I’m 28 with an MBA and work in the IT field, and my husband is 34, and works in food service, and we've got an 18 month old nugget that we're gaga about.
I’m a recent convert to the Mustachian way, having found the blog while trying to figure out what to do after being laid off from a retailer that’s known for their red and khaki (Last day was actually 5/15 because… I don’t know, I haven’t actually worked there since mid-March, but I was paid like I was...). Well, the severance package turned into a windfall, for now, after I landed a 6 month contract-to-hire job in April that goes through October. That being said, I’m not sure to do next and I feel like my judgment is being clouded by bitterness toward the red/khaki, terror at the idea of not being able to provide for my family, and just being tired from all the change. But it feels like I’m stuck in a pile of mediocrity and I just can’t get a handle on things.
So help please! What should our next steps be? I’ve never worked on a contract before and am leaning to just socking everything in a savings account until I find permanent work, but that also seems like a waste.
Gross Salary/Wages: 60/hour, max 9600/month for 6 months if I work without vacation/time off; No chance for overtime, but may turn into a fulltime job with benefits in October. This is a significant bump over what I had been making.
Pre-tax deductions: None, the contract offers no benefits and it isn’t clear what this will cost if it converts into a full time job
Other Ordinary Income: My husband has worked for the red/khaki for years, currently is part-time while he stays home to take care of our 18 month old. He brings in around 300-400 a month working 12-18 hours a week after taxes/401k contributions(these are matched up to 5%).
Taxes: Based on my first paychecks....
Federal: 771 per month
State: 364 per month
FICA: 592 per month
Medicare: 139 per month
Current expenses:
Mortgage: 934
Escrow: 263
PMI: 72
HOA Dues: 225
Student Loans: 445 (6 different federal loans on graduated repayment plans. We switched to that payment plan so we could pay off some CC debt that accrued while I was on maternity leave for the little one/hospital costs were more than I had budgeted for and had planned on switching back or refi-ing earlier this year; that plan got lost in the recent shuffle)
Internet: 68 (Need for work; I work from home a couple days a week)
Phones: 60 ish (We use Ting so this goes up/down. My husband barely uses his phone, so this is all me)
Home/Car Insurance: 100/month. (Both cars are beaters and its condo insurance; this gets paid out twice a year and I usually shop around before renewing)
Term Life Insurance: 31/month (My husband’s, he bought it before we were married and I don’t really know much about it)
Netflix: 7.99
Hulu: 7.99
Gas for the House: Between 30-120 depending on time of the year
Electric: Between 40-90 depending on time of the year (Gas bill and electric bill are more or less inverses of each other, when one goes up, the other goes down, so I just budget a hundred each month)
Water/Garbage: 40
Charity: 60
The below are all a best guess based on a year’s data in Mint, but we really haven’t taken budgeting seriously up to this point
Groceries: 700 (Ouch, I know. The best I can give is that this would also include all house hold supplies. We’re working on this now. Currently we’re at 270 for the most recent month)
Gas: 200
Pet Food/Care: 100
Baby stuff: 100
Gifts: 200 (We have a large family that is constantly getting married/having babies/birthdays… just makes sense to budget for this now)
Restaurants: 400 (This physically pained me while totaling up my charges in mint, I drank so much coffee/at out so much while at work…)
Healthcare: 120 for prescriptions, 260 on premiums for HSA plan through October at which point the red/khaki stop picking up their half of the COBRA payments
Retirement: None currently…
Misc: Usually I spent a chunk each month on clothes between dry cleaning and buying new to fit in at work (no longer needed, new work is casual/now I realize this is stupid) and we had been members at an expensive gym (justifying it on the idea that my kid loved their daycare and my husband and I’d use that as date-time…), and there were a bunch of other random expenses I can’t explain. We’ve recently picked up YNAB in an attempt to get that shit under control.
(Total Expenses & Taxes = 4344+1866 + Misc-ish = 6210 + Misc-ish)
Assets: Current snapshot:
Townhome worth 171,000 per Zillow (grain of salt, I know)
2 cars paid off (2008 Chevy HHR and a 2002 Audi A4)
12,263 in an emergency fund, stashed in a Capital One 360 savings account (roughly 3 months of expenses should I lose my job)
1,499 in a ‘oh fuck I forgot about that’ fund tied to our checking at our credit union
1,670 in checking at our credit union
975 in HSA
24,066 in a Primerica Roth IRA (This is my husbands, he opened it before we met and we haven’t contributed since we got jobs with 401ks)
15,529 in my husband’s 401k
18,234 in my 401k
18,085 in my Roth through Sharebuilder (it’s currently invested in a mixed of stocks and funds using the method described in “Investing without a Silver Spoon”; it’s currently up over the last couple years, but reading through the blogs here I’m not sure this a good long-term strategy)
2,389 in my IRA through Sharebuilder … I legit don’t remember where this money came from or why we have it in there
3,000 ish in a mutal fund my in-laws set up for my husband when he was 6… (we’re trying to get it moved into a proper investment account, but honestly it’s been a low priority; last I checked it's breaking even)
A good credit score; 816 per Mint.
