Reader Case Study: Working a Crappy Job – for Nothing

Stephen King can afford to drive a Murano. You cannot.

Dear Mr. M.,

My wife and I have been reading your blog, and slowly feeling some of the free-spending ways of our past slipping away from us. But it’s a slow process, and while my wife takes after her frugal immigrant parents, I am not sure if I am quite ready to step up to the plate for MMM-level badassity. I like my toys and my microbrews!

But we have an incentive to get there: two beautiful little boys, ages 1 and 4. The wife and I both work, and we are able to cover our bills with just a little bit to spare each month.

The issue is that while I love my own job (I’m an elementary school principal), she hates hers (marketing department of a midsized firm). I believe her dislike for the job is well-founded: both her boss and her coworkers all sound like they’re training for the world Douchebag Olympics.

She’d love to stay home with the kids, but when we do the math, it looks like we’d fall short of what we need to live on, if we lost her salary. Maybe you could have a look at the details and see if we’re missing anything:

Me: $80k/year (roughly $5,000/month after taxes)
Wife: $40k/year ($2800/month)
Also, we’re both contributing to employer-assisted 401k plans which leaves our net take-home pay at about $5800

Mortgage Principal+Interest+Property tax+Insurance: $2000
(Mortgage balance $250k at 5%, fairly high taxes, insurance is $70/mo)
Utilities: $150/month
Mobile Phones/Internet/Cable: $200/month
Car payments and insurance, oil changes and other maintenance (2009 Nissan Murano and 2008 Honda Accord, about half paid-off): $900
Gas: $250/month (The school where I work is only 1.5 miles from home (yay!), wife’s job is 25 miles (40 minutes mostly highway) away (boo!))
Child Care: $1500/month (which is actually a great deal in my area for two kids, full-time)
Groceries: $400/month (after reading your latest article, I noticed we eat very similarly to you)
Miscellaneous: clothes, entertainment, other: $300

Total:  $5700

What we’re seeing is that even after subtracting child care, we’d be in the red if my wife quit her job as she wants to do. But our food and entertainment spending is already pretty low. We don’t go shopping. There’s no vacation budget. Where’s the money going?

Principal S.

Dear Principal S,

I’ve got some bad news and some good news. The bad news is, your wife has been slaving away at her awful job at a ridiculously far-away office building, enduring those frequent Showers of Douchery, and missing out on raising her own children, for VIRTUALLY NO PAY! The good news is, she can bring a big cardboard cut-out of a middle finger to work with her TOMORROW, and duct-tape it to her boss’s desk, because she is done with that joint. Here’s why:

First of all, her driving is absolutely ridiculous. At 50 miles per day x 250 workdays each year, she’s spending at least $6250 of her after-tax money per year ($521/month) on the mileage costs alone, budgeting at 50 cents per mile. And that’s on top of the insane 22,500 minutes per year of high-speed life-risking driving time she takes out of her life to get there.

Secondly, your vehicle fleet is off-the-hook. What the hell do you need a 2009 Nissan Murano for!? Bought on CREDIT!!?? If you’re Stephen King, and your $15 million compound in Maine sits atop a 1500 foot cliff with a 45-degree rocky slope of a driveway that is snowbound for four months of the year, THEN maybe that’s a valid vehicle choice. But for the rest of us, the Murano is strictly for comedy relief, as it’s such an impractical vehicle.

So here’s your prescription:

