Case Study - Help me SPEND my money!

[LazyBones]

Hello everyone. 
I stumbled across MMM in late 2014 by chance, and it completely changed the way I do things now.  I may not be as frugal as many of you, but I have definitely made some big positive changes over the past year, and I plan to continue to do so moving forward.
I am looking for help regarding my future goal of FIRE.  Any advice would be greatly appreciated!

Right now, I am providing some high level information – I am doing this on purpose.  If you would like more detailed information, please let me know.

Life Situation:
Married, filing jointly
Him – age 31
Her – age 30
Child 1 – age 3 months
Currently living in Illinois – plan move to Michigan @ FIRE

Gross Salary (Before deductions):
Him - $84,300
Her - $48,500
Total - $132,000

Pre-tax deductions:
9% His 401k (4% matching if 5% or more is contributed)
3% Her 401K (3% matching if 3% or more is contributed)
Insurance  - ~$175 per month (Guessing here – Haven’t received a paycheck which includes insurance cost with Child 1 on it yet – without Child 1 on it, it is 105.11 per month – should receive paycheck May 13th)

Taxes:
Federal Tax Rate – 25%
Illinois Income Tax – 3.75%

Current expenses:
$5,500 per month (not the best compared to others, but not bad considering that it used to average $7,000 per month before we even had Child 1 or the car payment)

Monthly expenses of $5,500 include a Student Loan, Car Loan, Home Mortgage, and Daycare

Daycare - $1,292 per month; this will decrease over time, but I am unsure by how much.  This expense will go away once Child 1 starts public school Fall 2021.  (Yes, I know this is a lot of money, but it is actually one of the least expensive in the area where I currently live.)

Liabilities:
Student Loan - $250 per month, interest rate unknown (Wife & her parents pay $500 combined – her parents manage the account).  Approximately $6,000 remaining
Car Loan - $334.39 per month @ 3.24%.  Approximately $16,000 remaining
Home Mortgage - $160,000 remaining @ 3.75%; Total Monthly Payment - $1,436.37; Payment minus Principal & Interest - $793.09

Expected ER expenses:
Assume $40,000 (after tax).  Based on some of my earlier calculations, this could be lower, but let’s use $40,000 for now.

Assets:
His 401(k) - $80,000
Her 401(k) - $10,000
Vanguard Investment account - $10,000 (VTSAX)
His company stock - $20,000 (Currently participate in ESPP (8% max) – 15% off stock price at closing of last day of quarter; no penalties for selling immediately, but it takes 2-4 weeks for the funds to appear in the ESPP account)
Savings Account - $23,500
Other Investment account - $2,500 (from His parents)

Specific Questions:
Based on my assets, what would be the best plan of attack be to eliminate my current liabilities?  Should I eliminate all liabilities before Investing?  (My wife doesn’t like to see our Savings Account dip below $20,000 – it’s been hard to convince her otherwise)

I would like to purchase property in Michigan in as early as 4 years from now.  Assume $100,000 (goal is to find something for under $50,000).
As soon as a year after purchasing the property, I would like to purchase an RV to use as shelter on the property.  Assume $20,000 (goal is to find something for under $15,000)

Based on my Gross Salary and my current monthly expenses, what would be the best investment approach in order to reach my short term goals of purchasing the property and RV?

After that, what would be the best long term investment approach to reach FIRE?

-My current plan is in the post below-


Miscellaneous Information:
Our Checking and Savings accounts currently have a combined $3,280 going into them every 2 weeks.  Every 2 weeks, $100 is being deposited in to the Vanguard Investment account.
Currently, I am participating in my company ESPP at 8% (that’s the max we can contribute).  I sell every quarter and put that into the Vanguard Investment account.  This is a long term capital gain, because of the large amount of stocks I have in the account from participating in the ESPP previously and not doing anything with the money.

I figured out how I want to set up our 401(k) asset allocations with the help of the Boglehead forum. 

