s/o, since we're all talking about #2: budget question

rbtrumpet

I considered posting this in the other thread, but I didn't want it to get burried or threadjack.  

For anyone who feels comfortable sharing, what are tricks and techniques you use to budget?  Moms of more than 1 (or planning): how did adding a second/third affect your budget?

One of DH's biggest concerns is putting money away for DD's (and future children's) college. My argument is that getting pregnant now, vs a few months from now, isn't going to make that big of a difference in the long run, but he's all freaked out about our budget right now.  I also think if we can't pay for all of their college, it isn't a huge deal, where he feels like we need to (even though we both paid our own way through college).

I'd love to pick your brain for thoughts!

rbtrumpet

@sing2phins - PMI is crazy.  I'm not sure when we'll have enough in our house that we don't have to pay it.  We're also planning on upgrading in 2016 when DH's mom comes to live with us (yay!....).  We need a bigger house - I said, I know it's his culture to live with and take care of his mom, and I don't mind that, but she absolutely, 100% needs her own kitchen.  And her own space (she's a "white carpet, white couches, white walls" type of person, where I am the "organized clutter, homey" type).  She's giving us some $$ towards the new house, so we'll have 20% down and won't have to pay PMI anymore, but our mortgage rate will probably still go up $500-1000/month!

Kfran84

I haven't got much to contribute, but OUCH on the PMI. I had no idea it could be that high. I always buy foreclosures with construction loans, so by the time we refi we have enough equity in the house to avoid PMI. I say always... we have flipped 6 houses, lived in 3 of those. 

We were toying with the idea of moving to a 4-bedroom, but we love our location, house payment, and income we get from our garage apartment. I would like to have a bigger yard, but the kid(s) don't need a huge yard when they are little and we live near parks for a reason. Now that we are committed to staying for another 4-5 years, we are using the money we would have spent on a down payment to upgrade our current home. I am super excited. 

Also, I'm still hoping to go down to part time at work, but still want to make enough to pay our mortgage, bills, grocery, and daycare. That takes a lot of pressure off of DH so he doesn't have to worry about how his business's cash flow affects our family. 

Kfran84

@sing2phins FHA loans are not one and done deals. You can use them repeatedly as long as the home you are buying meets FHA standards (like, the junked-out foreclosures that I buy do not meet FHA standards). You might contact a lender if you are interested in the requirements. 

rbtrumpet

JoeLies said:

I do projections a lot, based on what we're spending/saving, but we've been living below our means for so long that we haven't really HAD to budget.

This, I feel, is our main problem, we've never had to budget (not that we're rich or anything, but we make enough for 2 people to live comfortably - not 3 or 4, maybe 5 people :-p). DH doesn't want to sit down and write up an actual budget.

I get you on hating to move, but our house was supposed to be a starter house. I want a gas stove and big yard, so I'm not terrified about the idea of moving.

Kfran84

@sing2phins I feel pretty confident about that. I was a private banker before I became a CPA. Things have changed since 2009 so it's definitely worth checking with someone who is in the know and current on their info, but here's what I know: There are requirements for borrowers (ie credit score, debt to income ratio) and requirements for the house, but it's ok for repeat homebuyers. I am seeing a caveat in my quick google research-- you can only have one FHA loan with greater than 75% LTV outstanding at one time. 

So, if your current FHA home loan is greater than 75% of its value, then you might be looking at selling that home first and using a rental for a short amount of time before you close on your new home. 

Some people also sell their home and go through closing, but then rent their home back from the homebuyer until they close on their new house. 

HTH, but I just wanted you to know you're not excluded just because you've used it before. It might take some fancy footwork and shuffling, but I think the two scenarios I've laid out are fairly common work-arounds.

Kfran84

Dapostrophe said:

@kfran84 Talk to me more about construction loans. H and I have looked at foreclosures before and may plan a move closer to the city in the next few years, where there are quite a few in nicer areas. We do have a somewhat flexible living situation now, that would allow for the time it may take to finance and remodel a foreclosure or short sale. We kind of dismissed them before, but I would be interested to hear how you managed to flip 6 houses and gain equity. 

Our construction loans have been 100% financing for the purchase and rehab. We have to submit our budget and plans ahead of time for loan committee approval. We make interest only payments for 6 months, and then have a balloon payment at the end of 6 months. At that point, we have to refi into a conventional mortgage. For flips, the goal is to sell before you have to refi. Not that refi-ing is a big deal, just more paperwork and costs that it's nice to avoid.

So, I've done 3 construction loans, 2 on flips and 1 on our current home. We are looking at a property to flip right now, we've made an offer to the owner, so about to go through that process again.

Our other flips were self-financed. 

We focus on undervalued, historic homes in good neighborhoods. It's not our bread and butter, but we've done well on all our projects because we are picky about them. DH is in construction, so our margins are better than what it would be for someone who had to hire a G.C. 

We have a good relationship with a commercial lender. We were referred to him by a real estate agent who knew we were interested in doing a flip. 

I hate the term flip because I feel like that equates to shoddy work, like lipstick on a pig, but we really renovate and rehabilitate these neat old homes. We have had neighbors and people who used to live in the house stop by when they were for sale and cry because they are so happy to see it looking great again.  

