OK, after a short time reading the site I am buying in big time to the MMM way. My timing is interesting in that last year I made a big shift in my career trajectory to pursue a graduate degree (rationale was twofold: 1) I accomplished more than what I set out to accomplish in the business that I previously ran, and 2) I want to be a college professor, which requires a doctorate in my field). I will not be paying tuition or fees and will be receiving a monthly stipend when I am in school. My situation is unique in that I have some small additional income that a typical college student does not have, in addition to the stipend. I am married, 35 years old, have three kids (preschool and elementary school) and live in Maine. Details follow.
Monthly Income:
4,500 (net after taxes, social security, and 401k - $2.5k from school stipend and $2k from passive side income from a business someone else runs).
Total Monthly Income: $4,500
Current expenses:
2,600 (rent - one year lease)
1,100 (Grocery/Wal-Mart/Amazon household expenses)
100 (restaurants)
350 (gas and parking - commute is a necessity and am rural so carpooling is not an option)
450 (Propane/Oil/Electricity/Garbage and Recycling Pickup)
150 (Recreation/Lessons for the kids)
70 (Internet)
400 (Preschool)
150 (net loss on rental property - we owe more than it's worth as you'll see below, so selling is not an option, probably not for several years)
Total Monthly Expenses: $5,370
Assets:
190,000 (Savings account with small (1%) interest rate - unwittingly I employed some MMM tactics in the past year by saving a ton ($85k including $25k (net) from the sale of our previous home) in anticipation of being on a graduate student's salary for the next four years...you'll see by comparing my income and expenses above that I have a monthly deficit, so I am planning on withdrawing from savings each month to make up the shortfall. I anticipate having 100k left in savings when I am done with school, so I view at least some of that savings as flexible and available to invest right now).
130,000 (401(k))
11,000 (Roth - Mine)
9,000 (Roth - Wife)
60,000 (Rental property value)
Prepaid college tuition plan, fully funded for all three kids
Total Assets: $400k not including 529
Liabilities:
100,000 (Mortgage on rental property)
Total Liabilities: $100k
Specific Question(s):
1. I'd like to hear ideas of what to do to make some of my 100k available in savings work for me. Note that my 401k and Roth IRAs are mostly low-fee index funds. I've considered putting more in a brokerage account independent of my retirement accounts.
2. I have about 10 years of experience personally managing a rental property and have gone through multiple experiences and am not hesitant about finding another rental property. Given my limited income for the next few years, my risk tolerance is a little lower than normal because I want my primary focus on my studies. So any rental property would be a single-family home that I could buy for cash.
3. My passive business income could be more than I've estimated above (perhaps an additional $500-800/month gross), so I would be interested in hearing thoughts on how/where that extra money could be directed should it become available. One thought could be to simply keep as cash to narrow that deficit between expenses and my income, then do something else with a part of that ~$90k I earmarked to help with expenses over the next four years.
Looking forward to hearing the insights of the MMM populace!