I mentioned to them that I planned to reach Financial Independence in 14 years based on a plan that I put together for myself (See second post below).  I also told them about my short-term goal of purchasing property.
They suggested that I stop contributing to the Vanguard Investment account altogether – Max out both 401(k)s, and then work on maxing out two Roth IRA accounts.  Then focus on contributing to the taxable account.

This makes sense to me if I want to reach early FI (using Roth conversion ladder/pipeline), but this doesn’t make sense to me for my short-term goal of purchasing the property.  Thoughts?

I’m essentially asking the MMM community on how I should set up my contributions towards 401(k) accounts, IRA accounts, Taxable accounts, and how I should pay off my liabilities (if any) using my assets, while taking into consideration my short-term goal of purchasing property – Help me SPEND my money!

[LazyBones]

My current plan to FIRE:

Contribute 9% this year into HIS 401(k).  Add 1% next year, and every year after that until maxed out (assuming a 3% annual raise, should be able to max out 401(k) in 8 years.  The lowest annual raise I have received at my company was 2.5% in 2010.  Every other year has been 3% or greater)

Continue to contribute 3% per year into HER 401(k).

For Vanguard Investment account:
Contribute $131 every 2 weeks – increase this amount annually (75% of HIS annual raise)
Beginning August, contribute 43% of wife’s take home pay ($575 every 2 weeks) – Assume $575 every two weeks until FIRE (wife doesn’t always receive an annual raise, if she does, they are often small)
Contribute 8% to ESPP – sell quarterly and contribute into Vanguard Investment account
In October, pay off Student Loan.  Put $50 per month into Vanguard
End of 2018, pay off Car.  Put additional $450 per month into Vanguard
In September 2021, Child 1 goes to school.  Take savings from Daycare expense ($1,250 per month) and put into Vanguard.

I assumed 5% average market return

Purchase property March 2020 for $100,000
Purchase RV March 2021 for $20,000

Assume $47,000 annual spending (pre-tax)

Based on the above plan, according to my spreadsheet that I have been maintaining for the past 14 months, I should be able to reach FI in January 2031 – Use money in Vanguard account until 2047, at which point I begin withdrawing from 401(k) at age 62.

I believe that the above plan is conservative – I can obviously spend less on the property and less on the RV.  I also didn’t account into putting in the full amounts from the paid off Student Loan and Car into the Vanguard account.  I also didn’t take the full amount from not paying Daycare.  I also assumed no promotional pay increases for myself, and no pay increases for my wife whatsoever.
Obviously, the plan going forward will be to continue tracking our monthly spending and adjust our contribution into the Vanguard account accordingly.  Based on my conservative estimates above, we should be able to put more into our Vanguard account than the plan shows.

Decent plan?  Can I make it better?

I could pay off the student loan and the car today with the amount that we have in our savings account, but as mentioned in the post above, my wife considers that money essentially untouchable, as she doesn’t want to see the account go below $20,000.
If you need any other specific information, let me know – I have a lot of it available

[BBub]

Ditch the clown car & pay off that $16k loan.   Since the car is financed it probably has an expensive comp & collision policy as well.  Buy a quality used car with cash.  That frees up $350 + a good chunk of insurance.

The SL will be paid off in 1 yr at the current pace.  You could accelerate it if you want, but it's not a huge deal.

Max 2 401k's.  The tax savings will be significant & you'll still have some money left over to add to a taxable account or roth.

Are you planning to move to the Michigan land?  If so, disregard the rest of this paragraph.  If not, I'd hold off on that plan for a little while.  The $70-120k that you put into that land & RV will probably earn somewhere around 0%, plus you'll have taxes, insurance, maintenance & improvement costs, expenses commuting back and forth, etc..  I get that it's a lifestyle goal, but it'll most likely add several years to your FIRE timeline.  Go for FIRE first, then make inflationary lifestyle choices.

