Author Topic: Case study: Family changing course  (Read 2485 times)

Anoushka

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Case study: Family changing course
« on: October 21, 2019, 09:26:26 AM »
Life Situation: we're in our 40s, married, 3 kids (12, 11, 7), live in Southeast US in lowish COL area. New to FIRE ideas, and wondering what to do next. I stay home with the kids (home school family) and husband works in IT. Husband recently sold his (huge, financed) truck and bought a civic. He also cancelled his expensive gym membership, we started using ynab, and have cut our expenses a lot. We have no debt except the mortgage which is a 20 year loan that we are about halfway through. It is seller-financed at 1.5%. Yes, you read that right.

Gross Salary/Wages: 133,000 (I guess this isn't really gross. It's from his w-2, so health insurance, hsa, and pre-tax 401k already taken out.)
Net monthly wages (after taxes, health/dental insurance, hsa, all 401k taken out): 6,160. Doesn't include bonus. Bonus last year was $17,000 after taxes

Savings:
Retirement savings:
His 401k: $172,000 (his contribution + employer match is 2700/month. I think we are maxing this out?) Also this is half roth, half pre-tax.
HSA: 13,000
Our Roth IRAs plus rollover IRA from previous job: 44,000

Total: 229,000

These are all in index funds except the HSA, which I haven't figured out how to invest. This saving/investing has happened pretty much over the last two years. We are late to the party, and trying to figure out how to save enough for my husband to retire eventually. (He's 44 now.) He would really like to retire around 55 or 60, but that doesn't seem possible to us right now.

Other savings: We have about 10,000 in a savings account for emergencies.


Taxes: Federal: 9,800, no state income tax, Medicare 2,055, and FICA 7,960. 

Current monthly expenses:

mortgage: 820 (We owe 100,000 total on the house, which is worth ~275,000)
utilities (gas, electric, water/sewer): 350
phones: 92
internet: 58
groceries/household (including dog/cat food): 1200
gas: 100
dance lessons for 3 kids: 337
giving: 500
eating out: 300
streaming/subscriptions: 50
clothing: 100
home school supplies: 50
misc.: 200
home maintenance: 500 (saving for new windows/siding)

total: 4,657

yearly (we pay these from the bonus):

term life insurance for both of us: 400

We don't have an escrow account, so we pay these in lump sums.
property taxes: 2200
insurance (home & 2 cars): 2,817


Specific Questions: What should our next steps be? Are we doing anything obviously stupid? We are open to all ideas. We could move (within our city), buy rental property, invest in more index funds. We're having some decision-making problems and not knowing what direction we should go to make the wisest use of $$.

We should now have about $1500 to save/invest every month, although realistically unexpected expenses do come up. We're definitely going to put $6000 in my Roth IRA for 2019. After we do that, what should we do with the rest of our savings? We need about $5000 to be reasonably liquid in case of emergencies. We also need to start saving towards our next trip to Germany (husband is German, and we try to visit his parents every couple of years). His parents house and feed us, and usually help pay for tickets, so it costs maybe 5,000 per trip for our family of five.

« Last Edit: October 21, 2019, 09:49:03 AM by Anoushka »

Boofinator

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Re: Case study: Family changing course
« Reply #1 on: October 21, 2019, 09:58:06 AM »
You should have no problem retiring in the next 10 years given a few adjustments. Here's my suggestions for relatively easy gains:

Double-check that you're maxing the 401k and IRAs every year. For the 401k, I would switch to all of it tax-deferred (and you're probably stuck with the Roth IRAs since you're likely over the deduction limit for traditional). The idea is that you save the taxes when you are in a high tax bracket during your working years, but then cash out when you are in a lower tax bracket (as most early retirees will be).

Your grocery bill seems high for a family of five. Maybe see what could be done to get it under $200 per week without sacrificing healthy eating? There are a few more items that could be cut (like eating out), depending on how badly you value more money versus those expenditures.

