Author Topic: 5 Year Case Study Review  (Read 983 times)

farmGirl14

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5 Year Case Study Review
« on: January 07, 2025, 01:09:11 PM »
I wanted to repost my last two case studies with my latest data from 2024. I think it's fun and helpful to see how things change over 5 years.

31-year-old couple, 2 young kids. SAHM

This year was a little weird. I had some major health issues and my husband had to take off work for a month unpaid to take care of me. We were very generously gifted a lump sum to help with the medical costs and care. I've tried to leave all that out of budget for simplicity's sake, but that's where the lower income and some of the extra cash came from. 

I started a one-day-a-week job to get out of the house but my self-employment income has taken a hit so it kind of comes out even.

Do we have any improvements from last time? Some costs have risen that are out of our control like property taxes ($300 more a month eek), and some things are changing as the kids grow (aka dance lessons.). We have been able to save some money using random income like yard sales, credit card rewards, etc. Which I didn't include here because I don't want to depend on it / budget for it ahead of time. But pretty much any extra money gets saved.

I really wish we had more wiggle room so I could have money dedicated to savings every month. At this point, we are putting $3k into my Roth every year and maxing out the HSA, which is then drained to pay for all my crazy medical bills. $8k oop every year. Oof. 

I'd love some feedback on glaring issues and what I can continue to work on. I know I spend more than I should on a lot of things, but I also don't see our financial situation changing drastically any time soon and I don't want to live too frugally and be miserable. A middle ground is nice.

Deductions
Putting 3% 5% 6% of husband's income into 401K plus employer 2.5% match. I have to pay self-employment tax on my income. $400 $680   $747 a month for health, life, and dental insurance, including $240 $375 $385 a month into an HSA.

Income
Net Income2019  2022  2024
Him:$35k/yr  $52k/yr  $50k/yr
Me & Extras:$19k/yr  $8k/yr  $9k/yr
Total Net Income:$54k/yr  $60k/yr  $59k/yr

Expenses

Housing201920222024
Mortgage & Escrow:$9,300 ($775/month)   $8,400 ($700/month)$12,360 ($1,030/month)
Electricity:$2,340 ($195/month)$2,460 ($205/month)$2,100 ($175/month)
Propane:$1,680 ($140/month) $1,920 ($160/month)$1,044 ($87/month)
Water & Trash:$720 ($60/month)      $840($70/month)      $936 ($78/month)     
Internet: $1,080 ($90/month)$1,128 ($94/month)$1,128 ($94/month)
Cell Phones:$660 ($55/month)$480 ($40/month)$480 ($40/month)
Land Loan:$0$2,712 (226/month)$2,712 (226/month)
Housing Total:$15,780 ($1,315/month)$17,930 ($1,495/month)$20,760 ($1,730/month)


Transportation201920222024
Gas:$1,200 ($100/month)$1,440 ($120/month)$2,400 ($200/month)
Car Insurance:$1,380 ($115/month)$1,200 ($100/month)$1,600 ($133/month)
Car Maintenance: $600 ($50/month) $480 ($40/month)$600 ($50/month)
Car Savings: $1,440 ($120/month) $0 ($0/month)$0($0/month)
Car Total:$4,620 ($385/month)$3,120 ($260/month)$4,600 ($383/month)


Recreation201920222024
Date Night: $480 ($40/month)$480 ($40/month)$480 ($40/month)
Clothes:$0$840 ($70/month)$600 ($50/month)
Eating Out:$1,080 ($90/month)$1,380 ($115/month)$1,800 ($150/month)
Vacation:$2,520 ($210/month) $5,000 ($417/month)$3,000 ($250/month)
Electronics, Fees, Subscriptions$1,100 ($92/month)      $1,200 ($100/month)$900 ($75/month)
Gifts, Christmas, Holidays$700 ($58/month)$1,600 ($133/month)$1,700 ($142/month)
Recreation Total:$5,880 ($490/month)$10,500 ($875/month)$8,480 ($707/month)

