Author Topic: 1 YEAR UPDATE: How to Optimize Investments on Low Income  (Read 5856 times)

Luz

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1 YEAR UPDATE: How to Optimize Investments on Low Income
« on: June 22, 2019, 01:53:30 AM »
1 YEAR UPDATE:
Life Situation
We're 34 and 37 now, with a 2 year-old and a second baby due in July. I'm still a stay at home parent and have found it to be a good fit for this season of life. My current plan is to re-enter the workforce when my youngest enters Kindergarten.
My husband has 1 year of his Network Administration degree under his belt. He's done really well, no small feat for an ESL student. He had a bit of a health crisis last summer that resulted in a number of ER/specialist visits. It was a scary 6 months, but he's in good health again and we finished paying off the last of the medical bills a few months ago.
His company furloughed 284,000 of its 286,000 employees due to the pandemic. Most of the 2,000 still employed went on paid leave these last 2 months. He was one of the 2,000, so we've been in the very fortunate position of him staying home and being paid for not working. We're holding everything loosely this next year or so, since he's in retail. My side hustle (bookkeeper for a small business) took a pause, but I expect to resume my very part time hours in a month or two. I found a good balance with upping my hours to 7 per week, mostly by regulating my evening internet use.
Our landlord offered to extend the lease for our 1 bedroom apartment for a year. We decided to stay for 6 months longer and will save quite a bit of money with keeping our rent and other expenses very low ($1,300-1,500/month) through the end of the year. I'm toying with the idea of sticking the new baby's bassinet in the (dry) bathtub for nights and naps so everyone sleeps better. Don't know if that's ill-advised.
Citizenship plans are a bit up in the air due to Coronavirus, but thankfully my husband has a 10-year green card.
I'm encouraged by this year. We've upped our income minus expense margin to $8,000.00 (as compared to last year's $6,000.00) despite adding another baby. Our net worth has also gone up by $10,000.00. This community's knowledge has helped a ton!


Income $43,700.00
   Gross Salary/Wages: $32,700.00
   Overtime: $2,400.00
   Other Ordinary Income: $4,000.00 (my side hustle)
   Tax Return: $4,000.00 (projected 5 year average: EIC/Child Tax/Additional/American Opportunity Credits)
   HSA Employer Contribution: $600.00

Deductions $7,930.00
   Medical/Dental/Vision $2,500.00 (1,400 ind/2,800 family deductible/$6,000 max OOP)
   HSA $520.00
   Taxes $3,275.00
   401k 5% match $1,635.00

Total Take Home: $35,770.00


Yearly Expenses   $27,600.00
  (by month*:)
   Rent $830
   Water/Sewer/Trash $50
   Electric $50
   Renter’s Insurance $7
   Laundry $40
   Food $650
   Household Products $65
   Gas $108
   Geico $44
   Internet $67 (still have not found anything lower, despite searching quite a bit)
   Phones $38
   Remittance to Parents $88 (half rather than all of their expenses, in order to live on one income)
   School $165
   Periodic Expenses $98
   Fun/Clothes/Gear- Christmas/Birthday Gifts

*This expense level is for when we move to a 2-bedroom apt at the end of the year. We're saving $6,000.00 this year by living on much less due to the pandemic. But will spend the $6,000.00 saved on dental procedures, a new computer for my husband, infant and toddler gear, and the rest of the year's university tuition.

Take Home minus Monthly Expenses: $8,170.00

Assets: $37,100.00
   -401K: $6,330.00
   -ROTH IRA: $1,000 (I just opened this and will transfer over more cash to build the EF)
   -HSA: $920.00
   -Cash $8,850.00
   -Mx retirement account: $3,000.00
   -Mx House $17,000.00
   
Liabilities: $0
   
Total Assets minus Liabilities: $37,100.00

Short and Long Term Goals
Baby #2 $4,650
-I'm hiring a doula rather than giving birth alone since my husband will be with our toddler
Citizenship $800
-hoping for the fee waiver, but not counting on it
Baby #3 $3,650
ER Fund $10,000
-The pandemic has made crystal clear what ER funds are for! Just opened a Roth IRA
Year(s) Abroad $4,000
-The (somewhat crazy) plan now is for me to move to Mexico with the kids for a year or two after my husband graduates from his program and while he's getting a few year's experience in his field. Aside from the travel expenses of him coming to visit us on vacation days/some weekends, we'd pay for it by him living simply ($1,650 per month) and the kids and I renting a room from a local family ($750 per month). Close to our regular monthly expenses. We want to do it before our oldest is 7.
Moving Expenses $8,000
-We plan to relocate after my husband gets his work experience and the kids and I return from Mexico. We've decided on a city to call home (hooray!). We had a few priorities in mind (moderate weather, somewhat walkable, decent job opportunities/schools (including universities), left-leaning (we're an interracial couple that speaks Spanish at home: liberal cities are much more tolerant of us) and economic/racial diversity. It feels good to think about putting down roots in a place of our choosing.
House DP $40,000
-It'll be years of renting apartments/houses before taking this step, but we're thinking 1,200 sqft in the $200,000 range. Hopefully we can get a low interest rate via first time homebuyer’s programs
Nursing Degree
-I'm going back to school when my kids are school-age and plan to pay the education loan with the salary I make that first year of work.
Retirement
-We contribute up to the 401K match every year and will keep doing so. Reaching our short term goals will likely take awhile. I expect to really ramp up retirement savings when I go back to work (which will be part time while I still have kids at home). The idea is to always live on 1 income and put the rest towards our goals. I hope to contribute $20,000 to retirement every year by the time I'm 45 ($2,500 for 401K match, $12,000 for 2 Roth IRA accounts, $5,500 for additional 401K towards max). According to different calculators, if we continue with our match the next 10 years, then invest $20,000 over the subsequent 20 years, we'd end up with $1,090,000 for retirement. We'd have about $60,000 left on our mortgage by then, so we'd use ~$90,000 of our retirement to pay off the house plus do some renovations.
I would love to leave a million dollar endowment when I die, so I'm toying with the idea of taking a 3% withdrawal rate (seems a rate that would pretty much guarantee that the principal wouldn't be touched). We'll see.
For unexpected money that comes in during our working years after our short term goals are met, we'll put half towards fun, 25% towards reaching the 401K max, and 25% towards paying off the house early (I know the math, but I'm debt-averse. I think balancing paying it off early with putting an equal amount towards investments will help us avoid tying up too much of our net worth in one place).
Education:
-My idea is to go from part to full time once I have an empty nest and use that extra ~$20,000 per year (in combination with having a somewhat reduced cost of living being kid-free) to help fund the kid's and my educations. I'd like to get a Master of Public Health degree in retirement and give each kid $55,000 to help with their expenses.

Questions:
Are there income levels at which investing in an HSA account doesn't make sense? I know that health costs account for a big chunk of retirement expenses. And that HSA withdrawals for medical bills are tax-free. It's just that the HSA calculators I've used show a 3% rate of return (versus 6% for 401K/ROTH accounts). And we'll likely not get above $85,000 per year income until our kids are on their own. Our retirement income will also likely be no more than $60,000 including social security. Anyone care to explain how investing with a 3% rate of return is gained back via tax advantage during retirement for our income level?

I still have so much to learn about investing. Any advice on how to allocate funds in our 401K and ROTH IRA accounts?


---------------------------------


ORIGINAL POSTt:
Life Situation: My husband (36) and I (33) live with our 1 year-old (with hopeful plans for 2 more kids in the next 3 years) in a LCOL city in Arizona (though that may change). Husband immigrated to the US 4 years ago with a college degree but little English, and was unable to work during the immigration process that first year. Couldn't find work for a time after that and when he did, he started at minimum wage. His wages have slowly increased and he's going back to school this fall while working full time. He used to put in lots of OT but his company added a 3rd shift and OT is rarely offered now. The goal with school is to increase his earning power enough to cover expenses for our growing family.  My eventual income will go towards long term goals.  I have a grad school degree but stay home currently. When I re-enter the workforce, I plan to go back to school and then work part-time (conservatively estimated at $30,000) until I have an empty nest (for about 10 years). I may increase to full time after that for another 10 years... or just stay PT, depending on how much I like the lifestyle.

Gross Salary/Wages: $30,430.40 husband.
Other Ordinary Income: I have a side hustle (bookkeeping) that brings in $45 per week (3 hours at $15/hr), so $2,250.00 (I give myself 2 weeks off per year for maternity leave or holidays). I used to work 7 hours, but it was too much while also caring for an infant. I hope the 3 hours/week will survive an infant and toddler.
TOTAL: $32,680.40

Assets: $4000 in our 401K (75% match on first 5%) $50 in health savings (we had $6000 in there prior to the baby's birth, but she and I had a few health complications) $600 is contributed to HSA by employer each year. Husband has a paid-for house in Mexico possibly worth $20,000. We have $1,500 in cash.
Liabilities: $0 (I paid for my grad school with a $30,000 inheritance)
TOTAL ASSETS minus LIABILITIES: $25,550.00 (though I'm skeptical about the return on the Mexico house). It's in a low-resource neighborhood and the bureaucracy there is unintelligible to me.

