When do you stop struggling?

[minkydog]

Part of why we are seriously looking at our finances is we are trying to decide if we want kids. If we did have kids we would want to contribute towards their collage (at least enough to cover half or more of a state school), and I would not be able to work for 5 years (till they were in school). I just think about doctors visits and clothing and dentists, school field trips and school supplies, family vacations, etc and don't see how we could do it. There are other non financial reasons why we aren't ready to have kids yet/or decide 100% we aren't ever going to its not just money. But when I think about the money either way, I just don't see how people make it.

Btw I don't feel comfortable giving specific dollar figures, but the house we bought is almost exactly 3 times my husbands annual salary (not counting my income at all).

Before you even think about saving for the kids' college educations, you need to be saving for retirement. It doesn't have to be a huge amount, but just get started, the earlier the better. We find that having the money taken right out of DHs' paycheck makes it painless. I'll be coming into an inheritance soon and you better believe half of it is going straight into retirement(i'm 48). There is more money available out there for college that there is for retirement and I don't plan to be one of those little old ladies eating cat food & collecting cans for pocket money.

If you want to pay down your house note or save for the 5yrs of being off with the future kids, then you might want to increase your hours at work. Everything else seems to be going in the right direction. I would not necessarily cut back on your entertainment. It doesn't seem excessive and couples need to have fun together--all work and no play gets very boring. Bored couples start "looking" and then you have a whole 'nother set of problems.

When the kids come there are many ways to save--thrift stores have great clothes for kids, vacations to Grandma or aunties are cheap, breastfeeding is free and MAY help keep the kids healthier(hold your flames; i know this varies with each child, no guarantees). There are many ways to cut expenses, when you have to.

You mentioned the house--I'm wondering if you are concerned about the cost of your home. Three times you income is a pretty large chunk. Good thing you qualified on only one income--it's likely that DHs income will rise over the years and it won't be such a huge hit if you do decide stay home to raise the kids.

 

[Bob Slydell]

Before you even think about saving for the kids' college educations, you need to be saving for retirement. It doesn't have to be a huge amount, but just get started, the earlier the better. We find that having the money taken right out of DHs' paycheck makes it painless. I'll be coming into an inheritance soon and you better believe half of it is going straight into retirement(i'm 48). There is more money available out there for college that there is for retirement and I don't plan to be one of those little old ladies eating cat food & collecting cans for pocket money.

Ditto that. The old saying is true: You can borrow for college, but not for retirement.

 

[Toby'sFriend]

We aren't saving for retirement besides his contribution at work. I cann't remember the details, I think he gets 1/2 or 2/3 of his pay averaged for the highest three years once he retires.

ok - time for my lecture.

You mention his pension as being your only retirement savings vehicle at this time. Usually in a Pension (assuming it is around when retirement age hits) your husband will have an option to receive a set amount that will cover him for the rest of his life, or a lower amount that will cover him and then a reduced payout for a surviving spouse. Very often, this reduced payout is not enough to adequately support a widow. Please also consider that at your age -- Social Security may or may not be around. If it is, it probably will not resemble today's plan..... which isn't all that great.


You need to have your own Retirement Savings in your name. I would suggest that you look into a deductible IRA if you don't have a 401k available through your work. The good news is your age. You have a long time to save. Take advantage of that compounding!

 

[JennyMominRI]

We've only really started to stop strugging in the last couple of years... Things should get really great for us financially in the next few months..We are 35 and 39.
We have had some big things going against us though..Illnees can really cause havoc to your finances

 

[JudicialTyranny]

I wouldn't say we are "well off", but we are pretty comfortable, and I didn't get to that point until I was around 31 or 32, and what got me there was starting my own business which became pretty successful.

It is a part time business, selling some computer software that I wrote. I am able to run the business and keep my full time job, which helped a lot because I don't have to foot the entire bill for health care. For several years, my salary from my full time job covered our expenses and the business income went almost entirely into savings.

That's not to say it was easy. I worked all day, then came home and ate dinner and worked at the business almost every night until 11 or 12, and on weekends. I can't take any vacation where I can't check my e-mail and get access to my laptop at least a few times a day (that leaves out most cruises). Another downside is that I probably did not spend as much time with my kids as I should have when they were very young. I'm starting to allow the business to slow down to give more family time.

