LivingAlmostLarge's Personal Finance Blog

I use credit cards a lot, for everything. I don't do anything like chase rewards but I do try to maximize the rewards I can gain through the cards I have. I've contemplated getting an airlines rewards card or chasing bonuses, but right now it's difficult to find the time to pay bills or keep on top of our spending with two small kids. Plus I know we're moving so rather than opening cards I'm keeping our credit scores high since each inquiry is a hit.

Last year in 2013 we earned $954 in rewards and trading some in to discover closer to $1000 in credit card cash rewards. We spent approximately $25k on the credit cards giving me a return rate of 4%. Plus another $108 Costco rewards. That's extremely high. It'll be higher this year.

Because of my high return rate I've definitely maximized our spending over using a mileage credit card. Why? Most times it's only worth using miles on an airlines ticket if you can get 2 cents/mile. Why? Because miles aren't that valuable. Meaning a ticket costing 25k miles, costing less than $500, most rabid mile collector (go to flyertalk to learn) say it's not worth it.

Personally I always try to maximize our mileage as well typically getting close to 3-4 cents/mile. My most recent trip to Hawaii I spent 17.5k miles on a one way ticket costing $800 = 4.5 cent/mile. Like I said maximize miles. People use miles when they don't want to pay, but true mileage collectors (and I'm best friends with one) helps me calculate the true cost of using the miles.

But back to credit card rewards. How did we get so much? Well we only use 4 cards discover it with it's 5% rotating categories and 1% back on everything else. I use this for most things since I can redeem it for gift cards that are also discounted for further rewards! Like a $45 for $50 Panera gift card or $45 for $50 starbucks (hello teacher gifts). I also ALWAYS use shopdiscover, because it gives 10% back right now on groupon and living social. It also gives great rebates on other sites too for extra savings and you can still use coupon codes on other sites.

We have a Citibank Simplicity cash rewards. Probably never heard of it. We got it 10 years ago and it gives us 5% back on gas, 5% pharmacy stores like cvs/walgreens, and 1% back on everything else. I use this for gas and most everywhere I can't use my discover since it's a mastercard.

Finally my DH and I each have a Costco Amex. We love costco and my rebate check since we have an executive membership for $110 was $108. We are getting close to getting over that hump. We get 3% dining out, 2% travel, great for international travel since it covers the exchange fee, and 1% everything else.

So that's it in CC. I should consider maximizing our CC rewards, but right now I think we're doing relatively well. Except for people who open cards for rewards I don't know that many people get a better value using their CC.

I have considered switching to a mileage or hotel (starwood) CC. My biggest issue is that I would never spend more than $100 on a hotel room between priceline and deals, so it's hard to get a card and use it on a room that cost $300. But perhaps if people sell me on it.

Do you have a favorite card? What's your redemption rate? Do you get great rewards.

I will end with if you overspend on CC or can't pay in full don't use them.

Decided to summarize answers. I want a third kid now because I worry about getting older, birth defects, the usual nine yards. My DH is worried not about the short term finances and of course the normal long term financial hit college, weddings, cars, anything and everything.

So why am I short changing them as they get older? It's starting over, and our lifestyle has to go back to baby lifestyle versus older kids you can go biking, hiking, kayaking, camping, traveling, etc with. I admit we've just about hit the sweet spot with both kids and adding a third now would rock boat, but we're in the rhythm of babyhood. What if we wait and we don't want to go back? What if we wait and can't go back? What if we wait and realize that our life feels complete in 2 years that it doesn't feel now? I don't know.

But truthfully what really worries my DH? Finances in the mid-term. Short term we'd be fine, i'm home we make more than enough to survive and honestly if we didn't save as much he can chill. He is a little stressed out because he feels we don't save enough, but that's a completely different argument. Long term he is worried we won't make enough to afford college, weddings, retirement, etc for 3 kids versus 2. I think it'll work out.

But the mid term? This is the real kicker. In 6/2016 we agreed we are making a huge change in our life. We are selling our house that winter and leaving where we live. We are moving to the west coast without jobs if need be. We are going to live off of our savings, which will not be enough to retire. We will not have health insurance. We will have to buy some. We will not have unemployment or anything coming in. Our net worth will be dropping because we are going to be going NEGATIVE. We will only have outgo, no income.

Now things between now and 6/2016 can change. DH or I could get a job. He could get laid off and we get severance and unemployment. But we cannot predict those things.

So DH reason for not having a kid now is he doesn't want to add a mouth to feed, diaper, insure when we have no income in 2 years. If we were staying put we'd be discussing when to have another kid. If we had a job opportunity and were moving with guaranteed income, we'd talk more about our 3rd. But right now he said he feels as though we need to make sure we can provide for the 2 we have before we add a third. Having a third would also mean less time at night for job searching as he'd have to take on more of the childcare after we have 3rd.

My DH also said he still doesn't see himself retiring but he wants to be secure in the knowledge that if he were unemployed that it wouldn't matter. That we could live "retire" and not worry. Hence why he thinks we should be saving more and spending less. The fast we get to the point where we have enough to live, then the faster he'll feel secure.

