Kayla and her partner Lauren live in Charlotte, NC with their two dogs and one cat. They both work in banking–at the same bank, in fact–and are feeling settled in the home they bought in 2019. Very soon, they plan to have children, which has them reflecting on their financial priorities. While they still have some debt, they’ve done a fantastic job of paying it down over the years. Now, they’re ready to get serious about their financial health and they’ve asked for our help. Kayla and Lauren both grew up in households they describe as financially unstable and they’re committed to breaking that cycle for their own children. Let’s work together as the Frugalwoods community to help this young couple chart the best possible future for their family!

What’s a Reader Case Study?

Case Studies address financial and life dilemmas that readers of Frugalwoods send to me requesting advice. Then, we (that’d be me and YOU, dear reader) read through their situation and provide advice, encouragement, insight, and feedback in the comments section.

For an example, check out the last case study. Case Studies are updated by participants (at the end of the post) several months after the Case is featured. Visit this page for links to all updated Case Studies.

The Goal Of Reader Case Studies

Reader Case Studies are intended to highlight a diverse range of financial situations, ages, ethnicities, geography, goals, careers, incomes, family composition and more!

The Case Study series began in 2016 and, to date, there’ve been 58 Case Studies. I’ve featured folks with annual incomes ranging from $17,160 to $200k+ and net worths ranging from -$317,596 to $2.9M+.

I’ve featured single, married, partnered, divorced, child-filled and child-free households. I’ve featured gay, straight and trans people. I’ve featured men, women and non-binary folks. I’ve had cat people and dog people. I’ve featured folks from the US, Australia, Canada, England, South Africa, and France.

I’ve featured people with PhDs and people with high school diplomas. I’ve featured people in their early 20’s and people in their late 60’s. I’ve featured folks who live on farms and folks who live in New York City.

The goal is diversity and only YOU can help me achieve that by emailing me your story! If you haven’t seen your circumstances reflected in a Case Study, I encourage you to apply to be a Case Study participant by emailing mrs@frugalwoods.com.

Reader Case Study Guidelines

I probably don’t need to say the following because you folks are the kindest, most polite commenters on the internet, but please note that Frugalwoods is a judgement-free zone where we endeavor to help one another, not condemn. There’s no room for rudeness here–the goal is to create a supportive environment where we all acknowledge that we’re human, we’re flawed, but we choose to be here together, workshopping our money and our lives with positive, proactive suggestions and ideas.

A disclaimer that I am not a trained financial professional and I encourage people not to make serious financial decisions based solely on what one person on the internet advises. I encourage everyone to do their own research to determine the best course of action for their finances. I am not a financial advisor and I am not your financial advisor.

With that I’ll let Kayla, today’s Case Study subject, take it from here!

Kayla & Lauren’s Story

Hi! I’m Kayla, 26, and my partner (we’re married, so she’s technically my wife but I’m not crazy about the word “wife” and prefer “partner”) Lauren is 30. We have two dogs and a cat and live in Charlotte, NC. We work at the same bank – Kayla in Corporate Treasury and Lauren in Supply Chain Risk. We got married while living in DC in 2017 and have been together since meeting in college in 2012.

Kayla at the spa on our honeymoon

Pre-COVID, the biggest thing we liked to spend our money on was travel. We both have a huge passion for traveling and have been to 15+ countries together. When traveling and in general, we really like luxurious experiences. We love to go on spa dates, to the ballet, to see concerts of artists we love, go to plays, nice restaurants, museums, etc.

Since COVID, we’ve been less focused on these types of experiences and more focused on individual hobbies. Lauren likes woodworking and home projects, which there’ve been plenty of since working from home and quarantining began. Kayla likes to read, bake, and garden. Some shared passions we have are the outdoors and history. North Carolina is naturally such a beautiful state with a lot of history. We love exploring and are really thankful to live in a location that has an urban feel but also a big beautiful lake for the summer time and a short driving distance to the mountains.

The Transition

I feel like we’re at a transition point in our lives. We both had pretty unstable childhoods that included both financial instability and physical instability (as in, we both moved at least once per year due to the instability of our family units, relationships, etc.). While we can both fully acknowledge the ingrained privilege we’ve had in our lives, we also inherited some of the unstable habits of our parents.

After Kayla graduated from college in 2015, we spent the next 4 years spending beyond our means. We purchased our first home in late 2015, which turned out to be a money pit with a lot of deferred maintenance that was missed during the inspections. We moved from Charlotte, NC to DC and then back again, which was quite expensive. We spent way more money on our wedding and honeymoon than we had to. We took frequent vacations and put them on credit cards without having the money to pay them off right away, traded in cars like the money didn’t actually matter, etc.

The list goes on and we have spent the past two years paying off all of that credit card debt and working through the emotional issues that led us to the same cycle of overspending and physical instability as our parents. We’re very proud of the progress we’ve made in our spending habits. Paying off our credit card debt and finding physical security through the purchase of our current home was a huge accomplishment. Our next financial goals seem daunting and we feel like we need some guidance and perspective.

The Best

Our dog Nala at the lake. Mrs. FW’s note: “DOGGO IN LIFE JACKET! LOVE!!!!”

The best part of our current lifestyle is the comfort we have. Lauren and I have been together since I was 18 and I literally feel like we have grown up together (because we have). I think we are really lucky that the work-from-home COVID situation has been fairly easy for us.

We like being around each other but at the same time are totally cool if one person needs alone time and then we barely talk to each other for 2 days while we each do our own thing. We are at a point where there are no plans to move. We can pay all our bills without concern, purchase the food we want at the grocery store, buy whatever books we feel like buying, etc. with no thought of oh how are we going to pay this off or where is this money coming from. It’s just nice to be comfortable and stable for what feels like the first time in both of our lives.

The Worst

The worst part of our current lifestyle is our fear of the future. The added layer of uncertainty surrounding COVID has definitely not helped. We both have always wanted a family and are ready to start that process. There are a lot of financial goals tied to this next chapter and they seem overwhelming and uncontrollable when looked at through a lens of fear and uncertainty.

Where Kayla and Lauren Want to be in Ten Years:


  • No debt aside from our mortgage.
  • Able to finance our pregnancy process in cash with no additional debt accrued.
  • Adequate savings for our children’s primary and college educations.
  • The ability to pay for family vacations and travel in cash.
  • Be on track to both retire somewhere between age 50-55.
  • Not worry about money at all.
  • Not have parental arguments about finances be something our kids ever experience.


  • We want to be long done with the pregnancy process and have our children as part of our family unit.
  • We have a family cabin in the NC mountains and would like our kids to spend a ton of time outdoors, swimming at the lake, exploring around the cabin in the mountains (we are very lucky to have ownership in this property with no expenses currently).
  • On the flip side we also love living in an urban space and want to take advantage of the public transport available to us in addition to the art, culture, and food scene of our town.
  • We want to be able to travel both domestically and internationally to historic and/or beautiful places.


  • Kayla: I’m very happy with the career path I’m on. I work in a very corporate setting, which I feel is kind of looked down upon from others in  my generation, but it works for me. My job fits both my personality and my strengths. I love the mental challenge my job provides and it’s a good outlet for me to push myself. I like the stability and predictability of the type of work that I do and in terms of being able to provide for my family. I also feel like I am on a path that can provide opportunities for career growth and higher income in the future.
  • Lauren: Am I in love with my job? No. Am I content? Yes. While I don’t feel that my current career path is my passion, I do appreciate what it provides: a great manager, low pressure, and a hybrid schedule once we go back to the office. I’ve spent many years trying to figure out what I want to be when I grow up and the best I can come up with is that I don’t know. I like the company I work for and they encourage internal movement, so if  I ever want to move to another role I know I have internal support. Otherwise, I am content to stay in my current field and progress upwards. My ultimate goal is to be financially independent so I can choose how and what I spend my time working on. I would like to get to a place where I don’t have to work for a living and instead can work without concern for how much income I make i.e. with a non-profit, as an EMT, with my woodworking.

Kayla and Lauren’s Finances


Item Amount Notes
Kayla’s Net Monthly Income $4,659 Minus Kayla’s 401k contribution (6% pre tax), supplemental life insurance and critical illness coverage, and state and federal taxes
Lauren’s Net Monthly Income $3,501 Minus health/dental insurance for both of us, Lauren’s 401k contribution (6% pre tax), HSA contribution ($200 per month), and state and federal taxes
Kayla’s Bonus $333 Paid annually – target is 7% of salary (81,600) but could be more or less depending on performance. Subtracted 30% for taxes.
Lauren’s Bonus $193 Paid annually – target is 5% of salary (66,300) but could be more or less depending on performance. Subtracted 30% for taxes.
Monthly subtotal: $8,686
Annual total: $104,232

Mortgage Details

Item Outstanding loan balance Interest Rate Loan Period and Terms Equity Purchase price and year
Mortgage on primary residence $269,157 2.88% 30 year mortgage $4,843 $276k; purchased in 2019


Item Outstanding loan balance Interest Rate Loan Period/Payoff Terms/Your monthly required payment
Lauren’s Student Loans $57,127 Currently set at 0% and not able to find what the interest rate was pre-Covid Normally pay $442 per month + $100 employer contribution – currently only paying $100 employer contribution
Kayla’s Student Loans $32,546 Currently set at 0% and not able to find what the interest rate was pre-Covid Normally pay $158 per month + $100 employer contribution – currently only paying $100 employer contribution
Lauren’s Car Loan $17,859 5.53% Pay $553 per month (minimum payment) – 2 years and 8 months left on the loan term
Kayla’s Car Loan $14,202 4.50% Pay $446 per month (minimum payment) – 2 years and 6 months left on the loan term
Medical Bill $3,460 0% Pay $65 per month (minimum payment) – program through our hospital to make small monthly payment with no interest for unexpected surgery
Total: $125,194


Item Amount Notes Interest/type of securities held Name of bank/brokerage
Lauren’s 401k $28,377 This is Lauren’s employer sponsored 401k (current employer). We both contribute enough to qualify for our employer’s full match. Tier 1 Vanguard Target Retirement 2055 Vanguard
Kayla’s 401k $17,005 This is Kayla’s employer sponsored 401k (current employer). We both contribute enough to qualify for our employer’s full match. Tier 1 Vanguard Target Retirement 2060 Vanguard
Lauren’s Company Stock $10,584 Some of Lauren’s stock was purchased through the employee stock purchase plan but most was gifted by the company Stock + accrued dividends Solium
Kayla’s Company Stock $8,674 All of Kayla’s stock was gifted by the company Stock + accrued dividends Solium
Savings Account $4,937 This is our savings for unexpected events, things for the house, basically anything/everything right now especially sperm purchase savings Cash – 0.50% Ally Bank
Kayla’s IRA $3,437 This is a 401k from an old job of Kayla’s that rolled into an Traditional IRA 0.50% Ally Bank
HSA Account $1,500 This is our HSA account – Lauren contributes $200 per month and our employer occassionally contributes as an extra perk. We pay for all medical expenses out of this account which have been a lot over the past few years. We also never track what we spend out of this account but there are recurring charges such as therapy for Kayla which changes based on when we hit our deductible. Currently cash (usually we have it set to automatically move anything over $1,500 to investments managed by the brokerage but we currently only have $1,500 in the account) Health Equity
Total: $74,515


Vehicle make, model, year Valued at Mileage Paid off?
2017 Buick Enclave $17,780 67,561 No, the amount I owe is listed under “Debts”
2014 JC Tritoon Pontoon Boat $14,000 Less than 50 hours Yes. We split the cost at the time of purchase with Kayla’s mom who covers the insurance and yearly storage fee as well. So we own half the value of $14k, not the whole amount.
2016 Hyundai Sonata Hybrid $10,000 49,000 No, the amount I owe is listed under  “Debts”
Total: $41,780


Note about this section: we don’t track our monthly spending at all (aside from making sure our bills are paid). Doing this spreadsheet was pretty eye opening because for the most part, we have like no idea where our money goes each month. Once we paid off all our credit card debt, we went to a system of only budgeting for bills and putting everything else on the credit card and then paying it off at the end of each month. It is very easy to buy a whole bunch of stuff using that method and have way less to transfer into savings at the end of the month.

