Hi Folks,
Long time lurker.
LIFE SITUATION:
My wife (38) and I (40) have a had a pretty rocky financial journey to this point, culminating in a bankruptcy in April of 2016. I’ll get to that in a bit. Anyway, I got a late start to my career due to a dead-end job after undergraduate that led to pursuing a lengthy PhD. The upshot is that my career (academia) didn’t get going until I was 32 years old. We have 4 children and file a joint return.
Kids are 14, 11, 8, & 6. They eat a lot!!!
GROSS SALARY/WAGES
Me: I will gross around $88,ooo in 2018 ($80,799 in 2017). I am a professor and teach as many overloads (classes on top of my regular load) as I can. I get 0.875% of my base salary ($68,266) for each additional class, which works out to about $6,000 per class. Overloads are not an entirely reliable resource, however, as sometimes courses do not make (that is, not enough students enroll, and the course is cancelled). This explains the variation between last year’s income and what I expect this year. It is also worth noting that I tend to take home less money because I am on a 9-month contract. My income during the summer comes exclusively from teaching summer school courses.
My wife: She homeschools our kids but recently started a side hustle that brings home about $700 per month (except in June, July, and August). All told she will have earned roughly $6000 in 2018. This number could definitely go up, especially if she decides to take on a couple of students—an idea we’ve been playing around with. Anyway…
Total: $94,000
Monthly take-home pay averaged: $6400
PRE-TAX DEDUCTIONS
Retirement account: 9% contribution with matching 9% from employer. Currently this account has $178,000.
Insurance: $228 (Kids on Medicaid; wife is on a religious cost-sharing program included in monthly expenses below)
Delta Dental: $19
ADJUSTED GROSS INCOME
(2017): $79,394 I would guess this would be closer to 86K in 2018.
TAXES
Fed, $360 per month
State, $280 per month
Medicare, $130 per month
SS: $540 permonty
Rough total $1,300 per month.
MONTHLY EXPENSES
PAYEE AMOUNT
Gasoline $350.00
Charity $300.00
Medicine/supplements $150.00
Savings $500.00
Misc $600.00
Groceries $1,050.00
Alcohol $220.00
Medishare $253.20
Snapbox $99.00
Kindle Unlimited $10.69
Wild & Free $19.00
Netflix $11.76
Care Credit $35.00
C-Spire $137.76
Progressive (cars) $103.50
Freetime $7.48
Credit Card $90.00
Rent $1,183.65
ATT $75.00
Sparkle Stories $15.00
Audible $22.95
Netflix $10.69
Utility company $310.00
Student loan 1 $154.82
Student loan 2 $261.05
Camper Insurance $11.05
Ruby Med. Bill $102.30
TOTAL $6,083.90
ASSETS
2 old cars (paid off)
Savings: $500
LIABILITIES
Mark’s student loan: $112,000 (per month: $274 income-based repayment.)
Sarah’s student loan: $18,000 ($158 per month) 3.375% interest rate
Credit card: $2,800 ($90 per month) 21% interest rate
Care Credit (medical credit card): $500 ($30 per month)
Medical bill for daughter: $250 (2 more payments)
Questions:
(1) I have confirmed with my student loan provider that I qualify for public-service forgiveness of my student loans after 10 years of repayment. (I have 8 years to go). My intuition is that it doesn’t make sense to dump extra money into paying this thing off if it is going away in 10 years anyway. Am I seeing this the right way? On the other hand, my wife’s loan is not eligible for forgiveness. Should I start dumping money into it?
(2) Based on my income, is FI before 50 even a possibility? I feel like every time we get a little extra money something breaks, needs replacing, gets sick, etc. In other words, I feel like I’m constantly REACTING to calamity. We just can’t get the ball rolling…
(3) As noted above, we went through a bankruptcy in April of 2016. We are trying to repair our credit so we can purchase the house we are currently renting for 1150 per month. Chapter 7 requires a minimum of two years to pass before one can purchase a house. Anyway, at a 4.9 % interest rate our monthly payment would be around $950 per month. Good idea?