This is going to be long, but I tried to include any and all relevant information.
(tl;dr: husband is in a band for a living, and is 12 years older than me. No debt aside from small-ish mortgage, but almost no retirement and zero investments. Huge tax burden. Financial literacy is in the early stages. I’d say that we’re in about third grade.)
Our special snowflake situation:
My husband is 49 years old, owns a recording studio, but also tours with two bands (which is our main source of income). Right now he’s earning well, but the shows could dry up at any time, at which point he’d go back to earning about $45,000/year from running the studio. He’s only been at this higher income for the past 2.5 years. Right now we set aside 30% of all that he makes for taxes. Last year we owed the IRS and state more than my annual take home pay. Shoot me.
I’m 37, have my Masters degree in social work, and work 30 hours a week as a researcher at a state university. It does not pay well, but the benefits provide our family with much-needed health care benefits. My hours are likely to get cut down to 20/week fairly soon. I am still eligible for benefits at 20 hours, but I will have to pay a larger percentage of them (which means that my income will go down further than just from lack of hours).
I’m developing a side hustle with a friend, but have next to no idea if it will earn income.
Over the past three years, we’ve paid off over $65,000 in debt, saved up an emergency fund that would cover 12 months of living expenses, and started Mr. N’s retirement account. We also bought my car brand spankin’ new (I know, facepunch), but paid cash. We keep cars forever and run them into the ground. Oh, and paid taxes. Lots and lots and lots of taxes.
Prior to this time, we were really struggling week to week. We lived below the poverty level so that our daughter would qualify for state Medicaid, which was desperately needed to save her life. We did this for six or seven years, and it was brutal. (Just to explain a bit of background and why we’re so fucked in so many areas.)
Places that we hemorrhage money that aren’t up for reduction:
Our kids are 12 and nine years old, and go to a small, hippie, private school. Total tuition is $20,000 a year. It only goes through 8th grade, so our daughter will be there for 2.5 more years, and our son 5.5 more years. They’ll both go to a public high school. (Right now we have exactly $0 saved up for college. Ack.)
I grew up in Australia, and aside from my parents and brother, my entire family still lives there. We fly over every other Christmas and spend a month with family. We start saving for the next trip pretty much as soon as we get home from the last one. I’m guessing that these trips cost about $13,000-15,000 each.
Places in which we’re pretty tight:
We don’t shop for fun, we research most purchases to death, Mr. N and I are both fine with wearing Levis and free band t-shirts until they rot off our body, he’s bald and doesn’t require haircuts, I only get them once every five months, and our friend cuts the kids’ hair for free. We rarely drink, and Mr. N brings home tons of booze left over from their tour rider. We don’t have expensive hobbies (unless you count going to Australia every other year). The mister gets his guitars, amps, strings, and picks free from sponsors. Oh, and free shoes from sponsors. All four of us get those. (And it’s fine for me to go to work looking like a teenage boy, so I don’t spend money on fancy work clothes.)
Our house is solid, though extremely dated, and has no pressing need for repairs. But goddamn, one day I’d love to replace the bright yellow fake marble counters in the bathroom. I’m not going to lie, we have some ugly ass stuff up in here (circa 1967).
Places in which we deserve facepunching, or at least a little slap and tickle:
We blow through way too much money on food, both in groceries and in take out. We are total assholes about this, and know it.
Our utility bills can be reduced greatly. Working on this now.
Income (it’s impossible to provide a monthly income, as dh’s varies by thousands each month. I can’t even average out years for you, as that changes drastically too):
This year should be around $150,000 combined. Previous years have been less.
Current monthly expenses (we are financial infants, so we do quite a bit of monthly expenses a la Dave Ramsey’s cash envelopes. Don’t hate):
Mortgage $1048.99
Cable/Internet $200? We just upped the service, because Mr. N was struggling to get the mixing and mastering projects uploaded. He works from home much of the time when not on tour, so much of this is a business expense
Phone $110 – Mr. N's cell phone, which he uses almost exclusively to run his business
Utilities $400 – water, trash, electric, and gas
Groceries $500-600
Entertainment/dining out - $150
Medication $100 – daughter’s lung disease requires significant meds
Household $80 - light bulbs, toilet paper
Car maintenance and tags $40
Gifts $20
Christmas $45
Assets:
Mr. N retirement $29,000 - SEP IRA, starting to do 15% of all income
N retirement $12,500
Cash $19,000
Credit union savings $75,000 - this includes our tax stash, upcoming tuition stash, savings for travel, and 12 months living expenses
Cars $24,000?
Guitars/studio equipment – don’t know, still waiting for my husband to total this up, but likely between $50,000-75,000
Jewelry $6,500
House equity $95,000 – conservative estimate
Debts/Liabilities:
House $67,000 at 7.5% (our credit was TERRIBLE, and this was the best that we could do. It’s still dreadful, despite working on it and paying everything on time, so refinancing isn’t an option. We’re just paying it off ASAP, hopefully within 1.5 years)
Net worth: around $311,000
Specific questions:
We clearly have dreadful credit, which causes a 7.5% interest rate on our mortgage. Though we don't have a debt emergency, I feel like we have a mortgage emergency (followed by a retirement emergency, an investing emergency, and a kids' college emergency). Are we right to focus our attention on paying off the last $67,000 of mortgage?
Husband is almost 12 years older than me. I would like to retire by about 45 (just over seven years from now), if it’s at all possible. Husband will likely never retire, as he has the greatest life ever. I’m struggling to figure out where to stash our money given the age difference, possibility of his main source of income slowing down or stopping entirely, etc.
We have not invested at all yet. I've been reading and researching, but am having a hard time figuring out what would be best for us. The age differences and unpredictability of income throws me off, and the whole thing just feels so damn overwhelming. I know that we need to just start somewhere, but where?
I know that we can be doing better at protecting ourselves from tax liability. Right now we write off the normal things associated with being self-employed, and stash bits of money in his SEP IRA. I’d like to drastically reduce how much we send off to the IRS and state each year. Any ideas on where to start?
My apologies that this is so long. If you read the whole thing, you're a total champion. I promise that future posts will be much more concise.
Any recommendations, facepunches, hand-holding, mocking, or advice is very much appreciated.
(Edited to remove some identifying details)