(Total Assets = 263,010)
Liabilities: Townhome: 159,000. Per Zillow, it’s worth 171 and a neighbor recently sold for 185; we’re 6 years into a 30 year FHA mortgage with 4.75% interest.
My 6 graduate student loans totalling 48,701 @ 6.55%. 17 months into 10 year payment cycle (I know, but to be fair, the job I got after my MBA doubled my previous salary)
My husband’s loan at 4,928 and is currently in deferment as he’s still in school, but interest is accruing at a rate of 6.8%
No credit card debt, but we have a 10,000 line at 7.8% with our credit union, 13,000 line with Amex that we get cash back on, and a red/khaki card that we use to get 5% off of groceries, but everything is going through checking until we get a handle on why we managed to accrue so much debt over the last 2 years (recently paid off 6,562)
(Total Liabilities = 212,629)
Specific Question(s):
My calculations right now put us at having around 2,000 dollars a month (conservatively, I feel like I’m missing something large/I know that any days off will have to be paid for out of my pocket) depending on how many hours I get left over to either save, put in an HSA, invest in retirement, or pay down debt for the next 6 months at which point I’ll either be hired here to do a job that’s ok (Low stress, pays well, allows for that mythical work/life balance thing, is decent experience, and the people are nice, but the work isn’t exactly stimulating) or I’ll back on the market(I’m currently being recruited back by the red/khaki but not gonna lie, it was brutal to be reminded I was just a number after working as hard/long as I had been and I'm currently employed by a consulting firm that'd help place me). We’ll also have a severance check coming from the red/khaki of around 11,000 after taxes come the beginning of June.
So what should we do/Where should we start?
1) We’ve already taken the extra paychecks I was getting in April (from being employed by red/khaki while not actually working there) and put that towards paying off the CC debt from maternity leave/the vacation we were on when I got laid off (really did not think I was getting laid off…), so that’s where all that extra money went.
2) I feel like I’m not getting enough taxes taken out of my paychecks now that I’m not contributing to HSA/401k; I currently have 3 allowances
3) I know I probably could refinance our student loans to save money at Sofi, but is that a good idea when my employment is in flux? Will they even look at me? When I checked, their fixed rate 3.85%, 5 year loan had something like a 800/month payment if I refinanced
4) I know refinancing our mortgage to get rid of the PMI/get a lower interest rate is also a good idea, but my back of the envelope math puts us at having to bring 10-15 thousand to the table to cover closing costs and to get us down to that 20% mark depending on how our home is actually valued, which is just hard to swallow when my employment is in flux and would stretch us thin. Is this something I should still consider?
5) Do I aggressively start paying down the student loans so that we can have fewer monthly bills in case I do end up having a gap in work? Or just hoard money in a savings account? I’ve never been a fan of having a massive emergency fund, but maybe that makes sense now?
6) I had planned on putting enough money, 4200, to cover our health insurance’s deductible in the HSA, but we no longer get to put money in there pre-tax, so there’s no real advantage right?
7) Does the general advice usually given to max out Roth’s still make sense for us? I’m already in the process of rolling over my 401k to a Vanguard IRA, but thought it made more sense for any retirement money to be put into a Roth?
8) My husband’s income we’ve been putting towards our ‘oh fuck’ fund to cover things like home maintenance, car fixes, etc stuff that comes up (like our washer just died, so we bought a washer/dryer combo for 600 from a scratch/dent store and that came out of the oh fuck fund; the working dryer was sold on craigslist for 150). Should this be redirected at debt repayment??
8a. My husband isn’t a super huge fan of his job and I would really enjoy having him home in the evenings (he’s currently at work/school 3 nights a week and Saturdays). Is it a good idea to cut that life line right now? He’s able to scale up to full-time at any time (which would probably include a raise since he’d probably go back to management), they match 5% for his 401k, and we get 10% off at red/khaki (a perk that becomes permanent in 3 years?)
Sorry for the long post! Any help/thoughts/guidance would be appreciated.