 

[whtyger97]

Someone suggested I look to my grandparents at our age and see where they were at. I'm not sure of my grandparents position then but I do know of our parents current situation.

My family (my mom, uncle, and grandfather and aunt) live within three blocks of each other. They all seem as if they are 'well off'. My grandfather takes the entire family (9 of us) to dinner EVERY sunday. He's taking us to Vegas in June for my mothers wedding (over 15 of us, out of town family and a few friends) and paying for the airfair/hotel. They act as if we live so FAR away (its only about 10-15 minutes) and that we live in a less then desirable neighborhood, and that our house in shambles ("It needs alot of work"). My family also paid for our wedding.

On the other side of the fence is my DH family. They act if we live in a large home, that its resonable well taken care of, and in a good/great neighborhood. They live farther away by a few minutes, but act like its nothing to drive over to our house. We are the home of choice for family gathering on that side of the family, do to the size of our home (its not the biggest, DH sister has a MUCH bigger house, but its way out, and she's a bit of a clean freak).

I know we are 'better off' then DH family, but I don't know when we'll ever be comfortable as my family seems to be (and they really aren't rich, I wouldn't even say upper middle class, or even as comfortable as DH sister). I would love to be in a financial postion to help out DH family (he's got 8 siblings and his parents and really all but one could really use help), but I don't see how we'll ever to a place to comfortably support ourselves let alone his family.

Another poster comment that spending 3 times my DH income on the house might be to much, but the bank was willing to approve us for nearly 50k more then we spent on the house, and the only limiting factoring was that we didn't want to take advantage of first time home owner programs that require no money down but make you pay PMI so we went with an 80/15 loan, because we didn't have 20% to put down (well we did but then we would have no money in the bank for emergencies).

If we don't end up having kids, we might stay in this house for the rest of our lives, or buy one more house thats 'perfect' for us, and if we did this we both know we'd be so picky we'd likely have to build it. This house is more then enough for two people. However if we decide to have kids we'll need to move by the time they are 7-8 because the current house only has 3 bedrooms, and we'd need the space as they got old enough for seperate bedrooms.

 

[Christine]

Don't ever feel "good" about what the bank qualifies you for. When I bought my house 10 years ago, the bank said "we will loan you up to $400K for a house". The house I bought was $220K and, at the time, it was a horrible stretch for us (and still is sometimes). I think a lot of people go by what the bank will give them--big mistake. I would have to say that when we bought our house, it was pretty close to 3 times what we were making (probably more like 2.5 times).

 

[disneysteve]

The definition of struggling changes over the years.

This may sound like an oversimplification and I'm sure not everyone will agree, but I think it is all a mindset. As long as all of your basic needs are met, all the other stuff ultimately doesn't matter. What matters is being happy with what you have. If you are always thinking, we'll be happy when we get a raise, or we'll be happy after our student loans are paid off, or we'll be happy after the kids are out of daycare, etc., guess what? You'll never be happy! You'll always feel like you are struggling to reach an unreachable goal.

DW and I have been together for about 15 years. I can honestly say that we have never felt like we were struggling. We always lived life to the best of our ability at the time and were happy with whatever we could afford. Sure, we now take more frequent and nicer quality vacations, but we have fantastic memories of extreme budget travel 15 years ago. Yes, we have a nice house today, but we were perfectly happy in my old 2-bedroom apartment or the house we rented when we first married.

Have there been financial bumps in the road? Absolutely. I was unemployed for a few months 5 years ago. When I first went back to work, it was part-time making half of my prior salary. We managed, dipped into savings and trimmed back some spending to make up for it. But did we feel we were struggling or unhappy - never for a moment. Are there things we would like to have that we don't? Sure. But we certainly don't feel that we're struggling because we don't have them.

The best definition of being rich is being happy with what you've got.

 

[whtyger97]

ok - time for my lecture.

You mention his pension as being your only retirement savings vehicle at this time. Usually in a Pension (assuming it is around when retirement age hits) your husband will have an option to receive a set amount that will cover him for the rest of his life, or a lower amount that will cover him and then a reduced payout for a surviving spouse. Very often, this reduced payout is not enough to adequately support a widow. Please also consider that at your age -- Social Security may or may not be around. If it is, it probably will not resemble today's plan..... which isn't all that great.


