Author Topic: Just Bought a House Case Study  (Read 2521 times)

BlueLesPaul

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Just Bought a House Case Study
« on: May 01, 2015, 01:29:36 PM »
Hey All

I did one of these a while ago, but I figure it should update since we just bought a house.  Here is the situation:


Monthly Income:

Me: (Age 30)
$3,176.78 (this is net tax, HDHP, $240 monthly HSA contribution and a 6% 401K contribution with 3% match, paid bi-weekly, so I get 2 “extra” checks every year)
Employer puts in an additional $240 a month into HSA, so a total of $480 monthly
Spouse: (Age 31)
approx. $1,800 (about 30 hours of work a week, paid semi-monthly, will drop to 20 hours in a couple of months and possibly quit working to stay home with our 1 year old within a year)

Total: $5176.78 (Does not includes HSA contributions from my employer)(My net income alone will be around $3472.72 because of reduced taxes)


Monthly Expenses and Savings:

Mortgage: $1294.37, includes $37.75 for HO Insurance, $64.75 for PMI and $147.94 for taxes

Utilities: Previous owner averaged $300 a month for Electricity, Gas, water and garbage, hoping to cut this down, but let’s work with this figure for the time being.

Internet: $30

Phones: $55, with Republic Wireless (includes 12.5 a month for replacement phone as needed)

Gifts:  $66.67

Food: $260

Hygiene: $20

529 Contribution: $10

Date Nights: $40

Misc: $150

Gas for Cars: $75 (5 mile commute, spouse works from home)

Car Insurance and oil changes: $128

Diapers and other baby supplies: $60

Tithing: $695 (will drop to $462 if/when wife stops working)(Non-negotiable).

Total Expense: Total Expenses: $2984.04 ($2751.04 if spouse stopped working)


Savings (In addition to 401K and HSA)

Vanguard Roth IRA:  $110

New Car:  $117.51

Home Repairs:  $117.51

Vacations:  $117.51

Additional Mortgage Payment: $798.13

Additional Roth IRA: $199.53

Additional Vacation:  $199.53

Additional Money for Spouse: $133.02


Total Savings: $1792.74 ($462.53 if spouse stopped working, could possibly be more)


Assets:

1998 Saturn Sedan $500
2006 Nissan Sentra $4000
Bank/Checking Account: $3807  (Used most of our liquid funds for the down payment)
529 Plan for Child: $187
John Hopkins 401K: $1,861
Vanguard Roth IRA: $8,467
Vanguard SIMPLE IRA $2,809
Vanguard IRA: $3,863
Appraised value of the home:  $260,000


Total Assets: $285,494


Liabilities:

Mortgage: $222,000

Net Worth: $63,494


Goals:

Wife wants to quit and stay at home with our child (9 months old)

Want to start saving at least 15% of take home for retirement, including 401K and match. 
-Should I include HSA contributions?  I am thinking of increase my HSA contribution, but I have noticed that we have been using the HSA quite frequently for health cost and I am not sure if it is appropriate for a retirement vehicle.
-Best place to invest with an HSA, my employer has Avidia Bank, but thinking of doing In-service transfer to HSA Bank once I get around $5,000?

FI attainable by the time I turn 55? If not, what adjustments need to be made?  I should note that we plan to have 3 kids an employer plans to increase match from 50% up to 6% to 50% up to 7% in a few months.

Best way to allocate the “extra” two paychecks from my work?  Is it too early to save for a wedding(s)?  Should I even worry about saving for college our kid(s)?

Thanks!

RexualChocolate

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Re: Just Bought a House Case Study
« Reply #1 on: May 01, 2015, 02:06:56 PM »
If your expenses stay flat with 3 kids that's 36k of expenses a year. You need 900k at 4% withdrawl rate for 30 years roughly. Less if you net Social Security.

Saving for future spending is not retirement saving; it's deferred consumption, so don't count your vacation or new car as retirement savings. If you take these off, that completely eliminates everything you're saving if your wife keeps working (referring to the 462 in parentheses at the end of saving)

Once she stops working and the last kid turns 5 and goes to school most of the day(if you keep having kids every year, this is in 7 years), what does she want to do all day? Do you think whatever that is is worth giving up her additional income? This is a personal choice, but I don't think you can afford it.

Right now you have 17k of investible assets and are planning on socking away approx 4k more a year. I don't think you're saving enough.

JLee

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Re: Just Bought a House Case Study
« Reply #2 on: May 01, 2015, 02:16:36 PM »
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

At a 15% savings rate, you're looking at 43 years of working prior to retirement.

BlueLesPaul

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Re: Just Bought a House Case Study
« Reply #3 on: May 01, 2015, 02:19:29 PM »
Sorry, I didn't not intend for the saving for vacation or car to be seens as retirement, but I see your point.

Not sure where you get we are only saving 4K a year, but now that I think about it, I may not have been clear.

401K contrbution $60,000 @ 6%:  $3,600
401k match $60,000 @ 3%: $1,8000
Roth IRA:  $1,320
HSA: Between $0-$5,760 (depending on whether you treat HSA a not, partially or all retirement, probably somewhere in between for us)

Total Retirement:  $6,720-$12,480 (11.2%-20.8%)


greenmimama

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Re: Just Bought a House Case Study
« Reply #4 on: May 01, 2015, 02:34:48 PM »
If she could keep her job at 20 hours a week, she might want to.

I wish I would have kept working, but child care was a big issue, so if you can work that out, maybe think about a few years down the road, I would love to go somewhere I enjoyed, have conversation with adults and I think it would make me a better mom. This coming from someone who could.not.wait. to quit and only ever wanted to be a stay at home mom, but almost 9 years later, I would love working part time, but now we homeschool and child care is still a big issue.