Reader Case Study: Hair on Fire!

fireToday we bring back the ever-popular reader case study series with an interesting twist.

First of all, our subject is a new reader, with sizable financial baggage from earlier decades, but plenty of potential for improvement. Equally notable is the fact that I have enlisted some outside help for the research and analysis.

During a recent trip, I ran into another blogger named Jacob Wade who, quite amazingly, actually likes  budgets. In fact, he feels so strongly about it that he named his financial blog iheartbudgets.net. We got to talking, and he enthused about how much he likes analyzing and solving detailed financial problems for other people.

“Oh boy, do I have a job for you”, I said. “I get emails from people with detailed financial problems every day, and although I still read every one, it pains me not to have time to respond to many of them.

Could Jacob’s enthusiasm be used to all of our advantage? I sent him a sample case study to test out his chops. I was pleasantly stunned by the results – he did a great job, and offers advice that even I would consider hard-hitting. Let’s dig into our dear reader’s story, then you’ll see the analysis with some joint recommendations by Jacob and myself.

[contents edited for length]

Dear Mr. Money Mustache,

I’m a recent reader of your blog, courtesy of your interview with Jesse at You Need A Budget, which is the budgeting software I’ve been using. I know that you’re all about retiring early, but I’m wondering what advice you’ve got for someone who wonders if they’re ever going to be able to retire at all!  Much of what you recommend we can still put into place, I know, and we are in the process, but I am unsure if our advanced age changes any of those tactics and strategies.

I’m not going to bother to tell you all the mistakes we’ve made in 27+ years of marriage and raising five kids.  I’m sure you know the drill, since we lived the basic “American Dream.”  We are now 53 years old. My question now is “What’s the best we can do at this point?”

This is where we are:

  • We have a home with a mortgage/equity loan that’s about $20,000 less than the list value of the house.
  • Our credit scores are low, partly due to not having any credit cards for the last ten years to show a history, and partly due to having late payments due to temporary unemployment, among other things.
  • We are the “OMG your hair is on fire” commuters; 45 minute commute for me, 55 for husband, we live in the middle of nowhere, and real estate in our area is not selling.
  • 4 of 5 of our kids are still in college, two live with us and commute, the (recent) graduate lives with us and has an entry-level job since he can’t find work with his degree.  Our commuters travel by bus 30 minutes to the WEST of us to go to school, we travel EAST to go to our jobs. Our employed graduate also travels west to his job, in the same town where the other two go to college. This makes moving a little bit more complicated.
  • Retirement: We both qualify for Social Security; however, I have met only the minimum number of quarters since I took 17 years off to home school our five kids, and my estimated benefit at age 67 is $524 a month. I have now been teaching at a charter school since 2006, and contribute to Massachusetts Teachers’ Retirement. I would need to work and contribute to that fund until the spring of 2026 to be fully vested.
  • My husband’s estimated Social Security benefit at age 67 is about $2000 a month. He has $20,000 in a 401K with his current employer, and two smaller accounts with former employers, one with a balance of about $4000, and one with roughly $500. I contributed briefly at work to a TIAA-CREF fund, and the balance is about $1000.
  • I have a newly minted Master’s Degree, which I was required to get in order to keep my teaching license, leaving me with loans of about 22,000.
  • Commuter son and husband have a Nissan Sentra and a Toyota Yaris, both paid for.  I am driving our 2005 Dodge Caravan, which is on its last legs at 180K miles with beaucoup mechanical issues.
  • We live in Massachusetts, so are among those few who still use oil for heat and hot water; we have electric appliances.
  • We own term life insurance policies, and have health insurance through my husband’s employer (a health insurance company).
  • We owe back taxes to the IRS and Mass DOR, and have had our paycheck withholdings changed recently to avoid this in the future.
  • Not necessarily in the same vein, but relevant – I am a Yankee who would love to penny-pinch, and my husband is a free spender who loves to buy things on sale and as little “rewards” for himself and others, and chafes at the yoke of a budget.  He is (grudgingly) on board with me now. We rarely disagree about anything except money.  :)

I guess that’s a grim enough picture for now; as you can see, our situation is a giant Charlie Foxtrot*.
I know you get tons of email; perhaps this one will be just different enough to intrigue you – maybe you can Mr. Money Mustache even the old and desperate!

CF in MA

Mr. Money Mustache’s Observations:

This story is a great example of what happens when you live a good, honest life, but just don’t get around to doing the math. Other than the $1200 of oil and gas that goes up in flames each month, the rest of this budget looks fairly moderate for a large household. But there is no way to cheat the numbers. Children cost money to raise, and if you want to raise a large number of them on an average income, something else has to give.

And most people don’t realize that car-commuting (even a 10-minute ride) is spectacularly expensive, so your 45-minute double commute is astonishing. A 2005 vehicle that is “on its last legs?”. I bought my 2005 car four years ago with 57,000 miles and it just cracked 80k this year. It is still brand-new and has many decades of life left! Commuting in a VAN? I use my van when I need to carry home 1200 pounds of steel beams I found on Craigslist for my house rebuilding project – not when I need to transport  one lightweight human across a vast distance!

Finally, while supporting adult children and “treating” oneself are nice options to have, from a financial perspective you don’t actually have these options. This is what has caused the long-in-the-making financial emergency.  The great news is that you can dig out of this hole much more quickly than you sank in.

So let’s move on to Jacob’s analysis:


Home – $235,000
Retirement Fund Savings (401k and MTR) – $45,000
Cars – $7,000

Debts (Balances):

Mortgage – $167,000 at 3.5%
HELOC – $25,000 at 4%
Student Loans – $22,000 at 6.8%
Dell Loan – $2,500 at 16.66%
Personal Loan – $650
Staples CC – $500


To retire ever

Total Income $ 7,200.00 $ 7,200.00
Total Expenses $ 7,161.00 $ 3,504.00
Projected Ending Balance$ 39.00 $ 3,696.00 <-- Much better!
Other$ 110.00$ 110.00
Total Donations$ 110.00$ 110.00
Mortgage $ 1,330.00 $ 1,000.00 The goal is to be able to actually stop working at some point, so aggressive measures need to be taken. I suggest selling the house and moving MUCH closer to work (within 5 miles of both if possible). If possible, find something for $1,000 a month (about $130,000 15-year loan) or less.
Electric$ 200.00$ 100.00You can lower your electric bill if you implement the changes suggested in this MMM article. You stated that you have started hang drying clothes, now it's time to move on and get all CFL's bulbs and watch the A/C.
Oil Heating$ 700.00$ 200.00This bill is KILLING your budget. When you re-locate to a location closer to work, look for a natural gas furnace or another home with low heating costs. Otherwise you will literally waste $86,500 over the next 10 years on this. It's not worth delaying retirement AN ENTIRE YEAR to pay for this inefficient heating method.
Cell Phone Sprint$ 320.00$ -When moving, you are going to need to drop the cell phone family plan. I didn't see a line for reimbursement for this, and you cannot afford an extra $275 a month to pay for your family's cell phone usage. Move everyone to Republic Wireless and only pay for the adult plans.
Cell Phone Republic Wireless$ 23.00$ 46.00Looks like you got started with one line, just double it up here.
Netflix/Hulu/Other$ 40.00$ 40.00MMM: Huh? Netflix is $7.99/month. Between library books, learning new skills, and this, you will have plenty of entertainment.
Car Insurance$ 155.00$ 90.00Shop this around. We pay $78 for liability on our two used cars, there's no reason you need to pay any more than $90 a month for basic coverage. Since you have a used car, all the extra insurance is not necessary to cover scratches and dings and the like. (MMM Note: mine is $30/month for two cars and two drivers)
Internet$ 70.00$ 70.00Also worth shopping around - in your new area the competition might be better.
Land Line$ 35.00$ -Land line is not needed. (unless there's a business need for this)
Garbage$ 20.00$ 20.00
Medical$ 182.00$ 182.00
Student Loan 1$ 293.00$ 293.00We'll address this debt below.
Student Loan 2$ 130.00$ 130.00We'll address this debt below.
Life Insurance$ 91.00$ 91.00
Personal Loan$ 90.00$ 90.00We'll address this debt below.
Dell Loan$ 160.00$ 160.00We'll address this debt below.
IRS and State Taxes$ 700.00$ -You stated in email that this balance is now at $0
Paypal Loan$ 160.00$ -You stated in email that this balance is now at $0
ADT Security$ 50.00$ -Not necessary. Here's a direct quote from MMM: "These are a silly invention – the Timeshare Condos of the suburbs. Drop it, live free, and save $(50)"
Homeowner's Insurance$ 55.00$ 55.00
Total Bills $ 4,804.00 $ 2,567.00
Other Expenses
Food$ 900.00$ 400.00Check out MMM's advice here. You can reduce this bill to $400 a month easily and eat VERY well with a though-out meal plan and some smart shopping.
Gas$ 575.00$ 150.00Since we have cut your commute down to only a few miles, your gas bill should be VERY low ($50 a month or less). I padded it a bit to drive out and visit family.

MMM Note - and remember that "Gas" should never be used as an approximation of the true cost of commuting. You need to triple this number at least, just to account for the direct car costs. Adding in life costs, the bill is much higher again.
Eating Out$ 15.00$ -While you're in debt, this is a luxury that cannot be afforded. Take care of the DEBT EMERGENCY first, and then add this back in.
Spending Cash$ 25.00$ -Same as eating out.
Personal Items$ 85.00$ 85.00
Household Items$ 62.00$ 62.00
Clothing$ 60.00$ 15.00You don't need $60 of new clothing a month. $15 a month should take care of any clothing necessities with thrift shops, consignment stores and garage sales. Also leverage family and friends to organize a clothing swap (read: FREE CLOTHES) if additional garb is required.
Misc$ 40.00$ 40.00
Car Maintenance$ 50.00$ 50.00
Total Other Expenses $ 1,812.00 $ 802.00
Savings Buckets
Christmas$ 25.00$ 25.00
Emergency Fund$ 410.00$ -This will be addressed below.
Total Savings Buckets$ 435.00$ 25.00
Total Expenses $ 7,161.00 $ 3,504.00

Jacob goes on to write,

Dear CF,
Thank you for exposing your budget to all of us financial voyeurs.

There is a LOT going on here, and a lot to address below. The goal here is to make every hour of work from now until retirement count. So let’s get to it:

Housing: I won’t pull any face punches here. You need to move. Your heating bill and commute are absolutely killing your financial situation, and you will NOT retire anytime soon if you stay there. There is $980 potential savings PER MONTH or more in this transition (including commute and utilities), as well as cutting your commute time down to almost nothing, saving time and stress. This move is to help you take a sharp exit off the highway of Never Retiring Wastefulness and allow you to not work until you die.

In emails, you stated the house needs about $8,000 of updates to rent or sell. Since you have about $2,000 of other monthly savings lined up in this budget, you should be able to have this taken care of within four months, and be moved out in six or seven months. Savings on mortgage is at least $330 per month.

You also stated needing a replacement car soon. Please read this MMM post and PAY CASH for your next used-car purchase.

Food: If you are feeding a flock of adult children, they are going to have to chip in. There is no reason you two people can’t eat VERY well on $400 per month, and with proper planning, that could be $300. So many people cannot save enough to retire but are actually just eating their retirement meal by meal. For reference, the extra $500 a month spent on food would cost you over $86,000 over the next 10 years, and cause you to work an additional year for that inefficiency. Nothing tastes THAT good. Savings of at least $500 a month.

Debt: This debt is to be treated as a radioactive plutonium. You must neutralize it ASAP, and this will be your first priority. Here’s how I suggest you tackle it with your extra $3,700 a month.

Dell Loan – $2,500 at 16.66% (gone in month 1)
Personal Loan – $650 (gone in month 1)
Staples CC – $500 (gone in month 1)
Student Loans – $22,000 at 6.8% (gone in month 7)

With all the expenses saved from the above changes, you can kill this debt COMPLETELY in 7 months. The first 3 debts will be gone in the first month! Now you have another $673 a month to invest.

Investments: Once your consumer debt is gone, you will have about $4,400 a month to invest in index funds to get you to retirement. Investing this at 7% for the next 12 years with your starting balance of $45,000 puts you at about $1,100,000 at age 66.

Your annual expenses with the above budget are about $42,000 per year, and using the rule of 4%, this money would provide you with $44,000 annually. You can retire!

This quick plan comes with a major safety margin:

  • the $2,000 per month of Social Security your husband can begin drawing at age 67
  • whatever you get from the teacher’s Retirement Fund
  • the fact that your new mortgage will be paid off in 15 years, dropping the future budget

Conclusion: Yes, this is a lot of change. No, moving won’t be easy, and figuring out the details of your kids housing and all that is going to be a challenge. But the status quo is what got you here, and changing the flow of money is what will get you out.

Comments: What would YOU do in CF’s position? Can she recover and earn a solid retirement in a timely manner?


MMM Note: Thanks again to my new friend Jacob for all of the help on this one, and you may see a few more case studies around here if we’re lucky.


*I think this is a witty polite way of saying “CF”, which of course means “Clusterfuck”. I thought this was a skilled use of swearwords, and it is one of the reasons I decided to take this case study. 

