Refinance the mortgage or get rid of the nanny? FINAL DECISION POST #135 - Page 3 - Mothering Forums
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Frugality & Finances > Refinance the mortgage or get rid of the nanny? FINAL DECISION POST #135
lovemykeiki's Avatar lovemykeiki 08:33 PM 04-08-2009
Quote:
Originally Posted by jentilla View Post
okay I see you pay her $15 an hr. So you pay taxes on her, etc, right? Do you deduct taht as a biz expense?
Yes.

lovemykeiki's Avatar lovemykeiki 08:37 PM 04-08-2009
oops
sogriffin's Avatar sogriffin 09:04 PM 04-08-2009
I think that if we were in that situation, with the info you have given here, I'd have to cut the nanny down to 20 hours a week and dh would have to agree to refinancing the mortgage with a 15 year loan. And of course we'd both have to take a good look at reducing other expenses wherever we can.
I think we would both look it at as a compromise until we could meet our yearly expenses and restock the emergency fund. Once we were back to where we would needed to be financially, then we could start paying the $4500/mo again towards the mortgage and go back to 30hours a week with the nanny.
I just don't see any solutions that don't involve a sacrifice of one or both of your ideals, at least for the short-term.
wahlmn's Avatar wahlmn 09:45 PM 04-08-2009
See some thoughts in red.
Quote:
Originally Posted by lovemykeiki View Post

Accountant - $1500
Auto (fuel, registration, maintenance) - $6200
Bank Fees - $360 Can you find a cheaper bank?
Cell Phone - $1320
Childcare (other than nanny) - $2000 What is this for?
Computer (software, maintenance) - $900
Dues and Subscriptions (business) -m $300
Housecleaner - $3600 This number seems super high! How often do you have a house cleaner? We cut ours back to once a month at about $100-$150 each time
Gifts Given - $600
Girls Classes/Other - $900
Groceries - $6000
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 This sounds high to me too.
Hurricane Insurance - $900
Life Insurance - $3900
Medical (meds, co-pays) - $3600 Can you do a pre-tax account?
Phone (land-line – necessary for business) - $360
Postage and Delivery - $300
Property Tax - $3100
Supplies (business related) - $600
Website (business) - $180
Utilities:
Garbage Pickup - $150
Electric - $4800
Internet Access - $600
Water - $300
Unexpected Issues - $3000

dsaucone's Avatar dsaucone 09:51 PM 04-08-2009
Am I the only one that noticed . . . business and nanny aside, with your DH's expected income of $120,000 and your expected expenses of $130,000 you're still overbudget?

Sorry if this has been said, I tried to read all the replies, but started skimming through towards the end.
Delicateflower's Avatar Delicateflower 09:57 PM 04-08-2009
Why is your power bill so high? Can you cut back on the cleaner, get her less often and do a quick swipe in between? I also think $2000 in childcare in addition to a nanny is a lot! Is this covering her vacation? Can you get a better cellphone deal? Do you both need it for your businesses?
lovemykeiki's Avatar lovemykeiki 09:59 PM 04-08-2009
Quote:
Originally Posted by dsaucone View Post
Am I the only one that noticed . . . business and nanny aside, with your DH's expected income of $120,000 and your expected expenses of $130,000 you're still overbudget?

Sorry if this has been said, I tried to read all the replies, but started skimming through towards the end.
What is your point?

Do you want to help me figure this out? Because your comment sounds more like a slam than helpful. Sorry if I am misunderstanding you.
skueppers's Avatar skueppers 10:11 PM 04-08-2009
Is that life insurance cost for 1 or 2 term life insurance policies, or for whole-life policies? It seems awfully high for term life, unless you and/or your husband are older or have significant health issues. It's typically possible for people under 40 to buy $1,000,000 worth of 20-year term life insurance for under $100/month.

I agree with the other poster about the childcare expenses -- what is that $2000 covering?

You may also be able to find a less-expensive house cleaning option.

Is it possible for you to learn to do whatever the accountant is doing for $1500 a year, or would that just be too time-consuming?

$500 a month seems reasonable for groceries, but what are you spending $250 a month on for your "household" expenses?