The big key is to consider each expense, and whether that gives you value relative to the extra time you or your husband is required to work to maintain that expense. For example, if you cut out $200 per month from your eating out budget, and your husband makes $50 per hour after taxes and you save 20% of that ($10/hour), then that expense is costing 20 extra hours of work (or roughly half a week).

JGS1980

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Re: Case study: Family changing course
« Reply #2 on: October 21, 2019, 10:13:21 AM »
Way to be brave and do a case study! I'm sure you'll get a bunch of pointers from the community here.

By my math, your savings rate per monthly take home is about 22% of Gross [($1500/mo x 12 + 17K bonus) divided by 150 K Gross Income]. If you add your 401K contributions, you are around 35%.  Not bad, but you can do better. The above gets you to FI in another 20+ years. Is that your goal?

How to get there quicker, you ask?
1. Max out the pre-tax 401K. No need to mix half roth, half pre-tax. Why? because this will save taxes for you every year. Do a fake tax return on taxcaster and SEE what I'm talking about.

2. $1200 on Groceries and Household goods is a lot. If you REALLY tried, you can get this down to $800. If you are the stay at home, you could do this. Meal planning would be huge for you.

3. 400$ for Term insurance for you both seems high. How much is this for?
-if you need 1.5 Million (25x your yearly expenses) to achieve FI, and you already have $230K in assests, than I hope each of these Term insurances aren't for more than 1 Million.

4. Check out phaseouts for Spousal IRA contributions if you do not have income. 

https://www.investopedia.com/terms/s/spousal-ira.asp

"Spousal IRAs: How They Work
The IRS has extensive rules on how IRAs must be structured and specific guidelines on how spousal IRA strategies can be deployed. According to the IRS, the amount of your combined contributions canít be more than the taxable compensation reported on your joint return. See the formula in IRS Publication 590-A. Worth noting is that if neither spouse participated in a retirement plan at work, all of their contributions will be deductible.

For married couples filing jointly in which the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $103,000 to $123,000 in 2019, up from $101,000 to $121,000 in 2018, according to the IRS.

For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is, the deduction is phased out if the coupleís income is between $193,000 and $203,000 in 2019, up from $189,000 and $199,000 in 2018."

4. Do you plan on paying for college?

-Hope this helps. Looks like your family is well focused here.

newloginuser

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Re: Case study: Family changing course
« Reply #3 on: October 21, 2019, 01:03:55 PM »
Looking at your larger expenses:

Food/Grocery - as everyone pointed out see if you can get this down. I'm guessing you buy meat, and if so do it in bulk with what's on sale. Throw in a few non-meat meals a week. Stay away from prepackaged or processed foods which have a much higher unit cost. Something else to look at when you're shopping is the unit cost. You may be surprised to see how much you are paying for an item on a per pound basis.

Giving - this seems to be about 10% of your monthly spending. Are you tithing? I think if you are looking to save more after being new to the savings game, cutting this back is reasonable for a period of time. Especially if you cut other expenses too. Some people also elect to "give" time instead of money and find that to be a reasonable substitute.

Dance lessons - Any other activity you could have your kids do that would save? volunteering may help with giving and cutting back on dance lessons depending on scheduling. This isn't actually outrageous for 3 kids entertainment, but I'm commenting since it is the next highest (I'm ignoring utilities since it encompasses multiple expenses really).

Eating out - See if you can do with a home cooked meal for some of the restaurants you go to. For example, my wife and I use to order pizza or even buy store pizza when we had pizza night, but this changed to us buying ingredients and making our own. Comes out to about half the price and there are usually left overs. Or if you wish to keep the restaurant budget, look for some more cost friendly options where the family can all eat for around $10 a piece or less.

Anoushka

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Re: Case study: Family changing course
« Reply #4 on: October 21, 2019, 03:01:19 PM »
Thanks so much for the ideas! It's so great that you all are willing to help others out with this stuff.

@Boofinator and others who suggested switching to all tax-deferred 401k contributions--we will definitely do that. I think it is an easy switch in our Fidelity account. If I remember correctly, we weren't sure which way to go, so we just split the difference.