  • Miss Growing Green December 3, 2013, 11:29 am

    Great assessment! I agree with all the suggestions. The one thing that struck me as *insane* more than anything else in the case study is the $900/month on oil and electric utilities. WOW!
    That’s nearly $11,000 a year on two utilities. We live in Northern Montana and spend a tenth of that for our heating.

    • Free Money Minute December 3, 2013, 12:02 pm

      That jumped out at me as well. I am in the midwest, in a smaller home, and I only spend $150 max on heating in the dead of winter.

      • Sky January 6, 2014, 10:44 am

        I also live in MA with no option for gas lines in my neighborhood. I keep the house at 64 during the day and 56 at night. We just replaced our furnace with a high efficiency version. My house is well insulated according to the MassSave assessors. And we are also spending close to $600/month in the really cold months.
        I appreciate all the comments expressing amazement, but its a practical reality here. Heat pumps don’t work in temperatures as low as we often get here. I don’t know how you other commenters spend so much less.You’re lucky that gas is cheap and you have that option.

        • Eldred January 8, 2014, 9:35 am

          Even *with* gas heat, I’m spending $122/mth on the ‘budget’ plan, and about $90/month for electricity. So not quite as much as yours, but still a lot more than most people here. I’m hoping to make my house more efficient over the next year, but I need the money to DO that first…

        • Slim September 26, 2017, 11:18 am

          I know this more than 3 years later, but I feel compelled to respond.

          I live in Vermont, and we get colder than MA, so I can confidently say that you are just making excuses. Heat pumps don’t work as amazingly well below zero Fahrenheit as they do above it, but the modern models do continue work at least a bit until something like -15. Will it replace all heating needs for a house? No. But it will certainly off-set a lot of them!

          State energy efficiency assessors are looking for low-hanging fruit. You may have a certain thickness of fiberglass bats in your wall, but without good air-sealing that only makes so much of a difference. Air seal around the rim joist of the house and the attic, and you’ll feel a noticeable difference.

          No more defeatism!

    • Jacob December 3, 2013, 1:50 pm

      Yeah, that was killer to even look at. Oil heating seems like the worst possible form of energy to consume and should be avoided at ALL COSTS. I can’t imagine wasting a few hours of each day at work just to heat my house. Ugh! Getting into a house with more efficient utilities is going to bring retirement earlier by a few years.

      • Mrs PoP December 3, 2013, 5:29 pm

        What I don’t understand is why there is not a booming business getting rid of these oil heaters? If it costs ~$8.5K/year to heat your house with oil, surely the payback on installing a new system that uses a different form of energy would be relatively short. Even if a new system cost $10K, if it cut your heating costs to just $3.5K/year (still high!), the payback would be 2 years.

        But maybe this is my warm weather bias as our electric heater is rarely used (since it’s so expensive at ~$10/day to run).

        • Jimfectious December 3, 2013, 6:20 pm

          In a lot of places in the rural northeast US many people only have access to oil heat and no access to natural gas. In my mother’s case, the local gas company, which is probably the same one that CF would have, ran gas lines all over her village this summer at no cost to the residents. However, it took a few residents contacting the company to demonstrate interest. Her switch-over to a gas boiler was about $4000-$5000 in addition to the cost of getting rid of an oil tank; still a good deal.

          • Ishmael December 3, 2013, 8:11 pm

            Look into mini-split heat pumps. In Atlantic Canada (where there is still a lot of oil heating), people are installing them in droves. $3500 to install and they heat a typical house for about $100/month in a land of sky-high electricity rates.

          • db December 3, 2013, 8:11 pm

            In our neighborhood, less than 25 miles from downtown DC and not too rural, Washington Gas does not have gas lines and refuses to bring them in unless we can get a majority of homeowners to agree to put two major appliances on gas. I have had no luck with my neighbors on this. Oil heat is nice and warm, but paying for it reallly really sucks

            • Roch Naleway December 9, 2013, 11:38 pm

              I second the recommendation to go for a ductless mini-split system when gas is not available, too expensive, or when upgrading from baseboard electric systems. Most homes can be upgraded for $3,000-$5,000.

          • Anna December 6, 2013, 7:40 am

            This case study also happens to be in Massachusetts with the awesome Mass Saves program. They’ll hook you up with rebates and a ZERO PERCENT loan (for the whole life of the loan – up to 7 years) to help you pay for the conversion from oil to gas. I just did it – it was super easy. I don’t know that taking more debt is in this case study’s best interest, but 0% interest is better than free money + the savings of having gas instead of oil.

        • lauren December 4, 2013, 7:23 pm

          two words: SOLAR THERMAL.

          (Plus incentives, rebates etc.)

        • Kenoryn December 5, 2013, 3:08 pm

          Or they could build a solar air heater to supplement their heating. Lots of DIY plans and ideas here:

        • M December 27, 2013, 6:16 am

          I’m also in the rural Noetheast and second everyone else. Of course we’d love natural gas, but there is only one neighborhood of one city you can be in to get it. For us we are on equalized payments of $271/month so $3k per year. Since we can’t get natural gas as we already have a very new propane boiler there is not much point I switching. Wood is the way to go if you’re going to switch – it is by FAR the cheapest option. But then you have to be home to stoke the fire.

          I have head of a few people mistaking mini splits. And Maine also has a program to help pay for these improvements. We got $600 for insulation.

      • EL December 7, 2013, 8:28 am

        The heating costs are high, but its irrelevant if they do not change their lifestyle immediately. Moving away from a home where they most likely raised their kids there is going to be a tough pill to swallow. All the other changes need to be made for them to eliminate the debt as fast as recommended. Then the tough question they have to ask themselves is will they really be able to sock away 4 thousand dollars a month in retirement. Great Advice Jacob.

    • CincyCat December 3, 2013, 3:08 pm

      And I thought our $230/mo. budget billing plan in SW Ohio was high!

      • Andy December 3, 2013, 3:35 pm

        And I thought our £40/month bill ($80ish?) was high!!! Genuinely I did, I know people with bigger houses than us with lower bills than that. Maybe us Brits are a thrifty nation by heart after all :)

      • Carla December 4, 2013, 8:04 am

        Cincy utility rates are fairly high…. and the houses largely old… It’s hard to do better. I feel your pain.

    • Money Saving December 4, 2013, 5:08 am

      I wonder where they keep their thermostat. That seems ridiculous, even at current oil prices. This definitely needs to be reigned in immediately :-)

      • Roch Naleway December 9, 2013, 11:40 pm

        Agreed. This must be a 40-50 year old oil furnace that is only 50% efficient. If she had to stay (obviously not recommended in this situation) she could upgrade to a high efficiency oil fired furnace running on biodiesel.

        • David July 9, 2016, 1:08 pm

          I have been burning biodiesel in my oil furnace for 10 years. I would not recommend it to the average homeowner. Biodiesel causes issues with furnaces and boilers that many oil burner technicians are not experienced with. If anyone is going to attempt to heat their house with biodiesel they need to have a good understanding of how the burner works and a good understanding of the fuel itself. I had to replace a seven year old burner because of the corrosive properties of biodiesel. Note: most oil burners are rated for up to 5% biodiesel. I have been burning a 50-80% mix depending on the outside temperatures.

    • Resman December 6, 2013, 12:31 pm

      This budget is nice, but still FI is not as easy as I have thought it was when I started on the project. In Europe it is much more difficult you Yankees have got it better than us in terms of average income and expenses :) Also they key assumption is that the stock market will give a yield of 7% isn’t that a bit optimistic given the fundamentals of the stock market at the moment.


      • greg December 14, 2013, 8:36 am

        “they key assumption is that the stock market will give a yield of 7%”

        I assume much less. Go though the historical returns of the S&P 500, and look at sliding windows for the CAGR and see how you feel. Choosing this assumption is quite a personal choice, and my personal choice is to pick one of the lower results of the sliding window.

  • tkurk December 3, 2013, 11:30 am

    Wow, $700/month to heat their house? We are also part of the fuel oil heaters, but we live in Fairbanks AK where it gets colder than 100% of other parts of America. -20 to -40 is common every winter for several weeks at a time, and -10 is considered “nice out”. We do have a small 1000 sqft home, but we have an inefficient 30 year old forced air furnace, but that still only costs us $180/month to heat.

    It’s nice to see that even in circumstances like this one, changes can be made and things can work out, so it makes our attempts at change that much easier to accomplish. I’m working up to bike commuting to work 7 miles one way (didn’t someone say that writing down and sharing goals makes them easier to implement…), but still have to get on that bike for the first time. Studs will need to be installed and pogies sewn from old kids coats!

    • Jacob December 3, 2013, 1:53 pm

      I wonder if they just implemented MMM’s advice to wear “clothes” and turn down the thermostat to 67, if that might cut their bill down by a large margin? In either case, that, combined with commuting costs, is all the more reason to relocate so they don’t have to work forever. Seems worth it to me, though I know if I was in this exact situation, it’d be a touch (but necessary) decision to make.

      • stellamarina December 4, 2013, 1:08 am

        I agree…..I think it is time to tough things out a bit in the winter until they get into a better house. That may mean closing off some of the rooms in the winter. I know of a family that used a wood fire in the family room and they all slept there for the winter.

        • Kate in NY December 4, 2013, 1:11 pm

          I wonder – is that $700 a month for oil ALL YEAR, or only in the coldest 6 months? We live in an enormous, drafty, 200 year old farmhouse an hour north of NYC – and we have oil heat – and I can’t imagine any private home anywhere that would, frankly, cost more to heat than our place in the winter (though we do keep the house at a fairly brisk 67 degrees). Our bill from Nov-March is – gulp – about $900 per month. But the thing is – it is much less than that for October and April, and virtually nothing (only our hot water) the rest of the year. Last year we spent, in total, just under $5800 in oil. I’m not saying this is great, or anything – but it is better than the projected figures for the case study family.

      • Roch Naleway December 9, 2013, 11:44 pm

        They could have the thermostat at 68-72 degrees during the day when folks are home. It is recommended to set back the thermostat at night by 10 or more degrees. I am setting my thermostat at 58 degrees between 10PM and 6:15AM. This saves about 10-20% on the heating bill. That’s pretty good.

  • Chris H. December 3, 2013, 11:34 am

    This is a great analysis of the budgets. The only advice that I would change is the recommended food budget of $300 for 2 adults. My wife and I spend about $200 and eat very well. Maybe direct them to the MMM article about buying foods with the lowest cost per calorie and shopping in bulk (or at Aldi’s if they have one nearby). I just think $300 is way too much (especially in their position). Nevertheless, $300 would be a huge improvement from what they were spending on food. Just my 2 cents…

    • Jacob December 3, 2013, 2:12 pm

      Though I completely agree, going from $900 to $400 is going to be a tough transition. I left a little breathing room in there as they adjust all their spending downward. I think they can get there eventually, but not for a little while.

      • Chris H December 6, 2013, 11:03 pm

        That is a very good point! Going from $900 to $400 would be a 55% drop in this area. This is significant and requires adjustment. Once they build in the habits of frugality, they can adjust downward more when they are ready to make the jump.

  • Karen W December 3, 2013, 11:34 am

    Great Case Study! I hope CF in MA takes your advice and makes those changes asap. I also hope that her husband and children get on board with her to help out and do their part. It’s tough having a goal as lofty as this one and not having the support of your immediate family…

  • Holly December 3, 2013, 11:41 am

    Nice analysis, Jacob!

    I agree they need to move. They’re not only wasting a ton of money, but they’re wasting so many hours of their lives commuting each day.
    And I cannot comprehend their utility bills. My soul would die a little every time I wrote a $700 check for utilities!

    • Jacob December 3, 2013, 2:14 pm

      The overall goal here is retirement, but the big win in the interim is getting more of their life back. Cutting out the commute time AND waste will gain them more time for the things the value the most, i.e. Family, and has the added benefit of CRAZY cost savings so they can enjoy family even more in a decade.

  • Lucas December 3, 2013, 11:46 am

    couple notes:

    1) Wife can plan on 50% of husbands social security if that is greater then her own amount (so $1000 vs just $500).
    2) SS with both wife and husband should provide ~$30k a year based on their earnings. So i don’t think they are in quite as dire straights as made out. But they do have to get their spending and debt under control or else this clearly won’t work.
    3) Might also consider new employment vs sticking with the same jobs – this might either kill the commute or free up ability to move somewhere a bit cheaper/with better utilities.
    4) adult children living at home – obviously this is a cost factor. Agree adding cost sharing and encouraging your kids to get out on their own. Yes they will make some mistakes, but it is better to learn early then later, and if they get their own feet on the ground they will be in a better place to help.

    • Jacob December 3, 2013, 2:17 pm

      With all my plans I do not count on SS income because it’s future is questionable, but if it is as you say, then they could even shave a few more years off their retirement date. As MMM pointed out, having a decent sized safety margin is important in the success of retiring and STAYING retired.

      • Chris T December 3, 2013, 5:22 pm

        I like how conservative you are, but I dunno about your assessment on SS. Congress can’t get much support for a small slowdown in the annual increase of benefits, even though it would be better grounded in reality (the chained CPI). You can never say never with these types of things, but the odds of changes to the benefit formulas for people 10 years or so from retirement…I’m going to call that a never.