You need to have your own Retirement Savings in your name. I would suggest that you look into a deductible IRA if you don't have a 401k available through your work. The good news is your age. You have a long time to save. Take advantage of that compounding!

I looked it up, I would only get 25% of his income if i'm reading this right, but thats only if he has less then 20 years. If he retires at 30 years I think I would get 60% of his Final Salary (averaged over 3 years).

If you had less than 10 full years, but at least 18 full months, of Ohio service credit, your surviving spouse (at age 62 or older with no children eligible for monthly benefits) may receive the greater of $250 per month or 25 percent of your final average salary. If you had at least 10 full years of Ohio service credit, your surviving spouse (with no children eligible for monthly benefits) may receive benefits of $250 a month, an amount equal to 25 percent of the final average salary, or a percent determined by your service (if over 20 years), whichever is higher.

From the chart that follows that paragraph:

29 years or more 60% of FAS

 

[Toby'sFriend]

and again -- employers make pension/retirement promises and employers take them away. My own Mother was promised for nearly 40 years that her husband's company would provide for her healthcare until her death at no cost. Starting in January she is now being billed over $350 a month for coverage nowhere near what she used to have.

ok look. You guys have done a wonderful job so far and I suspect that didn't happen by accident. I think you and your husband are some pretty smart people to have gotten to where you are at your ages. I get the feeling here that you are perhaps feeling a little melancholy because you want to have a baby? Am I right?

So (after you start depositing at least a minimum of $30 a month into YOUR OWN retirement account) what you need is a plan to make that, or whatever it is your goal is, happen.

Could you possiby work full-time for the next couple of years to save up some money to pay for a baby? Is there a skill that you could use to work from home? Can you tutor children? Housesit or Petsit for vacationers? There are alot of possibilities out there and I have a feeling you guys will find the way.

good luck

 

[whtyger97]

I know what you are saying about all the retirement systems defaulting but my understanding is the reason they default is the companies do some funny accounting and promise to put money in later that they never do.

He's in a PERS (public employees retirement system) and its considered a private account (i'm not sure of all the details) but that if he switched jobs or whatever we can take the money out. They have X amount of money in an account with his name on it (very much like a 401k), this is the same system that elected official, police etc use, I think if it fails we have a much larger problem with the economy.

Its not even so much that I want to have a baby right now, I really don't know, but I don't want to make the decision on whether or not we could afford one, I wish that was not an issue, but I feel like it is. Its also all the things we have spent or need to spend money on. I know we need to save money to redo the garage/driveway, thats going to be atleast 10k-15k, some day we'll need a new roob (thats a few years off), new cars if either breaks to badly (4k-6k). I would like to go back and finish my degree (its complcated but I didn't, and thats ok, no flames please) 2-3k, fix the porch roof 500-1k, etc. I would love to be able to make a trip to disney world, but that would be atleast 1500 - 2000 (we live to far to drive, or if we did drive we'd have to stop on the way which would add up with meals/hotels/etc).

I just feel overwhellemed by all the things I feel we should be saving for but aren't and I just don't see anywhere (but the eating out) to cut back. I know we aren't in a bad postion financially, but I know we aren't doing *everything* we should be, especially in regards to retirement.

I'm happy with my life and grateful for all I have but I just want to get to a point where I don't feel like I'm being bad because I know I'm not putting enough money away.

 

[caitycaity]

i just wanted to say that i think anyone at your age who is able to buy their own home is doing more than just OK. dh and i are older and i do not envision us being able to buy our own home for some time yet. my parents, for example, were 35 before they owned. i imagine it will probably be about the same for dh and myself.

JMHO. be happy with what you have and realize how lucky you are (at your age).

 

[whtyger97]

i just wanted to say that i think anyone at your age who is able to build their own home is doing more than just OK. dh and i are older and i do not envision us being able to buy our own home for some time yet. my parents, for example, were 35 before they owned. i imagine it will probably be about the same for dh and myself. and when we do buy, it won't be new.

JMHO. be happy with what you have and realize how lucky you are (at your age).

