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

[simple girl]

Growing up poor, I always resented the fact that money, or rather the lack thereof, controlled every aspect of our lives - where and how we lived, what we wore, what we could do (or, mostly, not do) and what we ate. I especially hated that we could not buy certain foods at the grocery store because it was too expensive. When I thought about my future, I never wanted to be "rich", I just wanted to have enough money so that I did not need to know or care how much something cost at the grocery. And that carries through to this day. I don't care about expensive and fancy houses, cars, clothes, jewelry, or other possessions. But as long as I have been an adult, I have bought anything I want at the grocery. Lucky for me, my aspirations were so small that I could be satisfied with a trip down the produce aisle.

This is VERY similar to my childhood. We had so little. Going to the grocery store with my Mom really affected my understanding of "want" vs. "need". I was her little helper at the store. We had one of those little counter machines where you clicked a button for each $ and penny, so that you could track your total amount spent. That was my job...everything that went into the cart...I clicked it on the little plastic device...we watched the total, and my mother had to carefully decide what she could or couldn't afford to put into the cart. Many times we either had to stop shopping or decide what to put back so that we could get something else that was more urgent.

I quickly learned to never ask for candy or anything special at the grocery store. I would have felt horrible asking for something that truly wasn't necessary for our survival.

This, along with drinking powdered milk and always having to wear handme-downs, and being picked on in school for not having nice clothes, etc., really impacted me. Being poor was hard.

It made me quickly realize the difference between want vs need.

I have the same feeling as you. As long as I can buy what I want to at the grocery store (and have my basic needs met), I'm content. I'm a "simple girl". Having my basic needs met and feeling secure and safe are most important to me, followed by having freedom to spend my time as I wish with my loved ones. Everything else is gravy - and yeah - I like things! I just value security and time more.

What's really interesting is that a likely similar situation affected my friend differently - he was impacted more by how little money made him feel in the eyes of others. So, thus, he wants to show others how much money he has by buying expensive cars, etc.

As Simple Girl suggests, if you know why you spend, you can better determine how you should spend.

Exactly. You really have to understand your inner motivations before you can attempt to make a significant change in your spending behavior.

 

[pjigar]

...In your first post you set a goal of cutting spending by 66%, but that's a really big number and it's likely to be pretty painful if you try to do it all at once. Maybe start with 25% this year and then cut another 25% of what's left next year, and so on....

We cut our expenses over 4 years, at at tune of about 5-10% a year. So I second this comment, too extreme won't work.

 

[Markola]

I could not live that way either. I bet there are a lot that do.

Simply having a buffer in the checking account of one month’s expenses, plus auto bill payment on everything possible, would eliminate at least 90% of that hassle and worry.

 

[Koolau]

I was a sailor, and the descendent of sailors, including my father. My brother and cousin were also sailors. The best that can be said of any of us is that we really know how to swear.

While we're slightly off topic, Gumby reminds me of a favorite Jimmy Buffet song.

Returning you now...

 

[Koolau]

Not picking on you specifically Koolau, just using your post to launch from.

I've seen a trend in this thread to blame the wife. I see no reason to make that assumption. I mentioned golf. If OP is a weekly golfer that could explain the credit card totals. I think having a sit down is great but lets not make assumptions about how it will come out. She may be a down to earth girl that does not need luxury travel.

I speak from experience. I do not spend wildly and never have. But I like to travel and like nice hotels. It's really my only indulgence. But my partners have never really cared about niceties so if there were such a discussion about outrageous spending, I would be the one needing to make sacrifices.

Perhaps I've missed it, but I don't see that anyone is "blaming" the wife as much as reminding OP that it's important to include DW in any significant decisions that affect her. Both members of any couple must be on board when changing spending patterns of the couple. I make no judgement on "fault" nor where the "issue" lies. It's just a fact that a couple is made up of two people and they both need to be involved and be in agreement before attempting a significant life change (like cutting spending.)

 

[Texas Proud]

I've seen it in this thread too, and it was annoying.

The OP (male) actually stated in one of his posts above that he is prone to impulse shopping, but the default in many of the replies still seems to be to assume the wife is the one with the spending problem. Some things never change.