Other201920222024
Charity$5,100 ($425/month)$5,100 ($425/month)$5,100 ($425/month)
Groceries:$4,200 ($350/month)      $7,800 ($650/month)$9,000 ($750/month)
Pets/Vet:$840 ($70 / month)$1,200 ($100/month)$600 ($50/month)
Roth IRA:$1,000 ($83/month)$3,000 ($250/month)$3,000 ($250/month)
Kids 529:$0    $1,500 ($125/month)$0
Home Improvement:$900 ($75/month)      $2,830 ($236/month)$840 ($70/month)
Kid Stuff:$1,200 ($100/month)$900 ($75/month)$0
Kids Dance:$0$0$1,440 ($120/month)
Medical:$3,400 ($283/month)$5,400 ($450/month)$2,780 ($232/month)
Work Expenses:$400 ($33/month)$720 ($60/month)$1,200 ($100/month)
Miscellaneous:$10,680 ($890/month)$0$1,200 ($100/month)
Other Total:$27,720 ($2,310/month)$28,450 ($2,371/month)$25,160 ($2,097/month)

Assets & Liabilities


Assets201920222024
Liquid Savings:$6,500+$11,000+$33,000+
House:$150k Appraised  $185k Appraised  $200k+ (estimated)
Roth IRAs:$16,200$20,700$37,300
Roth 401k:$26,200$41,100$76,000
HSA: $500$1,100$3,200
Cars:$0$20,000+$20,000+
Kids 529s:$0$0$3,312
Total Assets: $199,400$272,900$372,812

Liabilities201920222024
Mortgage:$112,730 (4.75%)  $116,314 (2.85%)  $110,003 (2.85%, 303 months remaining)
0% Credit Card:$2,700$0$0
0% Medical Loan:$1,800$0$0
0% Construction Loan$3,550$0$0
Land Loan:$0$11,225 (4.5%)$6,204 (4.5%, 28 months remaining)
Total Liabilities:-$120,780-$127,539-$116,207

« Last Edit: January 10, 2025, 10:23:22 AM by farmGirl14 »

zolotiyeruki

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Re: 5 Year Case Study Review
« Reply #1 on: January 08, 2025, 08:14:16 AM »
First of, I think a big congratulations are in order--you're operating on a much smaller income than a lot of forum denizens here, your expenses have gone up significantly, and yet you're still able to save money toward retirement.  That puts you ahead of a LOT of the general population.  Not only that, but you've increased the percentage you're saving, despite significant health challenges.  AND you've done through a severe inflationary period.  Kudos!

A couple of notes:
--why did your property taxes go up so much?  That's a huge percentage increase.  Any option to challenge/appeal the valuation?
--there's no 15% federal tax bracket, at least until the 2026 tax year (if I understand it correctly). The current tax brackets are 10/12/22/24...  These are scheduled to revert to 10/15/25.... in a couple years

I don't feel like I can hand out any facepunches, since our family's spending is significantly higher than yours.  Maybe the eating out could be slimmed down?  Your internet bill seems high, but that might be unavoidable given your location.

wistful

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Re: 5 Year Case Study Review
« Reply #2 on: January 08, 2025, 08:35:57 AM »
Me too, Me too.  I want to also congratulate you on your progress.  Your retirement accounts passed $110,000 and you're continuing to contribute with rising costs.  Sorry to hear about the medical costs.  Never fun to bear.

I'm impressed that your liquid savings climbed to $33,000.  With the hefty medical costs and being largely a SAHM (kudos on the extra monies you've been able to bring in while raising 2 precious little ones), I would recommend raising the liquid savings a little bit higher.  Maybe a slight reduction in charitable donations and slower vacation accumulation.  Once your liquid savings is at a higher threshold, you could increase your charitable giving again.  Emergencies happen - having a higher than normal emergency fund could really help you face some of those (and have a little added peace of mind. 

