Hi All,
I'm pretty new to MMM, but I've been reading a lot of posts and I've learned a lot over the last two months. I'm wanting to get my shit together over the next couple of years. Overall, I've made a mix of poor decisions and good decisions. I'm looking for you guys advice on my situation and plan below.
Quick Background -
I recently quit working for a large private company and decided to do contract/consulting work as a freelancer/self-employed individual. Previously, I was making around $95K + full benefits. Being my own boss has always been something I wanted to do and I think there is a good market for my services right now. In order to set myself up correctly for the long term, I just signed a very lucrative 18 month contract with a company through the end of 2016. This sort of gets my feet wet and will allow me to build up some financial reserves until I become a true freelancer in every since of the word.
A little bit of additional background -
I'm 29 years old and going to be getting married next year. We don't plan on having children and we live in the heart of a pretty large city in the rust belt region. Below is the information for both of us (as our finances are already pretty tied - though not legally)
Total Debts:
Mortgage Loan - $125K
Credit Card Debts - $13K
Home Improvement Loan - $5.5K
Auto Loan - $8K
Student Loans - $0K
Investments -
Wealthfront SEP IRA (just opened and transferred) - $35K
Fiance's work sponsored 401K - $25K
Vanguard SEP IRA (also just opened) - $4K
Savings -
General Savings Fund - $13K
Assets -
Estimated Home Value - $180K - $200K (we bought our home three years ago in a hot area for $130K, since then no home around us has gone for less than $180K and most of them are smaller and less updated than ours).
Car #1 - 2009 Hyundai Accent - paid off
Car #2 - 2007 Honda Element - associated with auto loan above
The above is our current situation and here is the plan -
Projected Monthly Income: $17.5K - $20.5K depending on monthly billable hours
Monthly Budget - $3K (we're trying to cut our spending, we've previously been in the $5K/month range because of excess/bs spending)
I'm basically going to take the remaining $14K - $17K/month and do the following (for the next 18 months) -
- Pay off all credit card debt immediately
- Pay off all non-mortgage based loans
- Stash away an extra $20K for an emergency fund/fund for when work gets slow
- Do a mix of the following every other month:
- Invest in Vanguard SEP IRA until I hit my limit
- Put towards mortgage (until I can get rid of PMI)
A few questions for you experts -
- First, is our current situation that bad? I feel like we have high-credit card debt and some crappy loans, but we also have no student debt (yay scholarships!) and are extremely up on our mortgage. Interested in hearing your thoughts given our age.
- Second, does my plan of attack make sense?
- Third, once I max my Vanguard SEP IRA (projected mid-next year) and get my mortgage to the point where I don't owe PMI, what should I do? I'd prefer to keep investing actually, but I'm a bit clueless on how I can do that since I've already hit my may contribution limit for our SEP IRA.
Thanks in advance!