        • Pylortes December 3, 2013, 8:43 pm

          I agree with your assertion that Congress likely wont have the “cajones” to make major changes, and yet I still believe Jacob is correct in discounting the benefits somewhat (I would discount them but not eliminate the amount). How is this possible you might ask? The easiest most politically convenient way for a country to pay back its debts in full when it otherwise cannot afford to- by inflating its currency.

          • Jon December 4, 2013, 7:19 pm

            The ones with the “cajones” are the ones fighting to keep Social Security. The banksters and fraudsters don’t like it because it doesn’t line their pockets, so they want to see it destroyed. So they constantly float the lie that it contributes to our debt and can’t be there for us in the future. They also funnel money to the candidates that pretend to be so brave their willing to hand it all over to Wall St, as if cutting of grandma’s food and shelter is brave and manly. Not a single penny of the debt is due to SS, and it’s a lifeline for a lot of people. Almost no administrative costs. You can’t find a single program that has done more to alleviate elderly homelessness and food insecurity.

            I don’t expect I’ll need it, but I’ll fight for it because there are a lot of people who do and will. And even moreso know with this new push to 401k’s. Great for people at the top, but it’s killing the poor, many of whom have absolutely no hope of retiring without SS.

            • Harriet Vane December 5, 2013, 8:57 am

              Thanks for this Jon. There is a lot of misinformation out there about SS these days, for the reasons you identify. Any serious Mustachian who takes pride in objective research will find that SS is not ‘mismanaged’ (Michael Astrue, the Commissioner who resigned in January, is one of the brightest guys around) although it’s definitely underfunded by a Congress that in some quarters wants to see it die for the sake of an every-man-for-himself ideology. And so it goes.

            • Leah December 7, 2013, 9:42 am


      • Lucas December 4, 2013, 6:19 am

        Not disagreeing that there is some risk with SS. I personally don’t count them in my plans or if i do I do a 50% benefit calculation, but like a couple other people mentioned: the risk increases the further you are away from retirement. For most people close to retirement right now I think the risk is very minimal. If you are 35 years away from applying for benefits there is a definite chance of reduced benefits.

        I know it is not ideal, but for people who have relied primarily on SS i would advocate figuring out a way to get their base expenses under the SS income (pretty much your suggestions, with the addition that they should consider moving to a less expensive area/change jobs) – so they can survive if needed. And then discussing how their savings would fund any additional lifestyle choices. Just guessing from the clues about the area they live in, my guess is they are not going to be able to find a substantial cost savings in housing in the immediate area.

      • HealthyWealthyExpat December 4, 2013, 10:53 am

        Yes, you are right to ignore possible social security benefits, as it wouldn’t be prudent to count on receiving anything from an entity that is digging itself deeper and deeper into debt with its egregious financial mismanagement. Just looking at the poor holders of Detroit pensions should be enough to scare you into counting on only yourself for your financial independence.

        • Jon December 4, 2013, 7:22 pm

          SS is not in debt. It’s in surplus. It’s not contributed a single penny to the deficit. No program has done more to alleviate elderly homelessness and food insecurity. The constant criticism of SS is rooted in right wing think tanks and their funders in the financial service industry, who don’t like SS because it provides people with a retirement without giving them a cut.

          • Reed June 19, 2014, 10:20 pm

            Back off the conspiracy theories. Seriously. There are people outside the “right wing” and “fraudsters” who think Social Security is in trouble financially. The math simply isn’t there. Over time, the worker to retiree ratio is shrinking, people are living longer, and Congress steals the surplus for other pet projects. That doesn’t exactly scream sustainability.

  • backyardfeast December 3, 2013, 11:52 am

    Powerful stuff; a good lesson for those of us who are a little younger about how seemingly reasonable decisions pile up one at a time into a CF over the long term if we’re not careful. I hope it is possible to move, if selling is tough in their area. There aren’t any details here about how much rent they might earn and what kind of hole (or not) that might cause…but clearly, moving and needing the kids to take care of themselves now is absolutely necessary.

    Just wondered about the %7 return assumption over the next 12 years? I know this is a standard, proven estimate for those who have decades ahead before they need the money, but in this shorter time frame, might one want to be a little more conservative?

    • Jacob December 3, 2013, 2:20 pm

      I went with 7% as an average, but of course returns may vary and their asset allocation is up to them and their risk tolerance. But at this point, they should be a little LESS conservative to hit their goal of retirement. But yes, generally speaking, the nearer they get, the more conservative they should be.

  • Stephen December 3, 2013, 11:53 am

    I enjoy this analysis. The good news is that they have a really big shovel to help dig out. The utilities are the big wow in the budget but the suggestions seem reasonable.

    I would enjoy getting a follow up from this (or another MMM case study) to see if any of the suggestions are taken to heart. I see budgets like this all the time but the clientele (on the probono side) seem to glaze over at the suggestion of moving (even if their home is killing them). Cars and fancy cell phone plans are also killers but for some reason people cling to them (non MMM readers obviously) unrealistically- even with other viable options are presented. It is amazing how long people can go along struggling before they are ready to change their life.

    • Mr. Money Mustache December 3, 2013, 2:43 pm

      At this point in the discussion, I just wanted to throw in another advertisement for MOVING. Yay, moving! It’s fun and it is way easier than you think!

      Break through the psychological barriers and realize that accomplishing a house move is really just a fixed number of hours of making a plan and executing it. Phone calls, emails, cleaning, painting, raking, browsing online real estate listings, packing boxes, driving a U-haul truck, unpacking, and you are done.

      (No, Mustachians do not hire moving companies to carry their boxes for them, especially non-millionaires!)

      Two moves ago, I measured the effort to accomplish this: about 80 hours. And I had to do most of the work because my wife was pregnant at the time. It was still easy. This case study participant and her husband probably burn that much time commuting EVERY. SINGLE. MONTH.

      Moving is fun, moving is easy. It keeps you nimble and helps you shed excess material burden and fear of change.

      I’m moving to my fourth personally-owned house (since moving to the United States in 1999) later this year, and my 16th address since 1993. And even though it will be a long-term move, Mrs. MM and I already know it won’t be our last home.

      • mable hastings December 3, 2013, 8:22 pm

        We are both older and I am disabled. We moved about a year ago and I contacted our church youth group and asked them to help us by moving boxes and furniture. We said we would supply pizza and pop. About 18 kids showed and spent 5 hours moving us; it cost us less than $100 and the pastor felt it was a good thing for the kids to assist others. Win/win. Not for everyone, I realize, but a possibility for some who have a church family and need help from strong young backs. (We even had 3 fathers show up, to supervise and help.)

        • Andreas December 5, 2013, 6:55 am

          That’s an awesome solution. Thanks for sharing.

      • Randall Pitts December 4, 2013, 2:19 am

        Moving is surely necessary when trying to avoid future debt, but sometimes there are factors that might just out-weigh the financial aspect. One example could be if the family has school children. Moving too often generally makes things difficult for the children who lose contact with their friends and have to re-integrate in the new school community. I have never met anyone who had moved frequently as a child who said that the experience was something positive. Moving around in the same area to down-size wouldn’t be a problem but moving to avoid a 50 mile commute has more than just financial repercussions. These should also be considered when make plans to move. It might make sense when looking at the “big picture” to move in two or three years even when the financial indicators are screaming MOVE!

        • Louisa December 4, 2013, 4:00 am

          I moved frequently as a child and I don’t regret it for a minute. Yes, it was stressful leaving friends sometimes, but it also brought me a lot of strength and resilience and I move into new situations with a fearlessness that many people envy. People who move a lot as children do not all fit into one camp!

          • Randall Pitts December 4, 2013, 12:13 pm

            This is getting a little off topic, but I would like to clarify what I meant. I didn’t want to suggest that all movers are the same and they all suffered. I only wanted to suggest that financial considerations, although very predominant here (of course), are not the only issues that may need to be considered when deciding whether or not to move. The effect of moving on children was just one example.

          • Bryan December 5, 2013, 5:55 pm

            A quick Google search on the negatives of frequent moves on children:


            referred in the above is this article from the New York Times:


            So, saying that frequent moves have a negative effect on children is not unfounded. Do supporters of frequent moves with children have some data to support their assertion of it’s positive effects (other than their own anecdotes)?


            • Kelsey December 27, 2013, 9:06 am

              I moved 3 times as a young child to different states and I definitely feel it had a negative effect on me. I’m more of an introvert, so making friends was very hard for me. My sister on the other hand, is an extrovert and is 3 years younger, and she has friends from every place we’ve lived and it doesn’t seem like it’s been that hard for her.

              The one good thing is that because there are three of us siblings, it definitely brought us closer together, and was probably easier to adjust than having no siblings, or a single parent home. But I wouldn’t wish moving on a school-age child, you never know how it will affect their outlook on life.

        • Mark December 4, 2013, 5:21 am

          “I have never met anyone who had moved frequently as a child who said that the experience was something positive.”

          I changed school 12 times in 12 years in 4 countries (all but two schools were US Dept of Defence, a couple only lasted a few months, others a few years). I do consider it as a positive: the variety of locations, different school systems with different learning levels, learning how to make new friends and identify the crowd to stay away from, etc. And yes, I am still in contact with my first grade school friend (I am 58 now).

          • T Schmidt December 13, 2013, 9:10 am

            You may look back on it as a positive, but my guess is you weren’t as crazy about it at the time. It can be isolating.

            But there are positives in learning skills like meeting new friends, navigating new areas but like most lessons, we don’t appreciate them as children!

          • JBS December 15, 2013, 1:55 pm

            If read the articles about various studies cited above, you can see that moving has a minimal impact in cultures where moving is normative. The best of example of this is the military where lots of kids move all the time and many of their peers have to deal with it at the same time.

            It appeared the negative impacts were for kids with introverted personality types or who already have anxiety or high strung issues. The worst time to move in terms of negative impacts is when your child is in middle school.

            Negative effects from moving also strongly correlate with negative life events at the same time (divorce, job loss, etc.).

          • MooseOutFront February 3, 2014, 2:15 pm

            I moved after 3rd grade, 5th grade, and 10th grade, all to places hours or states away. I learned things about how to win friends and influence people that I can’t imagine having learned otherwise at such a young age. I view it as a VERY positive experience in my life.

        • Kristina December 4, 2013, 8:08 am

          They might not say it was positive, that does not mean it isn’t positive. Generally the first move or two is difficult on children as they are learning the moving skills for the first time. Like anything in life there are skills and tools to be learned. Little things like observe social dynamics before jumping in. Remembering to smile, and get the nerves up to make the effort to meet new friends. Also moves remind you of the difference between friends and family. Our daughters are on their 6th school. We have moved for better employment, cheaper cost of living, and better schools. Each respective move has improved our family as a whole. Yes it is difficult to integrate in new communities, however adapting to change is an essential skill in life. It is important for children to have supportive parents that also make the effort to help the children integrate by getting involved in the community, signing the children up for clubs or activities, by move 3 the children will do this themselves. The end result is our children know in every room there is a friend, you just have to find them.

        • Lil December 4, 2013, 9:10 am

          Army brat here! Loved moving as a kid, but maybe I’m the anomaly. I was the only one out of my siblings that loved it. I just wanted to try another adventure, another culture, new kids, etc. Moving to Germany, I imagined it would be like Candy Land. It wasn’t, but it was still an awesome place! As an adult, I get an itch to move every 3-4 years. If only my hubby felt the same way….

        • Rich Davis December 4, 2013, 12:24 pm

          Another military brat here. I enjoyed moving every few years growing up. So much so that I joined the Navy to keep on moving!

        • Joshua Drake December 4, 2013, 12:39 pm

          I lived in seven different cities, one of them on two different occasions, before I was twelve, and I didn’t consider it a negative at all. Personally I like to think that it gave me some skill at settling in to a new environment. In fact my wife and I moved over 160 miles now just over a year ago, marking our third home ownership experience and the fourth place we’ve lived together in 12 years of marriage.

          Although you are correct that there are difficulties integrating into new schools, I’d much rather deal with those than hearing my parents fret and/or fight about money.

          Not that a single data point over turns your concerns, just realize that there maybe hidden benefits to a move in addition to your logical downsides and the financial benefits discussed here.

        • midwest girlstache December 5, 2013, 2:32 pm

          I respectfully disagree about moving. I moved almost every four years as a child and it never had a significant impact because I had a strong family unit and supportive parents. Since I moved frequently I learned how to show myself friendly and now have great friends all over the United States. Where were currently live is killing us, but my anti-mustachian spouse is sentimentally attached to where we are despite chronically under-earning and overspending for many years. This crippling mentality has caused our oldest son to not move either, enrolling at an expensive private college locally instead of going to another more affordable school some where else. It then becomes inter-generational. I agree with the people above said that sometimes people really have to hit rock bottom before they realize the math is working against them. I get it . . . but its still no justification for not taking action. I’d hate to be a greeter at Walmart in this same town when I’m 80 because the math couldn’t trump our fears. This analysis actually gave me hope! It means at 42 we can still retire if we change things! I know what it is like to live a CF. I hope they take the advice and post updates. What a gift and service MMM and Jacob are doing!

          • Cujo February 3, 2014, 2:23 pm

            This isn’t really an agree/disagree matter; it depends on the person. Some kids hone their social skills and thrive under the constant changes. Some don’t. I went to six different schools, I had social issues to begin with and had trouble making friends, and moving every couple of years meant I had to keep starting over. As a result I never had any close friends until college. Moving affects each person differently.