Finally about cost of living and our jobs. I think BOS-NYC-DC, LA/SD/OC, SF and Honolulu are HCOLA in the US. These places taxes are high, condos start at $400k for a 1 bd, homes more in the range of $750k+ for small crappy homes. Then there is a second tier of costs like Seattle, Portland, Philly, Denver, NJ, Chicago, CT/VT/NH/RI, VA/MD, rest of CA. These places are cheaper I think condos start at $250k, homes $400k, and taxes are still higher than normal. But the homes are nicer even at the higher end the higher end of the HCOLA. Overall the cost of living I'd say is 20%-30% lower cost of living according to calculators and just looking at real estate in general. But ideally I think we should look at moving to Seattle or Portland.

That being said we're not quite able to buy a home cash. We're getting close but not quite. And even with a paid for home, my DH is hesitant because he thinks we are going to take a severe paycut. I don't believe the paycut is as severe as he thinks. He also believes it'll be very, very difficult to land a job. I'm sure it won't be easy but I don't know the job markets of those areas.

Perhaps I'm wrong and he's right but he feels that most people in business make $50k. With an MBA $80k, where we live. He thinks if we move he'll be lucky to land a job making $75k. I showed him the numbers according to what we pay now we're going from paying $45k in taxes federal and state, to if we make $100k or less nothing in federal taxes with 2 kids. So off the top assuming we make half of what we make now half of the difference goes away to taxes. Yes we save the other half but still.

Making less = need to save less. But he's still worried we should be saving the same proportion. His argument that our house because living in a HCOLA we'd buy a $1M home versus $500k if it goes up 10% you make more on the more expensive house. True, but you have to struggle making payments! And often in HCOLA people are paying 30-50% of their net on housing.

I find it interesting that my DH was always mustachian before it became a word. Apparently though he never intends on retiring he always planned and hoped to be financially independent before it was popular. Me? I had no idea we even had a chance. But perhaps this move will derail us. I don't know.

But until then we'll keep chatting about jobs, third kid, etc.

I want a third kid, my DH is not sure. He isn't sure we can afford it financially. He isn't sure we have the time or energy to support a third child. He isn't sure about our family dynamic. I'll admit I always planned to get pregnant this summer and have a third kid in 2015, I turned 35 recently.

But we're planning on moving and giving up our income in 2016. So my DH is worried about another mouth to feed and no income. I don't believe we'll be without an income, nor do we need much income to live I believe. But my DH is hesitant to add another child. He's worried that having another kid now will delay his job search. That he won't have the time to do it. caring for 2 kids and adding a third. He's probably not wrong.

But I am struggling with not having a third period. No we haven't done anything permanent. We agreed to the snip after we're done but that's not even been brought up. Nor have we gotten rid of any baby gear or clothes. If anything we've both been saving and storing clothes, shoes, gear. We both had assumed we'd have a third. But now what?

Do I just put aside all my baby things? Realize that the sacrifice of moving will be the third child? Will I regret it? Can I still do it in another 3 years when my kids might be 5 and 7? I'll be 38 at that time. Could I get pregnant at that age easily? Am I missing my window? Will I regret the sacrifice?

I mean we did have a heartfelt talk the other night and the truth hurts to write that my DH said if we weren't going to move we'd be talking of having kiddo number 3. I am just struggling right now with this decision.

I wonder if I shouldn't have had my kids earlier? That is probably my one regret.

I have a friend in a very difficult situation. She and her husband are going to divorce eventually. They have three kids and I can't say I blame her. Long term cheating is the reason (4 years), but she's trying to get her life in order to leave.

I suggested that she really organize herself and finances before saying she wants a divorce. But it's hard obviously she's a stay at home mom, and she needs to get her license reinstated to work. She used to be a mental health counselor. I think she's a good person but seriously she's terrible with finances and I don't know if she can ever get herself righted.

She spends money like it's water. She only shops at whole foods and throws away food left and right. She said yesterday "I need to stop buying precut fruits and make an effort to cook dinner." I suggested buying frozen dinners and start from there to get into the habit of cooking, then learn after getting used to cooking.

But the real trouble? Both she and her husband make a ton of bad financial decisions and have no idea how much money they make or have.

Bad decisions
1. Bought a new to her Mercedes Diesel SUV 7 seater. Got a loan because she said they needed credit.
2. Spends on a credit card and just makes payments to have room to spend more.
3. Doesn't file taxes so her husbands paychecks are garnished by IRS for no payment.

Because she wants to leave I suggested to her that perhaps she start by collecting all paperwork to figure out how much money they make. And to file taxes. I even offered to help. I told her go around her house and collect any remotely financial paperwork.

But then she does things like get plastic surgery, go on week long yoga retreats to Belize; while saying she can't afford preschool for her kids. That paying $5k/year, what I pay for mine is too much. I couldn't help myself but I said one week in Belize cost more than $5k. She said it did. So right there was preschool tuition.

I don't know if she'll be able to get her act together. I don't know how to advise her to get on a budget or even to know what they make. Her husband gives her a cash allowance. She asks him for money when she needs it. Sometimes it's there and sometimes it's not.

She really has no idea about her financial house. I'm not even sure where she should start. Her husband works construction half the year. Then has his own business as a mechanic and plows snow in the winter. He has a shop but she has no idea how much he makes.

