Life Situation: Married; Both 37 years old. My wife is self-employed. Three children; 7,5,10 months. Live in New England suburb.
Gross Salary/Wages: 2017 $162,064 ($93904 Me, $ 68,151 Wife)
Individual amounts of each Pre-tax deductions:
My 401k about 8k 2017. On pace to max out at 18k this year. Family Health and Dental Insurance $6,890 annually ($265 bi monthly paycheck)
Other Ordinary Income: N/A
Qualified Dividends & Long Term Capital Gains: None
Rental Income, Actual Expenses, and Depreciation: Have a rental property where mortgage payment and escrow is $1548/mnth. Rent is $1380/mnth. So since we are not cash flow positive here I thought I would just note it in this column.
Adjusted Gross Income: $157,230 ($162,064-$4,815) (deductible self-employment tax.)
Income; $13,102/month
Current expenses:
Mortgage Primary Residence; $2,262 ($536 Principle, $1169 Int, $953 Escrow)
Rental Property; $2004 (Pay weekly with extra towards principle; Min payment $1,548 ($397 principle, $639 int, $513 Escrow)
Child Care; $2000
Groceries; $1500 (I know this is gross and it might be more. Currently trying to first nail down and track with WNAB. Between different stores, cards, farmers markets, tracking is weak here. Food quality/health is a high value to our family but I know that we can do much better than this and most of this is straight sloppiness.
Eating out; $600 (Again, Face Punch!) Date night out about 3x per month and my wife buys lunch 2-3 days per week.
Wife Student Loans; $276 (2.25% int)
Car (GMC Acadia); $262 (2.6%)
Gas; $300
Electricity; $160
Heating (Gas); $200
Phone; $152
Car Insurance; $136
Clothing; $100 (Mostly Kids)
Personal Care; $100
Continuing Education; $130(One big conference per year and books, certs, ect)
Travel/Vacation; $350
College Funds; $135
Personal Care (Wifes Hair mostly); $100
Child Programs/Sports; $50
Roth IRA’s; $912 (Max out both)
Furniture; $125 (0% int)
Charity; $25
Life Insurance ; $45
Total Expenses; $11,924/month
Assets:
Primary Residence; worth about $375k, outstanding mortgage of $330k, so about $45k in home equity
Rental Property; worth about $190, outstanding mortgage of $145, so about $45k in home equity
My Roth Ira; 12k
Wife’s Roth Ira; 13k
Work 401k; 20.5k
College Funds; 5k
Cars/Misc; 15k
Savings Account; 5k
Assets; $160.5k (Equity in houses included)
Liabilities:
Mortgage - previously mentioned, balance of $330,000, interest rate 4.25%, 27 years left, minimum payment $2,661 ($536 Principle, $1169 Int, $953 Escrow)
Mortgage rental property – balance of $145,000 interest rate 5.25% 19 years left min payment $1,548 ($397 principle, $639 int, $513 Escrow)
GMC Acadia Car Loan – Balance $12,000, interest rate 2.6%, minimum payment $263, 48 months remain
Wife’s Student Loan #1 – Balance $6050 interest rate 3.03% (variable) minimum payment $276
IRS Payment Plan- $3300 .5% monthly (Last years taxes) underpaid throughout year and had larger bill than expected due to poor planning.
Liabilities; $21,350 (House and rental not included because equity factored in to asset side of equation
Net Worth; $139,150
Specific Question(s):
1) What would it take to become financially independent in 7 years? I am not asking if it is possible, or realistic. I am asking in the manner in that if someone told me that I would be shot dead seven years from today if we were not financially independent. What changes would need to take place in order to live in this situation. What would we need to get our expenses down to and what type of income would we need to earn? In other words “what price are we going to have to pay to make this happen”?
2) What are the first steps that we should take to gain control over our situation that will give us the most bang for our buck?
Please bear with me here as I know that I might not appear serious to many of the readers of this post. I promise that I am, and that I will prove this to anyone that puts time in to read and respond to my post.