Author Topic: single mom in high cost area  (Read 1015 times)

mommad

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single mom in high cost area
« on: December 28, 2017, 10:16:04 AM »
Hi
I've been dreaming of  Fire at around the age of 50.  I'm currently 45 year old happily single mom. I live in a duplex I own(with lots of help from the bank) in san francisco.  I  have 1 child age 3  that I'd like to help out with college expenses.  I have an HMO through my job and I don't think I qualify for an HSA.  I don't want to move as I love SF and any place that I'd love as much would also be expensive

Income
1. w2 net 12500 per month after taxes, insurance, deductions
                        deductions:  includes maxed 401k 18500 a year  match is 100% of contribution but vesting won't happen for another 5 years so              I don't  count match,
            5,000 in dependent care fsa I currently pay 1700 per month for preschool.  Likely will go down to 300 a month when my daughter starts      public school
            250 in medical care fsa

2. rental income  2500 per month

3. I'll have a pension 1300/month at age 60 or 200,000 to roll in ira,  I anticipate i'll get max social security at 67

expenses
1    Housing                           4270
         Mortgage                      2750/month  585,000 @ 3.825   refinanced last year with 29 years left
         property taxes               8200 per year paid twice a year
         insurance                      1400 a year including flood insurance we live a block from the beach
         home repair                  450/month   we live in a 110 year old house
         utilities                             245   ( cricket 50, internet 30, recology 200/3 months, pge 75 avg gas/electricity, water 25)
         amazon prime/netflix       25/mon  i still get dvds delivered a few x a month
2.    auto       275/mo       Honda civic 2014  I own outright
         gas                               90/month  I work 5 miles from my house but I have to drop off my daughter so public transit/biking tough + hills kill like this will go down to 20 a month is retirement
         insurance                       1200 a year
         repair car                       600 a year  I still go to dealer for oil changes
         misc                               35 parking tickets, parking meters, etc, public transit
3.  other expenses        3153
         groceries                380    we eat organic but I could cut back a lot
         eating out              120    My fav restaurant is chipotle despite food poisoning risk but we love thai, burmese food but this can be cut
         entertainment         10    we're a library kinda family
         travel/vacations      250   usually 1 cruise a year with family + 1 trip in december to see family members
         gym                       88
         donations               500 
         kids activities         100   ( piano, dance, swim)  kids are expensive!!! our gym is ymca so all kids activities are discounted
         clothing/misc         5    we use second hand places, consignment to keep this down
         child care          1700 I anticipate going down to 300 when she starts regularly elementary. Ill likely keep her in an after school program as they tend to be where most of the enrichment activities happen in sfusd.  it will also go down another 500 a month in 9/18 when she qualifies for preschool for all grant.
total current expenses 7698.  In retirement I'm anticipating  6795/mo retirement need (-1400 delta childcare,-70 delta gas,-400 delta home repair +health insurance(350) and +taxes(10%).    My rental is rent controlled so unless my tenant moves out I'm at the rate of inflation in terms of income growth.   So I figure 52550 a year after rental income is what i'll need from my investments to cover my expenses.

Liabilities
         Mortgage  579000 @ 3.825
         403b loan   23000  @ 4.25 that i used for down payment of home.  one of my financial goals this year is to pay this off. 
         credit cards  0.   I make about 30-50 a month on cash back from credit cards and charge everything and pay by end of month

Assets
          401k current job          16k +18.5k a year until fire
          403b old job/side job    197k ending 2018 + I'll add 23 k for 403b loan repayment this year
          457   old job/side job    49k ending 2018
          dcp   old job/side job    52k  ending 2018
          roth ira                        101k
          saving /checking             10k my goal around 36k  which I will complete in 2018
          investment account       15K + I'll add 3k a month in 2018 barring any unexpected expenses.
          529                              31K + 500/month until fire
          rollover ira                    49k

total 489k not including 529

Home Equity             1,200,000 million value -  579,000 mortgage=621000
we live in lower half of duplex and rent upper half.  I track our expenses on  mint.  So far we have so much depreciation on our duplex that I haven't owed taxes on income i draw from it nor will I until another 10 years per my accountant.

Home repair will likely go down to 50-100 per month.  I'm planning on replacing hvac and roof as well as rewiring house prior to FIRE(lol freudian).  I'll likely get rewiring and HVAC done this year.  roof is in fair shape its just old (35+years)- no leaks.  roof inspector earlier this year suggested I just ride it out until i notice a leak.  I have a 20k line of credit at my credit union just in case I need it for major repairs at 7.75% but there is no fee to maintain credit line.