      • Chris December 4, 2013, 7:32 am

        One other benefit to moving, it is a superb opportunity to declutter. Instead of packing that attic full of junk into boxes, moving them, and then unpacking them into a new attic, consider getting rid of every extra scrap piece of junk that hasn’t been touched in three years and either donate it to charity (or the local landfill). Moving gives everyone a fresh start. Time to leave some of that wastefulness behind. Lastly, your house will show much bette to potential buyers if there is a lot less stuff in it.

        • Catherine December 5, 2013, 8:55 am

          No kidding! I have moved several times in the past few years, and each time I find there is less and less stuff that needs to come with me.

          Most of my moves I’ve known about well in advance also, which helps a lot. If you can keep that “moving soon, do I want to move THIS?” mindset, it will prevent a lot of silly acquisitions!

        • Emmers December 12, 2013, 6:59 pm

          Count me in the “moving is terrible” crowd, but I use the fact of owning a small house to be my decluttering impetus: as my mom says, if I never have the huge amounts of space, I never fill it up with junk!

          It also means a smaller mortgage payment, cheaper heating and cooling bills, and so forth! :-)

      • Suite Joey Blue Eyes (CSNY Superfan) December 4, 2013, 9:55 am

        MMM, what if a couple already lives very close to their jobs _and_ extended family? (By close, I mean within 2 miles of each.) What if they’ve optimized the space in terms of their needs and energy efficiency? (Of course, taking advantages of new opportunities and technologies in the future that will surely come.)

        There are transactions costs involved with selling and buying. There are tax advantages (homestead property tax treatment) that are lost when you move. There are state taxes that must be paid to record, etc. And when a house is purchased, the property taxes are based upon that new sale amount, so any untaxed benefit from buying cheaply and renovating is lost. For example, we paid 150k for our house and went to work making it efficient and lean, yet comfortable and optimized for us. The house was slightly average for our block, now it is at or near the top of our block because of the work I put in and the research we did. Sweat equity. If we sold the house, it would likely go for at least $250k, quite possibly $275k. So right now, we’re sitting on $100k+ of untaxed benefits that the state/county will never find out about because we’re not going to invite them in and because the work didn’t require permits.

        Moreoever, I own rental properties and I also buy/sell houses after fixing up. But none of my rentals or my flips is optimized like my own house. And I really don’t want to give up the tax benefits I’m sitting on for my personal property. Due to homestead tax laws here, an owner-occupied house can only have its property taxes increased by a small amount per year for as long as you own it. But if you sell, you have to start all over again based upon the new sales price. This isn’t a big deal now because prices have been flat since the property bubble collapse, but if you look at people who bought houses in the 90s or prior, their property taxes for a house are often 50% less than the prop taxes for recent sales. And this is irrespective of what the actual value or assessment of the house is.

        • Mr. Money Mustache December 4, 2013, 11:07 am

          Sounds like you’ve done a great job, Joey, and of course there is no advantage to moving in that case. My advertisement for the joys of moving was directed at those who stay in some awful, expensive, distant car-dependent wasteland just because they feel that moving is too much hassle.

          My own moves have always been specifically to optimize things – moving close to jobs or the university where I studied. This year’s move will be to downsize the house, get the chance to live next to a beautiful public park, and cash out $100k or more of equity for other investments.

          enjoy your optimized home!

          • Suite Joey Blue Eyes (CSNY Superfan) December 5, 2013, 8:28 am

            Your posts about optimization have contributed to a few things I did with our home — adding thermal mass on the 2nd floor was the most recent activity (I blew in cellulose insulation and pulled the carpet in favor of new wood flooring I got in sale).

            The point in asking my question was — many here in the US don’t think about transactions costs and their effect over time. This, combined with the simple fact that tax assessors do not come inside your house, means that if you are in a modest neighborhood but your house is much nicer than average, you are getting an “invisible” benefit. It’s the opposite of the typical American mindset, which is that you want to live in a “really nice” area (high prices) but know nothing about home improvement or home maintenance, so you end up with a cookie cutter/unoptimized house, which is often bigger than you need and not close to work/recreation (car dependent).

            • Emmers December 12, 2013, 7:01 pm

              I know people who flipped houses for years, and today are sitting on as big a mortgage as ever. It’s really *not* always a wealth builder. Oh well; I guess everyone has a hobby (and they seem to love home renovation, so…).

      • WageSlave December 4, 2013, 10:01 am

        I think an efficient MMM-style life enables fun/easy/quick moves. Being retired also enables the time requirement of DIY moving. On the other hand, the typical, non-optimized family probably has a bigger house than they need, and therefore that much more stuff to move (or at least sort through and dispose of prior to the move). Not to mention, if the adults in the house are working full-time, it’s a double-whammy. It all adds up, right?

        Two moves ago, while packing, I found so much stuff that I really didn’t need… enough of it was too valuable to be thrown out, so I moved it, but then had that much more work to do in the new place, going through and selling or donating all that stuff.

        So I adopted a little lifestyle improvement: every weekend, I picked an area of the house, and did a mental “what if I were moving” exercise: I looked for things that I wouldn’t want to have to move and sold, donated, recycled, threw away, etc.

        For my last/most recent move, I found my strategy had worked, but only to a degree: I had different standards depending on if I was pretending to move or actually moving. In the pretend case, I erred more to the “I’ll keep this” mentality, versus, for actually moving, I kept asking myself, “Why didn’t I get rid of *this*?!”

        Still, it’s worth doing, if for no other reason that I find de-cluttering feels great.

        • Lina December 4, 2013, 11:35 am

          I have moved every 2-3 years and I counted that I have lived in 16 different apartments during the last 16 years. During those 16 years I have only doubled the amount of stuff so my last move required 6 cubic meters. Everytime I have moved I have looked through my stuff and considered If I wanted to pay for moving the item. It is a really effective way to declutter. If you haven’t used the item in several years there is no need to pay for the move. I have saved thousands of dollars in moving cost during the years. Nowadays I can pack up my apartment in less than 24 hours. People always wondering where I have my stuff as it is not cluttering my apartment. My answer is that I don’t have that much stuff.

      • Free_at_50 December 7, 2013, 9:23 am

        I couldn’t agree more! Moving, especially to improve your quality of life or to reduce expenses, is awesome! And you get to periodically review what you already own so you don’t make the stupid mistake of purchasing it again! :)

      • Rob in Munich December 7, 2013, 10:36 am

        I want to second the point on moving, pre MMM days all our many moves were car centric, distance to work, friends church, parking for 2 vehicles (important in Europe) etc. Public transit was simply a nice after thought.

        This last move we completely reversed it and searched for a bus/metro friendly location, extra parking was simply an after thought. The difference, we went from 2 tanks a week to a tank every month or two. So much so that the times I have to drive I complain about traffic! As well we are seriously considering downsizing to one car.

        Even better is a new mall opened next door which has all three stores I go to (Aldis, Tengelmans and Roseman for drugey) once the landscaping is done it will be within walking distance! Not even bothering getting a bike trailer, faster to walk!

        Sure we pay a bit more in rent but the savings in not driving and getting rid of the second car more than outweight the costs.

        So yes when you do it right a move can save serious money

      • Cujo December 10, 2013, 5:42 pm

        I love this blog, but “Mustachians do not hire moving companies” is the sort of dogmatic thing you say from time to time that just makes me nuts. If a couple is not retired, do you realize how much time 80 hours is? How many days that is if you both work full-time? Add to that the fact that many people do not have the luxury of owning both houses (the one they’re leaving and the one they’re going to) at the same time, and thus don’t have weeks in which to complete their move, and for many people hiring a moving company is the sensible thing to do.

        • Mr. Money Mustache December 10, 2013, 9:50 pm

          Complainypants comment extreme!

          80 hours is less than a single week’s after work free time for a couple. It never occurred to me in my life to hire movers – if you need ’em, you have too much stuff. Exception for disabled folks, of course.

          • Jen December 11, 2013, 4:42 pm

            And considering the average American spends something like five hours A DAY watching TV, the fact is the most of us have the time we just don’t want to use it moving because moving is not fun. More of us need to be honest about why we make the bad financial choices we do.

          • Mikey January 22, 2018, 9:35 pm

            Sh…. I worked for a moving company back when you made this comment. I’m sure glad no one heard ya.

      • Eldred January 8, 2014, 9:44 am

        Moving is *fun*?!? Oy, I can’t believe that. Not counting college, I’ve moved twice – hated both times. I’m considering moving from Michigan to either Nevada, New Mexico, or Arizona, and I am NOT looking forward to that hassle. :-( Even if it DOES get me out of these damn freezing winters…

      • Hilda Corners September 20, 2017, 6:08 am

        (late comment, more for info for other comment readers than the case study)

        I also live in Massachusetts, and I have a guess to where the Case Study (CS) lives.

        Housing prices around here go from High in the rural exurbs of Boston to Oh My Flipping Diety! when you get into short commute distance of downtown. My suburb is 15 miles from downtown, and the newly flipped duplex down the street, complete with minimal yard and poor construction, is on sale for $900k. For each unit, not the whole building. Completely absurd.

        I’d still recommend moving closer to work, downsizing so the adult kids no longer have personal space in your home. Young adults should be paying rent/mortgage, whether they live with parents, roommates, or alone.

        The college students can share a tiny car … if one has to spend 3 hours on campus waiting for the other, well that’s life. You and your spouse can share a car, too.

  • MikeS December 3, 2013, 11:56 am

    First time to write, Mr. MM, and the first thing I want to do is thank you for writing all the articles you’ve written. I started at the beginning, and am almost to 2013. Because of you, I’ve made some major changes in my life, and I’m hoping my kids will learn too so they avoid the mistakes I’ve made. I cannot tell you enough, Thank You!

    Jacob’s take on the situation seems spot on to me. I look forward to seeing the replies to this case study because, as a father of two, I waffle on what parents should provide for their kids vs. when to draw the line and stop the gravy train. Tough love is tough in both directions it seems.

    • Jacob December 3, 2013, 2:29 pm

      You call it tough love, I call it a teachable event. In either case, it’s all out of love for family, and keeping this train on the same tracks ends up in a financial meltdown. So though it may be a tough transition, it really is the most loving thing to do.

      Kind of like keeping our kids from playing with fire or running in the middle of the highway. Might seem like a buzzkill in the moment, but years down the road they will be thankful for BEING ALIVE.

      • TomTom2 December 4, 2013, 6:52 am

        Perfectly said! If only MORE parents could realize this – so many more would have their financial house in much, much better order. I agree, if having your finances in order/on track is considered “tough love, so be it. Really, the kids will be just fine without all the extra “crap” that parents feel they “need” to give their kids. I often wonder what the parents of today are teaching their children by giving them everything, at the expense of their financial house being in ruins for many, many more years than really need be. And more than likely the children will grow up to be the same way with money – spending freely whenever, where ever, with no eye on saving and living a more frugal life.

      • Marcia December 4, 2013, 11:27 am

        I think this is a very good point. My parents were pretty poor, so it was just natural for all of the kids to take care of themselves.

        For most of my siblings, that meant getting a paying job out of high school, paying rent to our parents while living there, and moving out when they could afford it.

        For me, that meant getting scholarships and loans for college and joining ROTC. It never would have occurred to me to move home. It never would have occurred to me to get a car or phone that my parents paid for (though my mother did loan me $2000 for my first car until I got the loan from USAA).

        I have friends at work who are so proud of being “independent”, but they are 24 and still on their parents’ cell phone plan.

        • T.Lord December 4, 2013, 11:09 pm

          Being on the family cellphone plan isn’t necessarily a bad thing. A family I’m good friends with and very mustachian ni their spending habits (and they’ve done well therefore!) shares a family plan between dad, mom, and two adult daughters (who pay their share for the plan); they’ve been until recently on some old flip phones bought cheaply on ebay (they bought a bunch), and just this month switched to last-year’s-model smart phones. I get that this isn’t what you’re thinking of — just a note.

          • Marcia December 5, 2013, 11:26 am

            No, I can understand that sometimes, the family plan is cheaper per person.

            But the particular person I am thinking of said “My brother took my upgrade because he jumped into a lake with his phone”.

      • MooseOutFront February 3, 2014, 2:33 pm

        In this case the parents can very clearly explain to the kids that the choice is simple: they either lose the current benefits of living at home along with a 30 MINUTE bus ride to college, or they get to completely support their parents financially after they get too old to work anymore for the rest of their lives.

    • Michelle December 3, 2013, 9:03 pm

      Mike, I think you are smart to make a plan for where to draw the line for your two kids. Just realize that it is not really “tough love”. It is just loving your kids enough to prepare them to become self-sufficient adults. I provided food and shelter for my kids and a minimum of clothing. More importantly, I taught them how to bargain and find necessities at a low cost. I taught them to live close to work. I taught them to work hard in school to earn scholarships. As a result, my two oldest paid their own way through college and actually saved money while doing so. They graduated debt-free and both recently purchased foreclosures to fix up while living in them. Both married mustachians and are happier than many of their peers who are struggling to pay student loans. My third child is in college now. She currently has a $3 per month budget for luxuries. She bought Reece Cups last month. lol
      She is learning to live within her means, whatever they may be. I could help her, but then I would deprive her of self-sufficiency. Don’t give your kids too much, Mike. It really hurts them.

