Topic Title: Reader Case Study - When I got my current position (as a PhD student), I ran our tax numbers but my husband will be moving into a post-doc postion in Aug/Sept of this year with a small raise (that will be mostly eaten by the extra car/gas and uping retirement savings). However, I was planning on putting money into Roth IRA. I just thought maybe I should split that and put enough in his 403b to get back under 10% bracket and then use Jan-April saving to fund my Roth
Income:
My income -$25,000 (only pay FICA on 1/4 of the income)
Husband's income- $26,000
Rental (upper for our duplex)-rent is $575, we put $100 away for repairs (and really do use all of it), and $25 for water so I'd say $4500/year
Roomie- $3000/year
I have a pension I pay 3% into, pre-taxed. We put aside 15% into retirement because we are not as hard-core as some on here. We will be moving in about 3 years for my post-doc (maybe less if I can get done faster, my hope is 2 years) and plan to get rid of most of much of the household stuff (which we got via freecycle or craigslist) before we move. Moving costs include first, last and security.
Grocery 3432
mortgage 3029.76
house insurance 600
car insurance 514
taxes of house 2500
car 2040 (repair and next car fund)
gas 1560
utilities 2130
internet/phone 1272
house repair 1200
fun money 1040
medical 310
misc. 600
school cost 2465
cat 475
life/disability 500
daycare 12688
baby expenses 650
Gifts/xmas 550
hockey 475
travel 250
38280.76
We have "side expenses" that we use the roomie and rental money for which include:
Expenses Cost money set aside so far
grad SL 17000 17000
Moving cost 6000 500
Baby 5000
EF 9000 66.08
disney trip 2000
undergrad SL 10902 5500
Car 9000 1835
furniture 2000
60902 24901.08
Assets: We have about $19,000 in retirement accounts. We do own the duplex (worth about $60,000)
Liabilities: We owe $45000 on the mortgage at 4.75%, we have a NYSERDA home improvement loan at 3.49% which is a 15 year loan which replaced both water heaters, the furnaces and added programmable thermostats. We do owe on student loans, all that are in deferment, but money is set aside for all of them but mine which comes do after I graduate and will be at 5.75%. I am considering going with a private loan, or a unsub loan right before I graduate to get a lower rate, but very likely we will have it paid off by that time. We do plan to have a child between my graduation and post-doc so I want to have money set aside for that.
Specific Question(s):
My federal taxes break down as follows:
wages (minus pension)-48230
daycare FSA -4995
health insurance- 1560
standard deduction 12200
Personal exemptions- 11850
total taxable- $17625
We rarely pay money from the rental because of the improvements from the property (new needed roof, and the furnaces/water heaters plus general maintenance) and depreciation.
So basically we would be in the 10% bracket if we don't count my husband's new job. Plus we have the daycare credit ($600), Education credit ($400), EITC ($120) and the child credit ($1000). So basically, we get money back.
My husband's new wage will be $37,800 (starting in August/September) so a $11800 increase. Monthly retirement savings would run me $785 (instead of the $625 I put aside now. But that is $200 short of putting my husband's raise away. So my plan is to put the extra money away but then not put as much in my Roth right now and during the catch-up time (Jan-April).
However, as it stands now we can keep up with the extra $200 savings plus I do want money in our Roth's because I don't plan to retire till 55 so my tax plans are a bit different than some on here. But I could alternate. 2014 as detailed, then set aside $2400 for 2016 during 2015 but only use a Roth during 2015.
So, this was a lot of info and I am not sure if I was clear. Any questions or advice?
Oh, we are planning to try Ting out but are still in contract. Even once we are out it looks like it would take a bit for the saving to add up because of buying the phones. I am bribing my husband to try ting with a smartphone, but I plan to grab a cheap text phone. Our internet speed is part of the agreement with our roomie and even if I could convince him, they just got rid of dryloop and the next lowest would be more expensive than what we have right now.
Gas will be going up (a lot because my husband will be driving an hour each way) and the savings will get for him not being a student (no longer paying tuition) will go towards the insurance bill.