Case Study - Critique my financials

[CashFlo]

Hello all,

This is my first post here and I'm hoping to get some quality feedback on my current financials. Below are some details to accompany my Balance sheet and Monthly cash flow which I have also attached. Thanks!

32 years old, married (wife works and watches baby, no daycare)

In process of refinancing from 4.5% 30 year mortgage (4 years into mortgage) to 3.25% 20 year mortgage. This will result in mortgage payment increasing roughly $200 per month and no increase in principal. Total interest savings of $84k over life of loan.

Currently we put $710 into a savings account each month ($500 for emergency fund, $210 for lump sum expenses paid annually). Once we have 6 months worth of living expenses saved ($24k) we will put the $500 per month that was going to savings into a Roth IRA.

We invest $1,060 monthly into our retirement account (10% of salary with a 7% employer match)

We fund $5,500 into HSA annually, employer throws in $1,000 annually to HSA and HSA account covers all medical debt payments.

Every quarter my wife receives a bonus that ranges from $2-3k.

Currently saving money to pay cash to finish basement next year, and recreational property (with debt, 30-40% equity)  with CRP or tillable income in the next 5 years.

[MDM]

Generic advice can be found in Investment Order.  If that seems to fit you, go for it.  If not, ask about what doesn't seem to fit.

Welcome and good luck!

[CashFlo]

Thanks MDM! What a great resource. I guess I was just looking for general comments from people if they had any, or if anything stood out as areas to improve upon.

[Laura33]

It's hard to give much useful advice with the level of detail provided.  In particular, a full 20% of your monthly cash flow is allocated to "credit card"; we can't advise you on whether those expenses are reasonable if we don't know what they are.  I would say the car payment and gas look high compared to most on this board; that suggests that you have a relatively large, expensive, not-very-fuel-efficient vehicle that you drive a lot.  That's a big chunk right there that you could optimize. 

If you'd like a big-picture sense of how you're doing and where you are, check this out:  https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/.  Otherwise, the best way to optimize your spending starts with tracking everything you spend in more detail, by category.  The case study template may help as well with that kind of detail.  My hunch is that some of your numbers, like food, are just guesses, and that you are probably losing other money along the way that you're not really noticing. 

[Omy]

The cash flow sheet is not very detailed, but a monthly credit card payment of $1650 and vehicle payment of $490 are the items you should be addressing first. Most people recommend paying off credit card debt before starting an emergency fund (since emergencies can be paid for with credit cards).

[CashFlo]

It's hard to give much useful advice with the level of detail provided.  In particular, a full 20% of your monthly cash flow is allocated to "credit card"; we can't advise you on whether those expenses are reasonable if we don't know what they are.  I would say the car payment and gas look high compared to most on this board; that suggests that you have a relatively large, expensive, not-very-fuel-efficient vehicle that you drive a lot.  That's a big chunk right there that you could optimize. 

If you'd like a big-picture sense of how you're doing and where you are, check this out:  https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/.  Otherwise, the best way to optimize your spending starts with tracking everything you spend in more detail, by category.  The case study template may help as well with that kind of detail.  My hunch is that some of your numbers, like food, are just guesses, and that you are probably losing other money along the way that you're not really noticing.

Thank you for your honesty. You are correct, I could definitely add some more details particularly with the credit card. I will work on that. The $1,650 CC payment is an average for expenses each month. Gas and Food expenses shown are also averages from historical data.

We own two cars (2019 Honda CRV and a 2011 Ford F150) and the truck is a gas guzzler for sure - the CRV has the note on it.

[CashFlo]

The cash flow sheet is not very detailed, but a monthly credit card payment of $1650 and vehicle payment of $490 are the items you should be addressing first. Most people recommend paying off credit card debt before starting an emergency fund (since emergencies can be paid for with credit cards).

I appreciate the feedback and I will work on parcing out the Credit card information.

To clarify, we do not carry a balance on the credit card. It is used for all of our monthly purchasing and paid off in full each month.

[Omy]

Yes...that will help you see the big ticket items as well. $1650 is a rather large number for "miscellaneous".

[jjcbjs]

You mention that your wife works and watches the baby so you aren't currently paying for daycare. I don't know the age of your baby, however, you may want to plan in your financials to eventually use some childcare. I work from home and my employer requires me to have childcare. Also as a baby becomes more mobile it is harder to balance with work. Plus your wife is effectively working two jobs at the same time - her paid job + childcare and it may eventually be unsustainable. I'm not sure of your specific situation, and maybe she can make it work but I would suggest being ready financially in case you need to pay for some childcare help.
Input from I work at home mom with two kids :)

[CashFlo]

You mention that your wife works and watches the baby so you aren't currently paying for daycare. I don't know the age of your baby, however, you may want to plan in your financials to eventually use some childcare. I work from home and my employer requires me to have childcare. Also as a baby becomes more mobile it is harder to balance with work. Plus your wife is effectively working two jobs at the same time - her paid job + childcare and it may eventually be unsustainable. I'm not sure of your specific situation, and maybe she can make it work but I would suggest being ready financially in case you need to pay for some childcare help.
Input from I work at home mom with two kids :)

thats a great point. My wife is amazing and I am super lucky that she is able to handle working remotely from home as well as watching our 4 month old baby. We are saving a lot of money on daycare right now