Federal Total Income | $15,607 | $187,282 | |
Federal tax | $3,055 | 1916.44+1138.345 | $36,657 |
State/City tax | $847 | 576.5+270.23 | $10,161 |
Soc. Sec. | $1,113 | 672.06+440.57 | $13,352 |
Medicare | $260 | From paycheck | $3,121 |
Total income taxes | $5,274 | $63,290 | |
Add Health + Daycare reimb. | $417 | $5,000 | |
Add Commuter reimb. | $162 | $1,943 | |
Income before other expenses | $10,911 | $130,934 |
Monthly Expenses: | |||
Mortgage | $1,255 | $15,059 | |
Property Tax | $595 | $7,140 | |
Car Insurance | $86 | 2 cars | $1,026 |
Car Maintenance, Registration, etc. | $25 | oil changes, etc | $300 |
Child activities | $86 | $1,032 | |
Childcare | $1,651 | FML | $19,812 |
Child supplies | $73 | "Baby supplies" | $876 |
Clothing/Shoes | $457 | transition from factory job to office job | $5,484 |
Computer (paper/software/etc.) | $63 | mostly games (steam) | $756 |
Dining (Pizza, Restaurant, etc.) | $311 | includes lunch at work | $3,732 |
Donations/Gifts | $92 | $1,104 | |
Electricity | $337 | All Utilities | $4,044 |
Entertainment | $231 | $2,772 | |
Fuel/Public Transport | $171 | $2,052 | |
Groceries | $773 | $9,276 | |
Hair Care | $105 | hair cuts mostly | $1,260 |
Home Alarm System | $25 | $300 | |
Household; Maintenance | $26 | household supplies | $308 |
Internet | $77 | single option here, bandwidth caps | $924 |
Home décor | $67 | $804 | |
Life Insurance | $76 | $912 | |
Medical (Doctor, Hospital, etc.) | $25 | chiropractor | $300 |
Miscellaneous | $195 | random house stuff mostly | $2,340 |
Other Target | $107 | missing receipts | $1,284 |
Pets | $77 | 2 dogs, 2 cats | $924 |
Phone (cell) | $22 | partial, rest are company paid | $264 |
Sports/Recreation | $182 | includes new weight lifting set | $2,184 |
Toys | $26 | $312 | |
Travel/Vacation | $50 | $600 | |
Non-mortgage total | $6,010 | $72,122 | |
Loans: | |||
Student Loan | $62 | 1.875%; 8k total | $742 |
Total Expense | $7,327 | $87,922 | |
Total to invest | $3,584 | $43,012 | |
Additional Mortgage Principal | $2,000 | $24,000 | |
Additional Loan payments | $400 | Interest free family loan (30k total) | $4,800 |
Available for taxable investment: | $1,184 | $14,212 | |
Life Situation: File single but married, 2 kids 3 & 2, live in a suburb in OH, USA. Both myself and wife are 32.
Pre-tax deductions: 5k FSA, 13% (+50% of 6%) 401k (maxes 130k after bonus hits), 12% + (100% of 6%) for the 96k salary. We don’t qualify for IRA.You do qualify for a backdoor Roth IRA.
Specific Question(s): ... What else can I do?? Help me start the FIRE.
Life Situation: File single but married, 2 kids 3 & 2, live in a suburb in OH, USA. Both myself and wife are 32.
That's unusual. E.g., see http://www.irs.gov/uac/Eight-Facts-About-Filing-Status.
Can you elaborate?
Pre-tax deductions: 5k FSA, 13% (+50% of 6%) 401k (maxes 130k after bonus hits), 12% + (100% of 6%) for the 96k salary. We don’t qualify for IRA.You do qualify for a backdoor Roth IRA.
Specific Question(s): ... What else can I do?? Help me start the FIRE.
Do you qualify for a mega backdoor Roth IRA (this will depend on how your employers have established their plans)?
What is the purpose of a backdoor Roth IRA vs just investing in an index fund?You can invest in index funds in both a Roth IRA and a Taxable account.
Sorry, but it still doesn't make sense. Can you provide some background/details?Life Situation: File single but married, 2 kids 3 & 2, live in a suburb in OH, USA. Both myself and wife are 32.
That's unusual. E.g., see http://www.irs.gov/uac/Eight-Facts-About-Filing-Status.
Can you elaborate?
Unfortunately, not really, tax guy told us to do it so that's what we do.. /shrug
Life Situation: File single but married, 2 kids 3 & 2, live in a suburb in OH, USA. Both myself and wife are 32.
That's unusual. E.g., see http://www.irs.gov/uac/Eight-Facts-About-Filing-Status.
Can you elaborate?
Unfortunately, not really, tax guy told us to do it so that's what we do.. /shrug
Topic Title: Reader Case Study – Help me maximize savings and start the FIRE with a face-punchingly low amount of current savings/mo on a decent set of salaries. Ultimately, we'd like to be a single income family living on the larger salary and my wife quitting her job to take care of the kids full time in the next couple of years as well.Are you willing to move close enough that you could commute to work in some other fashion than by a single-occupant car?