On the daycare - could one of you negotiate working from home 1 or 2 days per week, get in-law's or parents to help out 1-2 and hire out the other 1-2 days?  Even finding another family & splitting the cost of a nanny would seem cheaper than that daycare.  If there is no way to avoid daycare, does either your's or SO's employer offer a Flexible Spending Account? This could allow you to defer the $15k per year tax free.  Geez that's a lot of money.

[LazyBones]

Ditch the clown car & pay off that $16k loan.   Since the car is financed it probably has an expensive comp & collision policy as well.  Buy a quality used car with cash.  That frees up $350 + a good chunk of insurance.

The SL will be paid off in 1 yr at the current pace.  You could accelerate it if you want, but it's not a huge deal.

Unfortunately, it is my wife's clown car, so ditching it is not an option, but paying it off early very well may be, as we have the funds to do so. 
What does a fellow Mustachian consider to be a reasonable cost for auto insurance, assuming that you actually NEED a car?  Currently, she is paying $80.28 per month. 

Max 2 401k's.  The tax savings will be significant & you'll still have some money left over to add to a taxable account or roth.

I ran the numbers yesterday to see if we could comfortably max out both of our 401k's, and it turns out we can.  I think the SO will be agreeable to this, as the initial plan was to use the money towards the taxable account...which obviously doesn't make much sense as the first step.  I'll have to sit down with her and have "the talk".
What is a better approach - Continue to max out the 401k's and use the Roth Conversion Ladder/Pipeline for "retirement", or following MMM'S route as suggested in his "How Much is TOO MUCH in your 401(k)?" article?

Are you planning to move to the Michigan land?  If so, disregard the rest of this paragraph.  If not, I'd hold off on that plan for a little while.  The $70-120k that you put into that land & RV will probably earn somewhere around 0%, plus you'll have taxes, insurance, maintenance & improvement costs, expenses commuting back and forth, etc..  I get that it's a lifestyle goal, but it'll most likely add several years to your FIRE timeline.  Go for FIRE first, then make inflationary lifestyle choices.

We were planning to move full time after we became financially independent.  It is a definite goal we want to pursue for our future, but there is no reason that we can't hold off on this for a while as you suggest.

After FIRE, how would one go about paying for the property? 
At this point we would also want to build a small home on the property, and just scrap the entire RV idea, as we would want to settle down.
I'm guessing selling our current home would cover some of the expense, but not all of it.
Is it safe to assume that the 4% rule would still cover this, if we paid for everything at once, and then just cut back on our expenses for the first year or two?

On the daycare - could one of you negotiate working from home 1 or 2 days per week, get in-law's or parents to help out 1-2 and hire out the other 1-2 days?  Even finding another family & splitting the cost of a nanny would seem cheaper than that daycare.  If there is no way to avoid daycare, does either your's or SO's employer offer a Flexible Spending Account? This could allow you to defer the $15k per year tax free.  Geez that's a lot of money.

I get every other Friday off, that's it.
My wife has a new boss who is not as accommodating as her old one, so no days working from home for her right now.
The parents live far away - no immediate friends or family in the area to help out.
We have talked with some people that run at home daycare's in the area, but they are similar in price to what we have now.

Both of our companies do provide an FSA.  We did max it out this year to cover my wife's hospital stay, and to help pay for part of the daycare.  We will continue to use the FSA for child care costs...hopefully we can find a less expensive option in the future.

[BBub]

Insurance: we pay $60 /mo for 2 cars.  Liability only, older cars, pretty clean driving records (DW has 1 speeding ticket in the last 3 yrs.  I have none.. fingers crossed).

401k's:  It's kind of a win-win, but most in the FIRE community suggest maxing the 401k's first while you are working.  Especially with a dual income.  The taxable account is still a great option, especially in retirement, because the gains & income are basically tax free up to about $90k if that's your only source of income.  Here's some further reading:
http://www.gocurrycracker.com/roth-sucks/
http://www.madfientist.com/retire-even-earlier/

I'd say definitely max out for the next several years.  If you're getting closer to FI & feel like padding the taxable stash a bit more, you can always pivot and spend a couple more years adding to that.

