What more do I need to do/should I do?

[s0198362]

Firstly, I know I am in a very fortunate position right now financially.  There are people out there (and on this forum) in vastly different and difficult circumstances.  So this is not a sob story, just my personal situation that I am looking for guidance with.

Topic Title: What more should I do/do I need to do?

Life Situation: Married filing jointly (both late 30’s), 1 dependent (1 yr).  Live in Georgia, USA.  I am an expat immigrant from the UK.  Been here 7 years, don’t expect full social security for myself, my wife should though. I am a chemist, she is an ICU nurse.

New to FIRE and only just took the plunge with going for a HSA (this year).  Maxing it out and paying out of pocket for health expenses.  Refinanced mortgage (see below) to allow us to max out Roth IRAs.

Want to retire early (obviously).  Aiming for 15 years time.

Gross Salary/Wages: $170,000 + bonus but not guaranteed

Individual amounts of each Pre-tax deductions
My 401k (16%):   19,200 50:50 spilt between Roth 401K and Trad 401k
Employer match (4 %):  4,800 (trad 401k)
Employer Pension Plan (8 %):  9,600
HSA:  $7,100 incl. $1,300 employer contribution
Dependent care FSA: $5,000
Roth IRA: $6,000 each p/a
Her 401K (12%): $6,000
Employer match (4%): $2,000

Taxes: 22% marginal rate federal, 5.75% marginal rate state.

Take Home Salary/Wages: $120,000

Current expenses:
We do spend quite a bit, but that is the lifestyle we want to have (expecting abuse here…).  Obviously later on in life some expenses will go away (mortgage, roth IRA contributions etc.).  W
We make most food from scratch, but do prefer organic so spend more here (kroger is our store).  We enjoy going out for food and drinks (once per week).  After all, we should enjoy life now as well as plan for retirement.
We are contributing to a 529 plan and an UGMA for our child ($400 a month).
We save $200 every 2 weeks towards vacations and car replacement - these are known future expenses (flying back to the UK is expensive), so that is how we manage them.  They go into a 90% stock account at Betterment.
Childcare (when COVID-19 stabilizes) around $580 p/m (30 hours).

Assets:
2 x Cars (ford focus, honda CRV) - we have two different jobs.  In theory she could cycle to hers, but it is dark half the year when she goes and leaves.  She is too nervous and tired.  I could cycle and have done so when I moved here with no other means of transportation, but it is 12 miles of death trap by tractor trailers (backroads full of warehouses).

Emergency fund (with betterment at 85% Bonds):  $33,000 - this is truely for emergencies.  Replacing a car/hvac etc. is a predictable expense - it will happen!  Once we retire we won’t need an emergency fund.

Roth IRAs:     ~ $12,000 (Betterment)
Roth 401K:   ~ $97,000
Trad 401K:   ~ $152,000
Pension:   ~ $70,000
HSA:      ~ $4,000

House:      ~$240,000-$290,000 market value (we do have a mortgage)

Liabilities:
Wife’s student loans:  ~ $10,000.  Monthly payment of $175 + Employer $150 contribution.  Rate currently 0% but will go up (congress dependent) in November back to approx 3.2 %

Mortgage: ~ $220,000.  Just refinanced to 2.00% (15 year).  Previous was a 10/1 ARM at 3.25 %.  Would have been due a rate hike in 2026.  Was over paying and had aimed to pay off (rate hike dependent by 2029.  Added 5 years to that now, but can now pay minimum and put difference into Roth IRAs etc. without fear of the dreaded rate hike.  Looking at P&I of $1,433 p/m.  Taxes and insurance paid out of pocket (no escrow) around $4000 p/a (i think that is low but it is the estimate on my closing statement).

Credit cards:  Rolling credit cards, paid in full each month.  One CC with $13,000 on it for a new HVAC.  0% interest to mid 2021.  Looking to pay off in full at that point.  Will likely have regular such expenses, e,g, 2nd HVAC system, house repainting, roof repair etc. (the joy of home ownership).

Car Loan (Ford):  $2,000 at 2%


Specific Question(s):
Looking at my monthly expenses and budget numbers, we bring in approx 10K each month and do spend most of that, but some of that is savings.  I know the target is 60% savings.  Is that 60% of take home?  Can I count pre take home contributions to savings?  How far off are we?

