Refinance the mortgage or get rid of the nanny? FINAL DECISION POST #135 - Page 7

[skueppers]

Glad to hear your husband came around to the idea of refinancing!

[Equuskia]

I don't know where you live, but if you have to run the a/c a lot during the summer, know that there are hybrid a/c units now. My auto air mechanic showed me some of the units he sells. They are like solar water heaters, but also draw some electricity. However, they are much more economical than a regular a/c, and they will make your bill plummet, especially here that electricity here is about 16-19 cents a kwh. He told me that the split unit system only cost $1800, which is about what regular ones cost here. Considering how much you pay in electricity a year, it sounds like a worthy investment.

[lovemykeiki]

Thanks for the support again, ladies.

DH hasn't officially agreed to the refi, but he is willing to seriously research it. In the meantime, we are cutting expenses.

Things are good, we have a plan.

[Delicateflower]

Originally Posted by lovemykeiki

So, yesterday DH called his Dad (the one with the PhD in Finance) to get his take on the idea of refinancing.

FIL agreed it was a reasonable possibility. So DH feels better about the idea and will research it further.

He clarified with me that my idea was to refi, make lower monthly payments and re-build the EFund. Then double up on mortgage payments again. I said, yes, that was my idea.

::

[SleeplessMommy]

Looks like the cost of electricity in HI is 20-35 cents per KWH. 2-3 times what is common on the mainland! There are rebates and 0-2% financing available for photovoltaic - if you live in HI.

A refi on the house is sounding good!

[Delicateflower]

Originally Posted by SleeplessMommy

Looks like the cost of electricity in HI is 20-35 cents per KWH. 2-3 times what is common on the mainland! There are rebates and 0-2% financing available for photovoltaic - if you live in HI.

A refi on the house is sounding good!

That explains it, then.

[Ellien C]

To the OP, I'm glad the financing is looking good for you.

I have one other thought that I don't think I've seen out there - since DH's income is expected to be smaller, does that equate to him spending less time on work? Could HE take on some of the childcare, cleaning or other home upkeep?

[wifeandmom]

Originally Posted by wifeandmom

Now, the other two questions I have for you are these:

1. If you've got $120K from your DH and $25K from you coming in, and what you listed is really what's going out, you shouldn't be pulling more than $2640 per month from savings. Compare that number to what you are *actually* pulling out every month. How do they compare? If it's more than $2640, you either don't have as much coming in as what you think or you have more going out than what you think.

2. I am assuming that you've accounted for all taxes and such when you say DH brings home $120K and you bring home $25K. Is this the case? If you've got to pay taxes on the $120K and/or the $25K, we're talking a whole different ball game.

I posted this earlier, and after going to bed that night, I realized that the $2640 you're short is for the entire YEAR, not one month. If you divide out by 12, you should really only be $220 per month short assuming you can make the list you posted work.

If you've been pulling more than $220 per month out of savings (when averaged together over time of course), then something is off. Either you're spending more somewhere than you think or you're not bringing in what you think. Sometimes, that's the hardest part...figuring out what you've truly got coming in and truly going out.

And the tax thing...this is all after-tax money we're talking about, right?

[2cutiekitties]

Originally Posted by Delicateflower

She's not adding another 7.5 years, she's adding however long it is until she can resume making payments at the level they are now. I would assume that would be when her business is making enough or when the younger child goes to school and the nanny hours drop dramatically. Probably about 18 months.

I think you need to stop pushing this point. This is such an idealized way to look at it. If everyone was like this, no one would ever get a tax refund. It is not practical for a lot of people. You know what would happen? LIFE. Life is what happens while you are making plans. Something would come up and they would not pay extra on the mortgage and it would end up being a 30 year.

[Pinoikoi]

Originally Posted by 2cutiekitties

If everyone was like this, no one would ever get a tax refund. It is not practical for a lot of people.

I have a mortgage at 0% interest. Obviously it does not help my tax situation at all.. not to veer this conversation off course, but even people WITH mortgages still sometimes have no tax advantage from it.

[vbactivist]

Originally Posted by Delicateflower

Can I just point out that work isn't always about money?

well, in this case it's costing the op money to work. If someone had a hobby that was very satisfied, yet cost $5,000 a year and was posting here about financial issues, most people would say - ditch the $5,000 a year hobby - you obviously can't afford it. I think it has less to do with WHAT she's doing than the COST of what she's doing.

[vbactivist]

Originally Posted by lovemykeiki

About the housecleaner -

We aren't giving her up!

We would rather cut back on date night than give up the housecleaner. Ha!