Land:  Once you're FI it just won't be as big of a deal because of the assets working for you.  Just using rough numbers, assume you are shooting for $40k withdrawals from a $1M portfolio.  You are saving $60k/yr.  Once you hit FI, OMY will get you the land easily.  You'll have $100k to spend on the land without disrupting the stash.  On the front-end, however, that $100k could set you back almost 2 yrs then you'd lose out on the future growth of that money.  So, really it would set you back many more years than 2.  Selling the house is also a very viable strategy to cover the cost of the land.

Daycare: 10-4.  At least you can use the FSA.  We don't have kids yet, so I'm always a bit blown away by HCOL daycare numbers.

[Mikila]

My primary advice is to max out your 401ks.  I ran your numbers through taxcaster, and holy cow, at that income level your taxes are needlessly high.  I want you to "spend" your money, in lieu of Uncle Sam.  Currently your tax burden is around $17k.  If you were both to max out your 401ks, that number would drop to approximately $10.4K.  You would be saving 36K/yr at an additional "cost" of 29K due to the tax savings.  There are paycheck calculators out there to show you the take home difference.  I encourage you to play with one of those.  The FSA is great for your bottom line.

Secondly, I think you have too much going on.  Student loans AND a car loan AND a mortgage AND a desire to save up for property AND to fund an early retirement.  You have a good income, but you are split too many ways now and not going to fund any of these fully any time soon unless you condense and concentrate your efforts. 

You can afford anything, but not everything.  The easiest expense to ditch would be the car payment, but you have indicated you don't want to do that.  I don't think you can afford property/ rv until you eliminate some of these other expenses.   Good luck!

[MDM]

Student Loan - $250 per month, interest rate unknown (Wife & her parents pay $500 combined – her parents manage the account).

Time to cut the apron strings, and for you and your wife to understand the situation and take control.

Car Loan - $334.39 per month @ 3.24%.  Approximately $16,000 remaining
Home Mortgage - $160,000 remaining @ 3.75%; Total Monthly Payment - $1,436.37; Payment minus Principal & Interest - $793.09

Those interest rates aren't high.  You could continue to pay the minimums.

Specific Questions:
Based on my assets, what would be the best plan of attack be to eliminate my current liabilities?  Should I eliminate all liabilities before Investing?  (My wife doesn’t like to see our Savings Account dip below $20,000 – it’s been hard to convince her otherwise)

Having an emergency fund is a reasonable thing, and $20K is a reasonable amount.

Based on my Gross Salary and my current monthly expenses, what would be the best investment approach in order to reach my short term goals of purchasing the property and RV?

If that is your highest desire, don't put anything into retirement funds.  Just accumulate in a savings account, then spend it ASAP.  Of course, that's not necessarily the best long term plan....

After that, what would be the best long term investment approach to reach FIRE?
...
They suggested that I stop contributing to the Vanguard Investment account altogether – Max out both 401(k)s, and then work on maxing out two Roth IRA accounts.  Then focus on contributing to the taxable account.
This makes sense to me if I want to reach early FI (using Roth conversion ladder/pipeline), but this doesn’t make sense to me for my short-term goal of purchasing the property.  Thoughts?

Seems your first question was answered correctly by bogleheads.

It's really up to the two of you to prioritize.

Might be worthwhile for you to look through the case study spreadsheet, particularly the 'Calculations' and 'Investment Order' tabs. 
E.g.,
"The emergency fund is your "no risk" money.  You might consider one of these online banks:      
   http://www.magnifymoney.com/blog/earning-interest/best-online-savings-accounts275921001   "
and
"It is up to you whether to consider "saving for a house down payment" as a "day to day expense", vs. lumping the down payment savings in with "taxable investments" at the end."