  1. Sell the Murano (book value: about $16,000). Use the surplus cash to pay off the remaining balance on the Accord. If you don’t have enough cash for that, sell the Accord too (value $11,000) it and buy a less costly car like a 2003 Matrix or something else from the MMM Cars for Smart People List. NO CAR LOANS ALLOWED! Monthly Cashflow Improvement: $700
  2. That’s right, now you only have one car. But that’s OK – your days of driving to work are DONE. 1.5 miles? That’s ridiculous! You can walk it, or if you’re in a rush, bike it. No exceptions here. Hey, what do you know, neither of you will be driving to work anymore. Let’s set your gas budget to $50/month just so you have some fuel for random errand running. Additional Savings: $200
  3. No More Childcare! This is the part you already knew about. That $1500 goes straight into your pocket. Additional Savings: $1500
  4. Refinance that mortgage! Damn, brother, what are you doing still paying 5% in this day and age? Don’t you know that three is the new five? You should easily be able to get close to 3.5% with no out-of-pocket costs. Also, if you shop around for homeowners insurance, and get the highest deductible your mortgage company allows, you might save at least $250/year based on the moderate cost of your house.  Additional Savings from mortgage interest reduction and insurance: $250
  5. Drop your cable TV, and get a per-minute cell phone plan, or at least share a family plan. No MMM reader is allowed to pay for cable TV. Life’s too short to spend it absorbing passive and ad-laden entertainment every day. Shop around for internet access if your bill is over $50/month. You may use Netflix, Hulu, or the Amazon pay-per-view movie service. You can probably cut $75 off of your current bills in this area in total. Savings: $75

Total Savings so far: $2725 per month

So, mostly because of her insane cost of commuting, plus the child care, your wife was effectively working incredibly long hours, missing her little boys, and risking death every day, for approximately zero dollars per month.

By cutting that out, and making the other changes relating to your home ownership costs, she can quit immediately with virtually no effect on your family’s cashflow.

Even if some of my suggestions above don’t fly, you can surely find others that are just as valuable. For example, your lower household income might qualify you for more tax deductions after she quits, effectively increasing your own paycheck since some benefits are scaled back as household income increases.

You can comb over your groceries and consider some changes or Costco runs. Look into that $300/month mystery fund. Will it drop now that your wife does not need work clothes or lunches out with coworkers? Your car insurance might drop drastically if you get the same discount as I do from Geico for having low annual mileage and no commutes.

You’ll still be pretty close to the edge financially, but there is room for more improvement over time. During naps or school days, the lady might feel like flexing her marketing muscles in a freelance way from home, bringing in extra income. Your salary might rise as you continue your career in education, or you might be able to build up a side hustle of your own. And depending on your area, you might be able to find a less costly house that still meets your needs. An $80k salary is enough for a great family life in the US and Canada, as long as your housing cost doesn’t eat up too much of it (I’d suggest going for $1500/month or less if possible given your income and family size).

And remember that kids don’t stay young forever. Even if you sacrifice a higher savings rate right now by spending time with them, there will be plenty of time later to crank things up and get Mustachian to get the savings you need for early retirement, helping them with their educations, etc. Once they’re firmly established in grade school, you’ll get your days back, allowing more working time without the need to pay for child care.

In the long run, you’ll do fine – as long as you get out of the consumer borrowing habit and start doing the math before making decisions about where to live and work in the future. Good luck!

  • Diane April 6, 2012, 7:27 pm

    What the HELL??? So many comments… Is it really possible that there is not a single person who has recommended reading THE FRUGAL GAZETTE? Amy Dacyczyn covered this topic exhaustively and beautifully in her ground-breaking frugality series. Get thee to the library. Better still, request it online and then WALK to the library to pick it up. The one with the blue cover. It contains all three books plus bonus material. You will be sorry your wife ever went back to work after those precious babies were born. Get going and pray that you can make up for lost time.
    OTOH, even if you buy it new tonight online and pay for spendy overnight delivery, you will still be miles ahead.

  • AEBinNC April 6, 2012, 7:59 pm

    I had no idea that home loan rates are so low right now. I thought that when I got my 30 year loan at 5.0 I was doing quite well. Two years later rates have gone down even further.

    Right now, I’m working with a company on getting a 3.25 loan for 15 years. I got an estimate earlier today and just have to check things over with my wife. In the prior loan my outstanding loan balance is 141k at 5%. I’m paying 7050 per year in interest.

