Author Topic: Case Study: I get to redesign my life.  (Read 4764 times)

Dsteadma

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Case Study: I get to redesign my life.
« on: February 13, 2020, 11:28:37 AM »
This is sort of a check-in as our life is about to rapidly change in the next year. Married age 30, 31 with 2 year old kid.

Life Situation:
IRS filing status: 0
Dependents: 1 (Hoping for another this year.)
Location: Midwest

Salary: Husband in IT 40k; Wife CNA 15k

Pre-tax: 401k 6% of Wife's
Post-tax: Roth 24% of Wife's

Federal tax: Husband 3,013 Wife 385
Social Security tax: Husband 2,489 Wife 954
State: Husband 1,262 Wife 223

Bills:
   Rent: 600
   Phone: 49.73
   Internet: 62.95
   Electricity: 180
   Gas Bill: 67
   Car Insuance: 60
   AAA: 9
   Life Insurance:32
   Hulu: 12.75
   =1073.43
Monthly Spending:
   Food: 300
   *Gas: 125
   Pet food: 100
   Diapers: 50
   Miscelaneous: 80
   Health Insurance: 0 (Covered by ACA subsidies)
   =655
Savings:
   House Downpayment: 300
   Doctor: 430 (saving for 4k-ish birth of kid number 2)
   Dentist: 72.5
   Car Repair: 100
   Vet: 100
   **Vacation: 300
   Family Events: 55
   Christmas: 34
   =1391.5
Total Monthly Spending =3200  (Anything extra income goes to Downpayment or Vacation)

Assets:
   Car 2007 Prius 200k miles =4k
Savings:
   Car Repair: 287
   Car Replacement: 140
   Christmas: 35
   Dentist: 145
   Doctor: 785
   **Vacation: 1000
   House Downpayment: 5079
   Vet: 602
   =8073
Retirement:
   Ira: 3500
   Roth: 6200
   Ira: 7500
   Roth/401k: 9000
   =26200

This budget is new this year, because in January our savings for our house down payment allowed us to use the last month's income to budget.  Turns out we were leaking money and had no idea.  This year we're trying to save for a family group trip to **Hawaii 6k, a second child 4k, and a house down payment 10k, which is a tad overwhelming.  THEN we realized that my husband wants to leave his current job in Fall of 2021, but he has a 3 year non-compete clause in IT.  When he does leave his job, I want to do something else for work.  This made buying a house less important, because we have no idea what we're going to do. 
I have a bachelor's in Wildlife Ecology, but have been working as a CNA for the last 10 years.  I spend my day with the toddler and work 4 hours in the evening.  The flexibility is great, but I want to do something else.  Help me out here guys, book keeping maybe?  I need a part-time job that would be quick to train for.
My husband has to figure out how to work around the non-compete.  He finally realized he was under paid, but hasn't searched for a job in 5 years and had no experience when he first started.  He has an associates degree in Cisco Network Administration and has been running a tiny hospital's IT.  Is getting a bachelor's worth the expense?

TLDR: We have until Fall 2021 to both pick new jobs, decide where to live, maybe buy a house, and have a second kid.  What can we do to prepare ourselves for this major change?

*Gas bill is high because of frequent one hour trips to visit family on weekends.  If we bought a house or changed jobs, that commute would be considered in our location.
**Our vacation to Hawaii is with the large extended family.  We are loathe to miss it, and are hoping to hack the vacation with credit card churning and bank bonuses.
« Last Edit: February 13, 2020, 04:19:59 PM by Dsteadma »

reeshau

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Re: Case Study: I get to redesign my life.
« Reply #1 on: February 13, 2020, 12:45:36 PM »
THEN we realized that my husband wants to leave his current job in Fall of 2021, but he has a 3 year non-compete clause in IT.

...

My husband has to figure out how to work around the non-compete.  He finally realized he was under paid, but hasn't searched for a job in 5 years and had no experience when he first started.  He has an associates degree in Cisco Network Administration and has been running a tiny hospital's IT.

