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

[skyking1]

DW's - ahem, personal maintenance may be more than yours. If you try to send her to a new hairdresser, your life may be in danger.

@MarieIG, that made me giggle.
I do the opposite with my DW. She spends so little on herself and has said for years she was going to quit going to Marco.
" no honey you keep seeing him. "
I know what it means to her.

OP, I hope you come back and take in the good advice above. Don't despair. Take in on a little at a time.

 

[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.

 

[The Cosmic Avenger]

Personal finance writer Michelle Singletary advises a 21-day financial "fast" to get a handle on spending...you might want to start with a week, though! Change can be difficult and scary, but seeing how different your life is without those purchases can show you what's really important to you and what isn't missed at all. https://www.washingtonpost.com/busi...83e5b2-ad94-11e5-b820-eea4d64be2a1_story.html

 

[Jerry1]

First - relax. It’s never good to make decisions under stress.
Second - As has been said, spend time to get to know all your spending. Set up a spreadsheet or use a program like Quicken and get some data to work with.
Third - Set some goals. Do you have a savings goal? A goal to pay off your house? A goal on when you’d like to retire? A goal of how you want to live your life (time with family).

Take six months, get the data and have conversations with your spouse so you know you’re both on the same page. Agree and create a plan and implement the plan.

Being shocked by your spending and just trying to cut spending without some thoughtfulness is not a road to success. It’s easy to cut spending, but it’s more important to plan out your life. Do that and the spending will be easier to handle.

 

[Teacher Terry]

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.

I too wonder if this could possibly be real.

 

[Love This Community]

OP can probably cut down his expenses by $100K just by following the great advice given so far.

Post # 14 by intent is spot on.

 

[Chuckanut]

Here's a thread that might be of interest. Learn from the masters.

https://www.early-retirement.org/forums/f29/cheapwad-finds-opposite-of-blow-that-dough-115254.html

I feel like we need a thread for bargains that we find. I am thrilled with 7-11. My regular Starbucks order (iced cafe latte in summer/hot in winter) ran me $6. Some 7-11's now have these fancy self-serve new machines that make my lattes just as good as Starbucks. I bring my own cup and pay a refill price of $1.69. Every 7th drink is free. I also acrue fuel points. Today I got 11 cents off every gallon. I'm delighted with this find.
What is your cheapwad find?

 

[EastWest Gal]

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.

Maybe troll, maybe real.

His first and only post was at ~12:30AM Mountain time.
His profile puts him in Colorado.
He included no information about himself.
He introduced himself in Fire and Money Forum.
He's online now, when he should be working.

Autonomousdog, feel free to introduce yourself in the "Introduce Yourself" Forum if you are really here for advice.

 

[savory]

I think you received good advice so far but my starting point would be different. I would answer the question about what age would you like to stop working. Develop an expected spending budget for that age. Then determine the savings required to reach that goal. As suggested many times here, find a retirement calculator you respect.

Then review your spending based on what you need to save.

 

[Rianne]

I think most posters here are frugal and dissect spending month by month. I know we do. And we do forward-thinking for the budget as well. I realize there are unknowns for future spending so a cushion is always necessary. OP's post seems desperate. Not much thought for that huge CC spending. And for a first post, seems like a last resort for help.

OP, maybe your response or comment is needed. We're spilling our guts here.

 

[Chuckanut]

Being shocked by your spending and just trying to cut spending without some thoughtfulness is not a road to success. It’s easy to cut spending, but it’s more important to plan out your life. Do that and the spending will be easier to handle.

+1

Whatever changes you make must be sustainable. Given your earnings you have a lot of room to live well and save more, so there's no reason to go overboard.

 

[Chuckanut]

I think most posters here are frugal and dissect spending month by month. I know we do. And we do forward-thinking for the budget as well. I realize there are unknowns for future spending so a cushion is always necessary. OP's post seems desperate. Not much thought for that huge CC spending. And for a first post, seems like a last resort for help.

OP, maybe your response or comment is needed. We're spilling our guts here.