If she wants to leave him she needs to get her finances in order. But it will be a long process. I hope she can get herself pulled together.

Tips or ideas for someone really bad with money? I do worry about her and really have suggested that I help her with mint or just sorting paperwork. But the truth is that she says she'll get to gathering paperwork but never does.

My DH and I have been discussing the cost of living situation. He just refuses to believe that if we make less and move to a lower cost of living things will work out.

He wants to maintain our current standard of living. He isn't worried so much about what we spend, we don't have a high burn rate for our income. But rather our savings rate, he's uncomfortable with the idea of us saving less. He knows mentally that you make less = save less. You have less income you need to replace, but the idea of going backwards and saving less per year makes him uncomfortable.

His statement to me was interesting, since I'm the one who has gotten more into early retirement. He said never considered us retiring early but the more he thinks about it, the more he wants us to be independent on jobs. He really doesn't want to retire and a lot of self worth is tied to working and what he does. But he doesn't want to be dependent on a job where a job loss will leave us floundering. He's reflected a lot lately and he wants us to be flexible financially always. That we are able to weather storms.

But how do we get there? He said how can I predict we'll have enough? How can we guarantee that our estimates of an annual budget are accurate? How do we know that unexpected expenses won't crop up after we "retire"?

I can't guarantee any of that. I don't know that we won't get sick or need medical care to the tune of thousands of dollars. But I also don't know that we couldn't die young before we get to retire.

And truthfully we aren't saving enough for college and we're both aware of it. But at the same time right now college is taking a backseat to everything because we are so unsure about the future.

I'll write my thoughts on college. For now I'm going to a splash park and enjoying the summer with my kiddos!

So where I live Craigslist can be a hit or a miss. Sometimes you can find a great deal, and other times you are wondering what are people smoking in asking so much for USED crap.

This weekend I bought a tagalong bike trailer for $40. It the cheapest I found but when we looked at it, it was a 2008 model and heavy. But we did it to determine that my 4 year old was terrified of riding like that. Well good thing we didn't spend money on a new one. A new tagalong can be had for $96 on Amazon, and I still don't feel I got a great deal buying used honestly.

So I resold it that evening for $40 and considered myself lucky to get rid of it. And not have to try to storage it. We're pretty big bikers and used to bike all the time before kids. We have a trailer but with two kids it's tight.

So a friend suggested trying out her Weehoo. This thing prices out at $379 new on amazon. I looked at craigslist and found only 1 for sale in my area. I was annoyed because they were asking $300! No way, I wanted to pay that. Hello! Also the ad said "price firm". But I'm going to trial out my friends and if she likes it I'll try to find it used for $200 or I'll buy it new for $320 from REI with 20% off coupon.

I guess I like craigslist when I get a "deal" for used. But where I live I feel like people aren't aware that used items should be sold at a discount. Many people ask for new or almost new prices you can buy from places like "amazon, allbeebaby, etc".

But at the same time good deals can occasionally be had by people who are looking to dump stuff (myself included).

Do you like craigslist where you live? I hope my kiddo likes the weehoo and I can land one for $200.

So a long, long time ago my mom said something that often resonated with me. She talked about people affording the expensive homes and flashy cars. My parents are those millionaires next door and so are my in-laws. And my parents are also the people who spend money like water, but have always out earned stupid. They've made so much money that it's never mattered how they spent it.

But my mom still preached financially responsibility and buying what you can afford. She said it's not bad to buy a big home or luxury vehicle if you can afford it. The problem is? Affording it. Really affording it. Not affording it on a shoe string.

Sure you can afford the monthly note on either a $500k home (this was a long time ago) or $50k car. But what happens when you need to repair it? Why would anyone want to buy a $500k McMansion and then have to clean it themselves? To really afford a house that big and expensive then you should have enough fat in the budget to hire someone to clean it. Be able to hire someone to fix something if breaks. You shouldn't be worrying about every little repair because if so you can't afford the house. The house is more than the payment monthly.

Same with the car. Her example was if you are sweating buying $400 tires for your luxury car then why did you buy it? Or $1k repair? Did you not realize the car is more than just the payment? Or the more expensive the car, typically the more expensive the repairs? We're not talking older versus newer car but rather brakes on a Toyota versus brakes on the Lexus.

That got me thinking that I would always try to underbuy what we could really afford so I'd have lots of fat in the budget to deal with all the extras. That I could own my house and car and take care of them and not worry they would rule my budget. That the next repair was too expensive and I'd put it off.

Turns out my mom gave good advice. Did you overbuy?

Is to charge everything I want on a credit card and not worry or consider how I'm going to pay or afford it. Then at the end of the month not pay it off.

For the record I've never done this so I've always wanted to know what it feels like. My DH and I have always been responsible with money. We were raised that that way.

But I want to know what it feels like to be irresponsible. I want to know a little bit of the thrill of not worrying about how can I afford this.

And the second part would be I'd like to see a paycheck where DH and I saved nothing. Where we just had taxes taken out and the entire thing would be deposited. Sounds nuts?

Truth is even though we make a good income I think the biggest check we've seen deposited has been $3k a pay period. When I see online people posting monthly budgets for $7k or more I wonder what it would be like to spend that much. What would I do with that much money? I know if we didn't save could potentially have that much deposited. And when we get bonuses we do see a really large cheack. But would I really feel better able to spend?