That non-compete is insane.  Even a VP level might have 1 year.  Maybe longer for the CEO, or the chief technologist...in the same industry, only.  If you don't want to just call their bluff, have a lawyer look at it.

I would call it unenforceable, but that doesn't mean they won't run up your legal bill proving it.

If your husband was running the hospital's network, you should have no trouble landing a new network job next week.  If you are risk averse, juat don't work for another hospital:  find a non-medical company with a network.  i.e. anywhere.  Or move to California, where they are formally unenforceable.
« Last Edit: February 13, 2020, 12:48:52 PM by reeshau »

GoCubsGo

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Re: Case Study: I get to redesign my life.
« Reply #2 on: February 13, 2020, 12:50:14 PM »
You're kind of all over the place with your wants vs. needs vs plans.  You want to spend $6k on a vacation when you only have $26k in LIFETIME retirement savings?  That's not going to play well here haha.

I'd talk to an employment atty about the non-compete, as they are often not enforceable in my experience and it would seriously hinder your husbands ability to earn a living if he can't do IT.  As far as you are concerned, with your major and current job as a CNA, why would someone hire you to do their books??? 

Is the there something else in the medical field you would enjoy that you could transfer easily too?

Based on your current income, spending and the fact that you plan on adding another mouth to feed, I think buying a house is a stretch that will add more stress to your situation.  I'd try to up your husbands income in the next few years, set a realistic budget once you know how much 2 kids will cost and then maybe consider the house.

Dsteadma

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Re: Case Study: I get to redesign my life.
« Reply #3 on: February 13, 2020, 01:23:42 PM »
You're right; we are all over the place.  We don't have much in retirement because we spent the last 5 years paying off my husband's student loans.  But you're right, they need to be more of a priority. 
We want to buy because housing here is cheap.  You can buy a nice place for 150k.  According to online calculators it's cheaper to buy vs rent here.  We are tired of having druggy neighbors that we have to buy security cams for. 

wellactually

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Re: Case Study: I get to redesign my life.
« Reply #4 on: February 13, 2020, 01:26:01 PM »
Why does everything hinge on fall of 2021??? Why can't you look for a different job before then?

Do you want to continue working part time or find something full-time and pay for childcare? How much would childcare be for a baby and toddler in your area? Why don't you want to continue as a CNA? Making 15k on 20 hours a week while avoiding childcare costs is not bad.

Do you have access to an HSA to save for potential future medical costs?

There is no way the non-compete would hold up. He needs to start looking at your job market in your area and seeing what skills or certifications are necessary to keep moving forward in his career and build his resume up for that. I wouldn't worry about more school for him until you've assessed what is available regularly in the job market and how competitive it is. In my part of the county, he would be fine to work as an IT tech of some kind and make about 40k without a college degree.

While you don't have debt and your "Daily Spending" and "Bills" are pretty frugal (get rid of AAA IMO), you are also in a pretty precarious spot right now should your husband lose his job or one of you get sick or some medical event to occur. Right now it looks okay because you have money in the bank, but you've already allocated it in your mind. I would prioritize some kind of emergency fund savings ahead of a downpayment. I certainly wouldn't advise you to put $10k down on a house without having money left in savings for emergencies. Some people treat their Roth that way, but I'd really push for you to have at least a couple months of expenses saved in cash. ESPECIALLY before buying a house where emergencies can be very costly.

Your bare bones monthly spending could be around $1600. I'd take $3600 out of that downpayment savings and put it in a lockbox for emergencies. You could also do that instead with the Hawaii savings because frankly that kind of trip is not really something I think you can afford with the combination of your income, your intention to have more children, and your desire to both change jobs.

Not sure what age you are, but you're doing some good things with your available income.

maisymouser

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Re: Case Study: I get to redesign my life.
« Reply #5 on: February 13, 2020, 01:48:00 PM »
I hear you on the house, I would definitely look into buying instead of renting in your shoes. Just do yourself a favor and don't get a 30-year-mortgage- if you can't handle a 15-year mortgage payment, the house you are looking at is out of your price range. Best house advice I've ever heard.