FWIW, during the crisis of 2008 I found out that a number of people at my church who lived in big homes in the hills of a very upscale neighborhood, were living paycheck to paycheck. They had huge on going expenses on top of an already big mortgage. Leasing fancy cars, replacing older but functional appliances with newer fancier models, drinking $30+ bottles of wine every day, redecorating the house with new furniture and drapes every 5 years, new garden layouts, country club memberships, etc. etc. etc. When their income dropped by 20% they were in big trouble. I don't think they realized just how unbelievable their situation was to the rest of us who did things like spending a 1/2 day fixing the 12 year old clothes dryer to get another year or two out of it.

 

[SnowballCamper]

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.

I think this is really good. While OP does spend a lot, it appears that it's less than income.

This approach avoids the nit-picking of individual expenses from one spouse to the other, and just says, LBYM. It's how I/we managed to retire early.

 

[Sunset]

He hasn't mentioned any income for his wife. I agree with you, though- for two-income couples a nanny can be more cost-effective and a life-saver when you have multiple kids with different school and activity schedules.

I have to wonder if the wife doesn't work. Why pay $30K per year for a nanny

If the wife works at a good paying job, then the nanny makes total sense.

 

[MichaelB]

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)

Welcome to our forum. Sounds like you’re so busy working, making money and living you haven’t sat down to figure out where you want to be financially 10 or 20 years from now.

Folks here will give you plenty of helpful advice. The only think I’ll add is you need to have financial goals, or the advice may not be relevant. Like Alice in Wonderland

One day Alice came to a fork in the road and saw a Cheshire cat in a tree. ‘Which road do I take?’ she asked. ‘Where do you want to go?’ was his response. ‘I don’t know,’ Alice answered. ‘Then,’ said the cat, ‘it doesn’t matter.”

You can help your cause by telling us a bit about yourself

 

[ivinsfan]

There is no way you spend $180K on your credit card per year and you don't know where the money is going.

I'll be your professional! I work on a commission basis and will only charge you 0.1% in perpetuity on what I save you.

Yes a 100% if it's not spent on eating out or the like STUFF is coming into your home a lot of stuff. I'm not saying it's not stuff you dont need but saying you don't know where it goes makes zero sense...

 

[ivinsfan]

Is your spouse employed is that the nanny expense?


What your goal here? RE , less hassle at work, a bigger nest egg? Fleshing that out might get you some clarity.

 

[rodi]

Welcome to the forum.

Some of your spend categories make sense to me - Nanny, school, etc. The elephant is the credit card spend... You need to figure out WHAT is being put on the credit card. Like Andre said, it's a method of payment, not a spend category... I put everything from health insurance and car insurance, to travel, and to dining out on my credit card to maximize the cash rewards.

What helped me get ahold of my spending was to find ways to divert money before it was available for spending. I contributed monthly to the kids 529's, I maxed the 401k and ESPP, I had monthly deposits into the investment account, I made extra principal payments to my mortgage... That left less to live on -but I was still pretty comfortable. By diverting to savings/home equity, I couldn't spend unlimited... so I'd stop to think about whether I had the money for bigger purchases.

Now you're in a different income bracket than I was, but the principle is the same.... Pay yourself first. It seems obvious, but I had so many discussions with coworkers about why they couldn't max their 401k, or do the full 10% of salary to discounted stock purchase through ESPP and that their kids were going to need scholarships. I'm retired, they're still working.

 

[autonomousdog]

+1

Whatever changes you make must be sustainable. Given your earnings you have a lot of room to live well and save more, so there's no reason to go overboard.

You are both really right - I'm in panic mode right now and I don't want to make drastic changes right away without thinking deeply, but at least I'm forced to look at this closely now. I feel bad I've been spending like a zombie but I'm so grateful to run into this forum, [mod edit] and others to reset my expectations.

 

[autonomousdog]

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.

 

[autonomousdog]

Maybe troll, maybe real.

His first and only post was at ~12:30AM Mountain time.
His profile puts him in Colorado.
He included no information about himself.
He introduced himself in Fire and Money Forum.
He's online now, when he should be working.

Autonomousdog, feel free to introduce yourself in the "Introduce Yourself" Forum if you are really here for advice.