Monthly Expenses:
HOUSING (420 sq ft apartment)
Rent $605 (1 bedroom, will need a 2-bedroom apartment with additional child due to max capacity laws)
Utilities $35 (water, sewer, trash)
Renter's Insurance $8 (required by landlord)
Electric $70 (fluctuates depending on season- we keep AC at 79 in summer and 69 in winter)
TOTAL: $718.00

FOOD + HOUSEHOLD
Groceries + Household/Personal Care Items (TP, Dish Soap, Deodorant Etc) $585 I like to buy as high quality food as possible, household items are a killer
Laundry $30 (3 loads at laundromat every week)
TOTAL: $615.00

TRANSPORTATION
(2003 Toyota Echo- paid for in cash)
Gas $108.00
Car Insurance $53.00 (geico)
TOTAL: $161.00

COMMUNICATION
Internet $67.00 (basic plan- husband attends school/I work online)
Cell Phones $38.00 (2 phones, no data on Republic Wireless)
TOTAL: $105.00

MISC
Remittance to Husband's Family: $175 (including $8 Western Union fee) - we support his elderly parents and also pay their medical bills as possible
Tuition + Books for Husband's school: $188 (2 Year community college: Network Administration degree spread over 4 years Part Time: $9000 total)
Medical/Dental/Vision Insurance: $208 (with $2800 family/$1400 individual deductible)
Taxes: Roughly $25 ($253.5 for my husband. $20 for me -I get a 1099 and it's about 15% on a portion of the gross. We get around $3000 in tax refunds (earned income, child tax credit, etc) per year and this will likely be more with more children. I subtracted this amount from what we owe)
TOTAL: $596.00

FUN
We spend $20-30 per month on treats like going to the movies or paying extra in gas to drive to the mountains.
TOTAL: $30.00

TOTAL MONTHLY EXPENSES: $2,225.00

Periodic Expenses
(these are items that vary month to month and we pay for as they come up- I don't like to budget for them but instead put all income minus expenses towards long term goals and then move money to this category when absolutely needed)
For example:
-Medical- $1,100 for husband's recent health issue involving ER, specialist visits, medicine, and labs
-Auto- $600 to deal with a few motor and suspension issues on our car
-Household- $200 to replace my cell phone that I dropped in water/$20 to thrift next size up clothes, shoes, and gear for baby, etc

Short and Long Term Goals
Emergency Fund: $1,000.00
Baby #2 Birth: $3,650
Husband's Citizenship: $1,500 (including cost of consultant, but I feel the consultant and continuing on from green card to citizenship are worth it because you never know)
Baby #3 Birth: $3,650
3 month's Living Expenses (combine with ER Fund): $5,000
Year Abroad: $10,000- $15,000
Return to School for my RN: $35,000 (* if I do this, my wages will also increase, especially over time)
Down Payment/Closing Costs on Small (but not tiny) house: $60,000
Pay off House: $150,000 + interest (early to minimize interest- 7 years would be great)
Help Kids with University: $150,000 (I also expect to help out my parents at this point, or at least work PT to help care for them)
Get a Master's of Public Health the first years of retirement: $35,000 set aside before then (though who knows what education costs will be in 30 years)
Fund Retirement: $600,000 (I don't plan to retire early, but would like as much financial independence as possible in the meantime).

Questions:
With roughly $6,000/year left after paying our expenses during the most important years in terms of compounding: 
How much should we put in the 401K/ROTH  (We don't yet have a ROTH but I've read that it's best to get your 401K match and then max the ROTH).
How should we use the HSA?
How much should we leave accessible for periodic expenses/emergencies?
Are any of my long and short term goals misguided? (ie: is it wise to help kids with college or buy a house?)
Would you approach taxes differently than we currently do?
Finally, if you weren't planning to retire early, would you allocate more money towards meaningful experiences (road trips, concerts, eating out) to enjoy throughout your life? How do you balance saving for your financially-free future and living as fully as possible in the present?

Thanks for reading this! I'm looking forward to hearing your feedback!
« Last Edit: May 10, 2020, 08:44:44 AM by Luz »

nereo

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Re: How to Optimize Investments on Low Income
« Reply #1 on: June 22, 2019, 07:47:19 AM »
Quote
Questions:
With roughly $6,000/year left after paying our expenses during the most important years in terms of compounding: 
How much should we put in the 401K/ROTH  (We don't yet have a ROTH but I've read that it's best to get your 401K match and then max the ROTH).
How should we use the HSA?
How much should we leave accessible for periodic expenses/emergencies?
Are any of my long and short term goals misguided? (ie: is it wise to help kids with college or buy a house?)
Would you approach taxes differently than we currently do?
Finally, if you weren't planning to retire early, would you allocate more money towards meaningful experiences (road trips, concerts, eating out) to enjoy throughout your life? How do you balance saving for your financially-free future and living as fully as possible in the present?

Welcome @Luz.

Many of your questions are addressed by the Investment Order sticky (link embedded). 
I think your goals are well conceived.  Your first priority should be establishing an emergency fund (again, see Investment Order) and then getting a 401(k) company match, HSA and then IRA.  I would not pay down the house at your income level and assets - its generally a very bad idea to have most of your Net Worth tied to your home.

Regarding saving for your children's university education, the general advice is to "put your own oxygen mask on before helping others".  In other words, first max out your IRa, HSA and 401(k) before you turn to saving money for their education.

ItsALongStory

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Re: How to Optimize Investments on Low Income
« Reply #2 on: June 22, 2019, 07:54:28 AM »
First thing that stands out to me is that you should put your own mask on first, it seems like a bit of a stretch to help others when you aren't saving nearly enough for your own goals. Could you sell the Mexican property and just use whatever proceeds from that to help his folks? Could they sell and you guys let them live there rent free as a form of support? As far as your own parents, they still have plenty of time to prep for retirement. Teach them how to fish now instead of supporting them financially later.

Secondly, your earnings potential is way higher than your husband so imo it would be financially wiser that he cuts back hours, perhaps wraps up school sooner and you go full time.

Thirdly, most mortgages should not be paid off early. Just invest in the market, it has historically yielded way better returns than 3-4-5% on your mortgage.

Finally, I also loved here as an immigrant and while I don't know specific circumstances there are tons of free resources online. Absolutely no need for a consultant or lawyer.

Sent from my Pixel 2 XL using Tapatalk


mistymoney

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Re: How to Optimize Investments on Low Income
« Reply #3 on: June 22, 2019, 09:03:42 AM »
I think you may need to be more realistic about finances and wanting 2 more children.

I'm curious about the decision to not do 7 hours/week of bookkeeping. I'm assuming this is work from home - so correct me if I am wrong. If the baby is not a good napper, then why was DH not able to take over evenings or weekends or whatever his off hours are for you to be able to maintain that income?

You really need it. And ideally increase that.

That said - I was super poor with my children (divorced when they were 1 and 3, and there was no child support or any co-parenting), and I made it through and (in my own humble opinion!) am doing quite well now. So finances can change for the better!

But you will be having a lot of years of scraping by I'm afraid, unless you make some harder choices now. You are both in your 30s, so you really need to start laying a foundation for financial independence as soon as you can.

Bernard

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Re: How to Optimize Investments on Low Income
« Reply #4 on: June 22, 2019, 11:22:09 AM »
Well,
you're living on a shoestring, and doing so quite well, so I'll have only a few points to make.

1) As a former immigration attorney let me tell you that you don't need to hire a lawyer to fill out an N-400 application. That process is so straightforward that a monkey do that. The application takes a few minutes to fill out. You order your tax transcripts for the past 3 years from the IRS (free) and that's pretty much it. The English "test" consists of 1 (one) written sentence such as "Canada is north of the United States of America" and the rest is conversation. The 100 civic questions you can get for free online straight from the USCIS Web site, and it's just basic learning as using common sense will not help. If you are still unsure, go to VisaJourney.com and -- again, for free -- get help. Put the $1,500 to better use.

2) There is no greater destroyer of wealth than children. That doesn't mean that you shouldn't have any children, and in fact, you already have a child, but you are in no position to have more, not at this time. I understand that maternal instincts and cultural norms are strong forces, but man is a thinking animal, so we need to add a healthy portion of reason to the equation. Put the $3,650 for baby # 2  you are not having now to better use and get an additional boost of happiness knowing that overpopulation will eventually kill this planet. Population was 2.1B when I was a young lad, now it's 7.3B. Unsustainable!

3) You are in no position to send money to Me-hi-co. Again, I'm aware of the fact that it's a different culture, but you are in no financial position at this time.

4) Internet is too expensive. I have AT&T for $40 a month, all in.

Know that I'm not trying to be mean. But I'm a straightforward guy and I don't dance around with my answers.

Luz

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Re: How to Optimize Investments on Low Income
« Reply #5 on: June 22, 2019, 12:55:10 PM »
Quote
Questions:
With roughly $6,000/year left after paying our expenses during the most important years in terms of compounding: 
How much should we put in the 401K/ROTH  (We don't yet have a ROTH but I've read that it's best to get your 401K match and then max the ROTH).
How should we use the HSA?
How much should we leave accessible for periodic expenses/emergencies?
Are any of my long and short term goals misguided? (ie: is it wise to help kids with college or buy a house?)
Would you approach taxes differently than we currently do?
Finally, if you weren't planning to retire early, would you allocate more money towards meaningful experiences (road trips, concerts, eating out) to enjoy throughout your life? How do you balance saving for your financially-free future and living as fully as possible in the present?

Welcome @Luz.

Many of your questions are addressed by the Investment Order sticky (link embedded). 
I think your goals are well conceived.  Your first priority should be establishing an emergency fund (again, see Investment Order) and then getting a 401(k) company match, HSA and then IRA.  I would not pay down the house at your income level and assets - its generally a very bad idea to have most of your Net Worth tied to your home.

Regarding saving for your children's university education, the general advice is to "put your own oxygen mask on before helping others".  In other words, first max out your IRa, HSA and 401(k) before you turn to saving money for their education.


The sticky is a fantastic resource! Thank you for pointing me in the right direction. I really like JL Collin's site and will have to check out Bogleheads. It's a bummer to think that we'd delay retirement savings for a year or two while getting the ER fund built up, but I understand the reasoning. It's also a bummer that funding a 529 is last on the list of priorities, though I understand that too. Hopefully we'll get the ball rolling enough to reach that step.
Just so I'm clear, we wouldn't touch the HSA until retirement, correct? We'd pay for medical expenses in cash and use the HSA as an investment vehicle instead of a tax-advantaged savings account? Also, it sounds like a Traditional IRA may be a better bet than a ROTH for our situation, although I don't fully understand the specifics just yet. I have some research ahead of me.

Luz

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Re: How to Optimize Investments on Low Income
« Reply #6 on: June 22, 2019, 01:18:55 PM »
First thing that stands out to me is that you should put your own mask on first, it seems like a bit of a stretch to help others when you aren't saving nearly enough for your own goals. Could you sell the Mexican property and just use whatever proceeds from that to help his folks? Could they sell and you guys let them live there rent free as a form of support? As far as your own parents, they still have plenty of time to prep for retirement. Teach them how to fish now instead of supporting them financially later.

