Prepping for a reduction in income - Mothering Forums

Forum Jump: 
 
Thread Tools
Old 09-24-2013, 01:07 PM - Thread Starter
 
mumm's Avatar
 
Join Date: May 2004
Location: Massachusetts
Posts: 1,603
Mentioned: 1 Post(s)
Tagged: 0 Thread(s)
Quoted: 6 Post(s)

I've been a SAHM for about 12 years now with DP earning the only income.  Within the next 24 months she will be getting a "promotion" that will actually drop our income substantially (by 80%!) for about 3 years.  It will then go back to where it is now for about a year and then slowly increase until retirement at age 65.  So while it will be very painful for the short term in the long term it is better for our family.

 

We plan to pull about 100k from a retirement plan to use over those 3 years but that still leaves us with far less than we've become used to.

 

What should I do to prepare for that time?  We tend to be frugal but not consistently.  I don't want to scrimp on kids activities (sports mostly but also social events).  This feels very different from when we didn't have the money.  Now we are used to being able to eat meat, buy the new hair band all the other girls on the team have, eat the good peaches from the orchard not just the seconds, etc.

 

If you've done this how did it work?  Or not work?  I really do not want to take on any debt but I'm also not sure where I could cut back.


Me.  With 1 spouse, 4 kids, 16 chickens, 74 matchbox cars, 968,562+ legos, a dishwasher waiting to be emptied, a washing machine waiting to be filled and a lost cup of tea in the house.

mumm is offline  
Sponsored Links
Advertisement
 
Old 09-27-2013, 07:50 PM
 
Staceyy's Avatar
 
Join Date: Jul 2006
Posts: 247
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
I would begin by learning as much as you can about frugality. I would also start stockpiling food, toiletries etc.and money.
Staceyy is offline  
Old 09-27-2013, 09:56 PM
 
zebra15's Avatar
 
Join Date: Oct 2009
Location: State of Confusion
Posts: 4,746
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 22 Post(s)

I would explore the tax implications of pulling the retirement funds to live on.  Do you plan on repaying the retirement funds?

Is there any way you can work for those years to make up the deficet?

I would also start stockpiling now both food, non food and cash.

 

what type of 'promotion' resuts in an 80% pay cut?


Mom to J and never-ending , 0/2014 items decluttered, 0/52 crafts crafts completed  crochetsmilie.gif homeschool.gif  reading.gif  modifiedartist.gif

Seeking zen in 2014.  Working on journaling and finding peace this year.  Spending my free time taking J to swimteam

zebra15 is online now  
Old 09-27-2013, 10:01 PM
 
zebra15's Avatar
 
Join Date: Oct 2009
Location: State of Confusion
Posts: 4,746
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 22 Post(s)

You are you going to have to cut back wher eyou dont want to.  That means the kids activites, those 'hair bows' all the other kids have, the social events.  

You might qualify for financial assistance for kids programs, you might quailfy for food stamps and medical.

Learn to meal plan, shop the sales and coupon, 


Mom to J and never-ending , 0/2014 items decluttered, 0/52 crafts crafts completed  crochetsmilie.gif homeschool.gif  reading.gif  modifiedartist.gif

Seeking zen in 2014.  Working on journaling and finding peace this year.  Spending my free time taking J to swimteam

zebra15 is online now  
Old 09-28-2013, 05:11 AM
 
EmsMom's Avatar
 
Join Date: Dec 2001
Posts: 1,387
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 10 Post(s)

Well, you have two years to prep for 3 years of reduced income, with an understanding that your income will get back to the same level at the end of that 3 years.  So for the next two years, if you live at around 30% of your current spending level, you can maintain that for 3 years.  First you will want to know what your actual take home will be: I would imagine taxes would be less - you may even drop down into the lower tax bracket.  Then figure where you can save $.  Determine what your necessary spending is - food, mortgage, utilities.  Then figure out your un necessary spending.  Prioritize.  Cut expenses -  refinance - reduce car insurance amounts - sell expensive car and replace with a beater - sell unnecessary items in your home - learn to love your local library (free books, movies, etc.) - find free entertainment in your area  - etc.

 

I would start living at that 20% income right now while you have some leeway and just stash everything else away, either in the bank or towards debt if there is any.  Whether you can successfully live at 20% of your current income depends entirely on what your current income is.  If you are earning $100000 a year and go to $20000 it is one thing.  If you start at $20000, whole 'nother story.

 

you also have two years to get an established side income going.  Doable.

