My husband and I live in an NYC suburb with our 8 month old and I'm going to be SAHM for the time being. We'd like to make the journey to FI sooner than later, but he doesn't plan on retiring early, in the sense that he might just try to go out on his own in his career if we were FI versus working at his current job as an associate at a big law firm - which he actually likes to do and is getting great experience in a very niche area doing. So the question for the case study is, how long to FI if we assume that there's going to be a continued income stream (albeit lower) and is there anywhere we can trim the budget?
Assets:
Equity in townhouse of $125K - $415K left on mortgage at 3.625% (15 year mortgage)
$85K in Vanguard taxable brokerage account
$22K in wife Roth IRA
$31K in wife 401K
$50K in husband 401K
$55K in cash (need to move this, we just don't want to sink it all into the Vanguard acct in one day so we're moving a few grand each week on autopilot)
Debts:
$415K mortgage at 3.625% for 15 years
Pre-Tax Income:
Annual 190000
Monthly 15,833.33
I'm a SAHM as of now but planning to try and pick up work from home (transferring my law firm skills to small-town estate planning or real estate contracts) - I might be able to bring in an extra $1k/month with time available but there's a lot of competition for this type of legal work so I could probably charge a flat rate for a will package/closing contract and have 1-2 clients per month.
Pre Tax Expenses:
H's 401k 1500
Spousal IRA 500
Health Insurance 900 - ouch, but it's H's employer plan and we don't qualify for ACA since he has one
Property Tax 400
Federal Tax 1894.02
State Tax 1021.25
Social Security 612.25
Medicare 229.58
Post tax income - 9,176.23/month
Post tax expenses:
Mortgage P&I 3450 (I know interest is deductible but that math is tough)
Home Improvement/Furniture 200
Home Insurance 70
HOA Fees (Condo association) 535
Life Insurance 50
Metro North Pass 300
Subway Pass 120
Car insurance 70
Gas + Electric 200
Internet 45
Amazon Prime 9
Netflix 10
NY Times 31
2 Cell Phones 55
Grocery 600
Medical OOP 200
Baby - General 100 (this includes interest-free family loan for expenses incurred while baby was in NICU)
Disposable Diapers 60
Stroller Strides 80
Yoga class or running race fee 20
Clothing 50
Laundry 10
Dry Cleaning 20
Vitamins 15
Toiletries 20
Wedding travel/gifts 100 (averaged for a year, 6 weddings this summer)
Restaurants 125
Entertainment 25
Vacation 100 (also averaged for a year, 2 vacations for the year planned)
Total spending 7220
At this rate we're saving $2k/month, roughly. We do most of our grocery shopping at Costco and buy mostly whole foods (chicken breasts frozen in bulk, 5 lb bag of spinach, lots of eggs, etc) although splurge on a few specialty items. We go out to eat 1-2x a month either for a date night or with another local family, now that it's summer that $ can go toward a cookout on the beach instead. The monthly spending on weddings is averaged, this year 6 weddings, we had 5 last year, probably at least 2-3 next year since we're mid-20s, and between gas to drive there (we forgo flying weddings because of the baby) and the gift of 100-150 for each couple it does add up. We don't feel comfortable giving less since most of the couples came to our wedding two years ago and generously gave us similar gifts.
Medical OOP costs are conservatively estimated really high, usually it's more like 50-75 for copays each month, but we had a NICU baby and a lot of out-of-network bills as a result last year so I'm trying to be cautious in the event we have another kid and that happens again.
We have one old car (2003 Honda) that at some point we will have to replace. Husband bikes to the train for his commute by train/subway. The cost of the train pass monthly is what it is in our area, there's no cheaper train or anything like that.
Some might consider the $100/month for fitness and activities excessive but mama needs to get out of the house with baby, and Stroller Strides has been a godsend for meeting other new moms and getting in some exercise. Otherwise we do free library activities and take a lot of walks on our own!
Our PITI is about $4400/month, so spending aside from that is about $2800/month.
So...how long to FI? Where can we make some changes?