      • Chris December 4, 2013, 7:51 am

        Wow! Well done Michelle. I’ve got a feeling your kiddos will do well in life.

      • Marcia December 4, 2013, 11:28 am

        this warms my heart.

      • Toodleoo December 4, 2013, 6:59 pm

        I just love the $3/month budget for luxuries idea! I might have to steal that :) Just enough money for some candy or a latte or a cheap app.

      • Ms. Must-Stash December 6, 2013, 11:05 am

        This is awesome! Flashing back to great analysis that I’m pretty sure was in The Millionaire Next Door. They cited numerous examples of families where, for various reasons, one sibling was coddled and one sibling was pushed to take care of themselves. Anyone care to guess which type of kid overwhelmingly grew up to be happy and successful vs. which type of kid grew up to be financially insecure and constantly asking their parents for hand-outs?

    • Kristina December 4, 2013, 8:12 am

      Remember denying someone the opportunity to struggle and survive denies them of the lesson that you can struggle and survive. Denying them the opportunity to build independence, denies them of the opportunity to build confidence. A sense of accomplishment is a beautiful gift to give your children, much shinier than any object as it will radiate out of them.

      • Cas Hout December 5, 2013, 7:41 pm

        I pasted your quote on my Facebook page. Love how you phrased this :)

  • writing2reality December 3, 2013, 12:06 pm

    Wow, great job Jacob (and MMM). I think you’ve hit the nail on the head with some of the changes that need to be made, especially with the utilities and commuting expense.

    Certainly some drastic life changes need to be made, and getting both the husband, as well as the kids, on board will be really important. Hopefully we hear back from CF in the not to distant future to get an update on how things are going.

    Which, MMM, would be a great post to have. Check in with all of the folks who’ve undergone the ‘MMM’ treatment and see what sort of progress they’ve made since the review.

  • Laurissa December 3, 2013, 12:09 pm

    I too would second the request for a follow-up (on this or any case study). Has anyone been able to make the suggested changes for the better?

  • Stephanie December 3, 2013, 12:10 pm

    Way to go Jacob! That takes great patience to assess other people’s situations like that and you did an excellent job!

    I think the food budget could go down to $300 for two adults. The adult children should definitely pitch it.

    If the adult children are members of the household, then their hair should be on fire with this situation too. If they don’t want to live in an “emergency” situation, then they can start their own household.

    We are paying off serious student loans right now and our children are very involved in the family finances (as much as a 2, 4, and 5 year old can be). They know we are saving money to pay for “daddy’s law school.” They are little entrepreneurs and come up with all sorts of ways to earn money. Adult children should definitely be involved.

    This year’s Christmas gifts should be long underwear and stocking caps :)

    CF you are lucky to have all this wonderful advice. Get your husband and kids on board and make this a family affair. It could even be fun :) Keep us updated on the move!

    • Jacob December 3, 2013, 2:31 pm

      Agreed. First order of business should be one of several family meetings to start setting in motion the changes suggested above. Getting the family on board will be the tough part, cut out all the crap from the budget will be much easier after that, because you’ll have an encouraging family behind you.

  • sara December 3, 2013, 12:10 pm

    More case studies please! I love these.

    A few things stick out from this one: 1) They likely can’t just up and sell their house. It sounds like they’re in an area where real estate is stagnate. I feel their pain because we have a rental property that we’ve been trying to sell off-and-on for five years. While selling their house and moving would solve a ton of their problems, it might not be as easy as it’s made to seem in the analysis above. 2) like so many of these case studies, the first step is getting her husband on board (which makes me extra appreciative of my husband and I being on the same page about things!).

    • Chadnudj December 3, 2013, 12:53 pm

      Any reason that the husband and wife can’t carpool? I think they go in the same general direction (East), and about the same time drive (55 minutes for one, 45 minutes for the other). Yes, one would have to sit around twiddling their thumbs (or else working on a side hustle?) while waiting to get picked up, but it could lead to serious savings.

    • Marie December 3, 2013, 1:06 pm

      Yeah, I think it would be really helpful here to provide advice about how to move. Moving is a lot easier said than done, even without real estate market issues.

    • Marcia December 4, 2013, 11:31 am

      The real estate is tricky. One tricky part is, how bad is the real estate situation?

      There is bad: it will take months to sell and we’ll have to drop the price and take a hit.

      There is really bad: nobody wants to live here and we have to let the bank take it.

      Is foreclosure an option? They would essentially be stuck renting an apartment after (would be harder to buy for years), but they have zero equity.

  • Tal F December 3, 2013, 12:15 pm

    Your advice is like telling a 27+ year chain-smoker to quit cold turkey. It may be sound advice, but somehow I doubt they will be able to follow through.

    By the way, this may be implicit in the response, but I’d move closer to where the adults work yet allow the kids to stay “rent-free”. Let them make their own decision whether they want to spend hours each day commuting or find an apartment or a new job, but don’t pay for their car or gas. They can take the bus if they like living at home so much. With half the kids likely to move out after the parents move, no reason to get anything larger than a 2 BR. Apartments are also much more energy-efficient.

    I wonder how many readers write to you thinking you have some magic pill they can take to cure their money ills. Your response makes it clear that there is no magic pill, just good old-fashioned hard work and effort.

  • Insourcelife December 3, 2013, 12:22 pm

    A drastic situation calls for drastic measures. Isn’t it amazing how even a complete cluster F@#$ of a financial position can be transformed into a potential retirement in a little over a decade of conscious effort? If that’s desired there is really no other choice than to follow the advice laid out here. It won’t be easy but but neither is working till you die. Think of it as your very own financial version of The Biggest Loser – losing the fat, gaining frugality muscles and being able to run up those steps to retirement. Good luck!

    Also – why Republic Wireless? Why not Airvoice for $10 per month or another even cheaper provider? Combine that with a regular phone connected with a VOIP device at home and that’s all you need and much cheaper.

    • Kenneth December 3, 2013, 12:41 pm

      I feel sorry for the contestants in the Biggest Loser, because they don’t know the unimaginable pain and suffering coming in the first couple of weeks of hitting it hard with 6-8 hours a day of working out. Same goes for an extreme budget makeover like this. But if you take the Leap of Faith, it WILL work and you can change your life.

      • Walt December 4, 2013, 11:00 am

        That’s a show I’d watch – Extreme Mustache Makeover.

        Each week, MMM could face-punch a family into doing something sensible and digging themselves out of a life of hamster-wheel debt.

        • Marcia December 4, 2013, 11:33 am

          There used to be a show on somewhat like this. Years ago..Larry Winget. “Big Spender.”

          Also, there’s a Canadian show that’s similar. The one show I have missed after I cut cable. “Til Debt do us Part”.

  • WageSlave December 3, 2013, 12:39 pm

    “Once your consumer debt is gone, you will have about $4,400 a month to invest in index funds to get you to retirement. Investing this at 7% for the next 12 years with your starting balance of $45,000 puts you at about $1,100,000 at age 66.”

    What investment is guaranteed to return 7% over the next 12 years?

    I assume the implication is stocks, since, historically, that’s one of few asset classes that have those kind of returns… but with dramatic volatility. And that volatility gets worse over shorter time horizons.

    I expect that much of the MMM readership is younger (below 40ish?) and therefore has the benefit of time on their hands, and can afford to ride out the inevitable wild market swings. Is that true for this family?

    If the PE ratio (or Schiller’s PE10) has any predictive power (a debatable point), then we are likely due for some kind of correction. The worst-case scenario for this couple is to put their retirement nest egg mostly in equities, only to sustain a huge crash the same year they intend to retire.

    Historically, I believe the odds are in their favor that the equities market will provide for them a decent retirement nest-egg. But stocks are risky investments, and perhaps that fact is glossed over by younger MMM readership that has the luxury of waiting out bad market conditions?

    I think this case study is spot-on: they have to cut expenses dramatically to have *any* chance of retiring. But I am curious what the best investment approach for them is? As with any question of asset allocation (AA), there’s no one right answer… but if it were me in this situation, I’m not sure I’d feel comfortable with an AA that over-weights equities; I’d probably give up a fair amount of potential return for something more predictable.

    • Kenneth December 3, 2013, 12:44 pm

      As MMM himself has pointed out, you need to read the Stock Series by JLCOLLINSNH. Investing regularly, whether $4,400/mo or $440 a month, gives you the major advantage of dollar cost averaging over time. The beginning and ending prices of stocks can be exactly the same over a decade, but you will be ahead big time with dividends received and reinvested, and the power of dollar cost averaging. So fret not about the Shiller PE ratio, just set up a regular investing pattern. JMHO.

      • Mr. Money Mustache December 3, 2013, 2:48 pm

        Indeed – and don’t worry about a major crash the year you retire, either. Remember, you’ll get a 2% dividend payment, and be selling 2% of your actual shares in that first year. That leaves 98% of them intact to recover with the market – severe crashes are generally very short-lived.

        And don’t forget the safety margin inherent in this plan. Technically, they could retire with no savings, since $2000+/month in social security is more than enough for a couple to live on once the kids are grown.

    • HealthyWealthyExpat December 4, 2013, 11:12 am

      There is definitely more than one way to safely invest. Who knows, maybe with all that extra time saved commuting, CF and her hubby might study how to invest in rental properties and thus get some of their investment returns and retirement cash flow from well-selected properties just like MMM and many of us now do.

  • Scooter December 3, 2013, 12:53 pm

    Obviously one wouldn’t want to rely on Social Security, but as mentioned, its a safety net. There is one way to potentially strengthen / maximize that safety net which works well for a couple where there is a large difference in eligible SS benefits (often referred to as the “hybrid approach”)

    1) Lower earner collects reduced individual benefits at 62
    2) Higher earner files and suspends at full retirement age (fra), making lower earner eligible for spousal benefits
    3) Lower earner files for adjusted spousal benefits at fra
    4) Higher earner collects increased individual benefits at 70 enabling
    potentially higher survivor benefits

    This can significantly increase the total lifetime benefits due from Social Security, depending on each spouses life expectancy.

  • Bonnie December 3, 2013, 12:54 pm

    I would like to know where you can get 7% return on index funds. Since 2000, my average (after 2001 crash and 2008 crash) is less than 4%.

    • Des December 3, 2013, 2:26 pm

      A straight S&P 500 index would have returned over 7% in the last 10 years.

      • PaulH December 9, 2013, 7:10 am

        This seemed a little unlikely, so I did some checking – according to this calculator (http://dqydj.net/sp-500-return-calculator/) over the last 12 years (the approx investment horizon for this case study) the S&P would have returned ~5.9%, before investment charges. Compounding being what it is, that’s quite a distance from 7%, though that in no way undermines the need to act!

  • rjack December 3, 2013, 1:06 pm

    I can relate to these people in terms of age (I’m 54), but I was able to retire 1.5 years ago by saving and being frugal.

    Whenever I hear stories like this from older couples, I have a whole host of emotional reactions (anger at their stupidity, sadness and fear for their future, hope that they will get smarter). I wish I could say that their situation is rare, but it’s very common.

    These will be difficult changes to make at their age and I think one way of improving their chances is to do the following:

    Step 1: Get really pissed off at past decisions and very excited about a brighter future. Feel and taste the urgency.

    Step 2: Sit down with the entire family and say “We screwed up bad and now we have to change”. If any of the adult children complain, tell them that “we are also doing this so that we won’t be a burden on you in the future”.

    Step 3: Create a specific plan of action with assignments and due dates so that everything can be done ASAP. Break the plan down into manageable chunks.

    Step 4: Track the plan by meeting every day or week until it is completed.

    Good luck!

  • Edward December 3, 2013, 1:26 pm

    Good assessment! …But (like Tal F) the only thing that worries me is the case study’s attitude could potentially not be fully on board. Reading through the “This is where we are,” list several words started jumping out at me–“however”, “due to”, “complicated”, and “required”. (Some were repeated more than once.) These are usually indications of not accepting full responsibility for a current position–things just unfolded in a certain way on their own to make life difficult. Credit scores aren’t bad “due to” temporary employment or “other things”. Bad credit is “due to” not paying bills and debts on time. The end. Unless your house and bank account were broken into and robbed, you have to take 100% responsibility for everything that has to do with your money, debt, investments, spending, and income. Ev-er-y-thing. Everything you’ve done and everything you will do from here on out. …Anyway, hope the reader is on board and ready to make immediate changes without any “however”s involved. That would be fantastic!

    • Jacob December 3, 2013, 9:31 pm

      Agreed. This reader may be a bit shocked at the analysis, but that’s because they lived the traditional American Dream for so many years, and it is a shock to realize they have drifted so far off course. Many family meetings and tough decisions lie ahead, but seeing the end goal laid out above should be motivation to start implementing these changes ASAP. I’m hoping the numbers get rid of the “however”s and the “but”s.

      • Rob in Munich December 7, 2013, 10:58 am

        Two steps forward one back is usually how it goes!