Seriously, we have a large house. 5000 square feet. We both work at home and have home offices, so we fill out this space. I know it sounds like a lot, but consider what it would cost us to rent the space for our offices and you can see that buying the bigger home was a better deal. Instead of paying rent money to some office building, we are paying our "rent" to ourselves.

And because the house is so big - it is hard to keep up with. So having the housecleaner 3 hours a week is great. We still have to clean, too.

Earlier you said no eating out or entertainment, whatsoever. What are you doing for date night that you can cut expenses? Also, you ahev a lot of things you say you don't want to cut back on. What DO you want to cut back on? Also, 30,000 a year, perhaps your nanny could do some of the housework - 30,000 a yer seems high for part time child care, in addition to the drop in days for your one child at the center, etc...

I think you need to look into a less expensive childcare option, or one with more 'value', ie does some light cleaning whe she only has the one child, etc...

[Delicateflower]

Originally Posted by vbactivist

well, in this case it's costing the op money to work. If someone had a hobby that was very satisfied, yet cost $5,000 a year and was posting here about financial issues, most people would say - ditch the $5,000 a year hobby - you obviously can't afford it. I think it has less to do with WHAT she's doing than the COST of what she's doing.

It's not a hobby, it's a business. She is in the first, growing phase of her business. She's investing her time and effort as part of a business plan that projects $50,000 profit after five years. And, at the same time, she has an easy option to ease the financial pressure for the next 12-18 months.

[phathui5]

Your yearly mortgage payments are almost half of your dh's income, and being self-employed means that your income isn't a fixed number you can count on.

Could you refinance to a 30-year mortgage?

[lovemykeiki]

THE FINAL DECISION!!!

OP here -

I thought this thread was done, and you nice women have kept it going!

Here is the Final Result:

DH and I talked.

We are going to refinance the mortgage to another 15 year mortgage and lower our monthly payments.

We are going to cut our living expenses.

We are keeping the nanny - in order to build up my business.

We are going to take any extra money and build up the emergency fund again to 9 months' savings.

THEN - we will double up on the mortgage payments again.


DONE - that is the final decision.

We can always revisit this if needed.


So - I'm done posting to this thread. Thank you for your assistance!!!

[papayapetunia]

Your plan sounds good. I'd look at the nanny and the refi as a business investment. A lot of people making negative comments probably don't understand business investment and start-up. You've been able to build your business to $25K a year. $50K is not unreasonable. To quit now would be completely stupid. As would making it harder for yourself by losing the nanny. It's hard to focus on building your business when you don't understand delegating taks to others. As a business owner, I've delegated tasks that I thought I couldn't afford to delegate, only to find that it freed me up to do the things that really make my business grow.

I think you're on the right track.

[Equuskia]

Originally Posted by papayapetunia

Your plan sounds good. I'd look at the nanny and the refi as a business investment. A lot of people making negative comments probably don't understand business investment and start-up. You've been able to build your business to $25K a year. $50K is not unreasonable. To quit now would be completely stupid. As would making it harder for yourself by losing the nanny. It's hard to focus on building your business when you don't understand delegating taks to others. As a business owner, I've delegated tasks that I thought I couldn't afford to delegate, only to find that it freed me up to do the things that really make my business grow.

I think you're on the right track.

I completely agree. It really is hard to work with no childcare. And it sounds like the nature of the OP's job does not allow children to be underfoot. I understand there are some WAH jobs that can integrate children, but some simply can't. (like lawyers, psychs, etc) And considering that she also mentioned that her DH works at home too, he is also benefiting from the nanny, so really, you could say that the nanny is costing them each $15k. Plus, the fact that his business is going down is MORE of a reason for her to stay in business because her business is going up. Closing up shop now could be disastrous.

I think you made a great decision and I wish you success OP!

[ell]

The reality is that for now, your expenses exceed your means. Unfortunately, this is going to mean taking a hit somewhere in your lifestyle. Whether it's the size of your home, your additional help, or somewhere else in the budget, it's going to have to be modified. So you have a choice: You can cut essentials like insurance, or you can cut non essentials like housekeeping or nanny expenses. It's crappy, if you're used to having certain things taken care of, but the reality is you can't afford these things right now. Outgoing is simply greater than incoming. It sucks. It will continue to suck. But dipping in to your savings or going into any further debt is really a bad idea. And what you want to do is unfortunately going to need to take a back seat to what you have to do.

Sorry.

[Rico'sAlice]

I'm sure your DH already works very hard, but if his business is "slow" perhaps he (or you) could take on a part-time job. And if he could squeeze in 20hrs working evenings at Starbucks you could even get health insurance.