We’ve now switched to using Dave Ramsey’s Allocated Spending Plan worksheets and are hoping that those help us reign in our discretionary spending and stop just swiping our credit card because we know we have excess cash to pay it off. Long story short: this is why we don’t have breakdowns for clothing, vacations/travel, holidays, entertainment, home goods, etc. because we genuinely just have no idea what we’ve historically spent on these things.

Item Amount Notes
Mortgage $1,562 Taxes and Insurance are escrowed
Lauren’s Car Payment $553 Noted in liabilities section
Groceries and household supplies $547 We don’t track this on a monthly basis, which I think is part of our issue with wondering where our money goes. We purchase household supplies and hygiene items on these trips also but don’t track them. This was the average I was able to calculate by going through our credit card statements.
Kayla’s Car Payment $446 Noted in liabilities section
Lauren’s Student Loans $442 (not paying on these currently but employer is contributing $100 per month still)
Car Insurance $174 Through Geico – pay monthly
Takeout/Restaurants $159 Again – we don’t track monthly and that is part of our issue. This was our average from 2020.
Kayla’s Student Loans $158 (not paying on these currently but employer is contributing $100 per month still)
Security system monitoring $80 CPI Security – very necessary for us as we had some scary incidents in our area last spring
Dog Medicine $75 Purchased monthly (both of our dogs take a daily medication)
Dog Boarding $73 We spent $879 on this in 2020. We typically board our dogs a few times a year if we go to visit family or on vacation. Calculated monthly by total divided by 12.
Vet Bills $70 We took our dogs to the vet once in 2020 (typically take them once a year for check ups, vaccines, etc.) It costs a lot when this happens and one of our dogs was sick when we went last time so the bill was $845. We paid it in full at the time but divided by 12 for the monthly amount.
Internet $70 Through Spectrum – unfortunately our only provider in our area
Dog Food $70 Purchase 1 bag of food per month
Medical Bills Payment $65 Noted in liabilities section
Gas for cars $64 Again, we don’t track this monthly but this was our 2020 average per month.
Electricity Bill $61 On equal billing payment plan where you pay one price based on historical usage and are billed or refunded at end of year
Gas Bill $51 Varies between $20-150 per month depending on time of year. Used average from 2020 to calculate
Water Bill $44 Varies between $40 – $65 per month. Most months it is around $45. Used average from 2020 to calculate
Car Registration Fees/Inspections $41 Pay annually in full for both cars but divided by 12 to get the monthly amount.
Netflix $20 Pay for family plan for us + siblings monthly
Cat Food $20 Purchase 1 bad of food every 2 months (so around $20 monthly)
Dog Membership $18 We pay a monthly fee to be part of our dog’s boarding and training facility
Amazon Prime $13 (Membership paid once per year but broke cost down monthly)
Disney Plus $7 Pay for family plan for us + siblings monthly
Costco Membership $5 Monthly amount divided by 12
Monthly subtotal: $4,888
Annual total: $58,656

Credit Card Strategy

Card Name Rewards Type? Bank/card company
Citi AAdvantage American Airlines Miles Citi Bank
Bank of America Travel Rewards Points used to make payments towards travel related purchases BOA
Capital One Platinum None Capital One (affiliate link)

Kayla and Lauren’s Questions for You:

  1. Our dog Hudson hanging out at the cabin

    How do we prioritize our financial goals and where our money goes each month?

    • Our priorities are: paying off our cars and student loans, saving for the pregnancy process, saving for our children’s education, and investing for retirement.
    • We have a big issue with excess discretionary spending. We’re no longer spending above our means, but we have lofty goals each month to transfer X number of $ into savings at the end of the month. But by the time the end of the month rolls around, we’ve spent money on so many random things/experiences/etc. that our savings transfer is a fraction of what we wanted it to be.
  2. How much should we be saving for retirement (monthly or annually) if we both want to retire somewhere between age 50-55?
  3. When should we start saving for our children’s education and how much should we save?
    • It’s a big priority for us to gift a college education to our children if they choose that path.
  4. How do we save for other things (vacations, holidays, unexpected expenses, unexpected job losses, etc.)?
  5. Kayla has the larger salary. For tax purposes should we switch over insurance, HSA, etc. withdrawals from her paycheck to have a smaller take home  pay or should they stay with Lauren?
  6. After looking at our financial situation – are there any other recommendations you have that would help us reach our goals?

Mrs. Frugalwoods’ Recommendations

Congrats to Kayla and Lauren for the hard work they’ve put in to pay off their credit card debt! I am really impressed with their drive to break this cycle of financial instability. I commend them both for recognizing that their childhood money experiences have a profound bearing on how they manage money as adults. A lot of folks don’t realize how deeply your childhood money experiences impact your lifelong relationship to money. Acknowledging this will help Kayla and Lauren create a money culture for their family. It will help them chart a path that’s different from how they were raised and recognizes the triggers and traumas of their unstable financial upbringings.

While I can offer advice about the numerical side of things, we all know that our relationship to money goes much deeper than that. Kayla and Lauren might want to consider speaking with a therapist about the deeper issues surrounding their emotional responses to money and finances. Until they’re able to truly understand what prompts them to churn through cycles of spending and debt, they’ll likely keep falling victim to them. I encourage Kayla and Lauren to consider spending some time with a couples’ therapist to dig into these issues. It will likely be time and money very well spent!

Ok, let’s dig into Kayla’s questions.

Question #1: How do we prioritize our financial goals and where our money goes each month?

Rainbow in New Mexico

To answer this, I’m going to back up a few steps and encourage Kayla and Lauren to start tracking their expenses rigorously. Kayla noted they’re not doing this and that’s obvious from their expense report. If they were truly spending only $4,888 per month, they’d have $3,798 leftover every month, which isn’t the case (that’s their net income of $8,686 – $4,888).

Priority #1 for Kayla and Lauren is to track where every dollar is going. Without that crucial data point, we can’t really move forward because we don’t know how much money is leftover every month.

There are tons of different ways to track your spending, here are a few ideas for them to try:

  1. Sign-up for the free expense tracking service from Personal Capital. This is what I use and recommend because it does the work for you.
  2. Commit to writing down every expenditure at the time of purchase. Then, create their own spreadsheet every month of what they’ve spent.
  3. Comb through their credit card statements to determine what’s being purchased every month. Combine this with a list of everything purchased with cash, direct deposit and check.
  4. Move to the cash envelope system and set a budget at the beginning of the month for each category. Create envelopes of cash (yes, actual envelopes) with the category and monthly budget written on the front. When the money’s gone from each envelope, that’s it for the month–you can’t buy any more. For example: you write “Groceries (food only), May 2021, $400” and you put $400 in that envelope. When you’ve spent the $400, you can’t buy any more groceries until June.

Bottom Line: there are a million different ways to track your spending and there’s no one right way. The “right way” is whatever Kayla and Lauren can commit to for the long haul. They need to find a system that works for both of them.

Once Kayla and Lauren know what they’re spending every month, they can start setting savings goals (more on that in a moment). 

Question #2: How much should we be saving for retirement (monthly or annually) if we both want to retire somewhere between age 50-55?

Lauren on a trip we took to Iceland

I want to take a moment to give a HUGE congratulations to Kayla and Lauren for contributing enough to their 401ks every month to qualify for their employer’s match. Very, very well done!!

At this point, they’re so many years away from retirement that it’s not possible to give them a precise answer. However, we can apply a few simple rules of thumb to help them track their progress.

  • Lauren’s total retirement: $28,377
  • Kayla’s total retirement: $20,442
  • Combined: $48,819

To give them some context, we’ll use Fidelity (somewhat oversimplified) retirement rule of thumb:

Aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67

Since Kayla is 26 and Lauren is 30, we’ll go with 1x their combined salaries, which would be $104,232. While they’re pretty short of this metric, I’m not super worried because they’re doing the right thing by contributing to their 401ks. It would be great if they could increase the percentage they contribute every year. One easy way to do this is to increase their contribution by one percentage point every year.  So if they’re contributing 6% this year, bump it up to 7% next year, 8% the following year and so on.

However, I can’t really advise them on how much more to contribute each month because we don’t know how much they’re spending every month. It all goes back to tracking your spending so that you know how much money you have to work with (net income – total monthly expenses = money leftover to put into savings and investments).

Question #3: When should we start saving for our children’s education and how much should we save?

The sun setting in Paris

I totally understand their desire to pay for their future children’s higher education, however, this should be their lowest priority at this point. Not forever, but right now, it’s the least important of their financial goals because:

  1. Kayla and Lauren need to first get out of debt.

Their debt is literally dragging them down. They are losing money to interest every month that they carry this debt.

Let’s take a look at their car loans first:

  • Kayla’s car: $14,202 owed at a 4.5% interest rate
  • Lauren’s car: $17,869 owed at a 5.53% interest rate

You want to prioritize paying off debt according to interest rate. The higher the interest rate, the worse the debt. So, if it were me, I would throw everything I have at paying off Lauren’s car ASAP since 5.53% is a pretty steep interest rate.

