Topic Title: Reader Case Study - What do we focus on?
Life Situation: Married Filing Jointly, wife and 2 children (ages 2 and 1), 33 living in the Greater Boston Area.
Gross Salary/Wages: $67,500 bi-weekly + a yearly profit sharing bonus that is equal to ~35% of my base salary (no clue how consistent this is), wife is raising the kids full-time
Pre-tax deductions: 401k - 10% with 10% employer match
Other Ordinary Income: NA
Qualified Dividends & Long Term Capital Gains: NA
Rental Income, Actual Expenses, and Depreciation: NA
Adjusted Gross Income: $4,312.60/month after taxes and 401k deduction
Taxes (monthly):
Federal: $131.50
State/Local: $187.78
Social Security: $349
Medicare: $81.62
Current expenses (this is from last month, need more data):
Rent: $2,100
Utilities: $200 (Gas, Electric, Water/Sewer)
Car Insurance: $50
Internet: $35
Cell phones: $45
Groceries/household goods: $600
Netflix: $11
Fuel/Tolls: $179
Medical (pharmacy, urgent care): $75
Misc: $572 (Gifts, charity, car repairs)
Credit Card #1: $67 (minimum)
Credit Card #2: $175 (minimum)
Personal Loan: $398 (minimum installment)
Total: $4,518
Expected ER expenses: NA
Assets:
My ROTH: $7,886.67
Wife’s ROTH: $51,498.71
My IRA: $14,032.97
Wife’s IRA: $43,686,35
Work 401k: $8,468.38
One Car: paid off and worth ~$12,000
Emergency fund: $307
Total: $137,573.08
Liabilities:
Credit Card #1: $3,997 @ 16.24% ($67/month minimum)
Credit Card #2: $7,345 @ 15.49% ($175/month minimum)
Credit Union Loan - $15,692 @ %8.9 ($398/monthly installment - 15 payments made)
Student Loans:
$2,000 @ 2.65%
$2,515 @ 2.65%
$3,143 @ 2.65%
$709 @ 0.4%
Total: $35,401
Specific Question(s):
How do we get these debts paid off quickly and start saving for a house and planning for FI?
Having rented for my entire adult life and now having a family of 4, I’m very tired of renting. However, I know that we are in no position to be thinking of a house until we tackle our debt and get some savings stashed away.
Our rent is our biggest monthly expense and my wife and I both realize housing is costing us too much. We made a cross country move for a new job and rented our current place sight-unseen due to its proximity to parks, activities, and shopping, allowing the wife and kids to walk to everything besides visits to the doctor. This location also allows us to only have one vehicle. Commute to work is about 30 minutes for me. Our lease is up in April.
Our current approach is to put all remaining income after expenses into paying off debt. Virtually all of that is going toward credit card #1, which has the highest interest rate.
My wife is staying home with the kids which is saving us the considerable cost of child care for two toddlers. We’ve talked about things she might do on the side to earn some extra income, but any insights here would be appreciated.
Thanks for your help Mustachioed Mystics!
EDITED 12/5/16 - Moved minimum CC payments to expenses, which now shows our monthly expenses exceeded income. Last month was exceptional as expenses usually go, but this is clearly unsustainable.