[LazyBones]

Insurance: we pay $60 /mo for 2 cars.  Liability only, older cars, pretty clean driving records (DW has 1 speeding ticket in the last 3 yrs.  I have none.. fingers crossed).

Good to know.  I'll definitely be shopping around a little bit for car insurance.

401k's:  It's kind of a win-win, but most in the FIRE community suggest maxing the 401k's first while you are working.  Especially with a dual income.  The taxable account is still a great option, especially in retirement, because the gains & income are basically tax free up to about $90k if that's your only source of income.  Here's some further reading:
http://www.gocurrycracker.com/roth-sucks/
http://www.madfientist.com/retire-even-earlier/

I'd say definitely max out for the next several years.  If you're getting closer to FI & feel like padding the taxable stash a bit more, you can always pivot and spend a couple more years adding to that.

That's what it seems like - 401k first.  After that, I see varying opinions between what to do next in terms of contributing to Traditional IRA, Roth IRA, and HSA, taxable...
I've read the curry cracker article a few times before - very informative.
I haven't seen that madfientist article before, so that was a nice link - Thanks!

After running the numbers, it looks like both my wife and I can max out our 401k accounts...we just need to do some quick restructuring of our direct deposits and should be all set.  I just have to get the DW on board with with that plan.

Land:  Once you're FI it just won't be as big of a deal because of the assets working for you.  Just using rough numbers, assume you are shooting for $40k withdrawals from a $1M portfolio.  You are saving $60k/yr.  Once you hit FI, OMY will get you the land easily.  You'll have $100k to spend on the land without disrupting the stash.  On the front-end, however, that $100k could set you back almost 2 yrs then you'd lose out on the future growth of that money.  So, really it would set you back many more years than 2.  Selling the house is also a very viable strategy to cover the cost of the land.

Agreed...save now, pay later.  I'll have to dream for a little while longer, but now we'll have more time to do some researching and exploring on the areas we are interested in. 

Daycare: 10-4.  At least you can use the FSA.  We don't have kids yet, so I'm always a bit blown away by HCOL daycare numbers.

It's really location dependent.  I was shocked as well, because where I used to live before relocating for work, it was about $600 to $800 per month.
I have a coworker who lived 20 miles northeast from work, and I live about 9 miles southwest from work.  He was paying over $2,500 per child...he has two kids.
He's recently moved to about 9 miles from work as well, but north.  I think he's at about $1,800 per month per kid now.  A great deal according to him.

[LazyBones]

My primary advice is to max out your 401ks.  I ran your numbers through taxcaster, and holy cow, at that income level your taxes are needlessly high.  I want you to "spend" your money, in lieu of Uncle Sam.  Currently your tax burden is around $17k.  If you were both to max out your 401ks, that number would drop to approximately $10.4K.  You would be saving 36K/yr at an additional "cost" of 29K due to the tax savings.  There are paycheck calculators out there to show you the take home difference.  I encourage you to play with one of those.  The FSA is great for your bottom line.

That's correct.  It was just shy of $17,000 last year.  A little under $15,000 after credits I was able to take.  It's funny you mention the paycheck calculators; I've been playing around with one since earlier this morning.

Secondly, I think you have too much going on.  Student loans AND a car loan AND a mortgage AND a desire to save up for property AND to fund an early retirement.  You have a good income, but you are split too many ways now and not going to fund any of these fully any time soon unless you condense and concentrate your efforts. 

You can afford anything, but not everything.  The easiest expense to ditch would be the car payment, but you have indicated you don't want to do that.  I don't think you can afford property/ rv until you eliminate some of these other expenses.   Good luck!