Secondly, your earnings potential is way higher than your husband so imo it would be financially wiser that he cuts back hours, perhaps wraps up school sooner and you go full time.

Thirdly, most mortgages should not be paid off early. Just invest in the market, it has historically yielded way better returns than 3-4-5% on your mortgage.

Finally, I also loved here as an immigrant and while I don't know specific circumstances there are tons of free resources online. Absolutely no need for a consultant or lawyer.

Sent from my Pixel 2 XL using Tapatalk

All great points! I think you're right about selling the property. His parents have (dirt floor) housing, but not much else  so the first option suggested of using it to set them up in other ways may be the best bet. Husband grew up in extreme poverty (parents have no formal education whatsoever and lost 3 infant and 1 older child due to lack of sanitation/medical care-kind've-poverty) and it would be hard for me to leave his parents to suffer through old age even though we can't afford to support them. We are wealthy in comparison. But you're right, it can be done smarter. As for my parents, maybe just providing care instead of money is more realistic. Even if they make poor choices, they'll be ok.
I'm a bit nervous about immigration policy and current politics, but doing our own citizenship work would save $750 (the rest would be a filing fee) so that's something.
I'm changing my plan for home ownership as we speak.
From a financial standpoint, going to 2 incomes or me being the breadwinner is kind've a no-brainer. However, our relationship dynamic is so much better with me taking the backseat for now. It's not that either of us have specific expectations on gender-roles, but that I would be the dominant partner (my country, my language, higher income earner, etc). I want to have an equal partnership and for that reason, he's got some catching up to do (only due to immigration, not ability). I also love staying at home with the baby, so there's that opportunity cost to consider.
Thanks again!

MrThatsDifferent

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Re: How to Optimize Investments on Low Income
« Reply #7 on: June 22, 2019, 01:40:43 PM »
Luz, thereís that saying, you can have everything, just maybe not all at the same time. You canít have as little income as you have, immigration issues, visions of a large family, supporting parents, and gender beliefs that limit everything. You. Canít. Afford. All. Of. That.

You and your husband need to truly and honestly re-examine everything here. I wonít even get into the what if game of if something happens to you, letís just focus on whatís before you. The biggest issue Iím seeing now are your gender beliefs. Youíre concerned about being the ďdominantĒ partner, a concern no man would ever have. Itís 2019, drop that belief in the toilet where it belongs. You both need as much money as possible and everything you do should be focused on that. Youíre in survival mode at the moment and you gotta push all that old thinking right into the corner. Your situation is precarious, your pressures extreme. Iím sitting here stunned reading your situation and a desire to maintain it so you can preserve someoneís ego. You both need to make better decisions. Put your education to work, make money, get the family on track. Having more kids is personal. Like the person above I find the decision to have 3 under your circumstances to be unwisely but thatís your family. Iím a risk adverse person and what youíre doing would terrify me. I wouldnít even consider a second kid for years until the money, immigration and living situation all improve dramatically. It feels like your family has blinders on and are thinking, we can do anything now, itíll all work out. Sometimes, it just doesnít, especially when youíre pushing everything to the edges and youíre not setting yourself up to win. You both are making decisions that are continually stacking the deck against you when things are already dire. That feels irresponsible and you seem way to smart to let emotional decisions continually override rational ones. Please make wiser choices, your life will be safer and far happier.

Luz

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Re: How to Optimize Investments on Low Income
« Reply #8 on: June 22, 2019, 02:28:55 PM »
I think you may need to be more realistic about finances and wanting 2 more children.

I'm curious about the decision to not do 7 hours/week of bookkeeping. I'm assuming this is work from home - so correct me if I am wrong. If the baby is not a good napper, then why was DH not able to take over evenings or weekends or whatever his off hours are for you to be able to maintain that income?

You really need it. And ideally increase that.

That said - I was super poor with my children (divorced when they were 1 and 3, and there was no child support or any co-parenting), and I made it through and (in my own humble opinion!) am doing quite well now. So finances can change for the better!

But you will be having a lot of years of scraping by I'm afraid, unless you make some harder choices now. You are both in your 30s, so you really need to start laying a foundation for financial independence as soon as you can.

You nailed it about the baby being a terrible napper! I work from home during nap time and just felt that going as low as possible on my hours would allow me to better flow with whatever the day brings (so necessary for mental health with little ones). I could potentially work when my husband gets home at 3pm, but since we have 1 car, that is prime time for us to get out of the house (the city we live in is not a walkable one). After the afternoon outing, it's bedtime and the last thing I can bring myself to do is anything productive. I'll have to reconsider my weekends.
It sounds like you absolutely kicked ass with young children! Did you find that the survival skills learned during that time contributed to your financial well-being now? I don't mind sacrificing now, but I hope that like you, we can build up to something more.

Luz

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Re: How to Optimize Investments on Low Income
« Reply #9 on: June 22, 2019, 02:49:28 PM »
Well,
you're living on a shoestring, and doing so quite well, so I'll have only a few points to make.

1) As a former immigration attorney let me tell you that you don't need to hire a lawyer to fill out an N-400 application. That process is so straightforward that a monkey do that. The application takes a few minutes to fill out. You order your tax transcripts for the past 3 years from the IRS (free) and that's pretty much it. The English "test" consists of 1 (one) written sentence such as "Canada is north of the United States of America" and the rest is conversation. The 100 civic questions you can get for free online straight from the USCIS Web site, and it's just basic learning as using common sense will not help. If you are still unsure, go to VisaJourney.com and -- again, for free -- get help. Put the $1,500 to better use.

2) There is no greater destroyer of wealth than children. That doesn't mean that you shouldn't have any children, and in fact, you already have a child, but you are in no position to have more, not at this time. I understand that maternal instincts and cultural norms are strong forces, but man is a thinking animal, so we need to add a healthy portion of reason to the equation. Put the $3,650 for baby # 2  you are not having now to better use and get an additional boost of happiness knowing that overpopulation will eventually kill this planet. Population was 2.1B when I was a young lad, now it's 7.3B. Unsustainable!

3) You are in no position to send money to Me-hi-co. Again, I'm aware of the fact that it's a different culture, but you are in no financial position at this time.

4) Internet is too expensive. I have AT&T for $40 a month, all in.

Know that I'm not trying to be mean. But I'm a straightforward guy and I don't dance around with my answers.

I love it when people are straightforward! And thanks for the compliment.

1) I think the consultant has been a security blanket for me and one I can do without. I think the filing fee is $750 and the consultant another $750. So now I have more $ to add to my buckets- thanks!

2) I couldn't agree with you more on the destroyer of wealth thing! I tracked all costs through pregnancy and the first year (every prenatal vitamin, diaper, onesie, etc) and ended up underestimating my expenses by $6,000 (all while living super frugally and not buying all the typical baby gear- medical bills were a huge part). I hear it gets more expensive as they get older. However, I find it very meaningful to have a family and what better way to use money than on the things you value most? (that is to say that the decision to have a family is not based on cost analysis, though the cost analysis is helpful for knowing what I'm getting myself into). And you never know, maybe my kid will be an individual who improves the way this country (or world) manages resources in a big way? Or just as possibly, they may be a drain on society. Let's hope I do a good job in raising her.

3) As stated in another reply, the husband's parents live in extreme poverty. We can't afford to support them, but in terms of values, we can't afford not to. What kind of kids would we be if we had our (at least immediate) needs met only to let them suffer through old age in truly horrible conditions? I get your point though.

4) Excellent! I will definitely check out AT & T. I hate paying so much for internet.

mistymoney

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Re: How to Optimize Investments on Low Income
« Reply #10 on: June 22, 2019, 03:08:54 PM »
I think you may need to be more realistic about finances and wanting 2 more children.

I'm curious about the decision to not do 7 hours/week of bookkeeping. I'm assuming this is work from home - so correct me if I am wrong. If the baby is not a good napper, then why was DH not able to take over evenings or weekends or whatever his off hours are for you to be able to maintain that income?

You really need it. And ideally increase that.

That said - I was super poor with my children (divorced when they were 1 and 3, and there was no child support or any co-parenting), and I made it through and (in my own humble opinion!) am doing quite well now. So finances can change for the better!

But you will be having a lot of years of scraping by I'm afraid, unless you make some harder choices now. You are both in your 30s, so you really need to start laying a foundation for financial independence as soon as you can.

You nailed it about the baby being a terrible napper! I work from home during nap time and just felt that going as low as possible on my hours would allow me to better flow with whatever the day brings (so necessary for mental health with little ones). I could potentially work when my husband gets home at 3pm, but since we have 1 car, that is prime time for us to get out of the house (the city we live in is not a walkable one). After the afternoon outing, it's bedtime and the last thing I can bring myself to do is anything productive. I'll have to reconsider my weekends.
It sounds like you absolutely kicked ass with young children! Did you find that the survival skills learned during that time contributed to your financial well-being now? I don't mind sacrificing now, but I hope that like you, we can build up to something more.

I'm no poster child, but I'm glad I started saving seriously in 401k accounts in my early 30's. I currently have well over 100k in student loans putting the kids through college, so, no poster child!

Luz

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Re: How to Optimize Investments on Low Income
« Reply #11 on: June 22, 2019, 04:13:19 PM »
Luz, thereís that saying, you can have everything, just maybe not all at the same time. You canít have as little income as you have, immigration issues, visions of a large family, supporting parents, and gender beliefs that limit everything. You. Canít. Afford. All. Of. That.

You and your husband need to truly and honestly re-examine everything here. I wonít even get into the what if game of if something happens to you, letís just focus on whatís before you. The biggest issue Iím seeing now are your gender beliefs. Youíre concerned about being the ďdominantĒ partner, a concern no man would ever have. Itís 2019, drop that belief in the toilet where it belongs. You both need as much money as possible and everything you do should be focused on that. Youíre in survival mode at the moment and you gotta push all that old thinking right into the corner. Your situation is precarious, your pressures extreme. Iím sitting here stunned reading your situation and a desire to maintain it so you can preserve someoneís ego. You both need to make better decisions. Put your education to work, make money, get the family on track. Having more kids is personal. Like the person above I find the decision to have 3 under your circumstances to be unwisely but thatís your family. Iím a risk adverse person and what youíre doing would terrify me. I wouldnít even consider a second kid for years until the money, immigration and living situation all improve dramatically. It feels like your family has blinders on and are thinking, we can do anything now, itíll all work out. Sometimes, it just doesnít, especially when youíre pushing everything to the edges and youíre not setting yourself up to win. You both are making decisions that are continually stacking the deck against you when things are already dire. That feels irresponsible and you seem way to smart to let emotional decisions continually override rational ones. Please make wiser choices, your life will be safer and far happier.