Annual 401K and Pension totals (ourselves and employers) = $41,600
Annual HSA = $7,100
Roth IRAs = $12,000

So we are at around $60,000 p/a for retirement already, so 50% of take home.  Is that right?  Is 15 years too conservative/optimistic?  What more can we do or need to do?
With respect to expenses, my wife isn’t quite onboard with cutting down all frivolous expenses, and I don’t think that will change.

It is important psychologically for my wife to see a reasonable paycheck every two weeks, so we have not maxed out her 401K.  She works incredibly hard as a nurse with COVID patients.  I’m not going to make her paycheck be basically $600.

Thanks for any guidance.

EDIT 8/1/2020 - I've added my monthly average expenses for YTD.  Now expecting the abuse!

Car Insurance	$167.06	Includes umbrella insurance - tried shopping around, but not found one yet that brings cost down significantly (discounted with home owners coverage too).  Will be cheaper for the next 6 months
Car Payment	$427.29	Paid off on car in feb, expect 2nd car to be paid off in feb 2021
Car Repair / Licenses	$92.78
Car Replacement Fund	$171.43	A new car will be needed at somepoint.
Child Care	$527.00	Using an FSA, expect 590 per month when back to daycare post covid
Clothing	$82.16
Debt	$166.60	Student loans - currentl 0% but still paying off right now
Doctor / Dentist	$197.79	Not using HSA savings
Fuel	$45.90
Groceries	$847.18	Seems high.  Was lower before Mach, but our dining expenses were higher then
Health Insurance	$0.00
Home Insurance	$0.00	WIll be 180 p/m from september
Home Supplies	$239.90	Been uprade various home needs (electircal etc.)
Life Insurance	$154.29	Expecting a $90 average p/m for the two of us over 12 months
Medicine	$86.35	Not using HSA savings
Miscellaneous	$88.59
Mortgage / Rent	$1,898.11	Will be down to $1433 p/m
Home Maintnance	$29.28
Pet expenses	$216.65	Have pet insurance at around $33 per pay period.  Pet food around $50 p/m, pet insurance keeping other costs down
Property Tax	$287.53	half way through the year, likely $340 p/m
Other_5	$103.57	One off, I just applied for US citizenship at a cost of $725
Personal Care	$32.22
Retirement Fund	$1,428.57	Ploughed $6000 into last year's ROTH in March (perfect timing so far), and now aiming to max out 2 x  roth IRA's this year.
Taxes	$121.43
Util. Electricity	$114.01
Util. Gas	$94.07
Util. Phone(s)	$124.62	Just switched to xfinity, expect to be down to $35 p/m for two phones.  Had to pay off a financed phone
Util. Water	$81.21
Util. Alarm	$31.85	Negotiated rate down from $45 to $30 p/m in January
FInance Fees	$93.85
-	$0.00
Charity	$16.57
Cleaning	$17.85	Every now and again we need help with a cleaner.  We are exhausted
Dining	$323.34
Discretionary	$1.19
Fun / Entertainment	$56.50
Furniture / Appliances	$72.57
Gifts Given	$142.36	American tradition of gifts for everything...  We did very well out of our baby shower, can't really complain, although I think it is so wasteful culturally.
Baby Education	$400.00
Util. TV / Internet	$64.36	COmcast ($40), netflix etc.
Travel	$166.18	parking, hotels, transit etc. Mainly a week vacation coming up
Subscriptions/Dues	$33.13
HSA	$362.96	Transfer from HSA cash account to investments
Vacation Fund	$171.43	Savings for future travel
Major Home	$1,866.97	I think this needs to be ignored.  Just spent 10K + on a new HVAC system

[firestarter2018]

I wouldn't worry too much about savings rates, they vary so much depending on how you calculate them. The real question is whether you're saving enough to meet your retirement goals. There isn't much in the way of specifics about your expenses and what you expect them to be when you retire. If your timeline is truly 15 years then I think you're in good shape; the house will be paid off and you're saving well for your kid's college (maybe even a tad too much, given that Georgia has pretty decent in-state scholarship programs). But it all depends on whether you expect to spend more or less in retirement than currently.

