Author Topic: Two Stubbles Who Want a Mustache  (Read 3811 times)

samantha_jamison503

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Two Stubbles Who Want a Mustache
« on: April 29, 2013, 04:42:41 PM »
We are new to the idea of early retirement, but my hubs and I have already been living frugally and love the simple life - we have no children yet.

Earnings: 50-55k (after taxes, health insurance, and retirement contributions.)
Expenses: (including our mortgage- fixed 3.5%-160k/29 years left to go)  $2500 monthly
Debt: nothing but the house

We intend to start a business this year or next year that would generate additional income, but there are a few lose ends to tie up before we can do that.

Should we focus on paying off our house at this point? Or should we invest? What can we do to start heading towards freedom?
                 

Stachsquatch

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Re: Two Stubbles Who Want a Mustache
« Reply #1 on: April 29, 2013, 05:12:38 PM »
Let's start by having a look at your expenses. More important than anything else will be ensuring you free up as much capital to put toward investments as possible. With that mortgage amount your expenses seem fairly high at $2,500/month. Where is that I come going each month? (Remember not to include principal payment as an expense).

samantha_jamison503

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Re: Two Stubbles Who Want a Mustache
« Reply #2 on: April 30, 2013, 10:29:33 AM »
House Payment: $1060 (FHA loan with *mortgage ins)
Car insurance: $100
Food: $300-400
Utilities: $225
Cell phones: $140 (we are out of contract next month and pairing this WAY down)
Internet: $38
Car payment: $148 (paid off in December - Scion xB 2006)
Gas/Maintenance: $150
Gym: $30
Entertainment/Dates: $80

Our income should be going up as my hubs is stating a new career soon.
*We didn't know what we were getting into with this, that drops off in several years.

Do you suggest we start dropping sums of cash on the house or invest in a mutual fund or?

Thanks so much for your advice in advance!





Done by Forty

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Re: Two Stubbles Who Want a Mustache
« Reply #3 on: April 30, 2013, 01:26:46 PM »
I'd say the extra payments to your mortgage would be worthwhile if they can remove PMI.

At your 3.5% rate, the math will say to invest rather than pay extra on the mortgage (after removing PMI).

As others have said, the most important piece will be driving down your expenses to free up more to invest (and increasing income will have the same effect).  That'll provide a much bigger impact to your bottom line than the decision of where to invest those dollars.

samantha_jamison503

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Re: Two Stubbles Who Want a Mustache
« Reply #4 on: April 30, 2013, 02:23:07 PM »
I talked to a mortgage/lender friend this morning about how to get out of mortgage insurance - we are making that one of the top priorities along with cutting expenses.

Is there recommended reading on how to get started investing with Vanguard?

Done by Forty

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Re: Two Stubbles Who Want a Mustache
« Reply #5 on: April 30, 2013, 02:59:27 PM »

samantha_jamison503

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Re: Two Stubbles Who Want a Mustache
« Reply #6 on: April 30, 2013, 03:48:49 PM »
Thank you so much! I am checking out your blog now!

bdc

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Re: Two Stubbles Who Want a Mustache
« Reply #7 on: April 30, 2013, 09:50:01 PM »
Save up money (and/or pay down principal) to get out of the PMI ASAP.  You don't break it out, but that is almost certainly a better return than investing.

GuitarStv

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Re: Two Stubbles Who Want a Mustache
« Reply #8 on: May 01, 2013, 07:41:13 AM »
How old are you?

This will change the amount of time you have to think about having a kid . . . while it's possible for people to give birth very late, conception becomes more difficult and the chance of complications/birth defects goes up as you get older.

samantha_jamison503

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Re: Two Stubbles Who Want a Mustache
« Reply #9 on: May 01, 2013, 11:39:24 AM »
We are 25/26