The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: PlanB on September 02, 2014, 10:26:04 AM
-
I am 33 and work full time. My husband stays at home with kids, and works part time. We do not pay for child care. Kids: Boy: 5 y/o, Girl, 2 y/o.
Income: Me: Take home $37,180. Husband: Take home $8,000. Me: side hustle $5000
Monthly: $1437 (this does not include side hustle, because that is put directly into savings account)
Total: 50,180 annual take home
Monthly: $4088 take home (not including side hustle)
Current expenses:
FIXED:
House, mortage + insurance/taxes: $1500/mo. $18,000/yr
Utilities: $ Avg 150/mo (tracked for 1 year). Includes natural gas stove, electric, and water. $1800/yr
Car registration: $400/yr, 2 cars
Car insurance: $265/6 mo. $530/yr
SAVINGS: $500/auto deposit in Capital One Savings. Trying to build fund for house projects. $6,000/yr
VARIABLE:
Netflix: $8/mo. $96/yr
Verizon internet: $69/mo. $828/yr. We just went through the $49/mo intro period. I need to call to see if I can finagle my way back into that price point.
Phones (2 with Ting): $50/mo. $600/yr
Gas: $300/mo. $1800/yr
Groceries: $600/mo (this include alcohol, free-range/hormone free/local meat, and lots of veg/fruit for 2 adults, 2 growing kids)
Misc: $200--this includes $30/mo copay for med for my thyroid, $50/mo for me to ride horses, and various weekend activities, low-key, typically low price point)
Heat: $400/mo for 4 months (this is not included in total, because it is paid for by extra padding in account).
Total monthly expenses: 3854
Total annual expenses: 46,248 (which should leave buffer of $4k in account at end of year). This might be used for heating oil, or an unexpected expense).
Assets:
EF: 5,000
Side hustle: 5,000
Invest in Vanguard account: 11,500
Me, 401k: 20,000 (unfortunately used some to help with down payment). Won't do that again!;) 6% income goes in, employer match 3% on top of that.
Bonds: 6,000 (these were given to my husband by his grandmother and will be maturing over the next 10 years)
House projects fund: 2,000 (increases by $500/mo)
Auto fund: for repairs/replacement: $1000 --we might put bond $ here, when deposited to boost amount
House: 320,000
Car 1: 2000 Saab 9-3, 110k miles, will be driven into ground by me. My commute is only 15 miles each way. I bike to work off-and-on. Worth: 3,000
Car 2: 1999 Range Rover, 105k miles. This was a gift (used then) for my husband from his parents). Worth: 5,000
Total: 378,500
Liabilities:
$228k mortgage. House worth $320k. Mortgage is 30 year. We moved in last year. Rate: 3.25%
Total net worth: 150,500
Please take a look at the numbers above. Does anything seem out of place, or are there areas I am not thinking about that we should be working on? A few of my main questions are:
Should I be investing differently? Should I auto-invest $200/mo into more Vanguard funds- is that amount worth it? I think yes, but looking for insight.
Should I be saving more/reducing waste of any potential $ ?
Should we hire a GC for any future house projects or trying to DIY. Hard to do with 2 young children, but could do room by room.
Our to-do list with house:
Strip down to studs 3 small rooms, insulate, sheetrock. While walls are open, rewire to current code (needs to be done by electrician). Estimate: Walls: $2,000, Electric: $4,000
Hardwood floor install on 2nd floor, and on main floor. Estimate: $4,000- to be done by inexpensive flooring contractor after walls are complete.
We are comfortable doing some DIY, insulating and sheetrock being among those items, but I'm wondering if we should save money, and pay in cash/DIY some of it which will take longer than hiring a GC, or take a home equity loan, get it all done by contractor, while investing cash in Vanguard?
Any help is greatly appreciated. Sorry this is so long- let me know if you have any questions. I'll be sure to respond. Thank you!
-
PlanB, I know you're new to the forum. Please prepare yourself for a few facepunches.