At their income level, if they really, really buckled down and trimmed every single unnecessary expense, they could pay off Lauren’s car in LESS THAN FOUR MONTHS!!!! Here’s how:

Item Amount Kayla & Lauren’s Notes Mrs. FW’s Notes New Amount Suggestion
Mortgage $1,562 Taxes and Insurance are escrowed Fixed $1,562
Lauren’s Car Payment $553 Noted in liabilities section Fixed $553
Groceries and household supplies $547 We don’t track this on a monthly basis, which I think is part of our issue with wondering where our money goes. We purchase household supplies and hygiene items on these trips also but don’t track them. This was the average I was able to calculate by going through our credit card statements. Reduce by $200 $347
Kayla’s Car Payment $446 Noted in liabilities section Fixed $446
Lauren’s Student Loans $442 (not paying on these currently but employer is contributing $100 per month still) Deferred at present $0
Car Insurance $174 Through Geico – pay monthly Fixed $174
Takeout/Restaurants $159 Again – we don’t track monthly and that is part of our issue. This was our average from 2020. Eliminate $0
Kayla’s Student Loans $158 (not paying on these currently but employer is contributing $100 per month still) Deferred at present $0
Security system monitoring $80 CPI Security – very necessary for us as we had some scary incidents in our area last spring Fixed $80
Dog Medicine $75 Purchased monthly (both of our dogs take a daily medication) Fixed $75
Dog Boarding $73 We spent $879 on this in 2020. We typically board our dogs a few times a year if we go to visit family or on vacation. Calculated monthly by total divided by 12. Eliminate $0
Vet Bills $70 We took our dogs to the vet once in 2020 (typically take them once a year for check ups, vaccines, etc.) It costs a lot when this happens and one of our dogs was sick when we went last time so the bill was $845. We paid it in full at the time but divided by 12 for the monthly amount. Fixed $70
Internet $70 Through Spectrum – unfortunately our only provider in our area Fixed $70
Dog Food $70 Purchase 1 bag of food per month Fixed $70
Medical Bills Payment $65 Noted in liabilities section Fixed $65
Gas for cars $64 Again, we don’t track this monthly but this was our 2020 average per month. Reduce by $25 $39
Electricity Bill $61 On equal billing payment plan where you pay one price based on historical usage and are billed or refunded at end of year Fixed $61
Gas Bill $51 Varies between $20-150 per month depending on time of year. Used average from 2020 to calculate Fixed $51
Water Bill $44 Varies between $40 – $65 per month. Most months it is around $45. Used average from 2020 to calculate Fixed $44
Car Registration Fees/Inspections $41 Pay annually in full for both cars but divided by 12 to get the monthly amount. Fixed $41
Netflix $20 Pay for family plan for us + siblings monthly Eliminate $0
Cat Food $20 Purchase 1 bad of food every 2 months (so around $20 monthly) Fixed $20
Dog Membership $18 We pay a monthly fee to be part of our dog’s boarding and training facility Eliminate $0
Amazon Prime $13 (Membership paid once per year but broke cost down monthly) Eliminate $0
Disney Plus $7 Pay for family plan for us + siblings monthly Eliminate $0
Costco Membership $5 Monthly amount divided by 12 Eliminate $0
Current Monthly Subtotal: $4,888 Suggested New Monthly Subtotal: $3,768
Current Annual Total: $58,656 Suggested New Annual Total: $45,216

I took their expenses spreadsheet and eliminated everything not required for their survival and reduced every other category I could.

Prinsesstarta Kayla made for Lauren’s sister

The challenge is that this isn’t their actual monthly spending. Kayla and Lauren didn’t include any of the following on their expense spreadsheet:

  • Travel/vacations
  • Gifts
  • Clothing/shoes
  • Personal care (haircuts, etc)
  • Home improvement supplies
  • Hobby-related expenses
  • Household supplies
  • Miscellaneous

The good news is that everything on that list is discretionary. If they eliminate all the stuff I listed–and every expense they didn’t list–they could wipe out their debt really quickly.

With their monthly net income of $8,686, if they stripped their spending down to the bare minimum of $3,768, they’d have a whopping $4,918 leftover every month to funnel into debt repayment.

At that rate, they could pay off Lauren’s car in LESS THAN FOUR MONTHS!!!!!!!

Lauren’s car loan $17,869/$4,918 = 3.63 months

Holy cow that’s fast!!! Then, if they were up for continuing this super duper frugal experiment, they could pay off Kayla’s car in UNDER THREE MONTHS!!!!!!

Here’s How:

Once they eliminate Lauren’s monthly car payment of $553, we can do the math of $3,768 – $553 = $3,215 to get their new monthly spending. Once again, we’ll take their net monthly income of $8,686 – their new proposed monthly spending of $3,215, which leaves them with $5,471 leftover every month.

  • Kayla owes $14,202 on her car, so we’ll do $14,202/$5,471 = 2.59 months to paid off!!!!!

Bottom Line: If Kayla and Lauren decide to eliminate all discretionary expenses for the next seven months, they’d have both of their cars completely paid off!!!! That’s a good thing for several reasons:

  1. They’d no longer be losing money to interest on those car loans every month.
  2. They’d no longer be paying $999 in two car loans every month (Lauren’s at $553 + Kayla’s at $446). That’s a TON of money freed up every single month! In fact, it’s $11,988 PER YEAR! That’s real money, folks.

Now that the cars are paid off, let’s turn to their…

Student Loans

Our cat Sappho being sweet

Federal student loans are currently deferred due to the pandemic. Given that, Kayla and Lauren are wisely not making payments on their loans right now. Here’s what I’d do if it were me:

  • Continue to not make payments while the loans are in forbearance and the interest rate is 0% for federal student loans.
  • Wait to see if the administration moves forward with waiving student loan debt of up to $10k (higher amounts of forgiveness are being discussed as well, so it’s very much a wait-and-see moment for student loans)
  • I very rarely advise people to not pay off debt, but given the forbearance program as well as the looming potential for loan forgiveness I think it’s wise not to pay down federal student loans right now (provided you’re certain you qualify for the federal student loan forbearance program. Read more about pandemic-specific financial programs in my series Uber Frugal Week: How to Manage Your Money in the Time Of Pandemic and Recession).
  • Once the COVID forbearance program ends on September 30, 2021, resume paying the monthly minimum required payment. However, keep an eye on this date as it continues to be pushed back.

If it appears that student loan forgiveness isn’t going to happen anytime soon, Kayla and Lauren might want to consider accelerating their pay-off of these loans. Unfortunately, without knowing the interest rate on these loans, it’s tough for me to give concrete advice. With debt, it’s the interest rate that matters.

  • Lauren has $57,127 in loans and Kayla has $32,546, for a total of $89,673

I would prioritize paying these off according to interest rate–in other words, pay off the loan with the highest interest rate first. If they continue with the uber frugal spending I outlined above, they could pay off both loans in 15.15 months.

Here’s how:

  • Once again, we’ll take their monthly net income of $8,686 – their new proposed monthly spending of $2,769, which leaves them with $5,917 leftover every month.

To recap, here’s how we got them to a monthly spend rate of $2,769:

  • We took their current spending of $4,888 – the eliminations I suggested in the spreadsheet above = $3,768. Then, with both cars paid off, we subtracted their $999 monthly car payments to reach $2,769.

Then we take their total student loan debt of $89,673 / $5,917 per month = 15.15 months

That means they could have BOTH of their student loans obliterated in ONE YEAR AND THREE MONTHS!!!!!


Lunch at a farm in Mallorca on our honeymoon

Based on the calculations I’ve done, Kayla and Lauren could be completely debt-free (other than their mortgage) in 22 months, which is UNDER two years! That’s an incredibly fast timeline!!!! To recap, it would take approximately 4 months to pay off Lauren’s car, 3 months to pay off Kayla’s car and 15.15 months to pay off BOTH of their student loans.

I realize that they still have a medical bill of $3,460, but assuming their hospital keeps this loan at a 0% interest rate, there’s no reason to pay it off ahead of time. Just keep paying on it every month until it’s gone. Kayla and Lauren should confirm that the 0% interest rate is fixed and not subject to adjustment.

The Trade Off

The trade off with this super sonic speed to debt freedom is their discretionary spending. What I’ve outlined is a pretty bare bones frugal lifestyle. However, Kayla and Lauren should feel free to tweak this spending as it suits them. Maybe they want to spend even less in one category in order to add a treat or luxury. Maybe they’d like to extend the debt-freedom timeline another few months in order to spend more every month. The bottom line is that Kayla and Lauren have a lot of options here and, given their salaries, they have the ability to be free from their debt in short order.

Question #4: How do we save for other things (vacations, holidays, unexpected expenses, unexpected job losses, etc.)?

Now that we’ve addressed their retirement investments and debt repayment strategy, let’s talk more about their savings.

View from the minor league baseball team’s field in Charlotte

What Kayla and Lauren really need is an emergency fund. An emergency fund is easily accessible cash held in a savings or checking account that prevents you from slipping into debt in the event of an emergency.

If you lose your job or your car breaks down or a tree falls on your roof, you have the ability to dip into your emergency fund as opposed to racking up credit card debt. An emergency fund is calibrated on your monthly spending, which is why its so crucial to track what you spend every month. The general rule of thumb is that an emergency fund equals three to six month’s worth of your expenses.

At Kayla and Lauren’s current spending rate of $4,888, they’d want to target an emergency fund of $14,664 (three month’s worth) to $29,328 (six month’s worth). Of course, if they choose to spend less every month, they can target a smaller emergency fund.

If they choose to stick with the super frugal spending rate of $2,769 per month, they could save $8,307 (three months worth) to $16,614 (six months worth). Since they already have $4,937 in savings, it would take them just TWO months of saving $5,917 per month to reach a fully funded emergency fund of $16,771. Nice!!!!

Question #5: Kayla has the larger salary. For tax purposes should we switch over insurance, HSA, etc. withdrawals from her paycheck to have a smaller take home  pay or should they stay with Lauren?

Assuming they are “married filing jointly,” it doesn’t matter because the IRS considers your income to be combined total household income.

Question #6: After looking at our financial situation – are there any other recommendations you have that would help us reach our goals?

Toboggan slide in Quebec City

Let’s do a summary of what I recommend for Kayla and Lauren:

  1. Start rigorously tracking their monthly spending. Sign-up for Personal Capital, use your own spreadsheet, write it in a notebook–whatever system will work best for them, Kayla and Lauren need to get a handle on what they’re spending every month (affiliate link).
  2. Continue contributing enough to their 401ks in order to qualify for their employer’s match. Consider increasing their contribution amount by 1% (or more) per year in order to catch up to where they need to be at their age.
  3. Consider stripping their monthly spending down to $3,768 as I outlined in the spreadsheet above. To guide them on this process, I strongly encourage them to take my free Uber Frugal Month Challenge together.
  4. Take their newfound monthly savings (per #3) and throw it at their debt in order of interest rate:
    1. Pay off their highest interest rate debt first, which is Lauren’s car loan of $17,869 at a 5.53% interest rate. This’ll be paid off in UNDER FOUR MONTHS!
    2. Pay off Kayla’s car loan next, which is $14,202 at a 4.5% interest rate. They’ll pay this off in LESS THAN THREE MONTHS!
  5. Monitor the federal student loan forbearance/forgiveness program, which is set to expire on 9/30/21. If student loan forgiveness isn’t happening by that point, consider wiping out their student loans, starting with the highest interest rate loan:
    • Based on my calculations above, they could have BOTH of their student loans completely paid off in just over 15 months!
  6. If they decide to follow steps 3 – 5, Kayla and Lauren could be debt-free (other than their mortgage) in under two years, which is remarkably quick!!!!!
  7. The next major priority is building up a fully funded emergency fund. Emergency funds are calculated based on your monthly spending, so Kayla and Lauren will need to track their spending and decide what level of frugality they’re comfortable with. The glorious thing is that, without their car payments, they’ll have a cool $999 extra every single month!!!
    1. Determine their monthly spending and save an emergency fund of three to six months worth of expenses.
    2. As outlined above, if they stick with the uber frugal scheme, they could have this baby fully funded in TWO quick months.
  8. Now it’s time to save for their other priorities!! Based on the above, Kayla and Lauren could spend exactly two years paying off all of their debt and building their emergency fund. There’s a hierarchy of financial wellness that Kayla and Lauren should strive for BEFORE turning their attention to other priorities. They’ll be ready to focus on their other priorities AFTER they’ve:
    1. Paid off their debt
    2. Built up an emergency fund
    3. Continued to contribute to their 401ks, increasing their contribution levels annually

Kayla and Lauren’s Other Priorities: Pregnancy and Their Children’s Education

A pretty hallway at Versailles

I’m addressing these two priorities last because financial management is very much a “put your own oxygen mask on first” situation. You need to get your own financial house in order BEFORE you start planning and saving for your children’s future.