TexasRunner

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Re: single mom in high cost area
« Reply #1 on: December 28, 2017, 12:16:03 PM »
Hi
I've been dreaming of  Fire at around the age of 50.  I'm currently 45 year old happily single mom. I live in a duplex I own(with lots of help from the bank) in san francisco. 

That quite the goal.  Nice.  :)

Income
1. w2 net 12500 per month after taxes, insurance, deductions
                        deductions:  includes maxed 401k 18500 a year  match is 100% of contribution but vesting won't happen for another 5 years so              I don't  count match,
            5,000 in dependent care fsa I currently pay 1700 per month for preschool.  Likely will go down to 300 a month when my daughter starts      public school
            250 in medical care fsa

2. rental income  2500 per month

3. I'll have a pension 1300/month at age 60 or 200,000 to roll in ira,  I anticipate i'll get max social security at 67

Your income is EXTREMELY solid, including that duplex/ownership.  That was a good move and should add some mobility in FIRE.  (Image a 5000$ a month steady income, banking on 90% occupancy since its bay area...  You might already be FIRE'd)



expenses
1    Housing                           4270
         Mortgage                      2750/month  585,000 @ 3.825   refinanced last year with 29 years left


Thats a great rate.  I would reccomend holding it and going taxable BEFORE paying any extra...  In other words, don't pay early (In My Opinion).  See below.

... Don't pay off the mortgage calc (click above to go there)


normal...
normal...
normal...  (we'll excuse the entertainment since you have high income + decent moneymaking strategies with duplex... but it really belongs under "entertainment")
         amazon prime/netflix       25/mon  i still get dvds delivered a few x a month
...
2.    auto       275/mo       Honda civic 2014  I own outright
         gas                               90/month  I work 5 miles from my house but I have to drop off my daughter so public transit/biking tough + hills kill like this will go down to 20 a month is retirement

HOLY GUACAMOLE BATMAN!!!!   WHAT ARE YOU SPENDING 275 A MONTH ON WITH A PAID OFF MUSTACIAN CAR LIVING SOOOOO CLOSE TO WORK?!?!?!!?!!1!!?!!1!!

But seriously, what is this?  If you own your car outright, I'm not sure what this is going towards?  Parking?  Oil Changes?  Getting 3 details a day?  (kidding)

I'll grant you 100$ a month toward insurance...  But 90$ per month on gas in a 2014 Civic with 34 miles per gallon at $3.50 is...  900 MILES A MONTH plus Stealership oil changes!

While your income is high and this isn't a **terrible** car cost, 900 miles a month is still a ton only living 5 miles from work.  Work on that some (more for your sanity) and it'll help a little.

         insurance                       1200 a year
         repair car                       600 a year  I still go to dealer for oil changes
         misc                               35 parking tickets, parking meters, etc, public transit
3.  other expenses        3153
         groceries                380    we eat organic but I could cut back a lot

I actually like this.  As long as you are not throwing away food a home, a high grocery budget is generally considered acceptable around these parts, though if you are only feeding two, this could come down to about $240 pretty easily, and $180 with strenuous effort.  You pick your poison, but don't rely more on restaurants or prepared food in exchange for a lower grocery bill...

Speaking of which...
         eating out              120    My fav restaurant is chipotle despite food poisoning risk but we love thai, burmese food but this can be cut

Is this going out 1x month, 2x a month or more?  Does this include fast food?  Just you and the daughter?  All useful questions since this *seems* high but really might not be.

Also...  Is this accurate?  Did you use mint or YNAB? I see below that you used mint.  Across how many months have you been tracking?

         entertainment         10    we're a library kinda family
         travel/vacations      250   usually 1 cruise a year with family + 1 trip in december to see family members
         gym                       88
         donations               500 
         kids activities         100   ( piano, dance, swim)  kids are expensive!!! our gym is ymca so all kids activities are discounted
         clothing/misc         5    we use second hand places, consignment to keep this down
         child care          1700 I anticipate going down to 300 when she starts regularly elementary. Ill likely keep her in an after school program as they tend to be where most of the enrichment activities happen in sfusd.  it will also go down another 500 a month in 9/18 when she qualifies for preschool for all grant.
total current expenses 7698.  In retirement I'm anticipating  6795/mo retirement need (-1400 delta childcare,-70 delta gas,-400 delta home repair +health insurance(350) and +taxes(10%).    My rental is rent controlled so unless my tenant moves out I'm at the rate of inflation in terms of income growth.   So I figure 52550 a year after rental income is what i'll need from my investments to cover my expenses.

