Hi everybody! I have been reading the forums for about a year now and finally decided to get an account and ask for some expert opinions. I apologize in advance that this is rather long and confusing. I am a little all over the place with what I want to do. Well rather what is possible for me to do. My ultimate goal is to not work a minute more than I have to. I have plenty of things I would love to be doing rather than working for a living. Volunteering with a rescue, growing a huge edible garden, crafts (knitting/crochet), and most importantly spending more time with my son and pets are at the top of my list. I am sure all of these are things that could be utilized for some income but my current job pays me pretty good so I would rather maximize my income while I can.
Life Situation: I am a 39 year old, divorced mom of a 3 (almost 4) year old boy. I am a mechanical engineer. We live in Houston. My ex lives in a different state. He is not involved in our son's life at any capacity by his choice. It is a long story. The only relevant part is that he pays zero child support and child support will stay at zero in the foreseeable future. We also have 2 dogs (large) and a cat. I realize I should be at a much, much better point financially at my age. I can list all kinds of reasons why I am where I am but it wouldn’t change anything so I am hoping I have learned from my past and I am looking at the future.
Gross Salary/Wages: $108,000/year
Current Take Home Pay: $72,250 annual/$6020 monthly (Income minus all deductions-see below for deductions)
Pre-tax Deductions (every two weeks):
Federal Tax: $528.95
SS Tax: $240.24
Medicare Tax: $56.19
Flex Spend: $192.31 (daycare expenses-maxed)
Dental: $18.92
Vision: $2.98
Health insurance: $75.63 (high deductible plan)
HSA: $0 (currently not contributing. I’ve put in $2342 for the year and my employer puts in $2300)
401k: $249.60 (6%, employer matches 50% up to 6%)
Post-tax Deductions (every two weeks):
Dependent Life: $0.92
LTD: $7.88
Optional Life Ins: $7.01 (3 times salary)
Additional income:
Unfortunately, being the only parent with no other family around, I don’t have the option for any additional work. And I would rather spend what little time I have outside of work with my son, especially since I am the only parent in his life.
I just started doing swagbucks and seem to be doing pretty good. I spend a lot of time but it is when I am watching tv (after my son goes to bed) or during the day (set up ipad to cycle through videos at home). I expect this to be negligible income, maybe $50/month (seems about this for far, not sure if it is sustainable).
Current expenses (monthly):
Rent $2150 (explanation below)
Utilities $200 (this is an estimate. We moved to this house a few weeks ago so not sure on average costs yet. Includes electric, gas, water)
Daycare $445 (This is actually $860 but I am subtracting flex spend money which I reimburse myself from. I couldn’t figure out where to account for that. Hopefully this will go down to just aftercare once he starts pre-k next year assuming he gets in the free program in school)
Cell Phone: $10 (It is actually about $90 but up to $80 is reimbursed by work)
Internet/cable: $70 (We watch stuff via netflix, and via the internet. This includes a wireless modem and some cable channels. It is a promotion I just signed up for. We don’t really watch cable much and there aren’t many channels but it was a better deal. Since we stream a lot of stuff via the internet I got a fast internet package-50 MB)
Netflix: $10
Credit card mins: $360 (see below for details)
Little Gym: $90 (for my son)
Car/Renter’s Insur. $120 (full coverage on the car plus renter’s insurance)
Fuel $100 (estimate)
Groceries/Misc $800 (more information below)
Travel $350 (all of my family lives out of the country so we visit them at least once a year, tickets can be anywhere from $1400-2500 for both of us. Next year we are going to Paris Disneyland with my sister/nephew/BIL and to my home country in the same trip so total cost will be about $4000 plus probably a beach vacation or cruise)
TOTAL: $4705
Remaining: $1315 (current plan is to throw all of this at credit cards)
Assets: total $61,460 (excludes car value)
Vehicle: 2005 Ford Expedition (KBB value about $4-5k), paid off
CapOne360: $350
ShareBuilder: $3437
IRA: $2146
Old 401k: $27601 (at T. Rowe)
HSA: $1410
HSA (invested): $2140
Current 401k: $19334 (at Merrill Lynch)
Regular Savings: $1000 (more like a short term emergency fund)
In FSA: $2042 (saved up that I can reimburse myself)
Deposit: $2000 (from the place we just moved out, I should receive this by November 20)
Liabilities: total $12,636
Numbers are rounded. Priorities listed to show in which order I plan to pay off. Plan is to pay them off by the end of 2016, the latest.
