Hello Mustachians! I’ve been mostly lurking the forum and I find you guys generally have some sage life/money advice, so I’m turning to you for some help. We’ve always lived below our means but were continuously frustrated to find that money was tight from month-to-month, and couldn’t figure out why. Then I stumbled onto MMM and this idea of being mindful of what you spend and spending according to your values, instead of the mindless spending we were doing. When I first started tracking our expenses, I was flabbergasted at how much I spent on music and wine (well I think it was mostly wine) in a given year. I love them both, but not enough to justify what we were spending. That’s just a couple of examples. We’ve done much, much better in the ensuing years.
Since then, we’ve started a family and have been a family of 3 for almost 5 years now, and are expecting our second son in November, so it’s time to start college planning for baby 2. We’d like to continue to save for retirement at our current rate, if possible, and divert as little of that as possible to college planning. Ideally, the money will come from what we already spend. I’d like some outside advice on finding the money, please.
Life Situation: Married, filing jointly. I am the sole earner (40yo) and DH is a stay at home spouse (39 yo). 1 son (soon to be 5yo). Expecting baby #2 in November of this year. We live in a low cost of living area.
In our state, you get a tax credit of $200 for every $1000 contributed to the state’s 529 plan, with a maximum credit of $1000. Historically, we have funded our son’s 529 up to $5000 yearly to obtain the maximum tax credit. Our plan, as of now, is to continue our monthly contributions to our existing son’s 529 ($3000/year) and then begin funding our next son’s 529 at $5000 yearly (250/mo + 2000 extra) x 5 years as well, then the contributions will drop to just the monthly contributions. In this way, we will fund each account to roughly the same level, frontloaded for maximum growth potential.
Gross Salary/Wages: $183,000 last year (includes salary, employer 401K contributions, and bonuses)
Net Salary (paid biweekly): $3460/pay, ~ $6920/mo (2 extra paychecks/year, generally put directly in savings, we plan our budget around 2 paychecks/month)
Individual amounts of each Pre-tax deductions:
HSA: $6,750
Health insurance: $8589 last year; increased in July by $84 per paycheck ($2189/year)
Dental: $1189 last year; dropped this in July
Vision: $234 yearly
Taxes:
Federal: $24,115
State/County: $6,473
FICA $7886
Medicare: $2317
Property: $2046
Current expenses: monthly - averaged over past 18 months
Mortgage (P+I): 1159.88
Home maintenance: $214 (this includes anything from repairs to outdoor projects – not a static monthly expenditure)
Homeowners: 109 (paid on yearly basis)
Electricity: 96
Natural Gas: 85
Trash: 63 (rates contracted by the city, no ability to change collection plans)
Water: 48
Internet: 40
Groceries: 594
Restaurants: 142
Auto maintenance: 199 (the past 18 months have been outliers due to 2 large expenses for one car, expect this to decrease over the next year)
Auto insurance: 144 (includes an umbrella policy)
Fuel: 133
Car registration: 17 (for 2 vehicles)
Student Loan: 699.44
Cell: 22 (husband’s phone, my service is paid by employer)
Life insurance (me and DH): 110
Life insurance (son): 22 (probably a facepunch; this was purchased at the urging of my father, who is in insurance and financial planning – his worry was that if not covered fairly continuously, it is extremely difficult to purchase life insurance later should something happen earlier in life [i.e. some sort of medical condition])
Son’s expenditures: 100
My spending allowance: 100 (clothing + other wishes)
Husband’s spending allowance: 100 (clothing + other wishes)
Preschool: 75 (this will go up as each successive year is more expensive)
Gifts: 120 (includes Christmas and other gift-giving holidays)
Personal Care: 31
Vet care for 2 pets: 117 (a little inflated because we had a third pet who we lost last year and she needed more frequent vet care over that last year)
Food/other pet expenses: 71
Doggy daycare: 12 (occasional use now, used to be more)
Tithing: 527
Other giving: 377 (has increased quite a bit over the last year, as my goal for total giving is 10% of takehome)
Vacation: 243
Entertainment: 95
Netflix: 14
Sirius: 9
Misc: 126 (includes a travel credit card fee, Prime subscription, and other uncategorized purchases throughout the year)
TOTAL: 6283
Assets:
Home: 215,000 (according to Zillow, probably way underestimated based on recent sales in neighborhood)
DS 529: 31695 (contribute 250 monthly + 2000 at end of year to maximize state tax deduction)
DH IRA: 21475
Roth 401K: 178092 (max contribution each year)
My Roth IRA: 35372 (max contribution each year)
DH Roth IRA: 33589 (max contribution each year)
Taxable: 208252 (at least 650/mo contributed)
DH IRA: 9290 (I’m pretty sure it’s an IRA from when DH was self-employed, not sure why he has 2 IRA’s and a Roth – I’m pretty sure they were all set up under the guidance of my father, but I wasn’t privy to those discussions)
Savings 27518 (specifically saved for upcoming renovations and expenses paid yearly, 1.73% interest)
Checking: 12422
HSA: 17624
2008 Toyota Camry: 6000
2009 Subaru Forester: 7000
TOTAL: 588544
Liabilities:
Mortgage: 143491 remaining @ 3.44% (18 year – maturity date 2031)
Student Loan: 119849 @ 2.88% (medical school + undergrad)
TOTAL: 263340 (we’re really not in any hurry to pay these off as we’ve prioritized savings)
Specific Question(s):
We’re looking for fresh eyes on the budget to find savings for future DS’s college savings – at least $250/mo, and stay on track for me to get out of my current field in about 10 years (retired or not).
DH does most of the spending, as he manages the household, and I know he works at keeping spending in check and I think he does a pretty good job. However, I often don’t know what we are spending money on – just what category he’s recorded it in and where the spending occured. This is most often the home maintenance category. Sometimes I fear seeming critical of his money management if I am suggesting cuts to the spending levels and try to be respectful of his spending that I think is superfluous, especially since he needs an outlet from the house from time to time. For example, he likes to go to movies at the theater and I think they are outrageously priced and am happier watching them at home. I also want to tread lightly because some of the larger expenditures are what I value – especially giving. Our goal for charitable spending is really my goal and he’s not religious, so giving to the church is clearly not a priority to him. So, with that in mind, I’m asking for some outside opinions on what you mustachians might target for spending reduction. Obviously, we can just take the money from extra paychecks and bonuses that are earmarked for savings, but this hurts our savings for retirement and would not be ideal, so we want to look at our existing spending and guaranteed income first. Thanks, all!