Author Topic: Case study- I'm not really sure where else to go  (Read 5253 times)

kasingerd1

  • 5 O'Clock Shadow
  • *
  • Posts: 8
Case study- I'm not really sure where else to go
« on: December 11, 2015, 08:09:58 PM »
Life Situation- Me 20, Wife 21. We currently live on the east coast but plan on changing that in about 4 years so we can move back to Arizona to be closer to family. My wife is finishing up her degree next year so we're looking forward to that extra income. Her school debt is a non-issue because her grandparents have pooled together. We have 12500 saved in our savings account and we're holding off on investing until after our upcoming move in January.

Gross Salary- 56466.2, 4705 monthly

Pre-tax deductions- 0

Other income- 0

Taxes- Federal, 265
          Social Security, 125
          Medicare, 29
          Life Insurance, 29 (400,000)

Expenses- All of these are monthly
                Rent, 1200
                Utilities, 140- Should be lower but this is worst case scenario.
                Eating out, 50- I don't know how this is?
                Internet, 87- Non-negotiable right now my wife refuses to pay for anything less because she's an online student
                Renters Insurance, 17- Mandatory in the apartments we live in
                Travel, 250- Non-negotiable by both of us because we both want to fly home twice a year to see family
                Groceries, 400- Not our best but not the worst. My wife has Celiac Disease so as far as I can figure we pay a bit more than "normal"
                Car, 75- Facepunch? I need to drive because I work in several different offices and can get called to different one's throughout the day
                Dog, 60
                Current Roth Contributions, 150

Annually:
Income- 56466
Taxes- 7153, Includes Roth Contributions
Expenses- 27442
Total spending- 34576
Total savings- 21890

Assets-
12500 in a savings account, explained above
Around 2500 in the aforementioned Roth

Specific Questions-
I honestly don't think any of this is over the top, and for the most part very reasonable, but I would love to be corrected because that means there's more room for improvement which I'm definitely looking for with this post. Like I mentioned above my wife is finishing her degree next year and we're thinking she'll make a minimum of 30000 which will create quite a bit of surplus, but we're still looking to streamline our expenses as much as possible especially for the next year. Some observant reviewers may see that we don't "pay" car insurance or a phone. For simplicity and clarification I wanted to explain I left those expenses out because my wife works and makes just enough to cover those expenses and we allow her to keep any extra for her own hobbies. Any and all advice, tips and tricks are welcome!
« Last Edit: December 11, 2015, 09:03:21 PM by kasingerd1 »

pbkmaine

  • Walrus Stache
  • *******
  • Posts: 8323
  • Age: 62
  • Location: The Villages, Florida
Re: Case study- I'm not really sure where else to go
« Reply #1 on: December 11, 2015, 08:12:37 PM »
What do you do? How old is your wife? What is she training to do? Where are you moving in January? What are your expenses?


Sent from my iPad using Tapatalk

hoping2retire35

  • Handlebar Stache
  • *****
  • Posts: 1401
  • Location: UPCOUNTRY CAROLINA
  • just want to see where this appears
Re: Case study- I'm not really sure where else to go
« Reply #2 on: December 11, 2015, 08:19:20 PM »
What is the question?

kasingerd1

  • 5 O'Clock Shadow
  • *
  • Posts: 8
Re: Case study- I'm not really sure where else to go
« Reply #3 on: December 11, 2015, 08:59:27 PM »
Sorry to everyone that has already posted, I accidently submitted the post before it was ready. Rookie mistake and my apologies. I'm looking forward to the advice.

kasingerd1

  • 5 O'Clock Shadow
  • *
  • Posts: 8
Re: Case study- I'm not really sure where else to go
« Reply #4 on: December 11, 2015, 09:12:14 PM »
My wife is getting her degree in information technology management. And we're moving to a cheaper apartment. The move across the country won't happen until 2020 unfortunately.

MDM

  • Walrus Stache
  • *******
  • Posts: 9492
Re: Case study- I'm not really sure where else to go
« Reply #5 on: December 11, 2015, 11:34:15 PM »
Easy: You could put another $200/yr into your Roth IRA and bump your saver's credit from $180 to $200.