Your house is killing you! You're spending over 35% of your takehome pay on the mortgage (+insurance, taxes). This doesn't include any of the upgrades that you're saving for and planning.
What are your long term goals?
From my perspective, I see two option. 1. Sell the house. 2. Make more money.
Good luck!
-
4alpacas, thanks for the input.
We are on track to increase our income in the next few years, me through experience, husband through potentially more work once kid #2 is in school full time--but I feel like we're living well on what we do make. ER is not our goal, but I do try to practice good habits learned through this blog. Our house is inexpensive for the area we live in (NE, outside of Boston, avg for town: 475k) and affords us to live close to our families (saving us childcare expenses). So, option #1 is out the window, and option # 2 will happen, with time. Our expenses, besides house seem in good standing. Besides the house, is there any other line item that you would try to reduce?
Also, do you have any input on the questions I posed? I mainly did a case study so that there would be reference for the questions below:
Should I be investing differently? Should I auto-invest $200/mo into more Vanguard funds- is that amount worth it? I think yes, but looking for insight.
Should I be saving more/reducing waste of any potential $ ?
Should we hire a GC for any future house projects or trying to DIY. Hard to do with 2 young children, but could do room by room.
Our to-do list with house:
Strip down to studs 3 small rooms, insulate, sheetrock. While walls are open, rewire to current code (needs to be done by electrician). Estimate: Walls: $2,000, Electric: $4,000
Hardwood floor install on 2nd floor, and on main floor. Estimate: $4,000- to be done by inexpensive flooring contractor after walls are complete.
We are comfortable doing some DIY, insulating and sheetrock being among those items, but I'm wondering if we should save money, and pay in cash/DIY some of it which will take longer than hiring a GC, or take a home equity loan, get it all done by contractor, while investing cash in Vanguard?
-
Oh, and to answer re: long term goals.
For long term goals:
Keep saving/investing, upgrade our house as we can afford to (see question re: equity loan v. saving cash wholly for projects). We will receive a 100k inheritance from an uncle within the next 15 years. We will likely invest that, since our mortgage rate is so low.
-
4alpacas, thanks for the input.
We are on track to increase our income in the next few years, me through experience, husband through potentially more work once kid #2 is in school full time--but I feel like we're living well on what we do make. ER is not our goal, but I do try to practice good habits learned through this blog. Our house is inexpensive for the area we live in (NE, outside of Boston, avg for town: 475k) and affords us to live close to our families (saving us childcare expenses). So, option #1 is out the window, and option # 2 will happen, with time. Our expenses, besides house seem in good standing. Besides the house, is there any other line item that you would try to reduce?
You could work toward lowering your grocery bill. $600/month isn't ridiculous, but you could easily cut $100-200.
Should I be investing differently? Should I auto-invest $200/mo into more Vanguard funds- is that amount worth it? I think yes, but looking for insight.
If you're maxing your 401k and Roth IRAs, then I would continue to put the extra funds into a brokerage account (index funds).
Should I be saving more/reducing waste of any potential $ ?
Yes.
Should we hire a GC for any future house projects or trying to DIY. Hard to do with 2 young children, but could do room by room.
Our to-do list with house:
Strip down to studs 3 small rooms, insulate, sheetrock. While walls are open, rewire to current code (needs to be done by electrician). Estimate: Walls: $2,000, Electric: $4,000
Hardwood floor install on 2nd floor, and on main floor. Estimate: $4,000- to be done by inexpensive flooring contractor after walls are complete.
We are comfortable doing some DIY, insulating and sheetrock being among those items, but I'm wondering if we should save money, and pay in cash/DIY some of it which will take longer than hiring a GC, or take a home equity loan, get it all done by contractor, while investing cash in Vanguard?
I would caution against taking a HELOC when so much of your take home pay is already consumed by housing costs. I'm currently reading "The Two-Income Trap," and you're standing dangerously close to the edge. I can't provide insight into the DIY vs. contractor decision because I don't know your DIY skills and timeline.