Kids can take out loans for higher education, parents cannot take out loans for retirement. Kids will be vastly happier if their parents are financially stable and don’t need to move in with them later in life because they can’t pay their own bills. To be clear: living together by choice is a totally different conversation, I’m talking about NEEDING to move in with your adult children because you can’t pay your bills.

After Kayla and Lauren take care of their car loans, student loans, emergency fund, and 401ks, they can–and should–turn their attention to their future children.

Kayla shared:

We have a big issue with excess discretionary spending. We’re no longer spending above our means, but we have lofty goals each month to transfer X number of $ into savings at the end of the month. But by the time the end of the month rolls around, we’ve spent money on so many random things/experiences/etc. that our savings transfer is a fraction of what we wanted it to be.

My suggestion: instead of waiting until the end of the month to save money, set up direct deposits from their paychecks into savings accounts. This way, the money will never actually be theirs to spend. Much like how their 401k contributions automatically come out of their paychecks, this would eliminate the issue of Kayla and Lauren having a big pot of money to spend. They’d have to commit to not touching these savings accounts, but it would be a way to automate their savings and put their long-term goals first.

They might want to open different savings accounts for different goals and name the accounts accordingly. For example, they could open an account for each of their stated goals:

  1. Pregnancy Process
  2. Children’s Education
View from the cabin during Fall

Then, they could specify that $x of every paycheck go into theses accounts. Thus, instead of being paid the big lump sum of $8,686 every month, they’d be paid, let’s say, $4,000 with the difference going directly into these savings accounts. They’d obviously have access to these accounts, but it would be a way to “trick” themselves into saving. Then, if they wanted to spend this money on a meal out at a restaurant, they’d have to face the fact that they were taking $100 away from their goal of “Pregnancy Process” in order to go to a restaurant.

It’s still their money, but by segregating it, Kayla and Lauren would be confronted with their long-term goals every time they wanted to spend money on short-term treats.

This would force them to do the mental exercise of “Do I want to buy these shoes or do I want to save for our kids’ education?” This is the technique I used when we were saving for our financial independence/homestead goal. I would actually ask myself, “Do I want to buy these boots or do I want to get to my homestead faster?” Sometimes I bought the boots, but more often, I’d be reminded of my overarching goal and I’d put the boots back on the shelf.

I also recommend that Kayla and Lauren take my free, 31-day Uber Frugal Month Challenge. The Challenge is designed to help you prioritize your spending, understand your triggers to overspend and come to a place of peace with frugality. If they’re up for it, I think doing the Challenge together would lend a lot of insight into the issues Kayla and Lauren face every month with their spending.

A final note: since the kids needs to be born before they go to school, if it were me, I would focus solely on the Pregnancy Process goal at this time. Once the kiddos are born, and assuming Kayla and Lauren are still on track with being debt-free and have fully funded emergency and retirement accounts, they can consider opening 529 college savings accounts for their kids.

The point of all of this isn’t deprivation, it’s about having control over your money. The goal isn’t to save every last penny and make yourself miserable, the goal is to spend your money mindfully and on your highest and best priorities.

Ok Frugalwoods nation, what advice would you give to Kayla and Lauren? Kayla and I will both reply to comments, so please feel free to ask any clarifying questions!

Would you like your own case study to appear here on Frugalwoods? Email me (mrs@frugalwoods.com) your brief story and we’ll talk.

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  1. I had to stop reading and google Prinsesstarta and, after wiping the drool off my tablet, add it to my recipe database. Thank you, Kayla, for bringing that to my attention!

    1. One of our friends introduced us to this amazing cake. It is SO delicious, but also a pain in the rear to make– so many steps. Definitely worth it if someone else makes it for you(!)

    2. Funny to see that cake here. It is a very typical one in at least here Finland and Sweden. We always had one for my teenage birthdays.

  2. As someone who just rented an Airbnb cabin in the Asheville area….have you thought about offering your cabin as a short term rental in order to add a revenue stream? Perhaps you could segregate that income as being your travel fund / discretionary fund and use your bank income as described above.

    1. Thank you! Yes we definitely plan on doing this. Unfortunately it’s joint owned with several of my siblings so the goal for now is to just put all income back into the property until the mortgage is paid off.

  3. Frugalwoods comments are very sound. I would only add – don’t ever underpay your pensions. You’ll need more than you think to maintain a half decent lifestyle. And – kids cost way more than you might imagine – get rid of those debts first. ( P.S. kids are worth it! 😊). Finally – all the best as you move forward.

  4. As always Liz has made perfect sense. Could the home baking and woodwork be another source of income along with the cabin? The prinsesstarta looks amazing by the way. I always struggled with savings until I started to think of them as another bill to be paid. Now the savings almost look after themselves and we can only spend whatever’s left. We still have treats and have more than we need but we also have a healthy financial future

  5. You’re doing incredible Kayla and Lauren! Really great to hear the positive financial choices you’ve made for your family to this point and wonderful to hear you thinking about your future.

    A few thoughts on your question:
    1. Another option for budgeting is an app called You Need A Budget (YNAB). It’s essentially a cash envelope system in a digital form. On that note though, Frugalwoods made some excellent suggestions. Mostly, find what works for you. And keep in mind that it’s a process so don’t get frustrated with yourself if you aren’t able to track your spending effectively with one method immediately. I’m 10 years into the process and have tried many systems (spreadsheets, envelopes, YNAB, etc.) along the way. Tweak and optimize to fit your life at the stage your in (and life changes so you may find what works now may not serve you well 3 years from now). Keep it up and enjoy the evolving process (as much as one can with budgeting).

    2. A way to calculate your retirement goal amount is the FIRE method (Financial Independence Retire Early). It’s not the only way by any means so research what would be best for your family. The FIRE rule is 25x your true expenses for retirement (based on a 4% withdraw rate at retirement). There’s a ton out there on it so I won’t go into detail (ChooseFI or Mr. Money Mustache are just two easy resources). Again, it’s just one way to think about it, but it could give you a solid number to work with for the time being and you can adjust as you need with more information down the road.

    Congrats on where you’re at today and cheers to experiences that enrich your lives!

      1. So do I. YNAB does just what Mrs frugalwoods describes in that it makes trade offs very clear; the “do I want the boots or the homestead”. But in every purchase, not only between the things you have a special savings account for. Also, it aknowledges that no 2 months are the same and it is allright to change your plan, while keeping the overarching plan clear.
        Especially as Lauren and Kayla haven’t tracked their spending before and getiting into that habit may take some effort: YNAB makes it easy and fun (ok, for me 😊) while not making it feel as a failure if you don’t predict right.
        I agree whith mrs fugalwoods and Ashley that you should find a system that works for you. YNAB was just eye opening for me and I whish you the same experience 😊.

        Once you do track your expenses and see the trade offs more clearly, in whatever system, it becomes easier to make them; for some it might fit to go extreme for a while, but maybe you discover you want to pay off your debt a bit more slowly and save for a pregnancy first and quick as you can. Though being debt free is wonderfull! And I second mrs frugalwoods order of tackling the loans!
        Good luck.

  6. The only advice I’d add is to consider saving for the pregnancy in your HSA, since you end up getting a triple tax break on it. (It goes in tax-free, grows tax-free if invested, and is spent tax-free.) Plus, it comes out of your paycheck directly, which helps with the “pay yourself at the start of each month” suggestion. You can save $7,100 a year in it ($591.66 per month), including employer contributions. If I were Lauren, that might be one of the first steps I took.

    1. This is exactly what I was thinking. I’m not sure exactly what the process would be, but I would check whether it would be HSA-eligible. If so, you can maximize your contributions to your HSA, which come out tax-free, and you can invest some of that money. Additionally, you get that “triple tax benefit,” where your money grows interest-free and your overall gross income is considered to be less for tax purposes. If the money ends up not being used for pregnancy and other health costs, it can eventually be used for retirement.

    2. Hi Kayla & Lauren! My wife and I are currently doing exactly this. You can pay for both IUI and IVF costs from either an HSA and FSA (with the possible exception of donor sperm, rules on that are kind of unclear) and those costs can be incurred by either you or your spouse. We maxed out the HSA this year for that purpose. Another note is that our journey has been way longer than we thought it would be. We are both young and don’t have medical fertility issues, but we’ve done many IUIs, had an ectopic pregnancy, and now IVF over the course of almost 3 years. We have probably spent $20k all together on this so far (and it’s only that low because IVF is now covered by my insurance). The good news is, we started getting our financial house in order 4 years ago before we got started (just like you’re doing now), and have not incurred any debt as a result of trying to get pregnant. We have also been able to meet our other savings goals during this time. We budget using Mint, and we have dealt with the cost by adding $500/mo to the monthly ‘Health’ budget that rolls over each month. For reference, our income is a bit less than yours, so it is possible. Good luck fam!

      1. I absolutely agree with the HSA max out. Its a complete life saver (if you have a high deductible plan) not to be confused with the other health accounts that are not nearly as good. Max your HSA out, just do it. Invest what you dont need this year in index funds. I keep one full deductible out just in case. I buy coverage from the market place (very high deductibles) and having a very well stocked HSA from my youth is a huge reason my husband and I decided I could stay home with my daughter. Good luck in your fertility journey!

      2. Definitely agree that maxing out an HSA is a great idea! And even better because it can roll over from year-to-year. Less flexibility with the FSA, but we maxed out our FSA the past two years and spent it all on fertility/pregnancy stuff easily. Once we moved from home inseminations with a known donor to using the donor in a clinic setting, the $ added up quickly. We were able to pay donor expenses with our FSA, but you’ll want to check on your individual plan’s limitations. Also check out your company’s fertility benefits – corporate benefits can be pretty good. BUT look into what restrictions they may put on it – some have limitations like requiring so many IUIs out of pocket to “prove” infertility before they’ll begin covering them, or other non-queer-friendly stuff.

  7. Does North Carolina have a 529 deduction? If so, you can put money into a 529 to max the deduction each year, and then take it out immediately to use for student loan payoff. You can do this each year until you reach the lifetime maximum of $10,000–and then, if you have a kid by then, just change the beneficiary to the child.

    But I agree with Ms. Frugalwoods that having the kid comes logically before saving for its college. This is also a good time to link to MMM: you’re allowed to have only one kid!



    1. 529 offers flexibility in that it can be used for one of you to pursue further training or education as well if the need arises.

