing apart my spending.  In March as I tracked $820.79 Groceries, $86.82 cleaning, $167.14 alcohol, $112.72 eating out.  Total CC spending across 4 cards is $4586.27 for the month of March.  Bit higher than I would have liked.  

My year to date spending is as follows (1/1-3/31)

Travel $2438
Pet $3310
Groceries $2713 (not teased out the cleaning supplies and extras but I'll try to be better in the future splitting dog food, clening suplies etc)
Hobbies (ski gear) $1290
Restaurants $421
Gas $409 
Alcohol $308
Healthcare (lots of dental) $758
Gifts $889 (DK1 got ears pierced and nail salon)
Cell Phones $674 (bought 2 cell phones $135 LAL, $208 DH) and 3 months of plan
Home Improvement $460 (DH 100%)
General Merchandise (crap we buy from Amazon and online) $599 (this is mostly DH by the way)

April my goal is $750 for groceries, $100 alcohol and $50 cleaning supplies so $900 total.  And our overall spending under $3k on the credit cards including groceries.  So that will leave us with room to save.  It might not be possible with me needing to pay for a couple of summer camps.  

Of course I already blew it today....I spent $135.28 on groceries, $45.47 on gas, $9.61 at Dollar store, $14.90 Home Depot, $66.09 Dog Food and treats, $70.92 alcohol.  So we have started the month at $419.50 spent.  UGH!  Then eating out this weekend and gas for driving.  So I might be dying on the groceries already.  Or I can eat everything I have and be super cheap this month!  Nah. I want a rib roast and I have my eye on making beef wellington.  My pantry and freezer however are stuffed to the gills for some reason so I do need to eat what I've bought.