Liabilities
         Mortgage  579000 @ 3.825
         403b loan   23000  @ 4.25 that i used for down payment of home.  one of my financial goals this year is to pay this off. 
         credit cards  0.   I make about 30-50 a month on cash back from credit cards and charge everything and pay by end of month

Assets
          401k current job          16k +18.5k a year until fire
          403b old job/side job    197k ending 2018 + I'll add 23 k for 403b loan repayment this year
          457   old job/side job    49k ending 2018
          dcp   old job/side job    52k  ending 2018
          roth ira                        101k
          saving /checking             10k my goal around 36k  which I will complete in 2018
          investment account       15K + I'll add 3k a month in 2018 barring any unexpected expenses.
          529                              31K + 500/month until fire
          rollover ira                    49k

total 489k not including 529

Home Equity             1,200,000 million value -  579,000 mortgage=621000
we live in lower half of duplex and rent upper half.  I track our expenses on  mint.  So far we have so much depreciation on our duplex that I haven't owed taxes on income i draw from it nor will I until another 10 years per my accountant.

Home repair will likely go down to 50-100 per month.  I'm planning on replacing hvac and roof as well as rewiring house prior to FIRE(lol freudian).  I'll likely get rewiring and HVAC done this year.  roof is in fair shape its just old (35+years)- no leaks.  roof inspector earlier this year suggested I just ride it out until i notice a leak.  I have a 20k line of credit at my credit union just in case I need it for major repairs at 7.75% but there is no fee to maintain credit line.

All this to get down to the following:

Expenses at FIRE stage (assuming you keep the mortgage as you should and she starts elementary):

2750 a month mortgage (keep it)
685 a month property taxes
120 a month property insurance
75 a month maintaining property
245 a month utilities (this seems high)
  - (netflix/etc should be in entertainment not housing...)
275 a month car expenses (BRING THIS DOWN)
450 a month food (including eating out, so keep it to 2x a month)
30 a month entertainment (including netflix / a-prime)
0 a month for vacations....   YOUR LIFE CAN BE A VACATION, (see travelling slowly and not consuma sucka vacations in the forum)
0 a months for the gym (unless this is the YMCA, but it seems high).  The Y should have a gym and barbells are cheap.  :)
500 a month donations (is high for a FIRE person with negligible income, reduce as you see fit at FIRE)
100 a month for the kiddo can come down...  There are more creative ways to do (some) of the activities.  You don't need a grand master pianist, give a local college kid (music major) some side cash and cut the cost in half.  Dance is just expensive, no way around that I can tell.  Swimming can be cheap...  Find a team with no membership fee that uses a local pool and pay the club fee for the pool.  Usually cheaper.  If the swimming is more than 5$ a month for coaching and 15$ a month for access, then you should check around.  Kids are often an excuse to be a consuma sucka.  Something to consider...
0 a month childcare.  She starts school and you no longer work.  maybe 20$/40$ a month for a babysitter if required.

All of that totals 5230$ a month or 62760 a year...

Assuming the rental is filled 11/12 months a year, that comes down by 27500 (assuming the rental is gross profit and you are including the rental costs in your personal figures).  New annual total = 35260 (and that includes a 1/month buffer plus extra spending that you could remove)

You need a stash of $881,500 excluding equity (though that is another safety-margin for the what-ifs)

You have $489,000 invested.

You are $392,500 away from FIRE with the expenses outlaid above.



Honestly... You are making 150k A FRIGGIN YEAR (Talk about a fire-hose of money!)  You shouldn't be aiming for age 50, you should be aiming for end of 2018 to mid 2019!

If your daughter is 3 now, that 31k (which will be increased by 7500 by FIRE date in 15 months) will be worth $110,008.49 at age 18.  Not to mention, if you just work 1 EXTRA MONTH at 12500, then it would be worth 145,725.54 at age 18.  She is taken care of already (or darn near close to it!)  Get the 529 to 50k and let it ride. 

You can Pre-fire now if you wanted too, but it risks not turning that fire-hose of cash back on so I wouldn't recommend it, but you can definitely FIRE before school even begins.  And if you want to work past that, or build a FIRE plan that involves gradually stepping down and making less money, by the time you're 70 you should have over 2.5MM digits in the bank.  If you work for 5 more years, you would have over 10MM in the bank....  Surprise, you are already rich and can FIRE really REALLY soon if its a priority for you.

It would appear you have avoided the most hair-on-fire cringe-worth mistakes of high volumns of high interest dept.  Thank your former self, because thats largely why you are where you are (unless you dug out of that situation, in which case double kuddos to you).
« Last Edit: December 28, 2017, 12:17:53 PM by TexasRunner »
"The mathematical formula for the number of motorcycles you need is   x+1, where x is the number of motorcycles you currently have."