    2. Since I’m from NC (same city as well), unfortunately, the state eliminated the deduction years away. As soon as it was cut, I pretty much stopped contributing to my kids’ 529 plan (but increased investing in the taxable accounts instead). To this day, it irks me to remember the stupid justification then the Republican governor gave for this elimination… A correspondent asked him why to eliminate the deduction for the 529 plan which encourages parents to save (I don’t recall if it was $5k or $10k max) but leave the deductions for the yachts and their maintenance… The answer was “Parents will not stop saving in 529 if we eliminate it, but the rich might decide to stop buying yachts and keeping in the state.” That’s the dumbest move and explanation I’ve ever heard. Unfortunately, the Dems didn’t reinstall the 529 deduction either, but I do believe having the deduction against taxes would be appreciated by parents. OTOH, not having the deduction you have choose any state’s 529 plan to contribute to because at the time I was only able to sign up for NC529 plan or would have lost the tax benefit.

  8. Does North Carolina have a 529 deduction? If so, you can put money into a 529 to max the deduction each year, and then take it out immediately to use for student loan payoff. You can do this each year until you reach the lifetime maximum of $10,000–and then, if you have a kid by then, just change the beneficiary to the child.

    But I agree with Ms. Frugalwoods that having the kid comes logically before saving for its college. This is also a good time to link to MMM: you’re allowed to have only one kid!

  9. Well done, love the details and wonderful to see real numbers from real people… helps so much to put things into perspective.

  10. A good topic for the FW community to discuss is whether college is even worth it if you have to take out student loans. Fat cats on Wall St are getting rich off Federally guaranteed loans and young people are falling into the trap financial indentured servitude.

    1. Yes, please! My husband and I are both college educated and managed to make it out debt free but we are highly skeptical that the value is worth the expense for our kids (unless they want to be in medicine or maybe law.) My brother recently got a very good (well paying) tech job. The job qualifications didn’t even list educational experience, just skill experience. He doesn’t even have a bachelor’s degree. He basically taught himself and gained experience through work. The company didn’t care.

    2. I agree this would be an interesting topic, but remember the issue is very localised. I’m in Ireland, where university education is tuition-free, and fees are capped at 3000 euros a year. With other European countries being similar. Yes, I pay somewhat higher taxes (and I came here many years ago as an American taxpayer) but considering those taxes have also covered healthcare for my family of six, it’a not a bad deal, and what’s more it promotes better social equality. It does not entirely mitigate the problem of some students spending time and money on qualifications with little return or prospect of employment. But declaring all but a few majors to be a waste in the US suggests the real discussion that need to be take place tbere is how to make education affordable. To everyone.

  11. This all seems like great advice. As a fellow travel-lover, I want to suggest that while Lauren and Kayla are working hard in the next few years to pay off debt, if they do not want to forego travel completely, they might want to consider traveling to places where the USD goes a lot further (Southeast Asia, Eastern Europe, for example). This is potentially less luxurious (but not necessarily-my partner and I once lounged around a world class hotel/pool/spa in the Philippines for very little money) and there are plenty of “off the beaten path” cities/countries with history, art, culture, good food for a fraction of the price compared to Western Europe (just noticing that is where most of their lovely travel photos were taken). Not to mention, these more “adventurous” places might be nice to visit pre-children (when staying in the hostel/budget lodging, taking public transportation, etc. is easier). Of course, this is all advice in a reality apart from Covid… All the best!

    1. And South America! I loved traveling down there because the USD went so far and you didn’t even change time zones and lose a day to jet lag! There’s plenty of luxury down there too! (though obviously right now, Covid concerns might be an issue)

    2. Thanks for your advice! Yes we definitely want to find a balance between still traveling some and also reaching our financial goals.

  12. So many of the couple’s eggs are in the single basket of their mutual employer. They both work for the same company, they both own company stock, and I imagine any company match in their 401(k)s is in company stock. We tend to forget how much we depend on our employer and how, should that employer have catastrophic financial difficulties, our finances could suffer.

    I’d like to see the couple get rid of the company stock if they are vested; if these shares are the result of stock options, consider exercising options in future by selling rather than holding them. And as they vest in their company 401(k) contributions, they should consider selling that stock to diversify. Finally, if the opportunity arises for one of the couple to change jobs, that would be prudent. Charlotte is a major banking center so finding work with another bank is something to keep in mind.

    1. Are there companies that make 401(k) contributions of their own stock? I assumed employer contributions were always allocated the same way your own contributions are. (I’ve never worked at a public company so that may not have been a reasonable assumption.)

      1. Correct, my company contributes to my 401k but you can choose (from their offerings) how to invest. Different than an ESPP or gifted stock or whatnot.

    2. Agreed with this– don’t get yourselves into an Enron situation. Sell off the company stock as it matures (is vested, like Dorothy says) on a regular basis and replace it with something else.

    3. Yes, we have definitely thought of this as well. Once our stock is vested we are planning on selling Lauren’s. Long term, Lauren is also planning on probably switching jobs since I have a better trajectory currently. Thanks for your advice!

    4. I also came here to say something about the reliance on a single employer. Every time a big employer closes down locations or does big layoffs, you see someone on the news who both partners worked there and both their inckems are gone simultaneously. Add to that pensions and investments with the same employer, and that’s a lot of your eggs in one basket. If this bank goes bust, or even just has a big round of involuntary redundancy, you could lose a huge amount all in one go.

      Also, i think you need to take into account the age of the partner who plans to become pregnant. If the 26yo partner plans to be the only one to carry kids, then the order laid out in the answer makes sense – get debt free, build up emergency fund, save for pregnancy costs. But if the 30yo partner plans to have any pregnancies, you may want to consider moving the baby plans earlier.

  13. A thought for consideration: Lauren and Kayla are extremely dependent on their common employer. That single company provides their entire household income (both salaries and both bonuses), health/dental/supplemental life/critical illness insurance access, some of their ongoing savings (the 401(k) matches), and a chunk of their existing investments (company stock). If the company is on very solid financial ground for the foreseeable future, this may not be an issue, but if there’s any chance the company might have problems, they might want to explore one of them moving to a different company and diversifying out of the company stock, so all their eggs aren’t in one basket.

    1. Thank you so much for mentioning this, Wendy! I meant to include it in my recommendations, but forgot!

  14. Kayla and Lauren seem to have other higher priorities right now with debt repayment and pregnancy process, but I wanted to point out for other readers and in case they end up with extra savings they want to move in a tax advantaged way. You can actually set up 529s that you will use for your kids before your kids are actually born. Many states will give you a state tax break on contributions to a 529 in anyone’s name, and you can switch the beneficiary to another person in the beneficiary’s family. So you’re can contribute to a 529 in your name and then transfer it to your child once they are born or closer to college age. You may also be able use this feature to increase your state tax benefits, ie contributing to 529s in both your and your child’s name to get tax benefits on both, and then later transferring your 529 balance to your child’s name.

  15. What struck me is how jealous I am about all of their trips and a cabin! I wish I had gone to more countries when I was young and didn’t have kids. So I wonder if they will have trouble cutting out travel, etc. while paying down debt (I would!)
    I did also notice the line about freely ‘buying books,’ etc. I think their lifestyle is going to change a lot if they are more frugal (use libraries, etc.). Still, they have the income to pay off some of these debts. Good luck!

  16. This case study sucked me in because I agree that this is about the emotional side of spending. I too grew up with financial instability (we didn’t move much but the last week of every month was the hungry week waiting for the social security payment at the beginning of the next month). I wholeheartedly second doing some personal work, with a therapist and on your own too, to further uncover how spending attempts to fill the emotional hole of scarcity and instability. For 2 of my siblings, this manifested as living as good a life as debt could provide in order to prove to themselves that they’d “made it”. For me, I bounced in the same cycle of debting and paying it off but over the years have managed to redirect the spiral upward and thanks to the pandemic curtailing my spending I am paying off my last credit card this month. My personal advice is:
    (1) Do the hard emotional heavylifting of dredging up how spending and fun stuff compensates for the childhood financial instability and what message you’re telling yourself by buying All the Things.
    (2) Use hacks to find the cheapest ways to still do the things you love (e.g., work as an usher at shows you really want to see, use the library instead of buying books or offer to haul books away from other people as a junk hauler [our friends now know to call us when they cull their book collections], be willing to travel on a major holiday when airline tickets are cheaper, etc.).
    (3) Remember that you can afford anything you want but not everything you want. Prioritizing is key. Write down everything you want to do and pick the top 3, focus on those and let the rest go for now; eventually you’ll be able to circle back to them or you’ll discover they weren’t that important in the first place.
    (4) For any non-essential purchase, put it aside for 24-48 hours. If you’re still thinking of it a day or two later, it’s probably worth getting. If you’ve forgotten about it, leave it forgotten.
    (5) Avoid temptation such as websurfing stores, you will always find the pretty shiny’s to buy so don’t put yourself there.
    (6) Keep a gift wish list so when loved ones ask you what you want for birthday/anniversary/Xmas, you can pull items from there that you wanted to buy and have someone else buy it for you.
    (7) Get and read “Your Money or Your LIfe” – this will help redirect your thinking per above.
    (8) Attitude is everything. If you think of cutting back as deprivation just like when you were a kid, it will be nearly impossible to sustain. Reframe it as the choices you’re making now so that 40-year-old you will be in the happy place for real instead of just pretending.
    (9) Remember this all takes time – Rome really wasn’t built in a day. But at some point a foundation has to get dug and a structure raised, and done repeatedly, so that the city gets built.
    Good luck! You have great assets of high-paying jobs and lower COL, you can leverage those now for real improvement. Warren Buffett said, “When the tide goes out, you find out who is swimming naked.” Use your high tide to find and pull on a bathing suit. 🙂 I hope to hear an update from you in a year or two and I wish you both the best.

    1. Agree with the “Your Money or your Life” recommendation. For a lighter read, the “Ultimate Cheapskate’s Road to True Riches” also covers re-thinking how you think about money and is pretty funny along the way. Good luck!!

  17. I can personally attest to the envelope method. I put so much money in every week for food, versus once a month. That works for us. I also used to have a few different savings accounts, vacation, Christmas spending, taxes, it really helped to simplify my life by having those different accounts. Do you make any charitable contributons? What about gifts for family members and office friends? Once you start tracking all your different expenses you’ll have different budget categories. I noticed you have company stock given to you. That could also make a difference in your retirement. I worked for a bank for 30 years and was given stock every day. When I retired after 30 years the stock was worth over a million dollars.

  18. Kayla – don’t feel bad about working a corporate job! If you like it and it pays the bills, that’s great, and so much more than what many people have in their jobs. Companies need corporate treasury functions to operate and provide goods/services to others in the wider economy. That’s very useful! If you are worried about your job not having as much of a social mission, then you can always donate time/money to causes you believe in as well. Plus you have a valuable skill that you could always transfer to another organization if/when you feel like it.

  19. I don’t have any advice but as “naturalized” Swede, I just have to say awesome job on the prinsesstårta! It looks legit!

