Hi all,
My husband and I (31 and 24, respectively) have happily hopped aboard the FIRE train and are looking forward to the journey (and the end result!). However, we have a few hiccups that make us question investing every extra penny right now. First of all, the details:
Income: | | |
Gross salary/wages | $7,600 | |
Net: | $6,319 | This is our after-tax income ($5,806) with 401k/HSA contributions and insurance premium added back in |
Expenses: | | |
Rent/WSG: | $1,010 | |
Phone: | $90 | |
Internet: | $66 | |
Electricity: | $55 | |
Insurance (auto + renter's): | $82 | |
Health/medical: | $316 | $50 premium for me (pre-tax). $203 premium for DH. He has no plan provided through work and it would have cost us $550/month to add him to mine. |
Student loan: | $128 | $4500 remaining @ 2% |
Groceries: | $250 | |
Restaurants/coffee/alcohol: | $250 | I know this could be lower. DH works from home and likes to get out of the house. We are working on lowering this! |
Fuel/transportation: | $125 | |
Car repairs/maintenance: | $71 | This just builds up until we need it for something. |
Household/laundry/pets: | $85 | |
Hair/toiletries/clothes: | $50 | |
Entertainment: | $50 | |
Gifts/birthdays/Christmas: | $20 | |
Allowance: | $200 | $100 pp to do whatever (electronics tinkering, books, non-essential clothes, etc) |
Total: | $2,848 | |
Saving/Investing | | |
HSA | $200 | My employer contributes $75/month. |
401(k) | $263 | This is 10% of my income. My employer matches 4%. DH's employer does not offer any retirement plans. :( |
Roth IRAs: | $917 | |
Emergency fund: | $1,000 | |
Tuition: | $1,100 | |
Total: | $3,480 | |
Liabilities: | | |
Student loan: | $4,500 | |
Assets: | | |
Roth IRAs: | $9,770 | We plan to switch to tIRAs |
401(k): | $8,815 | |
HSA: | $550 | I just started it this year and won't be able to invest it without a large fee until the balance is over $5,000 |
Emergency fund: | $6,901 | Goal is $10,000, roughly 4-5 months of expenses |
General savings: | $4,371 | Tuition & savings for new car, since mine is getting near 200k miles |
Total: | $30,407 | |
Specific Questions:I am planning to go back to school to finish my degree, starting this summer with a couple classes and then full time in the fall. The program should take me 2 years to finish. The tuition + books will cost about $17.5k/year. I completed the FAFSA and the only federal aid I qualify for is the unsubsidized Stafford Loan @ 4.66% interest up to $12.5k per year. I have not received my official aid letter from the school, so this isn't guaranteed. If I do in fact qualify for this loan, should we take it (or part of it) and invest the money that we would have paid towards tuition? I really really don't want to go into any more debt, but I'm not sure what the right decision is here. The interest rate isn't amazing but it's not horrible either.
My other question is, how should we prioritize saving for a down payment? We'd like to buy a house eventually, and probably stay in the Northwest. The median home price in our town is $300k, but prices vary wildly depending on the area. Should we start saving for this after the e-fund is done? We'll have that extra $1000/month to throw at something. We could almost be maxing out my 401k with that, though. Even though we're not spending 55% of our net income, only 20% is being invested. It frustrates me that we
could be investing all 55% if it weren't for these pesky things like tuition and a down payment.
I'm just curious how other folks here balanced their FIRE goals with other savings goals that aren't being invested. Let me know if there's any info missing and I'll try to add it. Also, any other advice about how we could improve is appreciated!
Edit: I do plan to continue to work as much as possible while going to school. I chose an online program (reputable state school, not University of Phoenix) for exactly this reason. It's entirely possible I will have to lower my working hours, though, depending on my class load. However, my husband is expecting a significant raise that would offset any lost income from me working less.