Totally agree.  My wife and I have been discussing paying some of these off, just to get them out of the way, so we can focus more on saving and not making irrational decisions in the future with spending.
Selling the new car and getting something older would make sense, but the DW would not go for that.  This is her first ever new vehicle, so I'll let her enjoy it.  She does agree though, used vehicles are the way to go, and she intends to drive her car until the wheels fall off.  So at least we have that out of the way moving forward.
With help from yourself and others on the forum, we are definitely moving in the right direction.  Thanks!

[LazyBones]

Student Loan - $250 per month, interest rate unknown (Wife & her parents pay $500 combined – her parents manage the account).

Time to cut the apron strings, and for you and your wife to understand the situation and take control.

I agree.  I have been trying to get the information for quite some time.  They finally looked and gave me the payoff amount, but they never provide me with the interest rate.  There used to be two loans, and her parents paid one off themselves, so we are appreciative of that.
The $500 combined is above and beyond what the minimum is, and it's a number that my wife and her parents agreed upon before we got married.  I'm OK with it, I just prefer to get it paid off sooner rather than later.

Car Loan - $334.39 per month @ 3.24%.  Approximately $16,000 remaining
Home Mortgage - $160,000 remaining @ 3.75%; Total Monthly Payment - $1,436.37; Payment minus Principal & Interest - $793.09

Those interest rates aren't high.  You could continue to pay the minimums.

We intend to the pay the minimum on the home mortgage for the forseeable future.
We are currently paying the minimum for the car loan, and we could continue to do so, but I would like to pay this off way before the 60 months is up.  Preferably this year.  Just get it out of the way so I can get it off my mind.

Based on my Gross Salary and my current monthly expenses, what would be the best investment approach in order to reach my short term goals of purchasing the property and RV?

If that is your highest desire, don't put anything into retirement funds.  Just accumulate in a savings account, then spend it ASAP.  Of course, that's not necessarily the best long term plan....

Yeah, I don't like the short term plan, because of what it does to the long term plan.  I'll have to discuss with the DW - probably push the land purchase back until after early FI.  Just makes more sense to me, as I don't plan on moving until after FI anyway.

After that, what would be the best long term investment approach to reach FIRE?
...
They suggested that I stop contributing to the Vanguard Investment account altogether – Max out both 401(k)s, and then work on maxing out two Roth IRA accounts.  Then focus on contributing to the taxable account.
This makes sense to me if I want to reach early FI (using Roth conversion ladder/pipeline), but this doesn’t make sense to me for my short-term goal of purchasing the property.  Thoughts?

Seems your first question was answered correctly by bogleheads.

It's really up to the two of you to prioritize.

Might be worthwhile for you to look through the case study spreadsheet, particularly the 'Calculations' and 'Investment Order' tabs. 
E.g.,
"The emergency fund is your "no risk" money.  You might consider one of these online banks:      
   http://www.magnifymoney.com/blog/earning-interest/best-online-savings-accounts275921001   "
and
"It is up to you whether to consider "saving for a house down payment" as a "day to day expense", vs. lumping the down payment savings in with "taxable investments" at the end."

I'll take a look at the spreadsheet.  I'll also have to play with mine a little bit as well.  As mentioned above, it makes sense to just delay the land purchase and focus on the early FI.  I'll have to talk to the DW to get her onboard with the new plan, but I don't foresee a problem with that.  I've finally been able to slowly start converting her over to MMM over the last few months, so that's been pretty exciting for me.

Thanks for feedback, I really appreciate it.

[MDM]

I agree.  I have been trying to get the information for quite some time.  They finally looked and gave me the payoff amount, but they never provide me with the interest rate.  There used to be two loans, and her parents paid one off themselves, so we are appreciative of that.
The $500 combined is above and beyond what the minimum is, and it's a number that my wife and her parents agreed upon before we got married.  I'm OK with it, I just prefer to get it paid off sooner rather than later.

You should not need to ask your in-laws.  Your wife should know this.  If she doesn't, then she should get that information.

