Hi everyone,
Thanks for responding, even my "succinct" version was all over the place. It does seem like I asked for help a little prematurely since a lot is up in the air; I apologize for that and am very grateful you all responded anyway!
Let me make our best case scenario a little bit more clear. In the next few months we receive $250k, pay off all debt except mortgage, stash $100k for medical, and use the balance for savings for tuition and retirement. We refinance our house and lower our payment from $1145 to $900 or so. My husband returns to work and earns $3k per month after tax, and I earn $600 per month after tax. This would cover all of our expenses and allow for paying off mortgage/saving, assuming we get the eating out under control. (Which we will.) This is where we would start our Mustachian journey, and I would go on to get my degree and increase my earning potential, eventually using my salary to build the stash while living off of husband's salary. So I guess we consider this part right now to be our Mustachian prequel, trying to get things organized/prepared for the future. Because of our late start we will likely not be true Mustachians retiring less than 10 years from the start date, but I think we could do 15. Once our degrees are complete we'd like to move, about 2 hours away close to my family, and build a house, renting this one out, so that could be an additional stream of retirement income once the mortgage is paid off.
Okay, so back to the original questions and responses. I separated these responses so you guys only have to read the ones you were asking about, I hope it helps.
1. Yes, we have $40k in credit card debt. I omitted much of my self-flagellation from the post for brevity ("brevity") but rest assured I feel horrible about it and stay awake nights thinking about it. It's split pretty evenly between the two of us. We were paying more than the minimums before the accident (doing a snowball type thing) but when shit hit the fan I put all the autopays on minimums. I've left them there only because of my intense fear of moving money out of checking right now.
2. Eating out is a long-term habit for me, one I brought into our marriage. I have spent the last year learning how to cook and before the accident we were doing much better about it as we were counting calories with MFP and eating at home a lot more. Since the accident, well, not so much lol. This is something we have immediate plans to change. (As in, today I went grocery shopping and tomorrow I will be bulk cooking and freezing meals to get a nice stash going.)
3. It's hard to talk about "income" right now. If you mean literally what we are getting paid each month, right now that is $1660, and will be $2260 once I start getting paychecks, and no that is not enough to cover our expenses. However, for the past five months we have been living off of the money in our checking account, which is why it's so large right now. I am loath to move any money around just from being terrified of potential surprises. When/if my husband goes back to work (we are aiming for mid to late fall assuming he is cleared to return by both his physician and his company's physicians) or when/if he is approved for SSDI, we will have additional income. So, yes, we have plenty of money to pay our monthly expenses at the moment, and time to whittle them down as needed (especially food) which is why I wanted to get a start on making a plan. I don't plan to keep our checking account at $20k forever, though, so eventually this will turn into a more normal situation where the money comes in and the auto drafts go out and the extra goes into savings. Also right now my checks will be deposited into the savings account, not the checking account.
4. Student loans will not increase as we will pay cash for our tuition from now on, assuming we are able to. We are both at community college, so it's not so bad. I just paid $3,500 for my tuition, my books, and his tuition for this fall. In fall 2018 we will both move on to a 4-yr university that will be a little more costly.
5. The settlement I mentioned is the uninsured motorist coverage payment, not a civil judgment against the person who hit him. He does have an attorney whom we trust. His coverage is $375k and if all goes perfectly, we will give 1/3 to the lawyer and get $250k for ourselves. The risk for this money (the other option besides "going perfectly") is any liens against it from interested parties, namely his health insurance company. That is why we have the lawyer, to hopefully protect as much of this money as possible. It's possible we won't get the full amount, in which case we will still pay off at least the consumer debt and then funnel the rest into his medical fund. My husband hasn't decided if he wants to pursue a civil case. It will cost us more money, and the person who hit him is young and was driving uninsured, a fair indicator that she does not have any assets for us to claim. We could, hypothetically, win any judgment against her without being able to receive any of the monies. The judge could award us anything, say $800 billion, and we may only be able to get a small wage garnishment, or nothing at all if she bankrupts the judgment. It doesn't matter what we are awarded, it matters what we can collect, if that makes sense. His attorney is focusing on the insurance side of things for now and once we are settled there we can decide to give the go ahead on pursuing a civil case.
6. His medical needs will primarily be equipment-related. He is still in good health after the accident. Thank god he was a healthy weight, drank lots of water and was active, and didn't smoke or have any other health issues. His left leg is amputated and his left arm is paralyzed, although we are pursuing some neurological surgery options with the arm. He will definitely walk again, though possibly not full-time (may use chair part time). His money would be set aside for prosthetics (insurance coverage can be difficult, plus if you need anything extra like a waterproof leg for showering, etc. it's OOP) and equipment like maintenance on his power chair. Assuming we can put the $100k (or whatever amount) in a place where it earns some money, I am hoping it can be a self-sustaining pool as it should be infrequently used. Also, I pretty much made up this number. Prosthetic legs range from $5k to $100k depending on how tricked out they are; my husband's amputation is very high up so he will likely never run and won't need special athletic legs. But who knows. I felt like $100k was a safe # but it's up for analysis and change.
7. One the refi front, the improvements to the bathroom should hopefully improve our home appraisal. We also installed some hardwood and ripped up carpets/refinished hardwood last year when we bought the house. Creating a laundry/pantry room should also increase the home value. Basically we are making the house (one floor, thank god!) accessible for my husband but also getting some value out of it, like a 2 birds 1 stone situation. Our house appraised for $168k when we bought it; if our improvements can earn an appraisal of $180k and we pay off $5k of mortgage principal, we will be at 80% LTV. We want to pay off our debt so that we have the credit boost to refi and get rid of PMI and also lower our rate (which is 4.5%).
8. I don't know if we can refi if my husband never returns to work. If he does not return to work, he should be eligible for SSDI long-term, which I assume would count as income. I don't know what amount he will receive, or even if he will be approved (application filed 2/24 of this year, still pending review as of today LOL). With me only making $10,400 a year at 20 hours per week $10/hr for the next few years, I'm not sure how all of that would be factored in. I have to imagine they would take assets into account, but I'm not sure. We want to refi with our credit union (have a mortgage mill type place right now).
9. Sorry to the previous poster but we won't be liquidating the retirement income. I just did that with mine when I quit my job in December--which was either the worst timing ever or the best, since I didn't have to worry about losing a job due to living in a different city for two months while he was in the hospital, and we also had a cash cushion in our checking account so I could keep paying the mortgage and bills while waiting for some of the insurance monies to trickle in. In the worst case catastrophic scenario where we do not receive a penny of settlement money and my husband can never return to work, maybe we would do that. But it is extremely likely we will receive a large cash settlement with which we can pay off at least the $40k in consumer debt.
10. I think I've answered everything so let me get in a plug now... please do not MMM your way out of proper insurance coverage. Collision/comp, sure, who cares, but max out your liability and uninsured coverages and the medpay option as well (we received $10k from the medpay coverage alone). Also, if your employer offers supplemental Accidental Death & Dismemberment insurance, buy the maximum allowable coverage. It's only a few bucks per pay period, but in our case it made a huge difference because my husband only had the employer-sponsored 1x salary. For like $3 a pay period he could have purchased 5x salary coverage and we would have received over $200,000 from that policy alone. NEVER SKIMP ON INSURANCE EVER basically.
