Car Insurance | $167.06 | Includes umbrella insurance - tried shopping around, but not found one yet that brings cost down significantly (discounted with home owners coverage too). Will be cheaper for the next 6 months |
Car Payment | $427.29 | Paid off on car in feb, expect 2nd car to be paid off in feb 2021 |
Car Repair / Licenses | $92.78 | |
Car Replacement Fund | $171.43 | A new car will be needed at somepoint. |
Child Care | $527.00 | Using an FSA, expect 590 per month when back to daycare post covid |
Clothing | $82.16 | |
Debt | $166.60 | Student loans - currentl 0% but still paying off right now |
Doctor / Dentist | $197.79 | Not using HSA savings |
Fuel | $45.90 | |
Groceries | $847.18 | Seems high. Was lower before Mach, but our dining expenses were higher then |
Health Insurance | $0.00 | |
Home Insurance | $0.00 | WIll be 180 p/m from september |
Home Supplies | $239.90 | Been uprade various home needs (electircal etc.) |
Life Insurance | $154.29 | Expecting a $90 average p/m for the two of us over 12 months |
Medicine | $86.35 | Not using HSA savings |
Miscellaneous | $88.59 | |
Mortgage / Rent | $1,898.11 | Will be down to $1433 p/m |
Home Maintnance | $29.28 | |
Pet expenses | $216.65 | Have pet insurance at around $33 per pay period. Pet food around $50 p/m, pet insurance keeping other costs down |
Property Tax | $287.53 | half way through the year, likely $340 p/m |
Other_5 | $103.57 | One off, I just applied for US citizenship at a cost of $725 |
Personal Care | $32.22 | |
Retirement Fund | $1,428.57 | Ploughed $6000 into last year's ROTH in March (perfect timing so far), and now aiming to max out 2 x roth IRA's this year. |
Taxes | $121.43 | |
Util. Electricity | $114.01 | |
Util. Gas | $94.07 | |
Util. Phone(s) | $124.62 | Just switched to xfinity, expect to be down to $35 p/m for two phones. Had to pay off a financed phone |
Util. Water | $81.21 | |
Util. Alarm | $31.85 | Negotiated rate down from $45 to $30 p/m in January |
FInance Fees | $93.85 | |
- | $0.00 | |
Charity | $16.57 | |
Cleaning | $17.85 | Every now and again we need help with a cleaner. We are exhausted |
Dining | $323.34 | |
Discretionary | $1.19 | |
Fun / Entertainment | $56.50 | |
Furniture / Appliances | $72.57 | |
Gifts Given | $142.36 | American tradition of gifts for everything... We did very well out of our baby shower, can't really complain, although I think it is so wasteful culturally. |
Baby Education | $400.00 | |
Util. TV / Internet | $64.36 | COmcast ($40), netflix etc. |
Travel | $166.18 | parking, hotels, transit etc. Mainly a week vacation coming up |
Subscriptions/Dues | $33.13 | |
HSA | $362.96 | Transfer from HSA cash account to investments |
Vacation Fund | $171.43 | Savings for future travel |
Major Home | $1,866.97 | I think this needs to be ignored. Just spent 10K + on a new HVAC system |
It is important psychologically for my wife to see a reasonable paycheck every two weeks, so we have not maxed out her 401K. She works incredibly hard as a nurse with COVID patients. I’m not going to make her paycheck be basically $600.
It is important psychologically for my wife to see a reasonable paycheck every two weeks, so we have not maxed out her 401K. She works incredibly hard as a nurse with COVID patients. I’m not going to make her paycheck be basically $600.
It's a very hard job to be a nurse right now, and in general.
But this isn't a good reason not to max her 401k. Especially since you can afford it.
If it helps, she can check her 401k balance every pay period, and see the number increase.
A couple of other comments: at your high income level you should be doing all traditional contributions instead of Roth. Mad fientist explains this really well.