Some things I'm not finding on there that are in my budget include:

Clothes/shoes
Entertainment/Travel -- things like dining out, books, movies, day trips, visiting family, whatever.
shayinme's Avatar shayinme 10:19 PM 04-08-2009
Quote:
Originally Posted by Delicateflower View Post
Why is your power bill so high? Can you cut back on the cleaner, get her less often and do a quick swipe in between? I also think $2000 in childcare in addition to a nanny is a lot! Is this covering her vacation? Can you get a better cellphone deal? Do you both need it for your businesses?
Actually if she is working at home, that is probably why her electric is so high.

The first thing that jumped out me is the housecleaner, I would probably get rid of the cleaner.
Knittin' in the Shade's Avatar Knittin' in the Shade 10:36 PM 04-08-2009
From that budget, I'd chop the housecleaner off first thing. If you and DH both work from home, you cand find a way to divvy up the cleaning jobs and get it done without that expense. The homeowner's ins seems awfully high - maybe shop around and see if you can get that lower? The extra childcare also seems quite high - is that for coverage when the nany is sick/on vacation? The computer costs seem high also - $900 a year, you can almost buy a brand new laptop every year for that cost. What sort of software and maintenance is costing that much? There's gotta be a way to whittle that down.
lovemykeiki's Avatar lovemykeiki 10:45 PM 04-08-2009
Quote:
Originally Posted by skueppers View Post
Is that life insurance cost for 1 or 2 term life insurance policies, or for whole-life policies? It seems awfully high for term life, unless you and/or your husband are older or have significant health issues. It's typically possible for people under 40 to buy $1,000,000 worth of 20-year term life insurance for under $100/month.
This was for 2 term life policies - $1,000,000 for each of us.

I just called the insurance company and reduced our life insurance to $750,000 each. I really think it is enough. This reduced the premiums and saved us $500/year.

Quote:
Originally Posted by skueppers View Post
I agree with the other poster about the childcare expenses -- what is that $2000 covering?
That was when our youngest was in a daycare earlier this year, and also covered a few drop-in days. This was a one-time expense and will not be ongoing.

Quote:
Originally Posted by skueppers View Post
You may also be able to find a less-expensive house cleaning option.
I would rather give up other things that give this up.

Quote:
Originally Posted by skueppers View Post
Is it possible for you to learn to do whatever the accountant is doing for $1500 a year, or would that just be too time-consuming?
Too time-consuming and too much over my head, tax-wise. We need the accountant to help us keep things in order. Again, I'd rather cut back elsewhere than give up the accountant.

Quote:
Originally Posted by skueppers View Post
Some things I'm not finding on there that are in my budget include:

Clothes/shoes
Entertainment/Travel -- things like dining out, books, movies, day trips, visiting family, whatever.
Clothes/shoes would fall in the "Household"category.

We aren't doing any traveling right now - no entertainment, no eating out.
lovemykeiki's Avatar lovemykeiki 10:47 PM 04-08-2009
Quote:
Originally Posted by Delicateflower View Post
Why is your power bill so high?
We have tried and tried to get the power bill down, but electricity is very high here. We have all the power-saving light bulbs, we have solar hot water, we turn off lights. We will keep on trying.
dsaucone's Avatar dsaucone 10:48 PM 04-08-2009
Quote:
Originally Posted by lovemykeiki View Post
What is your point?

Do you want to help me figure this out? Because your comment sounds more like a slam than helpful. Sorry if I am misunderstanding you.
No slam meant at all. I'm just pointing out that loosing the nanny and putting the business on hold (which is what the majority of the posts seemed to be talking about - seeing as how loosing the nanny and continuing the business doesn't seem to be feesible) isn't a good solution. You'd still be in the red. That's all.
lovemykeiki's Avatar lovemykeiki 10:50 PM 04-08-2009
About the housecleaner -

We aren't giving her up!