Chase Slate $782 (0% for about another 10 months, priority 6)
Chase Sapphire $3349 (0% for another 16 months, priority 7)
Macy’s $1150 (high interest, priority 2)
Cap One $1475 (0% for 12 months, priority 5)
Citibank1 $1520 (high interest, priority 3)
Citibank2 $2940 (high interest, priority 4)
Wells Fargo $1420 (high interest, paying this off with extra payments currently, priority 1)
Housing:
We live about a mile from my work. Daycare is within a mile. We have almost everything we need/want within 1-2 miles. The house is zoned to an excellent public school. There aren’t very many houses that are zoned to this school that is any less in rent. There are apartments but with our pets it would be too difficult to take care in an apartment. We just moved here from a townhouse with a tiny patio and it was a pain in the butt. Now we are in a single family house with a large yard.
I would like to purchase a single family house in the same area. The prices start around $400k with yearly taxes around 8-10k. I cannot purchase just yet because I had to do a short sale after the divorce for my property left in the previous state (where the ex is). So I am still in the waiting period. Truthfully, with the housing prices in the area I am looking at, it will be an FHA mortgage unless I wait a long time. Even though I really, really want to buy in the area I live in, I am also considering going further out, which would mean switching schools and a commute in Houston but I would get better value for my money. I have always been very spoiled with a short commute in my previous city and here with every job I held. Housing is part of my questions below.
Groceries/Misc:
I don’t keep very good track of groceries and miscellaneous expenses as some are purchased with cash, some are debit, etc. I estimate grocery part to be about $400. This includes extra calorie milk for my son which is about $62/27 small packs through amazon, the cheapest I found. He was a micro-preemie (born at 25 weeks) and he is still trying to catch up on weight. Food is not something I am willing to cut on.
The miscellaneous category also includes dog/cat food, cleaning supplies, occasional babysitter, eating out, shots for pets, occasional charity donation, etc. I might be estimating on the low end.
In order to figure out the actual spending and cap it, I plan on implementing a cash only system and take out $400 each paycheck to pay for all of the groceries and extras.
Prescriptions/health charges and HSA:
Like I mentioned above my son was a preemie and even though he is healthy for the most part, he has asthma medicine and other medicines, doctor’s visits, etc. These currently are at about $250/month and they come out of the HSA account. I keep my fingers crossed to not end up at ER with a cold that turned into an emergency as the current deductible is at $4000 (HD plan). It is not that I cannot afford to pay for that but would rather have my son healthy and keep the money in our account.
I am currently not contributing to the HSA account for the rest of the year. I put in about $2300 already for this year and my employer puts in $2300 (divided monthly). I stopped contributions to speed up the debt payoff.
Specific Question(s):
In the upcoming year health insurance, etc costs will change but I don’t expect them to change a whole lot (hopefully). Please take into consideration that I am considering purchasing a new/used vehicle in the upcoming year.
My long term goal is to get to a point where I have enough savings (not sure how much) where I don’t worry about a job but I would continue working PT at my job. We have 20 or 30 hour options at work, the pay obviously would be less but even at 20 hours it will be at least $50k. I wish I could do this now so I could spend more time with my son while he is young.
Also, I absolutely plan on helping my son pay for college (hopefully pay for all of it).
1. Should I max HSA for tax purposes or any other reason next year?
2. Should I max 401k even though I am still paying off debt? I know this is typically not the advice but I was
wondering if it would be a good idea to reduce my taxable income so I can get the child tax credit even if it is partial.
3. How should I plan for the short term and long term financially?
4. Should I buy a house? Continue renting? Is it ridiculous to buy where I currently live at outrages prices? Or should I trade cost with commute? It already feels like I have no time to do anything without added commute.
5. Any other suggestions/comments?
Thank you for taking the time to read. I appreciate all suggestions and comments.