I might get something thrown at me but the wife seems to not do much of anything for the home... a nanny takes care of the kids... takes them to kid things... cleans the house... plus another cleaner to clean.. add in the expensive school that takes care of the kids there... to me that is not the norm..


As someone else asked.. what DOES the wife do?

 

[Texas Proud]

This, along with drinking powdered milk and always having to wear handme-downs,

LOL... brings back a memory..... and my mom would make it twice as strong as we did NOT like drinking powdered milk so she wanted us to get more in...


It was not as bad for me with clothes... my brother wore them out so I got new... but cheap new... my sisters learned to sew and made all their clothes...

 

[Koolau]

LOL... brings back a memory..... and my mom would make it twice as strong as we did NOT like drinking powdered milk so she wanted us to get more in...


It was not as bad for me with clothes... my brother wore them out so I got new... but cheap new... my sisters learned to sew and made all their clothes...

I loved hand-me-downs and used clothing. I got a much better grade of clothing to wear compared to what we could afford to buy new. My big sis, still thinks we grew up poor because she wore hand-me-downs from her rich cousins. She is still affected by the experience and she'll soon turn 80. Her kids and GKs, all got (and still get from her) brand new. It's all in how you look at it, I guess.

 

[RetiredHappy]

I am picking on the wife, who doesn't seem to do much and is concerned that her allowance is cut when OP sat down with her to discuss cutting expenses. Who gets an allowance in an "equal" relationship? It should be "we are in this together" mindset.

We both worked our tails off, contributed equally and made joint decision on large expenses.

 

[brucethebroker]

Interesting story on how Nicolas Cage got out from under 6M in debt without bankruptcy. His keeping busy making numerous movies during that time might equate to others taking second jobs/PT gigs to get out from deep debt. "Crummy movies" or not, it sounds like Nic busted his butt to pay the money back. Well done.

https://deadline.com/2023/04/nicola...taken-crummy-movies-pay-back-debt-1235335778/

 

[ivinsfan]

I might get something thrown at me but the wife seems to not do much of anything for the home... a nanny takes care of the kids... takes them to kid things... cleans the house... plus another cleaner to clean.. add in the expensive school that takes care of the kids there... to me that is not the norm..


As someone else asked.. what DOES the wife do?

Yes you might need to duck. Now assuming this all legit, the issue to me is this couple appears to live the lifestyle of someone pulling in a million a year...a few things the OP has said don't really add up. For his example post saying they spent over 10k a month on CC cards and he doesn't know where it goes.. but the thread has had a good run.

 

[Gumby]

While we're slightly off topic, Gumby reminds me of a favorite Jimmy Buffet song.
....

I am exceedingly glad that I no longer have to live in a trailer.

 

[Texas Proud]

I am picking on the wife, who doesn't seem to do much and is concerned that her allowance is cut when OP sat down with her to discuss cutting expenses. Who gets an allowance in an "equal" relationship? It should be "we are in this together" mindset.

We both worked our tails off, contributed equally and made joint decision on large expenses.

Well, I got two BILs who do... to be fair both spouses get the same allowance that they can spend anywhere they want...


But both say their husbands would buy way too much if there was not a limit.. one sis said that she would buy a bunch of small stuff that does not cost much but spouse would buy a new electronic device that cost a bunch... and then say 'well, you bought all that stuff'...

 

[Koolau]

I am picking on the wife, who doesn't seem to do much and is concerned that her allowance is cut when OP sat down with her to discuss cutting expenses. Who gets an allowance in an "equal" relationship? It should be "we are in this together" mindset.

We both worked our tails off, contributed equally and made joint decision on large expenses.

I think we don't know enough about OPs situation and relationship (nor his DW's contributions) to suggest some sort of better "relationship." We know about spending and saving and investing here. Not so much about the best relationship or family dynamic. I'm guessing OP will ask for our advice about such things if he believes there need to be changes in that aspect of his family life.

Honestly, I can barely run my own life, and I give thanks every day for DW who is my equal in more ways than not. So, I hesitate to give more than financial advice - and I advise that not only YMMV but that I've made every mistake in the book before I came up with an adequate financial plan. So take anything I say with a grain of salt (or two.) And, again, YMMV.

 

[Koolau]

I am exceedingly glad that I no longer have to live in a trailer.

Heh, heh, I skipped the trailer and went straight to a slum!