  20. We lived on one salary and saved the other one for retirement. We saved up for a new car by pretending to have a car payment. We are too frugal to pay interest. We rode our tandem bicycle. We shopped at thrift stores for clothes. We are retired now. Because we have been frugal our whole married lives, it is pretty easy to live on one pension check and one social security check with money left over. I watched my grandmother live on $486 a month. It wasn’t pretty. I made no money at 27 but I saved for retirement first.

    Did you hear me? Live on one salary. You never know when you will lose a job. Get a side hustle just in case.

    1. I lost my job at 24 and my husband proposed a few days later. We have lived our entire married lives basically saving one salary and living on one. It has given us so much choice. We live in a small home we could afford on the lowest salary. Maxed out and HSA long before medical bills were an issue, retirement, savings. I cant say enough how much this is a great system if you can possibly do it. We were able to take big international trips, buy used cars outright and quit my job (making more money and carrying our insurance) when I wanted to stay home with our daughter. Our savings/HSA/retirement is still growing in the stock market and our fabulous frugal lifestyle fits so well with our new family life. Now we are 33/35 with a 2.5yr and one on the way. And I am thankful every day that I was a recession college graduate and saved before I spent and my husband lived at home and worked full time for several years and saved a ton. Thank you Frugalwoods for your insight over the years, that helped too!!

  21. I would suggest maybe selling the boat to cover most of the vehicle loans. Shout out to the 2016 Sonata Hybrid, that’s my car. Also, I would suggest maxing out your HSA, I think the limit is 7,100 per year for married couples, that should get you to the cash price of a birth in 2 years I think (never had kids so I could be way off with this one.) With the HSA, you save on FICA and SS taxes, so it’s the most efficient way to save for a planned medical expense.

  22. Simply safe home security system is much more affordable at $15 per month, for sure this is a reoccurring expense that could be drastically reduced.

    Consider also fully funding your HSA for triple tax benefits and not touching it. We keep track of all our medical expenses we pay out of pocket and don’t pull the money out of HSA so it can grow tax free like a retirement account. If we ever need money we can withdraw it since we keep the records

    Use online tax filing software like TurboTax or tax act to better understand the implications of taxes. It’s very affordable way to file your taxes each year and it will be obvious that if you are married filing jointly it doesn’t matter which income your health insurance comes out of.

  23. I enjoyed reading your story and Mrs. FW’s advice. I wanted to offer some perspective as a parent because I admire you both for wanting to take charge of your finances prior to adding children into the mix. The new proposed budget is as Mrs. FW said a little “barebones”…however, the feeling of starting a family without the mental weight of carrying a lot of debt is an awesome feeling. Besides not having to think about chipping away at it while raising your family, it also simplifies and streamlines your finances. Good luck with everything!

  24. Great post. $70 a month for 1 bag of dog food could be cut a lot lower. Grain Free diets at fad and expensive. Go with a $30-40 dollar large bag of Purina Pro Plan and save some dough – from a veterinarian.

      1. I agree. Our 5 have been on this food for years and love it! Unless their animals are on special dietary restrictions, they could give it a try.

  25. Kudos to Kayla and Lauren for submitting this case study, and for proactively dealing with their shared past of financial insecurity and general instability. That is not a small thing! I, too, experienced financial instability growing up, and I’ve worked hard to right the ship. I also identified with this case study because I live in the NC Triangle area, and my husband and I make just a hair under what Kayla and Lauren do combined.

    All that being said, what I’m going to say might sound harsh, but I am saying it from a caring place. To me, Kayla and Lauren’s situation is what MMM calls a “five alarm fire.” Lots of debt and few assets, but with their salaries it can be turned around rather quickly.

    I would recommend the following, some of which is more drastic than what Mrs. FW recommended:
    –Trade in the Buick and get a used compact SUV—something boring like Honda or Toyota. You may need to take out a very small loan to pay for it, but imagine paying off a ~$4k loan instead of an $18k loan. That is a huge difference.
    –As others have said, now’s the time to get really clear on your priorities. You want to keep traveling, have kids and pay for their education, AND retire early. Frankly—and this is important to understand—you don’t have enough assets right now to accomplish all of those things. I love the phrase “You can have it all, just not all at once!” I would continue the honest conversations you’re having with one another about what is most important to you. Perhaps you travel only to domestic destinations for the next 10 years (although I am super jealous of your honeymoon photo), have one kid, and retire at 60 or 65. There are so many options!
    –I’ve seen lots of comments above about 529 plans. Please do not even think about 529’s right now. In North Carolina, 529 contributions are not tax deductible. Furthermore, you have a ton of tax-advantaged retirement space (the rest of your 401ks + Roth IRAs) that you could be taking advantage of, but you’re not. Please, please, please do not open a 529 or even think about contributing until you are saving significantly more for your own retirement and have a robust emergency fund.

    I have a slightly different recommendation from Mrs. FW in terms of how to prioritize your emergency fund and debt payoff:
    –Get rid of the $18k loan and assume a smaller loan, or none at all.
    –Then, simultaneously pay off the $14k loan and increase your emergency fund. Split the money between the two goals. You do not have enough of an e-fund and need to bolster that sooner rather than later given that you own a house and work for the same employer.
    –Investigate your student loan interest rates and see if refinancing them makes sense. Don’t pay on them currently, and, if the interest rate is under 4%, you don’t need to pay them off super quickly, either. Concentrate on beefing up your emergency fund *before* paying off your student loans.

    Our situations are similar, except for one thing: I have children, and they’re in full-time daycare. We’ve always paid around $1,300/month per child, and in the Triangle that’s standard. I say this not to discourage you from having kids, but so that you know what to expect once you have them. Say goodbye to that extra $999 from not having car loans! While I know that talking about buying used kid clothes is fun, the day-to-day expenses pale in comparison to the cost of your time. It is so important to have your ducks in a row financially before you have kids. I commend you for taking the time now to re-prioritize and scale back your discretionary spending so that you’re on solid footing by the time you have a child.

    Finally, I love Laura’s comments above that deal with the emotional side of spending and saving. Such good stuff in this case study. Thanks to Mrs. FW for posting, and I wish Kayla and Lauren the best of luck!

  26. I love this story, my partner and I found ourselves in a similar scenario in our mid 20s. If all of your spending is on credit cards, personal capital/YNAB/mint can be really helpful. We trade off cooking responsibilities month by month- mint helped illustrate that one of us spent 2x the grocery budget with cold hard facts 🙂

    By having our loan payments/savings direct deposited we were able to create limits which enabled us to pay off$180k in student loan debt, save for a 6 mo emergency fund and bet to the 401k max point in 5 years. Not seeing the money hit your checkbook is powerful!

  27. 1) Car Insurance seems pretty high for two cars. See if you can shop around for better rates. Also i increased deductibles and reduced coverages on one car which we are not using much during Covid. You can try that
    2) Try Ring or Simply safe which cost less than $20 and gives all kinds of services. $80 is wayyy too high
    3) If you are really into watching lot of shows, try IPTV which cost around $10-$12 and pretty much has every show from all the streaming services

  28. Excellent case study and lots of good advice in the comments and from Mrs Frugalwoods. I just want to suggest this: Since you’re both working from home and both work at the same location, maybe sell one of the two cars, and share a car instead.
    I’ll also suggest waiting 72 hours before buying anything that isn’t groceries/toiletries. There’s excellent blog posts from Mrs Frugalwoods on that strategy. Gives you time to determine if you really want something, and whether or not you can find it free (e.g., borrow from library instead of buying a book) or much cheaper used (e.g., clothes, etc).

  29. I forgot to mention bartering. For instance to see the ballet sign up to usher people to their seats. No charge but you still get to see the ballet. What else can you do to reduce your entertainment expenses by volunteering? Can you switch with friends to board your animals at no charge?

  30. Lots of good comments here already with great suggestions! I wanted to give some perspective on the pregnancy process, having gone through the queer trying to conceive (TTC) process already, and suggest a couple things you might not have thought about. Overall I think queer TTC, like so many things in our culture, has been monetized/commodified in ways that are often unnecessary and create a huge amount of extra expense and other issues. When we step outside that commodified “norm” there are other options! This is going to be a little bit of an essay, sorry! First the expenses to anticipate:

    1) Fertility clinic expenses: As lesbian/non-sperm-having couples, there is this default of “when you’re ready to get pregnant, you go to the fertility clinic”. As you’ve probably already anticipated, this can start running up costs EXTREMELY quickly. Fertility clinics often run a bunch of tests and do a bunch of intervention and monitoring that is very expensive, because they’re used to seeing straight couples come in who have fertility problems. You don’t have (known) fertility problems – you just don’t have sperm at home. Even a “simple” insemination cycle can run thousands of dollars.

    2) Sperm bank expenses: Same re: “when you’re ready to get pregnant, you call up the sperm bank and order sperm”. To the cost of the cycles, you then add a vial of sperm which can cost $700-1000 per vial. (Plus banks often get you to purchase memberships and upgrade them just to be able to go through profiles, see photos/hear interviews, etc.)

    Then you do a few insemination cycles and you start weighing whether it makes more financial sense to just go straight to IVF because the costs of IVF might equal 3 more insemination cycles + sperm vials. It’s really hard and we’ve been there!

    Alternatives to consider:

    – Still buying banked sperm, but doing inseminations at home or with a nurse practitioner or midwife. This requires careful cycle tracking, but can be successful and NPs/CNMs often charge a few hundred dollars vs. $1000+ at the fertility clinic. Some home birth midwives will even do the insemination in your own home, in your own bedroom, which is awesome!

    – Seeking out a known donor (KD) and doing inseminations completely DIY. This was part of our journey (we did have to move on the fertility clinic eventually due to difficulty conceiving, although we stuck with the KD). We chose this for several reasons – once we started looking into sperm banks and the long-term implications of using them, we became really concerned about ethical and medical issues. Huge (like 50+ or 100+) sibling groups, lots of families that still don’t disclose to their kids that they’re donor-conceived so our kid could never be sure they weren’t potentially dating a half-sibling, banks selling sperm where there were known medical issues that they did not disclose, banks doing a poor job vetting donors, etc. Then hearing a lot of donor-conceived people expressing frustration and sadness that they knew so little about this other genetic parent and that at best, they might be able to make contact at 18 (another issue with banks – often not facilitating contact as promised). There’s only one bank that I’d be willing to use (it’s non-profit, unsurprisingly), but to us a carefully chosen KD removed almost all of those concerns. (We were not going to use one of those “super donors” who runs around the country trying to make as many kids as possible – that felt like the worst of all worlds.) A lot of people say “I don’t know anyone to ask” and we struggled with that too. But after sending out an e-mail to a group of trusted friends (most of them cis women!) asking them to connect us with people they thought would be potential donors, we honestly had more offers than we knew what to do with and had trouble choosing! We are excited we chose the donor we did and anticipate having an ongoing “uncle” type relationship that will be positive for everyone. So for us those “big picture” issues were paramount, but as a side benefit, as long as your donor is local then inseminations are completely free and fresh sperm is WAY more forgiving and likely to work vs. frozen sperm.

    That’s my queer TTC financial and other advice! There are some excellent queer TTC groups on Facebook – there’s an account called “Mx Seahorse” that if you friend, will add you to whatever groups would be helpful for your process.

