I've come up with 4 scenarios for our 10 year future, based largely on your suggestions... I've calculated each one to account for changes in income and expenses, assuming all savings go into a Roth IRA with an average of 7% Rate of Return over a 10 year span.
#1: Don't change a thing = very depressing financial future
#2: I add 2 days of work a week to my schedule and we move into an apartment for $700/mth (including heat but not electric) AND I qualify for medicaid =
$375/mth savings#3: I add 2 days of work a week, I qualify for Medicaid, we buy a yurt and everything required for living that we don't already own (wood stove, composting toilet, refrigerator, water system, electric hookup) for $15.5K =
$925/mth savings#4: I add 2 days of work a week, I DON'T qualify for Medicaid, we buy a yurt and everything required for living that we don't already own for $15.5K =
$752/mth savingsScenario 4 feels like the most likely winner and it breaks down like this:
assuming inheritance comes in ($49K into a beneficiary IRA + 15.5K untaxed), same Medishare for my health plan, work at least 2 days more a week, buy yurt and property setup for $15.5K.
Income: $2254
Expense: $1502 extra gas b/c it's further from work + yurt insurance – rent – internet
Savings: + $752
In 10 years (age 35):
Inherited IRA: $96K
Other IRA: $133.3K
Sitting in bank: $4K
NET WORTH: $233.3KIn 20 years (age 45):
TOTAL WEALTH: $585.4K
MY GOAL: I want to take it up a notch from there and find a way to consistently save $1K/mth to put into our IRA. We live pretty frugally already so I think the solution is simply to muster up and work more for a steady income while the wifey manages our shop. Anyway, that's our basic plan for now. Perhaps the shop will continue to outperform itself year after year to add to our savings... Maybe not. But the idea of "retiring" at age 35 when my son is only 10 years old... I'd say it's worth the additional "daily grind" over the next 10 years.
I could use an answer to this question though:
AMERICAN FUNDS OR VANGUARD??? Dave Ramsy endorses American Funds, MMM encourages Vanguard... Can someone who understands investments help me compare the two?
Thanks MDM for this hint:
1. From a quick look at their web site it appears American Funds will charge you ~5.75% just for starters, then ~0.75% every year thereafter. Compared with, say, Vanguard who will charge you 0% for starters, then ~0.15% every year thereafter. What do you think?