I agree with you, I am recently FIRE'd with my spouse, but we like to live more of a middle of the road kind of lifestlye as well.  I *know* I could live on beans and rice, but do I really want to?  I think not.  That being said, we need to really evaluate our groceries and eating out costs.  It's probably something we all can do.  We were hit with a 48% real estate tax hike 1 year ago and thankfully the current year it only climbed 3-4%.  Sometimes you can ask for a reassessment of the property tax value of your place (by the government dept that does those), but you still pay the taxes 'under protest' and hope for the best.  Where I am from (Montana), it seems that the wealthy people with higher value property are more successful at getting their property value reassessed at a lower level (go figure).

Keep up with your excellent tracking of expenses and net worth.  Having these snapshots really help to evaluate where your financial strengths and weaknesses lie.


Laura33

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Re: 5 Year Case Study Review
« Reply #3 on: January 08, 2025, 10:55:44 AM »
First, congratulations about making so much progress, especially with the unanticipated huge medical bills and rise in property taxes.  I was confused about the huge jump in gas and drop in car savings, but I'm guessing you have added a second car, since you didn't used to have a car listed as an asset?  What is the land loan for?  If it was related to the house (i.e., you built in 2019, swapped a construction loan for an 80% mortgage and a small land loan to make up the difference), that makes sense.  If you bought a separate property, however, consider selling that, since it's not currently providing any income, and your medical bills make this a bad time for cash flow.

Really, almost everything you have here is reasonable.  Yeah, there are a lot of areas you can cut back if you want; groceries, cellphone, internet, subscriptions, charity, and eating out leap to mind, but really almost everything is optional once you get past housing and food.  And you are absolutely right that you don't want to cut back to the point of feeling like you're sacrificing important things every day just to maybe be happy in 30 years.  So if this is all what you consider to be the kind of lifestyle and budget you can be comfortable on for decades, then that is what you should focus on; sure, you should always look to trim around the corners where you can (and certainly if the medical bills back off you will appreciate that slack!), but this is fundamentally what you should plan around.

The real issue, then, is whether this lifestyle is worth the tradeoff in years to retirement.  The problem with saying "I like my current lifestyle" is that it comes at the cost of working significantly longer -- which is also easy to ignore when you're in the thick of it day-to-day. You currently are saving at about a 10%-12% rate (counting both 401(k) and your Roth).  That savings rate puts you at 40-50 years to retirement -- see https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/.  Now, you are better off than that, because you already have the 2 years' expenses saved toward retirement, which will grow and knock probably 10-15 years off that end goal.  But that still puts you around standard retirement age.  So the real question that you need to consider is whether all of those other things you are spending money on are worth your DH continuing to work for another 30 years or so?

Another way to look at this, btw, is to realize that you guys are already semi-FIRE:  you have quit the day job, and you both decided that that was worth it, even though your husband has to work longer as a result.  That is probably the single-biggest luxury your income has afforded you, and the fact that you can do that at all shows that all of your efforts have been a significant success.

Finally:  you're right to stop the 529 savings right now.  Your retirement has to take precedence.  In addition, if you go into the college years still netting around $60K, you will get a very good financial aid packages; indeed, if your kids are smart enough to get into one of the top colleges (and want to go there), there are a bunch that have committed to 100% aid even for families making into the low six figures.  Now, those aid packages always include loans, so it's reasonable to have $$ available to avoid those and/or pay for unanticipated expenses.  But that's optional, so a much lower priority than all those other expenses that you're currently facing.

farmGirl14

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Re: 5 Year Case Study Review
« Reply #4 on: January 10, 2025, 11:35:49 AM »
First of, I think a big congratulations are in order--you're operating on a much smaller income than a lot of forum denizens here, your expenses have gone up significantly, and yet you're still able to save money toward retirement.  That puts you ahead of a LOT of the general population.  Not only that, but you've increased the percentage you're saving, despite significant health challenges.  AND you've done through a severe inflationary period.  Kudos!

