IncomeMe - I currently make $120K before bonus, but it will be about $90K this year due to upcoming maternity leave. My company has a really generous leave policy, and if I went back after 18 wks instead of the full 23, it would be more like $100K but we're playing that by ear (I'm a consultant, so I'll take project timing/desirability into consideration when the time comes - more time home with my infant and toddler is more important to me than more monies).
Spouse - He recently started working at a small brokerage, commission based; he gets a base equal to his student loan payments, so about $19,800. I have no idea what income to expect from him this year other than that, because ultimately it's sales. But, it's an experiment and we've built up our emergency fund and I'm glad to actually live off one (albeit rather large) income and build our frugality muscle.
So monthly income after taxes, health insurance, and 401(k) is about $7300. (I'm looking forward to cheaper insurance when the company gets larger.)
Current monthly expensesStudent Loan: $1651
Day Care: $900 (This will double when I go back to work in Sept or Oct.)
Groceries: $500 (I really don't understand how it is this high. We don't even buy a ton of meat. Too many visits to Whole Foods I think, which is where we get some of our supplements and homeopathic remedies, so there are some health costs hidden in there.)
Rent: $400-$450 (We live with my MIL, and this includes our cell phone bill - family plan - which I'm totally reducing, once our contract(s) expire, to the much cheaper plans outlined on this blog. Sometimes she asks for a little more to help out when she randomly decides to paint something.)
Car Payment: $330 (I wish I'd found this blog before I bought a used car on loan in September.)
Shopping: $300 (Mostly clothes - both of us - and little things on Amazon that add up. Definitely a lot of room for improvement here.)
Health: $300 (WAY overblown lately due to pregnancy complications, lots of pregnancy related supplements, chiropractor visits, a fancy fFn test... plus our daughter has asthma and had a scary episode recently. Also I had been going to a fancy gym for over a year at $175.50/month, for which I purchased a 1 yr subscription to save money on the cost - $1440 total. That is currently on pause due to my medical condition, and when it restarts and then expires, the responsible thing to do would be to start working out at home or at least at the YMCA that's about to open a half mile away, with $70 family memberships. Yes, I expect multiple face punches for that one. But it really did get me working out regularly longterm (something I'd never done before), repaired my herniated abs and got me in the best shape of my life, for reals... and ready to ruin my body again with another child. Ha!)
Charity: $200
Restaurants & Bars: $175 (This is actually down by ~$50% the last few months. It helps that I've been on bed rest and unable to go out much, but we've also been making a real effort to stop ordering takeout, only go out once a weekend at most, and order more frugally. We're often pressured to go out by my MIL, but we can at least push for breakfast as it's a cheaper meal typically. Still room for improvement though!)
Car Insurance: $157
Gas: $140-$190 (This is lower than it was, b/c of bed rest for me but my commute was only 8 mi each way anyway. Also my husband no longer has a hellish 40 mi commute, though he does drive around town quite a bit for meetings.)
House Cleaning: $160 (This probably is a big giant please-punch-me-in-the-face sign, but we really do need someone coming in for period deep cleaning. Especially with my current health issues, and postpartum recovery is going to ensure this continues for a few more months at least.)
Entertainment: $130 (on average, but that's high due to season football tickets to USC; now and then we go to a concert but we don't go to the movies often, usually just Netflix or Redbox things so most months it's like $20)
Personal Care: $50 (mostly hair cuts; I'm growing my hair out so won't need this as often)
Life Insurance ($200K on both of us) - $38
TOTAL: $5431-$5501 (soon to go up to $6331-$6401 with additional daycare, which is why we need to get a handle on groceries, shopping and eating out, sooner rather than later. And Health of course if possible.)
We are currently putting $3K a month to savings, from my paycheck. Obviously this is not sustainable with my husband's current income level, but we've been building up the emergency account savings, and can take some of that back to checking as needed. Also I currently have a buffer in my checking account from FSA reimbursements, but we do need to either bring our spending way down or bring down this amount. (Actually both, b/c we should be paying more into the student loans I'm sure.)
Expected ER expensesI'll just say $35K as that's a nice big cushion; if we were actually retired we wouldn't need daycare, or housekeeping, or as much gas. But I don't see ER as possible right now because of the housing issue. And I don't plan on retiring to my MIL's condo!