EmsMom is offline  
Old 09-29-2013, 08:01 AM - Thread Starter
 
mumm's Avatar
 
Join Date: May 2004
Location: Massachusetts
Posts: 1,603
Mentioned: 1 Post(s)
Tagged: 0 Thread(s)
Quoted: 6 Post(s)
Quote:
Originally Posted by zebra15 View Post

 

what type of 'promotion' resuts in an 80% pay cut?

commercial pilot.  Going from a commuter/feeder to the major airline.  So basically from the captain of a small plane to the first officer of a much larger plane.  All senority based so the good schedule and possibility of overtime turns into a cruddy schedule of basically sitting at the airport for 80 hours a week to cover the flight of delayed pilots, etc.   Plus the salary drop from about $120 to $25K.  (The median income in my town is currently $220k.  We qualify for low income housing here with an income of only $120k.)

 

We cannot cover our non-negotiable items on $25K (mortgage, gas, water, electricity, phone, insurances, medical etc).  We looked at loans but the penalty for early withdrawal is less than interest.  Plus it doesn't have to be paid back when our income is still low.

 

I can't imagine working!  The childcare costs would negate whatever I made.  I was the primary breadwinner pre kids, but my earning potential is nothing right now.  And the kids (one who is ill) keep me pretty busy while DP will only be home, at most, one day a week.

 

I guess I'm just scared!  I grew up on government cheese and 5 kids in a bedroom.  I much prefer how we've been living (a car that I know will start when I need it!  a fridge full of decent food!  new cleats when the kids outgrow theirs!)

 

I need to bite the bullet and start living like our salary has dropped 25%!


Me.  With 1 spouse, 4 kids, 16 chickens, 74 matchbox cars, 968,562+ legos, a dishwasher waiting to be emptied, a washing machine waiting to be filled and a lost cup of tea in the house.

mumm is offline  
Old 09-29-2013, 11:34 AM
 
Join Date: Oct 2010
Posts: 2,342
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)

Definitely look into ways to bring in more income. Every bit helps. I've seen some good ideas on frugality blogs. I was raised on the Tightwad Gazette and though some of it is a little dated there is a lot good there too. Definitely start now to overhaul your lifestyle in order to scale it down--learn to shop sales, garden, plan meals, buy kids' clothes, toys, presents, etc. secondhand. Make improvements to the house to make it more efficient and lower bills. Get the car in tip-top shape and get it paid off if it isn't already. Refinance the mortgage if feasible and would lower payments--or look into moving. (Yeah, refinancing stretches out your payments, but there's nothing to say you can't pay more in later years.) If you have student loans and can't get them paid off, put them in forbearance when your income drops. Kids would surely qualify for Medicaid and maybe the two of you would as well. Would the kids qualify for scholarships for stuff like sports? Food stamps would be an option, and perhaps WIC depending on the ages of the kids. You could look into a part-time job and trade childcare or services with another mom, or babysit a little to earn extra income. I think also some of the frugality stuff can be fun for kids--trying to find new recipes to cook with foods, trying to stretch a dollar or make a bottle of shampoo last, coming up with toys out of items that they have on hand, helping with gardening and cooking and canning, stuff like that. You can talk about how much money you save by doing X instead of Y. 

erigeron is offline  
Old 09-29-2013, 09:39 PM
 
Satori's Avatar
 
Join Date: Jan 2003
Location: Earth, I think, kids say Cybertron
Posts: 7,730
Mentioned: 2 Post(s)
Tagged: 0 Thread(s)
Quoted: 9 Post(s)
Quote:
Originally Posted by mumm View Post

Quote:
Originally Posted by zebra15 View Post

what type of 'promotion' resuts in an 80% pay cut?
commercial pilot.  Going from a commuter/feeder to the major airline.  So basically from the captain of a small plane to the first officer of a much larger plane.  All senority based so the good schedule and possibility of overtime turns into a cruddy schedule of basically sitting at the airport for 80 hours a week to cover the flight of delayed pilots, etc.   Plus the salary drop from about $120 to $25K.  (The median income in my town is currently $220k.  We qualify for low income housing here with an income of only $120k.)

We cannot cover our non-negotiable items on $25K (mortgage, gas, water, electricity, phone, insurances, medical etc).  We looked at loans but the penalty for early withdrawal is less than interest.  Plus it doesn't have to be paid back when our income is still low.

I can't imagine working!  The childcare costs would negate whatever I made.  I was the primary breadwinner pre kids, but my earning potential is nothing right now.  And the kids (one who is ill) keep me pretty busy while DP will only be home, at most, one day a week.

I guess I'm just scared!  I grew up on government cheese and 5 kids in a bedroom.  I much prefer how we've been living (a car that I know will start when I need it!  a fridge full of decent food!  new cleats when the kids outgrow theirs!)

I need to bite the bullet and start living like our salary has dropped 25%!