Is the pension defined benefit? If yes, then I generally wouldn't include the balance in your net worth calculations, but rather calculate your monthly/annual estimated amount when you retire and then factor that into your post-65 expenses (along with Social Security) -- cfirecalc and the other tools can help with this.  But if it's more like a cash balance plan or individual account that you can roll over into an IRA when you separate from the company, then it feels safer to include it in your stash.

And keep working on your wife about maxing the 401k. Maxing two 401k's is supercharging your FIRE quest.  Maybe see if she's willing to increase her contribution rate each year as she gets raises? And also show the tax savings in concrete dollars, that might help too.

[bloodaxe]

It is important psychologically for my wife to see a reasonable paycheck every two weeks, so we have not maxed out her 401K.  She works incredibly hard as a nurse with COVID patients.  I’m not going to make her paycheck be basically $600.

It's a very hard job to be a nurse right now, and in general.

But this isn't a good reason not to max her 401k.  Especially since you can afford it.

If it helps, she can check her 401k balance every pay period, and see the number increase.

[ysette9]

I ran your crude scenario in cfiresim.com and made some guesses. In 15 years of saving $70k/yr, indexed to inflation, you should have around $2.25M. Assuming your spending at that point is $80k/yr (big guess on my part since you don’t specify what you think your spending will be), you have a 92% chance of portfolio success for retirement from 2035 to 2080. This assumes a default 75/25 fixed stock/bond portfolio.

If you can provide more specifics then we can give much better answers.

How long have you been making this kind of money? To me your net worth seems pretty low considering how inexpensive your housing is and how much you are bringing home together. You also have a good amount of debt outside of the mortgage so you might need to look at your cash flow and see if you need to dial back the savings to make sure you aren’t running a structural deficit.

Definitely work on getting your wife to max put her 401k. That will do so much good for your joint financial position. The size of your take-home paycheck is pretty much meaningless; I like the idea of finding something better to focus on, like how much is getting funneled into an investment account and watching that grow.

[UnleashHell]

SS: I'm assuming that you've paid in for the 7 years that you have been here? another 13 and you are at the 20 years that will near enough max it out. you can increase in with further working after that but the amounts you get in return is fairly small.
check out whats happening with your UK pension. you may be able to do a top up. probably won't get the full amount but a small payment now could see a reasonable return when you collect (if they don't keep moving the goalposts).
You will have a reduction in SS here for 50% of the UK pension you collect if you only work here for 20 years. Each year after that reduces that 50% by 5%. so your 15 more years now could mean doing 22 years into SS which in turn means the value of the UK pension reduction is down to 40%.

its not huge but for the pair of you you might see a big chunk of that 60K outgoing covered by SS in your 60's and onwards.
Check the SS website for a real estimate. (that will assume you work until SS retirement but you can roughly figure it out)

Oh and max the 401k's - that'll drop your effective tax rate.

[Freedomin5]

If you really want to calculate your savings rate, others have asked that question and received a response in the past:

https://forum.mrmoneymustache.com/case-studies/calculating-savings-rate/

https://forum.mrmoneymustache.com/ask-a-mustachian/calculating-my-savings-percentage/

I think MMM calculates it as a percentage of take-home income.

[Morning Glory]

It is important psychologically for my wife to see a reasonable paycheck every two weeks, so we have not maxed out her 401K.  She works incredibly hard as a nurse with COVID patients.  I’m not going to make her paycheck be basically $600.

It's a very hard job to be a nurse right now, and in general.

But this isn't a good reason not to max her 401k.  Especially since you can afford it.

If it helps, she can check her 401k balance every pay period, and see the number increase.

Agree. I am a nurse and I max everything out. I also really started to hate my job after covid hit (I just transferred to a different department to get out of there) so seeing those numbers go up gives me a lot more of a boost than any frivolous spending could. Since your wife still has student loans, I am assuming she hasn't been at it long enough to get burned out.

A couple of other comments: at your high income level you should be doing all traditional contributions instead of Roth. Mad fientist explains this really well.

Have you ever tracked your spending? I use Mint but there are lots of other tools out there. That is the first step in figuring out how much you will need to retire. Your housing costs are low and going out once per week is reasonable, so unless you have a lot of junk from Target/Amazon you are doing just fine.