So interesting to hear your perspective and it's given me a lot to think about.
For the record, I don't feel like we're in survival mode. We have fresh air to breath, clean water to drink, a fridge always full of healthy food, more clothes than we need on our backs (and pretty cute ones at that), a good-quality apartment where management does a good job, a trusty set of wheels to get from point a to b (it's a real upgrade from my old 1990 toyota camry which I think is still running for the person I sold it to), and access to others and ideas through cell phones/internet. We enjoy top-notch health care and a solid educational system. Plus we're debt-free, able to help support husband's family, and still have $6,000 left over to invest in our future (a number that I hope will increase dramatically with time). We also can make do with very little and that is so freeing. All of this is PITIFUL compared to the majority of those who FIRE, but I think it's important to acknowledge that we're doing really well in comparison to the majority of the world. According to Investopedia, those who earn $32,400 are among the top !% in the world (which is not to say that cost of living is comparative, and also wealth is a different measure. But still). We have also dealt with unemployment, medical bills and the like. We're not putting our heads in the sand. And I think we're setting ourselves up to win (albeit slowly) by living below our means, staying out of debt and investing our savings.

 I didn't post for help with our income minus expenses (though that is appreciated and it's good to hear a different point of view) but to get advice on how to use that extra $6,000 we're fortunate to have. Honestly, I'm excited about our future, and I don't think it's because I'm overly optimistic or irresponsible. Why do we need as much money as possible? I've chosen to stay home and enjoy the preschool years unencumbered. Why would I work as much as possible right now in order to be financially set so I can in turn finally spend time with my daughter? I can spend gobs of time with her at present, while she's still at home. And in doing so, invest heavily in my husband's career (partners with a stay at home parent have it so good). Are there financial sacrifices? Hell yeah. But well worth it to me. And when I no longer have preschoolers, I have a decent job in a field I love (BTW: I made the decision to stay home in part from that quote: 'You can have everything, just not all at once". But my thinking was more about time pressures and not money ones). I also think putting off kids is unwise if you're my age.  So many women in their 30's struggle with infertility.

The decision to stay home and give weight to my husband's career (while again, spending precious time with my daughter) is not about supporting his ego. He made a huge sacrifice to immigrate to the States so we could live in my country. He has to start over from basically 0 in so many areas (English, navigating the health system, getting accustomed to our financial institutions, driving, etc, etc) and rather than plowing along at my speed, (with my familiarity of all the things that are a bit bewildering to him simply because I grew up here) I want to give him time to get established. And that takes longer than one might think. It's also difficult for me to try to juggle a full-time professional career, raising a family, and helping him in the ways he needs support (for example, he recently went to the ER and there would have been so many potentially harmful (or at least costly) mistakes made had he not had someone native to the country with him). So, it's about having an equal partnership where we're both pulling our weight equally, right now and in the long term. For right now that means that I pull my weight cooking, cleaning and caring for the baby during working hours and he with earning the family's income (we raise the baby together and manage the house and money together- though right now it's a lot of teaching him how to file taxes or research which specialist is in-network on our insurance, etc). Eventually we will both earn an income and both take care of the house and I have no doubt that he will be crushing it in no time (he already is).

And in response to "You.Can't.Afford.All.Of.That" I say: Watch us work the magic! Financial Independence is not just for those starting out of the gate with at least an upper middle class salary. My husband and I just might become the millionaires next door!
« Last Edit: June 22, 2019, 05:17:57 PM by Luz »

MrThatsDifferent

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Re: How to Optimize Investments on Low Income
« Reply #12 on: June 23, 2019, 02:56:54 AM »
Liz, Iím rooting for you to prove everyone wrong. Everyone and I sincerely hope that none of the awful what ifs happen. As I said, youíre smart. To me, youíre also gambling, but thatís life and it keeps some people on the toes. Enjoy the ride and I truly hope to see you at the finish line.

mistymoney

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Re: How to Optimize Investments on Low Income
« Reply #13 on: June 23, 2019, 09:16:41 AM »
Well - I will say this.

I myself had quite a few stumbles where I *seemingly* lost everything and had to start over. 15 years later, that may have been a dramatic way to look at it, but being on the verge of homelessness is pretty scary. Thankfully, we were never without shelter. Sometime the food was slim pickings, but there was always something. Given how closely you two are living at the edge, while also anticipating 2 more dependents - I would say - expect times leaner than what you have now at some point. Unexpected job losses or health crises happen everyday.

If your 1500 cash is the EF, you already have 2 months there, so maybe add just a little slowly. Put it into the best interest rate you can find. Maybe add a small amount, like 25/month.

Then the rest of it I'd put into a Roth IRA in low cost index funds.

You don't have a lot to work with, but you can make a solid move with 6k/year and the roth will keep it simple. It's great to be able to invest in a roth with a low income, as the immediate tax advantage of the 401k isn't as attractive. And it is easier to tap if the wolf is at the door.

Unless DH's income increases soon, you won't have that 6k/year cushion very long (adding in 1 then 2 more children). But I do agree with you that fertility is not going to improve with time, and that if that is what you both want, you might as well dive in now vs costly treatments later.

Good luck!

mistymoney

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Re: How to Optimize Investments on Low Income
« Reply #14 on: June 23, 2019, 09:18:30 AM »
Noting!

I'm assuming your DH is already contributing enough in the 401k to get the matching funds?

If not, do that first!

Bernard

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Re: How to Optimize Investments on Low Income
« Reply #15 on: June 23, 2019, 12:14:00 PM »

1) I think the consultant has been a security blanket for me and one I can do without. I think the filing fee is $750 and the consultant another $750. So now I have more $ to add to my buckets- thanks!



You are getting great advice here, so I'll focus only on the one thing I know most about.
The N-400 including biometrics costs $725 now (getting more expensive all the time). You'll be filing it accompanied by form I-912, Application for a Fee Waiver, and the aforementioned 3 years' worth of IRS tax transcripts. USCIS doesn't like to approve N-400 fee waivers as Naturalization is not a necessity, like, say, renewal of a Green Card, but given your financial situation, your chance of getting it approved is extremely high. This is one rare case where you'll make $725 in 10 minutes.

Luz

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Re: How to Optimize Investments on Low Income
« Reply #16 on: June 25, 2019, 02:38:42 PM »
Liz, Iím rooting for you to prove everyone wrong. Everyone and I sincerely hope that none of the awful what ifs happen. As I said, youíre smart. To me, youíre also gambling, but thatís life and it keeps some people on the toes. Enjoy the ride and I truly hope to see you at the finish line.

Thanks!

Luz

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Re: How to Optimize Investments on Low Income
« Reply #17 on: June 25, 2019, 03:22:48 PM »
Well - I will say this.

I myself had quite a few stumbles where I *seemingly* lost everything and had to start over. 15 years later, that may have been a dramatic way to look at it, but being on the verge of homelessness is pretty scary. Thankfully, we were never without shelter. Sometime the food was slim pickings, but there was always something. Given how closely you two are living at the edge, while also anticipating 2 more dependents - I would say - expect times leaner than what you have now at some point. Unexpected job losses or health crises happen everyday.

If your 1500 cash is the EF, you already have 2 months there, so maybe add just a little slowly. Put it into the best interest rate you can find. Maybe add a small amount, like 25/month.

Then the rest of it I'd put into a Roth IRA in low cost index funds.

You don't have a lot to work with, but you can make a solid move with 6k/year and the roth will keep it simple. It's great to be able to invest in a roth with a low income, as the immediate tax advantage of the 401k isn't as attractive. And it is easier to tap if the wolf is at the door.

Unless DH's income increases soon, you won't have that 6k/year cushion very long (adding in 1 then 2 more children). But I do agree with you that fertility is not going to improve with time, and that if that is what you both want, you might as well dive in now vs costly treatments later.

Good luck!

True about losing that cushion quickly unless wages keep pace with supporting more kids. The goal is to keep a $6000 minimum margin during the years I stay home, so he may need to interview for next-level positions this year. With his annual raise, we can cover increased rent/utilities, food, laundry, and household products like diapers/wipes. We'd have a cushion for covering post-birth medical bills and other unexpected things that come up without going into debt, but it would reduce (or obliterate) the amount available to invest (and that's my focus now).  I also try to keep kid-related costs low by constantly questioning what is really necessary. We have the start-up items already...but it's easy to under-estimated how much it costs to raise a kid. Maybe I'll have to do a cost analysis and/or post a question to this forum about the true costs of more than 1.

Any suggestions for accounts with good interest rates for the ER Fund?

The last 3 years (while I've been in school and then we started our family), we've been upping our percentage to get the match and recently raised it to 5%. Any thoughts on ROTH IRA v Traditional for our income level? If I understand correctly, the "Investment Order" sticky suggested Traditional, though I'm not totally clear on why. Can the Traditional be tapped into as easily?

I'm hoping that we can maintain solid footing while on 1 low income, and then really see gains with career advancement and moving to 2 incomes. Though I think you're right about having a plan for leaner times. For now that's: cut all fat from the budget and hopefully have 2 month's time (duration of husband's vacation/sick time/PTO benefits) for me to land a job. Until then, onward and upward!

Luz

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Re: How to Optimize Investments on Low Income
« Reply #18 on: June 25, 2019, 03:24:58 PM »

1) I think the consultant has been a security blanket for me and one I can do without. I think the filing fee is $750 and the consultant another $750. So now I have more $ to add to my buckets- thanks!



