Hello fellow Mustacians,
I was referred to this blog (lifestyle) by my sister-in-law and found it tremendously helpful reading it over the past few weeks. My wife and I were already trying to be frugal, but it has helped us cut and/or minimize all “unnecessary” expenses and see the big picture.
Up til now, we have been extremely cautious with our money keeping it only in regular savings accounts not wanting to “risk” losing it. However, now we understand that we are actually losing money by doing it this way, and are ready to invest so we can reap the benefits later in life.
With that said, we do not know much on the financial end of things in terms of all our options, so we are coming to all of you for advice on what to do.
Here is our personal and financial background…Both my wife and I are 29 years old with a 3 year old, 1 year old, and baby #3 set to arrive in July (surprise). We don’t eat out much(maybe 1x every 2 months), however we do like to do the occasional travel because we just moved to Florida. But when we do, we usually pack our own food, minimize expenses, etc.
We are both self-employed - our businesses have just surpassed the point of covering all of our expenses, and they are continuing to grow each month. No debt/loans/etc on the businesses as we used savings to start them. Prior to this, we left full time jobs to pursue our own ventures, so we feel as if we are “already retired" so to speak. We get to do what we love, and stay at home to raise our kids (but they do go to daycare for a few half days a week so we can focus on growing the businesses).
Our GoalsFinancial Freedom - We love what we do, don’t mind doing it for another 5-10-15 years and continue to live within our means to save for later. However, we have many more hobbies and love to travel!
College/Funds for our kids
- We’re interested in the 529 program, however was apprehensive if the kids decide not to go to college for whatever reason (we know the 529s can be transferred, so maybe opening 1-2 accounts?, in case one child doesn’t go to school?). We are both college graduates, and supporters of higher education, but it is hard to say what will be the case in 18 years, and when you are planning for 3 separate individuals. Maybe they will go the route of learning a trade instead, who really knows.
Monthly Expenses - Approx $4,600 TotalMortgage - $2200 per month which includes property taxes, insurance, etc
Approx 310k left on mortgage, 4.375% interest rate
We do bi-weekly payments as well as about $200 extra per month which goes to principal (we are looking at paying more each month). The ISP to pay biweekly with our loan company was free to join; saves us 5 yrs or so of payments and ~56K in interest….plus then the little bit of savings from paying the additional $200 in principal a month.
1 Car (Prius V) - lease - $575 month
- The payoff amount on the lease is approx $30k. Blue book says the car is only worth about 21k now. (palm smacking my forehead)
- We got taken to the cleaners on our previous vehicles (we didn’t really know what we were doing, we were naive early 20s, again smacking my forehead) so we are now picking up the pieces and paying for it now. On the plus side, we write off a small portion vehicle expenses for the businesses as travel is involved.
- With baby #3 coming, in the next few weeks, we are needing to trade it in and go to a minivan because our three literally carseats don’t fit in the Prius! ugh.
- We average about 15-25 miles per day driven which includes taking the kids to daycare 3 days a week, as well as occasional day trips to beach/orlando, etc. However, we occasionally have taken it on longer trips cross-country to visit family.
- Car insurance in FL is a consideration. We thought about do we just go to 2 cars? But car insurance alone on the Prius is ~$116 a month…pretty much double what we paid in WI. Vehicle registrations are also more here.
Remaining Expenses - Insurances, Cell phones (just changed to Cricket saving $35 a month), Daycare/Preschool, Food, Internet, business expenses, electric, water
- Baby #3 arrives in July - Not sure of what the medical expenses will look like as we just moved to Florida. Researching that now, but obviously having experienced this twice, we know its not cheap. We have used ‘goods’ for the baby, and wife plans on nursing.
Revenue/AssetsMonthly Total Income Average after business expenses the last few months - $5,900
- About $90,000 in checking/savings accounts (palm smacking my forehead again)
- Opened savings accounts for both kids and have about 1k each in them.
- Wife has approx 13500k in a 401(k) from previous job
- Wife has approx $10400 in a Roth IRA
- We need to keep about 10-15k available within 1 month as we pay commissions, buy inventory, etc for the businesses. Pretty much all expenses are put on a credit card for cash back bonus, so this is why we say available within a month as we pay it off in full.
- I guess as another side note, the above expenses are it, as far as debt to our name. Again no loans or anything of the sort on the businesses, no student loans, personal loans, unpaid CC balances, etc.
Our Main Questions…- Recommendations for investing? We know we need to diversify and are okay with spreading out between “low and medium” risk investments, and maybe even some high risk. Again, we don’t have really any experience and are not very familiar with the financial sector.
- Are there any sticky posts or threads that explain the basics and more?
- We were just made aware that there are One Participant 401(k) plans since we are both self-employed. Anyone have experience with this? Good idea? Or just invest our money elsewhere?
- What should we do about the vehicle situation? We know we need to get rid of the Prius for a minivan, and I am fine with going the used route, however I don’t want to get a complete beater that keeps us worried it won’t make a few hour trip, or will need repairs soon after we get it, or will break down with 3 screaming kids in the car, or will over heat in the Fl sun! Additionally, we do make occasional cross country trips from Florida back to Wisconsin too to visit/stay with family, as it is much more economical than flying the 4 soon-to-be 5 of us back there.
Thank you for your help in advance!