Life Situation: File single but married, 2 kids 3 & 2, live in a suburb in OH, USA. Both myself and wife are 32. 45 minute commutes for each of us, though we are looking to move closer to my job.
Gross Salary/Wages: 130k + 96k / year with bonus (25%-50% on the larger salary, 3% on the smaller)
Pre-tax deductions: 5k FSA, 13% (+50% of 6%) 401k (maxes 130k after bonus hits), 12% + (100% of 6%) for the 96k salary. We don’t qualify for IRA.
Considering 529 pre-tax for kids college education. Will probably do 5%/salary per kid with a goal of $100k/kid
Sorry, but it still doesn't make sense. Can you provide some background/details?Life Situation: File single but married, 2 kids 3 & 2, live in a suburb in OH, USA. Both myself and wife are 32.
That's unusual. E.g., see http://www.irs.gov/uac/Eight-Facts-About-Filing-Status.
Can you elaborate?
Unfortunately, not really, tax guy told us to do it so that's what we do.. /shrug
What is the purpose of a backdoor Roth IRA vs just investing in an index fund?You can invest in index funds in both a Roth IRA and a Taxable account.
Backdoor Roth:
Never (under current tax law) have to pay taxes on interest, dividends, or capital gains from your investments.
Penalty-free access to your invested money after 5 years; penalty-free access to all (invested plus returns) after age 59.5
Taxable:
Possibly (under current tax law) have to pay taxes on interest, dividends, and capital gains from your investments (depends on your marginal tax bracket).
Penalty-free (but not tax-free) access to all (invested plus returns) at any time
Sorry, but it still doesn't make sense. Can you provide some background/details?Life Situation: File single but married, 2 kids 3 & 2, live in a suburb in OH, USA. Both myself and wife are 32.
That's unusual. E.g., see http://www.irs.gov/uac/Eight-Facts-About-Filing-Status.
Can you elaborate?
Unfortunately, not really, tax guy told us to do it so that's what we do.. /shrug
Like what? Our certified tax guy told us we get more from our returns if I elect zero dependents and file as single, as does my wife except she takes the kids with her lower salary. For whatever reason, it gives us a higher tax return so that's what we do. It's been that way as long as I can remember across multiple accountants. I'm surprised this is the thing people are honing in on from a mega post of information.
Topic Title: Reader Case Study – Help me maximize savings and start the FIRE with a face-punchingly low amount of current savings/mo on a decent set of salaries. Ultimately, we'd like to be a single income family living on the larger salary and my wife quitting her job to take care of the kids full time in the next couple of years as well.Are you willing to move close enough that you could commute to work in some other fashion than by a single-occupant car? I'm going to start biking this weekend and see how I do with getting groceries. I think the short answer is "yes" but I'm not sure how long it will take me to become comfortable with the idea. Our winters have been quite harsh lately with multiple below -10F days for weeks at a time. I'll probably have to work my way into this one.
Life Situation: File single but married, 2 kids 3 & 2, live in a suburb in OH, USA. Both myself and wife are 32. 45 minute commutes for each of us, though we are looking to move closer to my job.Quote
Gross Salary/Wages: 130k + 96k / year with bonus (25%-50% on the larger salary, 3% on the smaller)
Pre-tax deductions: 5k FSA, 13% (+50% of 6%) 401k (maxes 130k after bonus hits), 12% + (100% of 6%) for the 96k salary. We don’t qualify for IRA.
You will as soon as your wife quits, so you should plan for it anyway. In the meantime, you can probably still do a mega-backdoor from your 401k into a Roth. Good point, I have some 401ks to roll over as it is so I'll look into doing this.Quote
Considering 529 pre-tax for kids college education. Will probably do 5%/salary per kid with a goal of $100k/kid
Keep considering, but if you intend to do this after your wife quits, don't bother and just focus on the Roth. You can withdraw without penalty to pay for a child's higher education. Another good point, and part of the reason I haven't pulled the trigger on this one. Thank you!
Sorry, but it still doesn't make sense. Can you provide some background/details?Life Situation: File single but married, 2 kids 3 & 2, live in a suburb in OH, USA. Both myself and wife are 32.
That's unusual. E.g., see http://www.irs.gov/uac/Eight-Facts-About-Filing-Status.
Can you elaborate?
Unfortunately, not really, tax guy told us to do it so that's what we do.. /shrug
Like what? Our certified tax guy told us we get more from our returns if I elect zero dependents and file as single, as does my wife except she takes the kids with her lower salary. For whatever reason, it gives us a higher tax return so that's what we do. It's been that way as long as I can remember across multiple accountants. I'm surprised this is the thing people are honing in on from a mega post of information.