 

[pc95]

Yes you might need to duck. Now assuming this all legit, the issue to me is this couple appears to live the lifestyle of someone pulling in a million a year...a few things the OP has said don't really add up. For his example post saying they spent over 10k a month on CC cards and he doesn't know where it goes.. but the thread has had a good run.

Enjoyed your responses, that's a big assumption - when talks don't go "super good". I've got to wonder about legitimacy.

"Super" has become a loathsome new overused word in the English language. It may overtake "like" even.

 

[Koolau]

Enjoyed your responses, that's a big assumption - when talks don't go "super good". I've got to wonder about legitimacy.

"Super" has become a loathsome new overused word in the English language. It may overtake "like" even.

Or my personal un-favorite "awesome."

Returning you now...

 

[LateToFIRE]

I have a high paying job and we live in a HCOL city. We have 2 kids age 2 and 6. We generally don't worry too much about money and spend what we think we need without a budget, and recently I looked back and saw we spent 300k last year, I haven't yet calculated what it was the year before. My eyeballs about popped out of my head, and I've been overwhelmed the last few days. I really don't even feel like we have a luxurious life, and I'd like to really cut that number down to <100k a year so we can boost our savings rate to >50% of my earnings. I don't even know where to begin to cut down and it's a bit overwhelming. My wife and I are sitting down to go through the expenses and see where we can make changes. We have a >3000 sft house, a fully paid off Tesla and a Toyota SUV. I have . I don't even know if I have a specific question, just looking for advice or tips on how we can start cutting down without us fighting about it and precipitating a meltdown. Should we work with a professional with our level of spendiness, if so who does that kind of thing? Is it too extreme to say we should cut essentially down to zero our CC spending and all discretionary spending for a few months? I have ~150k cash reserves, just under 2m retirement accounts and equity in the home. My income ranges from 350k in a bad year to 450k in a good year, it's pretty variable. This year I'm on track for >500k pretax income, and could earn more by working more, but I don't want to cover up this spending problem by earning more and spinning my wheels harder.
Mortgage 3800 (3% interest rate)
Nanny 2500
School 2000
Insurance (life, disability, umberella, car) - 1000
Credit card 12-15k between both of us per month
(Eating out 500/mo)
(Groceries 1200/mo)

Well, first of all, congrats on establishing a very nice income and NW, especially as you're not even yet 40. I'm 60-ish myself and about to retire, but I've been where you are in the past. HCOL city, high taxes, high spending for what does not quite feel like a luxurious lifestyle.

Don't panic! You've done great so far and no reason that shouldn't continue. IMO, what I'd advise is that you focus on incremental improvements to your spending. As others have said, understanding where the leakage is coming from is important.

Where I might differ from some other commenters is that I'd suggest that unless you're looking to aggressively FIRE pretty young, you focus more on making sure your spending does not increase further, rather than focusing on cutting. Your energy right now belongs primarily with your family and your work.

If you keep pace on earnings and saving as you have, your NW will start compounding rapidly, and at some inflection point in the future, savings from income won't even compare to what you're earning from your assets - your money will be making money for you while you sleep. This is financial magic I wish I had understood much earlier in life.

The key, as stated above, is to find a lifestyle you're comfortable with, prevent further lifestyle escalation, and hedge for the unexpected downside with emergency cash set aside (I recommend one year at your income level and fam situation), and insurance (life & disability insurance).

 

[stephenson]

I'm late to the thread ... was there ever an explanation if why a nanny was needed?

Clearly not sufficient details re actual spending. Taxes for HCOL area seem low if including the house?

Not sure the numbers make sense - and, the credit card thing is hilarious!

 

[Koolau]

^^^^^^^^


OP hasn't responded since 4/21 as nearly as I can tell. Perhaps he is overwhelmed with all our "advice" and wishes to just chill for a while.

In any case, it may be time to just move on.

 

[autonomousdog]

^^^^^^^^


OP hasn't responded since 4/21 as nearly as I can tell. Perhaps he is overwhelmed with all our "advice" and wishes to just chill for a while.

In any case, it may be time to just move on.

