Hi Mustachians,
I am a 27yr old commercial fisherman, married, and expecting my first child. My wife is currently not working, and has no plans to in the near future due to the coming baby. I essentially job share with another deckhand on the fishing boat I work on and have 2-4 weeks off at a time throughout the year, typically ending up with 3-4 months of vacation per year. This has given me a taste of early retirement, although it still seems far off when I’m on deck at 2am and the boat is covered in ice.
I get paid as a contractor and receive a 1099 at the end of each year. The job has no medical/retirement benefits and I pay all taxes out of pocket as if self employed.
Salary: I have averaged about 100k per year since I started 4 years ago. This has varied from 85k-120k though. Pay is not consistent throughout the year and I regularly go for 2-3 months without a paycheck between seasons.
Expenses: Our yearly expenses are around 42k, not including taxes. The largest part of this is a $2,100 mortgage payment. ($305,000 purchase price, 20% down, 3.4% interest for 15 years, $220,000 remaining) The second biggest expense is medical insurance which currently hovers around $600/month with a large (~7k) deductible. There is no debt aside from the mortgage, just monthly bills for car insurance, electricity, groceries, internet and gas. We don’t have a specified budget, but are both reasonably frugal. We do eat out occasionally and we don’t track every dollar that leaves our wallet. Perhaps I’m missing something major here by not having a detailed spending log, but it doesn’t seem like it. We don’t have expensive “toys” or obvious, singular hobbies that are expensive.
Taxes: Taxes are typically 25% of my income, this is about $25k/year.
Retirement Investments: I have started maxing out a SEP-IRA each year and will also fully fund individual IRAs for my wife and myself going forward. Currently I have a Roth and she has a traditional. I have put additional savings in a taxable account. Current allocation is approximately 90% stocks/10%bonds in Vanguard index funds.
SEP-$40,000
Roth-$5,500
Traditional-$5,500
Taxable-$20,000
Savings: Currently we maintain a checking account of $15-20k, and have an Ally bank CD with $15k. This cash, along with the current contributions to the Roth cover about 1 year of living expenses. I prefer maintaining this much cash because of my occupational situation. 25% of each paycheck also goes into a savings account earmarked for taxes, currently sitting at $18k.
Summary:
$100k average income
$220k debt on house
70k retirement savings
~30k cash
$25-35k of investable/saveable income/year going forward.
I’m hoping you all can give me some suggestions for improving my current financial trajectory. I feel like the low hanging fruit is minimizing taxes and medical insurance, but the mortgage also feels like an anchor dragging down my savings rate.