You are all totally right that our grocery spending is too high. Part of the problem is that category of the budget gets the random Walgreens trips and anything anyone needs that doesn't fit in other categories. But I can definitely cut some of that. And I have no excuse for a high grocery budget, because my kids would happily eat beans and rice every night, and my husband is not picky either.

The eating out budget is almost all for my husband's lunches. He has been cutting down his spending and I think that category will shrink more as we get going and he sees the impact of our savings. But honestly, if that is what he wants to do with that money, I'm okay with it.

@JGS1980 I've always been confused about the IRA rules. I think those phase-outs are for the tax deduction for traditional IRAs, is that right? Because mine is a roth, I think we just have the income limits for being able to contribute, which are significantly higher than our income. Please correct me if I'm wrong about that. One more IRA question, and I'm showing my ignorance here: Can my husband still contribute $6000 to his IRA even if he is contributing the max to a 401k?

That's a good point about the term insurance. We bought that when we had two kids within 15 months and knew we needed life insurance but were also exhausted. My husband also has a government job and gets more life insurance, and maybe disability insurance (?) through that as well. He's traveling for business right now, but we will look at the details of what we have and re-evaluate when he gets home.

I'm not sure about college. Whew--it can be so expensive. We live in TN, where community college is free, so one possibility would be for our kids to graduate early from our home school and spend two years in community college. The oldest is pretty young for her grade, so she could have an associate's degree at 19 and only have two years of further college to pay for. They are also German citizens and could study in Germany tuition free (well, it is maybe a hundred euro a semester) after receiving an associate's. So all that to say--we are hoping NOT to pay a lot toward their college, but we've kind of had our heads in the sand about it.

@newloginuser Yes, the giving is tithing. It's important to us to give, but I hear what you're saying. Lowering that for a time might also enable us to give much more later.

The dance lessons are kind of the holy grail to me, because the studio is three minutes from our house, all three kids are in the same classes, and we love the atmosphere and the fact that it's a family business. Our kids are also home schooled, so it's important to me that they have some kind of outside teacher. They dance for like eight hours a week, so we get a lot of class hours for the $$. It actually costs more than the lesson price, since we pay $75 each for them to be in performances twice a year, and they need dancewear and so.many.shoes. But we cover those things with the clothing and misc. budget categories.

« Last Edit: October 21, 2019, 03:02:54 PM by Anoushka »

Dee18

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Re: Case study: Family changing course
« Reply #5 on: October 21, 2019, 03:28:13 PM »
Will your husband have a pension from his government job?

Anoushka

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Re: Case study: Family changing course
« Reply #6 on: October 21, 2019, 04:26:09 PM »
No, he started there a few years too late. From what I understand, there is "the old pension plan," "the pension plan," "the amazing 401k match," and by the time he started it was a 6% match. Not complaining though--it's still a nice match and we get ridiculously cheap health insurance.

slappy

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Re: Case study: Family changing course
« Reply #7 on: October 22, 2019, 01:07:49 PM »
Thanks so much for the ideas! It's so great that you all are willing to help others out with this stuff.

@Boofinator and others who suggested switching to all tax-deferred 401k contributions--we will definitely do that. I think it is an easy switch in our Fidelity account. If I remember correctly, we weren't sure which way to go, so we just split the difference.

You are all totally right that our grocery spending is too high. Part of the problem is that category of the budget gets the random Walgreens trips and anything anyone needs that doesn't fit in other categories. But I can definitely cut some of that. And I have no excuse for a high grocery budget, because my kids would happily eat beans and rice every night, and my husband is not picky either.

The eating out budget is almost all for my husband's lunches. He has been cutting down his spending and I think that category will shrink more as we get going and he sees the impact of our savings. But honestly, if that is what he wants to do with that money, I'm okay with it.

@JGS1980 I've always been confused about the IRA rules. I think those phase-outs are for the tax deduction for traditional IRAs, is that right? Because mine is a roth, I think we just have the income limits for being able to contribute, which are significantly higher than our income. Please correct me if I'm wrong about that. One more IRA question, and I'm showing my ignorance here: Can my husband still contribute $6000 to his IRA even if he is contributing the max to a 401k?