    My new loan is for 137k at 3.25 = 4452 per year in interest. Basically a reduction of 2597 in interest costs per year. Additionally, I would be paying a higher percentage of my payment towards the principal of the loan.

    Usually the reader case study examples aren’t my favorite, but I’m really glad I read this one.

  • Prashant April 10, 2012, 1:17 pm

    Ah! So many interesting posts here, but some of them clearly misrepresent or misstate benefits or costs completely. I won’t call people out, but you know who you are!

    1) TWO cars – This needs to be purely a financial decision. If the car is instrumental in letting you work and commute to work, then you need it. Simple as that. Sure, you can take the bus or move (!?) but they all have costs in terms of time and flexibility. The independence offered by owning two cars, if both partners are working, is a benefit that can be assigned a real value. If this value is worth it for you, then you are better off with the car. You can flip this equation your way by owning a cheaper, fully paid off, economy sized car with bare bones insurance. Do the math, people. It isn’t that hard. If you go for the gas guzzling SUV with satellite radio on a 4% loan, well, that just makes it very hard to get the value in your favor.

    2) Taxes – There are too many people confused here about the tax benefits. If you are already married and working, reducing income is not going to have any benefits tax-wise, except for the case where you were making too much money to qualify for certain tax deductions. Otherwise, you cannot “save money on taxes” by reducing your income, you really just reduced your income and therefore have a smaller tax bill. Our graduated-tax-bracket system is not designed to be punitive.

    3) Social Security – As Anon (April 6, 2012 at 12:22 pm) states, the benefit of Social Security is reduced if you do not work. This can be valued as if it were an annuity, and you might be able to calculate the NPV of that now, vs. if you worked through the years. The difference will be in the hundreds of thousands for most people.

    4) Career Growth – You must not discount the ability to jump start your career and how over time, you would expect to make a lot more money, climb up the ladder and be able to hit your FI goals earlier.

    • Emmers April 11, 2012, 1:21 pm

      Well and concisely said! I’ve already agreed with 2-4 elsewhere, but to agree with #1 specifically here: Your time has value, too. Maybe you shouldn’t value it at exactly your hourly wage, but cost-in-time does need to be taken into consideration when making financial decisions.

  • pachipres April 10, 2012, 3:08 pm

    Twenty four years ago I quite my job as a full time registered nurse to stay home and homeschool my five children-youngest being now 7 years old. I have never regretted a day of it. My dh has had some good jobs and we have been able to be FI shorty but still, I have really enjoyed the years that I have had with them. After now 17 years of homeschooling, I am feeling restless but what I do to help with creativity and getting out of the house, is I am back at school casually-taking one night course at university. I have actually been in some of my older daughters’ classes and can now help them edit their papers. It’s been fun but as far as giving up a career and staying home, I am never regretted this decision.
    Also, I totally agree with the reader who mentioned Amy Dacycyn’s The Complet Tightwad Gazetter-Imust have read this book four times now.

  • Coversure April 27, 2012, 8:24 am

    The easiest option is definitely sell the cars. Instant saving with no change in lifestyle.
    Newer cars just lose value hand over fist, especially on finance with the interest on top, and older cars aren’t necessarily any worse. Logically, (if you think about it), older cars are so much more reliable than they used to be, and since 2000, when manufacturers started galvanising their steel, they don’t even rust anymore.
    Recently I downgraded from my sporty v6 which did 25mpg, to a 12 year old low mileage car. Low mileage means reliable. Cost me £600 (about $1,000 american) to buy, so I got plenty of change. It’s big enough for the family, it’s a diesel and does 50mpg, so my fuel bills are half what they were. Have I had problems? Not so far, but then if I do have a problem, I’ve saved £££’s already.