Hi everyone, sorry to ghost the folks that wanted an update. Just put the baby back to sleep, and I can't get back to bed, so I thought I'd log back on here and update you now that some time has passed for the changes to take effect, and to see what actual impact they're having on our spending/earning. My marriage survived the financial changes and Mrs. autonomousdog and I really feel like we're a team in our financial life now, whereas it was all driven and planned by me. I'm happy to report that our credit card expenses have come down to 6k between the both of us (the biggest expenses were 800 for washing machine that broke ireeparably, 1700 beach rental for big family vacation with bunch of extended family staying with us, 600 CPA, 900 groceries, 500 restaurants (3 instances of ordering food for a big group of 6-8 family members for get together), 900 Amazon, 400 for my therapist (which I've since stopped), plus small random expenses like special treat ice cream for the kids, pots and plants for the house. Our fixed expenses have been reduced to 8k a month, we renegotiated our internet bill and changed up our auto insurance coverage, etc and smaller changes that together have saved us a bunch. We have decided to keep the cars since it's not worth the hassle to change out at this point, the Tesla is not worth much on the secondary market. The SUV is worth a lot and I may change that out for a used minivan at some point.

I've managed to sell some of my more expensive and unnecessary toys much to my wife's joy (super nice lounge chair for 1k, swiss watch for 4k, old bikes just sitting around x 2 for 500 total). I will say, my wife and I feel more financial stress in general and I think it's because we've never had to explicitly think about our spending and justify it to each other. But it hasn't impaced our marriage at all, which was a big concern of mine. I think we can trim the fat a bit more, and some of those expenses were things like treating our family to eating out with big celebrations, etc that I think are totally justified and appropriate, but not recurrent. I've managed to totally cut out my random eating out habits and cook way more at home. I also stopped my random and frequent treating of the admin staff by buying coffee for everyone and ordering lunch for everyone whenever I felt like it. This has probably saved a bunch, and it hasn't impaced my relationships at work at all. I think when I feel more secure, I Want to do more of this since I'm in a fortunate position that I can and I think they all appreciated the gesture.

The other good thing is I've managed to hit the accelerator at work and my last month's and so far this month's income was higher than it's ever been (45k take home last month, ~35k this month), and since we managed not to blow it all on big expenses and impulse purchases, I'm paying for the next months expenses with what we've saved up from the last month's paycheck. I've also decided that I don't particularly enjoy what I do and the savings will help me to take a break and decide what I want to do next with my life, including how to spend more time with the kids and be more in charge of what I'm doing day to day. My wife is on board with this plan, and agrees that our savings and relatively more frugal lifestyle is the right move for us. I wish I could be totally Mustachian in my spending but I think we're making good progress and it feels sustainable.

We've also opted to go with a cheaper au pair for the next year instead of our more expensive nanny (25k a year approximately) and the older child will be in public school so our expenses will be way less with that, hopefully.

If anyone is interested, I can update at 6 months once our habits are more ingrained. I think the path that we're on now is more "us" and feels more authentic.


Thanks again everyone!

 

[Ronstar]

You're making great progress! And you're not only cutting spending now - you're building a solid plan for the future. Keep us posted as you continue to trim the fat.

 

[Koolau]

If anyone is interested, I can update at 6 months once our habits are more ingrained. I think the path that we're on now is more "us" and feels more authentic.

By all means, keep us posted. Feel free to post on other subjects as well if you feel so inclined. Thanks for the update!

 

[dobig]

Tremendous progress! Very inspirational to hear the drastic changes you've made. Please keep us updated!

 

[The Cosmic Avenger]

That's great, autonomousdog! Yes, please keep us updated.

And don't forget to reward yourselves occasionally, but in line with your new lifestyle. Have one nice restaurant meal a month, or something else that you can look forward to when you are saving what is probably many times that per week having cut back on ordering in/dining out. If you were making less I would say take a trip to walk around a museum or city or tourist attraction, which can often be a cheap to free outing, but you can probably afford, say, pizza for the family if you were in NYC, which is affordable but also a treat.

That's just an example, I'm only getting specific because it sounds like you're still finding a groove, and you'll need to break old habits and find new ones that stick. For me this was easy; I grew up in a very frugal, barely-middle-class household, and after seeing the retirement calculators indicating a very comfortable retirement, we've finally started to live like we're actually upper-middle class, and pull back a bit on savings (now that we're close to retirement). But IMO you're off to a great start!