That's a good point about the term insurance. We bought that when we had two kids within 15 months and knew we needed life insurance but were also exhausted. My husband also has a government job and gets more life insurance, and maybe disability insurance (?) through that as well. He's traveling for business right now, but we will look at the details of what we have and re-evaluate when he gets home.

I'm not sure about college. Whew--it can be so expensive. We live in TN, where community college is free, so one possibility would be for our kids to graduate early from our home school and spend two years in community college. The oldest is pretty young for her grade, so she could have an associate's degree at 19 and only have two years of further college to pay for. They are also German citizens and could study in Germany tuition free (well, it is maybe a hundred euro a semester) after receiving an associate's. So all that to say--we are hoping NOT to pay a lot toward their college, but we've kind of had our heads in the sand about it.

@newloginuser Yes, the giving is tithing. It's important to us to give, but I hear what you're saying. Lowering that for a time might also enable us to give much more later.

The dance lessons are kind of the holy grail to me, because the studio is three minutes from our house, all three kids are in the same classes, and we love the atmosphere and the fact that it's a family business. Our kids are also home schooled, so it's important to me that they have some kind of outside teacher. They dance for like eight hours a week, so we get a lot of class hours for the $$. It actually costs more than the lesson price, since we pay $75 each for them to be in performances twice a year, and they need dancewear and so.many.shoes. But we cover those things with the clothing and misc. budget categories.

If the grocery budget includes the random walgreens trip that doesn't fit anywhere else, what is included in the misc category?

slappy

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Re: Case study: Family changing course
« Reply #8 on: October 22, 2019, 01:10:08 PM »
Am I mathing correctly that there is a $1500 difference in your monthly income and your monthly spending? Plus bonus money. Where does all of that go? It might make sense to start tracking expenses for a while first so you have a better idea of what you are actually spending. Then you can look at what to cut. It will also help to give you a better idea of what your FIRE number actually is.

Anoushka

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Re: Case study: Family changing course
« Reply #9 on: October 22, 2019, 01:41:00 PM »
Am I mathing correctly that there is a $1500 difference in your monthly income and your monthly spending? Plus bonus money. Where does all of that go? It might make sense to start tracking expenses for a while first so you have a better idea of what you are actually spending. Then you can look at what to cut. It will also help to give you a better idea of what your FIRE number actually is.

You are mathing correctly. In the past, we spent all money some months, less than all of it other months, and more than all of it in still other months. We have tried to keep a $20,000 cushion in savings, but usually I would end up dipping into savings every few months to pay the CC bill, and then we would use the bonus to get the savings back up, pay our once-a-year expenses like property tax, and pay for christmas gifts.

Besides our inflated grocery spending, a lot of the other spending has been house-related. We bought our house nine years ago and have replaced the roof, the kitchen, the carpet, the gutters, one hvac system, had wood floors repaired and refinished, replaced crumbling hearth and fireplace surround, etc, etc. We did the kitchen ourselves, except the countertops, but all the other major things have been hired out.

We've been tracking expenses for a few months now, and it has been very eye-opening. We've made a lot of changes, and now trying to figure out next steps.

Sanitary Engineer

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Re: Case study: Family changing course
« Reply #10 on: October 22, 2019, 03:08:16 PM »
Hi @Anoushka !  Good luck with your case study.  I have been spending time recently imagining retiring as well. We have 3 kids 3.5 and younger.  The best thing that helped me is having all of my expenses recorded for a year.  I created an annual spending budget, not just a monthly budget.  Then I could look at how my earnings compared against my spending. 
I saw how much money I put into home improvements and repairs.  I saw how much I spend on pets.  I eventually caught on to some other expenses too, like how much I pay my tax preparer.  I started to think about my tax refund as my money and not some extra money.  Unplanned for windfalls like a bonus, now go directly into the saving priority (like your windows fund).
 
I have a few thoughts to help make sure your budget is complete:

I don't see vehicle maintenance or registration, insurance co-pays or deductibles, vet bills or pet medicines in the budget, do you groom your pets yourself? Are they ever boarded? 

