Hello Everyone.
First - let me say thank you for taking the time to read this and a double thank you for any advice I do receive!
Topic Title: Reader Case Study - Help Me Make The Right Moves
Income:
Currently I bring home around $12xx a week. For ease, let's just use $1200 a week.
This will drop in the near future as I convert from a contracted employee to full time.
$4800 per month
Current expenses:
EFT Expenses -
Health Insurance 182.00 - covers wife and child
Cell Phone 120.00 - 2 iPhones on unlimited data plans
Storage Unit 85.00
Car Insurance 85.00
Netflix 8.00
Total = $480.00 per month
Estimated Monthly Expenses -
Gasoline = $240
Baby = $150 - formula, diapers, etc
Shopping = $150 - This just a guess based on averages and not set in stone
Dining Out = $200-300 - This is always worse on someone's birthday month
Groceries = $250-300 - This amount fluctuates and not all groceries fall on us
Baby Savings = $100
Total = $1,240 per month
Money Envelope System -
Car = $40 - used for oil changes, wipers, etc
Cash = $160 - $40 a week for whatever random things pop up
Wife Cash = $40 - $10 a week for whatever random things pop up
Entertainment = $100 - $25 a week
Wife Grooming = $130 - For what it's worth, she doesn't literally use this every month
Total = $470 per month
Total From 3 Above Sections = $2190 per month
Expected ER expenses: (optional, if relevant)
Not sure yet - still learning before I can really answer this one.
Assets: Amount & description - include current asset allocation plan if you have one
Cash:
$4500 - Ally Savings Account @ 0.87% - "Emergency Fund" - Looking to set this at $5000 and leave it alone.
$2000 - Trading Account - new to this arena and starting with a small amount...
$500 - Savings Account @ CU @ 5% - Wife and I both have one
$500 - Savings Account @ CU @ 5% - Wife and I both have one
CU does 5% on the first $500 only. Wife and I both have an account with $500 to take advantage. This is why the "emergency fund" savings is in the Ally account.
Wife currently has a 401k with around 12-13,000 in it. I forget the exact number, we checked it about 2 months ago I believe. [Will check and put correct number]
Total = $7500
Updated Total = $19500 - with 401k included @ 12,000 -- I will correct this and put the accurate number when I check it.
Liabilities: Amount - rate - description
Not sure that we really have any liabilities currently...
Biography:
Just a short story to help in fill blanks.... The wife and I moved to Georgia with my Mother and had our child about 7 months ago. We are planning to stay with her and save for whatever is next. The groceries are a shared expense, but not based on strict calculations. We recently paid off the last chunks of debt and then were hit some medical bills. Thankfully we could pay it in cash, so that hurt the savings but still very very happy we didn't have to put anything on credit. Mom does not ask for rent or grocery or utility help - though we have offered and usually give anywhere from 500-800 a month to help her out. It just doesn't sit right with me to not help.
The plan!:
Just to be honest, upfront, and clear - I'm very new to the FI and ER stuff. I did make some debt mistakes and found Dave Ramsey. I learned a little bit from, but I take it all with a grain of salt. He's kind of annoying to me now that I've actually learned a lot more.
-Build Emergency fund to $5000 and stop contributing. Almost there.
-Contribute $100/month to my baby's saving account. Done and doing.
-House savings - I want to start putting just under $1700 a month towards saving for our own house. I plan to do this for 24 months which should easily give us enough for 20% on a $180k home. That being said, we are really hoping to be in a $150k or less home. (The goal is $40,000).
-Investments - We want to start putting $500 a month towards investing - the initial amount is kind of low, but I plan to start investing in VFINX and Dividend paying stocks. Once the house goal of $40k is hit, I will increase investment contributions.
-After we get our own house, the major plan is to start saving for the next one and a rental property. I think within 3 years we could have 2-3 rental properties and a primary residence - am I crazy? I would buy all rentals with a 25% down method as I believe in a safety net.
-Will also enroll into my companies 401k as soon as I'm eligible. ADDED
-Also planning to contribute $917 a month to fully fund 2014 ROTH IRA accounts for both of us by this time next year. ADDED
Okay - so my almost life story shared publicly on the internet, haha --- wow... anyways, very open to any advice, criticism, suggestions, questions, etc. Help me make the right choices so I can provide the best possible life for myself, my wife, and my kid. Also, I am wearing a mouth guard - so please proceed with any face punches.
And just to pat my own back and inflict a self punch at the same time - in the middle of 2012 we were sitting on just over $40k in debt. We are completely debt free now and have funded some major life stuff with cash and not credit. I said it above somewhere too, but I'm repeating it so I can take some pride in my accomplishments. I always kind of feel like I am "behind" so I guess I just need to remind myself I have been worse and could still be even worse.
Updates From Questions/Comments:
1. I will be able to enroll in my companies 401k plan once I am converted to a full time employee. Planning to use the match up to 5%. The company matches 100% on the first 3% and 50% on 2%.
Added - 03/17/14 @ 7:55pm
2. Explained CU savings rates. CU does 5% on the first $500 only. Wife and I both have an account with $500 to take advantage. This is why the "emergency fund" savings is in the Ally account.
Added - 03/17/14 @ 7:55pm
3. Totally forgot to add this, but my wife does currently have a 401k with around 12-13,000 in it. I forget the exact number, we checked it about 2 months ago I believe.
Added - 03/17/14 @ 7:55pm
4. Also planning to contribute $917 a month to fully fund 2014 ROTH IRA accounts for both of us by this time next year.
Added - 03/17/14 @ 8:10pm