WWYD - Long, rambling post with lots of questions

[my4littlebuffaloes]

Ok, this might get long, I have been thinking about my dilemma for awhile now and can't seem to come up with a short and sweet way of asking your opinion. So please bare with me. Oh, we loosely follow the Dave Ramsey plan.

So a few years ago - after many years of not contributing to a retirement account for me - I bit the bullet and figured I just needed to start or it would never get done. So at a point when we weren't in debt except for the house but didn't have a fully funded EF I started putting away $100 each month into a retirement account. We are still contributing and we have never missed the money. We have also never finished funding our EF.

Right now we have about 2 months salary in savings and are able to save a little bit each month. Yet, it seems as if we will never get a fully funded EF. There are just so many things we need to save for. Needs in the next year include braces for dd (paid for ds last summer). Needs that we know will happen sooner rather than later include a new furnace (22+ years old), new water heater (10+ years old), car replacement (something we need to be saving for all the time, yet aren't) and driveway replacement (low on the list, yet we know it really needs replacing!).

When I sit there and look at our finances and our goals it just seems we will never get there. We have 27 years left on our mortgage and desparately want to pay extra. Yet I know we don't have enough in savings and need to boost that. Something always comes up it seems, there is never enough money to cover all of our needs/wants/goals, etc. I also know that $100 a month going into our retirement account isn't enough either. I am 38 years old. I would like to increase this amount to $200 a month. Oh and with 4 kids saving something for college would be nice too - but we have yet to save a penny for any of them.

So, please help me get some focus and perspective. It seems when we have a good month (i.e. nothing major breaks and we have no unexpected expenses) we can make great traction but I estimate that happens about 2 months out of the 12 each year. There are just so many areas that need more money I don't know where to start.

I kind of feel as if we will never have a fully funded EF - we have seriously been working towards this baby step for 6 years now! I want to be proactive in saving for things that need to be replaced, but I just can't figure out a good priority list or a good way to save for each of these things. Any ideas? Any help? Anyone else stuggle with this? I get so frustrated sometimes I just want to give up.

I started working 15 months ago and we don't included this money in our regular budget for the most part. Ever since I started it has basically been used to cover whatever unexpected expense came up - surgery for the dog, car repairs, medical bills, roof repair, braces, paying off the van etc. I think having a plan for this money would help - we aren't spending it frivolously not knowing where it went - I can track it and it has all gone to cover specific things that have come up - that my dh's salary alone would never have been able to cover. So it is really nice to have the extra money - but it doesn't seem to be helping us meet our numerous goals - it is just preventing us from going into debt. Which is great, but frustrating at the same time. Sigh - anyway, any advice or help to help us figure this out would be great. Sorry it got so long!

[MissSeetonFan]

I guess I'm a little confused. You have 2 months' salary saved but you don't have a fully funded EF. Are you talking about the DR basic emergency fund of $1000, or are you talking about the next one up that he defines as 3-6 months worth of expenses?

I would guess that you are probably doing better than you think. You are doing better than I am at least :-)

If you were to put retirement savings on hold for a bit, how soon could you save up for even just one of the bills you see coming? How much are you putting towards them now? If you put retirement on hold temporarily, you could fund those future bills faster. Then when they are past and paid for, those amounts that you had to put by for them could then be split between retirement and college savings. So losing out on $1200/year for retirement for a few years but being able to increase it and putting twice that or more in a few more years, wouldn't make as much of a difference as you think.

Just a thought.

[my4littlebuffaloes]

DR's fully funded EF is 3-6 months salary. We have about 2 of bare minimum expenses. I don't think it is enough. The thing about putting the retirement on hold is it is only $1200 - not enough to make a huge dent in anything. Plus - you know how it is (at least for me) something always comes up. So I don't think there will ever be a time when we don't have something else to save for - which is one of the reasons why I went ahead and started saving for retirement a few years ago. Also one of the reasons why I want to go ahead and increase it now. There will likely never be a time (for long anyway) when we will enough extra to do everything we want. So trying to figure out how to prioritize and the best way to save the money we do have extra.

Thanks for the advice - something to think about for sure. I guess I don't feel like we are doing very well because progress is just so slow sometimes.

[monkeywrangler71]

Finances are as much about psychology as they are about math. If you temporarily stop putting money into retirement there is a very high probability that you will never start again. Odds are, that $100 a month will just disappear.

Personally, I don't think anyone should stop retirement funding unless they have an absolute financial emergency. Sounds to me like you are doing fine, you're just wishing that you were doing better.

Maybe you are being a little unrealistic when setting your financial goals? Perhaps it would help to sit down and put your financial priorities in order, and set savings goals that reflect the reality that not everything is possible, and that there are going to be large expenses every year.

I also think you are borrowing worry from tomorrow on some of these items - ex. is there anything actually wrong with your water heater? I've had water heaters twice that old.