We didn't build this home, its around 50 years old. Someone earlier had asked how long we plan on staying in this home and I was staying that if we don't have kids we will likely stay in this home for most/all of our lives. If we did move it would be because we could afford a 'dream home' and if we were that well off we'd likely want to build it to get the features we'd want in a 'dream home'.

 

[caitycaity]

We didn't build this home, its around 50 years old. Someone earlier had asked how long we plan on staying in this home and I was staying that if we don't have kids we will likely stay in this home for most/all of our lives. If we did move it would be because we could afford a 'dream home' and if we were that well off we'd likely want to build it to get the features we'd want in a 'dream home'.

i realized that and endited. still -- i don't think you realize how lucky you are to be able to afford a home at that age.

 

[The Mystery Machine]

Even when I had not much money, I didn't mind the struggle. I miss that 1st apartment that we had that was $240.00 utilities & furnished included (What a dump it was, but I loved it!)

I guess for "me", not speaking about yourself, (as crazy as this sounds), I really believe the commandment about 'not coveting your neighbor stuff'. I don't worry about what I have and what others have or do. Perhaps letting that go might help you.
I know it sounds nutty, sorry...

I guess in your shoes without kids I would play "bounce the house" and upgrade via making a profit, when the market goes 'hot' in your area. Do over as necessary.
You sounds as if you are on the right track. We didn't own our first home until, we were 28.

 

[BuzznBelle'smom]

I think you're doing really well, and maybe you need to cut yourself some slack. I grew up in a struggling family, and it really impacts how I look at money. I find I have to conciously tell myself that we're doing okay.

you'll be better off in the long run if you don't get too comfortable spending more money, although it's okay to save for some nice things, like vacations. Also, it will help to have the student loans go away, which they will eventually. My deal to myself was, I wouldn't quit my job until my loans were paid. Well, DD showed up, I used my last unemployment checks to pay off the loans.

Things do, generally, get easier with time. But circumstances change, too. If you think you want to stay home with kids down the road, you might want to try earning more now if possible, and putting it away, so you have it available.

I have a question--you've mentioned wanting to help out family members but being unable to do so. Are you sure they want or need the help? Some people don't mind living on less. After college, I always had decent living quarters, but my brother (11 months older) lived in a place so "rugged", he had to borrow his neighbor's outhouse! But, he never complained, didn't care. If you gave him money, it wouldn't go for nicer digs. Besids, I don't see this as really being your problem, unless someone is going ot be out in the cold. Not saying you shouldn't help, but not everyone wants it. Right now, you should really be concentrating on yourselves and building up your own nest egg.

And my final comment, then I'll shut up, really, but buying a house depends so much on the area you live in--friend in Boston and DC would kill us if they found out how (comparatively) little we spent on our house. Yet in some areas, you can get really nice houses cheap. I'm a fan of pre-paying the mortgage--you'll thank yourself when you sell--but now is a great time in your life to sock money away for retirement.

 

[Caradana]

Hey,

I'm exactly your age. I live in the city; I don't own a home. I'm a bit of an outlier (long story) and I am not having a struggling twentysomething experience, but money is very high on my priority list - I've been poor, and it sucked, and this is MUCH BETTER.

I'm actually Series 7 licensed so the US Government considers me competent to dispense advice on this matter. (ha) My advice: there's a great site called www.cheapskatemonthly.com . It's got a strong Christian component but I just gloss over that, more importantly, it's got amazing financial tools. Check out the Freedom Account Manager, and start one. If you see where the money goes, you'll feel calmer, and if you see savings build, you'll feel savvier. I also have a spreadsheet I'd be happy to send you, I can teach you how to use it. It's important for girls our age to see cash. I'll explain it when I send it (PM me your email )

If you're interested in an IRA (and I think you'd qualify for a Roth), look around on www.fidelity.com for info. I think the earlier advice you've gotten about cutting off the mortgage prepayment and instead saving that money for retirement is solid.

I also think that finishing your degree should move into priority #1, before kids, before the roof, before anything - how far away are you from finishing? A degree is layoff insurance, and averting disaster is a big part of getting ahead.

Good luck with things
Dana

 

[Chicago526]

As another young home owner, I say good for you!

