Eye popping spending and overwhelmed about how to cut down to a reasonable lifestyle

[dobig]

Before becoming overwhelmed trying to do a complete 180 you may want to take a different approach than the consensus here of targeting spending and expenses. For us, we started targeting savings years ago when we were just spending randomly without a care in the world. Just putting away some money in savings for a few months and watching that account balance grow soon became addictive as the money just piled up. Soon we started seeing what we could cut to boost that savings as it can get addictive. Our mindsets completely changed. We would look at things we'd want to spend on but we had so much momentum with our wealth growing that more often we just put our money in savings instead. Not everyone has to tackle this from the same angle. Just find an approach that gets you motivated without making it depressing as hell.

We make similar earnings to you and we have built what is fast approaching $2 million with less than 30% of that invested in mostly poor investments the past 7 +/- years. Imagine what you could do if you did something similar and actually had some investment acumen.

 

[Ramen]

Another big cheer for ElizabethT's advice above to read Your Money or Your Life and The Millionaire Next Door.

On the former, I suggest following all the steps for a year. It will change your life and your finances.

On the latter, read the original book from the 1990s, not the more recent sequel. The older numbers are outdated, but it's the wealth mindset that's important.

I never imagined getting all lusty about driving a Buick or shopping at JC Penney, but the book really highlights how material modesty and conscious spending lead to greater savings and a much richer life.

The title alone struck a chord with me, even before I read the book, and now years later I'm literally a millionaire next door. No Buick but very happy knowing what is of real value to me.

 

[marinauser]

I would agree with prior post(s) to get Quicken and load the last two years of spending from all of your accounts. You will really get a good breakdown on where the money is going to identify big categories that you could perhaps eliminate. Also, your spouse may want to work but her $20,000 income is really $10 k after taxes and you are spending $54,000 of after tax money to get that $10k. You are not going to make a dent in your level of spending by worrying about a $5 coffee or going out to eat once in a while. There has to be some major categories where the big dollars are going and nanny/preschool is probably the biggest after taxes (state and federal income tax and property taxes).

 

[edmund]

Not a luxurious lifestyle?

i skimmed through much of this. i have been super frugal my whole life so i could approximate the lifestyle I desired. We spend perhaps a quarter of what you do (and earn probably a quarter of what you do), and I feel we live a very luxurious lifestyle--frequent travel, major gifting to children. i think it's sad that you feel your life is not luxurious. You should be getting more for your spending--perhaps try to get your values and ideals more in alignment with your spending.

 

[Texas Proud]

I am just going to throw out that you do not have to go through all the stuff that people are talking about... you are spending $300K IIRC.. I cannot see how you would not know where the big numbers are going..


Even $10K to $12K per month on CC should have a trend you should be easily be able to see... stop thinking that this is a nickel and dime problem... it is a major purchase problem..

 

[38Chevy454]

An overused phrase, but applies to OP "you have a spending problem, not an income problem". There's been a lot of good suggestions made. You have to identify a problem before you can solve it. Your awareness of the amount of spending is great. Now just review where money is going, and make appropriate adjustments. Small savings add up to big savings in total. Especially when allowed to compound over time.

 

[JBTX]

Another way to think about it, prior to digging into a years worth of detail. The credit card amount is approximately $500 per day. Just think about yesterday, today, tomorrow - what did you buy on credit card.

 

[target2019]

OP reads like something that is being trolled for article research.

I make >500K, I don't budget or track monthly, and we spent ~300K last year.

Answer: What is Measured is Managed.

Haha, no I'm not making this up, I kind of wish I were. I feel really dumb for how much we spend, but I'm really motivated to make changes right now so I think I'll keep learning from you all [MOD EDIT] which have been my sources of learning so far.

I don't read those forums. Maybe they have been part of the problem? What I mean by that is you need the harsh truth, and some steps to go forward.

After I posted, I thought of a significant step you can take. Cut up one credit card.

If you and family continue down the current spending path, it's your choice. But if you want to modify the direction, take action.

But you don't want to become a penny-pinching ogre. It's just time to make some decisions, measure improvement month-by-month, and enjoy life.

 

[Andre1969]

Another way to think about it, prior to digging into a years worth of detail. The credit card amount is approximately $500 per day. Just think about yesterday, today, tomorrow - what did you buy on credit card.

That got me curious to look. My credit cards usually aren't too bad, but right now, I have a balance of about $5700, between two cards.

The main things that jump out are:
Oil bill (for my uncle; he reimburses me): $1134.29
Car insurance (once again, my uncle): $1990.00
Car insurance: (me): $1576.00
AAA annual renewal: $127.50

So, ~$4827 of that is for things that don't come up that often, and a good chunk of it, I get reimbursed for. My uncle probably won't need another oil refill until October at the earliest. And those other three are annual.

