2020 Upate in thread! Getting closer to pulling the trigger for my health.**********************************************************************
Have edited this post (a second time) for (more) clarity because my first edit made it more confusing.
After being on the MMM boards for many years I'm finally posting a case study :)
Me:37, StarHus 38, kids: 7 and 5
Gross Family Income: $130k a year, or $10,800 a month
Net Income: approx $7,384 a month
Current Savings Retirement Savings (combined):
workplace retirement accounts: 237k
Roth IRAS: 84k
taxable investment: 13k
Total: 334kEFund: About 18k
Checking: usually about a 5k buffer
Our family plans in regards to career have been in flux for several years but my DH accepted a tenure track teaching offer a couple of months ago and now we have stability so I'm looking for help. I've been in the same, relatively high stress, but somewhat flexible work from home job for the last 13 years. StarHus plans to work until at least his 50s, but almost all professors we know end up working into their 70s (he is currently uninterested in early retirement). DH has three years until tenure and then a year of sabbatical (@ 65% pay) and then I'm pulling the plug on working.
I'm going to give a super vague overview of our budget as I am not currently looking for maximizing but more looking at where to direct money in a big picture way (but will be happy to add micro level detail if people ask about it).
Monthly expenses Fixed (we aim to keep these around 50% of our take home)
*Edited to add - this number is not barebones fixed, but includes all automated payments include to charities and extra mortgage payments.
Total: 3604.85*ETA, this number will be $2400 started in January 2020 Savings in addition to work retirement accounts(aim to keep around 25%):
Total: 1750*edited to add, this currently has 1k going to top up of efund. When efund hits desired number this rolls over to Roth funding.
Flexible (aim to keep around 25%) (this is the category where we can make cuts)
Total: 1975*edited to add - this number could be cut by at least a third if I needed to.
so grand total monthly spend: approx $7,330 I'm not looking for face punches per se, mostly because we are pretty happy with our current balance. We were too tight a few years ago.
I have four years left at my approximate current salary and then I'll quit or take a lower paid lower stress job etc.
Starting in August, StarHus gets a 10k raise and youngest child starts kinder so our fixed costs will lower by 1k a month. StarHus will also get another bump up to 68k when he gets tenure in three years (though in his 4th year he'll take a sabbatical cut).
The first year that we lived only on DH's salary, we believe we'd be living on approximately 4k a month.
SO- The Question - If you were us, where would you be putting your "extra" money for the next four years.My question is really where should I focus on putting our extra savings for the next few years? taxable account? Roth? (and then I can pull out contributions). Should we set a goal to put a certain amount aside before I quit? We aren't worried about having enough in our work accounts: in 4 years mine should be in great shape, and DH is required to put back 15% and gets a 12% match until he retires. But we might need to augment DH's pay?
We are also being responsible and planning to take care of some big expenses before I pull back:
- We are cashflowing the replacement of our furnace and AC this fall
- Will probably replace the roof summer/fall of 2020
- And are looking at replacing our other vehicle (2006 corolla) in 2021
Other confounding future stuff: Kids college in 11 and 13 years. They can attend DH's institution for free, but if they get into Top Top schools in excellent programs we would consider supporting that. Current thought is to do our best to cashflow what we can and pull from Roths (penalty free, but taxes on earnings) within reason for what we can't cashflow.
I'm basically looking for a little direction. We've talked about rental properties (but I'm not really drawn to that), or just throwing more into taxable accounts but we aren't fully committed to a path yet. If you all also tell me that I'm nuts for thinking of cutting back on work I will listen. I will also listen if you think our spending is out of control.
I am open to any and all suggestions and am thankful for folks taking the time to read.