[s0198362]

A couple of other comments: at your high income level you should be doing all traditional contributions instead of Roth. Mad fientist explains this really well.

I’ve gone back and forth on this one.  The reason I’m doing some in Roth is that I feel for early retirement I’ll need to draw on this (as I don’t have much of anything else) and it should be available, whereas the traditional 401k won’t be available till traditional retirement age.  Or am I misunderstanding something there.

[s0198362]

SS: I'm assuming that you've paid in for the 7 years that you have been here? another 13 and you are at the 20 years that will near enough max it out. you can increase in with further working after that but the amounts you get in return is fairly small.
check out whats happening with your UK pension. you may be able to do a top up. probably won't get the full amount but a small payment now could see a reasonable return when you collect (if they don't keep moving the goalposts).
You will have a reduction in SS here for 50% of the UK pension you collect if you only work here for 20 years. Each year after that reduces that 50% by 5%. so your 15 more years now could mean doing 22 years into SS which in turn means the value of the UK pension reduction is down to 40%.

its not huge but for the pair of you you might see a big chunk of that 60K outgoing covered by SS in your 60's and onwards.
Check the SS website for a real estimate. (that will assume you work until SS retirement but you can roughly figure it out)

Oh and max the 401k's - that'll drop your effective tax rate.

That info re.  SS is really helpful.  Yes, 7 years and counting of SS contributions, my wife has a whole load but not much in terms of totals contributed (early career change to nursing so only been employed full time for 5 years or so).

My UK National Insurance is likely nothing.  Last I checked I only have about 7 years of contributions as I did a post grad education and then moved to France.

French pension minimal too (3 years), so I’m just going to have both as nice to have bonuses but not count on them.

[MrsSpendyPants]

Good job keeping your house payment low!  We make a similar amount and our home was a stupid 425k which definitely hurt us.

As for savings rate, if you are counting 401k+HSA then you need to add them back into the take home pay.  So 60k/(120k+41k+7k), otherwise you get the benefit of the 401k twice.

I'll be watching this for tips since we're in a similar both.

[ysette9]

A couple of other comments: at your high income level you should be doing all traditional contributions instead of Roth. Mad fientist explains this really well.

I’ve gone back and forth on this one.  The reason I’m doing some in Roth is that I feel for early retirement I’ll need to draw on this (as I don’t have much of anything else) and it should be available, whereas the traditional 401k won’t be available till traditional retirement age.  Or am I misunderstanding something there.

Will you have anything in taxable accounts or will all of your savings be in retirement accounts? If you will have some in taxable as long as you have about 4-5 years worth of spending in taxable then you can start your Roth conversion pipeline to get access to retirement funds early.


https://www.madfientist.com/how-to-access-retirement-funds-early/

[s0198362]

Will you have anything in taxable accounts or will all of your savings be in retirement accounts? If you will have some in taxable as long as you have about 4-5 years worth of spending in taxable then you can start your Roth conversion pipeline to get access to retirement funds early.


https://www.madfientist.com/how-to-access-retirement-funds-early/

Nothing in taxable right now worth speaking of, apart from emergency fund at $33K.

[s0198362]

I wouldn't worry too much about savings rates, they vary so much depending on how you calculate them. The real question is whether you're saving enough to meet your retirement goals. There isn't much in the way of specifics about your expenses and what you expect them to be when you retire. If your timeline is truly 15 years then I think you're in good shape; the house will be paid off and you're saving well for your kid's college (maybe even a tad too much, given that Georgia has pretty decent in-state scholarship programs). But it all depends on whether you expect to spend more or less in retirement than currently.

Is the pension defined benefit? If yes, then I generally wouldn't include the balance in your net worth calculations, but rather calculate your monthly/annual estimated amount when you retire and then factor that into your post-65 expenses (along with Social Security) -- cfirecalc and the other tools can help with this.  But if it's more like a cash balance plan or individual account that you can roll over into an IRA when you separate from the company, then it feels safer to include it in your stash.

And keep working on your wife about maxing the 401k. Maxing two 401k's is supercharging your FIRE quest.  Maybe see if she's willing to increase her contribution rate each year as she gets raises? And also show the tax savings in concrete dollars, that might help too.