Medium: Are the tax line items monthly, semi-monthly, or biweekly?  Based on the SS and medicare I'd guess biweekly, but don't know if taxes based on your wife's income is there.  If those are your numbers alone, and your wife's withholding takes care of taxes owed on her income, you are over-withholding and could increase your paycheck by adjusting your W-4.  Just make sure to invest, not spend, the extra take home amount.
 
Hard (but appears doable): Contribute $5500 each to Roth IRAs.  If you have a Roth 401k option at work, contribute ~$750/mo to that.  If you have a 401k but only the traditional type, contribute ~$900/mo to that.

Numbers above are from the case study spreadsheet - you can download the template and enter your own numbers to verify the above and/or explore more options.

Good luck!


MayDay

  • Magnum Stache
  • ******
  • Posts: 3999
Re: Case study- I'm not really sure where else to go
« Reply #6 on: December 12, 2015, 05:00:55 AM »
Celiac or not, I'd take a hard look at groceries. For that price I hope you are eating local, organic, etc. If not, I'm guessing you eat too much fake GF packaged stuff.

Increase the Roth contributions!

kasingerd1

  • 5 O'Clock Shadow
  • *
  • Posts: 8
Re: Case study- I'm not really sure where else to go
« Reply #7 on: December 12, 2015, 06:02:33 AM »
Easy: You could put another $200/yr into your Roth IRA and bump your saver's credit from $180 to $200.

Medium: Are the tax line items monthly, semi-monthly, or biweekly?  Based on the SS and medicare I'd guess biweekly, but don't know if taxes based on your wife's income is there.  If those are your numbers alone, and your wife's withholding takes care of taxes owed on her income, you are over-withholding and could increase your paycheck by adjusting your W-4.  Just make sure to invest, not spend, the extra take home amount.
 
Hard (but appears doable): Contribute $5500 each to Roth IRAs.  If you have a Roth 401k option at work, contribute ~$750/mo to that.  If you have a 401k but only the traditional type, contribute ~$900/mo to that.

Numbers above are from the case study spreadsheet - you can download the template and enter your own numbers to verify the above and/or explore more options.

Good luck!

Easy: Super easy and already done thanks!

Medium: I'm sorry if I was unclear, the numbers are biweekly and only look at my own income because my wife covers all of her own expenses. I will definitely look at whether or not I'm over contributing.

Hard: This looks like a great option and I think we really can do that. But we were thinking that index fund investing with vanguard would be a better option. Any thought there? Thanks so much!

kasingerd1

  • 5 O'Clock Shadow
  • *
  • Posts: 8
Re: Case study- I'm not really sure where else to go
« Reply #8 on: December 12, 2015, 06:26:38 AM »
Celiac or not, I'd take a hard look at groceries. For that price I hope you are eating local, organic, etc. If not, I'm guessing you eat too much fake GF packaged stuff.

The answer to your.. question? is yes we eat fully organic, local, etc. Yes we do buy a packaged GF brownie mix and such about every other month.

MDM

  • Walrus Stache
  • *******
  • Posts: 9492
Re: Case study- I'm not really sure where else to go
« Reply #9 on: December 12, 2015, 09:45:05 AM »
Hard (but appears doable): Contribute $5500 each to Roth IRAs.  If you have a Roth 401k option at work, contribute ~$750/mo to that.  If you have a 401k but only the traditional type, contribute ~$900/mo to that.

Numbers above are from the case study spreadsheet - you can download the template and enter your own numbers to verify the above and/or explore more options.
Hard: This looks like a great option and I think we really can do that. But we were thinking that index fund investing with vanguard would be a better option. Any thought there? Thanks so much!

Re: "...index fund investing with vanguard would be a better option."  Depends on what the other options are.  You may invest your Roth IRA money in a Vanguard index fund.  In fact, that's a great thing to do with it (and maybe you already are?).

The "I have a 401k but the investment options aren't so good" vs. "Vanguard index fund" question is in general more difficult.  As it seems you won't be at the current job for more than a few years, however, that makes the 401k very likely the correct answer.  See http://forum.mrmoneymustache.com/investor-alley/to-401k-or-not-to-401k-that-is-the-question-43459/ for details.