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.
lovemykeiki's Avatar lovemykeiki 10:53 PM 04-08-2009
We are going to do first is try and cut our expenses as much as possible. There is money coming in this month - so it's not like we are dead in the water.
jentilla's Avatar jentilla 11:00 PM 04-08-2009
Accountant - $1500 seems a bit high, but you probably write it off.
Auto (fuel, registration, maintenance) - $6200 [I]If you both work from home, why do you spend over $500 a month for your vehicles. I SAHM and Dh works from home and we spend "maybe" $100.
Bank Fees - $360 new bank, that's ridiculously pricey.
Cell Phone - $1320 Again..you work from home, we have trac phones
Childcare (other than nanny) - $2000 date nights? reduce that.
Computer (software, maintenance) - $900 write off?
Dues and Subscriptions (business) - $300 write off?
Housecleaner - $3600 every week? reduce.
Gifts Given - $600 try cutting those down to homemade
Girls Classes/Other - $900
Groceries - $6000
Home Repair - $2500 what is this for?
Homeowner’s Fees - $170
Household - $3000 what is this for?
Insurance:
Auto Insurance - $900
Dental Insurance - $720
Disability Insurance - $400
Health Insurance - $10,800
Home Insurance - $3000
Hurricane Insurance - $900
Life Insurance - $3900
Medical (meds, co-pays) - $3600
I assume you can deduct some of this, but you LI seems very high.
Phone (land-line – necessary for business) - $360 write off
Postage and Delivery - $300 write off
Property Tax - $3100
Supplies (business related) - $600 write off
Website (business) - $180 write off
Utilities:
Garbage Pickup - $150
Electric - $4800 REDUCE $400 a month?
Internet Access - $600
Water - $300
Unexpected Issues - $3000 is this clothing, etc?

You could likely shave off at least $5,000 and with a refi, even more.
Mama Dragon's Avatar Mama Dragon 11:01 PM 04-08-2009
Quote:
Accountant - $1500 (anything you can do to lower this?)
Auto (fuel, registration, maintenance) - $6200
Bank Fees - $360 (how? I pay $7 a month for gold checking and have free business checking)
Cell Phone - $1320 (can you lower this?)
Childcare (other than nanny) - $2000 (seems weird to have $2k when you're already paying someone else $30k, kwim?)
Computer (software, maintenance) - $900
Dues and Subscriptions (business) - $300
Housecleaner - $3600 (get rid of, or drastically cut down)
Gifts Given - $600 (drastically cut down)
Girls Classes/Other - $900 (cut down?)
Groceries - $6000
Home Repair - $2500
Homeowner’s Fees - $170
Household - $3000 (what is inluded in this? does it include things like paper towels that you can stop buying and use rags instead?)
Insurance:
Auto Insurance - $900 (have you shopped around?)
Dental Insurance - $720
Disability Insurance - $400
Health Insurance - $10,800
Home Insurance - $3000
Hurricane Insurance - $900
Life Insurance - $3900 (ouch - do you need to carry that much?)
Medical (meds, co-pays) - $3600
Phone (land-line – necessary for business) - $360
Postage and Delivery - $300
Property Tax - $3100
Supplies (business related) - $600
Website (business) - $180
Utilities:
Garbage Pickup - $150
Electric - $4800 (can you lower that?)
Internet Access - $600 (can you get cheaper? I'm moving to fiber optic for $20/m cheaper then DSL)
Water - $300 (do you have automatic sprinkers that you can stop using in the summer?)
Unexpected Issues - $3000
Would the nanny quit if you cut her pay? Not a lot, but some? All told, I would not extend my mortgage by 7.5 years to keep a nanny for 2ish.
jentilla's Avatar jentilla 11:04 PM 04-08-2009
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.
Mama Dragon's Avatar Mama Dragon 11:08 PM 04-08-2009
I also had the thought after I posted of finding a smaller (not too small, just smaller) house, you could probably find a good deal on a foreclosure or someone doing a short sale.
p1gg1e's Avatar p1gg1e 11:17 PM 04-08-2009
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.
lovemykeiki's Avatar lovemykeiki 11:18 PM 04-08-2009
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's Avatar lovemykeiki 11:20 PM 04-08-2009
Quote:
Originally Posted by p1gg1e View Post
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's Avatar lovemykeiki 11:24 PM 04-08-2009
Quote:
Originally Posted by jentilla View Post
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's Avatar p1gg1e 11:37 PM 04-08-2009
Quote:
Originally Posted by lovemykeiki View Post
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's Avatar Irishmommy 11:54 PM 04-08-2009
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's Avatar lovemykeiki 12:05 AM 04-09-2009
Quote:
Originally Posted by Irishmommy View Post
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's Avatar Leta 12:11 AM 04-09-2009
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's Avatar Irishmommy 12:42 AM 04-09-2009
Quote:
Originally Posted by Irishmommy View Post
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?
Quote:
Originally Posted by lovemykeiki View Post
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's Avatar dsaucone 12:44 AM 04-09-2009
Quote:
Originally Posted by lovemykeiki View Post
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's Avatar Emmama 12:49 AM 04-09-2009
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 .
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