As another person pointed out, you should REALLY reprioritize some things in next year's budget. In your shoes, I wouldn't feel *at all* comfortable planning on a $6,000 trip to Hawaii. Hell, that is outside of my budget and we own a house outright while maxing out our retirement accounts. I also wouldn't personally feel very good about planning on a second child, at least, not for another couple of years or so. Not only that, it sounds like you may be considering a FT job in the future, which would mean you'd need to budget for another child's daycare unless you worked evenings/nights. I don't think you posted your age so that might be a factor in the second-kid decision, and I understand it's an extremely personal one. tl;dr I don't mean to sound harsh, just want to give my personal perspective on the budget for 2020.

On the plus side, I'm blown away by your spending (or should I say lack thereof!). I see that you're a one car family and drive one of the most economical cars out there (old Prius lover here- holla holla!). I'm surprised that you spend $125 on gas per month, though (I'm assuming the 'daily' header is a typo). If you're renting and DH is commuting that much to work, that is a lot of miles to put on a car. The medical situation is also a bit confusing; I see healthcare premiums as $0 but you're budgeting $430/month; could you elaborate on that? And a minor comment on internet, if you could get that down to ~$45/month you'd save over $200/year. Have you called your ISP lately to request a discount? I make a call once a year, takes about 15 minutes but saves us $20/month or so.

I hear you on the work challenge. Do look into the legality of that non-compete, that is outrageous. If he's feeling nervous about a job search, look to your local resources for polishing up the ole' resume. In terms of your work, have you considered providing in-home daycare to another kid or two? If I were a SAHM that's the first thing I'd consider if I needed additional income.

Dsteadma

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Re: Case Study: I get to redesign my life.
« Reply #6 on: February 13, 2020, 01:54:09 PM »
Why does everything hinge on fall of 2021??? Why can't you look for a different job before then?
We technically can look before then; that's just our end date.  At that point the hospital he's with will drop his company's contract.  He LOVES this hospital, and isn't willing to work at his current company/salary if he has to leave it. 
Do you want to continue working part time or find something full-time and pay for childcare?...
I want to find something part time so that we don't have to pay child care.  The cost here at a sketchy place for 2 kids would be at least 250 a week.  I don't want to be a CNA anymore because I already have arthritis and back issues from the manual labor.  I suggested bookkeeping, because it sounded like something I could train in quickly and be able to do part time. 
Do you have access to an HSA to save for potential future medical costs?
Our current ACA plan is covered through subsidies.  It does not allow us to have an HSA this year, which is why we are saving for the doctor and dentist. 
 (get rid of AAA IMO)
We have an old car that has issues more frequently than we would like.  AAA saves us the towing fees.
The call for an emergency fund is warranted.  As to the trip, it is our entire extended family.  I would hate to miss it.  I am hoping to travel hack it through bank bonuses and credit card churning.
We're 31 and 30 years old.

dandarc

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Re: Case Study: I get to redesign my life.
« Reply #7 on: February 13, 2020, 02:16:09 PM »
If y'all want to stay there, he should definitely at least ask the hospital about working there if he wants to stay on. If he likes the hospital and they like his work, he can likely come out ahead and save the hospital money at the same time.

Sure, they could put up a stink, but if the contracting firm ever want to be hired by this hospital again (and possibly far beyond that - you never know how far the "pissed off executives" networks reach), they'd be stupid to do so. Particularly over 1 person.

Freedomin5

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Re: Case Study: I get to redesign my life.
« Reply #8 on: February 13, 2020, 03:02:29 PM »
The best way to prepare yourself for that major change is to not do all those changes at the same time.

Iíd focus on increasing income first (before focusing on increasing spending via having a second kid or buying a house). So have DH ask for a raise and start looking for a new job and figure out the non-compete.

FWIW, a former company raised a stink about my non-compete. Like, raised a giant non-professional stink, but ultimately, other than having the wife of the owner rant and scream obscenities in my face for 10 minutes, there was nothing they could do.

