About us: I’m 38, DH is 41 and little dude is 2. We live in the suburbs of Los Angeles. DH works freelance from home and is Mr. Mom when he doesn’t have gigs and when I work. I’m the high earner in a full-time job (working swing shift) and daytime I'm Mom.
Financial background: I found MMM in 2014 when I doubled my salary. This group helped me work out a plan
https://forum.mrmoneymustache.com/ask-a-mustachian/pay-off-student-loan-interest-free-loan-or-invest/. I maxed out my 401k and both Roths yearly, saved $20k in a brokerage (with the idea of using the interest to pay off student loans), and we saved $100k for a small home addition and remodel after a bad leak. In 2016 things went off-path - my job was cut to part time while I was on maternity leave, DH lost his biggest client, and we had a baby. We managed well for over a year on my part-time income other than an emergency home repair ($13k). We borrowed from family (no interest) instead of wiping our emergency fund. I went back to work full-time a few months ago and finally have a chance to dig into our finances again.
Goal: We both still love our work and LA is the place we need to be to do it (for the time being). If I got cut to part-time again (or lost my job or got injured) we want to be in a position where DH isn’t forced into a full-time job just to pay the bills. FIRE comes later when we’re ready to leave LA. :)
I'm a total penny pincher and I know a lot of these expenses will go down just because I can better monitor our spending (which I haven't been able to do the past couple years). Like, I know diapers are in here somewhere but I couldn't tell you where and that drives me crazy. Where I really need help is the extra money and how to allocate it. I'm seeing all these numbers together for the first time and that's where I'm stuck what to do next.
Gross wages:
$11,250 monthly ($135k) +
$1,000/month side hustle
DH:
Varies $25-50k. 2018 will be around $30k
Deductions (monthly):
401k -
$1,100 (+ employer matches 3% of salary)
Daycare FSA:
$500Taxes:
$2,670Union dues:
$150Total incomeTake home pay:
$6,830 (around
$1700/week)
DH income and my side hustle:
~$1000-4000 depending on the month.
Current expenses paid by my paycheck (monthly) ** = more info below
Mortgage
$1445Property tax
$500Home insurance (+ earthquake)
$173Car insurance
$185Car maintenance, gas, etc
$167Utilities (gas, electric, water trash)
$269Student loan
$125Groceries
$625 (this seems high to me - I’m going to go through receipts closer)Pets
$100 (4 cats who are getting older)
Dining out and booze for home (we do have a toddler…)
$200Family Loan
$500Personal care, medical, prescriptions
$140Home maintenance and home stuff
$150Clothes, shoes
$60 (gonna look into this - it seems unnecessarily high)Gifts, charitable contributions
$25Misc Shopping
$85Travel/activities
$250 (visiting family out of state and 1 interesting vacation)
Preschool
$500 (taken out of check pre-tax)
**Babysitters
$720**House cleaners
$185(I'm not counting kids toys, clothes etc cause I buy AND sell in consignment sales)
Total (not including preschool):
$5,654Note: doesn’t include contributions to Roth, 529, additional emergency fund or saving for future necessary house projects. This is what I need help figuring out
Paid for by DH’s business income and my side hustleBusiness-related expenses:
$1,475/month. I don’t want to get too deep into this but it does include expenses like internet and cell phones. I’m using last year’s actual costs but I think we can get it down 15-25% just because we have time for oversight again.
Self employment taxes (for accounting purposes):
$100? (When he earned $40k, taxes owed after expenses were $2,500 with a deduction of $1,250)
AssetsOwn 2 cars (fully paid)
My retirement:
$136k (401k, Roth and SEP IRA)
DH retirement:
$72k (Roth and SEP IRA)
Brokerage account:
$28k529 College Fund:
$3kEmergency Fund
$10kHouse worth
$750k (house purchased 2008 at market low)
Liabilities:
Mortgage
$256k, 3.875%
Student Loans
$7,800, 1.75%
Family loan
$6k, 0%
NotesBabysitters: I hate spending this much but I’m not sure how to get around this. The going rate for a good sitter in our area (one that won’t flake or let our kid play with darts) is $20/hr. We can’t do daycare because of the hours we often need help. We don't know a lot of other parents yet (and won't know anyone well enough to leave our kid with them for a while!). A lot of these hours are covering so DH can work or I'm not stuck with 5 hours of sleep on a work day.
Cleaners: Before I get a facepunch… we’re both business owners (with clients sometimes at our house) who work opposite hours and cover childcare. I will absolutely be having my son help clean when he’s old enough to safely be around cleaning products but this is a temporary expense we’re ok with for our own sanity (and business use of home)
QuestionsI'm just seeing all this together for the first time. I’d like to build up emergency fund (maybe $5k additional), contribute to DH’s Roth, and save $5k for a house project. What's a good plan of attack?
We have the option of paying less monthly for the family loan (but I would like to get it off the books).
It’s tricky to figure out how much to save (and what to save for) when our monthly income is variable. Any suggestions?
Anything obvious I'm missing?