You have a cash flow problem!+1
...
Non-Mortgage Total Expenses - $3,592
Mortgage - $1,463
Loans - (student) $336/monthTotal Expenses - $5,091
Specific Questions
1. Do I target pay down of loans first? Which ones?
2. Do I target pay down of house to achieve 20% and reduce payment for repurposing of cash?
3. Working on targeting expenses but the transportation one is tough because we live way out and aren't in a position to afford anything close to where I work.
Thanks!!!!!Don't thank me, thank my fist, and the fists of everyone else here....
There is a mistake in your numbers....your total expenses are:
Total Expenses - $5,391
Not $5091. That's what I meant when I say "you have a cash flow problem". I'm not even sure how you are making it month to month, your Total Expenses exceed your income.
Category | Monthly | Comments | Annual |
Salary/Wages | $6,194 | $74,328 | |
Pretax Health Ins. | $245 | $2,944 | |
FICA base salary/wages | $5,949 | $71,384 | |
Federal Total Inc. | $5,949 | $71,384 | |
Federal tax | -$10 | 2015 rates, MFJ, item. ded., 6 exempt. | -$124 |
Soc. Sec. | $369 | Assumes 2 earners paying | $4,426 |
Medicare | $86 | $1,035 | |
Total income taxes | $445 | $5,340 | |
Income before other expenses | $5,504 | $66,044 | |
Monthly Expenses: | |||
Mortgage | $1,163 | $13,956 | |
Property Tax | $180 | $2,160 | |
Mortgage Insurance | $70 | $840 | |
Home/Rent Insurance | $52 | $624 | |
Car Insurance | $124 | $1,489 | |
Car Maintenance, Registration, etc. | $153 | $1,836 | |
Charitable contributions | $629 | $7,548 | |
Child activities | $40 | $483 | |
Clothing/Shoes | $34 | $405 | |
Dining (Pizza, Restaurant, etc.) | $75 | $903 | |
Donations/Gifts | $73 | $882 | |
Electricity | $139 | $1,672 | |
Entertainment | $9 | $104 | |
Fuel/Public Transport | $453 | $5,438 | |
Groceries | $834 | $10,008 | |
Household; Maintenance | $89 | $1,068 | |
Internet | $40 | $480 | |
Life Insurance | $40 | $480 | |
Medical (Doctor, Hospital, etc.) | $152 | $1,830 | |
Medical Insurance | $4 | $45 | |
Pets | $55 | $656 | |
Phone (cell) | $40 | $480 | |
Recycling/Trash | $23 | $276 | |
School Tutition/Books/Etc. | $194 | $2,332 | |
Sports/Recreation | $61 | $732 | |
Water/Sewer | $31 | $372 | |
Non-mortgage total | $3,595 | $43,143 | |
Loans: | |||
Student Loan | $15 | $178 | |
Student Loan | $191 | $2,295 | |
Student Loan | $130 | $1,559 | |
Total Expense | $5,094 | $61,131 | |
Total to invest | $409 | $4,913 | |
Summary: | |||
"Gross" income | $6,194 | $74,328 | |
Income taxes | $445 | $5,340 | |
After-tax income | $5,749 | $68,988 | |
Living expenses | $5,004 | $60,043 | |
Non-mortgage loans | $336 | $4,032 | |
After-tax investable | $409 | $4,913 |
Filing Status | 2 | 1=S, 2=MFJ | |
# of earners | 2 | ||
Total Income | $71,384 | ||
Std. Deduct. | $12,600 | ||
Act. Deduct. | $13,381 | ||
# Exempt. | 6 | ||
Exemption | $24,000 | ||
SL int. (guess) | $2,016 | ||
Taxable | $31,987 | ||
Tax | $3,876 | ||
Tax after n-r credit | $3,876 | ||
# Children <17 | 4 | ||
Child Tax Cred. | $4,000 | ||
EIC | $0 | ||
Net Tax | -$124 | ||
Monthly | -$10 | ||
Mtg. Int. (guess) | $3,673 | ||
Prop tax | $2,160 | ||
Charity | $7,548 | ||
Item. Deduct. | $13,381 |
Isn't it pretty hard to get rid of PMI, though? I mean why would a bank make it easy for you? That's free money for them. Plus OP would need to pay down his mortgage 28K to get rid of it. At OP's current rate of surplus, that's going to take a very long time. Paying off the student loans would give him or her immediate results and free up more money to throw into retirement.At OP's current rate of surplus, he's going nowhere, fast. Getting rid of PMI is automatic at 78% LTV as long as 24 months have passed. He might have to make a call or write a letter. The $28k is the larger issue, but he shouldn't balk at that. This is the optimal place for debt paydown, as the interest rate is highest. I guess that with the low student loan balances, he might see quicker cashflow change, but that's not the long term optimal approach. Again, if it were a $28k debt at 12%, would we even be discussing where the money should go? The insidious thing about PMI is that because the payment doesn't change, the effective interest rate is very high. I can look for a thread where it's discussed in detail.
You have a cash flow problem!+1
Maybe not quite as bad as the OP suggests - do you really pay ~$6K/yr in taxes? Or do you get $4K/yr in child tax credits, taking your federal income tax below $0?
But even with a small net federal credit, you aren't saving much now. I'd pay off the 5% loan, but just pay the minimums on the rest and invest as much as possible. Your call on the traditional vs. Roth question.
Look, the thing on your charitable giving is that you are one bad month from being in a bad place yourself. It is not fair to your children to do what you're doing now. And when that bad month comes, when it will, do you want to be in a position where you can handle it, or in a position where you can't? Which do you think will enable you to return to giving to charity faster?
When you pay down your big debts and your PMI then look at charitable giving again.