Have you paid off a lot of debt? Was it hard? Or were you always responsible? Did you change your ways? How did you change from overspending on a CC to paying it off?

I never considered early retirement for DH and I. I still don't. I've always planned for 55 for DH to retire and I join him. I hate planning that far out because it seems weird to assume return rates and that we should have "millions" according to the savings calculators.

But rather I just have lived by the motto, save as much as you can, as early as you can, and see where life takes you.

So we've done that. I guess I should add I am soon to be 35 and DH will be 37 this year. Our financials are stable. But early retirement? We'll definitely hit it by 55. But any earlier? I'm not sure.

Let's assume we live on current budget of $60k/year. Right now that consists of half our mortgage and half our spending. At a Safe Withdrawal Rate (SWR) of 4% we'd need $1.5M. To be extra conservative for retiring early perhaps 3% WR would be better so we'd need $2M nest egg. This is of course assuming we have no Social Security draw. We could split the difference since FIRE Calculator says we'd have 0% chance of failing a 50 year retirement with $1.75M and a $60k/year spend rate. Also I'm assuming we get to spend all $60k on health insurance, health care, car replacement, home repairs, and we'd have no mortgage.

How long would it take us? Well using $475k retirement starting balance, assuming a $30k addition to retirement annually and a 6.5% return we'd have after 10 years $1.3M. We'd be $200-400k short of the nest egg I'd need to be comfortable. However if we looked at 15 years we'd hit $2M, the high end of our number

However that's not looking at our taxable accounts and assuming we're mortgage free. I find it hard to account for all variables because we haven't settled in a final home. We have no idea what our spending budget would be in a final home or how much we could really have saved outside of retirement. I mean our annual spending could go up by a lot over the next 5 years. It could also go down depending on where we live and what sort of house and lifestyle we live.

Just looking at the numbers I'm pretty confident we are securely on track to retire by 55, and possibly by 45 we could "retire" or at least be financially independent where a job loss wouldn't matter. Sometimes it's the knowledge that you could walk away and not worry financially is the best feeling.

Would we retire at 45? I don't think so. While I think we'll be set to FIRE, it doesn't account for the college expenses we'd be looking at after we FIRE. I think we probably need to wait until 50 because our nest egg would be enough solely in retirement accounts and I think our taxable accounts and cash flow at that time will be going to college. Of course I have no idea if our kids will want to go to college or get scholarships. I'm not even sure we're done having kids yet.

But I'll reevaluate every year. Of course the other factor is everything I budget off of now is based on living where we live. That I plan on changing sooner rather than later.

As I mentioned in our previous post something had to be done to leave where we currently are. And I think at 34 and 36 we are going to "Early Retire" and switch from "high cost/high pay" to something else. Our current savings will give us the freedom to move.

It was mentioned that we may not want to move away from an exciting HCOLA, but I honestly I don't think any of the locations we are considering are "boring". I actually think they fit us better than NYC-BOS-DC does. We're more nature, outdoors, relaxation people.

This weekend we biked and hiked with the kids and I wish we just had better location to do it in. I was worried the entire time biking about being hit by cars. I'd like to also be able to take the kids to hike more somewhere closer. Perhaps one day.

This happened yesterday in the shoe store and I found it interesting in the perspective of money and kids.

I have some very rich friends. Very rich, we are talking the 1% or probably closer to the 0.5% easily. Very nice people and pretty normal in many ways.

But at the same time there are some stark differences. Now I will admit we are closing in to the 1% in income, but certainly not in assets. I openly acknowledge we live a very "nice" lifestyle and definitely upper middle class. And a lot of our income goes to savings so I do try to stretch every dollar we make. Every dollar not spent, means less we need to save.

But anyway as you know I went to stride rite and landed great deals on shoes. I bought 9 pairs of sneakers for $60. That works out to $6.66 a sneakers for stride rite!!! Cheaper than even thrift stores at least where I live. But I never buy shoes used because it's not good for developing feet to have used wear patterns. Even hand me downs between kids I sell if I think they are too used.

So as I was there on Monday getting more shoes (I bought 4 pairs Saturday), then "5" on Sunday. Anyway I ran into a friend who is "VERY RICH" and there because I told her about the sale. She was very excited to be buying shoes because her daughter needed them but to get on a deal was great.

I pointed out the cheapest options (ie what I bought) but she said her daughter wouldn't wear them. She said daughter is very picky, and will never buy the same shoe two years in a row. Also she's very particular about color and style. So the newest models.

She asked me how I get my kids to wear what I want, ie the cheapest, ugliest shoes in the store. She runs into the problem with clothes. Her kid won't wear stripes, no leggings with buttons, nothing but pink and purple, no zippers, etc. And always buys "high" end boutique clothes so she doesn't match other kids.

My answer? I told her that I tell my kids I'm not made out of money. They can pick their clothes out of the choices I give her (both our girls are 4) but that's it. I have X amount of $$$ and she's got freedom to pick from the clothes I offer up at the store or home, but at the end of the day we have to buy what we can afford. If she doesn't wear it and it's a gift, it's consigned.

