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.
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
Adjusted Gross Income: ~$187k not including bonuses (we don’t plan on bonus at all)
Taxes: 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 |
Current expenses: 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 |
|
Assets: $115k equity
$140k 401k (1)
$110k 401k (2) (Mix of roth 401k & traditional)
$15k common stock with dividend
$10k vanguard index fund (started this week thanks to MMM! Came from savings…)
$20k savings
$15k child1 savings/college (cash currently)
$10k child2 savings/college (cash currently)
$15-20k in checking at any given time
$5k in video games (seriously, this has appreciated more than the index fund!)
~$15k SUV with 20-25MPG (KBB)
~$13k sedan with 25-30MPG (KBB)
Liabilities: Student loan of $8k @ 1.875% (we pay about $200/mo)
Mortgage: $182k left of $214k (we pay +$2400/mo currently)
NO CC debt, NO car loans
Specific Question(s): I’m looking for general cutting advice/consolidation of costs advice where applicable. There are certain things that I’m for cutting that my spouse wouldn’t be of course, but I’m willing to have the conversation on anything. For example, we have recently started planning our meals out and will be cutting that $700+/mo grocery bill to ~$230/mo. What else can I do?? Help me start the FIRE.