So scared! Be gentle! :) Thanks in advance for any ideas.
My husband and I are each teachers and have an eight month old son. We live in a high cost urban area. I am interested in trying to work part time next year.
Income:
Jointly, gross from full time jobs is 12,000/mo. I earn a few thou more than him but basically it’s a 50/50 split.
We also have a rental business. Bare bones details: It’s one home, we owe about $60K on it (pmt. $577/mo. @ 4.375%) and it’s worth about $180-200K. It gets $1285 in rent per month and we pay the taxes ($3000/yr.) and insurance ($1200/yr.) separately. We have kickass tenants who are in until May 2016.
Current fixed monthly expenses:
Pre-tax:
- My 457 contribution: $1458/mo (max of 17500/year)
- DH’s 457 contribution: $833/mo (planning to up it)
- Health insurance: $300/mo
- Childcare FLEX contribution: $416/mo
After tax:
- Each contributing $100/mo. to a Roth IRA with TIAA-CREF
- Mortgage (including insurance and property taxes, no PMI): $1500/mo
- HELOC (current payment, looking to increase and eradicate): $200/mo
- Phones: $120/mo (a complicated family plan that we "own" and we can extricate ourselves, but not without a lot of work and general family ickiness - prefer to focus efforts elsewhere right now)
- Childcare $1200/mo.
November’s variable expenses:
I do not track closely, but want to start again. Here’s one month’s expenses, pulled as best I can from debit card/credit card statements.
Internet $39.95
Electric/Gas $140.59
Water $80.81
Groceries $478.15
Gas $135.90
Car Repairs $6.45
Health $145.00
Charitable $80.00
Restaurants $114.13
Clothing $29.73
Fun Money $94.53
Gifts $12.45
Cash $43.00
Amazon $130.00
A lot of leaky spots, especially Amazon, cash, and fun money categories. Not really sure what those are on.
Assets:
- Home, value approx. $350K
- 2005 Pontiac Vibe, 120K miles
- 2007 Honda Accord, 50K miles
- My retirement funds total about $100K (Roth IRA and 457)
- DH’s retirement funds about $150K (Roth IRA, several 403(b) plans and 457 plan)
- We have $12K in our high yield checking (LOL - 2% or something like that), which we use as an EF. I’m lobbying to send $8K to the HELOC, but DH gets nervous with a “low” checking balance. I think $4K makes him nervous. I noted that if we had a true emergency we could draw on the HELOC again.
- 130 shares of Medtronic stock which must be sold in 2015. Value approx. $7K. See below.
Liabilities:
- Mortgage on primary residence: $220K balance at 3.25%, 30 year note
- HELOC: $27K at 4.99%. Ugh.
Specific Question(s):
1. Retirement/reducing taxable income: I know we need to up DH’s contribution to his 457 plan, and I’d like us to max our Roths. But it starts to feel kind of tight at that point . . . not really based on data, but emotions - like the “low” checking balance referenced above. We are now earning in a range we never dreamed of 5 or 10 years ago . . . how can we maximize the reduction of our taxable income?
2. Medtronic stock: Medtronic is merging or selling or whatever they are doing so stock has to be sold off in 2015. I think I will have to pay cap gains, not sure, anyway, what to do with the proceeds? This was a college graduation gift and I have always mentally treated it as my “retirement contribution” for the few years after college that I went abroad and earned a pittance and wasn’t making any retirement savings even though I knew I needed to be. So I don’t want to plunk it on the HELOC or something like that. I want to put it in a long-term savings kind of vehicle. I was thinking of selling it between Jan and April so I could fully fund my Roth from this year and put a chunk toward next year. But I’m open to other ideas!
3. Preparing for part-time employment: For my sanity I’d like to go down to 80%, perhaps as low as 50%. I think I still want to work, just not full time. Not sure if it’s possible within my organization, but starting to plan. How do I even go about calculating the financial impact of this? I mean, straight up income/expenses are easy. I mean the opportunity cost - on potential retirement contributions, on increased cost of benefits, on opportunity cost for pension credits, etc.
Whew! A novel, and that’s pared down! Thanks for help you can offer.