Thanksfirestarter2018.  Pension isn't a defined benefit, basically an individual account that I can roll into an IRA at somepoint.
Upped my wifes 401K contribution to 15% for now, will let some dust settle on various other cost savings and expenses that have occurred this summer and see where we are.

[s0198362]

It is important psychologically for my wife to see a reasonable paycheck every two weeks, so we have not maxed out her 401K.  She works incredibly hard as a nurse with COVID patients.  I’m not going to make her paycheck be basically $600.

It's a very hard job to be a nurse right now, and in general.

But this isn't a good reason not to max her 401k.  Especially since you can afford it.

If it helps, she can check her 401k balance every pay period, and see the number increase.

Will look to see if I can "pay money" into her back account on her pay day so that it looks like she isn't working for nothing as we up her 401K contributions.

[s0198362]

It is important psychologically for my wife to see a reasonable paycheck every two weeks, so we have not maxed out her 401K.  She works incredibly hard as a nurse with COVID patients.  I’m not going to make her paycheck be basically $600.

It's a very hard job to be a nurse right now, and in general.

But this isn't a good reason not to max her 401k.  Especially since you can afford it.

If it helps, she can check her 401k balance every pay period, and see the number increase.

Agree. I am a nurse and I max everything out. I also really started to hate my job after covid hit (I just transferred to a different department to get out of there) so seeing those numbers go up gives me a lot more of a boost than any frivolous spending could. Since your wife still has student loans, I am assuming she hasn't been at it long enough to get burned out.

A couple of other comments: at your high income level you should be doing all traditional contributions instead of Roth. Mad fientist explains this really well.

Have you ever tracked your spending? I use Mint but there are lots of other tools out there. That is the first step in figuring out how much you will need to retire. Your housing costs are low and going out once per week is reasonable, so unless you have a lot of junk from Target/Amazon you are doing just fine.

Just read up on SEPP on mad fientist's blog.  looks as if there will be a way to access funds in a trad 401K.  Now changed my contributions to 100% trad 401k.

I use a spreadsheet for budgets.  I really like this tool:  https://www.vertex42.com/ExcelTemplates/money-management-template.html

[s0198362]

I ran your crude scenario in cfiresim.com and made some guesses. In 15 years of saving $70k/yr, indexed to inflation, you should have around $2.25M. Assuming your spending at that point is $80k/yr (big guess on my part since you don’t specify what you think your spending will be), you have a 92% chance of portfolio success for retirement from 2035 to 2080. This assumes a default 75/25 fixed stock/bond portfolio.

If you can provide more specifics then we can give much better answers.

How long have you been making this kind of money? To me your net worth seems pretty low considering how inexpensive your housing is and how much you are bringing home together. You also have a good amount of debt outside of the mortgage so you might need to look at your cash flow and see if you need to dial back the savings to make sure you aren’t running a structural deficit.

Definitely work on getting your wife to max put her 401k. That will do so much good for your joint financial position. The size of your take-home paycheck is pretty much meaningless; I like the idea of finding something better to focus on, like how much is getting funneled into an investment account and watching that grow.

I've added some numbers above.  I've been on this salary range (6 figure) for around 4 years.  House purchased 4 years ago too. Does that explain the net worth?  My wife (girlfriend at the time) basically bought debt to the table (student loans), had just graduated (career change) and was in her first regular paying job when we moved in together.

When you say "You also have a good amount of debt outside of the mortgage" are you talking car and student loans?  interset rates are done at decent levels.  Are you suggesting save less and clear those debts?

[s0198362]

OK.  I've been thinking about this, and will at the next opportuity stop my wife contirbuting 13% to her ESPP and put that into 401k.  That way she'll be up to 28% into 401K, which will get her a lot closer to maxing that out.

[red_pill]

Your $30 alarm bill is probably a waste of money (unless it gives you more than that in insurance reduction).  Monitored alarms are there to make you feel good, but don't really do much to prevent break ins.

Also, you mentioned a few times how exhausted you and your wife are.  Why are you so tired all the time?

