Hi!
I am seeking the guidance of wiser-more seasoned Mustachians to aid my life planning post law school.
I am in my last year of grad school, married, with a baby, two dogs, chickens, and a horse.
We live in a semi rural-area (think two small college towns with lots of very small towns surrounding) and we plan to stay here. We do not have much stored away and have not been very mustachian in the past.
Here is our financial situation once I graduate:
INCOME:
* Next year our income will be about 85k, but within 3 years it should be more like 150k. Once I graduate I'll make about 50k (small area = smaller pay). But within 3 years my income will be closer to 100k (it's a weird situation, but you'll just have to trust me). My wife takes home about 38k as a teacher and PT horse trainer.
INVESTMENTS/SAVINGS
*10k currently being rolled over from 401(k) to Roth IRA
*5k in savings
* Wife 401(k): 3% match. We do the minimum to get the employer match
* Me once I start working: Employer does 12% contribution to my IRA. (my employer will be doing a SEP (simplified employee pension plan) IRA system for retirement, which will give me 12% of my salary ON TOP of my salary)
DEBT
* 110k in student loans @ approximately 6% (but plan to consolidate at graduation and hopefully lower rate)
* 15k pickup payment @ 5% (a truck is necessary for PT horse venture)
MONTHLY EXPENSES total about 3500
* 850 rent
* 350 car payment
* 120 vehicle/horse trailer insurance
* 500 day care
* 300 groceries
* 35 cell phones (thanks to Ting)
* 85 heat/electric
* 40 internet
* 500 Student loan payments
* 275 horse board
* 150 gas
* 70 dog insurance
* 100 in animal feed etc..
* 100 miscelaneous
I think we have done a good job of trimming our smaller expenses, but we are going to find a way to cut the bigger ones (rent, car payment). We also produce lots of food through our garden and our chickens. We have the horse expenses, but my wife's PT horse training work basically pays for that (and getting rid of the horse is a deal breaker for her)
We live in an area where rents are somewhat high, the only thing we can get for less is a small 2br apt. The only comparable place we could get is through buying, and there are some pretty inexpensive houses around here. There are also some duplexes for sale. There is one in particular that is very cheap, in sound condition and with the rents it currently produces we would net about $200/month immediately with only 15% down. We've thought about trying to buy one and live in half or stay where we're at and use the income to offset our rent.
My questions are these:
1. Should we buy or continue to rent? If we were going to buy, I'd take the 10k out of the IRA to help with the down payment (first time homebuyer - no penalty up to 10k principal in a Roth IRA)
2. How should we manage our finances - attack the debt in a "snowball fashion", contribute to IRA/Vanguard Index, or something altogether different.
3. any other ideas/thoughts - all would be appreciated.