  31. Great story and a I’m excited for your future endeavors! As a fellow travel junkie (and NC resident), one thing 2020 reminded me of is how many great travel options are nearby. We were forced to spend significantly less on 2020 travel than most years but discovered some really cool non-crowded spots in SC (one really close to Charlotte, check out 40 Acre Rock), VA, and TN that we probably would not have otherwise. It was enough to scratch the travel itch while spending significantly less. We searched for good spots for unique photography opportunities or just “waterfalls near ___”. Good luck, yall are doing a great job!

  32. I grew up in poverty and financial instability. To this day most of my sibs struggle with managing money, even those with good salaries. I learned a lot about money from my 5th grade teacher and have applied those lessons. My husband and I retired at 60 and have a set income for life, no debt and are still managing to save a good chunk of our pensions for the future. We are both frugal by nature. We reuse/recycle/repurpose. Never buy new unless we have to! We enjoy seeing our investments grow the way other folks enjoy spending. And I budget to the penny with Quicken. It is worthwhile to take the time to understand your historical and present relationship with money and the emotional aspects of spending. Best of luck!

  33. Kayla and Lauren, huge high praise for doing this case study. So much great advice. Good Luck.

    Now to look up this amazing dessert.

  34. I love your courage in laying out all these numbers and their history. I would only add that, like dating different people to find the right person to marry, you could consider your spending history (and creating credit card debt) like this – I mean, would you Not wanted to have gone on those trips? And it’s harder to do with kids. I think your current stability and willingness to look at your plans is partly Because you traveled and spent lots of money in your history. You got some Adventure out of your blood, and also gained a “why” about living within your means, saving, and planning for retirement. Kudos to you both!!

  35. they’d probably benefit from how I handle my savings. Since I can’t keep track of every little thing. I set a percent I transfer to my investment accounts as soon as I get paid or within a week. If you wait until the end of the month to save, you’ll probably have already sent it, so set up separate investment and savings accounts and “pay yourself first” either a set amount or a percent of net/take home pay as soon as you get your pay check. Better yet automate it to transfer the % or amount 1 or 2 days after each payday so you won’t be tempted.

  36. I agree with someone else’s comment to sell the boat..storage insurance etc even though is being paid by someone else is a lot of money tied up at a dock. Sell your half share to another relative or sell the whole thing. If you need a boat to go out on occasion rent one for the day it will be much cheaper. Getting the car loans paid off in a few months is amazing….focus on that. Join the library, they have DVD’s for hire as well so if you give up your streaming service. If you can’t give up your streaming service cut the Disney one for now..you don’t need two of them. If you don’t have a streaming service you will have more time to read books or do your hobbies. Unsubscribe from all those emails, amazon, cosco, any shop/business that sends you sale emails as they are designed to make you buy. Unsubscribe and you won’t be tempted plus it’s a waste of time reading them.

  37. Awesome case study! I had an idea about the dog boarding…I bet you could get a house sitter to stay at your house and watch your dogs instead of boarding them. It could be friends/family or it could be through an organization. I also second the advice to do automatic contributions–it becomes really easy all of a sudden. I think you can really take the bull by the horns and smash that car debt, and then once you do that I’d take the money you were spending on a car payment and make it an automatic investment. As someone who is making about $25,000/year and living very very frugally I challenge you to take advantage of your excellent salaries and blast off into a whole new realm of possibilities! Nice work y’all!

  38. A significant way to start your retirement savings is to stop using your HSA for current medical expenses and instead, invest and save it for retirement, when your healthcare expenses are likely to be more significant. HSAs are the ONLY triple-tax-advantaged account in existence–no tax on money going in, no tax on earnings, and no tax when you take it out later to use for healthcare expenses. Since you can affort to pay your healthcare expenses now, this would be a smart move for retirement.

  39. I would seriously consider ditching those expensive cars. Bike, public transit, share a car, share a commute, carpool, buy cheaper cars… I would rather do that than spend all my extra money paying off car loans.

    Your car insurance seems high to me. I would shop around there. Maybe you can bundle with your home owner’s insurance.

    An emergency fund is a good idea for sure. Even an extra 5K would be nice.

    Start contributing to Roth or regular IRAs.

    Sell your half of the boat and save the money .

    I would suggest reading The Non-Consumer Advocate, Bitches Get Riches, and also The Frugal Girl blogs for inspiring, ongoing, engaged dialogs about money and frugality.

    Don’t adopt more pets.

    It looks like you will be doing a big reset – going from traveling and not so thoughtful consumption to building new habits. Good luck!

    1. I forgot to say, look at your expense ratios in your investments. Make sure you are choosing funds with low annual fees, Vanguard or Fidelity.

  40. The cars, the cars, the cars! Oy! If I really wanted to move the needle, I’d sell them both and buy basic transportation. Two solid used cars would save them a ton of money. At the very least, refi the existing cars loans to get better rates. And I’m giving that boat the stink eye.

    I second the suggestion to look into renting the cabin out at least part-time. Check with your CPA first so you don’t get hit with unexpected taxes.

    I see so many conflicts in this case study! They want to have pets, but they spend a fortune boarding them so they can travel. They love to globe trot, but they have a nearby second home and a pleasure boat. Well, half a boat. They want all these things, plus they want to have babies. At some point, it makes sense to say, “We’ve done enough of X to last a while. For now were going to stop doing X and focus on Y.” Trying to do it all is an unlikely recipe for success.

    I was concerned that they worked for the same employer, but they have varied skill sets, which should make them more marketable to other employers in the event of a job loss or economic downturn. Speaking of marketable, I think they could focus on earning more, through promotions or job changes.

    I love Liz’s suggestion to cut expenses to the bone. It would make a huge difference.

  41. Hello,
    I’m going to suggest something extreme but only because I’m speaking from experience here:

    sell one of the cars

    My wife and I also worked for the same company and it was an easy transition to ride together for work. I’m not sure if you have the same schedule but maybe one of your managers gives you enough scheduling freedom to match your schedules. Even if they don’t you could wait for one another and update your expense tracking 😉 while you wait. We sold our extra car to an online company and they gave us $2k over the loan amount. Going down to one car catapulted our savings rate each month.

    Also – save to pay your auto insurance in full, you’ll save a decent amount there and don’t be afraid to shop around for auto/home insurance bundles.

    Finally – I don’t see any “fun” money, I suggest you each take a small allowance per paycheck for frivolous spending (I suggest starting with cold hard cash). All work and no play makes us dull ladies. Enjoy a little bit but keep it to a set amount.

    You’re doing a great job, keep going!

    1. Yes, I second this! My partner and I worked at the same organization for a few years, and we consolidated to one car and haven’t looked back, even after he switched jobs. (He started working from home full-time, which obviously made it easier.) Our Prius has been paid off for years now and the savings are fantastic. We also started putting money into a separate “bucket” in our savings account that we’ll use when we eventually need to replace the Prius so we don’t need to take out a loan.

      It’s funny how people react to seeing that you only have one car. My mother-in-law kept trying saying she’d “give” us her old car when she bought a new one, even when we said we were good and didn’t WANT a second car—it’s a conscious choice, not a matter of being unable to afford it!

  42. I think it would be worth the investment to use YNAB, especially since they are not used to tracking their spending (and that is crucial!). YNAB (You Need A Budget) is the online version of using cash envelopes without having to juggle actual cash and envelopes. It is forward-looking instead of reactive, You never budget money until you actually have it, and then you immediately decide what you are going to use it for. You can enter transactions and view it in real time on your phone and transactions show up immediately. I am grandfathered in at a low subscription rate so I don’t know what an annual subscription would cost now, but I am sure it works out to less than $10 a month. They give you two months free before you commit to see if it will work for you, and they have great customer service, workshops, etc.

  43. Sounds like this couple is on the right track! They have a decent combined income and live in relatively low cost of living area, so should be able to get on track quickly!

    Agree with previous poster that it is time for this couple to make a change. If they want to have kids, they simply can not continue to travel and enjoy “luxurious experiences”! I know, I know, there are lots of ways to do this on a budget, but if you want kids, basically it is time to stay at home, stay in your cabin or other inexpensive places and save $$$$.

    Second point is that I assume it is now understood that credit cards should only be used for convince and getting points or cash back. Nothing should go on it that can’t t be paid for at the end of the month.

    Good luck! Kids are worth it!

  44. Your financial status is incredibly impressive with all the time ahead of retirement. One consideration is to look for ways to increase your salaries. If you like where you work and have been showing up as a reliable employee, perhaps you could ask for a small increase. Salaries are never fixed, and $5K extra could accelerate the debt payoff timeline. Nice job and keep it up.

  45. Sell the company stock and use the proceeds to pay down debts.
    You’d generally want at most 10% of your net worth in one specific stock – and this is definitely true for your company’s stock.
    Given that your net worth is actually negative, I’d sell all stock where you’ll pay longterm capital gains (I believe for that the stock needs to have been yours for at least 12 months) and use the proceeds to pay down debt with. Over the next years, you’ll probably receive new company stock anyway (and I would still sell it after a year to keep it under 10% of net worth).

    I also like the “pay yourself first” idea – so indeed: when a paycheck comes in *first* put money towards debts (and when those are gone: towards savings and investments), and only then allow yourself to spend the rest on bills and fun.

    I’d not cut spending on groceries, nor on some of the smaller fun expenses (that you also share with siblings). I’d also add like a $100 per person monthly “free spending” amount to spend on fun or clothes or baking tools or whatever you want. A total spending freeze could work for a month or two (and could also help you find out what expenses truly bring value to you two), but I don’t think you can do that for more than a year and still enjoy your lives. So I’d like you two to find a balanced way of spending and saving.

    Finally, try to keep your bigger goals in mind. There may be times when it’s hard to persevere, or when you just forget that you’ve been wanting to be better about spending money… if you’ve got your bigger goals of financial stability and a stable family life in mind, then perhaps it’s easier to do well. It could help to add a small note to your wallet or a small symbol or symbolic picture of your goals. It can also help to track your progress towards these goals. (First goal I’d make “car debt freedom” because that in turn will open up other options).

  46. I am a little late to this post, but here’s my advice.
    Firstly, huge congratulations on finding stability for yourselves.
    Since you both work at the same employer, you have slightly more risk than 2 earners at different employers. Based on that and your emphasis on stability, would aim for the higher end of an emergency fund. Perhaps 6-12 months of spending. This will give you time for at least one of you to find a job if needed.
    College savings. As you look into this, make sure you consider the impact on aid. Do some research or meet with a (fee-only, fiduciary – this is very important so that they have your interests in mind rather than their own) financial advisor. If I recall correctly, any money you put into a 529 plan will be considered when calculating aid, while any money in retirement accounts or home equity will not. So, you might consider saving into retirement accounts and the house, and then reducing those savings during college years to pay college costs directly out of your income. I think your combined income would qualify your kids for good aid if you planned well in terms of where to put savings. I might be wrong on the specifics, but this could save you a lot of money on college.
    Finally, there are great retirement calculators online that can help you figure out how much to save. Since you want to retire early, you will want to exceed the standard advice of saving 15%. It will probably be something like 20-30%, but the calculator can help you decide. This should be lower priority than paying off any high interest debt, but higher priority than low interest debt (say around 2% if you know it will stay that low). Look into low cost index funds for investing this.