A few years later, when I left another company with a non-compete, I had my new company look over the non-compete from the old company to figure out a workaround. That way I didnít have to shell out any money for a lawyer and because it was new companyís own HR and lawyer that looked over the clause and came up with a solution, they readily accepted the solution.

BringFuturamaBack

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Re: Case Study: I get to redesign my life.
« Reply #9 on: February 14, 2020, 09:13:24 AM »
I won't comment on the financial stuff as several people on this site know much more than me but I will tell you my opinion on what your husband should do. I'm assuming that his non-compete runs out in the Fall of 2021 and that he wants to stay in a somewhat similar field? If so, I would personally look at an online accredited college like Western Governors University where he could quickly get a BS and potentially MS for a fraction of the cost of a typical college and would likely provide significantly better job opportunities. They offer scholarships as well that you could look into to offset the cost even more (not to mention tax deductions for attending college). The time he has left before leaving his current position should be enough time to finish a bachelors from Western Governors University, or some other comparable school (GA Tech also has some amazing online degrees but I've only looked at them for masters programs). The typical time to complete a degree at WGU is significantly lower than 4 years. The MBA program Iíve been eyeing to be worth Ďmoreí to my employer can be done in 6 months by diligently working on it or 9 months at a casual pace; thatís a two-year program in less than half the time.

Why do I think he should get a degree? When a company is hiring someone their first questions are can this guy do the job and does he seem like a good fit for our company. The next set of questions is how low of an offer can we make that heíll take. By having that degree (and the added experience heíll get in the next year) that low ball offer goes up significantly. It also makes him more desirable because many employers, even if a degree isnít required, see that you are a driven person that cares about personal development. Believe it or not this has been critical to my own career. Iím a chemical engineer and Iíve literally gotten some of the opportunities Iíve gotten because I went for my professional engineering license. Do I use it? No, but it shows Iím more driven than the other guy they were just looking at who got his bachelors and stopped growing.
 
Also, if youíre interested, they have finance degrees as well which would help your prospects too. Since you already have a degree you could probably go for a masters in finance or business and claim you have a masters to future employers, which would raise your pay level significantly.
I promise this isnít an ad for Western Governors University, just from my own research and the people who live in my area, they seem like one of the good options out there. Iím sure there are many others as well.

You're my first post. Sorry for the book.

formerlydivorcedmom

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Re: Case Study: I get to redesign my life.
« Reply #10 on: February 18, 2020, 01:01:35 PM »
I'd have him review that "non-compete".  It sounds as if he's working for a contracting firm and is on assignment to the hospital.  There are occasionally rules about how long after you leave the contracting firm before you can work for one of their clients (to eliminate poaching).  However, that wouldn't stop your H from getting a job anywhere else within IT.

My H is a computer repair tech at a school system and makes as much as yours does - so if your H is really running the entire network for the hospital, he is underpaid by a lot.  Healthcare, in general, doesn't pay IT as well, and the benefits are often crappy.  If he's looking to make more money, I would recommend an industry shift for him.

lisaholland

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Re: Case Study: I get to redesign my life.
« Reply #11 on: March 27, 2020, 01:44:36 AM »
Youíre right. That thought occurred to me too actually.

kpd905

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Re: Case Study: I get to redesign my life.
« Reply #12 on: March 27, 2020, 06:58:33 PM »
I'm guessing the taxes you listed is the withholding on your checks, not the actual taxes paid.  Using your income of $55,000 minus $900 401k contribution and $2,000 child tax credit gives you a federal tax bill of about $1100.

MrThatsDifferent

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Re: Case Study: I get to redesign my life.
« Reply #13 on: March 31, 2020, 07:04:58 AM »
Iím going to echo challenging the non-compete clause. First, thatís batshit crazy to have one that long, and then to have one for a hospital, and only be paid $40k? Even if enforceable, it shouldnít preclude him from IT work, at most, maybe IT work at another hospital in the area? Certainly no other business would compete. You could pay to get legal advice on it, or roll the dice and see what theyíd do. I wouldnít let that stop your husband from finding a better paying job.