A couple of notes:
--why did your property taxes go up so much?  That's a huge percentage increase.  Any option to challenge/appeal the valuation?
--there's no 15% federal tax bracket, at least until the 2026 tax year (if I understand it correctly). The current tax brackets are 10/12/22/24...  These are scheduled to revert to 10/15/25.... in a couple years

I don't feel like I can hand out any facepunches, since our family's spending is significantly higher than yours.  Maybe the eating out could be slimmed down?  Your internet bill seems high, but that might be unavoidable given your location.

Thank you!

Our property taxes went up because my county sucks, and also because we did a home addition in 2019 but had a 5 year "grace period" on our new taxes.
You are right. I copied and pasted that from somewhere on my previous case studies so I've just removed it.

I agree I eat out too much and our internet is high. Unfortunately, it's the only internet option besides starlink which is higher.

farmGirl14

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Re: 5 Year Case Study Review
« Reply #5 on: January 10, 2025, 01:36:35 PM »
First, congratulations about making so much progress, especially with the unanticipated huge medical bills and rise in property taxes.  I was confused about the huge jump in gas and drop in car savings, but I'm guessing you have added a second car, since you didn't used to have a car listed as an asset?  What is the land loan for?  If it was related to the house (i.e., you built in 2019, swapped a construction loan for an 80% mortgage and a small land loan to make up the difference), that makes sense.  If you bought a separate property, however, consider selling that, since it's not currently providing any income, and your medical bills make this a bad time for cash flow.

Really, almost everything you have here is reasonable.  Yeah, there are a lot of areas you can cut back if you want; groceries, cellphone, internet, subscriptions, charity, and eating out leap to mind, but really almost everything is optional once you get past housing and food.  And you are absolutely right that you don't want to cut back to the point of feeling like you're sacrificing important things every day just to maybe be happy in 30 years.  So if this is all what you consider to be the kind of lifestyle and budget you can be comfortable on for decades, then that is what you should focus on; sure, you should always look to trim around the corners where you can (and certainly if the medical bills back off you will appreciate that slack!), but this is fundamentally what you should plan around.

The real issue, then, is whether this lifestyle is worth the tradeoff in years to retirement.  The problem with saying "I like my current lifestyle" is that it comes at the cost of working significantly longer -- which is also easy to ignore when you're in the thick of it day-to-day. You currently are saving at about a 10%-12% rate (counting both 401(k) and your Roth).  That savings rate puts you at 40-50 years to retirement -- see https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/.  Now, you are better off than that, because you already have the 2 years' expenses saved toward retirement, which will grow and knock probably 10-15 years off that end goal.  But that still puts you around standard retirement age.  So the real question that you need to consider is whether all of those other things you are spending money on are worth your DH continuing to work for another 30 years or so?

Another way to look at this, btw, is to realize that you guys are already semi-FIRE:  you have quit the day job, and you both decided that that was worth it, even though your husband has to work longer as a result.  That is probably the single-biggest luxury your income has afforded you, and the fact that you can do that at all shows that all of your efforts have been a significant success.

Finally:  you're right to stop the 529 savings right now.  Your retirement has to take precedence.  In addition, if you go into the college years still netting around $60K, you will get a very good financial aid packages; indeed, if your kids are smart enough to get into one of the top colleges (and want to go there), there are a bunch that have committed to 100% aid even for families making into the low six figures.  Now, those aid packages always include loans, so it's reasonable to have $$ available to avoid those and/or pay for unanticipated expenses.  But that's optional, so a much lower priority than all those other expenses that you're currently facing.

We got a new to us car that is worth a lot more than the previous car. I also started a job out of the home so more driving for me. That plus the kids having appointments and extracurricular activities have resulted in more gas expenses.