[Steeze]

As far as savings rate goes - if you are in the 50% ballpark then you should be good for 15 years. Main thing is to start to eliminate/lower expenses and immediately apply those expenses to retirement savings. Lower you car payment, house payment, cell phone payment, etc. - up that 401k. When everything is maxed - start that taxable account. Bonus this year? Max out that IRAs right away to keep your cash flow up. Avoid moving that found money to additional spending.

FWIW - we calculate our savings rate at the end of the year as (Total Savings Contributions)/(Gross Income - Taxes Paid)

Although my spreadsheet is coded to show Contributions/Gross Income - I aim for >50% for this figure when creating my budget.

[Morning Glory]

What is "baby education" for 400/month, and why is it separate from daycare?

What are the $93 in finance fees?

[Steeze]

....

Car Insurance	$167.06	This should come down when car paid off? No collision?
Car Payment	$427.29	Could pay this upfront with EF to free up cashflow for 401k
Car Repair / Licenses	$92.78	Is this for 2 vehicle? Isn't your car new?
Car Replacement Fund	$171.43	20k every 10 years?
Child Care	$527.00	Using an FSA, expect 590 per month  - Low, congrats!
Clothing	$82.16	Seems high? is this temporary?
Debt	$166.60	Student loans - currentl 0%  - convert to 401k / taxable when finished
Doctor / Dentist	$197.79	Not using HSA savings
Fuel	$45.90
Groceries	$847.18	This is really high! Especially when combined with eating out budget!
Health Insurance	$0.00	Nice!
Home Insurance	$0.00	WIll be 180 p/m from september
Home Supplies	$239.90	Been uprade various home needs (electircal etc.)
Life Insurance	$154.29	Expecting a $90 average p/m
Medicine	$86.35	Not using HSA savings
Miscellaneous	$88.59	What is this?
Mortgage / Rent	$1,898.11	Will be down to $1433 p/m (Great, Up that 401k!!)
Home Maintnance	$29.28
Pet expenses	$216.65	Have pet insurance at around $33 per pay period.  Pet food around $50 p/m, pet insurance keeping other costs down
Property Tax	$287.53	half way through the year, likely $340 p/m
Other_5	$103.57	One off, I just applied for US citizenship at a cost of $725
Personal Care	$32.22
Retirement Fund	$1,428.57	Savings not expense
Taxes	$121.43	What is this?
Util. Electricity	$114.01
Util. Gas	$94.07
Util. Phone(s)	$124.62	expect to be down to $35 p/m Great!
Util. Water	$81.21
Util. Alarm	$31.85	Agree this is probably unnecessary, are you in high crime area or creates other savings?
FInance Fees	$93.85	What is this?
-	$0.00
Charity	$16.57
Cleaning	$17.85	Every now and again we need help with a cleaner.  We are exhausted
Dining	$323.34	With that grocery bill this could be less! Pack your lunches!!
Discretionary	$1.19
Fun / Entertainment	$56.50
Furniture / Appliances	$72.57
Gifts Given	$142.36	Seems high!
Baby Education	$400.00	What is this?
Util. TV / Internet	$64.36	COmcast ($40), netflix etc.   Do you get much use from these subscriptions?
Travel	$166.18	parking, hotels, transit etc. Mainly a week vacation coming up
Subscriptions/Dues	$33.13	can any of these subscriptions be eliminated?
HSA	$362.96	If this is not a contribution, then not an expense or income - no net change in net worth
Vacation Fund	$171.43	How is this different from travel above?
Major Home	$1,866.97	How is this different from home maintenance above?

Overall - it looks like a few of your expenses are about to decrease which will allow you to max those retirement accounts.

The biggest area I see for you to cut back is your food bills - seems really high for 2 1/2 people. Maybe try to limit yourself to $1000 max, then try to get down to maybe $700-$800 including eating out. Plenty of people on the forums with multiple kids and $400-$600 food expenses. That is a lot of dough to be saved!!

Otherwise I could see you cut your car insurance in half, clothing budget by $10-$20, gifts budget by $40-$50, get rid of the security system - maybe that saves you another $150-$200/mo.

Overall I could see you easily cut $500-$600 out of your budget.

One thing I would recommend doing is creating a 'target budget' based on these number, expected future expenses, etc. Then see what the most you can save is. Then set your savings to maximum. Make sure to account for things like a new HVAC every 10-15 years by saving for it each month.