I told my friend Mrs R, "I say we can't afford it. We can afford this and you can get this. You can wear this because that's it." She said how does she get it?

I said the "choice" is there is none. I give my kids choices because we can afford enough for choices. But I realize that if we had less money there are less choices. And even if we make more money I don't think I'll change.

I just can't fathom paying $16 for Hanna Anderson shorts for a 4 year old. Sure great quality, but seriously how long are they going to wear them? One season? Buy 4 target shorts for $20 and call it a day. At this age they wear clothes hard and for a shorter amount of time. People are going to say but it last longer. Really? Long enough that your growing kid can wear it for years?

I freak at the idea of paying $50 let alone $140 for a pair of shoes. Mrs R buys her kid uggs every winter and this season they were $140. I got knock offs from $20 from Walmart. At the end of winter her kids foot didn't fit and mine were worn. I bought winter boots kamiks for $10 from the outlet and she got whatever color was leftover. Mrs R bought new ones the color her kid wanted for $50.

Another example my kid gets to pick a snowsuit for $30 from Costco. It works fine and I'll use it for a hand me down for kiddo number 2. Mrs R buys North Face Jacket and fleece for her kid. We're talking $100 fleece and $200 jacket. I've got a lot of friends who do this. Seriously? Target and Costco. I mean one season! The kids don't stay the same size for more than one winter. At least I'd like to meet a kid who does.

But heck I will admit to getting some nice outerwear for my second kid from friends Mrs R then has her older kid need shorts and she said her husband asked how much should they give their teenager. He suggested $20? She said that won't buy one shorts. It would if you shopped at Target. But A&F, AE, mall stores, etc all cost way more than that for one pair. Perhaps I'm in for it when my kids get older and want name brands, but I doubt it. Again I'll be on the "it's not in our budget wagon."

But Mrs R is shocked I'm so strict with my kids. That I would be so religious as to say we can't afford it and you don't have a choice. She knows we make a decent living and to be to frugal is a little odd. I don't think I'm being mean, I think I'm teaching them that we only have so much money and we are using it wisely. So they don't have name brands and even their swim suits and "carters" clothes come from costco. But I spend less than $50/month on clothes all year for my kids including shoes and seasonal wear because of deals and costco.

Growing up my mom gave me a annual clothing budget and said this is it, make it last. So I had to shop sales and see how to stretch my dollars. I had what I had and that was it.

I think I'm teaching them not how to be cheap, but how to maximize income. I get we can afford "more", but honestly do kids really need name brand? And I buy stride rite because I think good shoes are important. And my kids feet are ridiculously wide. But even then I try to wait for deals and buy when they are on sale. I keep the receipt in boxes until we use them just in case they grow and skip a size. But otherwise? Target, Costco, Walmart, Marshalls, Kohls are my places for clothes. And even then I'll wait until serious discounts.

What are you teaching your kids? At least where I live everyone is a little fashionista, even boys. I can't imagine knowing what I know about prices of clothes how so many parents can spend so much on kids clothes. It's more than I even spend on myself.

This weekend kids shoes at Stride Rite are up to 60% off. I landed 5 pairs of sneakers for my kiddo for $49.95. $9.99 a pair of stride rite sneakers. I have 3 of the same and 2 aurora princess sneakers all different sizes.

But what happens if her foot grows? Well keep receipt and they honor exchanges. I stick it in the box until we use it. But for now with a kid in 10.5W I have sizes up to 1W. I am set for a long time and I finally got it a price I can swallow. Typically I hate paying more than $20 a pair and usually I try to score $10 or less for stride rite. Amazingly I've been lucky and done so for the most part.

Another savings is do the survey on the receipt for $5 next purchase and go back the next day and buy more. I'm doing that this weekend to buy for the younger one. I find that my kid's feet grow slowly but with the return policy I find it worth it no matter what. And I don't buy anything but sneakers at a deal price. Because kids feet do grow. But sneakers at least for us are used year round as playground or indoor play shoes.

As an only child with three step siblings, and the knowledge my dad will predecease my mom, I worry about my mom. I know that she'll have more than enough money.

But I also know that my parents have always made bad financial decisions but out earned stupid. No matter what bad decisions they've made they've always earned enough to not worry about it. They've leased cars, taken trips every month and lived a great life. But they've never done any home repairs and literally gotten rid of cars because they didn't want to fix it.

My dad still works at 83 and has been forced to take RMD from his IRAs and SS. My mom has a pension and is collecting now SS. With everything they are making too much to qualify for Roth IRA which my mom still does since my Dad still works. So financially good.

The real bad? Well here are a couple of examples. First my mom finally sold a house in July 2012 after it sat empty for 3 years because she had to "clean" it and have it recarpeted and new window treatments to sell it. The people who bought it flipped it in less than a year for $50k more. Sigh. I told her to just dump it and stop worrying about it. She refused and said she had to "fix" it to sell.

Second my parents have a large house they live in part-time. Large as in 5000 sq ft. I worry about my mom trying to clean it, they no longer have a cleaner come in since the one we had got too old. My mom doesn't trust anyone else so she's been trying to clean the house herself. I try to suggest finding someone new but she said they "steal". This house is literally leaking in the roof. When we were there for Christmas we were using buckets all over the house and my DH considered getting up there to hammer in shingles himself.