I wish our finacial picture looked as good as yours. Our only debt is the house, a credit card (not much, we'll have it paid off in about a year) and DFi's car (a big thorn in our side!). However we have nothing (zilch, zero, nada) in savings. I do have a 401k going, but DFi has nothing other than a pension (and ask United employee's how their liking THEIR pension right now...) so we need to get him an IRA set up, too.

Over all, we are struggleing, but we really need to get some emergency savings put together, and fast. DFi is diabetic, and if something happens to his health, we'll be up a creek. Thank goodness, with the exception of the car payment, we can live off my income if we had too, but I'd rather not, you know what I mean?

But it sounds like you guys are in great shape, the only thing I'd do differant is to stop overpaying your home and put that money into an IRA. If you decide to have kids, increase the amount in your emergancy fund a bit, then be prepared to start a college fund. As for day to day child expences, you'll be able to economize without too much trouble, anyone that is as well set as you two are should be able to manage child expenses just fine!

 

[whtyger97]

I have a question--you've mentioned wanting to help out family members but being unable to do so. Are you sure they want or need the help? Some people don't mind living on less. After college, I always had decent living quarters, but my brother (11 months older) lived in a place so "rugged", he had to borrow his neighbor's outhouse! But, he never complained, didn't care. If you gave him money, it wouldn't go for nicer digs. Besids, I don't see this as really being your problem, unless someone is going ot be out in the cold. Not saying you shouldn't help, but not everyone wants it. Right now, you should really be concentrating on yourselves and building up your own nest egg.

The main family members we would like to help:
DH Family - brother #3 is going thru a really bad divorce and is looking to declare bankruptcy, his child support payments aren't based realisticly on his salary (he often gets laid off do to the nature of work) but doesn't have money to fight it. Would like to be able to help with money for atleast the bankruptcy.
Sister #2 - is struggling, wasn't sure where she was going to come up with $200 for a deposit towards college for nieces college (niece is paying her own way with loans). Would have liked to be able to offer it as a graduation present.
Sister #3 - often has to borrow money from DMIL just to make ends meet and buy things like medicine (over the counter) for her daughter.
Brother #6 - has downs syndrome - would like to be in a place to offer to take him in if something happens to DMiL.
Brother #1 - is mentally ******** but violent, he lives in a home, not much we can do for him but I wish we could do something
Brother #2 is missing - would like to contribute money for a private investigator to help find him
Brother #4 passed away last october - his family lives 20 hours away, would like to be able to offer plan tickets for niece and nephew to come visit the rest of the family up here.
DMiL - Struggling to get by, cleaned out her savings to help brother #3.

My Family
Sister has severe mental disablity (depression), and if something happened to my mom would have to live with either me or another relative.

We do help out right now in non-fiancial ways, we often babysit the nieces and nephews and often have family gatherings (for DH family) at our house to easy the burden on his mom. We are doing much better then most of his family, and I know we are very blessed to have all that we do at such a young age, I just get fusterated when I think of all the things we don't have or aren't doing (like cell phones, retirement, etc) and wonder how people can do it. We just don't have the extra money for those things so i feel as if we are struggling. Not saving enough for the future is my biggest worry, but I just don't know where to find the money I'm supposed to be saving.

 

[pearlieq]

Honestly, I'm confused by your original question after reading your post. You are 25, own your own home as well as two cars, have no debt except your mortgage and student loans, pay all your bills on time and are pre-paying your mortgage. It sounds like you are very responsible with your spending habits. I don't see where the "struggle" part enters the picture. What is it you feel you are doing wrong or don't have that you think you should?

One general piece of advice I would offer is to stop pre-paying the mortgage and direct that money into savings instead. Build up a nice cash reserve as an emergency fund and then direct the rest to long term savings.

Otherwise, sounds to me like you are doing incredibly well for your age.

Exactly what I was going to say. Sounds like you're doing just fine. Yes, you're frugal, but you'll always want to be reasonably frugal.

The only thing that you might want to change would be to stop pre-paying the mortgage. Direct part to a money market account for an emergency fund and the rest into Roth IRAs. The money will do you better in a Roth growing tax free for 40 years than it will saving you deductable interest on your mortgage.