You are getting great advice here, so I'll focus only on the one thing I know most about.
The N-400 including biometrics costs $725 now (getting more expensive all the time). You'll be filing it accompanied by form I-912, Application for a Fee Waiver, and the aforementioned 3 years' worth of IRS tax transcripts. USCIS doesn't like to approve N-400 fee waivers as Naturalization is not a necessity, like, say, renewal of a Green Card, but given your financial situation, your chance of getting it approved is extremely high. This is one rare case where you'll make $725 in 10 minutes.

Brilliant! I so appreciate this.

Luz

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Re: How to Optimize Investments on Low Income
« Reply #19 on: June 30, 2019, 10:31:13 PM »
At your level of income you will get the 24k standard deduction for MFJ + child/new family tax credit of 2500 (for one kid) + Earned income tax credits so you will actually get substantial refund already (you will get MORE back in taxes than you pay in because that is how the child tax credits and EIC work for lower income families).  Throw any extra you have into a Roth to add the savers credit on top of that, because there won't be any tax to avoid to begin with.

I really like this calculator tool for playing around with the numbers -- if you or your DH have income increases during the year it can help you keep an eye on the tax credit situation so you can switch to traditional if you need to to keep the EIC):

https://www.olt.com/main/home/taxestimator.asp

Thanks for the link!

meandmyfamily

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Re: How to Optimize Investments on Low Income
« Reply #20 on: July 01, 2019, 01:00:24 PM »
I think you are in a great spot with how aware you are of your situation.  I feel so blessed to be able to stay at home with my 4 kids.  I don't feel you can put a price tag on it.   You can do this!  Priorities are different for everyone but this is the MMM community so the focus is pretty specific.  You have gotten lots of great advice.  Any chance you would want to do childcare for another child or two while you stay at home?  Many of my friends do this to hit their financial goals while staying at home and so many people need quality childcare. 

meandmyfamily

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Re: How to Optimize Investments on Low Income
« Reply #21 on: July 01, 2019, 01:04:19 PM »
I would also get term life insurance immediately on you.  I am not sure if you could get it on your husband yet.  Until your networth improves your family really needs to have life insurance just in case.

robartsd

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Re: How to Optimize Investments on Low Income
« Reply #22 on: July 01, 2019, 02:35:50 PM »
Your $6000/yr surplus is impressive for your income and family size. Unfortunately it can easily be decimated by your increased housing costs when kid #2 comes along. I'd recommend finding the income and housing needed to support kid #2 before becoming pregnant.

If you really are paying no income tax (I don't know much about AZ tax structure), you'll be best of contributing to Roth IRA after contributing the minimum to employer sponsored accounts to get any available match. Since you have much more tax advantaged space than annual savings, I'd even keep your emergency fund in a Roth IRA Savings Account (Ally's current APY is 2.1%).

I think your savings goal for a down payment is $10-15k higher than needed for conventional lending with no PMI.

Good luck.

JGS1980

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Re: How to Optimize Investments on Low Income
« Reply #23 on: July 01, 2019, 03:47:16 PM »
Any suggestions for accounts with good interest rates for the ER Fund?

The last 3 years (while I've been in school and then we started our family), we've been upping our percentage to get the match and recently raised it to 5%. Any thoughts on ROTH IRA v Traditional for our income level? If I understand correctly, the "Investment Order" sticky suggested Traditional, though I'm not totally clear on why. Can the Traditional be tapped into as easily?


I use Ally Bank, it's near the top in interest rate for our ER Fund. Very user friendly as well.

I agree with above posters that you should use the ROTH IRA for your income level. If your income starts getting a bit higher in the 12% tax bracket (approaching 80K/year), I'd look at the math again.

I surely respect you and your husband's decision to prioritize making and raising children at this stage of your life. Fertility, after all, is in no way guaranteed.  I would, however, humbly suggest you look into professional options where you could work, use that Grad degree, while also getting employer subsidized healthcare, FSA benefits, Education benefits to further your RN goals, and even possibly Daycare benefits. Don't forget that Maternity benefits are often times available as well.  In other words, don't paint yourself into a corner.

I have a friend who is a Medical Assistant in a doctor's office in a large healthcare corporation. All of the above benefits are provided, and are worth WAY more than the actual salary of my friend.

In either case, I'm posting to follow, and I'm sure you have the heart and soul to succeed in the long run.

JGS
« Last Edit: July 01, 2019, 03:49:45 PM by JGS1980 »

Mrs. D.

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Re: How to Optimize Investments on Low Income
« Reply #24 on: July 01, 2019, 09:38:01 PM »
Just another thought to add to the conversation - your husband is planning to work full-time, go back to school AND be the father in a growing family. That is a LOT to expect from him. And if it means all the childcare for three young children is going to fall on your shoulders, then that is a LOT to expect from you. I certainly hope you get napping sorted out so you have some time for yourself or to do uninterrupted housework during the day! I'd recommend you think about the stamina you'll need to keep working towards your goals over the next decade or so. Right now 7 hours of additional work per week feels like too much and you're planning to add two more kids to the mix while your husband increases his obligations through school. It just seems like....a lot.

I certainly empathize with you, though. DH and I are still up in the air about having a 3rd kid and our situation is much less complicated than yours (slightly more income to work with, husband situated in a stable-ish career, both our parents are rich AF so we don't have to support them at all). We both have to assess how much energy we have left for ourselves and our marriage now and what a 3rd kid would do that stability. (You actually wrote a response to my recent post about feeling worn down). Wishing you all the best.

And on a more practical note, I would really focus on that EF. Especially with the kids, having the safety cushion really helps you sleep at night.

JestJes

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Re: How to Optimize Investments on Low Income
« Reply #25 on: July 03, 2019, 10:56:51 AM »
You seem very positive and upbeat which is inspiring because if I was in your situation I would be wracked with worry. The thought of supporting 9 people (3 kids, two adults, two grandparents, and your parents possibly) on 30K a year would send me over the edge.

Some things I would consider:
1. It would be pretty reasonable to consider you will be out of the work force for an extended amount of time. Given it will take you guys over a year to save up a Emergency fund, save for one baby, and your husbands citizenship will cost $6,150 which is roughly a year of savings given something doesn't go wrong.  So if start saving immediately after that you could maybe have another baby in a year, which would put them in first grade 8 years from now, best case.

2. I'm sure you know that 5 humans in a 400 sft apartment is not going to work so after an emergency fund housing should be your next focus.

3. The markets have been up for a long time and I'm not saying they are going to crash tomorrow but it might be worth considering because it seems a lot if riding on your husband making more money.

4. It seems like your family is the main bread winners for the extended family, meaning you would have no one to turn to in an emergency. 6k a year can seem like a lot but its can easily be spent with a little bad luck. If you car breaks down and you have to take a child to the ER and grandpa needs new glasses then a whole year of savings can be down the drain.

I would recommend against investing at this time and build up a solid emergency fund. Then start looking for a house. I don't know what field you husband works in but if it is something that could be effected by a recession double your emergency fund. Say 10 years down the line when you are able to reenter the workforce, you can start saving for things like college, retirement, world travel or going back to school yourself. I think your idea of you can have everything but just not all at once is a good thought. It has to be applied to your goals as well. You can have a big family on one income and thrive but you may not be able to fund all your kids college outright. But having the gift of a mother home full time is a wonderful thing to give to a child. They may not need fancy toys or a year abroad to be successful.

I would love to hear more updates as to how its going and I wish you the best of luck!

Luz

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Re: How to Optimize Investments on Low Income
« Reply #26 on: July 07, 2019, 09:30:11 PM »
I think you are in a great spot with how aware you are of your situation.  I feel so blessed to be able to stay at home with my 4 kids.  I don't feel you can put a price tag on it.   You can do this!  Priorities are different for everyone but this is the MMM community so the focus is pretty specific.  You have gotten lots of great advice.  Any chance you would want to do childcare for another child or two while you stay at home?  Many of my friends do this to hit their financial goals while staying at home and so many people need quality childcare.

Thanks! I know quite a few people who take on extra kids as well. That may be a good option. I was a nanny throughout my teens and twenties and enjoyed it.

Luz

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Re: How to Optimize Investments on Low Income
« Reply #27 on: July 07, 2019, 09:55:16 PM »
Your $6000/yr surplus is impressive for your income and family size. Unfortunately it can easily be decimated by your increased housing costs when kid #2 comes along. I'd recommend finding the income and housing needed to support kid #2 before becoming pregnant.

If you really are paying no income tax (I don't know much about AZ tax structure), you'll be best of contributing to Roth IRA after contributing the minimum to employer sponsored accounts to get any available match. Since you have much more tax advantaged space than annual savings, I'd even keep your emergency fund in a Roth IRA Savings Account (Ally's current APY is 2.1%).

I think your savings goal for a down payment is $10-15k higher than needed for conventional lending with no PMI.

Good luck.

Thanks for these pointers.
In terms of contributing to the Roth IRA Savings Account, are you suggesting I ignore the Investment Order sticky referenced above (ER Fund, 401K Match, HSA Max, Roth IRA Max, 401K Max, 529)? I'm wondering if the principle of those suggestions works for those of us with low income.... or if the fact that my husband and I will likely only get the 401K match and like half the HSA Max during the preschool years changes things. I'd love to make use of the HSA, but it seems that the 401k match and Roth contribution approach is more straightforward when there's less money to work with.

Luz

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Re: How to Optimize Investments on Low Income
« Reply #28 on: July 07, 2019, 10:22:41 PM »
Any suggestions for accounts with good interest rates for the ER Fund?

The last 3 years (while I've been in school and then we started our family), we've been upping our percentage to get the match and recently raised it to 5%. Any thoughts on ROTH IRA v Traditional for our income level? If I understand correctly, the "Investment Order" sticky suggested Traditional, though I'm not totally clear on why. Can the Traditional be tapped into as easily?


I use Ally Bank, it's near the top in interest rate for our ER Fund. Very user friendly as well.

I agree with above posters that you should use the ROTH IRA for your income level. If your income starts getting a bit higher in the 12% tax bracket (approaching 80K/year), I'd look at the math again.

