Author Topic: Case study - Doing well on current plan, looking for next steps  (Read 1136 times)


  • 5 O'Clock Shadow
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Any & all advice is welcome! Thanks!

Life Situation: Married filing jointly. I am 26, my husband is 27. No kids currently, but will likely have one in the next year or so. Husband is a programmer with a location-independent job that he loves. I just graduated 2 months ago with a masters in social work, and have been doing some research contracting work part-time while I take a break and figure out what I want to do full-time. We both work from home. We hope to go into partial retirement (though we would both probably still have income-producing activities) within the next 5 years.

Gross Salary/Wages:
Husband: $140,000/year + yearly bonus of ~$21,000 (~$15,000 after tax).
Me: currently variable, with an estimated average of $1,000/month. Likely to change in the near future.

Individual amounts of each Pre-tax deductions:
401k: Maxed, + 4% employer match (total monthly contributions to 401k= $2100)
HSA, FSA: None

Monthly income (after tax, 401k contributions, etc. Not including yearly bonus or tax return): ~$8,500

Current monthly expenses:
Mortgage: $860 (Not sure how much is P&I vs T&I.)
Condo HOA Fees: $150
Health insurance: we are both covered through husbandís work
Car Insurance: $65 (one car)
Phone: $15 (husbandís phone & household internet are reimbursed by his company)
Gas for car: $60
Utilities: $70
Groceries: $200
Restaurants: $70
Clothes: $50
Other: ~$100
Donations: ~$1,575 (This is 10% of our gross income +$300. It is not a negotiable expense for us. However, it will be lower in retirement as our income will be lower.)
Total monthly expenses: $3,215

Monthly automatic savings:
$2,100 to 401k (as mentioned above)
$4,000 to taxable Vanguard account (Roth IRA contributions get maxed out early in the year)
$340 extra on the mortgage principal

This is the imprecise bit: We keep about $3-4k in the checking account to cover irregular expenses (ie travel, car maintenance, house repairs, etc). Every couple of months the balance gets to be higher than that, so we add the excess to our taxable Vanguard account. When we get our tax return or yearly bonus, we usually donate some of it and then put the rest in the taxable Vanguard account. I estimate (conservatively) that these non-automatic savings total to about $18,000.

401k: ~$41k
Roth IRA: ~$28k
Taxable Vanguard account: ~$137k
Condo: currently valued at ~$165k
Cash: 5k
1 car, bought in cash. No plans to get a second.

Asset allocation plan:
Roth IRA is mostly Target Retirement 2050 fund
$20k is a bond index fund (I consider it an extension of our emergency fund), the rest is in a mix of VTSAX, VTIAX, small cap index, and at teensy bit of REITs. We are working toward a specific allocation by percentage (30% VTSAX, 15% small cap, 35% VTIAX, 15% bonds, 5% REITs), but arenít there yet.

Liabilities (no debt besides mortgage):
Mortgage on condo -
Original loan amount: $116,000 (1 year ago)
Rate: 3.125%
Original length: 15 years
Monthly payment: $860
Current balance: ~$109,000

Net Worth: ~267k

Specific Questions:
(1) I think we are doing well. I want to see what we can be doing better. We have made all of the changes that we can think of, and now our progress feels automatic. I would like for us to challenge ourselves more to reach FIRE faster, but Iím not sure how at this point. Very open to suggestions.

(2) As stated above, we donít have kids now, but likely will by the time we retire. How should we incorporate that into our retirement plans?


  • Pencil Stache
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Re: Case study - Doing well on current plan, looking for next steps
« Reply #1 on: July 01, 2018, 01:42:09 AM »
Welcome! It sounds like you are doing well.

I guess the biggest thing on the income side would be for you to find steady work.

It's interesting that you tithe 10% + $300. That's the first time I've heard of that formula, so I'm curious. Why not a straight 10%?

You might invest the £340 a month instead of putting it toward mortgage principal. Others will no doubt have strong opinions on that.


  • 5 O'Clock Shadow
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Re: Case study - Doing well on current plan, looking for next steps
« Reply #2 on: July 02, 2018, 01:31:43 PM »
Thanks, Kwill! Yes, the tithing is a straight 10%, the $300 is a different monthly donation.


  • Stubble
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  • Location: Dublin, Ireland
Re: Case study - Doing well on current plan, looking for next steps
« Reply #3 on: July 03, 2018, 04:40:46 AM »
So, if I look at your savings rate vs. accumulated savings, you are now in your third year on this plan, correct?  Your expenses are very low currently, so absent changes you could be on track for your plan.  But a kid will turn your life upside down in oh-so-many ways; you have stated that you are thinking about it, but you didn't provide any targets or details about this.

Big rocks:
health care:  clearly, pre-natal / delivery / pediatrician phases are key times to have insurance.  Going ACA / high deductible during any of these will definitely add a lot to health care.  I say this because insurance is the only healthcare line you note in your budget.  While it's typical for your age to have little health spending, do you really have none?  No dental, vision?  No copays / deductibles?  That's a bulletproof health plan that will be a shock to leave for the public market.

College:  You have a masters and your husband has a STEM degree, I assume.  What will you philosophy be for your child to pay for college?  If you fall on the "don't want to burden them with debt" side, this will be a $100k plus savings goal.  While there's plenty of time for any investment now to compound its way to that, it is worth thinking of specifically.

Daily living / expenses:  You are in a condo.  Is there space for a kid?  This is one of the prime times to trade up / remodel to fit the new family situation.  Of course, $$$ with that.  Also, groceries and clothes budgets can go kablooie, unless you are purposeful in managing them.  Good news:  no more restaurants, unless you count ordering takeout because you're too tired to cook.  And, lest that deter you in your early thoughts, I wouldn't trade my son for anything in the world.


  • Stubble
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Re: Case study - Doing well on current plan, looking for next steps
« Reply #4 on: July 03, 2018, 02:00:48 PM »
You guys are doing awesome! The kid wonít add much besides extra health care coverage (can review your company plan and predict from there) and extra food. Since your wife makes $1,000/month now donít know the time involvement for this, her income is a small percentage of the household so if kids are in the mix she can focus on them to save in the day care portion.

Stay in track, donít loose focus is the key, keep the eye on your prize and you will hit it! By 40 you will have many many options presented in life. To retire, to reduce working hours, to focus on maybe a start up engineering, consulting.


  • Stubble
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Re: Case study - Doing well on current plan, looking for next steps
« Reply #5 on: July 03, 2018, 02:10:17 PM »
When 40 rolls around you guys can be looking at net worth of around 2.3M. Which is way more than you need on current income.

You guys are in a very solid position, this illustrates the POWER of front loading savings at a young age. Amazing.

Also, donít forget your tax rate will reduce significantly with children. Mine did $2,00 Credit now we we year.


  • Stubble
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Re: Case study - Doing well on current plan, looking for next steps
« Reply #6 on: July 03, 2018, 02:16:55 PM »
I would start immediately contributing to HSA, $100/month to start. This is tax free money for healthcare which we all get sick even the healthy get sick or worse accident. Please this can be used for child birth expenses.

This is one change I would start doing.

Also, you could start looking at your tax situation, goal should be 0% Federal (I am at this goal but 3 children)