  • dude December 3, 2013, 2:01 pm

    Indeed, desperate times call for desperate measures, and these folks are on a treadmill that unfortunately will not only preclude *early* retirement, but possibly any retirement at all (and if so, a meager one at best). I’ve read that a very significant number of people who suffer from heart attacks and are required to make lifestyle changes after the event return to old habits very soon after — reinforcing the point that the hardest thing in the world to change is human behavior. Not impossible, just very difficult. But many folks on this website have made changes, some minor, some dramatic, so there’s hope for CF in MA and her husband. Here’s wishing them strength and fortitude to take control of their financial lives.

  • Joy December 3, 2013, 2:13 pm

    This is similar to the situation my wife and I were in – much too high expenses, lots of debt, and no retirement savings plan. We had a similar solution – make a major move.

    By moving, we were able to save $400/month on gas, extend the life of our car (which already has 257,000 miles on it), save $1000/month on housing, and improve our quality of life immeasurably.

    HOWEVER, in order to do so, we had to let the home go to the short sale/foreclosure process. It took us 8 months to find and move into an affordable home in the new city.

    I’m not seeing how these folks are going to find the 8000 to put into the house BEFORE moving in order to get it ready to sell, and with a LTV that tight and market that slow, it’s unlikely they’ll be able to sell without having to go to a short sale process. They don’t say how they got the “list price” – if it didn’t come from a qualified realtor and local comps it is likely to be high.

    I am very glad about the choice we made to move, it has really been a lifesaver for our family and gotten us to the point that we can finally make progress on our debts. But we had to face the hard reality that this meant losing our prior home and destroying my credit in the process.

    • Mrs PoP December 3, 2013, 5:51 pm

      I was wondering where the savings were coming from to renovate the house prior to sale as well…

      The home sale might get complicated, but that doesn’t mean that all the advice should be written off. Like Florida, Massachusetts is a recourse state, so that means that legally lenders can come after your other (non-retirement) assets for the deficiency between any short sale (or foreclosure) value and the remaining principle on your loan. But in practice (in FL at least) this hasn’t happened in quite some time.

      CF and her husband probably want to find a realtor who knows their area well and has been a part of short sale or foreclosure proceedings. While it might be a blow to their ego to go through either one of these processes, the reality of the situation is that they’ve already said their credit is shot, and if they’re not planning on retiring in the area and see renting as a fair option until retirement, they could easily have either one of these judgements wiped clean from their slate well before then.

      Until they have an idea of whether or not they’ll be trying either of these with the home, by all means don’t start dumping money into it for renovations!

      • Jacob December 3, 2013, 9:26 pm

        The savings is everything else NOT associated with moving. Food, Cell phones, other debts that are now gone, etc. all add up to close to $2000.

        • Kenneth December 4, 2013, 9:56 am

          And, they might be able to take out a temporary loan against 401k retirement assets at work. If they could borrow $15,000 or so it could really help out in selling the house and if any is left over, immediately getting rid of the 3 small debts.

          • chc4444 December 6, 2013, 9:44 pm

            More debt that they might not handle well. Bad idea.

      • CTY December 4, 2013, 11:28 pm

        I think I am missing something regarding selling the house. Who says you have to fix before selling or even at all? We sold our house “As Is”–the buyer knew what they were doing & the price was fair for everyone. There was no realtor involved–so it only cost us $400 for the lawyer. The big concern was the house getting a C.O. (certificate of occupancy–allows buyers to move in). So what we did was had an up to $ amount specified in the contract that we would pay towards fixing the things that prevent the C.O.. But, no money left our pocket until the house was under contract.. Our actual cost for repairs required to pass inspection was $56. All other repairs were considered cosmetic. So I would say that there is a good chance they won’t have to spend the $8,000 to “ready” their house.
        Also, a note about realtors. We listed our home (in NJ) for sale by us online. A realtor contacted us for a “look see” and an offer. Her offer was–if she brought us the buyer she would get a % of the sale (like realtors usually do), but it was 1/2 the amount a realty agency usually gets. We would sign a contract with her regarding this–but we were still able to show the house on our own. We ended not contracting with her because we sold on our own in 4 days, so we owed her nothing.

        • Joy December 5, 2013, 10:26 am

          That can happen, but it’s not always possible.

          The OP said homes in their area aren’t moving. I tend to believe them. That also leads me to believe that the home valuation is high, which would indicate that a short sale would be necessary.

          My wife’s grandma ended up having to reduce the value of her wonderful home by HALF in order to move it, and even then it only sold after a long period of no interest in it at all.

          My stepdad also had to take a huge hit in order to move his home.

          Fortunately they both had the equity to do so. These people don’t.

          In my case, the house had to have a cash buyer or put around $14,000 put into it in order to sell. No bank would finance the purchase of my home AS IS.

          The kicker? When *I* bought it at the peak of the market in 2007, there were parts of the floor missing, broken pipes, huge problems with the foundation, pealing paint, windows that didn’t shut properly, a leaking fireplace brick work, and loads of big cosmetic issues.

          When I tried to sell? Restored/new hardwoods throughout, new, energy efficient hot water heater, furnace, insulation, plumbing, electric, bathroom sink, etc.

          ***The only problems remaining when I was ready to sell were that the linoleum in the kitchen and bath was dinged up, a few cabinet faces were missing, and the roof looks like it might need to be replaced in a few years, since it has 3 layers on it.***

          This necessitated a cash buyer, as no bank would touch it.

          Fortunately for me, we were able to get cash offers quickly… The house would make a great rental property due to the neighborhood, home size, and condition. In our area, homes ARE selling. BUT the offers were less than what I owed on the home, necessitating a short sale.

          You can’t do a short sale without the bank and servicer agreeing, however. They won’t work with the homeowner, they require a realtor. And they didn’t approve the first offer we got, due to them changing the rules about how long it had to be listed. Now we are 2 months into the SECOND attempt at selling, with another cash buyer.
          These things don’t always go smoothly.

          • Brooklyn Money December 8, 2013, 1:45 pm

            Thanks for pointing this out, Joy. I was thinking the same thing — the analysis is awfully glib about the reality of moving. They say houses in their area aren’t selling, and also, they will most likely need to get permission from the bank to do a short sale, which I believe is a long complicated process.

  • Judy December 3, 2013, 2:17 pm

    Great case study. I can relate to this couple as I am close to their age, and in debt.

    I suspect that selling the house and moving closer to work is going to be a tough sell. So is kicking any of the kids out to downsize the house. I agree that the one that is working should be paying room and board.

  • dadof4 December 3, 2013, 2:21 pm

    Nice analysis. There is a mistake though – inflation wasn’t accounted for.
    When you account for inflation, the return on the investment isn’t 7%, it is closer to 4%. So after 12 years, they’ll have $880k (in today’s dollars) instead of $1.1MM.

    It should still be sufficient though. For early retirees (eg retiring before 50) , I recommend treating SS as a safety margin. But for those retiring in their 60’s, they can add SS income in to their hard budgets.

    • Jacob December 3, 2013, 9:28 pm

      Thanks for the inflation-check. Assuming a 7% return, personally, I thought was on the conservative side, as te stock market average and most 10-year periods are closer to 10%. They will be weighted heavier in stocks, so to see a 9% return isn’t entirely unrealistic.

      All that said, as you pointed out, even at 5%, with their SS income and total savings in 10 years from now, they’ll be set.

  • Lindsey December 3, 2013, 2:22 pm

    I am a mass resident & wanted to let this homeowner know there are great incentives for MA homeowners to insulate and replace old inefficient oil burners through masssave (http://www.masssave.com/). We had a rep come round and he replaced all our light bulbs for CFLs for free. We have since insulated & replaced an oil burner and have reduced our monthly heating by 50% to around $200 on a 250 year old 2000 sq ft house. Call them for a home energy assessment asap, it will increase the value of your home if & when you sell it.

    • Kathleen R. December 6, 2013, 9:18 am

      We did the same thing… Replaced our ancient oil burner * with a hybrid electric water heater that was on sale. We just did this, so I haven’t seen the electric bill yet, but we were really takinig it in the shorts in our oil bill. (We are also in MA.). There is a tax credit available in 2013, too. Still time left!

      * the guys who brought the new water heater asked if we were going to donate our old burner to the Smithsonian. Everyone’s a comedian…

  • Becky December 3, 2013, 2:38 pm

    Well, I’m fairly sure of where they live (because hmm, Massachusetts + jobs to the East + college to the West…). It wouldn’t be realistic for them to move close to their jobs and still have the kids commute to college.

    The city to the East is an expensive Metro area, so finding affordable housing there will be challenging, but possible. If their jobs are downtown or nearby anything close will be expensive, so I’d suggest that they find a place with a public transit connection to one or both of the jobs and ditch one of the cars. It’s a big advantage that they don’t care about school districts anymore. Also, unless they are wedded to staying in the Metro area after retirement, it might make more sense to rent than buy.

    The college town to the West has relatively reasonable rents – the kids should be able to find an apartment there together (or with friends).

    • Mr. Money Mustache December 3, 2013, 2:51 pm

      Good point – the kids are probably paying more in commuting costs (without realizing it because many people equate gasoline spending to commuting cost), than they would pay in rent with a good roommate situation.

      I didn’t even OWN my first car until after graduating and starting my first $42k/year engineering job, because that is roughly the point you can afford your first basic used car. Even then it should be viewed as a very fancypants optional luxury to add to your life.

      “Hmm.. I am now so rich, I think I will procure a Motorized Throne for myself!”

      • Kevin December 4, 2013, 12:32 pm

        Unfortunately, the colleges out in the western part of the state aren’t hooked up to a regional transit network, and rents are through the roof in places like Amherst/Northampton. Short of transferring to a different school, there really isn’t anything that can be done. The entire family could move closer to the college, but that would just compound the other problems.

        Honestly, thinking it over, I’d really consider talking to their kids about transferring. It seems harsh, but in the end it might be best.

        • PFgal December 12, 2013, 3:13 pm

          I wouldn’t be surprised if the kids were in Worcester, not Amherst/Northampton, but either way, it’s so easy to live in each place without a car. I did it in one city, my sister did it in the other, my cousin is doing it right now. The PVTA bus system in the Amherst/Northampton area is phenomenal: clean, on time, and free. There’s no need for a car and while rents are high compared to most of the country, they’re cheap in both places compared to Boston. If the kids get roommates and jobs, they should be able to make it work.

          I agree with Becky about CF and her husband, though – buying a house near jobs in Boston probably isn’t an option, but living on public transportation might be, and renting would make a lot of sense. In this part of the country, renting is often a lot more cost effective than buying. But landlords do run credit checks on renters, so they’ll need to be ready to handle that.

      • Art Guy December 7, 2013, 11:25 am

        Omigod…. I just spit out my coffee laughing so hard. Motorized throne!!! Priceless!!!

    • Mr. NYBudget December 3, 2013, 3:40 pm

      I definitely foresee the biggest issue being parting with their kids. They may feel as though they are abandoning them or not providing for them as parents. But I think moving out and making it on their own will benefit the kids in the long run. And of course it will benefit the parents. I agree that moving into “Eastern Mass City” will be tough in terms of finding affordable housing. I love your suggestion of being near public transportation and ditching (selling) one of the cars.

      Basically, this seems like a tougher one to get someone to actually follow through with. I really hope for their sake that they do.

    • SC December 4, 2013, 5:29 am

      I agree with Becky. We live in the most rural part of MA. 36 mile (me) and 60 mile commute (spouse). A ten mile bike ride to the bus station, a $1.50 bus ticket, a short walk for each of us and we are at work and in reverse at the end of the day. Our home is in a very small town, 2 mile walk or cycle to post office and general store. If CF and family are anywhere in the central region of the state there must be alternatives for transportation. We choose a rural life. We are willing to cut commuter costs. We actually enjoy the commute, having time to talk during cycling and on the bus AND then a relaxing walk before getting to our work (that we both like btw). At 58 years we are older than a lot of the MMM readers.

      I think the best attitude to have in order to implement change is one of gratitude. Forget about being angry at past mistakes – waste of energy – it is ovah! Lots to be thankful for – for starters you live in Massachusetts! I love my state. Good luck.

      • Kevin December 4, 2013, 12:34 pm

        Wow, I thought taking the train in from Woosta every morning was bad. Hats off to you if you can make that work.

      • Kathleen December 6, 2013, 9:25 am

        SC, I agree with you about living in MA (I do believe we are neighbors…). One budget buster out in rural Mass is the cost of Internet service. MMM readers would freak out if they knew what we are paying.

        • SC December 7, 2013, 4:49 am

          Kathleen – you are right internet is expensive and in the hill towns not even available! I called Verizon and explained to them how lucky they were to have me for a customer :) they took $20 off the next 24 months as a “customer appreciation” discount. I’m about 9 months into that now. We are considering canceling home service next year and using the library (2 mile walk and only open 2 days a week) for internet access.

    • Kevin December 4, 2013, 1:11 pm

      I don’t think they’re all that reasonable any more. You’re looking at about $700-800 per person on average out there, maybe a little less if you don’t mind fearing for your safety every now and then… that’s fully half the income from an average P/T job, unless the parents spring for a subsidy, which it sounds like they can’t.

