Refinance the mortgage or get rid of the nanny? FINAL DECISION POST #135 - Page 5

[lovemykeiki]

Thanks Ladies for continuing to reply!

This is so fabulous to have your input and your reality checks.

THANK YOU!!! :

Wonderful... I'm feeling better already!

[lovemykeiki]

Originally Posted by p1gg1e

Id not Refi. Id cut back on the hours of the nanny or the house keeper. You said your DH's income may go down. I know its sounds harsh but you may have to put your feelings , wants ( even your dh will have to himself ) comforts, aside. This isn't a SAHM vs WOHM thing you aren't making enough to justify the nanny....mainly the reason I don't work , I like being a WOHM mom better but its just not something that I can afford right now.

Your DH is right to have a 15 yr loan , that's not the issue, the added nanny , house keeper and expenses are. Take care of your 4 walls first. Its reality.

The expenses are going to be cut back first.

Nanny and housecleaner are going to stay as is for now.

Like I've said before - childcare is a *shared* expense in our household. I am not responsible for making enough to pay the nanny. DH and I share that. We both value the nanny/childcare.

[lovemykeiki]

Originally Posted by jentilla

Well with 5,000 sq ft I see how your bills are so high. Have you guys thought about downsizing? We have a 3/2 with 3 kids and 1700 sq ft. Dh has a home office. Now sometimes it feels tight, but moslty b/c we are a bit disorganized right now. Just a thought.

We've thought about it, yes.

I have to admit - our house is comfy for us. We are total homebodies and we love to be home. We would rather spend money on a mortgage than on entertainment/meals/other stuff. So, having a nice home works for us homebodies.

[p1gg1e]

Originally Posted by lovemykeiki

The expenses are going to be cut back first.

Nanny and housecleaner are going to stay as is for now.

Like I've said before - childcare is a *shared* expense in our household. I am not responsible for making enough to pay the nanny. DH and I share that. We both value the nanny/childcare.

How is it shared? I know you say it is but how do you see on paper that it is? If switched roles how would you see it? Its not a sexist issue either its a money flow issue , with the time expense kids throw into the mix.

[Irishmommy]

You have 5000 sq feet. Is there any space you can separate out and take a tenant/lodger for a year or two? Own bedroom/bathroom/shared kitchen kind of thing?

[lovemykeiki]

Originally Posted by Irishmommy

You have 5000 sq feet. Is there any space you can separate out and take a tenant/lodger for a year or two? Own bedroom/bathroom/shared kitchen kind of thing?

That is a possibility that we have discussed. We have a completely separate apartment that has a full kitchen, etc. We could rent it out as a short-term vacation rental if needed.

[Leta]

Okay, I've read this whole thread with a magnifying glass, and this is just MHO.

I would at least reduce the nanny hours. I have a mild SN child, and I completely understand the utility of having another trustworthy and talented person there for your child. Completely.

Having said this, I think it is probably realistic to cut out all or most of the business for the time being, and start up again in seventeen months. If you halve your nanny's hours, you will be saving $15K per year- maybe not a deal breaker, but a whole lot nonetheless, especially when combined with other trimmed expenses. Then, when your youngest starts school, you could maintain your nanny's hours at 15 per week, and start up your business again. Between school and 15 hours per week of nanny time, that seems to me like it would be enough to WAH full time or close to it.

I would not sell my house, nor would I refi, even with the low rates. You are looking at having a house valued anywhere from $500,000 to $1,000,000 (ah, the crazy market) paid off in 7 or so years. I absolutely would move heaven and earth to stay on that track.

[Irishmommy]

Originally Posted by Irishmommy

You have 5000 sq feet. Is there any space you can separate out and take a tenant/lodger for a year or two? Own bedroom/bathroom/shared kitchen kind of thing?

Originally Posted by lovemykeiki

That is a possibility that we have discussed. We have a completely separate apartment downstairs that has a full kitchen, etc. Right now DH uses part of it as his workspace. The other part is our guest room. The guest room is empty most of the year. We could rent it out as a short-term vacation rental if needed.

See, I'm brilliant.

You're welcome.

[dsaucone]

Originally Posted by lovemykeiki

Ok - here is a basic budget. The total for this is $67,000.

I said $75,000 because I'm conservative and like to have a cushion for when stuff happens - like the washer/dryer going out, trip to the ER, septic tank backing up, etc. That sort of stuff that life throws at you.

Also, I'm sure I've missed a few things and I want to make room for that stuff by padding it a bit. I don't have time right now to get a line-by-line budget prepared for you all to look at. Maybe later...