CarrieB.

I did not find going from one child to two to be terribly more expensive in some ways. They are both girls, so there wasn't a lot of new stuff to buy. DH and I work opposite shifts so we have no daycare costs, just a small amount monthly for DD1's preschool. We did sell our station wagon that was on its last legs and bought a new to us minivan and having a car payment again sucks.

I just am trying to be thoughtful about money. We have 529s for the girls that we contribute to monthly and my parents make an annual gift to. We contribute for our retirement. I'm trying to pay off a small credit card. It's just medical bills and house fixing stuff that always gets me off track with savings.

We have a three bedroom house where one bedroom is upstairs. The girls technically share a room, but we kept the baby in the PNP in our room for six months and most nights she still sleeps in the PNP which is in DH's office. We make things work. I also work in finance and you can drive your self crazy worrying if you have enough money for two. We did IVF and FET which was insane expensive, but I wouldn't trade my girls for all the expensive bags and pedis and vacations in the world.

Kfran84

@caishov That is awesome! 

I will say that when we were starting out and our incomes were a lot tighter and we had credit card bills and car loans, Dave Ramsey's Total Money Makeover book and his website were very helpful to me in budgeting and planning debt-attack strategies. 

cagoldi

@CaiShov we aren't quite as frugal, but we have similar thoughts about saving aggressively. That's a major hurdle for me when we consider number 2. I struggle with knowing what we save for college will be split and I don't love that idea.

When I say we can't afford private school for two kids, that's not exactly true. We could afford it as in our income allows for that but a more accurate statement would be that we're not comfortable with that expense.

cagoldi

kellykinns said:

I seriously need someone to sit down with me and make feel comfortable with investment strategies that include risks. I'm not looking into a 529 because the idea that I could potentially lose capital scares me.

which is why all of our savings are currently in CDs I can deposit into or a savings account. You know being the smallest possible return at no risk.

We aren't doing a 529. A's college money is in a stock account I manage. Pete is very risk averse also.

He is a lot more comfortable having CD's. It took me forever to convince him to take advantage of our company stock purchase plan. You have two purchase periods, and during each they will look at the PPS on the first and last day during that period. They offer the stock at that lower price plus a 15% discount. Basically, it would have to go down 15% for you to lose a dime. He's up over 300% since he started buying a few years ago. That's the only investment I've ever talked him into.

In the meantime, I "gamble" on (volatile) microcap biotech stocks.

AlisonM12

Kfran84 said:

@caishov That is awesome! 

I will say that when we were starting out and our incomes were a lot tighter and we had credit card bills and car loans, Dave Ramsey's Total Money Makeover book and his website were very helpful to me in budgeting and planning debt-attack strategies. 

DH and I took "Financial Peace University" by Dave Ramsey. Changed. Our. Lives. We took this class and I read "The Millionaire Next Door" and basically have changed my life and the way I look at building wealth.

I think doing a budget every month with your SO and using cash for some spending categories is a good way to get a grip on spending. Handing over cold hard cash makes it very real for me.

@kfran you do need your own HGTV show!

thelastunicornxo

Dh is our financial guy and he takes care of most of our savings, college funds, etc. so I don't have anything helpful to contribute there. One thing I have done though is started meal planning and making a weekly grocery list. I pretty much only keep enough food in the house for that week, so I don't end up buying extra and wasting it. I use coupons and look for deals, and for a family of five (granted three of us are 5 and under) I can usually keep our weekly trip under $100.

This is pretty big for us. I use to be the kind of person who decided daily what I was in the mood for for dinner and then hit the grocery store. When I did that I always ended up buying extra stuff and it really added up!

Anyway, that's probably not super helpful, but that's one budget thing that has really helped our family!

Kfran84

LizB8943 said:

@kfran84 You need an HGTV show! If the girl up in Detroit/Minneapolis can do it, so can you and your H

@LizB8943 Haha. No. People would be like "OMG Why are they married??" We have had some epic battles while working on a house together. 

Aaaaand.. coincidentally, our offer was just accepted on next project house. We'll call it... "Bedbug Manor" for reasons I will leave you all to guess.. Now to go write up a purchase contract and call my banker.

CarrieB.

kellykinns said:

I seriously need someone to sit down with me and make feel comfortable with investment strategies that include risks. I'm not looking into a 529 because the idea that I could potentially lose capital scares me.

which is why all of our savings are currently in CDs I can deposit into or a savings account. You know being the smallest possible return at no risk.

CDs are not zero risk. You still run inflation rate risk- the risk that inflation will grow faster than your returns. $1 today is not worth the same as $1 tomorrow or 10 years from now.

thelastunicornxo

@lizB8943 It's really kind of amazing how much money it has saved us. I was the same way, I would run into the store for chicken for dinner, and leave with chicken, wine, a loaf of bread, another side, dessert….. and a bunch of other crap. I was spending soooo much money. I picked up one of those smallish leather bound notebooks from TJMax and every Sunday I write down what our meals are Monday-Friday and then a shopping list underneath. We never go to the store without doing that anymore!

Edit to correct tag

thelastunicornxo

I posted in the wrong thread!! Sorry! Moving my slipper post to the daily thread!