Life Situation: Married, 33 y/o, 2 children, ages 5 and 2. Background: We never planned on having kids, and we owned a modest townhouse with great salaries. Being the beach bum that I am, we bought a beach condo at the bottom of the market in 2011. It was gross so we spent a year fixing it up with sweat equity and it became my dream property. I’m extremely attached to it but I’m starting to wonder if the responsible thing would be to let it go. We could still go to the beach, we’d just go like everyone else does- rent a place for a week or two. We bought it in Aug 2011, then found out I was pregnant in December 2011. We still planned to stay in our townhouse but a combination of factors led us to buy a single family home (I can go into those factors if it’s important to anyone). So we are in a wildly different life situation than we were when we purchased the vacation home. We did not sell our townhouse, and are instead renting it out.
While I’ve never been irresonsible with money, I also have never really gotten into the weeds before. Also we haven’t started college funds yet which is actually pretty irresponsible I will admit. Currently sending my oldest child to kindergarten in a private school- he was born 11 days after the public school cut off but is extremely bright so we are starting him early in the private school and next year he will go public and that will free up ~600 per month.
Gross Salary/Wages: 190K, plus ~20K bonus. (Me- 70K, husband the rest), 21,000 rental income
Individual amounts of each Pre-tax deductions - 401k-9% husband's income w/ 3% company match-total retirement 265K
- HSA- 2,000/yr
- health insurnace
- Traditional IRA- 2,700 a year through profit sharing.
Other Ordinary Income: None significant
Qualified Dividends & Long Term Capital Gains: I'm not really sure about this
Rental Income, Actual Expenses, and Depreciation: Rental income: 1750/month
Rental Expeses: Mortgage + HOA + Maintenance: $1360
Income - Expenses= Approx $400/month
Property is worth ~275K, have ~200K left on mortgage
Adjusted Gross Income: I'm not totally sure how to calculate this
Taxes: Yes, I pay them. Not sure what else to say about this.
Current expenses:House: Trash $27.00
House: BGE $240.00
House: Water $100.00
House: Internet $29.99
House: Groceries $550.00
House: Church $200.00
House: Home Maintenance $100.00
House: Homeowner's Insurance $96.50
House: Cell Phones $100.00
House: Mortgage $2,118.42
P&I- 1588
T&I-528
House Total $3561 :Car: EZPass $55.00
Car: Car Insurance $159.66
Car: Auto Maintenance $30.00
Car: Gas $200.00
Car Total: $445Kids: Child 2 College $300.00
Kids: Child 1 College $450.00
Kids: Breakfast with Child 1 $25.00
Kids: After Care $175.00
Kids: Clothes/Medicine/Misc Expenses $50.00
Kids: Daycare $715.00
Kids: School $457.58
Kids Total: $2,172Shopping: Saving for Xmas $30.00
Shopping: Software Subscriptions $5.00
Shopping: Gifts $20.00
Shopping: Shopping Catch-All (not kids) $300.00
Shopping Total: $355 (This is extremely variable, I hardly ever buy extra things. Not the typical female.) Just for Fun: Dining Out $50.00
Just for Fun: Netflix $10.00
Just for Fun: DirectTV $88.08
Fun Total: $148Rental: Maintenance $40.00
Rental: HOA Fees $14.16
Rental: Mortgage $1,308.43
P&I- 1,031
T&I- 257
Rental Total: $1362.59Vacation Home: Comcast $70.00
Vacation Home: Electricity $40.00
Vacation Home: Water $102.45
Vacation Home: Entertainment (golf, etc) $7.00
Vacation Home: Restaurants/Desserts $30.00
Vacation Home: Gas $8.00
Vacation Home: Maintenance $50.00
Vacation Home: Condo Fees $75.00
Vacation Home: Mortgage $1,444.26
P&I-1,155
T&I- 289
Vacation Home Total: $1826Misc: Next Home Project $30.00
Misc: Computer Replacement $15.00
Misc: Stuff I Forgot to Budget For $25.00
Misc Total: $70Expected ER expenses: Not sure what ER expenses means. Coming up we are traveling for a wedding, going on a cruise for our 10 year anniversary, doing some work on the backyard which could cost $10k. We don’t have to do the backyard work, still just thinking about it. Want to put a large chunk of money in 529s.
Assets: 3 properties above
3 cars-
one 2006, worth 3-4K (Acura)
One 2012-worth?? Worth 10K?
One 20?? Bought used. Worth ~6K
RetirementRoth IRAs- total 47K
Traditional IRA- 40K
401k-185K
Pension plan
InvestmentsIndex Funds- 18K
CashSavings- 31K ($1,300 of husband’s paycheck goes directly into savings)
Checking- 2K
Rental account-6K (first year collecting rent)
Savings accounts for the kids with a few hundred each.
No college funds yet!!! Want to start 529s with ~8,000 to start between the two
Liabilities: Mortgage 1 (Residence) Maturity date Oct 2046
Balance 361,646, 3.25%
Payment $2,118.42
P&I- 1588
T&I-528
Mortgage 2 (Rental) Maturity date?? Couldn’t find this, estimate 25 years left. We refi’d.
Balance 203,407, 4%
Payment $1,308
P&I- 1,031
T&I- 257
Mortgage 3 (Beach condo) Maturity Sept 2026
Balance- 110,022, 3.875%
Payment $1,444.26
P&I-1,155
T&I- 289
Specific Question(s): My goal: Put more money into retirement and 529 plans, then index funds with any leftover. While FIRE sounds great, I'm afraid I started too late and have too much money strapped up in properties now to recover. I haven't been putting my money in the right places.
Problem: Our monthly expenses, as laid out in the budget, total 9,941. At this rate, we cannot save fast enough. We put 1300 a month directly into savings but sometimes we need to eat into that to pay our monthly expenses. As you can see, nothing is terribly crazy in our budget. We could shave some off of groceries, TV, and save an extra few hundred a month I guess, but I think we need more than that.
Question: What would you do? Sell your beach place even though you’re really attached to it? Would you sell your rental property instead? Would you sell BOTH?? We spend 3K a month between the two of them. Would you keep yoru rental property and then sell it before capital gains kicks in? I think I have another 2 years before that happens. (We have only been renting it for a year, and it’s 2 out of the last 5 years).
Thank you in advance. Please be gentle, I am a beginner, but I do want any and all constructive criticism.