The land loan was a few acres adjoining our property that came available. I don't regret that expense at all, it was the chance of a lifetime to extend our property, and it's been merged into our deed. I could pay it off but with the interest being pretty much the same amount we are making in our savings accounts I'm leaving it for now.

I definitely would like to save more for retirement. We hope to continue to increase DH's contribution % each year with raises. I might have to get creative if I want to contribute more to my Roth.

WE never actually saved for our kids 529. That was all money given to us by grandparents specifically for that purpose. Last year I included the money with both the income and the outflow. But for 2024 we figured out how the grandparents could contribute directly to the account without it passing through our fingers. Hopefully, that makes sense.

Freedomin5

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Re: 5 Year Case Study Review
« Reply #6 on: January 10, 2025, 05:24:08 PM »
Quote
I really wish we had more wiggle room so I could have money dedicated to savings every month. At this point, we are putting $3k into my Roth every year and maxing out the HSA, which is then drained to pay for all my crazy medical bills. $8k oop every year. Oof.

I'd love some feedback on glaring issues and what I can continue to work on. I know I spend more than I should on a lot of things, but I also don't see our financial situation changing drastically any time soon and I don't want to live too frugally and be miserable. A middle ground is nice.

I think another consideration is whether you and DH can work another 40-50 years to continue funding your current lifestyle. I recently had a medical issue (cancer), and what I learned is that I cannot depend on myself or my husband working until retirement because I like my current lifestyle. On-going medical issues really put things into perspective.

 Because of that, we would rather forego some extraneous perks now to prepare better for the future. For example, do you really need to spend $50/month on new clothes, or can you spend half of that at the thrift store? Do you need to spend $3000 on vacation, or can you do a staycation? Young kids are generally equally happy playing at the local beach as they are at an exotic beach. Do you need to spend $1800/year eating out? Is the food really so great that it's worth $410609 (which is what it would be worth if $1800 was invested annually at 7% return for 40 years)?

Years ago, DH and went through an exercise that was introduced I think on the MMM site. We cut things out one at time until it started to hurt, then added the last item back in. And then we asked ourselves if there was some way to achieve the same goal for less. It helped us truly realize what was important to us and what was worth spending money on.
« Last Edit: January 10, 2025, 06:00:00 PM by Freedomin5 »

farmGirl14

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Re: 5 Year Case Study Review
« Reply #7 on: January 10, 2025, 07:20:25 PM »
Quote
I really wish we had more wiggle room so I could have money dedicated to savings every month. At this point, we are putting $3k into my Roth every year and maxing out the HSA, which is then drained to pay for all my crazy medical bills. $8k oop every year. Oof.

I'd love some feedback on glaring issues and what I can continue to work on. I know I spend more than I should on a lot of things, but I also don't see our financial situation changing drastically any time soon and I don't want to live too frugally and be miserable. A middle ground is nice.

I think another consideration is whether you and DH can work another 40-50 years to continue funding your current lifestyle. I recently had a medical issue (cancer), and what I learned is that I cannot depend on myself or my husband working until retirement because I like my current lifestyle. On-going medical issues really put things into perspective.

 Because of that, we would rather forego some extraneous perks now to prepare better for the future. For example, do you really need to spend $50/month on new clothes, or can you spend half of that at the thrift store? Do you need to spend $3000 on vacation, or can you do a staycation? Young kids are generally equally happy playing at the local beach as they are at an exotic beach. Do you need to spend $1800/year eating out? Is the food really so great that it's worth $410609 (which is what it would be worth if $1800 was invested annually at 7% return for 40 years)?

Years ago, DH and went through an exercise that was introduced I think on the MMM site. We cut things out one at time until it started to hurt, then added the last item back in. And then we asked ourselves if there was some way to achieve the same goal for less. It helped us truly realize what was important to us and what was worth spending money on.

This is a very good perspective. :)