So my mom promised to fix the roof. I went back earlier this month and it still hasn't been done because she's too busy and it has to be coordinated with tenting for termites and re-roofing. I suggested calling and organizing for her, or even coming back to do it, but she said she has to "clean" and pack up everything. I suggested hiring an organizer/cleaner. But she says they steal and wouldn't do it right.

It's not about the money. She told me that she has $80k in her checking account waiting to do the roof and termites. But how can anything be done if you live in perfect weather and yet almost 6 months later a roof can't be done?

I want to hire someone to come in and just start cleaning the house up. I suggested getting a dumpster put outside so she can stop saying she has to drive to the dump.

This doesn't account for the fact that my parents have a condo they live in part-week as well. Stuffed to the brim. Everytime I visit I am lucky to fit a gallon of milk in the fridge. I have a photo I took as proof of salmon in my mom's freezer from 2001. Yes it's dated. For 2 people they have 2 refrigerators and a freezer.

Every time I suggest downsizing I'm told they can't sell the house it's not sellable. They have to clean it up first.

Mind you my mom had physical therapy for her rotator cuff in the past year so I'm worried about her cleaning toilets, lifting heavy things, etc. She's in overall great health and so is my dad, but seriously? Why do they need 3 cars for 1 driver?

I read on another blogger talking about taking over the checking account. So I worry. I wonder when do the roles reverse and the child starts taking on parental roles?

Pack your lunch. Sounds dumb right? But seriously I lid you not most of my stay at home mom's working husband's eat lunch out everyday. Most of my Dr coworkers buy lunch daily. Many of my sahp buy lunches when we go out. Yep eating out is prevalent and honestly easier.

But with a little planning you can save a lot of money. Assume a $5 foot long from subway is all you have or a six inch sub with chips and a drink. Want to do that for less than $110/month? 22 working days on average or 176 hours a month is normal payroll. Buy a big bag of chips, loaf of bread, and luncheon meat and cheese and throw it in office fridge for week and you are set. Even better put in five sodas and you are having a full meal. Seriously my DH did this throughout graduate school including the soda. Always brought in five on Monday for the week and 12 packs were $2 a case. His meals for the week were maybe $10? I did the same or if I didn't have a fridge I'd make a sandwich.

I also usually cook enough for dinner and lunch the next day or two. Leftovers are great. No microwave? But a thermos and it'll keep. Buy a lunch bag and ice pack. And chill your soda the night before in the lunch bag in the fridge.

I can't take credit for this behavior. But our parents behaved this way and we grew up only knowing you always pack your lunch even the soda you'd want but couldn't fathom paying vending machine prices.

But seriously I doubt most people only spend $5 a day on lunch if they are eating out. More like $20 after the morning breakfast, Starbucks Coffee in morning and afternoon. And it does add up fast.

Do you buy or bag it?

Is it worth it to live in a HCOLA? Does the income you can potentially earn outstrip the costs? Maybe.
But the truth is that there are more expenses than just a large mortgage although I'll get to that later.

I hadn't realized all the extra expenses but the small stuff all adds up. Our heating expense are $3k/year, $2500/year electricity, $4800/year for gas for cars. Small differences in price could give us financial freedom somewhere else. Saving on heating and electric bills or even gas could be diverted to paying for an individual health insurance plan.

But what really made me start looking at our financials and future plans was we decided to look at houses. We've been in our townhouse for 9 years now. Bought at the peak in 2005 and we've been happy. As I explained in an earlier post we never expected to stay here past 1 kid. Turns out we're still here with two.

But the truth is we started looking at homes this year. We decided why not make the jump, we've been prudent, paid down our home and increased income. Truthfully we can't afford it. Insane you say? I agree.

We looked at our monthly budget and decided okay we'll increase our payments a little, loosen the purse strings, and cash in some home equity. We bought our current townhouse for $575k and can sell it for $729k low end. With what we owe I estimate we'd have comfortably $300k in equity to put down on our next place or 20% and bank the rest.

Well we started our budget search at $750k. After looking around we realized no way in hell were we going to be able to buy a house. We upped it to $800k and started to finally see homes sort of. We looked a house 0.5 miles from us 3 bd/3ba 1500 sq ft on a 3400 sq ft lot listed at $749k went in a bidding war the first weekend with 10 offers, 3 over $800k and settling at $830k. Um no thank you bidding war.

Well that meant our budget needed to head to $900k to get into the market at an "entry" level home that might need work. So we stepped back.

Trust me as you read you're probably screaming move the f$*% out LAL! You're insane. But my DH I think wanted to cry because he loves his career, he wants to continue at it, but the reality of us living here is a tough pill to swallow. Yes DH loves his job, but even if I go back to work we'd be one job loss away from losing the house if we took on a huge mortgage. And honestly we'd be working for what? To make more money to spend it on housing and living expenses. I pointed out we are constantly chasing a lifestyle that people in lower COL already have. It was time to reevaluate the true financials.

