Author Topic: Reader Case Study - New budget, advice needed.  (Read 975 times)

crredding

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Reader Case Study - New budget, advice needed.
« on: May 28, 2018, 11:32:55 AM »
Hi everyone!

I recently finished school, started a new job, and am redoing our family budget. As our income has changed dramatically, I'm trying to rework our budget and see if we can get to FI as quickly as possible.

It's difficult to get life advice in this area as most people aren't fi-oriented. But you guys are great and any advice would be massively appreciated!

Life Situation: 30 years old. Married filing jointly. Wife stays at home with our three kids (6, 4, 10 months). We own our home north of Seattle, WA (holy real estate market!). Just got a new job!

Gross Monthly Salary/Wages: $10,417
Net after tax Salary/Wages: $9,550

Expenses:
Bills:
  • Mortgage int. and escrow:            1,161
  • Dental insurance for wife:                 35
  • Health insurance for kids:                 60
  • Water/Sewer:                                  89
  • Gas heating:                                    54
  • Auto insurance ('07 van, '04 sedan):  85
  • Mobile phone:                                  55
  • Life insurance:                                 38
  • Internet:                                         40
  • Garbage:                                         18
  • Electric:                                           70
Total Bills:                                  1,705

Other expenses:
  • Groceries:                                      575
  • Clothing:                                          75
  • Restaurants / Entertainment:          100
  • Homeschool stuff for kids:                 75
  • Taekwondo for kids:                        135
  • Gym membership for wife:                 60
  • Gasoline:                                       160
  • Other stuff (house/haircuts/etc):      425
Total Other Expenses:              1,605

Total Expenses:                             3,310

Various giving/donations             955

Remaining:                                          5,285

Investing:
  • House principal:                                362
  • Roth IRA / 401(k) / Indiv. / etc.      4,923

------------
Assets:
  • Home:                                      423,000
  • Retirement accounts (idx funds):  60,000
  • Cash:                                        Minimal

Debts:
  • Home Mortgage (30yr fixed):     242,000
  • HELOC:                                      30,000

Net worth:                               211,000

--------
Other interesting bits:
  • We own a small chocolate company that my wife is the CEO of. It's profitable but we're hoping to donate the majority of the net income.
  • I'm assuming that we need 50k to live on in FIRE. Based on the 4% rule we'll hit that in 2026 or so. We want to eventually rent our home out as part of this and we think we could cashflow it by $1k or so at that time.
  • I live an hour commute from work each way, but am working on telecommuting about two days a week. As I'm only three weeks into the new job, this wont happen for about two more weeks

Any criticism/advice/feedback would be great!

zolotiyeruki

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Re: Reader Case Study - New budget, advice needed.
« Reply #1 on: June 11, 2018, 05:47:51 AM »
I think I know why you haven't got any responses on this:  There isn't much to say, and that's a good thing!  You seem to have all your expenses in a reasonable range, you're making a very good salary, and you're saving a large percentage of your income.

Seriously, you're investing 1.5x as much as you're investing.  You're on the right track.  Accordingly to this calculator, you'll have enough to retire on in less than 10 years.

freya

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Re: Reader Case Study - New budget, advice needed.
« Reply #2 on: June 11, 2018, 06:18:26 AM »
Looks like a nice tight ship!  However, there are a few budget items I'm not seeing:

- Property taxes & homeowner insurance - for your mortgage balance, unless you have a crazy low interest rate, it doesn't seem likely that these are included in the mortgage interest/escrow figure.
- Home repair, car replacement etc - these are long-term but knowable expenses and should be budgeted
- Vacation spending
- 529s for kids - I assume you'd like to put them through college?
- HSA, if applicable - look into this as you're at the ideal age to take full advantage of this
- Emergency fund - with 3 kids you should definitely have one.  3 month expenses at minimum.

Good luck with your FIRE plan!