  • JCH May 17, 2012, 5:43 pm

    MMM, great blog – found it through ran prieur’s blog. sorry for resurecting what might be a dead thread…

    I have to comment about the cost of living in hawaii. if you think the cost of living here is high, you’re doing it wrong. yes, most consumer goods are more expensive. BUT – needs are much less. I harvest food from the wild, hit the farmers markets for cheap, fresh, local produce, get my entertainment free at the beach, don’t need to buy cloths for winter, have no utility bills (solar power, water catchment…i do spend about $1/day on propane for hot water and cooking)…i don’t want or need a new car, a TV, a big house, fashionable clothes, go to the movies, fly for vacation etc etc etc.

    i’m lucky to have heeded advice to decrease my needs years back, so now at 28 i own outright a piece of land (a farm-in-the-making) on which i’ve built a cabin, two paid off vehicles (a beater volkswagen, and a giant diesel ford for work), and i work for other people for money less than 20 hours a week. i lived in a tent for a year while building my cabin, working freelance jobs for people i like. all my extra money gets put into improving my property – planting fruit trees, buying more solar gear, adding to my cabin – or purchasing tools that will make me money. i have tons of extra time, so i scavenge craigslist for materials to build with and deals on things to fix up and re-sell. I grow a good portion of my own food, help friends with their projects, and generally bum around enjoying nice weather, happy people, friendly dogs, and cold beer. my monthly expenditures run about $1000. That doesn’t include one-off purchases of things like more solar panels, new tools & equipment, etc etc – things that either further reduce my monthly expenses or can earn me money. for example, my truck (bought used with a solid body/strong engine) has since been completely paid for by work i was only able to do because of the truck. now i have a paid-for resource that holds it’s value and cost me next to nothing. i only drive it when i’m getting paid to do so, or picking up materials – the free section on craigslist is AWESOME.

    when i consider buying something, i try to remember a few things:

    i’m too poor to buy low quality shit – i expect my things to last for years
    get the right tool for the job the FIRST time i need it <- this is crucial, wish i had learned it years ago
    whatever i buy should pay for itself over time
    whatever i buy should hold it's value, so that when it's paid for itself, it is standing capital

    having tried to follow these guidelines, i've bought all the tools and equipment i need to build a house and run a small farm, and each tool has paid for itself by providing me with employment (i have no job, i'm 100% freelance – i call my clients and tell them when i'm coming to work). i've learned a whole slew of skills, and gotten paid while learning. i can build houses, install solar, plumb, operate heavy equipment, farm, tend livestock, prune/fell trees, mill lumber, handle a fishing boat, do some basic medical (first aid, stitching, injections etc – i practice on pig-hunting dogs)…etc etc. And i can do these things for free for my friends.

    TL;DR: living cheaply in hawaii (or anywhere) is simple when you don't need much and can meet those needs with your own two hands. Quality tools and useful skills will always have a good ROI

    to be rich, act poor. to be poor, act rich.

  • Alexandria August 13, 2012, 7:31 pm

    Great blog!

    This rings very true for me. When we had our first child we were both making $50k per year. Running the math, I figured my spouse could work full-time and *maybe* bring home $10k. The first $40k would go to daycare, taxes, and work expense. & probably didn’t factor how efficient we can be with a spouse at home (more time to shop for deals, sell things when we are done with them, and time to commit to home cooking). I am a tax accountant so I understood that I could increase my take-home substantially (less taxes). Lower tax bracket, more tax breaks at the lower income, etc.

    Anyway, I know when I talk to other people that they think we are insane to give up that $50k income. If I was really losing $4,000 per month? Come on! That would be insane! We were taking home about $5k per month before, and maybe knocked it down to $3500 when my spouse stopped working.. Yes, living on $1k per month would have been a little hard – we live in California. ;) Actually, my job is very low-key and flexible, but since I don’t have to deal with sick days and school and Doctor appointments I have no doubt I make a lot more money than I would with a working spouse. My take-home has almost doubled in the last decade (& I still don’t make six figures – I have no benefits to speak of – but I still pay virtually no income taxes!). These little points *really* add up. The decreased taxes, the ways we save money, and the fact that I make more income than I could otherwise. But there is no real way to describe this to the average person – it is the sum of many parts. The average person hears you gave up a $50k income and they make ridiculous conclusions.

