Case Study: Average Everyday Complainypants Seeks Redemption
Average consumer's daily commute vehicles
Today's case study is a classic, because it addresses a problem suffered by tens of millions of families: the chronic time shortage caused by a double income, double commute, kid-raising lifestyle. While some practitioners of this game do it by choice, many other would rather have more free time " if only they could afford it.
Dear Mr. Money Mustache,I am new to your blog but have been seriously enjoying this new found financial porn on a daily basis. I think I have the basic principles down. Bike good; car bad. Mindful spending good; mindless consumer orgy bad. Early retirement good; endless wage-slavery bad.
Instead of sitting in my beige 8i-12 government cubicle daydreaming about how cute I would look with a new red Guess bag and tall leather boots from the mall across the street"I am now in my beige cubicle fantasizing about a simpler life with a smaller home, more time at home with my tiny humans and more time to read.
At the risk of being labelled a complainypants, I genuinely do not understand how to move from this wageslavery to being a Mustachian. It seems to me to be bit of a chicken and egg conundrum. How do I live on 50% or less of my income while still being stuck in said cubicle with all the expenses that it incurs?
The Basic Stats:
- I am a fellow Canadian and as such am exceedingly polite
- I live in one of the coldest winter cities in the world (temperatures in January and February routinely dip to -40 degrees)
- Aside from the extreme temperatures in which I live, I am otherwise average in virtually every way.
- Average height, average weight, average number of kids (2)
- Average home (1200 sq feet), average mortgage (260K, worth about 420K in today's market)
- Average income (75K/year, 165K/year household"although according to you"I have already made it big)
- Average cars (2 -one 2006 Honda Odyssey mini van and one"wait for it"2011 Ford F-150 Eco-boost Extended cab truck)you saw that coming from a mile away didn't
- you?"but amazingly both are paid off)
- Average commute time (20 minutes direct, 45 minutes if you include the kids daycare/school drop time. My husband works 15 km in the opposite direction so we can't even car pool.)
- And last but not least, average amount of consumer debt ($12000 on a line of credit).
- We have an average amount of savings (120 000 in RRSPs and $12 000 in a few different savings places)
- And best of all I am in 15 years into a 30 years sentence with Her Majesty the Queen to be given my golden hand shake at the age of 55 (ie 70% of my income for the rest of my life"or if I cashed it in today 280K)"which as you might guess, I am starting to think isn't worth the next 18 years of my life.
A basic sampling of our current overall monthly budget is below:
| Take-Home Pay | $7500 |
| Savings: | |
| Retirement accounts, emergency fund, etc | $500 |
| Debt Paydowns | $500 |
| Spending | |
| Mortgage | $1400 |
| Property Tax | $325 |
| Home Improvement /maintenance | $300 |
| Utilities | $325 |
| Daycare | $1200 |
| Groceries and Personal care | $1200 |
| Insurance (home, life, van, truck) | $475 |
| Gasoline | $500 |
| Parking | $95 |
| Charity | $150 |
| Kids' sports (hockey/swimming) | $100 (we're Canadian - hockey is a fixed expense) |
| TV/phones/Internet | $100 |
| Miscellaneous (birthday parties, lunches out, hair cuts, gifts, golf, hobbies, entertaining) | $330 |
| Total Spending | $6500 |
My days and nights consist of rushing around like a chicken with its head cut off. How do I get from here to retirement and more time enjoying life with tiny humans?
Interestingly my husband is a structural engineer, who does carpentry and custom wood working on the side, which is his passion that he would like to make his career, he is not interested in 'retirement' he would just like a career change.
Sincerely,
Whiny in Winnipeg
Mr. Money Mustache Responds:
Dear WW,
While your situation sounds horrific to me, it is of course the standard situation for most two-jobs-plus-kids families. Let's begin with the end in mind: getting you some freedom ASAP.
Right now, you earn $75,000 before tax or 45% of your family's gross pay. Since you listed take-home pay at $7500, let's assume you are bringing in $3400 of it.
Out of that, the following monthly costs might be byproducts of your job:
- Gas and direct/indirect car costs for almost 2000km/month of driving around in a van: $1,000
- Parking: $95
- Daycare: $1200
- Convenience foods and services that show up in your grocery and miscellaneous bills: $200
Total: $2495
This leaves only about $1000 per month of "profit" from your job. So, including commuting and shuttling kids around to child care, are spending about 250 hours a month to earn $1,000 - or four bucks an hour. If you can think of better things to do than working for well under half of Manitoba's minimum wage, you should quit immediately. Since this is what you wanted anyway, congratulations!!!
But it gets even better than that. Since it sounds like properties increase in price as you move towards your job downtown, they might well decrease as you move towards your husband's job. If so, you could find a new place close to his work, and eliminate his commute as well - potentially saving the $600 per month he is currently burning up commuting in the opposite direction.
The savings from owning a less expensive house might free up an additional $200 per month in interest, since the equity from your current house would easily wipe your debts and you'd also have a lower mortgage payment.
So far we have only addressed basic strategy - the simple choice of where to live and work. There's even more wealth on tap as soon as you activate a bit of Mustachian frugality.
For starters, since this is the MMM blog we'll need to fix your insane choice of vehicles.
You have two kids, and yet you drive around in a BRAND NEW GAS GUZZLING LUXURY RACING BUS. The 2006 Honda Odyssey is not a vehicle for an indebted mother to use to drop the kids off and then head downtown. It is something a hopelessly spendy multimillionaire might use to shuttle around six pampered passengers on a cross-country roadtrip while hauling a giant trailer full of supplies. For two kids, you use a Toyota Yaris or similar. That will cut your gas bill down by 50%.
Your husband appears to be driving alone and not even a multimillionaire himself, and yet he has a TWIN-TURBO SIX PASSENGER RACING FARM TRUCK!!! Holy shit, brother, how many heads of cattle and pigs are you hauling on that roundtrip, while simultaneously carrying international heads of state in the stately cabin? That is a fucking ridiculous vehicle for ANYONE to drive except the rarest breed of Farmer/Diplomat, and I'm betting none of them also hold jobs as Structural Engineers.
So you'll be selling that, and walking to work. For those rare times you drive, you can ask to borrow the wife's manual transmission Yaris hatchback. You are also permitted to buy a used mountain bike, and if you're REALLY getting serious with the carpentry, a 2001 Ford Ranger pickup, 2 wheel drive 4 cylinder manual longbed. You may weld a 12-foot lumber rack to it in order to outperform your current clown truck.
The savings on depreciation, fuel, and insurance will compound an additional $86,000 per decade into your family's wealth.
Once you have these big wins in place, you'll have much more time and energy to go after the medium-sized ones: your grocery bill can easily be cut in half, according to most Canadian Mustachian 4-person families. Restaurants and other takeout frivolities may drop as well, depending on your priorities. Another $1000 per month is possible in this area, which will go directly to your financial independence fund.
When you add in Mrs. WW's outstanding windfall of a $280,000 early pension payout, all my calculations indicate that you will be further ahead than you are today, even after ditching the government job. In fact, after a year of making these changes, Mr. WW may even start getting the itch to scale down his own job and do exactly as he sees fit as well. And that would be nothing to whine about at all.
Best of luck!
Do YOU see any parallels to your own life? It is almost always possible to avoid the two-commute family with kids if you make it a priority.