We keep 4 buckets of money - short term expenses (monthly) in checking - long term expenses (1-5 years) in savings - emergency fund in separate savings - all other savings in retirement accounts or taxable brokerage. Brokerage, retirement fund, emergency fund, and long term expense contributions are fixed, all money goes into checking then gets distributed to other accounts. Anything leftover stays in checking unless I reach 3 months expenses, then I sweep a month's worth into the emergency fund or brokerage.

[s0198362]

OK, I've done some thinking and changing plans.

My wife's ESPP is paid quarterly.  Currently at 13% contribution with a 10% discount at purchase date.  Usually takes about 5 working days to clear and sell, so I'll take that risk.  Will sell as soon as I can and put into a cash savings account  Next one is due the start of September, and she has almost $2000 (+ 10%) in it.  What I have done is put her 401K contribution to 25%, and will make up any shortfall to her "take home pay" with a bi weekly transfer from her ESPP sales.

I think than maximises as much as we can  Doesn't yet max out her 401K, getting closer.  Also need to hit our tax accountant over the head as they still seem to be not understanding the correct ESPP cost basis.

Will comment on our expenses soon.

THanks for all the feedback and comments.

[s0198362]

....

Car Insurance	$167.06	This should come down when car paid off? No collision?
Car Payment	$427.29	Could pay this upfront with EF to free up cashflow for 401k
Car Repair / Licenses	$92.78	Is this for 2 vehicle? Isn't your car new?
Car Replacement Fund	$171.43	20k every 10 years?
Child Care	$527.00	Using an FSA, expect 590 per month  - Low, congrats!
Clothing	$82.16	Seems high? is this temporary?
Debt	$166.60	Student loans - currentl 0%  - convert to 401k / taxable when finished
Doctor / Dentist	$197.79	Not using HSA savings
Fuel	$45.90
Groceries	$847.18	This is really high! Especially when combined with eating out budget!
Health Insurance	$0.00	Nice!
Home Insurance	$0.00	WIll be 180 p/m from september
Home Supplies	$239.90	Been uprade various home needs (electircal etc.)
Life Insurance	$154.29	Expecting a $90 average p/m
Medicine	$86.35	Not using HSA savings
Miscellaneous	$88.59	What is this?
Mortgage / Rent	$1,898.11	Will be down to $1433 p/m (Great, Up that 401k!!)
Home Maintnance	$29.28
Pet expenses	$216.65	Have pet insurance at around $33 per pay period.  Pet food around $50 p/m, pet insurance keeping other costs down
Property Tax	$287.53	half way through the year, likely $340 p/m
Other_5	$103.57	One off, I just applied for US citizenship at a cost of $725
Personal Care	$32.22
Retirement Fund	$1,428.57	Savings not expense
Taxes	$121.43	What is this?
Util. Electricity	$114.01
Util. Gas	$94.07
Util. Phone(s)	$124.62	expect to be down to $35 p/m Great!
Util. Water	$81.21
Util. Alarm	$31.85	Agree this is probably unnecessary, are you in high crime area or creates other savings?
FInance Fees	$93.85	What is this?
-	$0.00
Charity	$16.57
Cleaning	$17.85	Every now and again we need help with a cleaner.  We are exhausted
Dining	$323.34	With that grocery bill this could be less! Pack your lunches!!
Discretionary	$1.19
Fun / Entertainment	$56.50
Furniture / Appliances	$72.57
Gifts Given	$142.36	Seems high!
Baby Education	$400.00	What is this?
Util. TV / Internet	$64.36	COmcast ($40), netflix etc.   Do you get much use from these subscriptions?
Travel	$166.18	parking, hotels, transit etc. Mainly a week vacation coming up
Subscriptions/Dues	$33.13	can any of these subscriptions be eliminated?
HSA	$362.96	If this is not a contribution, then not an expense or income - no net change in net worth
Vacation Fund	$171.43	How is this different from travel above?
Major Home	$1,866.97	How is this different from home maintenance above?

Overall - it looks like a few of your expenses are about to decrease which will allow you to max those retirement accounts.