As for recurring expenses, I have:
Verizon (again, my uncle): $87.70
AT&T Cell phone (3 phones): $195.82
AT&T/DirectTV (uncle): $72.13
So, this accounts for another ~$356. This leaves ~$517 unaccounted for.

Here's a few more regular expenses:
Liquor store: $113.29 (I tend to buy in bulk, I'm not THAT much of a lush! I probably go once every 4-6 weeks)
Groceries/incidentals from Aldi, Shoppers, the Dollar Tree, and WalMart: ~$154
Prescriptions: $22.26
Gasoline: $35.10 (this was an aberration, although I don't drive a whole lot, so the fuel bill is rarely TOO outrageous, except for classic car show season)
So this knocks out another ~$325. That leaves $192 to account for.

Here's what covers the balance:
Cigars International: (one of my vices, perhaps put this under "entertainment?" ) $87.32
Amazon (some wrap to protect the trees from deer, a cell phone case, and vitamins): $36.91
eBay (found a pair of Doc Marten loafers on clearance that caught my eye): $74.36. So that comes to ~$199.

Mmkay, so there's a $7 discrepancy in there, but I just did this quick and dirty, and guess it's good enough for government work!

But, anyway, running up $5700 in a month on the credit cards is something of a rarity for me, and it takes a lot of help from my uncle to do it! I couldn't imagine running up 2-3x that amount, every single month! But I'm sure there's ways to do it.

As for some other regular expenses, my house mate covers the bill for the Verizon Fios (tv, internet, home phone) and he buys most of the groceries. My uncle also has a health insurance bill of $289/mo that I cover for him, and he reimburses me. That just didn't show up on another card I opened specifically to get $200 cash back if I spent more than 1,000 in 3 billing cycles. I already paid it this month, but normally it would show in my somewhat sloppy accounting above.

 

[mystang52]

An alternate opinion: Determine how much you need to invest/save for a comfortable retirement (lots of calculators on the web for that). Make those investments automatic, monthly. Pay off the full credit card charges monthly. Spend the rest.

+1 So far, I haven't gone beyond page 1 of this thread, but this is the perfect, simple, approach. Not literally, but this is close to what I did. I'd also caution about that goal to trim spending to 100,000. That's a 2/3 cut, and would seem draconian to your lifestyle, and not likely to succeed.

 

[perez99]

i don't think you have stated what do you do with your savings. Do you have 401K, IRA's, taxable brokerage accounts?
The reason I mention this is that if you get excited on the investments goals that you could achieve with the money freed up from spending, it should help you and your wife with the emotional side of having to reduce sending. Create a "goal" for those free-up monies.

 

[RetiredAndLovingIt]

No update from OP.
I'm guessing the conversation with the wife did not go well

 

[Masquernom]

No update from OP.
I'm guessing the conversation with the wife did not go well

I was thinking the same thing.

I recall an article from years ago about a financial planner. A couple came to him with a very high income level, and some debts with no savings. I don't remember the actual numbers. He reported that he worked out a simple plan that was easy for the family to save a considerable amount of money each month. At the end of the year he met with the family to show them how much they had saved. After seeing the amount, they withdrew all of the funds and took the family on a vacation to Hawaii. It's a totally different mind set.

 

[athena53]

I recall an article from years ago about a financial planner. <snip> It's a totally different mind set.

Yeah, I remember Dave Ramsey telling a story of a couple that needed to meet with him urgently to get help with their financial problems. It had to be soon, though, because they were leaving on a cruise the next week.

While I don't agree with DR on everything (his "always" and "never" statements are typically too simplistic), I think he does a good job with his "baby steps" and helping people to determine wants vs. needs

 

[MarieIG]

Yeah, I remember Dave Ramsey telling a story of a couple that needed to meet with him urgently to get help with their financial problems. It had to be soon, though, because they were leaving on a cruise the next week.

While I don't agree with DR on everything (his "always" and "never" statements are typically too simplistic), I think he does a good job with his "baby steps" and helping people to determine wants vs. needs

While I don't agree with everything he promotes, I do feel that he offers some good advise with the getting out of debt, budgeting, distinguishing wants from needs, and (loosely) the baby steps - so far as establishing a plan to getting out of debt and working towards financial stability/ independence. I have not purchased any of his materials nor used any of his "pros." I believe that he has a budgeting tool which can be used for free, but I did not try it as, IIRC, one has to set up an account.