I've also included every expense relating to personal and business, so you see the big picture.

Ok - help me whittle this down!

Accountant - $1500
Auto (fuel, registration, maintenance) - $6200
Bank Fees - $360 Find free/checking savings?
Cell Phone - $1320 Cheaper plan options?
Childcare (other than nanny) - $2000 No longer an expense as I understand from one of your posts?
Computer (software, maintenance) - $900 Is this a business expense? It's awful high.
Dues and Subscriptions (business) - $300 Are these ALL business? Or are some personal that could be gotten rid of?
Housecleaner - $3600 Gone
Gifts Given - $600 Homemade or significantly cut
Girls Classes/Other - $900What sort of classes? If it's anything unnecessary, Gone.
Groceries - $6000 If this is for food only, it could be cut back a bit.
Home Repair - $2500
Homeowner’s Fees - $170
Household - $3000
Insurance:
Auto Insurance - $900
Dental Insurance - $720
Disability Insurance - $400
Health Insurance - $10,800
Home Insurance - $3000
Hurricane Insurance - $900
Life Insurance - $3900 shop around look at what each covers, is it worth it?
Medical (meds, co-pays) - $3600
Phone (land-line – necessary for business) - $360 Shop around for cheaper alternatives.
Postage and Delivery - $300
Property Tax - $3100
Supplies (business related) - $600
Website (business) - $180
Utilities:
Garbage Pickup - $150
Electric - $4800
Internet Access - $600Again, shop around.
Water - $300
Unexpected Issues - $3000

I realize not everything is doable as some people consider necessary what others don't.

[Emmama]

I have read this thread and I, also, am not trying to be harsh, this is just what I would do from what I see on paper.

It's hard giving up comforts that we have been used to, but its necessary when we have to survive. ANYTHING that is not home, food, clothes, and transportation is negotiable.

1) I would not refinance or sell the home, I would set the business aside temporarily. We had to stop contributing to our Roth IRA's for a couple years to get on track financially and it was tough and we didn't want to do it, but we survived and looking back, I wouldn't do it any other way. I read that you say it is important to both of you to have the nanny, but if you are making 25K and the nanny is 30K, you are in the negative with that. I had four kids in five years... I HAD to stay at home because I couldn't afford to work. I wouldn't have made enough to cover childcare costs. I hear that you don't want to stay at home (that you hate it) but on paper, you can't afford the nanny.

2) I would cut down on housecleaning. Not forever, just until things get on better track.

3) Cut down on all utilities as much as possible.

Again, I know its tough and it won't be comfortable, but it isn't forever .

[wifeandmom]

Originally Posted by Delicateflower

But everyone expects to lose money in the first year of a business. It would not cost their family if her husband would agree to reducing their exorbitant mortgage payment. Do you think $4000 a month is reasonable or affordable?

It's impossible to say whether or not a mortgage of *any* amount is "reasonable" or "affordable" without an idea of the bigger picture.

In this particular case, I wouldn't want a mortgage that high on $120K/yr. But I also wouldn't want one that high on $200K/yr. DH makes considerably more than that, and our mortgage is considerably less than the OP. It's really all about what you feel comfortable with, and that's going to vary widely from person to person.

And I can totally understand why her DH wouldn't want to re-finance into another 15 year mortgage. They're already half way to paying off their house. That would mean a HUGE monthly obligation is just gone. Finished. Done.

[wifeandmom]

I added up exactly what you listed and came up with $63,360/yr. Add in the mortgage payments, and you're at $117,360.

Assuming your DH does indeed bring in $120K this year, that's $2640 extra from his salary.

If your business makes $25K, and you pay the nanny $30K, using the extra from your DH's salary, you're at a difference of $2360.

You can come up with $2360 off of your expenses listed (i.e. I saw where you said the life insurance will go down by $500/yr).

The biggest problem I see with that is you have *zero* listed for savings. Now, if you truly are miserable without your nanny, I would personally be OK with not saving much of anything for the next 17 months as long as you feel confident that your DH's business is secure.

I totally understand where you are coming from not wanting to give up your nanny. I don't have a nanny, but we pay out a lot of money every month for household help that I would *not* want to give up. So I get it. I really do.

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.