  • Josh Porter aka the Porterhouse September 18, 2012, 12:07 pm

    Lets say that the wife worked and enjoyed her job vs didn’t enjoy her job. Do you feel sometimes it can be better to take a loss of some sort if it means that she could keep her job secure? I’m torn on the topic because I’ve seen people stay home that sometimes never get back to work and income is another way to build savings (assume the numbers work out). Are you suggesting that she cares for the children until school then tries to re-enter the workforce? It can be tricky to get back in after you’ve left if you’re not very qualified, and for the people that aren’t they don’t exactly feel like working any retail job paying minimum wage. WWMMMD? (what would MMM do?)

  • propertymom June 27, 2013, 8:56 am

    Dear MMM,
    You are my hero. THANK YOU!

  • workingmomNJ October 24, 2013, 10:44 am

    Sorry for the very belated comment – I just discovered your blog a couple months ago and am in the process of reading through all the posts! I thought I had always been pretty good about staying on top of my finances, but alas it was only “pretty good” based on the typical American consumer-centric lifestyle model! Thank you for making me see the light! I’ve been making small but deliberate changes to the way our family spends (or rather, not spends) $$, which hopefully will put us in a much better place 5, 10 years down the road. (Planning to pay off the car in 6 months, student loan in 2 yrs, and then start saving crazily for a house so we can make at least a 30-50% down payment, then hopefully FI in less than 10 yrs!!!)

    I know this is a super old post and not sure if anyone will even read this, but I just wanted to add my two cents from a newly-converted mustachian point of view. I think most of your fans would agree that after reading your blog, financing new (or even used) cars should be shunned forever. BUT for those of us who made this costly mistake before stumbling across this site, unless you’ve either paid off or are close to paying off your car, the simple “sell your new car and buy a used one!” advice doesn’t seem to make sense, at least from an immediate cash benefit perspective. Your Principal S. said he had paid about half for both his cars – which means even if he sold them, he probably would have to use most, if not all (or even more) to pay off the balance on the newer cars. Which means he wouldn’t really be getting a cash inflow from the sale of the cars, and would probably have to shell out extra money to buy a used replacement car.

    In this situation, would you still recommend selling the newer cars? I’m in a similar situation now – I’ve paid off about half of our family car (I know, I know, we never should’ve financed it in the first place….but at least we’re a 1-car family), but my balance is about the same as the used sales price of it according to kelly bluebook. I figured my best bet would be to make large extra payments on it and pay it off in 6 months, then maybe consider selling it and using the extra cash to pay some of my student loan. But until my car’s paid off, I’m kind of stuck. Seems like it would’ve been the same for your case study subject. Hopefully by now, 1.5 years later, he would’ve paid it all off already.

  • DLcygnet July 18, 2016, 11:51 am

    Any chance of getting a “Where are they now?” post for reader case studies? I’ve got a 2-year-old and if/when we have a 2nd child was toying with the idea of staying at home.

  • Erica November 25, 2016, 3:02 pm

    His story is very similar to ours, only my partner was moustachian before we got together. So he road/walked to work (and occasionally car pooled, it does get 115+ in summer).

    I’m the one that financed a car and had cable TV and was paying for childcare. I always considered myself frugal, but it was more like buying things on sale than not buying at all.

    When we got together and I was exposed to his lifestyle and our lives got better together. We had a combined income of $99k, but when I started staying home and our lives continued to improve in the happiness factor he ended up with several raises and now we’re almost back to our old income.

    I know this is an older post, but I hope other people in similar situations make the changes they need to move forward in life. It is SO worth it!

  • Rachel December 10, 2016, 3:26 pm

    This post just blew my mind! My husband commutes a total of 60 miles each weekday, to a job he loathes. I used the math you presented in this post and realized he’s doing this for about $8,600 per year after all we would save if he didn’t that job. This may be my best argument yet to get him on the mustashian journey. You’re a genius!!!


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