Honestly I wasn't comfortable spending so much and getting so little. I didn't like the idea of DH or potentially me being a clown car commuter where he drove at least 1 hour or at "least" an hour on public transit. What's the point of having a family you don't see? Why should he get up and leave the houose at 7 before the kids do to come home by 6 and maybe see them 1 hour??? Why live so far way to afford a home? Then we'd be better off staying put. But do we want to raise our kids in a townhouse forever? Do we want to yard or indoor playspace?

These questions are what ultimately lead us to the hard decision that we need to move. That we need to reevaluate and restock our life. We need to consider working smarter. We've amassed a pretty sizable pot of money, perhaps it's time to maximize what we can do with it.

The next step? Early retirement...but not quite what you think.

Yesterday I got my teeth cleaned during my semi-annual cleaning. I've been going to my dentist for 7 years now and they are very good. The dental hygienist is great and she's a lovely lady. Tells me awesome stories about growing up in a military family and she's lived all over the world.

She tells me she recently turned 65 and was asked if she was going to retire. So I said "will you?" She got offended. Now she's married but without children unless you count two golden retrievers.

She says to me if I retire and take SS I only get 33% of my income. If I wait until 70 I get 45%. I need every penny I can get. My mother is 95 and still alive. I'm going to live a long time. And I want to live in the lifestyle I'm accustomed to. And I don't have enough money. I'll still be short when I do decide to retire. She says it's so hard to save money.

I sit there unable to really comment as my mouth is being worked on of course. Good thing it was because I really wanted to ask, how much money does she really think she needs to retire? 100% of her income? Does she spend every penny she makes?

I sit here now thinking, on these forums everyone touts saving at least 15% for retirement so you can adjust to living on only 85% of your income. But I've been seriously looking at retirement numbers and I've wondered do people really need to replace 85% of their income? I mean if they have a paid for home? Then the mortgage if it's say 20-30% of their income, then perhaps it goes down to 5% repairs/maintenance.

So couldn't someone in retirement live on 65%? And then less taxes because they are in a lower bracket, say saving 10% federal? So is the truth that most people could afford to live on 55% in retirement?

Or it that people are just spending every penny they make? So that the thought of living off what they saved is impossible?

I don't know but I found it sad that she is 65 and worried about retiring and replacing her income. And she can comment that SS won't be enough for her.

Is this what is waiting for most Americans?

When we bought our townhouse in 2005 we bought using an 7/1 ARM @ 4.25% for $460k. We figured we wouldn't be here in 2012, hahahaha...We're still here in 2014. BUT we've saved a ton in mortgage interest and we've still got an adjustable rate mortgage.

Back in 2011 we refinanced to a 5/1 ARM at 3.125% $416k. A year later in 2012 we refinanced to another 5/1 for 2.625% for $410k. Both times was no cost mortgage, so our rate was higher than if we had paid but it didn't cost us anything to get a cheaper rate.

Our current mortgage caps out in 2020 @ 7.625%. It starts increasing in 2017 @ 2% annually and caps out with a lifetime minimum of 5%. Who knows where rates will be but since we're paying down approximately $800/month or $10k/year we could easily handle the increased interest rate or we could refinance before then. Seriously we've saved a ton in mortgage interest and we've been paying down the mortgage faster because of it.

We have 33% equity in our house now based on purchase price, and with current appraisals/sales I know we're looking at a sale price of $725k-$750k and we owe around $390k so we have about 50% equity and we'll be paying off more the longer we stay put.

The joys/sorrows of living in such a HCOLA. It's an old, tiny townhouse. But it also could be the bedrock of our future plans.

Have you considered an ARM?

Well it's when what you do affects others. And what you did causes others to suffer or pay more. The easiest example is people who always split the bill in the group and throw in far less than their fair share. I know this because I love to get credit card rewards but more often than not the amount comes up short. Seriously tax and tip people. People who are frugal will budget for a split bill and not mind. People who are cheap will pay for their meal but not the tax and tip. Trust I know from watching the bill of what people throw in.

Recently I went to a wedding that was so obvious they were trying to be "cheap" and save on a big wedding rather than having a wedding they could afford.

During the appetizer time samosas and chicken strips with lemonade, water, and coffee were served (good move no booze so frugal). The catering staff forgot to put out plates, knives, forks, napkins. So people were standing around looking for help and trying to get something to eat off of. But then the lemonade, water, and cups ran out. When I went to ask the catering people they said too bad. There wasn't enough because the couple didn't order enough. CHEAP! Seriously you can scrimp on what you serve but the amount? To not order enough food and drinks?

Then the buffet. It was spicy, no kid friendly food. Personally I ate the food but I like spicy. But again on each table there was one pitcher of water for 10 people. Luckily our table had 8 adults and my two kids. So the one pitcher really didn't have to fill all 10 cups. When we tried to stop the couple of waiters they said they were busy and would get to it. So not enough tap water! UGH. But apparently there was soda but only waiters were carrying around pitchers because there wasn't enough pitchers to leave on every table. There was 140 guest by the way. Then we had to bus the tables ourselves and rearrange the tables for dancing at 8:30. So the couple CHEAPED out and didn't hire wait staff or pitchers for soda! I mean seriously fill a few coolers with ice and throw in bottles of water, soda, juice and put it next to the buffet and let people grab their own. What would it cost? $200 at most! CHEAP! Again the couple cared about themselves and not how to provide enough beverages for the guest. I can accept busing my own table, getting my own drinks, but to not even enough water? Okay it's a bit much.