I think your utilities are high.  Are you estimating $350 per month or is that a real number?  If real, why so high? And does it include garbage?

Your streaming/subscriptions budget seems idealized.  How many subscription services do you have? Are any of them home school related and should they be in the home school costs item?  Do you subscribe to any print media?

To speak to some of the other suggestion made:

Life Insurance:  Have your husband sign on to the social security website (I assume you don't have a significant history paying Federal Insurance Contribution Act taxes) and determine what his survivor's benefits will be.  I did this and discovered that my and my wife's life insurance coverage are backwards.  She should have 1M and I should have 0.5M, because the survivor benefits for my wife and children are significant.  My 20-year 1M policy is $441/year, so your $400 for two people seems like it might be a good price if the coverage is right.

Food: try tracking how much food you throw away by throwing all food scraps, leftovers, and spoiled food in its own garbage or compost bin.  Many people do not have a good understanding for when food goes bad and throw it away prematurely.  People also have trouble preparing meals outside of recipes so they can't adjust recipes to the amount of food they have or to the number of people being served.  Food classes are wicked fun, especially if the kids will participate and maybe you can learn some tricks for wasting less and spending less.  Also, ask your husband if he really wants to spend $300 a month on lunch or if he would rather have a PBJ or a frozen soup.  I would rather have the $300 in my pocket - a good way to do this, I think, is to have him pay for lunch with spending cash, what Dave Ramsey calls, "Blow" money and then also make a simple home made lunch for him.   Hopefully, someone will take the time to post links to all the good forum threads for reducing food budgets.  You should be getting this down to $500/month or less.

I want to think with your high income you will land on a savings plan that works for you and lets your husband retire in ten years.  Using the MMM app FI Calculator, if you can actually get your monthly budget down to $4,657 you might be FI with 1.4 million in 12.6 years (disclaimer, I don't really know how this calculator works and I made some assumptions that I didn't track real well, like I considered all of your HSA as investment rather than include an estimate for actual health costs).

Anoushka

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Re: Case study: Family changing course
« Reply #11 on: October 22, 2019, 09:23:25 PM »
@Sanitary Engineer  Thanks for responding! Three kids under four is no joke! We only had three under five for a few months. It's great that you are thinking about these things while your kids are so young. I spent a few years in a complete daze and just came up for air when my youngest turned four.

You bring up lots of great points. My husband will love the idea of an annual budget. I had to stop him from over-engineering the budget, so we settled on ynab, but now that we've been tracking for a few months we can add an annual plan. I was afraid we would never get started if we made it too complicated at the beginning. But we do have a lot of annual expenses that aren't reflected in our regular monthly expenses, and those are hard to account for in a monthly budget.

Vehicle costs: I'm glad you brought up vehicle registration, because that reminded me that mine is expiring on the 31st, so I have to go get the emissions testing done. That is about a $45 expense between the testing and the actual registration, so we just use the misc. budget category for things like that. But we do need to include car maintenance, especially as my minivan is 9 years old and will need work eventually.

Pets: there are some expenses there, but they are pretty minimal. My brother is a vet tech, and he gets us a discount for vet care and the flea/heartworm meds as samples or at cost. We trade pet sitting with our neighbor, so they aren't ever boarded. We don't plan to have expensive procedures done for them. (That might sound cold-hearted. I know some people view pets differently, but we give them good lives and have them put down when they have major issues.)

Health insurance: we have a high deductible plan, and we pay out of pocket costs from the HSA, although now I'm hearing that maybe we should use the HSA differently, so I'll have to think about that.

Utilities: they are actually even higher than I recorded--ack! In October, we paid electric, gas, and water/sewer bills of 401.63.
There are two issues. One is that our house is very large. It is 3000 sq ft, and the main part of the house was built in the 1920s, and is drafty. The second issue is that we've had my brother and his fiancee living with us for the past year in the 400 sq ft. apartment on the back of our house. Adding two adults has added about 100 to our utilities. But they are moving out next weekend, so I'm expecting our utilities to gradually go back down (the electric is averaged throughout the year, so it will take a few months to decrease). Garbage/recycling is a yearly 200 fee that is part of our property tax bill.

