My case might be a bit more complicated than some, due to my income varying month to month. But here it goes:
Life Situation:
I'm an IT contractor (34) working from home in Central Texas; my wife stays home with the kids. Married filing jointly. 3 kids - 5yo in kindergarten and 2yo twins.
Gross Wages:
Varies between ~$3500/mo and $11,000/mo. 2016's AGI totalled $104,400; This year on track to be ~$80,000. Expecting next year to pick back up to closer to 2016.
Taxes (2016 numbers):
$5600 federal
$6500 social security
$1500 medicare
$0 state (Texas :-) )
Current Monthly Expenses:
Charitable giving 10% of monthly post-tax... ends up between $350 and $900
Mortgage Escrow $479
Mortgage P+I $834
Dental Insurance $83
Internet, Streaming services $59
Water/Sewer $88
Power $171
Life+Disability Insurance $205
Medishare $226
Cell Phone $45
Gym $30
Gas $100
Allowance $100
Clothes $100
Groceries $675
Restaurant $100 (works out to a sit-down restaurant maybe once per month, and fast food 1-2x per month)
Misc $100
Total ~$3,750-$4,300
Current Yearly expenses:
Amazon Prime $107
Umbrella Insurance $265
Vehicle Registrations $205
Vehicle Inspections $27
Auto Insurance $746
Motorcycle Ins $92
Sam's Membership $45
Medical/dental costs $2600 (est. based on previous years)
Total ~$4,100
Assets:
House $195,000
Savings accts ~$26,000 Adding to this basically at the rate of [month's income]-[month's expenses], which varies from one month to the next. Last year we added about $22,000 (and then put a chunk of that towards down payment on our current house), but has been negative a couple months this year.
Taxable investments ~$7900 Currently about 40% bonds and 60% mutual funds. Not currently adding to this.
Teacher Retirement System of Texas $14,000 (need to roll this into an IRA as it's not gaining value since my wife is no longer working)
Thrift Savings Plan $3300 I'm no longer elligible to contribute, but it's still earning so my plan is to leave it alone.
2002 Honda Odyssey $3500 ~135,000 miles, and running great
1997 Saturn SC1 $600 ~183,000 miles and refuses to die (but sometimes I wish it would). Can fit my 5yo son's booster seat, but too small for the twins' car seats. Wife doesn't like to drive it unless absolutely necessary.
1979 Honda CB750 $700? I know, I know. It's got sentimental value though, it's loads of fun, and the operating expenses are low.
Total ~$251,000
Liabilities:
Mortgage
Original amount: $180,000
Rate: 3.75%
Original Length: 30 yr
Monthly Payment: $1,313
Current balance: $178,100
Total: $178,100
- Obviously I need to start putting money into IRAs. With our current tax deductions and relatively low marginal rate, seems like Roth is the way to go for now. My plan for this year and forward is to leave ~$20k in savings accounts, and follow the investment order beyond that (for us that would mean maxing out IRAs, then more of the taxable investments).
- Seems like we need to be able to shrink expenses during months of lower income. I expect the most room for potential improvement will be in the grocery expenditures? In practice, it's seemed pretty difficult to spend less without sacrificing nutrition.
- Expect to hear that I should cancel the dental insurance? Signed up for it about 2 years ago when we were on a Marketplace Health Insurance Plan that required us to maintain dental insurance. This particular plan has a provision such that it wouldn't cover things like root canals, crowns, etc... until you've been on the plan at least 2 years. I know I need some work done, so I was thinking of waiting until after I'd gotten that taken care of before cancelling.
- I do plan to get home gym equipment and can the gym membership. I've just had a tough time justifying doing so in the past 6 months when my income has been on the lower end of the range and I'd have to pull from savings up front to do it. Face punch accepted. What I've seen on Craigslist hasn't been much less than what I'd pay new (~$700 for a power rack, bench, barbell and weights). I've seen some nice looking DIY power racks though, which would definitely reduce the cost a bit.
- Have been considering selling the Saturn and not replacing it. I bought it 5 years ago when I was driving 55+ miles each way to work, but I now work from home. Selling would mean that most of the 3000 miles per year currently driven in this car (@~30mpg) would now be driven in the Odyssey (@~18mpg), but would also save about about $400 per year in insurance and registration fees.