Hi Mustacians!
I have a case study some of you might find interesting. My fiance and I currently live in NYC, both working full time. We are moving to Denver in mid-December, and I'll be going back to school. We're both 26. What I hope to takeaway is whether we need to have such a large cash pot and whether you would do anything differently. I'm going to list our projected financial situation for mid-December since thats' what we'll be working with when we go down to one income (his) and move to Denver. Here we go:
Joint assets:
Liquid savings: 44k
Index funds: 3k
401k: 30k
Joint debts (currently none, so the below are projected for my school program that begins Jan 2015, lasts 21 months):
12k in subsidized federal student loans @ 6.9%
17k in ubsubsidized federal student loans @ 6.9%
25k in private student loans @11% (this is a guess and I think it's conservative)
*We would pay these off as quickly as possible-- i.e. when I start working again, $3k per month and have them all paid off roughly 2 years after I graduate. Unless however we're making more interest on our investments than paying in student loans... then I guess we would pay them off more slowly? I hate this idea but know that it makes sense.
Joint projected expenses (montly):
1300 Rent
180 Utilities/cable
160 Groceries
160 Gas/public transportation
150 Restaurants/bars/wine
50 Pharmacy
30 Laundry
200 Medical insurance
200 Miscellaneous
2,430 total
*Some of the line items above may seem generous, but since we're moving to a new city we want to be very conservative in our estimates. I know the cable is antimustacian, and if our situation calls for it I might be able to convince fiance to cut it.
Now that we've decided we're going to go for it and move to Denver, fiance has started looking for jobs. We're hoping he can bring in 55-60k per year (he's currently paid 55 in NYC, but it's for a start up company that our good friends own, and I think he's underpaid). After taxes and 401K, 55k would bring us to $38,000 per year, or $3,166 per month.
So here's the deal: I think we should be using some, if not much, of our liquid savings toward my school program instead of taking as much out on the 11% loan. Fiance is very inclined toward having a large cash cushion with good reason: all of the pressure is on him to find a job in Denver. Ido think we'd be better in the long run if we had less of the 11% debt.
Finally, we will not be dipping into our savings at all to pay for living expenses. If fiance is not able to find a job in Denver, he'll keep working and living in NYC while I move to Denver, and I would live with a roommate. For reasons I don't need to get into, fiance's rent in NYC would be free until mid-2015, so we would still be able to swing my school program on just his income.
Thoughts? Any information I left out that you need to know?