[Free Thinker]

Hi! I hope you don't feel too judged by this thread. I htink I feel some of the judgement b/c I have a lot of things I don't 'need' either, but I really likel them! I am a WAHM and my DH WAH, too. We have a 5000sqft house like yours, and we each have seprate offices, ect., so I do get it! I really do! I am saying all that so you can qualify my answer I think right now you need to look at the overall family picture and not at your indivudual businesses. You need to make the household budget work with what your DH is now bringing in. I am not going to say a lot about our situation, but I'll just say we have no idea how much (or little) we will make this year. No idea! We are going over business expenses and household expenses and trying to make it work. I think taxes are an important issue that hasn't been raised yet, is the 120K before or after taxes? What about your 25K? If you have to pay taxes on the 25K you make, at the rate you make as a family, that's about 1/3 of your income gone to Uncle Sam! That means you really aren't making much at all Of your expenses, I see the accountant as very important, and I would suggest meeting w/ him soon to go over your proposed budgets and tax info for this year. Ours has said to be extremely frugal business-wise as well as household-wise. The goal is to make it thru this hard time, and still be there when it gets back good again If I were in YOUR shoes, this is what I would do.

1. Get rid of the nanny except for 2 afternoons a week, and those afternoons are yours to enjoy.
2. Reduce the cleaning lady to 2x per month, you still get SOME cleaning, but it's cut in half.
3. Put your business on hold for now, and focus on the household budget.

I know this isn't what you want to hear, and I know that you really want to keep living the way you have been, but this is only for a short time! My DD#2 goes to kindy in 2010, too We are strong women and we can do ANYTHING for 2 years. You can do this! It takes a lot of sacrifice, but you need to think long term and paying off that house is the best way to really get ahead in the long-run. Just think, in 7.5 years your home will be paid off and you will have a lot of extra wiggle room! If things get worse this year, you need to take these steps NOW, and preserve the cushion you have. Refinancing the house, and taking out equity to live on is a cushion that you have, and you need it to be there as much as possible for the uncertainty we are facing.

I know this is big for you. Feel free to PM me if you want. These are hard decisions to make, and we have to find a way to balance family, our needs and wants, and financial responsiblities at the same time.

[lovemykeiki]

Originally Posted by Irishmommy

See, I'm brilliant.

You're welcome.

Yes, you are brilliant!

And thank you for your input!

[weliveintheforest]

It's only a small drop in the bucket but I bet you can cut your cell phone bill back quite a bit, by at least 15-20 dollars a month.
If you call them and tell them what you are willing to pay they will probably work with you, there may be a plan or option that wasn't available when you set yours up. Especially if you use the words 'I want to cancel'. If you say you want to cancel they will probably put you right through to the cancellations people who will do anything they can to keep you as customers, including finding you a better deal.

[weliveintheforest]

I also wanted to mention that you may be able to bundle your phone, internet and cell to get a better deal, if you are not in a contract for those already.

[lovemykeiki]

Thank you to those of you who have been supportive. I was on the verge of asking the mod to remove this thread because of the negative vibes... but the last few posts have been sooooo kind - even when you felt that you had to present me the "negatives".

Thank you for your kindness.

I know I don't need to justify my Motherhood or my Love for my Children to anyone... I know what I know and I know it's all good...

I also feel that - in this economy - to provide someone else with a job (our nanny) - is a positive thing. I like being an employer and making a way for someone else to make a living. It's a good thing to do. I know that our nanny is a very cool person with a lot of wonderful skills, and I feel privileged to have her in our household. I'm GLAD that she is here, and she is like a respected member of the family.

DH and I talked further, and like I said earlier - our first focus will be on reducing all of our non-essential expenses. We can knock those down, I'm sure of it.

Thanks again to those of you who have been so helpful and non-judgmental of our lives. You are the best of MDC.

[lovemykeiki]

Originally Posted by Free Thinker

I know this is big for you. Feel free to PM me if you want. These are hard decisions to make, and we have to find a way to balance family, our needs and wants, and financial responsiblities at the same time.

Thank you for your kind response!

[lovemykeiki]

Originally Posted by wifeandmom

And I can totally understand why her DH wouldn't want to re-finance into another 15 year mortgage. They're already half way to paying off their house. That would mean a HUGE monthly obligation is just gone. Finished. Done.

I know. I know.

[homewithtwinsmama]

Definitely refinance to a 30 year fixed! Congress passed a law that just went into effect whereby you can refi with your current mortgage lender even if you don't have 80/20 loan to value and still not have to pay PMI. I am in the middle of a refi now and will lower our monthly payment by $400 (going from one 30 year fixed to another 30 year fixed, you would save more). Stay put, keep your steady child care as that is priceless and grow your business.