Background:
I'm a 44 year old stay-at-home mom to two little boys, 2.5 and 4 yo. My husband is 54 and is a licensed social worker. He just started his own private practice in April (2 hour car commute became a 7 min. walk. Totally badass :). I am working part-time as his scheduler, biller, claims adjudicator, marketer, etc. We save money by not having to hire someone, and this allows him to focus 100% on seeing patients.
Income: For this year, projected net is 25-30K. We are hoping that next year we are in the $60-70K range, but it is hard to really predict until we have a few years under our belt.
Expenses: Approx $4,000/mo. $1K/mo in deductible business expenses (rent and misc. office expenses). The rest is living expenses. We live fairly frugally….or do we? I have modified this post and have broken out expenses, and I see there are places to trim fat. Our older child is enrolled in an expensive preschool that a relative generously paid for, and we are keeping our fingers crossed that she will pay again for year 2 of preschool. If not, we will have to factor that in to our living expenses next year. We could transition him to a different preschool but this would not be ideal for him. The little one goes to daycare two days a week also so I can get work done and also stay sane. He will go to a far less expensive preschool next year (although I will have less time to work then since it will only be 2 hrs/3 days a week). Daycare this year and preschool for the next two years are our biggest expenses. No vacations on the horizon.
Here is a breakdown of our expenses for September:
Groceries : $450
Home supplies: $100
Fuel: $125 (gas to get to and from expensive preschool for #1, daycare for #2)
Gas & Electric: $240 (we use YNAB and save this amount every month; bill much lower in summer, higher in winter)
Basic cable + internet: $63 (part of this is deductible since I work from home)
2 cell phones: $190 (we use these for business so partly deductible. I have thought about switching but have not really looked into it all that much…we drank the iPhone kool aid and not sure how to sober up!!)
Trash & recycling: $25
Municipal water: $40
Home Ins: $33
Life Ins (husband): $69
School and Property Taxes: $198 (gotta love NY)
Health insurance: $0 at the moment due to our projected annual income (thank you NY); will likely change next year so I try to save about $75/mo for Future Health Insurance
Daycare: $450/mo. Preschool is $0 due to generous benefactor but if we had to pay for it, it would be an additional $700/mo.
Car insurance: $61
Kids catch-all (diapers, clothes, activities, etc): $200
Xmas, Bdays, Other special occasions: $200
Pizza: $44
Netflix: $8
Boxed wine: $46
Monthly car service and inspection savings: $30
Roof replacement in 2015 savings: $200
Snow/Lawn & Garden: $50
Adult clothing: $40
One-off expenses: $73 for driver's license renewal
Anything left over is earmarked for either Roth 401K contribution or 529's (not sure which, that is one of our questions).
Liabilities: None. House is paid for (est. $275K). We will likely keep the house when we retire. Cars are paid for ('03 Impreza, '06 Outback). I have tried to get the hubs to give up the Impreza, but he feels strongly that we need it. He is a musician and has weekly gigs as a side hustle, so the 2nd car is mostly used for that purpose. His feeling is that when he is out playing, he does not want me to be stranded at home with no car if there is an emergency with one of our kids. He also drives the car to yoga twice a week in the am while I am driving kids to school/daycare. He could ABSOLUTELY ride his bike to yoga as it is one mile away, but, his mustache is more of a 5 o'clock shadow at the moment.
Assets: We were DINKS for quite some time and I had a wonderful 6-figure job that allowed me to save...we also inherited money in '07. We are currently working with a financial planner that has worked with my husband's family for several years. Assets including cash in checking account include $680K.
1. Metlife Annuity worth about $92K. We are still in the first 7 years and cannot withdraw without penalty. I think in 2017 we will have some flexibility. Not sure why we ever thought this was a good idea!?
2. Inherited fixed annuity from NY Life for about $27 or $28 K. My father had it set up as a qualified IRA. Surrender period ends in Dec. Not sure what to do with this - perhaps roll into Roth IRA?
3. Husband's Roth Ira and my Roth IRA - his has $35K, mine has $32K. Invested in MFS Moderate Allocation B (MMABX). High fees, Expense ratio 1.8%, sales load. Should we migrate to Vanguard accounts?
4. My rollover IRA: $33K all invested in PIMCO Real Retirement 2050 PFYPX. I guess I'm stuck with this until PIMCO shakes out? Otherwise we are considering perhaps moving this to and IRA at Vanguard: Vanguard Total Retirement Funds 2040 or 2050.
5. Husband's Rollover IRA: almost $200K. Invested in various mutual funds: FINSX, FKSAX, AMEFX, IGFFX, OHYFX, MUSEX, NEFFX, OYEIX, OOSYX, and 30% in PIMIX (grrrr...)
6. We have an investment account with approx $220K invested in a range of mutual funds. Most have E/R's under 1%. ATDYX, OHYFX, NEFFX, OYEIX, OOSYX, OIDYX, and unfortunately 43% in PIMIX (double grrrr...).
7. 529 plans for boys, each have only $5K in them.
Here are my burning questions:
1. Should we migrate any/all our investments to Vanguard or Betterment?
2. Should we try to take advantage of our very low tax bracket this year and do a Roth conversion for my husband's IRA?
3. Husband is going to open a Roth 401K. Anyone have ideas on best place to do this?
4. Should we be putting any extra savings into 401Ks, or 529's? Our plan is for my husband to work full time for 10 more years and then drop down to part time at age 70. This will coincide with children's college. We would like to pay for 50% of state school for each of them. If we have $50 or 60 K each saved for them by the time they go to school, we will be overjoyed. BUT, we will not save for college at the expense of our retirement.
5. My biggest question is, will I need to go back to work in 2 or 3 years in order for both of us to be fully retired in 15 years? I know we shouldn't count on social security, but my husband is 54 and it is likely he will receive it - at least $2K per month. I will have a pension of $1K/month starting at age 65. I have earned enough to qualify for SS ($1096 at age 62, $1556 at 67 or $1930 at 70 with 0 projected future income). We do not plan on a lavish retirement - we'd like to be snowbirds and spend the winters somewhere warm, but plan on continuing our frugal lifestyle. Would be nice if we could both have monthly massages in our retirement, LOL!!!
Thank you so much MMM readers for any insights you can share. I love this forum and appreciate all of the wonderful advice and expertise.