I surely respect you and your husband's decision to prioritize making and raising children at this stage of your life. Fertility, after all, is in no way guaranteed.  I would, however, humbly suggest you look into professional options where you could work, use that Grad degree, while also getting employer subsidized healthcare, FSA benefits, Education benefits to further your RN goals, and even possibly Daycare benefits. Don't forget that Maternity benefits are often times available as well.  In other words, don't paint yourself into a corner.

I have a friend who is a Medical Assistant in a doctor's office in a large healthcare corporation. All of the above benefits are provided, and are worth WAY more than the actual salary of my friend.

In either case, I'm posting to follow, and I'm sure you have the heart and soul to succeed in the long run.

JGS

 I had my baby shortly after I graduated from my master's program. When my daughter was 3 months old, I was offered my dream job (with good pay and fantastic benefits). I turned it down. Mainly because I didn't want to juggle a professional career that requires at least 50, if not 60 hours a week, with raising young kids. That did not sound enticing to me at all and I didn't feel like I could show up in the way I would want in either area. However, I think the decision to stay home with preschoolers is one that needs to be reassessed frequently. For now, I'm content with the decision. At the same time, those 50+ hours per week may sound very enticing in a few years. Many mothers I know state that work feels like a vacation in comparison to being at home with what for me may be a preschooler, toddler, and infant.  So I'll remember your advice: to not paint myself into a corner.
Thanks for this!

robartsd

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Re: How to Optimize Investments on Low Income
« Reply #29 on: July 08, 2019, 08:56:51 AM »
Thanks for these pointers.
In terms of contributing to the Roth IRA Savings Account, are you suggesting I ignore the Investment Order sticky referenced above (ER Fund, 401K Match, HSA Max, Roth IRA Max, 401K Max, 529)? I'm wondering if the principle of those suggestions works for those of us with low income.... or if the fact that my husband and I will likely only get the 401K match and like half the HSA Max during the preschool years changes things. I'd love to make use of the HSA, but it seems that the 401k match and Roth contribution approach is more straightforward when there's less money to work with.
Not quite saying ignore MDM's Investment Order Post; just saying that you can opt to use a Roth IRA Savings account to hold your EF. Disadvantage of this is that EF growth is locked up in a retirement account (contributions can be withdrawn with no tax consequences, but earnings must stay until age 59.5 or else there will be tax penalties). Once you have sufficient contributions to your Roth IRA Savings account to meet your EF needs, further Roth IRA contributions would be done in an investment account with a long term focus (mostly stocks). If you later are able to save enough to maximize tax advantaged accounts and have some left for taxable investing, you can establish your EF in a regular savings account then rollover your Roth IRA Savings into the Roth IRA investment account.

Also note, that while those who can afford to maximize tax advantaged space, can benefit from paying medical costs out of pocket while letting the HSA build up. If you have any state income tax liability (we've already established that you should have no federal income tax liability), it would be best in your situation to contribute expected medical expenses to the HSA to reduce that tax then claim the expenses from the account to maximize your Roth IRA investments. If you have not income tax liability then an HSA would only add complication and potential taxes later (withdraw as a regular retirment account).

Luz

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Re: How to Optimize Investments on Low Income
« Reply #30 on: July 08, 2019, 01:06:58 PM »
Just another thought to add to the conversation - your husband is planning to work full-time, go back to school AND be the father in a growing family. That is a LOT to expect from him. And if it means all the childcare for three young children is going to fall on your shoulders, then that is a LOT to expect from you. I certainly hope you get napping sorted out so you have some time for yourself or to do uninterrupted housework during the day! I'd recommend you think about the stamina you'll need to keep working towards your goals over the next decade or so. Right now 7 hours of additional work per week feels like too much and you're planning to add two more kids to the mix while your husband increases his obligations through school. It just seems like....a lot.

I certainly empathize with you, though. DH and I are still up in the air about having a 3rd kid and our situation is much less complicated than yours (slightly more income to work with, husband situated in a stable-ish career, both our parents are rich AF so we don't have to support them at all). We both have to assess how much energy we have left for ourselves and our marriage now and what a 3rd kid would do that stability. (You actually wrote a response to my recent post about feeling worn down). Wishing you all the best.

And on a more practical note, I would really focus on that EF. Especially with the kids, having the safety cushion really helps you sleep at night.

Yeah, stamina is an important consideration. I'm finding that managing my energy and motivation is as important as managing my time and money these days. I often wonder why I didn't have kids in my 20's.
Things that have helped so far and I hope will carry over with more than 1 kid is to make sure I take care of myself as well as I take care of the baby (I'm unapologetic about self care, especially now that I'm a mother) and to tell myself daily that the intensity of the infant/toddler years won't last forever (nor will my husband be in school forever). It helps me keep perspective and pace myself.

Both my husband and I will likely put in 70 hours a week. For him that includes work, commute, study, classes, and a bit less than an hour of kid duty a day. For me, it's kid duty minus an hour or 2 for naps and the time he has the kid(s) plus the night wakings. The baby isn't a great napper, but I can still count on at least an hour for naps, and another hour where she plays alone in her crib (we built that time up slowly). I have 2 hours after she goes to bed and another hour in the morning before she wakes up. Plus the hour that my husband has with her. Those 6 hours will decrease with more kids (though I hope to introduce a little screen time by 2 years old and coordinate nap/quiet time as best I can), which is why I don't want to use much of it for my side hustle. I also try not to entertain the baby and so I do my chores while she's awake, but you're right that there's only so much you can do with little ones underfoot.

I think the 7 hours of side hustle feels like too much because it divides my focus. I do best when I'm able to really get into the flow with fewer things. I'm sure I'll feel completely all-over-the-place with adding more kids to the mix, but the focus of my days will remain somewhat the same. The first year is kind've crazy, too, with all the naps and feeds. Trying to coordinate that with a toddler sounds a bit insane. But once each baby is weaned and on 1 nap (we're there with my daughter and it's AWESOME!), it seems like the day will flow a bit better. I'm ready for the first year of each kid to be chaos and the first 3 years of each to be all-hands-on-deck. I'm hoping that if we have 2 more in quick succession, I'll be able to come up for air in 6 years!!

My husband and I both want another child, but agreed that once we (hopefully) have two, we will reassess whether a third is really a good idea. By that time, it may very well be a firm "no!" And like you mention, that decision will be based more on endurance than on affordability.

« Last Edit: July 08, 2019, 01:08:36 PM by Luz »

Luz

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Re: How to Optimize Investments on Low Income
« Reply #31 on: July 08, 2019, 01:51:31 PM »
You seem very positive and upbeat which is inspiring because if I was in your situation I would be wracked with worry. The thought of supporting 9 people (3 kids, two adults, two grandparents, and your parents possibly) on 30K a year would send me over the edge.

Some things I would consider:
1. It would be pretty reasonable to consider you will be out of the work force for an extended amount of time. Given it will take you guys over a year to save up a Emergency fund, save for one baby, and your husbands citizenship will cost $6,150 which is roughly a year of savings given something doesn't go wrong.  So if start saving immediately after that you could maybe have another baby in a year, which would put them in first grade 8 years from now, best case.

2. I'm sure you know that 5 humans in a 400 sft apartment is not going to work so after an emergency fund housing should be your next focus.

3. The markets have been up for a long time and I'm not saying they are going to crash tomorrow but it might be worth considering because it seems a lot if riding on your husband making more money.

4. It seems like your family is the main bread winners for the extended family, meaning you would have no one to turn to in an emergency. 6k a year can seem like a lot but its can easily be spent with a little bad luck. If you car breaks down and you have to take a child to the ER and grandpa needs new glasses then a whole year of savings can be down the drain.

I would recommend against investing at this time and build up a solid emergency fund. Then start looking for a house. I don't know what field you husband works in but if it is something that could be effected by a recession double your emergency fund. Say 10 years down the line when you are able to reenter the workforce, you can start saving for things like college, retirement, world travel or going back to school yourself. I think your idea of you can have everything but just not all at once is a good thought. It has to be applied to your goals as well. You can have a big family on one income and thrive but you may not be able to fund all your kids college outright. But having the gift of a mother home full time is a wonderful thing to give to a child. They may not need fancy toys or a year abroad to be successful.

I would love to hear more updates as to how its going and I wish you the best of luck!

2. Our apartment complex has max capacity laws. 3 people in a 1 bedroom, 5 people in a 2 bedroom. Which is a bit of a bummer, because I think we could do just fine with 4 in our 1 bedroom since it has a large walk-in closet. I'm also a fan of the tiny house movement and have been really inspired to make tiny space living comfortable. I don't feel crammed in the least in part because we have minimal belongings. But yes, securing affordable housing once our lease is up is my next priority.

3. In my parent's case, my mom stayed home with my siblings and I. It was great for us, but it was always a bit precarious financially because if something happened to my dad, she would have had a difficult time finding living-wage work with her high school education. I'm hoping that investing in my education before having kids provides a bit more of a buffer. I know there are penalties to stepping out of the workforce. And that I will have to be creative about my re-entry, especially if the economy falters. But if we are to build up an emergency fund of 3 month's living expenses, that will give me a little time to secure a $25,000/year job to survive, which I hope I am scrappy enough to do. (Though as a side note: I'm a hospital social worker and economic downturns have a strange relationship with social work jobs. Government funding for social services is often cut at a time when the need for social services skyrockets).  My husband is in supply chain management and is switching to network administration. I'll have to look into how recession-proof either of those are.

4. My sibling/sibling-in-law are quite wealthy (with an income of around 250k/year). So if we were in dire straits, we'd have them to turn to. That sibling will also likely have the means to support my parents in old age. I would like to have the option of working part time to help with caregiving though, so there's still a cost.  I don't want the wealthy sibling to shoulder all the responsibility. My parents are wonderful people and fantastic grandparents, and I want to be able to give them back something of what they've given us. My husband's parent's total living costs are 175/month. And we are the wealthy ones in his family. So we stepped up. I like having the 6000 buffer, but you're right that it won't take much to deplete it. Time to get that Emergency fund built up as well as a Periodic Expense fund for unexpected bills so we can start using more of that 6000 for investing.

