Hi All,
Long time reader, first time poster. I am looking for feedback on my savings / retirement strategies. I went through a divorce a few years ago and between splitting assets and paying a lawyer, I am happy with what I have done so far to bounce back.
I am 38, I have two kids 16 and 13
Current Assets are:
401k = 268k
Roth IRA = 17k just started backdoor Roth last year
HSA = 4k first year, hoping to let it grow
Emergency = 35k in savings account
CD ladder = 30k I consider this part of emergency fund as well
House equity = 150k Value $280k, Mortgage $130k
Car = 3k No loan, 195k miles but hoping it will make it a few more years and become my kid's car
Brokerage = 6k
Income = 14,766 / month
Benefits = - 274 / month
HSA (max) = -438 / month
401k (max) = -1,500 / month
Taxes = -4,426 / month
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Net pay = 8,128 / month
I also have a 6% 401k match for another $886 contribution per month
My receive some child support but deposit directly into brokerage acct for future expenses (car ins, college, etc)
If I get a tax refund or bonus, it goes into house projects or savings
Expenses:
Mortgage P&I = 1,450 / month
Tax & Ins = 520 / month
Roth IRA = 458 / month - maxed out
Electric = 180 / month average - I run my pool and a/c in the summer, line dry clothes careful about usage
Cable/internet= 180 / month - this is phone/cable/internet. I have looked for cheaper options but this is the best deal for what I "need"
Car ins & gas = 223 / month
Heating oil = 125 / month
Food = 450 / month
Spending = 1,000 / month - this covers everything else, pets, clothes, sports, movies, activities, vacations, charity.
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Total base expenses = 4,586 / month
Extra mortgage payment = 3,500 / month
I know my "spending" category is high, it is really a combination of my lifestyle choices. My kids do some sports, I have 3 dogs and 2 cats, we enjoy going on vacations and donating our time and money to local causes. This includes birthdays, christmas, etc. It is a bit of a catch-all category because I basically spend what is left over after all the other expenses. There is definitely extra spending that could be eliminated, but I don't worry about it because of my maxed out retirements and healthy savings rate (I consider the extra mortgage as savings).
So, I am currently paying an extra $42,000 per year on my mortgage. At this rate I will have it paid off middle of 2018 and then 14 months later my older kiddo will be starting college. The money that is excess every month would go to helping the kids with college and my own savings. I know this may not be the best financial decision, but I want the mortgage gone so bad, it is an emotional decision and challenge to myself to have it gone by 40. I don't think my kids have a great shot at financial aid for college given my income, but I think this strategy of maximizing retirement and primary residence would be the most beneficial for that purpose. Once the kids are out of college, I will be mid-40s with a paid off house and (hopefully) around $700k in retirement; at that point I would like to work part time or in a less demanding job.
Feedback appreciated!
A