Ah, I understand now. Your tax guy is maxing out your payroll tax withholding, so that your refund check is larger. You are just loaning the government money at 0%, and they are giving it back the following April. If you think that loaning your money for free is sound tax consulting advice, keep doing what you are doing; but I'd say that there were more profitable investments to be had with that money.
Taxes aside (but not too far aside, I would look into that to make sure it won't bite you later) I will take a crack at it. Below are the expenses I find to be particularly high or easy to cut:
Clothing/Shoes $457 - totally understand transitioning, there was probably a better/cheaper way to tackle this, but done is done. Make sure this is MUCH lower going forward. Consider developing a bit of a "personal uniform" to keep your wardrobe on the minimal-ish side. agreed
Computer (paper/software/etc.) $63 hmmm...seems high. Especially with two kids...my DH games, but doesn't spend near this and we don't have kids which could be a great distraction from the computer it was high because I was paying for twitch.tv subscriptions to multiple channels which was included in this (supporting broadcasters who use this as their primary source of income). I've since cancelled $15/mo of recurring subs as well as stopped buying 3-4 games a month that I don't even play. I've stopped buying as of this month across the board so this should be an easy drop. also, I only play when they are in bed :)
Dining (Pizza, Restaurant, etc.) $311 - for someone on your salary/family size, this actually seems reasonable to me. BUT if you are looking for places to cut, dining out is a great one. You have some easier ones. agreed
Donations/Gifts $92 - Could be easy to cut, but also a fine number.
Electricity $337 - again, fine-ish. you are converted to LEDs/CFLs? Keep your thermostat at responsible temps? Minimize dryer use? We spoil ourselves with heat/AC too much. Lights are good, but dryer & heating/cooling, not so much. This will be a lifestyle change for sure... one degree at a time!
Entertainment $231 - What does this mean? Like...movies? Concerts? It isn't computer games or sports... zoo, movies, non-free parks, museums, etc
Fuel/Public Transport $171 -bike more, reduce # of trips, etc. etc. Moving could help, but so many other things to cut first
Groceries $773 Yikes. But as you say, you are working on this one.
Hair Care $105 - as you advance, this is a great thing to insource. Will probably insource the kid's cuts but unlikely for mine/wife short term. We can practice on the kids >:)
Home Alarm System $25 I would just ask if you really feel you need this. Deep down. this one's the wife's. for the cost it's not worth the argument, tbh...
Home décor $67 -Easy to cut
Miscellaneous $195 -You have a lot of categories already, I would really track what this is.
Other Target $107 - this is quite a bit of missing $$ yeah, unfortunately the only way to fix this is to be better with keeping receipts! not much we can do about past purchases here.
Sports/Recreation $182 - this is a bit high, I would really evaluate all the things that fall into the "discretionary time spending" category and ask yourself if you really need to spend that much on non-working hours. Can you find free things? yeah trying to go that route now.. just got our library cards and getting the bikes off the wall. there is a lot of nature around here to take advantage of and that's a goal of mine.[/li][/list]
Frankly, I see an EASY $1300 of savings without lifestyle changes, just by thinking about your spending a bit more. Is it really making you happy.
Other thoughts-
Consider spousal "allowances" to help moderate spending and think about what should come out of that. (And excuse my assumptive stereotypes) for you, video games, etc. For your spouse home decor, etc. My DH and I say that ALL personal spending + clothing comes out of "allowance" to help limit some of those "necessary" but highly discretionary spends.
Remember that going to a single income cuts: taxes, childcare expenses, commute/work cloth expenses, and convenience expenses. You may find it isn't as much of a shift as you think.
Frankly, I haven't bothered to look into most of my money/investments until now and there is a lot of clean up work to be done.
Frankly, I haven't bothered to look into most of my money/investments until now and there is a lot of clean up work to be done.
No shame in that. It appears both of you have been quite successful at whatever you do, and likely have concentrated on developing expertise in your fields and dealing with all that comes with raising young children. Been there and understand.
Kudos for recognizing that with some (but not a huge amount of) effort you can get your home finances in better shape and more or less on cruise control.
I've been looking into backdoor IRAs all morning and I'm still not 100% sure on how I would go about setting one up. I really don't want to go see a financial adviser either. Are there any places in particular people would recommend going to reading more about how they work?
I've been looking into backdoor IRAs all morning and I'm still not 100% sure on how I would go about setting one up. I really don't want to go see a financial adviser either. Are there any places in particular people would recommend going to reading more about how they work?
Backdoor Roth: http://www.bogleheads.org/wiki/Backdoor_Roth_IRA. Note that the most you can contribute to a backdoor Roth is $5500/yr, or $6500/yr if age 50 or over: http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-IRA-Contribution-Limits.
Mega Backdoor Roth: http://whitecoatinvestor.com/the-mega-backdoor-roth-ira/ and http://www.madfientist.com/after-tax-contributions/. Your ability to do this will depend on how the 401k works at your companies, so you may need to have a talk with the HR department.