Author Topic: Case Study: Combining finances  (Read 2064 times)


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Case Study: Combining finances
« on: July 10, 2014, 07:24:37 AM »
My fiance and I are in the process of combining our finances. I am 29 and he is 25. I have 3 kiddos from my previous marriage. I started out with Dave Ramsey in my journey to financial freedom and now that we are combining it's time to become a mustaschian :). I want to be FI asap and retire before i am 50! I have always held an emergency fund in cash but I recently drained it to completely pay off my student loans. So that's a yay! But now I feel like we need to build it back up... we have a nice surplus of cash every month now, do we really *need* cash sitting in an account earning .75%? My fiance is in school for the next two-three years but it is 100% paid by his GI bill and he gets a nice stipend monthly on top of that. My job is very secure and our only debt now is the mortgage. When my fiance graduates and gets a job we would like to move closer to his parents. Oh, and we do have to replace our roof soon, after the insurance payout it'll cost us 2k out of pocket which is no biggie.

1600 my job- after my health ins, maxing my hsa, and required 7% to a pension
880 child support
925 VA disability for fiance (as long as the VA still pays this won't go down, his disability won't get better. It will go up a bit when we get married)
860 ssdi for fiance (this will not continue once he graduates and gets a job)
2100 GI bill stipends (this will be prorated down when he isn't in school the whole month, ie august or december)

Total income $6365

Current expenses
Mortgage 880
Electric/water/trash 200
Natural gas 50
Cable/internet 110
Netflix 9
Google music 11
Daycare 365
Kids 75
Cell phones 110
Car gas 250
Car ins. 50
Groceries 400
Pets 50
Life ins. 17 (just me, need to get a policy for fiance asap)
Gym 32
Fun money 300

Total expenses 2909

House owe 99k at 5.25%

House worth 125k
2007 honda odyssey 8k
2009 scion tc $5k
My roth IRA 11,500
HSA 1,900

I do have the option of a 457 at my job with no match. My pension is matched 2.1:1 once I am vested... 6 years rom now. Once my HSA is over 2100 i can start investing those funds. We also plan on opening and maxing a roth IRA for my fiance 2014 and beyond and continue with mine. I get large tax refunds every year due to ky income and family size and have been using that to fund the roth. The large refunds are due to refundable credits and not me paying too much in. These will continue while my fiancr is in school even after we get married due to all of his current income being non taxable. So we basically have almost $3500 leftover each month. Yes I know I am way behind retirement wise (and fiance too)but I feel we can catch up quickly with our surplus. Do we need an emergency fund? Or should we just start stashing cash in a vanguard account? How is our starting plan? Any suggestions? Thank you!


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Re: Case Study: Combining finances
« Reply #1 on: July 10, 2014, 07:55:44 AM »
You have $3500/month "leftover."  The very fact that you recognize this and are looking to do something with it puts you miles beyond most people your age, and that is a tidy sum given your income -- you can easily make great strides in a short time toward being FIRE'd.  Start by looking at the expenses of each investment option in each of your three options (457, IRA, Roth IRA) -- fees are killers, avoid them at all costs.  Invest in low-cost index funds.  You are at the target age for William J. Bernstein's "If You Can" -- I suggest reading it, though his focus isn't so much early retirement as it is simply investing for a comfortable retirement (  Sounds like you are not paying much in taxes now, so maybe the 457 or regular IRA won't do much for you as far as lowering your tax burden, but it's worth looking at the numbers.  The Roth would give you some flexbility as far as having access to the funds you contributed in 5 years should you need them, but really, I would caution against thinking this way.  The money you are going to invest is your FUTURE INCOME, the income that will allow you to stop trading your labor for a paycheck.  So don't do anything to diminish the power of those savings to earn a living for you.

Rika Non

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Re: Case Study: Combining finances
« Reply #2 on: July 10, 2014, 08:58:47 AM »
Sounds like you're doing well. 

The main issue will be fighting the life style creep as your income and net worth grow.  I'm a detail person, so I keep a yearly budget and track my spending by category, and keep a year on year summary.  It's a good way to have a graphical direct comparison so you know when the little things start to creep in.

Good luck. Though you sound like someone who will do quite well.