Topic Title: Starting a Mustachian Life in Boulder as a Single Parent Professor
Life Situation: Filing single and head of household, one 2yo daughter (I’m her only parent), new job as professor at CU Boulder
Gross Salary/Wages: $72.5K starting in August.
Pre-tax deductions: There’s a GREAT match (10% to my 5%) so will definitely contribute at least 5% ($3625) for a $10875 savings; Health insurance will be about $120.
Other Ordinary Income: I give lectures and do art/music commissions occasionally; I usually earn about $5000 a year at this.
Adjusted Gross Income: $84,750.
Taxes: Federal tax will be on 54,875 after head of household/child credit/401K/student loan interest; unsure about others. If I buy a house, obviously knock off at least another 10K per year on interest to calculate my taxable income.
Projected monthly expenses:
Rent: $1000-1700 (??)
Childcare: $1100
Groceries: $300
Student loans: $300
Coffee/Restaurants: $150
Medical: $50
Utilities: $100
Life insurance: $60
Cellphone: $100 (T-mobile iphone)
Driving costs including insurance: $150 (one tank of gas, insurance)
Miscellaneous: $200
Travel: $200TOTAL: $2710
Assets:Roth IRA: $32K (2/3 VWELX (Vanguard balanced fund), 1/3 global small cap fund)
Promised down payment/emergency fund from parents: $60K
2009 Volvo XC70 station wagon, fully paid for with only 47K miles on it. I generally only drive about 3K miles a year and anticipate it lasting about 15 years.
I should also mention that my family is super supportive and has some means, so in a true emergency I would definitely have backup. Also, although I hope this is decades away as they’re in their early 70s, I should have a fairly significant ($1-2M) inheritance eventually coming my way; but of course, I can't rely on that.
Liabilities:
Citibank Visa: $14K, currently at 0% and paying the minimum till I start earning salary. Thinking about paying it completely with my emergency fund, now that I have a job.
Various student loans: $22K, at 5-6.8%, all currently in deferral, but I will start paying them back when I start work; minimum payments are about $250/month.
Specific Question(s):
I am a 50 year old single parent (donor kid, no co-parent) of a 2 year old with a PhD, and I have *finally* obtained a really sweet tenure track job as a professor at the University of Colorado, so off to Boulder I go. Note for those unfamiliar with academia: this is essentially a ‘forever’ job; after six years I will go through a tenure review, and as long as I have kept up my creative work, I will get tenure and cannot be fired unless I, you know, embezzle or something. So the chances of my staying in Boulder forever are very, very high, unless I receive a much better offer elsewhere.
This is super exciting, and what a great place to end up — however, I have sticker shock from the cost of living. I knew it had gotten pricy, but didn’t realize just how pricy. Right now I live in Providence, RI, where I live in a wonderful neighborhood walkable to pretty much everything but groceries (and even that is only a couple of miles away), and I walk/bike/bus to work. I drive about once a week. Childcare is five blocks away. I want to replicate this life in my new town! However, living in a ‘nice’ walkable district in Boulder seems to mean pretty much living near Pearl Street, or moving to Louisville or Lafayette. I really don’t want to commute from as far away from Longmont if I can help it, though the prices are MUCH better there. I have close friends in Denver.
Also, the university has a fantastic housing assistance program where they will either (a) loan you a down payment of up to 25%/$80K, whichever is less, at 50 basis points under prime, or (b) give you the down payment, and then when you sell the house, they get the appreciation on that amount. You have to apply for this program, with preference given to more junior faculty. Given this, the ways in which Boulder County home prices AND RENT are skyrocketing, I think I would like to buy as soon as possible, even though I still have some student loan debt. Here’s a link to the program:
http://www.cu.edu/sites/default/files/fhap_prog-description.pdfRight now I am adjuncting and living pretty hand to mouth, but I have enough to make it through the summer till I start this new job. I’m not as interested in advice on my current situation as I am in how to build my new life/budget. I feel pretty good about my plan going forward — I am used to living on an extreme budget and many of my purchases, like computers or books or media, will now be covered by my research fund at work. But housing is such a big part of this picture.
I guess my questions are basically:
(a) How much can I afford to pay in rent this first year while I start my career and get to know the area? I would love to save money, but I also want to kick ass in my new job the first year, and I feel like I’d be better able to do that if I was super centrally located. It's also very important to me that I be a pleasant walking distance to a playground and library. I’m waiting to hear whether I will live in family housing on campus (which would be amazing at only $1000 for a 2BR), but otherwise I’m trying to figure out whether I should try to rent somewhere central for around $1500-1700, or suck it up and live in a tiny 1BR for a year — which my daughter would hate, because of no backyard — or try to find someplace in Lafayette or Louisville, even if it means a commute.
(b) Ways to keep my moving costs reasonable? I have a piano, couch, and bed to move so I will need to use movers. I think we will probably road trip, painful as it may be solo with a toddler. Shipping the car is $1200 plus our airfares. I do have quite a few miles through my Chase Sapphire card, so I could look into doing that. The university will reimburse me for up to 3K in a move, though I need to use their movers.
(c) Am I crazy to want to buy a house within a year of getting there, given the housing assistance program? I don’t want to buy into a bubble, but I also lived through SF prices going up, and up, and up, and up. My gut says Boulder County is not a bubble, it’s just an expensive and desirable place to live. On the other hand, the logistics of becoming a homeowner are significant, and I don’t want to overwhelm myself. I really want to get started on the right foot with this job. I would get a 15-year mortgage since I don’t want to hold a mortgage longer than age 65. Note that in three years, I’ll have quite a bit more income once my kid starts public school. I’ll also be getting a 2-3% raise per year, and if I get tenure should get a 5-10K bump in salary.
(d) Should I spend more time prepaying the mortgage or investing in my Roth/401k beyond the match? I am happy to invest solely in my 401k because I’m only ten years away from being able to access it.
Any thoughts as I build a new Mustachian life? Things I haven’t thought about? I have spent my life as somewhat of an itinerant artist and musician, so a stable income like this seems incredible to me. I’m so excited!