What We Plan to Sacrifice

by Kevin on April 22, 2009

Yesterday I asked if you had the guts to make sacrifices necessary to reach your goals.

Today I’ll tell you about changes we are making to hit some of our goals.

We Talked About the Future

A few days ago my wife and I started talking about our future. Before we got married we had a discussion about how many kids we wanted to have and when we wanted them. That time frame is getting closer and closer.

Currently we live about 6 or so hours from both sets of parents since we share the same hometown. For us that’s just too far. We have great friends in Birmingham, but we just don’t feel the support network you would feel having your parents close by.

We don’t want to live in our hometown… it is much too small for our tastes. But there is an option nearby — about an hour to an hour and a half from our parents — that would be a great fit in our eyes.

The Problem: Considering Moving in a Few Years

Nothing is set in stone, but we are considering moving back closer to home sometime in the next few years. The problem we run into is we just bought our home a year and a half ago. Since we are just starting to chip into our 30-year mortgages, we have little equity to show for our payments. We’ve made additional payments in the past, but most of our payments are still interest.

If we want to move we need to be able to sell our house and have money to put down as a down payment on a new house (plus moving costs, a beefed up emergency fund, etc.).

What Changes Can We Make?

We’re both on the same page with wanting to get back closer to home. That’s a key point — you can’t have one spouse wanting to move and the other wanting to stay. That doesn’t work. We’re on the same team here and the team is going in the same direction.

The next obvious question is what could we cut or change to help us either pay off the house as quickly as possible, or at least put a huge dent into the mortgages. If we could pay off the second mortgage we would have roughly 20% equity to walk away with if we sold the house (minus realtor commissions).

To achieve this we discussed the following budget changes:

  • Cutting our allowances/individual spending money in half each month
  • Cutting our eating out budget in half (from roughly twice per month to once)
  • Cutting trips from our budget — we’ve already got money set aside for our summer vacation, and money to
  • Applying all of our extra money left at the end of the month to the second mortgage
  • Adding in my blogging income (minus taxes) to the second mortgage

Result of the Changes

If we are able to successfully maintain our income and our current budget… while also maintaining the changes above… we will pay off our second mortgage by February 2011. If we want to move in the next two to three years that puts us in the 2011 to 2012 timeframe. Paying off the second mortgage by then would be absolutely huge in moving us toward that goal.

Naturally, nothing is set in stone. I’m not planning on leaving my current job. Lots of things can happen between now and then. (Hey, No Debt Plan could get really popular and I could be blogging full-time from anywhere in the world!)

But we’re making the changes. We’ll see if they are sustainable. We’re deciding what is most important to us and realigning our budget to get us there. Even if we don’t end up moving for whatever reason we’ll have saved a ton of money in interest.

Have any of you made significant budget changes to meet a lofty goal? (Or have any advice on how to move a two-income family — two jobs, sell a house, then buy a house — all at the same time?)

{ 7 comments }

Baker @ ManVsDebt April 22, 2009 at 9:02 am

Good luck with those changes. I would keep the eating out budget at twice monthly. I’m using a huge fan of intensity, but twice monthly still gives you some opportunity for a little balance.

That being said, it’s awesome to see someone passionately attacking the 2nd mortgage. The way you write about this, there is no doubt in my mind you guys will be able to destroy it!

Ricky April 22, 2009 at 9:14 am

We have made some recent cut backs in our budget as well. I am going back to school in the fall and our goal is to be able to pay cash for the whole deal. Also going back to school is going impact my ability to contribute to our income. We’ve trimmed our budget down to what we estimate I will be able to make while in school. Between now and the time I will start, all the excess money is going towards paying for school. By September we will have more than enough money to pay for school and we will already be used to living off the reduced income.

Kristy April 22, 2009 at 1:44 pm

We recently decided that we wanted to move about 40 minutes north of the city to a more rural area. Of course, we still have our house in the suburbs that we’ll need to get market ready in order to sell. We’ve lived in it for 5 years and it’s depressing that we’ve only paid down a little over $10,000 in principal; close to $70,000 in payments has been interest (wow, that one really hurt when I calculated it out).

Here’s some small changes we’re making in order to be able to free up the funds to get our stuff in order:
1). Got rid of cable – savings $86/month
2). Cancelled gym membership – savings $106/month
3). Started price matching groceries and using double coupons – savings of roughly $35 – $40/week (craziness, yes?)
4). Cooking big dinners on Saturday and Sunday and taking them to work as lunches all week (savings $20 – $30 week / person).
5). Stocking up on diapers and baby supplies BEFORE baby gets here (she’s due next week) so that we’re prepared and have bought those items at a pretty low price instead of having to pay full price when we need them.

We’re currently looking at houses on 5-6 acres of land, a huge jump from the postage stamp size lot we have right now. The reward is definitely going to be worth the sacrifices we’re making. Hope this helps!

Kevin April 22, 2009 at 7:48 pm

@Baker: We thought about completely cutting eating out, but then boosting our grocery budget by $5 per week ($20 per month) and then eating out of the grocery budget. So if we wanted to eat out we would really need to plan for it. Not sure what will be best.

@Ricky: Good times man! Paying cash (as in no debt, not necessarily with actual bills) is the way to go. Looking forward to hearing about your progress.

@Kristy: $106 for a gym?! Does it come with a Swedish massage after every work out? Great job with the coupons and cooking big meals.

Best of luck with the little one, too. Glad to hear we aren’t alone!

Mr. ToughMoneyLove April 22, 2009 at 8:36 pm

I like your logic and sentiments – except this one: “We’re both on the same page with wanting to get back closer to home.” Eventually you will learn that “home” is where you are, not where you came from. It’s great to be near family but don’t let it interfere with your ability to engage other people and other places. I’ve met a lot of young couples that treated living away from “home” like going to summer camp – they never tried to fit in and eventually left. I think you are wise to get closer but not all the way there.

Golfing Girl April 23, 2009 at 9:37 am

You may want to consider another posibility. After staying in your current location for all those years while paying off the second mortgage, you are going to become more entrenched in the community you live in, and will start growing roots.

Before our daughter was born, we used to live 3 hours from my parents and 2 hours from DH’s parents. Then DH’s parents moved 10 hours away (glad we didn’t count on them in the equation). So we then moved several states away for jobs about 7 years ago. We are now 12 hours away from my parents and are 2 hours from DH’s parents. However, now that we’ve been here so long, I can’t imagine moving at all. We have built up an incredible social network and although our families are hours away, our friends, neighbors, and church provide the support that our family cannot.

Not to be a downer, but you’d be pretty disappointed to do all that planning to move back home to find that one set of grandparents is moving or is no longer healthy enough to assist with the grandkids (that’s the case for 3 of my daughter’s 4 grandparents).

I grew up 5 minutes from both sets of grandparents so I couldn’t imagine it any other way, but I’ve learned you can make it work. Just trying to give you another perspective…

Kevin April 27, 2009 at 9:23 am

@ToughMoneyLove: Excellent point. Slip of the keyboard there. Where we live is home, no doubt. I guess I meant closer to our shared hometown and parents. We want to eventually get closer to home in assisting with our parents as they get older. Kind of hard to do from 6 hours away.

@Golfing girl: We actually talked about this last night. What if we change our mind? Well, we’re still in a better position — no 2nd mortgage, extra cash flow from not having to pay it, etc.

It is also highly unlikely that our parents will be moving anytime soon.

We did talk about our church yesterday and it would be very, very difficult to leave. We love the community and friendships we’ve built there. We’ll see what happens!

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