We're is that jaw dropping icon when I need it? You make more in a year then I have in entire life and I'm no spring chicken. I would be thrilled to make $25k a year, that said I would sell the house because you won't be able to afford it. Replace the cars with paid for decent cars. Start stock piling now. Sock away everything you can. Sports are expensive from team fees to uniforms and are luxuries, unless the kids get a full scholarship that covers everything sports are out. Learn to coupon like a pro. Babysitt a child or 3 or get a job. You say you need to do xyz but your also refusing to work, figure it out but you must start bringing in income. You at least have lots of warning, most folks get none.

Seriously?
Satori is offline  
Old 09-30-2013, 05:32 AM
 
justmama's Avatar
 
Join Date: Dec 2002
Location: beginning anew
Posts: 5,727
Mentioned: 3 Post(s)
Tagged: 0 Thread(s)
Quoted: 21 Post(s)
instead of paying for daycare, do you have family or friends around who might do a babysitting trade so you can work? it sounds like your partner doesn't have a set schedule so you can trade off with the children and both work. so maybe trading off with friends would work better and keep you from paying for daycare.

treehugger.gifjog.gifgreenthumb.gifknit.gifnamaste.gif

justmama is offline  
Old 10-03-2013, 08:54 AM - Thread Starter
 
mumm's Avatar
 
Join Date: May 2004
Location: Massachusetts
Posts: 1,603
Mentioned: 1 Post(s)
Tagged: 0 Thread(s)
Quoted: 6 Post(s)
Quote:
Originally Posted by Satori View Post


We're is that jaw dropping icon when I need it? You make more in a year then I have in entire life and I'm no spring chicken. I would be thrilled to make $25k a year, that said I would sell the house because you won't be able to afford it. Replace the cars with paid for decent cars. Start stock piling now. Sock away everything you can. Sports are expensive from team fees to uniforms and are luxuries, unless the kids get a full scholarship that covers everything sports are out. Learn to coupon like a pro. Babysitt a child or 3 or get a job. You say you need to do xyz but your also refusing to work, figure it out but you must start bringing in income. You at least have lots of warning, most folks get none.

$25K for a family of 6 puts us far below the poverty level.  Our current income qualifies us for low income housing, so for where we live it isn't much.  The area's COL must be considered.

 

Selling my house would be stupid.  Then I'd need to buy a new place to live and this house cost less than $200 15 years ago.  It is assessed at $600K for tax purposes now after lots of work.  We remortgaged recently and have stopped paying ahead on the mortgage like we have for the past 15 years.   Our cars are oldish but paid for and should, with care, make it another 5 years or so.  We garden, raise some meat and eggs, and I've never seen coupons for the things we buy.  We purchase grains, rice and sugar in bulk (with a coop).  We already thrift shop for clothes and household items.  Sneakers need to be new (or mostly new) if a kid is going to be wearing them everyday.

 

I don't consider kids activities like sports a luxury in the society I live.  When you consider the exercise and the confidence boost, along with the social opportunities it provides I think it is valuable.  Gymnastics and hip hop classes, group dodgeball- yes a waste of money and I say no.  Soccer, basketball, cross country, swimming all feel valuable.  There aren't other kids just hanging around to play with.  They are all at sports or activities too.


Me.  With 1 spouse, 4 kids, 16 chickens, 74 matchbox cars, 968,562+ legos, a dishwasher waiting to be emptied, a washing machine waiting to be filled and a lost cup of tea in the house.

mumm is offline  
Old 10-03-2013, 09:48 AM
 
JamieCatheryn's Avatar
 
Join Date: Dec 2005
Location: SW Pa
Posts: 5,070
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 13 Post(s)

If the cost of living is so high it will be that much harder to live on a severely reduced income. Any way to move to another area and keep the job level? I don't know the dynamics of the airline industry but since it's travel, maybe she can? Let me give you perspective here, your moderate house is worth $600k. You sound like you have equity in it. My fairly luxurious house is worth $130k, my neighbors' decent moderate places are $50k. You could buy a decent place cash in some places. We are rich for here at 40k a year or more but have to watch the budget carefully. Pinching pennies in food and clothes costs is a start but will only get you so far. Some part time jobs you can work with your kids around or around their schedules, like babysitting, maybe housekeeping. And under poverty level, what was a necessity, like organized extracurriculars, may well become a luxury you may need to cut. Don't dismiss even wild ideas too quickly. Make the budget and consider what big and small changes are possible, even if improbable.

