The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: june28 on December 07, 2012, 03:06:58 PM
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Long-time lurker. I've been wanting an objective opinion on this for some time, but convinced myself I was doing fine. In reality, I need some public shaming and face punches, I'm sure.
Ages
We’re both 27
Income after deductions
Me: 3,000/2 week month (including daycare FSA reimbursement)
Him: 2,200/2 week month (this is the lowest possible, it’s typically a bit more dependent on overtime)
**We use our extra 4 checks to fund our Roth IRA every year
Debts
3,000- student loan it’s at 2.25% and I just can’t convince myself to pay it off
126,500- mortgage, just no-cost refinanced to 3.875%, which I’m sure isn’t awesome, but it’s better than where we were
Assets
$33,000 in cash in various accounts, I realize this is probably too much…
$50,000 in a bunch of different retirement accounts, about $20,000 in the 403(b)
The house is worth about $155,000
2007 Ford Focus and a 2008 FJ Cruiser
Pretax investments
Me: 5,300/year 401(k), my employer puts in an additional 3,200 regardless if I put anything in (I just became eligible for this, this month)
Him: 4,810/year 403(b) (he also contributes a percentage to a pension)
Monthly Expenses
1,000-credit card bill which includes gas, food, clothes, gifts, trash, internet, water and miscellaneous
140-phones
125-electric
125-car insurance
75-student loan
50-529 for daughter
820-daycare
919-mortgage
250-extra mortgage payment
300-car savings
Total- $3,800ish
Yearly Expenses
4,500-vacation (max budget)
2,500-home costs (trees, replacing/fixing stuff)
5,000-Other Roth IRA (first one done with 3 extra paycheck months, this is our first year investing the full $10,000, previously we only maxed out one)
Ultimately, this leaves about $5,000 that just adds to the savings account every year… It’s actually $2,000-$4,000 more than that when you take into account my husband’s overtime, but I don’t know when to really count that, since it fluctuates so much.
Goal
I want to have the option to retire at 42. My husband’s in a hazardous duty retirement system, so he’s eligible at that point. He also will receive a pension, which if he never gets another raise in his career will be about $26,000/year.
Challenges
My husband is probably 60 percent on board. He doesn’t spend a lot of money, and I’m generally in charge of the finances. However, the whole owning acres of land thing (which is EXPENSIVE mind you, we’ve had more than $1,500 in tree work this year), driving ridiculous cars and having a super fancy phone are important to him. There is a possibility that I will be able to convince him to move to a better school district for our daughter where we wouldn’t be able to afford as much land and would be closer to our jobs, but generally speaking this is not negotiable for the sake of saving money.
I would say about $350 of our credit card bill every month is for gas, but like I said, as much as I would LOVE to move closer to our jobs, it’s unlikely to happen. Going to one car is also impossible because my husband works rotating 12 hour shifts at the moment.
I am scared of normal investment accounts. I realize they are the same thing as what I’m doing with the general retirement funds, but psychologically it’s just scary to me. I'm a crazy person.
Now, let me say, we do lead an exceptionally decadent life. I get that. $4,500 on vacation a year?!? 3 separate week long vacations?!! Ridiculous! --excuses deleted due to shame-- I think we should still be able to accomplish our goals with this insanity, but maybe I need to get rid of the bed pan. I don’t know.
Where to Go
So, what would you do if you were in my shoes? Up the 403(b) contributions? Cancel a vacation a year? Switch to an in-home daycare? Pay more on the house? Pay off that student loan? Open a regular taxable investment account? Learn how to cut down trees? Please don’t make me wield a chainsaw. It’s unlikely to end well.
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FJ Cruiser = WTF. Also, why are you putting $300/mo into a car savings? Your cars are fairly new.
Vacations seem expensive. Are you sure you can't do similar vacations for cheaper?
Phones expenses are high.
Unless you are debt-averse, that extra mortgage payment might be better utilized in the market, especially after your refi.
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I'm confused.
What do you mean by other IRA? You take home 5200 every 2 weeks. Your extra 4 paychecks (from 3-paycheck months) total 10400. That's 2 IRA, no?
And your listed monthly expenses is less than half your monthly take home, yet you don't reflect it in your yearly savings.
From what you've listed, you should be able to easily afford to max out your 401/403s.
From your listed expenses:
What is covered under the very big range of '50-529 for daughter'?
You lump a lot into that 1000 for cc. Perhaps it will help to track it better, so you can have a better idea what categories seem reasonable, and which have room to cut.
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OP seems to have deleted their account same day as posting this.
How odd.
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What is covered under the very big range of '50-529 for daughter'?
I think that indicates putting $50 into a 529 account for their daughter. Which is more "savings" for the future expense of college.