The biggest area I see for you to cut back is your food bills - seems really high for 2 1/2 people. Maybe try to limit yourself to $1000 max, then try to get down to maybe $700-$800 including eating out. Plenty of people on the forums with multiple kids and $400-$600 food expenses. That is a lot of dough to be saved!!

Otherwise I could see you cut your car insurance in half, clothing budget by $10-$20, gifts budget by $40-$50, get rid of the security system - maybe that saves you another $150-$200/mo.

Overall I could see you easily cut $500-$600 out of your budget.

One thing I would recommend doing is creating a 'target budget' based on these number, expected future expenses, etc. Then see what the most you can save is. Then set your savings to maximum. Make sure to account for things like a new HVAC every 10-15 years by saving for it each month.

We keep 4 buckets of money - short term expenses (monthly) in checking - long term expenses (1-5 years) in savings - emergency fund in separate savings - all other savings in retirement accounts or taxable brokerage. Brokerage, retirement fund, emergency fund, and long term expense contributions are fixed, all money goes into checking then gets distributed to other accounts. Anything leftover stays in checking unless I reach 3 months expenses, then I sweep a month's worth into the emergency fund or brokerage.

Thanks for looking in detail at my numbers, here are my responses.

Car Insurance  - looking elsewhere right now.  I do have umbrella insurance for my wife and I bundled in there, but it still feels high.  I think I got stung when I first moved here from the UK by a super high price, and have always "accepted it"  Will try shopping around again.  If I still want umbrella insurance, do I need to have the "max" coverage on the car?  State farm seem to think so.

Car payment/repairs.  We have a 2016 ford focus (approx 30,000 miles) ($1,500 left to pay, will be paid off in February 2021)  and a fully owned 2007 Honda CRV (approx 55,000 miles).  Typical repairs recently have been new tires (major puncture on the ford), new brakes on the Honda etc.

Car replacement fund.  Basically once my wife's Honda was paid off (earlier this year), we diverted the extra cashflow into a taxable investment account.  We will need a new (replacement) car one day, so planning to build up to pay in cash.  I have no idea how much will really be needed.

Clothing- yes it's high.  doing my best to get this lower...
Groceries. - An Aldi has just opened up near us, so we will try to get some cheaper griceries (this is total spend in Kroger basically, so includes baby stuff - although we do use cloth diapers).  Been to a Sam's club once or twice, not impressed by the selection or quality.

Taxes - I underpaid Uncle Sam last year.  That number is an average per month approx 6 months through the year, so should halve.

Alarm - included remote monitoring, I do get a discount on home insurance through it, not sure how much.  Will check.  I am locked into a contract though.

Dining - we like to support our local restaurants that make our neighborhood (increased house value).  Seems high, but that is what it is.  I probably drink too much beer there.  We do take doggy bags home and prep lunches etc.

Gifts given - One of those things.  Baby showers, birthdays, christmas.  It's expected and a cultural thing for my wife.  Such is life.  We do ern significantly more than most of her family and friends, so I'm not going to be too cheap there.

Baby education is 50/50 529 plan and an UGMA.  Intend to use UGMA to pay for summer camps and other "child benefits" that fall outside 529 restrictions.

Subscriptions/dues - Some are professional and needed (nursing licence etc.)

Tv/internet.  $40 comcast, $13 netflix, hulu/hbo when there are shows we want to watch (then cancel).  Trying to restrict that a bit, as I feel we watch too much TV, and sets a bad example to our baby.

HSA - you are right, not an expense, just a monthly transfer to investment account,

Vacation fund - putting away some money each month for an annual vacation.  Not spent it yet, and try not to (i.e. leave for capital gains relief).  Would likely have spent it this year going to the UK were it not for travel restrictions and COVID-19 concerns.

Major home - keeping the HVAC system separate.  It's such a huge "one off"  Will need to do the second system soon, and likely paint the house, but that should be it.


What we have done so far is:  Upped her 401K to 30%.  Will use ESPP (quarterly payout) to make up the shortfall.  Will look at car insurance again.  Advice needed on necessity of umbrella policy, and if you have to have "gold plated" auto policy.  WIll max out the roth IRA's for both of us this year.  her 401k may will not be, but we'll be so much closer next year.  I haves switched to 100% regular 401K rather than a 50% roth 401k.