JamieCatheryn is online now  
Old 10-03-2013, 07:19 PM
 
mommaof3boz's Avatar
 
Join Date: Feb 2006
Posts: 1,485
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 5 Post(s)
It makes no difference if the sport are valuable where you live if you can't afford them. Food and housing and clothing are a necessity. Poor sucks. No one living poor wants to go without the extras but they do. Your partner could keep the same job for several more years and pay off everything possible before changing jobs. You will lose 25-30% of a 401k with early withdrawal. If they will even let you have it. We were told unless its medical bills or foreclosure you can't have it while you are still employed at the company. I work two jobs and my dh works 40-50 hours per week. You sometimes have to do things you don't want to survive.
mommaof3boz is offline  
Old 10-04-2013, 06:33 AM
 
sunflower.mama's Avatar
 
Join Date: Apr 2008
Location: Boston suburbs
Posts: 689
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)

If you have significant equity in your home, how about tapping into it in the form of a HELOC for  your budget shortfall instead of cashing in retirement? It would be more flexible to repay that when your income increases, and would not have a penalty. While you are at it, you could refi your main loan while your income is high and reduce your payments, even if the interest rate is similar to what you have, if you have paid down significant principal since you last financed the home.  Finally, and this is a somewhat desperate idea, but in the interest of making this work and staying in your home, perhaps go to an interest-only mortgage (if those even still exist) for the time that income is low?


Katherine mother to DS 8/03 and DD1 9/06 and DD2 6/10
sunflower.mama is offline  
Old 10-04-2013, 08:31 AM
 
EmsMom's Avatar
 
Join Date: Dec 2001
Posts: 1,387
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 10 Post(s)

The truth is that with your current income and the equity you must have in your house, this is very doable.  However, it does not appear as if it is doable if you want/need to continue your current exact lifestyle.  You could sell the house, pay cash in a lower cost of income area (even if your partner had to be away from the family during the week maybe even renting a room if she needed to; it sounds as if dp is already gone much of the time).  If you have low taxes and no mortgage payment, $25000 is totally doable.  If you don't want to sell, you could rent out your current house and rent a small cheap one in a cheaper area.  Obviously, moving has the problem of school changing for your kids.  Depending on their needs that could be huge.  If you stay where you are, tap the equity in the house as needed.  But if you can just cut your expenses by 50% for the next couple of years you would have cash savings to get through the re-training period.  Other options would include converting part of your house into one or two studio apartments and renting them out to nice quiet single people who would probably be thrilled to have something in such a high expense area.  If one or more of your kids is older, perhaps they could take part time jobs and contribute to household expenses.  You may need to go radically out of the box here!

EmsMom is offline  
Old 10-04-2013, 09:58 AM
 
Join Date: Oct 2010
Posts: 2,342
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)

Also, if you really do pull 100k out of retirement, once you add the penalties, how much is your retirement going to be down and how long will it take to replenish that? That's a big consideration too. A few years of "living poor" would be worth not taking that hit to your later standard of living, imo. 

erigeron is offline  
Old 10-04-2013, 11:22 AM
 
zebra15's Avatar
 
Join Date: Oct 2009
Location: State of Confusion
Posts: 4,746
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 22 Post(s)

FWIW- we are way below the poverty line. My kiddo is on swiim team.  If you are with USA swimming (most competitive teams are) they offer scholarships/sponsorships depending on the level of your swimmer. If your kids are on teams with the school, the school has the ability to sponsor kids.

Have you looked at the library for programs.  Most libraries have kids and teens programs which are FREE.

City run programs, rec center programs tend to have scholarships and sliding scale fees as well.

 

I agree with  a PP, this may not be the best time for a job/career change.

 

To do this you are going to drastically change your way of living.  Are you really ready and able to do that?


Mom to J and never-ending , 0/2014 items decluttered, 0/52 crafts crafts completed  crochetsmilie.gif homeschool.gif  reading.gif  modifiedartist.gif

Seeking zen in 2014.  Working on journaling and finding peace this year.  Spending my free time taking J to swimteam

zebra15 is online now  
Old 10-06-2013, 04:39 PM
 
wildmonkeys's Avatar
 
Join Date: Oct 2004
Location: Metro DC
Posts: 1,620
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)

I would not pull 100K from retirement.  Between the penalties and the interest you would be losing - I would find another way.

 

I agree with the suggestion to see if you can use your equity to help fund this change.  I would also plan to find pt work and make some lifestyle changes. For instance, my kids do play sports (spending $150 for an entire season provides them lots of exercise and entertainment); however, we don't do many of the camps in the summer that the neighbor kids do....they are super expensive. I run rather than paying for a gym membership, etc.

 

I would change how you cook and shop for food and do the obvious cutting of eating out, going to the movies, vacations, cable or at least cable channels, etc.