Streaming/subscriptions: I also feel like I must be forgetting some, but I've looked back through my records and think this is it.
We have:

spotify: 10.93
amazon prime: 119/12 months= 9.92/month
yousician (music lessons app): 14.99
github (no idea what this is--something tech related): 7
public library: 50/12 months= 4.17/month

total: 47.01

Sometimes we'll get an extra Amazon channel for a month if there is something we want to watch. I think my husband did get a year of the Headspace meditation app, but I'm not sure if he'll renew it. We used to have a lot more subscriptions, but we went through and cancelled the ones we weren't really using. (And we cancelled Netflix, which the kids were using, but they have survived.)

I do have a huge home library (a few thousand books), but I am trying to only buy books by selling some to the used bookstore and getting other books with the store credit.

Thanks for the tip about the ssa website. I knew you could estimate retirement benefits, but I didn't know you could do that with survivor benefits.

I've been meaning to start composting anyway, so that would work well to gauge the food waste. We do cook simple meals without recipes, for the most part. There is *ahem* a lot of alcohol in that budget. But the food part is also too high. Our girls are athletes and eat like grown men, but we do buy too many snacks, and we tend to buy instead of make food to bring to potlucks and things like that. We also host a lot of friends and family for meals, but they are perfectly happy with simple foods and we need to be making pots of chili instead of cheese plates and burgers for a crowd. $500/month seems impossible, but I'll aim for 800 and then revisit.

You are right that this budget is missing things. We've made a lot of changes recently, and I'm sure we're forgetting expenses, especially sporadic ones. Hopefully if I can get the grocery budget down, that savings will cover some of them. It seems like a crazy dream for him to retire in ten years, but I'm excited about the possibility. I'm going to check out that calculator.

Thanks again for all the ideas and suggestions!

Linea_Norway

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Re: Case study: Family changing course
« Reply #12 on: October 23, 2019, 04:48:32 AM »
Is your husband the one who wants to retire early? Then calculate for him how much his lunch is worth, 5 times a week for 10 years, put in the stock market with a 7% profit each year. That is the amount of money he is offering for his lunch today, while it could have contributed to his pension fund instead. Everything you buy now should be considered against the big goal. Is it worth to spend x on something and work longer for it. Or do you spend x mindlessly and would you rather quit working earlier. Your children's dancing lessons sound like a thing that you prioritize and is worth it.

I think you can make the biggest win on the food/groceries. And maybe you can keep the alcohol as a weekend treat, not an every day treat?

Sanitary Engineer

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Re: Case study: Family changing course
« Reply #13 on: October 23, 2019, 07:16:58 AM »
I was thinking last night when I was picking the kids up from daycare, what would I do with $300 in my pocket?  I decided I would buy my wife more gifts, drink more beer, and buy sports equipment.  None of which would increase my savings, so maybe I shouldn't have $300 in my pocket each month.

@Anoushka It looks like your on the right path.  Budgeting, saving, planning, working things out with your mate and on the MMM forum.  At least, I hope this is the right path. 

GoCubsGo

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Re: Case study: Family changing course
« Reply #14 on: October 23, 2019, 08:25:13 AM »
@Anoushka

I've been tracking maintenance and repairs for the last 9 years on my 1920's house.  I'm wondering if you are budgeting enough for the house (especially at that size and age).  In the last 9 years I've done the following (kitchen and bath were done myself)

- Kitchen gut remodel - $23,000
- Bath Gut remodel- $5,800
- Siding and Windows (replaced  all 90 year old windows, done by family friend for a big discount)- $27,000
- Flooring- (carpet and new hardwood)-$7,500
- Tree work- $7,000 (100 year old trees that had a disease- village made me remove)
- Electric work/Hvac- $5,800
- Exterior Paint/Caulking- $3200
- Landscape/Hardscape- $3,000
- Plumbing- (drain rodding, repairs, etc)- $3,500
- Yearly misc supplies for maintenance done myself (replace attic fans, fix gutters, sink repairs, yard equipt, etc)- $1,200/year

So with some major renovations plus maintenance, I've averaged about $10K a year on the house.  Now I didn't need a new kitchen/bath remodel and the flooring was old but potentially salvageable, but most of the other items were needs.  You many not have big projects left but I had no idea a newer a/c condenser would die, or trees would be removed or an old galvanized pipe would have to be cut out.  Those things pop up in old houses.  Now I budget for them ($5k a year. Every year).