I'm not sure about looking for a house, since we'll likely only be in our current city for 4-6 more years. But I'll have to take a look at my goals and run my numbers again with your advice in mind. I hate to miss out on the 401K match and compounding these next 10 years, but I may be surprised at what the numbers state, if I reorder the steps (ie: not try to do so much at once).

I'll try to post an update every once in awhile! Thanks for your input!
« Last Edit: July 08, 2019, 03:01:11 PM by Luz »

Luz

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Re: How to Optimize Investments on Low Income
« Reply #32 on: May 09, 2020, 10:42:59 PM »
Thanks for these pointers.
In terms of contributing to the Roth IRA Savings Account, are you suggesting I ignore the Investment Order sticky referenced above (ER Fund, 401K Match, HSA Max, Roth IRA Max, 401K Max, 529)? I'm wondering if the principle of those suggestions works for those of us with low income.... or if the fact that my husband and I will likely only get the 401K match and like half the HSA Max during the preschool years changes things. I'd love to make use of the HSA, but it seems that the 401k match and Roth contribution approach is more straightforward when there's less money to work with.
Not quite saying ignore MDM's Investment Order Post; just saying that you can opt to use a Roth IRA Savings account to hold your EF. Disadvantage of this is that EF growth is locked up in a retirement account (contributions can be withdrawn with no tax consequences, but earnings must stay until age 59.5 or else there will be tax penalties). Once you have sufficient contributions to your Roth IRA Savings account to meet your EF needs, further Roth IRA contributions would be done in an investment account with a long term focus (mostly stocks). If you later are able to save enough to maximize tax advantaged accounts and have some left for taxable investing, you can establish your EF in a regular savings account then rollover your Roth IRA Savings into the Roth IRA investment account.

Also note, that while those who can afford to maximize tax advantaged space, can benefit from paying medical costs out of pocket while letting the HSA build up. If you have any state income tax liability (we've already established that you should have no federal income tax liability), it would be best in your situation to contribute expected medical expenses to the HSA to reduce that tax then claim the expenses from the account to maximize your Roth IRA investments. If you have not income tax liability then an HSA would only add complication and potential taxes later (withdraw as a regular retirment account).

I finally got my ROTH IRA Savings Account up and running. Thanks for this advice!

TassieFI

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #33 on: May 13, 2020, 11:57:42 PM »
Just curious about your plan to move to Mexico with the kids.  Is your husband staying behind in the States or coming with you? 

terran

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #34 on: May 14, 2020, 07:10:25 AM »
I'm not sure where you're seeing the 3% vs 6% return in an HSA vs IRA, but there's no reason for that. An HSA (like an IRA) is just an account in which you hold investments. The investments you hold are what will dictate the return. There aren't as many places to open an HSA that allows investing as there are places to open an IRA, but there are enough. My top recommendation would be Fidelity.

20957

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #35 on: May 14, 2020, 05:54:11 PM »
I am curious about your decision to hire a doula vs a babysitter for the toddler. Wouldn't that be more straightforward as well as cheaper? Also, have you looked into free doula programs? There is one in my city that I used for my second birth and would have for my fourth except it went too fast. It is part of a nursing school. Finally, have you checked that your hospital will allow a doula in July? If she doesn't attend you for some reason I hope you will get a full refund. I mention all this because despite really liking the whole doula thing I couldn't bring myself to pay $1k+ for it, despite a pretty good income, so it stood out to me in your numbers.

Sanitary Engineer

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #36 on: May 15, 2020, 04:06:45 AM »
Have you looked into low income food benefits?

Your food budget at $650 a month could be significantly reduced if you qualified for WIC.  My wife and kids just snuck into the WIC program for the next two months at least and it is a big cut to our food budget.  I am looking back into SNAP also.  We got some EITC on 2019 taxes and I think that might be a qualifier.

PMG

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #37 on: May 15, 2020, 04:38:08 AM »
Love a good update! Thanks for coming back to it. Wishing you all the best with your goals.

Also curious about moving separately to Mexico.  That sounds difficult with two kids and sad to be separated.  You must have good reasons?

Dicey

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #38 on: May 15, 2020, 07:13:38 AM »
Lots of good advice here so far. I'm wondering about what you charge for your bookkeeping services. Isn't $15/hr. the current minimum wage? Is it possible you are selling yourself way too short?

Luz

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #39 on: May 15, 2020, 09:38:35 PM »
Just curious about your plan to move to Mexico with the kids.  Is your husband staying behind in the States or coming with you?

We would go without him and he would visit. That's why it's kind've a crazy idea (though I've lived there before). He graduates in 3 years and we're staying in our current city an additional 2 years so he can get some work experience in his new field. We want the kids to live in Mexico for a time (before they're older and more connected to school and friends) and I also want to finally become fluent in Spanish. If he were to move with us, it'd likely affect his job opportunities. And it'd be a lot to pull off financially. We were thinking that I'd go for a month to try it out and we could take it from there.

Luz

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #40 on: May 15, 2020, 09:57:27 PM »
I am curious about your decision to hire a doula vs a babysitter for the toddler. Wouldn't that be more straightforward as well as cheaper? Also, have you looked into free doula programs? There is one in my city that I used for my second birth and would have for my fourth except it went too fast. It is part of a nursing school. Finally, have you checked that your hospital will allow a doula in July? If she doesn't attend you for some reason I hope you will get a full refund. I mention all this because despite really liking the whole doula thing I couldn't bring myself to pay $1k+ for it, despite a pretty good income, so it stood out to me in your numbers.

I hired a doula after researching giving birth for a second time. I had a really pleasant epidural birth with my first. It sounds like second births are often fast and intense, with no time for pain relief. I'd REALLY like an epidural again, but want to be prepared if that's not an option. The next best thing for me after an epidural for getting through labor is a doula. My husband was lovely at my daughter's delivery, but if I had to choose between him and the doula, I'd totally pick the doula (for her knowledge and assistance)!

It sounds like the current policy at my hospital is for one person to accompany the mother. I'll have to ask about projections for July and also what plan B would look like in terms of refund with the doula. I had her for my first birth and she charges $500 for repeat customers. $500 for an insurance of sorts that I'll have hands-on help if things get real seems like a worthwhile investment. I'll definitely check out free programs, though!

TassieFI

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #41 on: May 16, 2020, 01:15:41 AM »
I think your idea of going for a month to try being in Mexico before you commit for the year is a really good one. 

I lived in a foreign country which was very culturally different from the country I grew up in (Canada) with all our family and friends on the other side of the planet while my spouse worked away from home where he was often gone 80% of the time on stints that usually lasted 4-6 weeks or longer (and this was just over 20 years ago so no internet and only a sat phone where he worked) and it was VERY, VERY hard.  While I was so glad that we got to experience a very different culture and it was a really good opportunity for my husband's career, it was extremely hard on us both.  I had just found out I was pregnant when we moved, and we stayed there until our daughter was 8 months old before we threw in the towel on the experience (for various reasons).  Not only was it really hard on me not having my husband around, it was extremely hard on my spouse being away from both me and our daughter as much as he was during that time. 

So I'd say that if it's at all possible for you to stay together as a family to do your year in Mexico, you will probably all get a lot more out of it than if just you and the little ones go. 

robartsd

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #42 on: May 19, 2020, 11:54:24 AM »
I'm not sure where you're seeing the 3% vs 6% return in an HSA vs IRA, but there's no reason for that. An HSA (like an IRA) is just an account in which you hold investments. The investments you hold are what will dictate the return. There aren't as many places to open an HSA that allows investing as there are places to open an IRA, but there are enough. My top recommendation would be Fidelity.
My guess is their HSA requires a minimum holding in the default savings account before access to investment options. With a relatively low HSA balance this in addition to fees can really drag the overall returns on investment. Of course the marginal return on marginal additional investment is likely much closer to the returns they see in their IRA, so they might really be comparing the difference in overall return of two very different asset allocations.

Some HSAs have very poor investment options, but you always have the option of moving funds to a personal HSA with another provider. Usually you'll want contribute through payroll to the employer's HSA to save on FICA taxes, then move the funds to the HSA of your choice regularly (rollover every 12 months is often the cheapest option).

https://thehsareportcard.com/the-hsa-report-card-1/2018/12/10/how-to-transfer-work-hsa-to-preferred-hsa

Dicey

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #43 on: May 20, 2020, 06:40:43 AM »
I think your idea of going for a month to try being in Mexico before you commit for the year is a really good one. 

I lived in a foreign country which was very culturally different from the country I grew up in (Canada) with all our family and friends on the other side of the planet while my spouse worked away from home where he was often gone 80% of the time on stints that usually lasted 4-6 weeks or longer (and this was just over 20 years ago so no internet and only a sat phone where he worked) and it was VERY, VERY hard.  While I was so glad that we got to experience a very different culture and it was a really good opportunity for my husband's career, it was extremely hard on us both.  I had just found out I was pregnant when we moved, and we stayed there until our daughter was 8 months old before we threw in the towel on the experience (for various reasons).  Not only was it really hard on me not having my husband around, it was extremely hard on my spouse being away from both me and our daughter as much as he was during that time. 

So I'd say that if it's at all possible for you to stay together as a family to do your year in Mexico, you will probably all get a lot more out of it than if just you and the little ones go
.
I completely agree. Your kids will most likely value having their family intact more than they will appreciate learning a second language.

Luz

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #44 on: May 20, 2020, 05:51:48 PM »
Have you looked into low income food benefits?

Your food budget at $650 a month could be significantly reduced if you qualified for WIC.  My wife and kids just snuck into the WIC program for the next two months at least and it is a big cut to our food budget.  I am looking back into SNAP also.  We got some EITC on 2019 taxes and I think that might be a qualifier.

We're eligible, but I prefer not to use WIC because I feel we don't really need them (we're not at nutritional risk and we have assets). WIC agencies don't always have enough money to serve everyone who applies for their services. I feel we'd be taking someone's spot that is truly food-insecure.  Our income is low, but I feel we're pretty fortunate financially.
My husband and I both grew up poor (he on the much more extreme end). As a result, there's something super satisfying about paying for food with our own cash as adults. It's probably a weird psychological thing, but when you've dealt with the stigma of food pantries/begging for defective produce at market stalls as a kid, it sticks with you.