 

We made a similar change about 4 years ago when we moved into a much more expensive house/school district.  The money that we have to spend each month was effectively cut in half because our mortgage payment more than doubled.

wildmonkeys is offline  
Old 10-06-2013, 06:17 PM
 
starling&diesel's Avatar
 
Join Date: Nov 2007
Location: West Coast, Canada
Posts: 3,813
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 14 Post(s)
How old are your kids? Can they be in on this as a family project? Can you let them know what the trade offs are going to be?
Some quick thoughts about what I would do (we actually went through something like this, but going from 80k to about 30k so that I could stay home with the kids).
I'd move to a cheaper COL area if it would at all work for your DP to get to and from work.
Maybe rent out your place, and get an apartment for a while, somewhere cheaper.
Do you have smart phones? Get rid of them. Or at least dumb them down to pay-as-you-go.
Cable? Get rid of it. Netflix is endless, and so is the internet.
I'd get rid of the cars, but likely your DP will need one to get to and from work, so in your case, keep the one that is more economical.
I'd try to live on 50% of your current income now, and sock away the rest. If you can do that for three months, then I'd squeeze down to 40%, and so on.
Start scaling back Christmas and birthday expectations, more as a positive lifestyle move rather than a punitive measure.
I'd look for night time work, or work with shifts that will compliment your DP's schedule, if it's wonky. This can include overnight asleep shifts at group homes, overnight babysitting, considering foster care of adult care in your home.
There's also enough time in there that you could do some vocational training. Dog grooming, aesthetician, hair dresser, care aid ... these are things that you could be certified for and work out of your home.
What did you do for work before kids?

If moving is AT ALL possible, I'd look at this as if you NEEDED to move for the betterment of your family. I'd approach it as if this was a job transfer, or educational upgrade ... two things that we'd move for and take a financial hit for, even if it was hard on the kids. Children are resilient, and it's okay for them to feel disappointment or sadness or resentment, especially if the lesson in all of this is how to maked choices that are good for the whole family.
It would be hard on the kids, sure, but it might be easier to adjust in a different town.
In the same vain, I'd tell them that they could pick one sport each for the next few years.

Also, keep track of every penny that you spend now. Every. Single. Penny. You might be surprised how much is oozing out for things like coffee, ready-made meals, entertainment, gifts, vacations, gas to all your kids' activities, etc.

Good luck with it! Sounds like a great opportunity!

dust.gifFour-eyed tattooed fairy godmother queer, mama to my lucky star (5) and little bird (2.5). Resident storyteller at www.thestoryforest.com. Enchanting audiostories for curious kids. Come play in the forest!
starling&diesel is offline  
Old 10-07-2013, 10:54 AM - Thread Starter
 
mumm's Avatar
 
Join Date: May 2004
Location: Massachusetts
Posts: 1,603
Mentioned: 1 Post(s)
Tagged: 0 Thread(s)
Quoted: 6 Post(s)
Quote:
Originally Posted by starling&diesel View Post

I'd move to a cheaper COL area if it would at all work for your DP to get to and from work.
Maybe rent out your place, and get an apartment for a while, somewhere cheaper.
Do you have smart phones? Get rid of them. Or at least dumb them down to pay-as-you-go.
Cable? Get rid of it. Netflix is endless, and so is the internet.
I'd get rid of the cars, but likely your DP will need one to get to and from work, so in your case, keep the one that is more economical.
I'd try to live on 50% of your current income now, and sock away the rest. If you can do that for three months, then I'd squeeze down to 40%, and so on.
Start scaling back Christmas and birthday expectations, more as a positive lifestyle move rather than a punitive measure.
I'd look for night time work, or work with shifts that will compliment your DP's schedule, if it's wonky. This can include overnight asleep shifts at group homes, overnight babysitting, considering foster care of adult care in your home.
There's also enough time in there that you could do some vocational training. Dog grooming, aesthetician, hair dresser, care aid ... these are things that you could be certified for and work out of your home.
What did you do for work before kids?
 

Moving is not an option.  Isn't going to happen.  DP could be, in the future, based just about anywhere in the us.  We are in MA, she's been based in MA, TX, NY, IL and FL in the past 10 years.   DP is going to be gone from the house at a minimum at least 4.5 days per week.  We are used to her sleeping at home two nights a week.   I have less than 4 hours per day when the kids are in school.  Kids are 6-13.  Oldest is smart and kind and competent but has OCD.  Depending on the day he can be a complete basket case requiring my full attention.  We'd hope adolescence would help him get past his quirkiness but it has only exacerbated his troubles.

No cable, no netflicks, no hairdresser or pets.  We already shop thrift.  We don't celebrate Christmas and we don't do gift for birthdays.  (We celebrate, but don't do gifts.)  We heat our house with wood (bought but I split and season it) and keep it about 62F.  We live quite frugally already.  Our outrageous hobbies (I like to do long distance triathlons where the entry fees tend to be $200+ a race.  That has stopped. bawling.gif  I'm keeping my race bike for when this has all passed.)

I have my M.Ed. and was an administrator.  I have a teaching certification for k-9 and am looking into substitute teaching.