    • jenna December 6, 2013, 12:43 pm

      I agree when I read this I didn’t think moving would be very possible because the further east they go typically the more expensive. But that’s not even a significant savings to their budget, so I’d focus on the small, easier things first to get some wins in.
      1. Start having your children contribute. For the ones in college, they could at least pay for their own cell phone, commuting costs, etc. For the graduate with a job, they could contribute that plus something toward room and board. (savings 200-400+)
      2. Focus on getting that grocery bill down by meal planning and having the kids contribute. (savings 200+)
      3. Investigate switching away from oil heat, as others have suggested. If not possible, then see if you can optimize your heating situation by keeping the house cooler in winter, additional insulation, etc.
      4. Get rid of the land line. (saving 35)
      5. If you can get out of your cell contract, it may be cheaper to switch to the wireless plan suggested.
      6. As some suggested, can the two of you commute together to work? One or both take public transit?

      These suggestions are not as extreme, but would still make a big difference in your monthly budget. Once you get a few wins it will be easier to do the more extreme suggestions (once the kids are through with college – presumably in 4 years or less from now maybe you would be able to sell or downsize – or at least collect rent if they are still living there).

      • Mr. Money Mustache December 7, 2013, 8:50 am

        I would disagree – commuting is this family’s biggest expense by far. Multiply mileage by 50 cents and add in time at $25/hour – a car commute like this is absolutely life-destroying and should never, ever be part of anyone’s life. This is the most powerful and useful advice I can offer to anyone – stop designing extreme car-dependence into your life. It is step one in improving every day you live.

        • Zac August 19, 2015, 1:50 pm

          Hey MMM, I have a question:
          I’m 25 years old and currently in the middle of a hair-on-fire debt emergency because I racked up a bunch of student loans going to college (I’ve learned a lot in the past two years and now I live like a true mustachian). I’ve been working at the beginning of my career since graduation for about a year and a half. I currently make $35,000/year with about $40,000 in student loans left to pay back (this is priority one, financially), and here comes the question:

          The parents are letting me live at home for free right now, which results in a 45 mile, 45 minute commute (90 miles, 1.5 hour with normal daily traffic, round trip) to work. I earn $17 an hour right now… I’m working hard to at least double this amount in the near future (hopefully 3-6 months) since my employer is very focused on promoting-from-within when possible and they need more competent people in the position I want to be in.

          Since I drive a ~30-35mpg 2007 chevy Malibu with 130k miles on it which I own, does it make sense to start renting near work? The cheapest thing I can find within biking distance to work is around $700 per month, without factoring utilities in.

          I think I’m in the very strange scenario that, due to the utter generosity of my parents and a housing cost of 0, my absurd commute is the best financial decision… even if it’s hurting the environment until I get that raise that I’m hunting down.

          Before you do the math, keep in mind that I’ll happily work an extra 2 hours per day for $17/hour right now. My time during my commute, as I think about it, is being spent to earn me money since it’s saving me money on housing. 55 hours a week is easy for one as young as I.

  • CincyCat December 3, 2013, 3:07 pm

    Yet another case study with someone who should be in a position to retire very soon, who is instead choosing to support adult children (housing, food & transportation expense), and therefore “can’t” do it. Good grief! Is anyone else sensing a pattern here?

    That said, moving may not be as easy as the analyst thinks. If their home is truly appraised at $20K less than what they owe, a bank may not give a buyer a loan.

    • Koshka December 5, 2013, 11:26 pm

      I don’t really see that letting kids live at home during college is some kind of unwarranted support of adult children. I don’t think that most parents say to their 18 year old – go and don’t let the door hit you on the way out.

      Since there are no tuition/books costs in the budget I assume the kids in college get financial aid. There don’t actually seem to be all that many expenses associated with the kids (food certainly) but not all that many so I suspect they have part-time jobs to pay for most of their stuff.

      As a parent of kids in college, I also think it would be kind of unfair to tell kids that they can live at home during college and then just tell them to move out.

      As for the graduated child, who has a job, I think it is fine for him to be at home but he should be paying room and board.

      • CincyCat December 6, 2013, 1:48 pm

        In this case, I think it certainly is unwarranted support. I moved out at 18, as did my sister (actually, she was 17, since she started kindergarten a year early). We both went to college w/ scholarships & loans, and had jobs & roommates to help pay the rent, etc. Our parents couldn’t afford to pay for 100% of our expenses, and neither can this couple afford to continue to pay for their kids’. They need to have an honest discussion with their children and make it plain that they will have nothing to live on in retirement unless the kids either move out or start paying their own expenses (including rent & food).

      • PFgal December 12, 2013, 3:18 pm

        True, but asking the kids to support them when they are older and unable to work isn’t a good thing for the kids, either. Better to have the kids support themselves now, than support the parents later.

      • Gracie December 12, 2013, 7:33 pm

        Better to be “unfair” now than to be 100% financially dependent on your children in your old age.

  • Sarah December 3, 2013, 3:43 pm

    The thing that stands out to me is that they are actually located halfway between the college and their work. So it may or may not work out cheaper for the kids to find alternate accomodation. The cheap solution I can think of off the top of my head is to buy an RV for the kids to live in, and to sleep at the walmart or somewhere else free near college/work.

  • payitoff December 3, 2013, 3:53 pm

    your post came in perfect timing! i was sleepless last night figuring out how to deal with my 2008 gas guzzler. I NEED EVERYBODY’s ADVICE.

    i owe about $14,000 still and found out the value is only 5,000. i dont know whether to pay it off, or pay it down to the value and trade it in to a hybrid prius. its an 8 seater V8 engine and at this point, we dont really need this big truck anymore.

    my car salesman friend told me to return the car, but i know ill end up paying back some of the loan too.. so any advice???

    • CincyCat December 3, 2013, 4:06 pm

      Personally, I would return it and count whatever you paid/owe as sunk cost. I also wouldn’t buy a brand-new anything to replace it, though.

      The standard advice here is to buy a reliable, used vehicle very inexpensively with cash, then pocketing the difference. I also advise really running the numbers to see if a hybrid *anything* is worth the up-front cost vs. the “savings” over the car’s useful lifespan.

    • Mr. Money Mustache December 3, 2013, 7:11 pm

      Hey Payitoff – you definitely need to ditch the tank, but the good news is it may be worth more than $5000. Look up the “private sale” value on edmunds.com for that make/model/mileage.

      Dealers always drastically underbid, so you never “return” a vehicle to a dealer unless you are just dropping it in order to flee civilization and have no further use for money.

      And the rest of the world could take a lesson from this – THIS is what happens when you buy a giant SUV new – its value drops like a stone, meaning your cost of ownership is many hundreds more per month than you assumed. I am continually astounded that this class of vehicle even continues to exist, and yet they are EVERYWHERE!

      • SusieQ December 4, 2013, 7:09 pm

        Yeah, every time I see someone driving (alone, usually) in one of this huge gas guzzlers, I just shake my head and think “dude/dudette, do you realize the money you could be saving in the bank if you’d only ditch that thing!” WHEN are people going to get this? So many say they “need” them – I find that extremely hard to believe – because not very often do you see them filled with the 6-8 passengers they are able to carry!!

    • Jacob December 3, 2013, 9:41 pm

      Do NOT take it back to a stealership. Ever. Private sale through Craigslist, enlisting the help of a mechanically inclined friend (bribe them with beer) will net you THOUSANDS more. Also, you can get some great deals on 5-10 year old vehicles that get great mileage. I, personally, have only paid over $2,800 for a vehicle once, and the rest have averaged $2,000 or less. My 1994 Honda Civic was purchased at 204,000 miles for $2,000, drive it for 75,000 miles over 7 years (FACE PUNCH), got 33 MPG, and still sold it for $1,400. You don’t need to spend a fortune to roll yourself from point A to point B.

      • Mike Long December 3, 2013, 10:35 pm

        I’m confused. He owes $14,000 on the SUV to the bank. Even if he tries to sell it on CL, he gets maybe $8,500 for it. Where is he going to come up with the additional $5,500 in order to get the title from the bank so he can actually sell the vehicle to someone else?

        • Jacob December 3, 2013, 11:55 pm

          A personal loan, equity, or some other means. Staying with the car is the worst option, owning the difference between the sale price and the debt owed is a better option. He’s going to have to come up with the money either way, but if he can drop it before it depreciates more, that will save more wasted money.

          Depreciating cars with loans on them are the reason people stay broke. I recommend running away as from a pyroclastic cloud of an erupting volcano.

        • CincyCat December 4, 2013, 11:57 am

          I interpreted the OP’s question as proposing a voluntary repossession, which is probably the scenario that Jacob & MMM are trying to help him avoid. BUT this option may only be available in the first place if the car is dealer financed. If it is independently financed, the dealership already considers themselves “paid,” and will most likely not take it back. (In which case, this idea is moot.) :) If the dealership does take it back, they will charge him for storage & selling fees. He may still come out ahead in this scenario, though, instead of borrowing $5,500 unsecured from goodness knows where.

          • Petunia 100 December 4, 2013, 4:46 pm

            I keep trying to follow your thought process here Cincy, but I just can’t see it.

            If Payitoff does a voluntary repossession, the dealer won’t simply forgive the negative equity, Payitoff will still be on the hook for the difference, plus fees (which can be substantial).

            Or, Payitoff can sell the car to a private party for it’s full value and avoid all of the repo fees.

            Why would the private party not be a better choice? It should result in far less remaining debt than a voluntary repossession.

            • CincyCat December 6, 2013, 2:05 pm

              This person explains it better than I can:

              I personally think it’s highly unlikely that this person is going to be able to sucker someone into giving him $14,500 in a private sale for a car that is only worth $5,000 blue book. As someone else said above, $8,500 would even be a stretch, and he’ll still have to come up with the shortfall.?

              As I said above, if the dealer won’t take it back, then this entire conversation is moot.

    • Insourcelife December 4, 2013, 9:13 am

      Clean it up, put all maintenance receipts in a folder, post a nice detailed ad on Craigslist with plenty of pictures (they allow 8, take more, create an online album and post a link in your ad) and get rid of that giant POS that is dragging you down. Gas prices went down a bit and there are plenty of idiots that think it’s a great time to pick a truck or an SUV when a smaller car would do perfectly fine.

  • Kathleen December 3, 2013, 4:22 pm

    Great work, Jake! Fantastic analysis. I wonder, if the market is stagnant where they live (which is a foreign concept to me in Portland!), can they jump ship and rent it out? Are renters responsible for oil? What IS oil heating anyway?

    • Jacob December 3, 2013, 9:50 pm

      Thanks Kathleen. Becoming landlords in this situation may put too much pressure on this family amidst all the other changes required. Freeing themselves of this house and it’s debt would be a burden lifted and help them move forward with the rest of the plan, IMO.



      • Miss Fit December 4, 2013, 12:13 pm

        While I agree that selling is best, I completely understand that it may not be possible. We moved from a rural area a year and a half ago and despite listing our house over 15% under the appraised value, we were not able to sell it. In the area we were from only 2 houses sold during the 6 month period our house was on the market, and both were starter homes. We ended up renting out our house and still are (since we had to move for a new job).

  • Tahoe Paul December 3, 2013, 5:11 pm

    My wife and I hold meetings a few times a year where we brainstorm what changes we want to make to live our best life. We retired 9 years ago when I was 39 and she was 32. I would highly recommend the couple in this case study put some work in together thinking what their life might look like in 5, 10 and 20 years if they make these changes and if they don’t. The second part of this is realizing how exciting and positive this change will be and will lead to so much happiness. The other exercise I would recommend is making a list of everything fun they will be able to do while implementing this plan. My wife and I wanted to get in shape and that’s free and fun. Also if you have a passion, volunteering will increase happiness dramatically. Good luck. It is all possible one step at a time.

    • Jacob December 3, 2013, 9:43 pm

      ^ this. They will need all the motivation they can get, and making a list of everything fun involved in this huge lifestyle change will help keep them on track. Good call.

  • lentilman December 3, 2013, 5:36 pm

    There is danger here!!!!

    Massachusetts Teachers’ Retirement will count against her SS (or spousal benefit should she be widowed). This is through the WEP (windfall elimination provision) and GPO (government pension offset).

    Many people don’t learn about this until they are about to retire. There are plenty of widows around that are surprised to find they are being hit with these and left in poverty.

    link: http://www.massteacher.org/advocating/gpowep.aspx

    MMM- can you check with the lady and see if she has considered this?

    • Beth December 3, 2013, 6:02 pm

      I am a teacher in Massachusetts, and was about to comment on the Windfall Elimination Act as well! As far as I understand it, being a member of this pension means you are inelligible for SS retirement benefits. REGARDLESS of how much you may have paid into SS in the past (for me, that’s just a little from part time high school and college gigs). But for CF, I wonder if that pension will be worth the SS loss at the end of the day. Given her age and years teaching, her pension might only be 50-60% of her last three-year salary average. There’s a whole chart about it here: http://www.mass.gov/mtrs/docs/active/retpercentchart.pdf
      She’s contributing at least 10% of her pre-tax pay to that pension also (a legal requirement), which you can get back (to invest another way) if you leave teaching. A whole lot of numbers to go through there, and she should definitely look at those scenarios with an expert, either in HR or at the MTRS. I would also suggest her union, but that probably doesn’t apply at a charter.

      • David B. December 4, 2013, 9:15 am

        If she cashes out her teacher retirement benefits instead of waiting to vest, would she still have issues with getting SS benefits? (Her own, or spousal benefits?)