Haha good detective work. I am indeed in Colorado, MST. The little one was up at midnight, I walked her around and put her back to sleep, and couldn't sleep because my wife and I are meeting about this today while the nanny is watching the kids to figure this out a little bit. Was reading [mod edit], and these forums and signed up for an account in panic mode to ask my question!



I typically work 4 days a week so I'm online on my day off Got to make breakfast wtih the kids, went for a massage and a run, and then have our financial meeting today just the wife and I!



thank you! I'm really here for advice and to learn. Honestly, comparing this to some of th reddit subreddits, you are all so amazing, welcoming, and knowledgeable - I think I found my tribe. I'd love to stick around and learn from you all if allowed!

 

[autonomousdog]

I usually counsel to cut back or stop eating out, but $500 a month doesn't seem outrageous in your situation. Neither do the nanny, school, or insurance. I'm not seeing utility costs - are those included in your credit card spending?

So, to echo everyone else: What's going on with the credit card spending? Many of us barely spend $15K in a year, let alone one month. Vacations/travel? Those can be negotiated downward, although it would feel hard to go back from luxury level travel, once you've experienced it.

Oh, and I'm curious: Your list doesn't include help with the housework and yard care - are you really doing your own?

I didn't do a full breakdown because I didn't think it was totally relevant but I should have in retrospect. I can come back after my wife and I meet later today and report what we came up with. WE have no budget as of now, I think that's the smartest place to start and just monitoring what is happening with money will be key.



No, we don't clean the house or do the lawn ourselves - I'm just getting into [mod edit] and just fixed a hole in the wall made by my almost 2 year old myself rather than calling a handyman, so that's a start I really want to change, I don't like how mindlessly I spend this valuable resource that could be used for much better things.

 

[BlueberryPie]

Not trying to keep up with the Joneses is the #1 way to cut expenses.
I drive a Kia even though I can afford a Tesla (well, it's now so engrained in me that my brain tells me I can't afford a Tesla, even though the math says I can).

Set a savings target and put it away first, before you spend money on anything else, it will force you to spend money more consciously. You can afford the fancy dinner, the cute pair of shoes or the latest iPhone model, but not all 3. Which one will make (both of you) happiest?

It's amazing how many things you can live without even though you start thinking you couldn't ever do without them.

 

[autonomousdog]

You don't say how old you are, but given the age of your kids I would assume 30-40. If your job is stable, I would counsel the opposite and continue doing what you are doing. Spend time and money with your kids when they are young. Let them have wonderful memories rather than Dad always trying to save money. My nest egg was made between 40 and 57 when I retired from my own business. You've already started accumulating even with your current expenses which don't appear extreme to me. The only important item which I don't see are 529 plans for your kids college. Although your income is good it is not enough to pay for college out of ordinary annual cash flow unless your income increases substantially.

Thank you, You're spot on about my age. My job is very stable I think, but who really ever knows and I'm in a leadership position so I'd have an early warning if I'm getting axed. MY goal is to be able to save a lot more so I can spend less time at work and spend more time with the kids. I do work 4 days a week typically but the 5th day has some spillover work/meetings/etc. So all in all a good life, but I feel rushed most of the time and I really want to be much more available for my kids (a la [mod edit] who has been a recent inspiration). I do not currently have 529's for the kids, I'll set that up asap.

 

[ivinsfan]

Haha good detective work. I am indeed in Colorado, MST. The little one was up at midnight, I walked her around and put her back to sleep, and couldn't sleep because my wife and I are meeting about this today while the nanny is watching the kids to figure this out a little bit. Was reading [mod edit] these forums and signed up for an account in panic mode to ask my question!



I typically work 4 days a week so I'm online on my day off Got to make breakfast wtih the kids, went for a massage and a run, and then have our financial meeting today just the wife and I!



thank you! I'm really here for advice and to learn. Honestly, comparing this to some of th reddit subreddits, you are all so amazing, welcoming, and knowledgeable - I think I found my tribe. I'd love to stick around and learn from you all if allowed!

Well add a 5th day of work since your work is so lucrative...