Me.  With 1 spouse, 4 kids, 16 chickens, 74 matchbox cars, 968,562+ legos, a dishwasher waiting to be emptied, a washing machine waiting to be filled and a lost cup of tea in the house.

mumm is offline  
Old 10-07-2013, 10:55 AM - Thread Starter
 
mumm's Avatar
 
Join Date: May 2004
Location: Massachusetts
Posts: 1,603
Mentioned: 1 Post(s)
Tagged: 0 Thread(s)
Quoted: 6 Post(s)
Quote:
Originally Posted by sunflower.mama View Post
 

If you have significant equity in your home, how about tapping into it in the form of a HELOC for  your budget shortfall instead of cashing in retirement? It would be more flexible to repay that when your income increases, and would not have a penalty. While you are at it, you could refi your main loan while your income is high and reduce your payments, even if the interest rate is similar to what you have, if you have paid down significant principal since you last financed the home.  Finally, and this is a somewhat desperate idea, but in the interest of making this work and staying in your home, perhaps go to an interest-only mortgage (if those even still exist) for the time that income is low?

No idea what that is.  Off to check it out!  Thank you.

We just refi the house.

We'd been quoted a 7-17% penalty for early withdrawal but have calls in to figure out exactly.

 

EDIT- Never heard of the abbr.  Yes.  We've looked.  Typically 2.49/3.25apr.  Not sure it is worth it.


Me.  With 1 spouse, 4 kids, 16 chickens, 74 matchbox cars, 968,562+ legos, a dishwasher waiting to be emptied, a washing machine waiting to be filled and a lost cup of tea in the house.

mumm is offline  
Old 10-07-2013, 12:08 PM
 
SunRise's Avatar
 
Join Date: Apr 2005
Location: CNY via Canada
Posts: 1,535
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 1 Post(s)

Well, maybe do not pull all 100K at once. Plan to take what you need once a year or twice a year.

Budget your basics and absolutes (mortgage, bills (heat, phone-dsl, water - what ever they are); food, some activities for the kids). Pay your mortgage at the beginning of the month and the bills, when they are due.  Put 20 dollars in your pocket and dont spend it, behave like it has to last until.... Don't spend anything else until it is absolutely necessary.

 

If you ever put money into a Roth you can withdraw the cost basis without penalty. You may also transfer retirement money to a Roth account and then maybe withdraw it.

 

And then, I think you will find you do not need half the things you typically spend money on. (clothes, shoes, eating out, - make do with what you have until they are with holes or grown out of).

 

It can be done, and it can be eye opening to how much is spent just because you have the money.

 

(I recently was downsized from 5 days to one day a week which was a huge pay cut, I lived carefully before, had 30% money going to savings and still had extra money so little daily or weekend extras were not a big deal. ... now I'm on a very tight budget, but each month my mortgage and bills are paid, food on the table and kids in a couple activities and we are OK.) I also scour craigslist once in a while  for any day jobs that may interest me, in order to make some pocket money.


Sara - Mum to C (10/02) ; m/c 10/07; 7/08; 3/09; Lucy Olive Feb 28, 2010 !
SunRise is offline  
Old 10-13-2013, 02:57 PM
 
Satori's Avatar
 
Join Date: Jan 2003
Location: Earth, I think, kids say Cybertron
Posts: 7,730
Mentioned: 2 Post(s)
Tagged: 0 Thread(s)
Quoted: 9 Post(s)

All I can say is just wow... you live a privileged life and unless your willing to make some major changes your in for a very rude awakening.


Seriously?
Satori is offline  
Old 10-13-2013, 05:53 PM - Thread Starter
 
mumm's Avatar
 
Join Date: May 2004
Location: Massachusetts
Posts: 1,603
Mentioned: 1 Post(s)
Tagged: 0 Thread(s)
Quoted: 6 Post(s)
Quote:
Originally Posted by Satori View Post
 

All I can say is just wow... you live a privileged life and unless your willing to make some major changes your in for a very rude awakening.

 

Thanks for the help and understanding!   I am privileged but not in the way you tried to insult me with the word.

 

Life is what you make it.  I don't think most people would consider being dumped and then raised in numerous crappy foster homes as privileged.  I worked full time while going to a state college on a scholarship.  We worked our tails off to pay off college debt before grad school.  Finished grad school without owing a penny.  We never ever took on debt without knowing how it could be paid (our mortgage).  We've had illness setback and struggles. I don't think taking a snapshot at one point in person's life give you much insight into what the ride was like.

You can't make assumptions about a "rude awakening".  I already lived that life.  I already picked maggots off my food on a daily basis.  I've known the kids didn't want to sit near me at school because I didn't have a place to bathe and my clothes were dirty.  I've known the look of teachers who don't want to bother with me because I'm just passing through.

