What to Do Now?

[arie1989]

Hello there. I am looking for some specialized advice. We have thought about seeing a financial advisor but I thought we would try this first. I hope I am not opening a can of worms here and would genuinely appreciate all or any help.

Background- my husband is 34 and I am 27. We both got scholarships to help pay for college and we also worked all the way through. I remember many holidays as a college student choosing to work and make "holiday pay." Needless to say, we sacrificed! I worked in nursing homes and cleaned houses, and we came away from school with debt but not an outrageous amount. He went to four years of seminary so he was actually in school for 8 years and is now a pastor. We have been married for 3 1/2 years and have a two year-old with a baby due this spring. I am just telling you all this to give you a backstory.

I stay home with our toddler and do childcare for another family to bring in some income. I could "do" more, and I hustle from time to time, but I do enjoy what I am doing now. I plan to work full-time in the future once the kids are in school.

We live in a parsonage that is part of my husband's salary, so we currently do not have a mortgage. This would benefit many pastors who come out of seminary with 70k+ in student loans, but I am not sure if it's benefitting us anymore. We pay self-employment taxes and are taxed on a "housing allowance" with having a parsonage. If that's confusing I can tell you more later. We have been working very hard to become debt-free and I think we will actually achieve this soon. We have one vehicle, we do straight talk phones, meal-plan, rarely shop, no cable, all of that standard stuff.

Our NET monthly income is only about $2,100 (we get money taken out for self-employment taxes, HSA, and 403B) and this is including my income but like I said we do not have a mortgage. I am only telling you this personal information so you can get a better idea of our situation.

We contribute $200 to our HSA and $200 to a 403b account every month. The extra money we had coming in we used to pay dental, medical and student loan bills. We try to keep our spending down.

I forsee us being debt free in February (no car payment, medical bills paid, student loans paid, etc).

We have $2,000 in emergency savings.

We have good health insurance but a high deductible.

This will be a huge accomplishment for us and something we have worked very hard for! Our first two years of marriage we neglected all the "fun" purchases we could have made since we did not have kids.

What would you recommend us do? I know we could be investing more, but in what? I do like the idea of owning our own home but I don't want to let wants get in the way of what is smart/best. I am also not the wisest in all the technical stuff. I was raised to save more than I spend but other than that I'm not an expert in finance.


ADVICE? SUGGESTIONS?

[boarder42]

i'd suggest a full case study

but you have a free home no reason to go get a mortgage. 

go read http://jlcollinsnh.com/stock-series/  this will teach you how to invest in index funds.

If i were you i'd increase my 403B and HSA contribution to allow for the maximum tax advantage to get the savers credit and then put the rest into Roth accounts.  Hopefully you're investing your HSA money. 

[arie1989]

I'm just getting started looking at forums so I didn't realize the Case Study thread was there. Thanks for your advice and I will look into that information. Thanks again!

[terran]

Personally I would not even think about using a financial advisor. They can "help" with investments (in quotes because whether they're actually helpful is debatable), but the help you need, if anything, is personal finance.

A full case study would be a good idea. Make sure you include information about the housing situation since it sounds like you want to consider leaving the parsonage. How much value is being assigned to the parsonage (ie what are you paying in self employment taxes)? If you gave it up, would your husbands salary increase and how much? Would any increase be considered a housing allowance (which you would still pay self employment tax on, but like the current housing, you would not pay income tax)? How much would it cost to rent what you would consider an acceptable alternative? How much to buy an acceptable alternative?

Also make sure you post information about the investment options you have available in your 403b (including expense ratios) as this will effect where people suggest you invest.

[Noodle]

I think a case study would be really helpful, but also we need information about your specific situation. For instance, in your denomination, do pastors stay with one church many years, or does the governing authority move them around on a regular basis? Does your denomination have any financial accommodations for retiring pastors, or pastors who become physically disabled? What if your husband has a falling out with his congregation and can't serve there any longer?

At any rate, I would say an important first step is to build that emergency fund a bit. You may not need as much as someone in a different situation, but $2000 could be one major car repair. And if you do decide to move into a home you own, you will definitely need a good solid fund (ask anyone on here who has had to replace a roof/sewer line/air conditioning system).