Assets$150K in a traditional IRA (mostly from recent rollover of my old 401(k))
$40K in Misc Discover Savings Accounts (the emergency funds - getting teeny tiny interest)
$35.5K in various Roth IRAs (American Funds)
$23K in stocks of old company purchase plan(-ish; I try not to pay attn to these since I can't sell some of them for a while, and also b/c they keep growing amazingly well. I sold ~7K to pay for our wedding a few years ago, ~$8K to pay for our trip to Japan last year, and some to fund our midwife for this year.)
$10K in checking right now (this is high b/c husband's base pay for the entire quarter came in early, but I also keep a pretty high buffer)
$10.5K in CDs (this is my extra extra emergency fund - clearly I am too conservative when it comes to savings on hand)
$9K in a Mutual Fund (American Funds)
$6.2K in a Schwab 529 Plan for our toddler
$1600 in Misc Stocks (aka gambling stocks)
$1400 in my new 401(k) (I just joined this firm, hence the low number, but I am putting in the maximum amount for 2014, and getting a 4% match.)
$700 in Spouse's old 401(k) - $700 (yes, he needs to roll this over)
Oh, and really a liability but - 2008 Hyundai Elantra fully paid off (bought new but paid off early... never will I ever buy a new car again)
TOTAL (old age money) ASSETS: $187.6
TOTAL (liquid or liquid-ish) ASSETS: $94.1
*Note: I'm not counting the 529 in either total
Liabilities$206K in student loans at 7.25% <--- The big scary thing that stresses my husband, and causes him to frequently advise younger folks not to go to law school.
$12.5K Car Loan at 4.59% - 2008 Nissan Altima Hybrid (Bought end of last year when my Hyundai was stolen before it was recovered a month later. And before I found this blog. I tried to buy in cash but was convinced by my husband and the salesman that it was better to get the car loan and put cash towards the student loan. Really I should have bought an older/cheaper car, in cash.)
TOTAL LIABILITIES: $218.5K
(MONTHLY = $1,980)
Specific Questions- We have a lot of liquid savings. Should we put some of that to the student loans, and if so, how much? My work is steady and solid, but my husband's work is totally volatile right now; that and upcoming maternity leave caused us to go into this 'must build up emergency savings' mode (before finding MMM) - but we could still count the CDs and mutual funds as emergency savings, plus our various credit cards, which go up to like $50K or something, for a really crazy emergency. Another option - put a big portion (what portion?) of the emergency fund into the student loans, but after I'm back at work?
- Should I consider selling one or both cars and buying cheaper ones in cash? This would be a big hassle but more do-able with the time and energy that late maternity leave should allow me. (I can't wait to be up and about again. Bed rest sucks.)
- Is early retirement even a possibility for us? Just paying off the student loan in the next 10 years seems like a crazy feat, let alone saving for a down payment in LA - especially after we move out (timing TBD) and have to pay real rent. Though, serious payment of the loan will prepare us for serious down payment savings, and I do think LA is over-priced right now and will drop sooner or later.
- Anything obvious that I'm missing that we need to consider?
- I would really like to move out of my MIL's condo... some days more than others. I have agreed to stay until the end of 2015, but for it to actually be an option, we need to prepare to be able to pay insane LA rent. As my spouse reminds me, we'd also be missing out on the huge space we live in, including awesome bathroom and giant closet, and semi-available babysitter (she works full time, more hours than us, but sometimes helps pack my daughter's lunch, and often plays with her on weekend mornings while we sleep in a bit). Should I just suck it up? I need an attitude adjustment don't I?
Thanks everyone. I'm new to the blog and reading through everything sequentially right now, though I think I've already read a majority of the articles out of order. I used to be much more frugal (hence the strong retirement savings) but let my high-falutin' income trick me into thinking I needed a fancy new car in '08, and then too many clothes and shoes and nights out. And my husband is such an enabler - "you make more than me, so of course you can go spend $100 on a Ross shopping spree whenever!" My husband and I are 29 and 30 respectively, and have been married 3 years, but only recently combined finances (and we're not even sharing accounts, I just mean we have all our accounts in one place through Learnvest - it's a process). I had been contributing to his loan principle to some extent but now that the reality of this loan is staring me in the face, it's time to nut up and do something about it. Please provide me as many face punches as necessary to get a real badass strategy for tackling this loan AND saving for early retirement. Maybe I can't be around a ton in my wee ones' younger years, but high school is an important time in their lives too.