Then the cake cutting of a tiny cake at 9:15. They didn't have a knife or server so they used spoons to feed each other and "cut" the cake. Fine didn't want to bring a knife or forgot it. However they didn't serve the cake. People had to go up to the kitchen area and get cake from the one server working. I asked for a piece vanilla and a piece of chocolate, and was told there wasn't enough cake for everyone so I couldn't do it. I was stunned. Lucky my piece went to one kid and DH got the other kid another piece. Not enough cake for all the guest? CHEAP. Provide enough food if you are hosting a party/wedding.

I have to say the groom asked me about cakes about a month before and to be "frugal" and save money I suggested a $100 "cutting" cake for photos then sheet cakes at least 2-3 from Costco at $40/each. WTF! CHEAP!

The only bigger insult was the couple trying to hit guests up for cash for their honeymoon. I don't think it often gets worse than that.

Moral of the story? The line between frugality and cheap is thin. It's really easy to cross over and hurt people by being more than just frugal, becoming cheap. Having the expectation that others will provide largess to make up for the lack of your own contribution.

Recently my DH and I made a big decision. We are leaving our current location for a new place. We decided that for non-financial reasons we want to move. However we finances has of course complicated our decision.

Do we move without jobs? Do we move to somewhere that we could possibly get jobs in our fields? Do we take jobs in something different with a lot less pay? Do we move somewhere else a lot less expensive?

My preference is to move somewhere less expensive. I think that we can likely get jobs paying enough to cover our basic expenses and if housing is cheap enough we could manage on a lot less.

We certainly don't have enough to retire early but I am not sure we want to. My DH isn't comfortable with that jump. Perhaps when he's 45?

I guess that's the reason why I'm blogging again now. To document our journey for this big change in our lives. I don't know what the future holds but I am excited.

I'll start by breaking down our pretty boring path down savings lane. High income helped and it did increase a lot, but we do live in a very expensive area with lots of expenses. That'll be another day, another post.

Income let me explain that in 2000 when we met I had landed a job paying $25k and DH started out in graduate school making $18k. Yes we were living in sunny Southern California being pretty poor. Trust me our "rent" for a one bedroom was $900/month. I moved to LA and lived in bachelor apartment, apartment without a real stove or fridge for $750/month. Basically 2 stovetops, a microwave, and a bar fridge. So you can imagine $40k in CA is not $40k in Texas. Definitely below what you seriously needed to live well, thank god we were young and healthy and had health insurance. And we had car loans and student loans. We were young and in love. However since 2004 I can look at our joint tax returns and see some of the story.

2000 - $20k maybe?
2001 - $43k
2002 - $43k
2003 - $35k - I started graduate school at $20k salary
2004 - $39,562 - OMG maybe we didn't break $40k those years before!
2005 - $147,728 - company paid relocation taxable income
2006 - $111,289 - company benefits added to taxable income
2007 - $92,417
2008 - $106,390
2009 - $112,790
2010 - $143,487, single income had DK1
2011 -$172,303 - $25k Rollover IRA to Roth conversion
2012 -$196,459 - $25k Rollover IRA to Roth conversion, added DK2
2013 - $200,524

So yeah our income has gone up a lot, 5x what we made when I have my first pdf tax return. We've maxed out since 2006 DH 401k and two IRAs.

As you can see below starting when the market was terrible in 2006 it was not hard to see balances going up but going down since we were saving more than it went up. But we stayed the course period.

Savings - Retirement, Cash
2005- $6500, $13762
2006- $34,782, $23,296
2007- $67,785, $18,680
2008- $74,245, $4,441 - started paying MBA cash, considering we were adding $25k to retirement a year not including company match and it went up $6k...ugh
2009- $117,055, $4,798 - also not really tracking our cash in EF/taxable accounts until 2012
2010- $196,398, $5,060
2011- $232,534, $3,968
2012 - $302,841, $90,924 - started tracking better
2013 January - $396,055, $74,496
2014 January - $439,650, $218,816

Have you changed our spending? Not really. But we did start really making steep savings. Our mortgage is another topic for another day.

I guess I'll try this for a couple months before really getting going on a full on blog again. I used to blog about finances but time constraints and my total inability to figure out how to code stopped me. But where to start?

Perhaps by saying I never considered early retirement or financial independence until January of 2014. Though my DH and I have been long term Living Below Yours Means (LBYM) people, it still never occurred to either of us. To us we were to live frugally, save, and then raise our heads at 55 and determine if we could retire like our parents.

It's never occurred to us to accrue debt, spend more than we can pay on the CC, and not save the maximum. We've never really grown into our incomes. When we got our first jobs the only question was "what's the maximum allowed to save?" And that would be the first line item and everything else would fall into line.

Our lifestyle has always been determined by savings first then everything else like a puzzle we fit together. We aren't line item budgeters. We aren't tracking every penny people, rather we're pay yourself first people then spend. And our pay ourselves first has been all savings at the maximum then we have to figure out to live on the rest. Even if the rest is pennies.

And I will admit our income has increased a lot. I will have to go back and see perhaps the next post.