Wednesday, May 10, 2006
revised monthly spend ($11,790)
Thanks for the wonderful comments from the previous post.
Here is the revised monthly expenditure. As my wife receives bonuses that effectively cover our premium cost for much of our insurance, I have removed the employer bonus paid portion of the disability insurance to reflect what we actually pay.
The following paragraphs are responses to the questions and suggestions raised in my earlier posting.
The life insurance is in fact term insurance. We have a fairly high income and therefore have purchased enough insurance to provide many years of replacement income coverage for our surviving spouse and children. The insurance is 30 year level term purchased at competitive prices.
The telephone bills reflect having a single land line (traditional) and two VOIP lines with unlimited calling plans ($25/mo. each). One of the VOIP lines is used exclusively for business. The land line is needed for satelite, burglar alarm and as a backup if the internet connection goes down.
Jonathan raised an excellent point, we are spending alot of money for storage. It's $140 a month for an air conditioned unit. We have quite a bit of furniture, books and other items. Our goal is to gradually empty the unit over the course of the year. Some items may never find their way out, such as grandma's dining table and chairs, etc.... We originally rented the unit due to the small size of our temporary home. Our new home is larger and able to absorb more, but not all, of the boxes in the unit. I have a feeling we'll keep the unit for a while, however, I'm hoping we can at least give away much of what's in it and use it to reduce clutter in our house.
Jim, we're spending $0 on short term disability for my wife after applying the company bonus.
Madame X, I like the idea of grouping expenses and will try to do that next month, if time permits. We're actually feeding the two parents (us), two grandparents and two kids. I think our groceries are fairly reasonable for the number of mouths we feed, but I'm sure we could do better. I benchmarked against a friend who's spending 80% more, but they shop at wholefoods.
The LTC is for my wife and myself. It provides daily coverage (I think $175 each per day at 6% annual coverage appreciation full at home coverage or at facility). It's actually paid through a company I own, which gives us a bit of a tax benefit on it (41.25% less real cost due to payment with pretax dollars).
The LTD provides an exceedingly high amount of salary coverage as neither of us has group disability coverage at work. It's a series of private policies providing approximately 70% of our current income. Until our savings reach a significantly larger level, we feel it's necessary to safeguard our income in this manner. I do have a friend who's questioned the value of the disability expenditure based on the likeliness of it happening. However, with two young children, we would both be anxious.
The $590 for utilities is a guess, as we just moved, however, we live in a very expensive service area and our heating, as is much in the south, is provided by electric heat pump, which can be quite expensive. I'm hoping that utilities will actually be lower. It is disgustingly high. Hopefully our new house with new and efficient appliances will cost less. Also, water is very expensive here.
I've changed the cell $ amount to reflect the amount reimbursed from work. I am examining whether we can reduce our calling plan and lower the amount even further. The telephone expenditure was explained above, but is for 3 lines. Thanks, emptyspaces, for the idea about the plan size.
JLP, we're going to have weekly meetings with our storage unit. 5 more boxes came out today! I think there are about 100 left.
Jocular, we own more than two cars. The auto repair is for the other cars. We lease two cars through the business and they are used primarily for business purposes. I feel the monthly cost and keep thinking I would rather buy the cars outright. My wife does like the idea of having a new one every 2-3 years, therefore a lease, at least for hers, seems most cost effective. We will buy one of the leased cars when it comes off of least this year. I guess I should budget for that.
apollo, we have a 30 year mortgage. We found the rate difference between 30, 7 and 5 to be fairly minimal. Our rate is 6%, which isn't bad for the recent market. However, we put less than 20% down and took the balance in a second mortgage. I prefer to have the cash on hand than tied up into the house. At least at 6% interest rates. I forgot to add in the yard service. They cost $30 per week, however, I'm thinking about inve3sting in a $350 self-propelled push gasoline powered lawn mower. Grandpa says he'd like to cut the grass himself. In 12 weeks it will pay for itself. I'm thinking of composting the clippings. Anyone have any advice on this topic? Is it worth the effort? What's a good lawn mower?
Nathan, very good insights regarding insurance. I've checked it and there's little duplication. Actually there's some, but I've been in the process of modifying the policies for the last five months - boy do they move slowly!!
apollo, we'll be dropping the short term disability premium. Neither of our employers provide disability insurance. We also own a business, but it only provides LTC for us. The disabillity insurance has been purchased with the sole purpose of replacing earned income. Unfortunately we earn enough such that it's hard t get a decent level of replacement.
Gifts given, represent an average amount for gifts given to relatives, friends, each other and our children over the course of a year. It's something we could probably lower. I'll have to look into the detail on it.
The areas where we can lower the monthly cost by year's end are:
1. The auto lease (buy one car), that may end up cost $18k in cash to remove $400 in monthly payments. The $18k amortizes out to $500/mo over 36 months without NPV factors. Seems most likely to be worthwhile if we keep the car for more than 6 years - we should.
2. cell phone - will probably reduce plan
3. short term disability - will drop in Nov. or earlier.
4. Grandma's supplemental health insurance can go sometime within 6-24 months, exactly when is TBD. She'll also have another source of coverage for medicare part D, too.
I have to work on more.
Thanks so much and have a wonderful day,