 

Maybe I got where we are by luck, but I think much has to do with planning ahead and not making rash decisions.  Just as I am trying to plan ahead now so I don't have to struggle as much down the road.  I plan and then follow through, and it has produced much of my privileged.

 

But, Satori, thanks for offering help when I reached out a hand for advice.  Your kindness was noted.


Me.  With 1 spouse, 4 kids, 16 chickens, 74 matchbox cars, 968,562+ legos, a dishwasher waiting to be emptied, a washing machine waiting to be filled and a lost cup of tea in the house.

mumm is offline  
Old 10-13-2013, 08:30 PM
 
Satori's Avatar
 
Join Date: Jan 2003
Location: Earth, I think, kids say Cybertron
Posts: 7,730
Mentioned: 2 Post(s)
Tagged: 0 Thread(s)
Quoted: 9 Post(s)

You have asked for advice yet you seem unwilling to give up anything so how are we supposed to take it? I would love for my kids to have extracurriculars but at this point I don't even know where the rent money is coming from much less how were going to pay anything else. I would love to have the extra money to play with that you do, right now we have 1 space heater to keep us warm and I dread running it the few hours a day I do because its so expensive but its cheaper then oil. My kids need winter clothes that fit and today I noticed my 13 yo shoes need replacing since they are starting to come apart but I can't afford it. I didn't get enough hours on this paycheck so I won't have enough money to pay for gas to get to work next week which means we will get caught in a vicious cycle of needing to take time off because I can't get to work then I don't make the money and again can't afford gas, and thats if I don't get fired for calling in sick due to lack of gas money. There is no public transit here and its over an hour commute so I can't exactly bike to work. I didn't ask to live in poverty, I had a good job when my oldest was born and she was born sick, I haven't been able to work much since due to her disability. Your lucky you have a partner who can support you and you have vast resources IMO, I mostly live on SSI now and its not much so to me to see your lifestyle and the amount of money you have at your disposal is mind boggling. If I had $2k a month to live on I would feel really rich and would be thrilled. I have been there, I didn't cut things like I should have and it was a huge wake up call, one day the bottom fell out, we were down to 1/4 of a roll of TP, had no clean laundry, no clean diapers and no money to wash much less soap to wash with, the car was on empty (and the payment way overdue), the electricity and phone was about to be shut off and we were almost out of food. I didn't have a penny to my name. A friend gave me $20 and taught me how to make it stretch till it screamed. If I had listened to my friend BEFORE things were that bad and had stopped spending money like I had lots I wouldn't have had to hit rock bottom like that and I certainly would not have an obsession with TP stocking that I do today lol. My point is, what I thought was a necessity wasn't but I didn't realize that until it was the frivolous thing or clean clothes/diapers, frivolous thing or gas to get to the Dr. I thought I NEEDED all those things I had but after the wake up call I got a major education in whats actually necessary. Sports are not NEEDS, they are WANTS and if your facing needing to go down to NEEDS you need to start seeing whats an actual NEED vs a WANT and I'm seeing a lot of WANTS in your list. Your home is worth half a million, I could live for 20 years on that and live well, I couldn't afford to live in the city I work so like everyone else I commute an hour and a half each way (thank you construction! grr) each day I work but thats as close as I could get rent wise. A nice home is well and good but you can't afford to maintain it on only $25k a year, a single repair could seriously be an issue and left undone could lead to a major repair bill. What if you need a major repair? A new roof? HVAC goes out, major appliance dies, I would LOVE to own my own home, a mortgage would be cheaper but the cost of maintaining a home is not something I know I can afford. Even on $25k a year unless I owned the home free and clear but even then its risky. I understand you don't want to change your lifestyle but you know this is coming and if you don't get into a better position now your going to find yourself in dire straights later.


Seriously?
Satori is offline  
Old 10-14-2013, 01:26 AM
 
Poddi's Avatar
 
Join Date: Feb 2003
Location: BC, Canada
Posts: 1,911
Mentioned: 1 Post(s)
Tagged: 0 Thread(s)
Quoted: 3 Post(s)

We're kinda living through this - reduction of income.  DH quit his job to start a small business, and we don't expect to see much income in the first couple years.  We did save up for this, we got enough savings to last a while.  Although it's helpful that we were never wasteful to start with.  I don't know how old your kids are.  We told our kids long before he quit.  Everyone's on board.  We all cut our monthly allowance by half, reduced spending on birthdays and other gifts.  Chose cheaper activities and loaned movies from the library.  We didn't change our eating habit, I'm just more careful with planning and try to waste as little as possible.  I also shop at the thrift store more and ordered online less (I was rather addicted to Land's End shopping before).  Overall it's not very hard.  I would say anything you cut out, try to replace it with a cheaper option or healthier habit.  Don't just cut out things and sit at home and do nothing.   You might find your life feel even fuller and your family feel even closer together after this.  Good luck with your transition!