[my4littlebuffaloes]

Thanks monkeywrangler - that helps on the water heater - I was told it was old and would likely need to be replaced soon when we moved in - 5 years ago. Good to know it could last longer. I just want to plan as much as possible for everything that might go wrong - but there is no way I can plan for everything and there never seems to be enough money to go around for it all. Thanks for the tips! We do need to prioritize - but how is the question.

[Hurricane0884]

You have a good idea here and some people can do it better than others. But for me when I try and itemize each thing that needs to be saved up for it gets very overwhelming as you can see. What my wife and I have started doing is just saving, saving, saving in general. We put down certain goals for savings and then rush to get there. It makes it easier to have one solid goal as opposed to 20 little ones. When something comes up we use the money and work hard to get it back in. Its like and emergency fund for big expenses. When the expense occurs we have it covered but if it wont occur for ten years or more we just stopped worrying about it. That is my best suggestion it has worked wonders for us.

[ansley]

It will be okay. You can do this.

I am 38, married and have 3 dc (17, 10 and 4). I have been on the dr plan for almost 11 years and finally made it to bs4. It took a lot of work and the free spirit had to get on board and give up some things but it feels so good now.

We did stop retirement but wish we hadn't. It was money that just slipped through our fingers.

My plan now is to make a list of what has to be done first, second and so on. Then work it like we did the debt, one at a time.

[tmffv]

Just my opinion, and I'm certainly no expert, but here's some food for thought.
Remember how DR explained the line by line budgeting? List most important needs first, then your planned purchases, savings, ect. Take what you have for the month and start allocating towards that list, top to bottom. When you run out, you make a line. Anything below the line is ignored for that particular month.

I would do the same in your situation. List the actual needs first. Food, shelter, cloathing, ect. I would proritize savings by importance and what is most imminent. Each item I would set a monetary goal, and then divide that by 12 so I could see what monthly contribution I would have to make in order to meet that goal in 1 year. First would be the EF. Since you are a two income household, you could shoot for the lower end of the 3-6 month range, but that's up to you. Next I would have to determine what is more important: Saving up for braces or saving up for new furnace/water heater/car. Put them in whatever order you think best. Realize that for the first year (or two, or three) that the items on the bottom of that list will probably not recieve a contribution. So make sure they are the ones that can wait. I wouldn't change your retirement contributions; stoping them puts you at risk for not adding to it for a long time, increasing them takes away from how much you can put towards your savings.

While making extra payments on your mortgage can save you thousands in interest, I would not let that distract you right now. Focus on the more pressing needs first. As long as you are making the mortgage payments on time, you are doing fine. I'm sure there will come a time when you can start making those extra payments.

I understand how you feel. I have more things listed to save up for than I know what to do with as well

[Telephus44]

Have you ever done this exercise?

Go through and add up everything that you want to save. $100 towards retirement, $300 towards new furnance, $200 to the EF, $200 for college fund, extra $50 towards to mortgage, whatever.

Once you have that number (say $1000), look at your income. Is it possible to save that much on your income? Would it be possible if you tweaked your spending a bit? Or maybe not?
Would you need to use your second income to fund this?

sometimes it just helps to put goals in pespective. I do this occasionally. Just because I want to have a replacement car fund, a $5000 EF, sinking funds for the car insurance, fully funded ROTHs, pay off the mortgage in 15 years, and save 15% for retirement - doesn't mean I CAN do it all.

[my4littlebuffaloes]

Thanks so much everyone! Lots of great tips and ideas here that I hadn't thought of. I like the idea of just dumping as much money as we can into 1 account - that would cover anything unexpected that came up with the house, cars, etc. A general replacement fund I guess. I think I will also make that list that telephus mentioned and see where we stand. Dh's paycheck is going down by $100 a month in January (we are increasing our flex plan contribution due to the increase in medical expensed) so I really need to have a plan and figure out where we are at.

And as much as I want to pay extra on the mortgage - it just doesn't seem realistic to do so on a regular basis. Ugh! I really don't want to have a mortgage payment at retirement time, you know? I must prioritize this stuff and putting it in order of when it will be needed will help.

Thanks so much!

[krbshappy71]

You are WAYYYYY ahead of me and I'm only 2 years older than you are. I can't/wont/don't even think of the things you are planning for because I feel like I'm never going to get myself out of current hole.

The fact that those items are on your radar shows how good you are at this stuff. You can totally do this. Try to breathe and focus, focus. Even if your "replacement" fund doesn't grow as fast as you think it should, it is still there! Even if your EF isn't as big as you think it is, it exists! Nothing wrong with your secondary income supplementing to keep you out of credit card debt and loans, what better use for it than to keep on top of things instead of paying interest for situations that come along? (like I do, ugh!)

Keep on keepin' on, you are an inspiration.

[GirlBoyGirl]

You're doing great! Keep at it! Just think of where you would be if you had put just half the stuff that your paycheck has covered on to credit cards instead!