Here's my situation: I'm a married 31-year-old in a first-year program for a city & regional planning master's degree. Wife is a college professor. We're currently net-negative on our income, so I'm still taking out loans for school. The only job my wife could find near Ithaca is in Binghamton, an hour's drive away, so we held our nose and bought a car. This commute won't be so bad next semester - rather than 5 days a week on campus, she'll only have to drive 3. My commute to campus is free thanks to walking and a school-provided bus pass. Here's what our structure looks like for the next year and a half:
Name | Principal | Interest | Origination Fee | Interest Accrues While Deferred? |
Fall 2016 Perkins | $4,000 | 5.00% | 0% | No |
Fall 2016 Stafford | $10,250 | 5.84% | 1.068% | Yes |
Spring 2016 Perkins | $4,000 | 5.00% | 0% | No |
Spring 2016 Stafford | $10,250 | 5.84% | 1.068% | Yes |
Spring 2017 Perkins | $4,000 | 5.00% | 0% | No |
Spring 2017 Stafford | $10,250 | 5.84% | 1.068% | Yes |
Our existing loans are:
Name | Principal | Interest | Interest Accrues While Deferred? |
My PLUS | $6,785 | 6.84% | | Yes |
My Unsubsidized Stafford | $10,494 | 5.84% | | Yes |
Wife Sub Stafford | $5,794 | 6.8% | | n/a |
Wife Unsub Stafford | $5,415 | 6.8% | | n/a |
Car Loan | $9,217 | 6.79% | | Yes |
Parental Loan | $33,000 | 5% | | No |
IRS | $9,360 | 1.3% | | n/a |
And our structure looks like so:
AssetsAsset Name | Amount |
My Checking | $466.28 |
Wife Checking | $3,526 |
Emergency Fund | $1,953 |
Adoption Seed Fund | $2,000 |
401k | $6,493 |
Category | Monthly | Comments | Annual |
Salary/Wages for person #1 | $3,333 | | $40,000 |
Salary/Wages for person #2 | $1,941 | | $23,296 |
457 plans | $117 | Room to increase? | $1,400 |
Employer Match | $283 | | $3,400 |
Income subject to IRS tax | $5,158 | | $61,896 |
Union dues | $33 | | $390 |
Paycheck income before tax | $5,125 | | $61,506 |
Schedule C net profit | $150 | | $1,800 |
Federal Total Income | $5,308 | | $63,696 |
|
Federal tax | $510 | 2015 rates, MFJ, stand. ded., 1 exempt. | $6,123 |
State/City tax | $131 | Guess, using 3.35% * Fed. Taxable | $1,574 |
Soc. Sec. | $327 | Assumes 2 earners paying | $3,924 |
Medicare | $76 | | $918 |
Self-employment Tax | $21 | | $254 |
Total income taxes | $1,045 | | $12,539 |
Untaxed Income | $267 | | $3,200 |
Income before other expenses | $4,497 | | $53,967 |
Monthly Average Expenses: | | | |
Rent | $1,563 | | $18,750 |
Car Insurance | $64 | | $768 |
Car Maintenance, Registration, etc. | $104 | A set-aside | $1,252 |
Clothing/Shoes | $10 | | $120 |
Dining (Pizza, Restaurant, etc.) | $302 | Face-punch goes here | $3,629 |
Electricity | $35 | | $420 |
Emergency Fund | $100 | | $1,200 |
Entertainment | $10 | | $123 |
Financial Fees | $3 | | $36 |
Fuel/Public Transport | $130 | | $1,559 |
Groceries | $472 | Amount is falling | $5,665 |
Hair Care | $7 | | $80 |
Internet | $30 | | $360 |
Medical (Doctor, Hospital, etc.) | $218 | Includes prescriptions | $2,619 |
Miscellaneous | $351 | | $4,215 |
School Tutition/Books/Etc. | $2,834 | | $34,008 |
Travel/Vacation | $110 | | $1,326 |
Total | $6,360 | | $76,319 |
Loan payments: | | | |
Wife's Stafford Loan | $251 | | $3,007 |
Car Loan | $207 | | $2,479 |
IRS | $130 | | $1,560 |
Total Expense | $6,948 | | $83,360 |
Net Income | -$2,451 | | -$29,409 |
Basically, we'd be at even without school, which is why the future loans. We are looking at doing other forms of income next semester, like Air BnB, and we're trying to cut down on groceries and the miscellaneous shopping that happens. We don't have to pay my Stafford or PLUS loans yet, so we haven't been. Even if we cut everything except for rent, school, and car, we'd still be negative. If we cut rent in half, we'd have $220 a month for food.
My spring Stafford and Perkins loans aren't here yet, but we don't have enough money to cover tuition so they're in the bag. We've maxed out our student loan interest payment deduction for the year already thanks to the parental loan which we got in January rather than in December - would have been nice to split it up, but the idea didn't come to us until this month - and are looking now for ways to ensure our debt load stays roughly neutral.
With the hair-on-fire situation we're in, it looks like we've been living way beyond our means, especially with regards to "miscellaneous" and food. We need some help.
Updates:
- Expected income from the degree is about $60k per year to start, with upward mobility of up to $125k. I plan to work in the for-profit sector doing consulting work in the developing world.
- I'm planning on boosting map sales, which could add to income, though nowhere near enough to make up the hole without serious cuts. Summer internship employment should help.
- Rent is high because the Ithaca housing market is awful. Air BnB should help, and we will start looking for somewhere new come summer.
- Miscellaneous does need to get tracked more closely, and I'm starting that this week. This case study is based off the last three months' worth of spending, so we no longer have the receipts from, say, CVS or wherever. I'll also start tracking our groceries a bit more closely. Wife is wheat-allergic and effectively prediabetic, which raises our food costs away from stuff with a lot of carbs.
- My income includes 10 hours a week part-time at $31 and hour, plus $7200 per year from grad school TAing.
I combined College and School Expenses into one category. Breaking that down, we get:
- Adobe Subscription, $48.13. Includes Illustrator and Acrobat.
- Microsoft Office, $7.55
- Books, paper, printer ink, $105. Some of this might be household goods bought via Amazon.com but not tracked properly.
- Tuition & fees, $2,673
Looked closer at financial fees and found that my car registration was miscategorized. It should be $3, which is an ATM fee.