Luz

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #45 on: May 20, 2020, 06:09:38 PM »
Lots of good advice here so far. I'm wondering about what you charge for your bookkeeping services. Isn't $15/hr. the current minimum wage? Is it possible you are selling yourself way too short?

$12 is the current minimum wage for my state. Not much different from $15, though. It's for a family member's business. I'm probably selling myself short, but I'm not sure how they could afford much more. I also have no credentials (learned on the job) so I don't feel that entitled to more. I'll have to look into my options, because it's a great little side gig that I hope to do the next 5 years.

Sanitary Engineer

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #46 on: May 22, 2020, 04:34:20 AM »

We're eligible, but I prefer not to use WIC because I feel we don't really need them (we're not at nutritional risk and we have assets). WIC agencies don't always have enough money to serve everyone who applies for their services. I feel we'd be taking someone's spot that is truly food-insecure. 

There is an interview process where a person trained in making the "nutritional risk" determination asks you questions before you are qualified for the benefit.  The way I look at it is that parenting is really hard and really important and WIC makes it easier to make good decisions around feeding the children, which in turn makes it easier to make good decisions in every other aspect of life.  Like 100 times easier.

WIC may not be able to serve everyone who applies, but I haven't heard anything about them not being able to serve everyone who qualifies.  Google gives me an article from 1991 indicate WIC may not be serving enough people, but a quick search doesn't turn up much commentary on a shortage within WIC.

Luz

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #47 on: May 27, 2020, 01:11:29 PM »
I think your idea of going for a month to try being in Mexico before you commit for the year is a really good one. 

I lived in a foreign country which was very culturally different from the country I grew up in (Canada) with all our family and friends on the other side of the planet while my spouse worked away from home where he was often gone 80% of the time on stints that usually lasted 4-6 weeks or longer (and this was just over 20 years ago so no internet and only a sat phone where he worked) and it was VERY, VERY hard.  While I was so glad that we got to experience a very different culture and it was a really good opportunity for my husband's career, it was extremely hard on us both.  I had just found out I was pregnant when we moved, and we stayed there until our daughter was 8 months old before we threw in the towel on the experience (for various reasons).  Not only was it really hard on me not having my husband around, it was extremely hard on my spouse being away from both me and our daughter as much as he was during that time. 

So I'd say that if it's at all possible for you to stay together as a family to do your year in Mexico, you will probably all get a lot more out of it than if just you and the little ones go
.
I completely agree. Your kids will most likely value having their family intact more than they will appreciate learning a second language.

Thanks for the feedback. The original idea was to do the year(s) abroad before my daughter turned 7. We're planning to relocate from our Southwestern city to the Southeast around that time and I thought it would be less disruptive for her if she were still quite young. But the point you both (and you too, @PMG) bring up about being away from her PapŠ for an extended period would probably be harder.

So I thought about it quite a bit this week and talked it over with my husband. We're now thinking to go as a family for a year after he's finished his 3 years of education and 2 years of job experience. My daughter will go to Kindergarten and 1st grade in the city we're in now. Then 2nd grade in Mexico and will start 3rd grade in the new city. It'll take a bit more financially (probably $15,000 including airfare) but I think we can pull it off. We'll likely not save or invest that year and my husband will have a gap in his resume, but it's been a dream of ours since we moved back to the States and I think it's important for the kids to experience my husband's culture. My daughter is pretty outgoing, so hopefully she can make friends quickly in each new spot.

The other option would be for my husband to try to land a job in the Southeast city right after graduation. It seems like it would be easier to get a job in our current city with school connections and state residency. But there would be more continuity for my daughter if she started her school years in our (hopefully) forever community and returned there after our gap year. Does landing a job in a new city right out of school with no experience in the field sound impossible? Although he'll have worked in the supply chain field for 6 years by that time, so maybe if he finds a network administrator position related to that area, he'd have a leg up.
« Last Edit: May 27, 2020, 01:32:14 PM by Luz »

JGS1980

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #48 on: May 27, 2020, 02:28:30 PM »
I think your idea of going for a month to try being in Mexico before you commit for the year is a really good one. 

I lived in a foreign country which was very culturally different from the country I grew up in (Canada) with all our family and friends on the other side of the planet while my spouse worked away from home where he was often gone 80% of the time on stints that usually lasted 4-6 weeks or longer (and this was just over 20 years ago so no internet and only a sat phone where he worked) and it was VERY, VERY hard.  While I was so glad that we got to experience a very different culture and it was a really good opportunity for my husband's career, it was extremely hard on us both.  I had just found out I was pregnant when we moved, and we stayed there until our daughter was 8 months old before we threw in the towel on the experience (for various reasons).  Not only was it really hard on me not having my husband around, it was extremely hard on my spouse being away from both me and our daughter as much as he was during that time. 

So I'd say that if it's at all possible for you to stay together as a family to do your year in Mexico, you will probably all get a lot more out of it than if just you and the little ones go
.
I completely agree. Your kids will most likely value having their family intact more than they will appreciate learning a second language.

Thanks for the feedback. The original idea was to do the year(s) abroad before my daughter turned 7. We're planning to relocate from our Southwestern city to the Southeast around that time and I thought it would be less disruptive for her if she were still quite young. But the point you both (and you too, @PMG) bring up about being away from her PapŠ for an extended period would probably be harder.

So I thought about it quite a bit this week and talked it over with my husband. We're now thinking to go as a family for a year after he's finished his 3 years of education and 2 years of job experience. My daughter will go to Kindergarten and 1st grade in the city we're in now. Then 2nd grade in Mexico and will start 3rd grade in the new city. It'll take a bit more financially (probably $15,000 including airfare) but I think we can pull it off. We'll likely not save or invest that year and my husband will have a gap in his resume, but it's been a dream of ours since we moved back to the States and I think it's important for the kids to experience my husband's culture. My daughter is pretty outgoing, so hopefully she can make friends quickly in each new spot.

The other option would be for my husband to try to land a job in the Southeast city right after graduation. It seems like it would be easier to get a job in our current city with school connections and state residency. But there would be more continuity for my daughter if she started her school years in our (hopefully) forever community and returned there after our gap year. Does landing a job in a new city right out of school with no experience in the field sound impossible? Although he'll have worked in the supply chain field for 6 years by that time, so maybe if he finds a network administrator position related to that area, he'd have a leg up.

So the husband is just finishing his training, and he will have a 1 year resume hole right after completion?

This would be a red flag if I were hiring.  Better to get the post training experience for a couple years, and then take a sabbatical for cultural reasons. No guarantee that a job will be available when he gets back, which was the point of all the training, right?


Luz

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Re: 1 YEAR UPDATE: How to Optimize Investments on Low Income
« Reply #49 on: May 30, 2020, 07:57:10 PM »
I think your idea of going for a month to try being in Mexico before you commit for the year is a really good one. 

I lived in a foreign country which was very culturally different from the country I grew up in (Canada) with all our family and friends on the other side of the planet while my spouse worked away from home where he was often gone 80% of the time on stints that usually lasted 4-6 weeks or longer (and this was just over 20 years ago so no internet and only a sat phone where he worked) and it was VERY, VERY hard.  While I was so glad that we got to experience a very different culture and it was a really good opportunity for my husband's career, it was extremely hard on us both.  I had just found out I was pregnant when we moved, and we stayed there until our daughter was 8 months old before we threw in the towel on the experience (for various reasons).  Not only was it really hard on me not having my husband around, it was extremely hard on my spouse being away from both me and our daughter as much as he was during that time. 

So I'd say that if it's at all possible for you to stay together as a family to do your year in Mexico, you will probably all get a lot more out of it than if just you and the little ones go
.
I completely agree. Your kids will most likely value having their family intact more than they will appreciate learning a second language.

Thanks for the feedback. The original idea was to do the year(s) abroad before my daughter turned 7. We're planning to relocate from our Southwestern city to the Southeast around that time and I thought it would be less disruptive for her if she were still quite young. But the point you both (and you too, @PMG) bring up about being away from her PapŠ for an extended period would probably be harder.

So I thought about it quite a bit this week and talked it over with my husband. We're now thinking to go as a family for a year after he's finished his 3 years of education and 2 years of job experience. My daughter will go to Kindergarten and 1st grade in the city we're in now. Then 2nd grade in Mexico and will start 3rd grade in the new city. It'll take a bit more financially (probably $15,000 including airfare) but I think we can pull it off. We'll likely not save or invest that year and my husband will have a gap in his resume, but it's been a dream of ours since we moved back to the States and I think it's important for the kids to experience my husband's culture. My daughter is pretty outgoing, so hopefully she can make friends quickly in each new spot.

The other option would be for my husband to try to land a job in the Southeast city right after graduation. It seems like it would be easier to get a job in our current city with school connections and state residency. But there would be more continuity for my daughter if she started her school years in our (hopefully) forever community and returned there after our gap year. Does landing a job in a new city right out of school with no experience in the field sound impossible? Although he'll have worked in the supply chain field for 6 years by that time, so maybe if he finds a network administrator position related to that area, he'd have a leg up.

So the husband is just finishing his training, and he will have a 1 year resume hole right after completion?

This would be a red flag if I were hiring.  Better to get the post training experience for a couple years, and then take a sabbatical for cultural reasons. No guarantee that a job will be available when he gets back, which was the point of all the training, right?

The plan is for him to finish his education, (3 more years) then work for 2 years directly after graduation to gain experience in his field. We'd then do our year abroad. After the year abroad, we'd relocate to a Southeastern city in the US. He might also apply for positions in both our current city and the Southeastern city after graduation to see if we might be able to relocate sooner. If he did get a job right away in the city we'd like to end up in, we'd still take the sabbatical year after he gets experience under his belt. We want to do it before I go back to work and the kids are of the age where being rooted makes a big difference.

The original idea was for me to go alone to Mexico with the kids, in order that his job options wouldn't be affected. But I think the others are right that a separation would be hard for that long.   He and I are ok with him having to start entry-level again when we return from Mexico. Just as long as it's in IT (because that was the point of training, like you said).

How would you navigate all this if you were in our shoes?