Malum Prohibitum

  • Pencil Stache
  • ****
  • Posts: 678
Re: Case study- I'm not really sure where else to go
« Reply #10 on: December 12, 2015, 11:13:50 AM »
Some observant reviewers may see that we don't "pay" car insurance or a phone. For simplicity and clarification I wanted to explain I left those expenses out because my wife works and makes just enough to cover those expenses and we allow her to keep any extra for her own hobbies. Any and all advice, tips and tricks are welcome!
  It is hard to figure out your finances when you carve things out separately like that.  You are married.  Income and expenses should be together.  Hobbies should be a budget line item for spending.  So should car related expenses. 

csprof

  • Stubble
  • **
  • Posts: 229
Re: Case study- I'm not really sure where else to go
« Reply #11 on: December 13, 2015, 02:11:29 PM »
Easy: You could put another $200/yr into your Roth IRA and bump your saver's credit from $180 to $200.

Medium: Are the tax line items monthly, semi-monthly, or biweekly?  Based on the SS and medicare I'd guess biweekly, but don't know if taxes based on your wife's income is there.  If those are your numbers alone, and your wife's withholding takes care of taxes owed on her income, you are over-withholding and could increase your paycheck by adjusting your W-4.  Just make sure to invest, not spend, the extra take home amount.
 
Hard (but appears doable): Contribute $5500 each to Roth IRAs.  If you have a Roth 401k option at work, contribute ~$750/mo to that.  If you have a 401k but only the traditional type, contribute ~$900/mo to that.

Numbers above are from the case study spreadsheet - you can download the template and enter your own numbers to verify the above and/or explore more options.

Good luck!

Easy: Super easy and already done thanks!

Medium: I'm sorry if I was unclear, the numbers are biweekly and only look at my own income because my wife covers all of her own expenses. I will definitely look at whether or not I'm over contributing.

Hard: This looks like a great option and I think we really can do that. But we were thinking that index fund investing with vanguard would be a better option. Any thought there? Thanks so much!

Many thoughts:  Do the hard version as much as you can.  At $55k/year for a married couple, you're in the 15% tax bracket, and your effective tax rate is lower than that with the various deductions.  This is, hopefully, the lowest it will ever be (until, perhaps, retirement).  That's exactly the time you want to pay in to a Roth, because it's post-tax income you're putting in there.  When you pull it out and don't owe any taxes on the money you pull out, you will magically transport back in time and give your 21 year old self a huge high-five.

Put as much as humanly possible into your Roth.  It's a very flexible investment, (and do what others noted:  Store your Roth at vanguard and invest it in a long-term index approach).

If you have the choice, I'd kill the life insurance.  You're young, you don't have kids, your wife will be well-positioned to support herself if you die, so you're wasting $29/month.  $29/month more in your Roth is cool.  Kids change the life insurance question;  revisit it if that ever happens.

AZDude

  • Handlebar Stache
  • *****
  • Posts: 1298
Re: Case study- I'm not really sure where else to go
« Reply #12 on: December 14, 2015, 08:37:37 AM »
$87 a month for internet seems incomprehensibly high. We pay $35 a month and have no problem streaming sports and a movie at the same time. You said non-negotiable, but if you are married then everything is negotiable. Try researching cheaper alternatives. Someone studying IT should understand the infrastructure enough to what is necessary and what is not.

Mr. Green

  • Handlebar Stache
  • *****
  • Posts: 1951
  • Age: 35
  • Location: Wilmington, NC
Re: Case study- I'm not really sure where else to go
« Reply #13 on: December 14, 2015, 09:26:03 AM »
Congrats for having such a good handle on your finances at such a young age! Almost a 50% savings rate and your wife doesn't even have income yet.

celticmyst08

  • Bristles
  • ***
  • Posts: 382
  • Age: 29
  • Location: Seattle, WA
Re: Case study- I'm not really sure where else to go
« Reply #14 on: December 14, 2015, 12:09:26 PM »
$87 a month for internet seems incomprehensibly high. We pay $35 a month and have no problem streaming sports and a movie at the same time. You said non-negotiable, but if you are married then everything is negotiable. Try researching cheaper alternatives. Someone studying IT should understand the infrastructure enough to what is necessary and what is not.

I don't know where OP lives or what his internet speed is but we pay almost exactly that amount with Comcast. We have literally no other options so we can't cancel. They refuse to lower our bill (and we have tried). So, it's possible that's as low as OP can get.