[LazyBones]

I agree.  I have been trying to get the information for quite some time.  They finally looked and gave me the payoff amount, but they never provide me with the interest rate.  There used to be two loans, and her parents paid one off themselves, so we are appreciative of that.
The $500 combined is above and beyond what the minimum is, and it's a number that my wife and her parents agreed upon before we got married.  I'm OK with it, I just prefer to get it paid off sooner rather than later.

You should not need to ask your in-laws.  Your wife should know this.  If she doesn't, then she should get that information.

I should clarify - I ask my wife to ask them. 
I'm not sure if she asks for the payoff and the interest rate and her parents only give her the payoff, or if she only asks them for the payoff.
There is also a slight possibility that she told me once before and it went in one ear and out the other...

I think for everyone's sake, it would be easier just to have her get a copy of the statements.  I'll ask my DW about getting that and we'll see how that goes

[RelaxedGal]

If there is no way to avoid daycare, does either your's or SO's employer offer a Flexible Spending Account? This could allow you to defer the $15k per year tax free.  Geez that's a lot of money.

Both of our companies do provide an FSA.  We did max it out this year to cover my wife's hospital stay, and to help pay for part of the daycare.  We will continue to use the FSA for child care costs...hopefully we can find a less expensive option in the future.

Just to make sure you are in the know: The dependent care FSA, which is separate from the health FSA, has a limit of $5,000/year per family. 

Also: when you get to 2 kids you can use the dependent care credit for the next $1,000 in expenses. 

Last thing: childcare expenses don't go away when your oldest starts school.  Mine starts kindergarten this fall and I have extended day (after school care) expenses and summer camp/care expenses that will still exceed $5,000/year.  I'll be using that DCA until my child turns 13 and no longer qualifies.

[MDM]

I think for everyone's sake, it would be easier just to have her get a copy of the statements.  I'll ask my DW about getting that and we'll see how that goes

That makes sense.

Are you deducting the SL interest on your taxes?  You could estimate the interest rate from the balance due and the interest you paid, but getting the statements is much simpler. ;

Good luck!

[LazyBones]

If there is no way to avoid daycare, does either your's or SO's employer offer a Flexible Spending Account? This could allow you to defer the $15k per year tax free.  Geez that's a lot of money.

Both of our companies do provide an FSA.  We did max it out this year to cover my wife's hospital stay, and to help pay for part of the daycare.  We will continue to use the FSA for child care costs...hopefully we can find a less expensive option in the future.

Just to make sure you are in the know: The dependent care FSA, which is separate from the health FSA, has a limit of $5,000/year per family. 

Also: when you get to 2 kids you can use the dependent care credit for the next $1,000 in expenses. 

Last thing: childcare expenses don't go away when your oldest starts school.  Mine starts kindergarten this fall and I have extended day (after school care) expenses and summer camp/care expenses that will still exceed $5,000/year.  I'll be using that DCA until my child turns 13 and no longer qualifies.

I'm aware for the $5,000 FSA limit on dependent care, but I wasn't aware of the $1,000 dependent care credit.  Thank you for the information.

I totally forgot about winter and summer break...  There will definitely be some expenses for that.  However, if things hold up how they are right now, I shouldn't have to worry about the after school care.  This year, the town I live in is running a full-day kindergarten pilot program, so hopefully that sticks.  For all of the other grades, the kids get out of school as I'm driving home from work, so that should work out real nice.

[LazyBones]

I think for everyone's sake, it would be easier just to have her get a copy of the statements.  I'll ask my DW about getting that and we'll see how that goes

That makes sense.

Are you deducting the SL interest on your taxes?  You could estimate the interest rate from the balance due and the interest you paid, but getting the statements is much simpler. ;

Good luck!

I didn't even think of that.  I'm not sure what the balance due at the end of the year was, but just plugging in some numbers, it looks like it might be somewhere in the 4.xx% range...

I'll see if I can get a statement.

Thanks!