TexasRunner

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Re: single mom in high cost area
« Reply #2 on: December 28, 2017, 12:20:57 PM »
By the way.......   You are already FIRE'd if you move out (even more so to even a slightly lower COL area) and rent out both spaces.  You could travel the world.  You could live almost anywhere.  Ponder that before you dismiss it outright.  Many people have FIRE'd on a lot less even with WAY lower income through geographical arbitrage and rentals... 
"The mathematical formula for the number of motorcycles you need is   x+1, where x is the number of motorcycles you currently have."

mommad

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Re: single mom in high cost area
« Reply #3 on: December 30, 2017, 08:53:42 AM »
Excellent advice.  fyi fuel economy is relatively low in san francisco likely because of hills and cold damp weather  I get around 28 mpg but I have to go along a climbing cliff on highway 1 for part of my commute (very beautiful really but hard on mpg).  I could probably get twice a year old changes for  35 a pop and just get major services at dealership.   I drive around 8-9 k a year.  I use to bike and everywhere in the city but its pretty dangerous.    My family lives in tx which is a very lcol state but quality of life for me would be terrible( shudder strip malls).  I actually like my job but its very stressful and my self care suffers when I'm on it.  travel would be fun Its just finding  the courage to do it especially with a little one.  There are post in my field in australia and new zealand which seem amazing.

ShoulderThingThatGoesUp

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Re: single mom in high cost area
« Reply #4 on: December 30, 2017, 09:23:48 AM »
TX isn't all strip malls. Dallas, Houston, and Austin all have nice walkable spots.

Dee18

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Re: single mom in high cost area
« Reply #5 on: December 30, 2017, 04:50:34 PM »
When I found a good mechanic to do any needed maintenance on my car I saved a lot.  My dealership not only had higher prices for every kind of maintenance, they falsely said things needed fixing that were fine.  I know not all dealerships are that bad, but I suspect all charge premium prices.  I found my mechanic on the cartalk website.  When he retired I found a new one by asking coworkers.

TexasRunner

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Re: single mom in high cost area
« Reply #6 on: December 31, 2017, 08:43:41 PM »
Excellent advice.  fyi fuel economy is relatively low in san francisco likely because of hills and cold damp weather  I get around 28 mpg but I have to go along a climbing cliff on highway 1 for part of my commute (very beautiful really but hard on mpg).  I could probably get twice a year old changes for  35 a pop and just get major services at dealership.

Thanks.  Well, overall thats not that bad.  Not great, but not bad.  It appears you have a gameplan for reducing the highest cost items (eg house maintenance, etc) and I still don't change my advice.  You can FIRE in 2018.  You can FIRE comfortable in 2019, and everything beyond is gravy.  Obviously you have kept spending creep at a minimum (there are a ton of case studies with 150k income and 165k spending......) so keep that up and you are on the right track.

The car maintenance and oil changes is still the easiest cut.  Ask around.  Search online for ratings.  There is almost always a great mechanic around who work independent- because they CANT STAND the dealership practices / rip-offs.  Besides, I would argue it has a better net impact on local economy, though I may be wrong.

I drive around 8-9 k a year.  I use to bike and everywhere in the city but its pretty dangerous.    My family lives in tx which is a very lcol state but quality of life for me would be terrible( shudder strip malls). 
Hey! Go easy on Texas now!!!!  (kidding).  I get what you mean.  Mustachianism can be pretty difficult in many LCOL areas.  However, without the stresses of needing a job, there are a ton of overseas LCOLs that are amazing.  Italy, Greece, some areas of New Zealand, Nicaragua....  The list goes on.  I would love to live in many of those, and many are statistically safer than many places in the US of A, all of them safer than some places.

I actually like my job but its very stressful and my self care suffers when I'm on it.  travel would be fun Its just finding  the courage to do it especially with a little one.  There are post in my field in australia and new zealand which seem amazing.

I get that.  Single mom with a kid makes an unfortunate target...  But when she is 6 or 7, much more realistic and she can learn from the travels.  There are several on this forum who ahave / are doing this sort of thing with kids.  If you're interested, I can dig them up for PM.  Another big one is working in another country while your rentals earn US dollars.  This is a big one.  If you enjoy the work, I could image double or triple FIRE that way (as in a 2% or 1.33% withdraw rate due to savings rate and income, these are the people that die and leave their kids with 50MM + in inheritance...)

Either way, glad to help.
"The mathematical formula for the number of motorcycles you need is   x+1, where x is the number of motorcycles you currently have."

Blackeagle

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Re: single mom in high cost area
« Reply #7 on: December 31, 2017, 08:59:18 PM »
I actually like my job but its very stressful and my self care suffers when I'm on it.

It depends exactly what the source of your job-related stress is, but the knowledge that you could FIRE right now if you wanted to may be helpful in managing that stress.  One of the lessons that I've taken from the Epic FU money stories thread is that the negative aspects of a job you otherwise like can be a lot more bearable when you realize that you're there because you choose to be, not because you have to be.