Also, I found that my kids got more expensive as they aged (clothing costs, activities costs and now driving costs). My siblings and coworker have all said the same thing. Might want to include that in future projections.  I'd tell you mine but it's embarrassing.
 
The more I tracked the more I found "leakage" I had no idea about

Anoushka

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Re: Case study: Family changing course
« Reply #15 on: October 23, 2019, 09:41:44 AM »
@Anoushka

I've been tracking maintenance and repairs for the last 9 years on my 1920's house.  I'm wondering if you are budgeting enough for the house (especially at that size and age).  In the last 9 years I've done the following (kitchen and bath were done myself)

- Kitchen gut remodel - $23,000
- Bath Gut remodel- $5,800
- Siding and Windows (replaced  all 90 year old windows, done by family friend for a big discount)- $27,000
- Flooring- (carpet and new hardwood)-$7,500
- Tree work- $7,000 (100 year old trees that had a disease- village made me remove)
- Electric work/Hvac- $5,800
- Exterior Paint/Caulking- $3200
- Landscape/Hardscape- $3,000
- Plumbing- (drain rodding, repairs, etc)- $3,500
- Yearly misc supplies for maintenance done myself (replace attic fans, fix gutters, sink repairs, yard equipt, etc)- $1,200/year

So with some major renovations plus maintenance, I've averaged about $10K a year on the house.  Now I didn't need a new kitchen/bath remodel and the flooring was old but potentially salvageable, but most of the other items were needs.  You many not have big projects left but I had no idea a newer a/c condenser would die, or trees would be removed or an old galvanized pipe would have to be cut out.  Those things pop up in old houses.  Now I budget for them ($5k a year. Every year).

Also, I found that my kids got more expensive as they aged (clothing costs, activities costs and now driving costs). My siblings and coworker have all said the same thing. Might want to include that in future projections.  I'd tell you mine but it's embarrassing.
 
The more I tracked the more I found "leakage" I had no idea about

Argh! I think you are right about the house expenses, and I'm at the point of not even wanting to afford this house anymore. I think we are in denial about how much this house is costing us. The mortgage is low and the interest rate is tiny, but the maintenance, renovation, and utility costs are astronomical.

Sanitary Engineer

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Re: Case study: Family changing course
« Reply #16 on: October 23, 2019, 11:32:43 AM »
+1 on the 1920s home improvements budget.  We realized we have put more than $25,000 into the house in the past 5 years while saving maybe half that. 
Tree removal, fruit trees, fence, driveway, porch repair, pest removal/pest proofing (18 skunks!), kitchen remodel, bathroom remodel, painting, etc.  Now we are talking about air sealing the attic and basement, new insulation in the attic, new furnace, new water heater, etc.

JGS1980

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Re: Case study: Family changing course
« Reply #17 on: October 25, 2019, 12:42:09 PM »
"Can my husband still contribute $6000 to his IRA even if he is contributing the max to a 401k?"

I believe he can contribute 6K to an IRA, but there are "Tax Deductibility Limits" on that contribution because he already has access to a workplace retirement plan and your household makes a MAGI between 103K and 123K [you need to do the math!!!]

By the way, a nondeductible IRA contribution can be converted to a ROTH IRA and never pay taxes on gains again. This is called a BACKDOOR ROTH.

JGS

PS -I very much recommend the book "Bogleheads' guide to investing". It's a concise guide to what you need to know to navigate all these acronyms (401K, 403B, Roth, IRA, etc...) and how to plan you long term strategy.  It's well worth it's cost (x 1000).