First Post and long time Lurker
Thanks in advance
Life Situation: Married filing jointly, we are both 37, two boys (3.5 and 1.5 yo), we live in an expensive urban area of the western, USA. We live 1.5 miles from my wife’s (CPA Accountant) work and 2.5 miles from my work (Civil Engineer), daycare is 1 mile away and on the way to work. We just recently moved to our current house had have a 4.25% rate on a 30 year note that starts in June, 2019. Parents are in the Midwest.
Gross Salary/Wages: $115,000 Salary plus Bonus and $100,000 Salary plus Bonus.
Total Estimated 2019 Gross = $235K
Individual amounts in pre-tax deductions: 401k – 19k each (one has a profit sharing and the other has a 4% match), max out H.S.A. ($6.9k total), $5k in Dependent Care FSA
No other income, rental income, capital gains, or dividends
2019 Adjusted gross income: ~185K
Taxes: not sure - we always pay in to uncle Sam
Current Monthly Expenses:
• Mortgage/Property Tax/Insurance - $2,600
• Daycare - $2,795
• Car Loan (Honda Odyssey) - $656
• Student Loan 1 - $325
• Student Loan 2 - $300
• Grocery/household – See Left Over
• Restaurants – See Left Over
• Education - $1,215 (See Below)
• Electric/Gas - $150
• Water/Sewer - $75
• HOA - $36
• Auto Insurance - $170
• Life Insurance - $65 (two $500k policies)
• Gym - $32
• Kids Swim Class - $150 (CANCELED)
• Comcast Internet - $55
• Verizon 1 – $69 (wife wants to be separate)
• Verizon 2 - $362 (family plan for 5, $200 is paid to me from family, includes 4 phone contracts, and i pay for 93 yo grandma's phone)
• Amazon Prime, other TV, and music (Netflix, hulu, HBO Now, Noggin, Spotify, audible, epic books, apple cloud storage) - ~$90
• Invisaglin - ~$300 (17 more months, for me to prevent more crowns, not for the kids)
Total Monthly Expenses: ~$9,440
Total Monthly Take Home Income: ~$10,600 (I get paid every two weeks, those extra checks are not included in the monthly so annually our income is about $4400 more)
Total Monthly Money Left Over: ~$1,170 (for food, groceries, household, clothes, saving, etc.)
Assets: Home worth ~$535k, 401k – one at ~$104K and the other at $$118k, ~$15k cash in savings, 2010 Mazda 3 (~$6,000 and not counted in Net worth), random household stuff.
Liabilities: Student Loan 1 - $13k (at 4.75%, Student Loan 2 - $31k (at <3%), 2018 Honda Odyssey - $29,700 (at 1.9%), Mortgage - $416k (at 4.25% for 30yr), Chase Card - $0 (paid off every month for points).
Total real Assets = ~$786K per Personal Capital
Total Liabilities = ~$491K per Personal Capital
Net worth = ~$295k per Personal Capital
Question Background: The education expenses above are due to oldest son, recently he had some behavior issues at pre-school and after some testing it was determined that he’s gifted, (IQ around 130). The education expenses are helping use better support his development, manage behavior, and figure out exactly what we should be doing with him, i.e. best schools, and how best to help develop his talents. The big issue here is the cost which was not anticipated and cut our monthly money leftover basically in half. The costs may be short term but could extend for several years at full (~$1,200) or half rates ($600) (cut back number of sessions per month).
Let me clarify this extra education cost, right now we are scheduled for 4 sessions totaling the $1215. After this the service will provide lots of resources for us to help him and best school options for him based upon his disposition. As of today there are no additional sessions scheduled beyond the initial 4. if we find value in the sessions they may continue. but it would have to be a lot of value, just thinking worst case here.
We are not trying to FIRE soon, or necessarily at all, as we got a late start on saving. I created a retirement spreadsheet before this added expense and it determined that we could retire in our mid to late fifty’s at the latest, while not trying very hard to FIRE. Those calculations included the money spent on daycare to fund the boys’ college funds and supplement our retirement or debt payments. Now it appears that we may need to use those funds to put our son in private school for gifted and talented kids at $15-25K a year (hopefully he cures cancer).
The wife is not parting with the van, so please don’t go there. My car could go though…
Question: what’s the best place to reduce expenses to give us some breathing room in our monthly budget? Previously we had in the ~$2,500 range in left over money to pay extra on debt, build our cash reserve, or do small projects around the house, now it’s pretty tight.
Thanks
Joe189man