        I’m in Illinois and have a similar situation with my wife, she’ll never teach long enough to be at retirement age. I don’t trust Illinois to have the money there when we get to typical retirement age anyway, so we plan to cash it out when she stops teaching.

        Shouldn’t matter too much in the end, but would be nice to know how much of a saftey margin we might have through SS.

      • WD December 4, 2013, 10:26 am

        Actually, you can be eligible for SS with a pension if you previously worked for an employer that paid into SS IF you have earned enough credits to qualify for SS. You get nothing if you don’t have enough credits, but if you have enough credits the WEP will reduce your benefits by a percentage which is determined by how long you have paid into SS where you have had “substantial earnings” as defined by a salary chart in my second link below.

        To determine if you have enough credits to qualify: http://www.ssa.gov/pubs/EN-05-10072.pdf

        To see what percentage SS will be reduced:

        To illustrate since it took me a long while to figure it out myself…
        I work for a local government where we do not pay into social security. We employees make a payments into our pensions instead. However, I have 40 SS credits making me eligible for SS. Of those 10 years, all were years of substantial earnings and thus if you look at the chart I would qualify for 40% of my SS at the time of retirement.

    • Jacob December 3, 2013, 9:48 pm

      She has considered it, and is vested in MTR in 2026, foregoing her SS. All the more reason in this case to build a portfolio that will outlast this family and NOT depend on SS or MTR. Thanks for bringing this concern to light.

  • NC retired cat lover December 3, 2013, 7:02 pm

    If there is room on the HE line (was that a line of credit or loan?), i would pay off those 3 loans immediately and put them on the HE. Interest rates matter!

    If the real estate market is too bad to sell the home at this time, I would get an estimate (several, of course) to install electric baseboard heaters. I have these and love them. The only negative is that they restrict furniture arrangement. I have 2 in living room and kitchen, one in each of the other rooms.

    N.C, is not a really cold climate, but I am all electric here and have never paid more than 210.00 a month for power.

    • chc4444 December 6, 2013, 10:23 pm

      I know a number of people who have installed ductless heat pumps that are electric. They aren’t too expensive and they use much less energy then other electric heating methods.

  • Catherine Jean Rose December 3, 2013, 7:03 pm

    Appreciate CF sharing her story, acknowledging the problem, and showing commitment towards change. I’d start with my Five able bodied children. ALL of them would be out working and contributing to the phone bill/groceries/mortgage/student loan debt. Period.

    My husband worked 30 – 40 hours per week and took 15-18 credits per semester. He paid for 100% of his college tuition and expenses and graduated with zero student loan debt — plus a used (paid for) car. I had a little bit of help from my parents who paid for in-state tuition and I covered the rest: room/board/beer/etc. I worked on weekends, holidays, and 60 hour work weeks every summer…also graduated with zero student loan debt.

    Insist your kids contribute! You OWE it to them. They’ll become more responsible and financially stable as a result. Trust me…its the BEST thing you can do for them.

  • db December 3, 2013, 8:22 pm

    we aren;t in a position to move, but DH just started car pooling. The other guy drives and he pays him a set amount per week. no more wear and tear on our car, too. I work nearby, but different hours, so I can pick him up if his ride has an emergency. I recently found a potential car pool buddy, too. If you can’t move this is a step in the right direction.

  • Peter H December 3, 2013, 9:15 pm

    I think the main challenge to this budget working is housing. It isn’t explicitly said here, but given the geography of Mass, they clearly work in the Boston area, which is a really expensive housing market. We’re probably talking a not very large apartment in a not very nice area for $1000 a month. It’s doable for sure, but that’s gonna be a gigantic lifestyle change from a large house out in the country.

    • Penelope K. December 3, 2013, 11:04 pm

      Yes — unless you get very lucky (which is always possible), for $1000/month (does that include utilities?) in Boston you’re probably only going to get a crummy studio or 1-bedroom apt in a crummy building in a not-great location (rundown neighborhood far from the subway or on a long bus ride, making your commute even longer than it is now).

      Why not move within commuter rail distance of Boston instead? Yes, fares can be expensive, but many workplaces will pay for half the rail pass and you can read or nap or whatever. Free wifi. And depending on how you play it you might find an affordable house. South of Boston tends to be the cheapest area that also has commuter rail. Just look for a house within walking or biking distance of a train stop.

      • Kevin December 4, 2013, 12:58 pm

        I’ve actually done the math for most of the lines, while I was home shopping. On average it’s just over $0.15 a road mile with current fares, with variations depending on where the position of a given station within the fare zone.

        In the long run it’s actually extremely cheap, considering that cars are $0.50 a road mile and up.

        Not really sure about south of town being cheaper; the mid size cities in the Merrimack Valley are discount rate with all the advantages of living in a city. The towns near the cape and RI are a mixed bag and are car-centric.

  • JenInMontana December 3, 2013, 9:51 pm

    Please keep the case studies (and their respective follow ups) coming. It is super important for me (maybe not personally but sociologically and as a member of the MMM community) to hear about readers who are lower wage earners or have high debt or are older. All of it is inspiring. I have read several posts on the Forum from such readers and it brings tears to my eyes.
    Also, the benefit of moving is selling lots of STUFF…
    This family will also be teaching their children valuable money and life management skills. This could be the most important “gain” in the whole experience…. Young MMMers!!

    • Melissa December 4, 2013, 5:13 am

      Good point on selling stuff! Surely a family of 7 has lots of stuff to get rid of…and even a garage sale (consider borrowing a friend’s garage or even their driveway in a nearby town) could bring in $500-$1000 to pay down debt. One trick for garage sales is to plan it during a “whole town” garage sale event, which includes free advertising. Engage the kids, it should be quick to gather, price and load an empty van up a couple of times for the big sale.Then make sure everyone is up for donating the proceeds towards mom & dad’s debt. A “good will” donation, only it’s for Mom & Dad! (Who better to give to than your adoring parents? *smiles*) A big empty house (a step closer to selling or renting), and less debt = double win.

  • Christian December 3, 2013, 10:28 pm

    This is a minor suggestion, but it may help to kill that $40 entertainment budget — if you have commuting college students, you have an additional (and more exclusive) library to pull movies, music, books and magazines from. I know the library at my school has hundreds (if not thousands) of popular (and surprisingly recent) movies on DVD and online stream, all available to students for free.

  • phred December 4, 2013, 8:13 am

    Wow, that’s a lot of heat. Is the oil gun (the burner) worn out or malajusted. Can they add some insulation? Caulk all the cracks — especially at the sill? Are the windows just single pane (get the plastic sheet kits)?

    Getting the house ready to sell in 4-6 months will put it fresh on the market at the start of prime home-buying season. Instead of looking for the cheapest realtor, look for one that is good at staging a house for sale. Even with a small money loss on the sale price, they will still be total money ahead. Installing a geothermal heatpump would be nice, but if you can’t, you can’t.

    Can offspring all rent a house together with two extra bedrooms to rent out — thereby living cheaper than commuting? Dumpy student digs make for great stories in later life.
    Offspring with entry-level job moves in with them. Goes to trade school in spare time as most necktie wearing jobs are either being outsourced or being replaced by software.

    Counter-intuitive, perhaps, but you need a couple of credit cards. Try for one gasoline company card, and one grocery. Only use once a month and pay in full ea. month

  • Lcg December 4, 2013, 8:34 am

    Why aren’t the kids chipping in? Not just food, but something toward rent? Seems like there is more than one teachable moment here to me!

  • Christie December 4, 2013, 9:08 am

    I think the good news is that they can free up $800 per month with cutting back on groceries and changing cell phone providers. The personal loans could be paid back in 3 or 4 months. This would free up another $250. So, in the Spring they would have $1050 a month – with out selling the house. ( I’m not advocating keeping the house). There are things you can do now. I hate plans that revolve around, ” when the house sells” … Because you don’t know exactly when that will be. Personally, I would save the $1050 a month in case I needed to bring money to the table when the house sells. Or make repairs to sell it.
    Short sale ? ? Uh, why would the bank consider a short sale ? Where is the hardship here ? These folks make $7k per month. You might have to make some payment arrangements or something if you are short of funds but you will have over $3k a month to throw at that debt when you are out of the house.
    Do look in to any and all arranagements that you can make for energy efficiency. If you were the only house that didn’t use oil, or had cheaper energy costs, your property would be very popular. Remember, you only need one house to sell … yours. Dont’ be too discouraged by what others are saying and doing. Focus on making your house marketable. Make those college kids declutter and paint their rooms during Christmas break. Santa is bringing paint this year!
    Best of Luck ~ Christie

  • Joe December 4, 2013, 10:42 am

    Oh man, good luck with that.
    It’s going to hard to turn around after years of going down the wrong path.
    I would like to see a follow up in about a year or so.
    It’s easy for us to say do this and do that, but the execution is much more difficult.

    • Vivian December 4, 2013, 11:44 am

      I totally agree. As much as I can see the wisdom of doing what Jacob says, I would find it hard to make so many changes. My advice would be to think of it as one thing at a time. Obviously the move is the most important item on the list, so starting the home improvement needs to be the first step. Hopefully, one change will inspire more changes. In my own life, that’s what I’m working on. Change is really hard!!

  • barb December 4, 2013, 11:07 am

    Jacob…………I think I love you.

    • Jacob December 4, 2013, 1:08 pm

      I love you too, Barb.

  • cwebb December 4, 2013, 12:11 pm

    Jesse said he wouldn’t pull any punches, but he definitely pulled a big one.


    The son who can’t find a job in his field needs to either move to a region where he can, or continue his education in a more affordable state/university.

    The parents need to get the hell out of dodge. The wife is definitely career mobile, and the husband probably is too. I’ve lived in the midwest, east coast, left coast and now southeast. Spread your wings and fly to a land with better weather, lower taxes, affordable housing and effortless commutes.

  • marc cryan December 4, 2013, 12:20 pm

    HEAT Loan Program at http://www.massave.com

    Provides zero interest loans to replace a heating system. Up to 25K over 7 years. (because of this, companies will quote you $25K, laugh heartily at them).

    Do you have a separate hot water tank? Or just one big box?

    If it is all one box, then the whole thing maybe firing up every time you use hot water. Just installing a hot water holding tank may save a lot of oil. It made a huge difference for us.

    If you are interested I could track down the person that did it for me…. (maybe Ted?)… I’m in Middlesex County.

  • higginst December 4, 2013, 12:23 pm

    My only question is: why are the kids even going to college? Seriously, the one graduated sibling can’t find a job in relevant, so why not wait until the job market stabilizes before pursuing an in demand degree/certification? You’re better off earning minimum wage with no student loan debt than having to service it while at minimum wage.

    While quitting college may seem extreme, they at least need to make ABSOLUTELY SURE that the degree/certification they are obtaining is useful, in demand, and well-paid enough to justify the expense. Is there a “business case” to justify the investment in the education?

    Another interesting option is for the children to move too, in order to pursue employment in higher paid areas of the country or even internationally. Or look into the interesting low/no cost education options MMM has profiled before!

  • Kevin December 4, 2013, 12:26 pm

    Big problem with this analysis; based on the numbers, they are commuting into Boston metro for work (sounds like the kids are commuting to UMass). There is no way in hell they are going to be able to find a house at $130k or below 5 miles from a job in town.

    It’s much, MUCH more reasonable to look at towns along the commuter rail lines and become transit-oriented. The MBTA has above average service and costs approximately $0.15 a road mile, less than a quarter of car costs. Places like Framingham, Worcester, Haverhill, and Lawrence are all reasonable choices.

    Local conditions really need to be taken into account here; there is a reason I personally live in Worcester and commute to the city… I may spend a lot of time commuting, but in the end I’m able to put away over 60% of my income. If I were to move within 5 miles of work, I would only be able to put away 30% at best.

    • Mr. 1500 December 4, 2013, 1:26 pm

      The solution here may be to rent until time of retirement. Post retirement, they can go do someplace like Texas or Florida or my beloved Colorado where living is cheap and good.

      • Kevin December 4, 2013, 1:34 pm

        The rents are pretty well up there as well. $1000/m will get you a 300 sq. ft. studio, or a 1 BR in an inner suburb with a crime problem.

        Not recommended. Last time I tried it, I had a break-in and generally didn’t spend a lot of time outside.

  • Hawkity December 4, 2013, 12:42 pm

    Its amazing though how much more transparent peoples budgets / situation becomes when they have to share it with someone else.

    It’s also amazing the amount of people that need advice / help in this area. Probably a lot more than we know about as lots of people want to keep it private.

    Recently a family friend mentioned that they had high interest payment and i could barely stop myself from help

  • Doug P. December 4, 2013, 12:44 pm


    Keep putting these up. I would read several per day if you had the time to develop them.

    The bad news is that it would take significant time to do that every day. The good news is that there are millions of families that could use your help. You would never run out of ‘work.’

    Love your content.

  • Done by Forty December 4, 2013, 1:10 pm

    The numbers don’t lie. It’s pretty remarkable to see what a quick turnaround can be achieved by the seemingly difficult but do-able steps of moving and basic changes from a budgeting perspective. Well done. I’d love to hear a follow up in 12 months to see what happens.


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