  47. I have heard much about the beauty of North Carolina. Aside from your cabin and boat, focus on traveling locally! See what is nearby for a few years before you start looking internationally.

  48. Not sure if this has already been mentioned. I was so eager to share that I didn’t bother to read through the other comments first. CPA here with a background in tax (disclaimer that I no longer practice in tax). I highly recommend maxing out your HSA contribution (7200 per year for MFJ). Assuming Lauren and Kayla are in a 25% tax bracket, this will save them $1,425 per year in federal taxes.

    Additionally, funds in this account can be invested tax-free, providing an additional stream of income for healthcare expenditures. Most importantly, this account can be used to pay-off your monthly medical payment plan (agree with Mrs. FW not to pay it off in advance, unless the interest rate is subject to change). Using this account instead of your after-tax savings will effectively save you $865 over the remaining term of the loan (again, assuming 25% tax bracket).

    And the best part – HSAs can also be used for your pregnancy-related expenses. So more tax savings on that one.

    Congrats to you girls on paying off that credit card debt and taking charge! Best of luck with everything!

    1. ^ edit: increasing their HSA contribution will increase their tax savings by 1,425, on top of what they’re already saving by contributing $1500.

  49. Consider slowly backing out of financial entanglements with your family. I count 3: the boat, the cabin, Netflix. Joint ownership of boats and cabins is a problem waiting to happen. One persons “fix it” is another’s “upgrade it while we’re at it”, and another’s “let it be”. Especially so with your families’ financial dysfunction.

    For some people I would suggest credit card churning to help fund travel, but not for you. Too easy to rationalize spending to meet minimum spend requirements and a “free vacation”.

    Look at your employer’s benefits. Sometimes there will be a random little-known perk that could help an expense (e.g., cell phone discount or free Costco). Ditto with your existing credit cards. Also every month pick a bill (e.g., home insurance, car insurance, cable bill) and see if you can reduce it by changing deductible, changing supplier, getting an incentive to stay.

  50. I haven’t read all the comments and I don’t want to duplicate advice. What I would like to offer is encouragement! When my husband and I were in our late 20s we had a mortgage, a second mortgage (that the loan officer set us up with at the same time as the first mortgage with the idea we would use it for improvements), student loans, a car loan, and $24K in credit card debt. A year after we bought our condo I started wanting to start a family, but my husband felt uneasy with our financial situation. In two years we eliminated everything but the mortgage! Part of it we covered by cashing out my IRA rollover from my previous job (based on advice from Mary Hunt — I got to talk to her), but it was mostly done by cutting out everything unnecessary. I learned to track every penny we spent using Quicken (we use YNAB now), and Quicken also set up a credit card repayment schedule based on interest rates (not the snowball method). While doing this we also saved cash for a trip to Japan (made frugal by combining some work into it and not having to pay anything for lodging). It’s really amazing how much easier it is to get ahold of your finances when you really want something.

    Nearly 25 years later, we have two grown sons, a paid off mortgage, and we are financially independent. The mortgage and financial only came in the last couple of years when we got super serious about our finances — before that we stayed out of consumer debt but often had a car loan. I was able to be an at-home mom the entirety of our sons’ childhoods and am now “retired” at 51. My husband still works.

    Perhaps I do have some advice after all — these are the basics I recommend to everyone:

    1) As soon as you can, get yourself to the place where you budget each month with the money earned the month before. In a few days I’ll budget May using the income from April. This makes it so you always know exactly how much you have to budget. I wish we’d done this decades ago, but we only started a few years ago. It creates such simplicity and security to know you are spending money already earned and accounted for.

    2) Create what we (and Mary Hunt) call a “Freedom Fund”. It’s for all of the expenses that occur during the year that aren’t regular, like car insurance/registration, car and house maintenance and repair, holiday spending, property taxes, etc. Add up all it is in a year and divide it by 12, and commit to saving that much everything month. If you use YNAB you can set this up as goals in your budget for each category. Before we learned to to this we would be “surprised” by a car needing tires, or the car insurance and then we’d create new debt. Of course, they aren’t surprises at all. I always advice people to include these items in the monthly budget so they have a true sense of their expenses. This is also where education spending would go, but only after you get out of debt.

    3) Create an income replacement fund. Most people call this an “emergency” fund, and certainly losing a job is an emergency, but we don’t consider this fund to be where we go to for regular emergencies. This is where we have six months of monthly expenses saved in case of job loss.

    4) Create an emergency fund. If you’re saving for your anticipated annual expenses this doesn’t have to be huge. This is where we would take money from if we had to repair something unexpected that exceeded what we save for annually, or if we needed to help out a family member, etc. The income replacement fund can serve this purpose but only if you can refill it very quickly.

    5) After you get rid of all your debt except your mortgage, start thinking ahead to upcoming big expenses. For example, estimate how much time your car has left, come up with a reasonable amount to spend on a replacement vehicle (new or used is your call — most people preach used cars, but my experience has been such that I prefer new cars, just not pricey ones), and divide that amount by the number of months you think your car has left, and save it monthly. If you do this you’ll be in a place to buy a replacement vehicle without going into debt for it. In early 2019 we bought our first all cash brand new car!

    Good luck!

  51. Congratulations on how far you both have come. As someone who has a tendency to overspend, I know the personal battle to being good with money is a continual battle.

    After paying off our student loans, I realized my husband and I were extremely behind in the X times salary for age retirement thingy, so we now are putting in 15% of our income each paycheck into our retired. Unfortunately, we are still a bit behind (and may never catch up) but we’re a lot better off than average which is good. We also have kids and unfortunately cannot currently contribute to an education fund as we have chosen to prioritize our retirement. I know as we get older and make more money and childcare expenses drop, we will be able to add even more retirement.

    I will say that lifestyle inflation creep always happens but sometimes there are expenses you need to have to keep sane and or not overspend in other areas. Having kids, we now know we need to have a basic cable plan with kids channels PLUS my favorite mindless TV relaxation channels of DIY/HGTV (and being cheaper than internet only and streaming equivalents and that would be without access to local broadcast channels we cannot get without cable due to poor antenna reception). But there are other things we cannot justify, so we have learned to cut those. But lifestyle creep is continual, so we always have to check out spending. We bought a bigger car on payments that we truly did need, but bought sooner than we really needed, so like I said, it’s a process to stay on financial track. Luckily for us, getting a bigger home is out of the question now that the housing market is super wild in our area, so that prevents us from getting a bigger house sooner than we need (we definitely can wait a few years to jump to a 4 bedroom)

    I highly recommend adding multiple high interest savings accounts for specific goals so you can track them easily. You can have 10 savings accounts within Ally for instance and you can name them your goals (emergency fund, home repair fund, travel fund, gift fund, pet fund, an “escrow” fund for once a year expenses like car registration and once a year paid cell phone service like Mint Mobile, etc) and you can set up auto withdrawals monthly to each account separately (and for separate $$ amounts for each) so the money goes automatically and you’re not tempted to spend money in checking. This works well for us.

    I’ll admit that I haven’t been great at tracking what we’re spending on as we just had our 2nd kid in December (and I was in/out of the hospital freq. due to complications with lots of $$$ copays for that) and have had expenses for baby stuff not planned for (birth was a lot more this time around on different health insurance). I am now trying to get better of that and realize that things are too complicated (multiple credit cards we pay off monthly for different things) and perhaps cutting down credit cards for simplification is better for us even if it means we don’t get as many good deals/points/etc.

    Lastly, when you have kids, your priorities and your interests can change drastically. I used to love cooking and I don’t anymore. I don’t have patience for it. I even tried the meal delivery kits but it didn’t matter. I just don’t have time or energy to cook on week nights and I don’t have time to spend 4 hours batch cooking on weekend either, especially since I have picky older sone and husband. We have a small kitchen that is not conducive to cooking as it gets messy easily so as long as we stay where we are (and will for a while) I realize I’m not going to be cooking much. Although it’s not the healthiest, eating more ready to eat meals either from frozen or refrigerated from club stores or grocery stores is sometimes the best option. While yes they cost more than making the same food ourselves, it is still much cheaper than take out or delivery. Same thing with frozen veggies… I am never going to cook the fresh broccoli and it just goes bad in my fridge. It’s just easier to cook frozen veggies I don’t have to worry about getting rotten and wasting money! Making peace with myself that we will have higher monthly grocery bills for this reason but it saves money in long run was difficult but I see it now.

    One other random tip you may have already heard… You both work for the same company but if that ever changes, figure out which health insurance plan is cheaper with kids and put dependents on that one. I STRONGLY do not suggest an HSA plan for kids unless you have at least 2 years of family plan deductibles in an HSA plan already. Kids get sick all the time (our newborn actually has a mild hearing issue and we’ve been to numerous appts already that are only affordable because we qualify for Medicaid for secondary coverage in our state). Our oldest son already broke his arm at age 4. If something can happen, it will happen, and you don’t want to be stuck with a $7,000 bill from an ER visit in December right before your deductible resets (so you’d have to pay another $7,000 or more in January of something repeats). Even if the HMO or PPO plan costs $300 more a month, that is still cheaper than the family plan deductible on an HSA plan.

  52. There was no mention of diversifying their employment in the suggestion section. I would definitely pursue it in their situation as I had a front row seat on my brother and sister-in-law’s scrambling when their mutual employer decided to downsize. The diversity is probably worth a slight pay cut.

  53. There is so much good advice here! Good luck with all your goals! The only thing that I might suggest is to pick your number one savings priority (perhaps saving for baby?) and make that a fixed expense that you save as soon as your pay hits your bank account. Waiting to save what is left over at the end of the month has never worked very well for me. But if you take 500$ per pay off the top, you will have 12 K towards your goal at the end of the year no matter what else happens. Pretend it is as fixed as your mortgage!! All the best!

  54. Congratulations on being credit card debt free and owning your own home.
    I would definitely suggest selling one car and paying off the debt on the car that you decide to keep. Especially since you are working from home currently. Keep the more family friendly car.
    I would recommend if Lauren is the one planning on carrying the baby that you start looking for a donor sperm now and start trying the DIY method someone mentioned above. It could take a while to get pregnant and since she is already 30 I would recommend starting soon in case it takes a few years. Also, since Kayla is making more money and enjoys her job more, it would make more sense for Lauren to be the one who stays at home with the baby. (Of course, maybe you have already decided that Kayla would be the one to conceive) Try to live off of only Kayla’s salary, being at home with the baby for the first year is such a lovely time if you can afford it. Also, since daycare is so expensive in the US it makes sense also not to waste all your money on daycare and not see your baby all day. Or you could choose to have the birth mother stay home the first 6 months and the other mother stay home the second 6 months (if possible to take leave from your company).
    I would focus on saving for your retirement rather than college funds. Your children can apply for student grants or scholarships or study in countries with much lower university fees (Finland has free university!). Or they might decide to go into a profession that doesn’t require a college education.
    Good luck and I hope that you conceive easily and quickly!!

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