Mom to 2 beautiful autistic boys (12 & 11)  
Poddi is online now  
Old 10-14-2013, 10:11 AM
 
JamieCatheryn's Avatar
 
Join Date: Dec 2005
Location: SW Pa
Posts: 5,070
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 13 Post(s)

I've rented before, having to pay for a repair yourself is better than having to live with things breaking and never getting repaired at all then getting charged your deposit over it, which is what happens in a rental.

 

Coming from a hard life to a more privileged one presents it's own obstacles. You've earned this life and never want to go back, I get it. You want better for your children. My husband is the same way, he and his mom often were out of money and lived off his foraging avocados, oranges, anise, and mussels and fish. In one of their homes he lived in a pantry, in another he slept in the living room. Once he was homeless living in a tent, though he made the best of that. Now that he makes pretty good money he does NOT want to get too frugal, he won't leave the thermostat at a setting where he's not comfortable, and major things like picking a cheaper house or putting off repairs aren't options for him. As a result we can't ever quite dig ourselves out of debt, though we never miss payments. Radical choices can make a huge difference. Many tiny ones might keep you afloat if that's all you want.

JamieCatheryn is online now  
Old 10-14-2013, 03:10 PM
 
Join Date: Oct 2010
Posts: 2,342
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)

My concern would be in the attempt to not scale back their lifestyle too much, that the OP and her family might end up hosing their retirement so much that they can't recover later. Unfortunately, there is no easy way here to avoid having to pull from retirement (or a HELOC or whatever). If they are projecting to need $100k, then making some minor tweaks might mean, what, only needing $90k? Not a big difference. Only a big lifestyle change will avoid that. And she doesn't want to make that. And with the 20-year plan looking the way it does, then everything will probably turn out fine... unless something happens. Long-term disability, major illness, ??? And if something does happen, I'd hate to be that person who had borrowed a ton of money from my retirement to keep my kids in sports and stay in the super-expensive suburb. 

erigeron is offline  
Old 10-14-2013, 03:39 PM
 
Vaske's Avatar
 
Join Date: Jan 2009
Location: The cold, cold North
Posts: 324
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 1 Post(s)

If you add up your retirement accounts, equity in your house, and expected partner's income in the next two years or so, you might be getting close to being able to have both of you take an early retirement--if you can live very frugally somewhere that has a much lower cost of living.

Vaske is offline  
Old 10-15-2013, 01:04 AM
 
LoveOurBabies's Avatar
 
Join Date: Dec 2011
Location: In an Australian kitchen
Posts: 621
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 1 Post(s)

I don't think satori is trying to be mean. I think what she is saying is that you have the means to make it on this new proposed income, but are unwilling to distinguish between want and need. This is where you'll be headed into trouble. FWIW, I think sports are an "extra" and not a necessity. Doesn't matter if everyone else is doing it and your kids will be the only ones left out, it's still not a necessity. You are essentially teaching your children that by remaining in an activity the family cannot afford, that it's okay to keep up with the joneses at any cost.

 

A drastic change in income is NOT doable if there isn't a drastic change in lifestyle. It's as simple as that. I'm sorry to be so blunt, but after spending 3 weeks working and re-working our budget to accommodate my dh's very unexpected job loss (and a 70% reduction in income), I have learned that to stay afloat in a high COL area on very little money, much sacrifice needs to be made in every department.

 

Best of luck mama. 


Me: DH:

Our babies: Our researcher Our comedian Our boundless energy Our streaker Our cuddly bear
LoveOurBabies is offline  
Old 10-15-2013, 08:27 AM
 
justmama's Avatar
 
Join Date: Dec 2002
Location: beginning anew
Posts: 5,727
Mentioned: 3 Post(s)
Tagged: 0 Thread(s)
Quoted: 21 Post(s)

I had to say no to my daughter today for All-State Chorus.  It was $15 to register, $65 if she was accepted, and then the cost of driving 25miles one way at least once a week for rehearsals.  The cost along with the time commitment was just too much.  Did I feel like a total jerk?  Yeah.  Was she disappointed?  Yeah.  But she's doing 2 after-school classes for free at her middle school instead.  It's not the end of the world.  Sometimes kid's lives have to be affected by financial constraints.  And it's not always a terrible thing.  Her needs are covered.  She just even got new sneakers this weekend and she's got more fancy popular Aeropostale shirts than I  am going to admit.  And even some of her wants are covered too.  But this one was just too high.  It's not the end of the world.  


treehugger.gifjog.gifgreenthumb.gifknit.gifnamaste.gif

justmama is offline  
 

Tags
Frugality , Finances
User Tag List

Thread Tools


Forum Jump: 

Posting Rules  
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are Off