 

[REWahoo]

There really may be no hope for us. I'll shoot an update after our pow wow later today .

No update from OP.
I'm guessing the conversation with the wife did not go well

My guess is she did all the shooting, then took away his gun...

 

[MarieIG]

No update from OP.
I'm guessing the conversation with the wife did not go well

I noticed the lack of an update too.

 

[aja8888]

My guess is she did all the shooting, then took away his gun...

I noticed the lack of an update too.

(speculation here...)

......(after the "meeting")....realizing the great amount of savings potential the "spending problem" has, the couple decided a short European vacation was taken in order to relax and clear the minds before tightening the purse strings.

 

[MarieIG]

(speculation here...)

......(after the "meeting")....realizing the great amount of savings potential the "spending problem" has, the couple decided a short European vacation was taken in order to relax and clear the minds before tightening the purse strings.

 

[autonomousdog]

I noticed the lack of an update too.

Haha sorry I kept meaning to log in and update you all but didn't have time with a super hectic weekend. I'm on a short break at work now, thought I should post my very delayed update.



It didn't go super great, the Mrs was quite overwhelmed but she agreed it was an issue for our lifestyle and what we want for the future. We're going through all the credit card bils the next few weeks, starting 30 days back and then 6 months back. Our bgigest issues are 1) fancy travel and 2) eating out and 3) luxury one time expenses. The $2k VIP San Diego Zoo tour, the $10k ebike to haul the kids, the $800 fly fishing guide along with $800/nt 5 star hotel, it all adds up quick. ALso it turned out I miscategorized some stuff and our expenses were 310k, 160k of that was credit card. 50k mortgage. 50k nanny with taxes. She's looking at whether we can transition to much cheaper childcare for the little one. 25k for private school that goes away when the almost 6 year old goes to public kindergarden.



We both agreed that a spending pause for 30 days is a good idea to reset out expectations a bit, and I'm learning to cook and made a commitment not to eat out for 30 days for myself (We made pizza as a family this weekend, came out terrible, but oh man everyone had fun and the kdis made an awesome mess and had a blast). I placed a hold on some of the book recommendations above at the library, whereas normally I'd automatically go buy on Amazon We decided not to pause Amazon Prime, it's such a small expense relatively, but we agreed to every day look back at our spending and see if it was needed and added to our life or if we could have done without.



We need to work out what to do with the traveling, we love it and we don't want to stop that. I had a big shingdig planned for the whole family and grandparents, etc in Grand Cayman later in the Fall (huge house on the beach and paying for most people's flights) that I've put on ice for now. That would have been a 20+k expense for 7 days. The cars are already paid for, and that damage is done, so I'm going to just let it be and not trade out for the minivan right now.



Can't thank everyone enough for their advice. I owe it to re-read all the comments again after work today.



Have a great day all! And if there's more advice/tips, we'll be glad to take them!

 

[aja8888]

Thanks for the update and it sounds like a good start. These things take time to get under control.

And doing family stuff, like cooking meals at home, is very important for child development and for you!

 

[The Cosmic Avenger]

Great to hear, autonomousdog! It sounds like the spending is mostly just out of habit, which means you probably won't miss it, especially if you have a savings goal and/or a non-spendy reward to take its place.

 

[Love This Community]

With your attitude and commitment, I have no doubt you’ll turn things around for a sound financial future.

Vacations are expensive and with growth in income, it is easy to splurge on luxury vacations. While it is important to create memories that last a lifetime, also look at whether your kids are getting used to this lifestyle and whether they will be able to afford similar lifestyle when they are on their own.

We take 1-2 mini vacations that are short getaways or in driving distance and 1 big vacation within a budget (most of the time).

Good luck in your journey.

 

[ivinsfan]

So you had no idea why your cc bills were so high yet forgot about all your fancy vacations...carry on.

 

[athena53]

Thanks for letting us know of your progress! You mentioned a lot of one-shot extravagances but if you have a few of those every month they add up. Travel is a passion of mine so I can get why you want to continue to enjoy it (and maybe don't want to cut back to tent camping). There may also be ways to do what you want but be less "splashy". Is a $2,000 VIP tour of the Zoo really worth $2,000 more than just bopping through it at your own pace and buying a few snacks along the way? If you're flying all over in Business Class, I understand that on long hauls but I'm planning to fly my son, DIL and 3 kids to a destination that will likely involve a couple of 2-hour flights with a connection. We'll all survive in Coach. The kids are small so they don't need bigger seats and they're too young for free booze! And DS and DDIL are teetotallers.

Those are my own priorities but you may have other ideas of where you can scale back and save big $$ with minimal pain.