Reader case study- What can we do in order for me to quit my job, start a family, renovate the house and eventually have a self-sufficient, financially independent homestead?
Here is our situation:
Both my husband and I were in the Navy (Nuclear propulsion), which is where we met. I got out end of 2011, and he was a year or so later. He found a job in MT as a software developer and we made the move. We put the house I bought in 2006 up for rent and moved. We ended up renting a place for a year and then bought a house in MT. (We couldn’t take paying our landlords mortgage for him anymore) We found a place 20 miles out of town, ~5 acres, and a 1300 sq. ft. mobile home/ stick built monstrosity of a fixer upper. But it had land (I wanted livestock), a hand full of neighbors which each had bigger houses with at least 20- 40 acres land in between, and it cost a fraction of other equivalent options. (Not to mention the view) I work as a legal secretary (no college degree) for a state agency and getting paid at 2006 rates (I hate it). My husband and I are 34/33 respectively, and I would like to start having kids. (Not the livestock variety, we had 2 of those this year). My goal is to be able to quit my 8-5 job, start a family, still be able to renovate the house and eventually have a self-sufficient homestead. Eventually producing all our own food and produce, and selling any surplus. Having both of us work full time jobs makes it very difficult to achieve much of anything on the home front. If only we could figure out how to live and save off my husband’s income and still be on the path to become financially independent. We need help/ advice on where we can put our money to achieve these goals. We have a huge chunk of cash just sitting in the bank doing nothing for us. The husband does not know what to do with it and is highly concerned with losing it if invested and/ or needing it for an emergency. Any advice would be greatly appreciated.
Our numbers:
Husband’s earnings(per paycheck) 25.80/ hour @ 80 hrs.= 2063.77 which would be about 54k/ year
Deductions-
401k @ 5%= 103.19
Health Flex- 20
Life/STD/LTD- 12.50
Purch vacation- 39.69 (gets an extra paid week off per year)
Taxes-
Fed withholding- 207.24
Medicare- 29.76
Soc Security- 127.23
MT withholding- 101
Accruals/ other-
HP ER Contrib- 20.84
For a take home total of 1444 every 2 weeks or about 37.5k per year
My earnings-(per paycheck)
Hourly rate of 12.03/ hr. which is about 25k per year
State share credit- 443.50
Regular pay- 962.68
Taxes-
Fed withholding- 43.25
Fed Med/EE- 12.17
Fed OASDI/EE- 52.04
MT withholding- 30
Before tax deductions-
Pretax medical- 535
Pretax dental- 30.50
Pretax basic life- .95
Pretax AD&D- .38
New PERS retirement- 76.05 (7.9%)
Employer paid benefits-
New PERS Retirement- 80.58 (8.2%)
After tax Deductions-
MT State Admin staff- 19.52
For a take home of 606.32 every 2 weeks, which is about 15.8k / year
Both combined- we have a monthly income of 4100.64
Rental income-
Rent is set for ~1200, property management takes 10%, then any maintenance done comes out of it as well. We get about ~ $1075
For a monthly income of 5175.64
Savings- ~37k
Other assets-
2004 Chevy Silverado- paid for and in good shape- permanent registration this year- value ~5k
2004 Saturn Vue- gift- excellent shape- permanent registration this year. Value ~2k
Honda rebel motorcycle- ~$1000- permanent registration. Used for commuting during good weather.
5 dairy goats (1 in milk, and currently supply’s all our milk needs), 28 heavy breed ducks( 10 of which are of laying age) we get 4-10 eggs a day and can sell a dozen for $6(I only have 1 customer so far, sell about 1 dozen every week or so), surplus ducks will be meat. 1 breeding pair of geese (guard birds, lawn mowers, surplus will be meat). 3 dogs (large rodent exterminators, guard dogs). 1 barn cat (small rodent exterminator).
Retirement/ Investing-
Vanguard- Roth IRA (mine) - VEMAX @ 23.7k. Inactive- nothing added
TSP- G fund @ 13.1k- inactive- nothing added
Vanguard- Roth IRA (husbands) - VTIVX @ 49.2k- 100 added per month
Husband’s 401K(work) - He thinks ~45K is in there.
We have 2 mortgages
WA house mortgage- I bought the house brand new in 2006, 30 conventional Fixed with PMI @6.5% for $235k. The payment was ~1600, but split 3 ways since I had roommates. We refinance before moving to MT to get the payment down.
So it is currently a 30 convention fixed W/ PMI @ 4.5% Original loan was 198.4k currently it is 188.5k (We tried to sell it last year, but it turned out that we would have had to pay someone 20k just to get rid of it) PMI payment is 85. Total 1340 Principal and interest is 1005. Escrow is 334. Property tax is ~2k
MT mortgage is a 30 convention @ 3.25% no PMI Original amount was 255k. Current principal- 242.5k. Payment of 1253.57, 455 in principal, interest 658, 140 escrow. With an additional 100 a month towards principal.
Bills/ monthly expenses-
we have no credit card debt.
Car Payment-
2013 Subaru Impreza- financed. Has a loan total ~23k @ 3.25% with 20.8k left. monthly payment of $333.17
Electric bill-88
Phones -133
Insurance180
Internet-60
Gas-250
Entertainment -20 (movies, maybe 1-3 times per year)
Restaurants-150
Groceries-330
Pet/ animal food-150
Home improvement-Most of our extra money goes into home renovation or the bank account for future home improvement
Firewood- ~$100 a cord- use 2-4 cords per winter for heating- 33/ month
Propane- $500 to fill tank- may use 1/2 a tank a year- 21/ month
Monthly expenses run about 4441.74
We have a savings of about 733.90 per month. If I were to stop working it would cut gas, restaurants, groceries, pet food, and possibly phones costs. Giving us a few hundred extra in savings. However, if I were to stop working, we would be losing a few hundred a month, even with savings from me not working. My husband would like to put more into the retirement funds too…
What can we do, so that I can stop working and still have enough to renovate the house and save for retirement?
I am not too concerned with kids costing a ton… I am very frugal and practical. Think primitive tribes raising their kids, strapped to mommas back kind of thing. Plus parents and grandparents falling over themselves to help should make up for anything else. (They are dying for great/grandchildren) Plus, I would plan to work till I have said children.
Some specific questions-
Should something be done with the TSP? Nothing is added to it and it just sits there. Should it be rolled into a Vanguard account, something that we could pull from for early retirement?
We have a lot of savings- we would like to keep about 10k for a big solar room/ green house/ aquaponics project. But we don’t know what to do with the rest/ how to make it work the best for us. We could pay off the car loan but would it be better used towards paying down one of the mortgages, or invested somewhere else?