Me (29 yrs old) and my Wife (28 yrs old) have 3 dogs, and one child on the way. Our goal is for her to have the choice to stop working before 40, and I will probably cut back significantly after 40. She has a chronic disease that has been costing us around $5000 per year in out of pocket costs that will be ongoing for her entire life. I am considering keeping enough hours at an employer to have insurance, and being able to put some money in IRA and HSA to hedge against the fact that we will have above average expenses. The combination of part time income, employer sponsored insurance, investment income should get use to a point of financial independence by 40.
Our combined financial picture
• Assets:
o 401K’s: $156,672 (Both have a 6% match)
o ROTH IRA’s: $19,267
o H.S.A. Investment account: $1,094
o Her Car: 2008 Audi A4
o My Car: 2008 Subaru Impreza (and a commuter bike)
• Liabilities:
o Mortgage: $58,887 (3.75% interest rate is low but my wife doesn’t like debt/and neither do I)
• Gross Income: (Annual)
o $66,443 (not including possible 7.5% bonus)
o $89,000
o Total: $155,443
• Expenses: (Annual)
o Cell Phone: $660 (Cricket Wireless)
o Life and Home owners Insurance: $1,200
o Mortgage: $576
o Property Tax: $4,214 (1000 sqft home, high tax area in CT, only 5 miles to my work)
o Water Bill: $600
o Gas Heating: $1,128 (cold winters, and most of our appliances run on gas)
o Electric: $1,224
o Internet/cable: $1,176 (need internet for work from home)
o Grocery: $3,840
o Gas for car: $2,160 (this is probably a little high unless we go on a road trip)
o Vehicle Insurance & taxes: $2,160
o Gifts/Charity: $600
o Dog food: $1,200
o Vet bills: averages between $1000-$3000
o Going out/misc: $6,600
o Memberships/licenses: $436 (she has some RN licenses, Amazon, & AAA)
o H.S.A: $3,000
o Medical/Dental: $1200
o Total: $32,975*
*Some years are better than others depending if we have stuff going wrong with the dogs, cars, repairs on the house, or vacations but this would be a typical spending without some one time items. I think it would be safe to say $35-40K in expenses on an annual basis with debt would be comfortable amount which means we would need $875K-$1M in investments to retire on.
I work from home 3 days a week, and bike/drive to work the other 2 days. She has to go into the office every day that is about 20 minutes away.
We are planning on not getting any more dogs it was stupid to have 3 dogs. We will probably get back to a one-dog home over time that will lower expenses considerably.
Currently all our extra money is going towards the mortgage, but once when we pay off the house this year we plan on maxing out $18,500 each towards our 401Ks (currently she contributes 8%, and I contribute 16%.) Currently neither of us contributes toward the Roth IRA’s, but we will max out $11,000 each once when debt free. I will also be maxing out my H.S.A. investment account (my company contributes $1800 per year).
We plan on moving in the next 3-4 years so any income we have left will probably go towards a taxable account. I am thinking I need the flexibility to pull out money since we will be moving up in home slightly, and will want to have some money I can access easily for early retirement.
We plan on buying between $225-$300K home, but because we are in the North East cost of living is pretty high in terms of taxes, and utilities so not much we can do there unless we move far away from family. We are considering currently CT, NH, VT if will be difficult with a baby to move far away from family. Our current home was purchased for $131,000 in 2011, and should be paid off this year if all goes well. I am going to try to go full time work from home when we move, and she will probably end up having to get a new job. She is an RN so she can find work a little easier. I work as a health insurance Underwriter.
•Do you think the numbers work to get us to a spot of financial independence by 40?
•What mustachian recommendations do you have?
•With a baby on the way what increase in cost of living have you experienced, and did it delay your early retirement? We plan on using day care 2 times a week or less if at all possible.
•Does anyone have any experience/recommendations with early retirement and having ongoing health issues/costs?