SS: I'm assuming that you've paid in for the 7 years that you have been here? another 13 and you are at the 20 years that will near enough max it out. you can increase in with further working after that but the amounts you get in return is fairly small.
check out whats happening with your UK pension. you may be able to do a top up. probably won't get the full amount but a small payment now could see a reasonable return when you collect (if they don't keep moving the goalposts).
You will have a reduction in SS here for 50% of the UK pension you collect if you only work here for 20 years. Each year after that reduces that 50% by 5%. so your 15 more years now could mean doing 22 years into SS which in turn means the value of the UK pension reduction is down to 40%.
its not huge but for the pair of you you might see a big chunk of that 60K outgoing covered by SS in your 60's and onwards.
Check the SS website for a real estimate. (that will assume you work until SS retirement but you can roughly figure it out)
Oh and max the 401k's - that'll drop your effective tax rate.
Will you have anything in taxable accounts or will all of your savings be in retirement accounts? If you will have some in taxable as long as you have about 4-5 years worth of spending in taxable then you can start your Roth conversion pipeline to get access to retirement funds early.A couple of other comments: at your high income level you should be doing all traditional contributions instead of Roth. Mad fientist explains this really well.
I’ve gone back and forth on this one. The reason I’m doing some in Roth is that I feel for early retirement I’ll need to draw on this (as I don’t have much of anything else) and it should be available, whereas the traditional 401k won’t be available till traditional retirement age. Or am I misunderstanding something there.
Will you have anything in taxable accounts or will all of your savings be in retirement accounts? If you will have some in taxable as long as you have about 4-5 years worth of spending in taxable then you can start your Roth conversion pipeline to get access to retirement funds early.
https://www.madfientist.com/how-to-access-retirement-funds-early/
I wouldn't worry too much about savings rates, they vary so much depending on how you calculate them. The real question is whether you're saving enough to meet your retirement goals. There isn't much in the way of specifics about your expenses and what you expect them to be when you retire. If your timeline is truly 15 years then I think you're in good shape; the house will be paid off and you're saving well for your kid's college (maybe even a tad too much, given that Georgia has pretty decent in-state scholarship programs). But it all depends on whether you expect to spend more or less in retirement than currently.
Is the pension defined benefit? If yes, then I generally wouldn't include the balance in your net worth calculations, but rather calculate your monthly/annual estimated amount when you retire and then factor that into your post-65 expenses (along with Social Security) -- cfirecalc and the other tools can help with this. But if it's more like a cash balance plan or individual account that you can roll over into an IRA when you separate from the company, then it feels safer to include it in your stash.
And keep working on your wife about maxing the 401k. Maxing two 401k's is supercharging your FIRE quest. Maybe see if she's willing to increase her contribution rate each year as she gets raises? And also show the tax savings in concrete dollars, that might help too.
It is important psychologically for my wife to see a reasonable paycheck every two weeks, so we have not maxed out her 401K. She works incredibly hard as a nurse with COVID patients. I’m not going to make her paycheck be basically $600.
It's a very hard job to be a nurse right now, and in general.
But this isn't a good reason not to max her 401k. Especially since you can afford it.
If it helps, she can check her 401k balance every pay period, and see the number increase.
It is important psychologically for my wife to see a reasonable paycheck every two weeks, so we have not maxed out her 401K. She works incredibly hard as a nurse with COVID patients. I’m not going to make her paycheck be basically $600.
It's a very hard job to be a nurse right now, and in general.
But this isn't a good reason not to max her 401k. Especially since you can afford it.
If it helps, she can check her 401k balance every pay period, and see the number increase.
Agree. I am a nurse and I max everything out. I also really started to hate my job after covid hit (I just transferred to a different department to get out of there) so seeing those numbers go up gives me a lot more of a boost than any frivolous spending could. Since your wife still has student loans, I am assuming she hasn't been at it long enough to get burned out.
A couple of other comments: at your high income level you should be doing all traditional contributions instead of Roth. Mad fientist explains this really well.
Have you ever tracked your spending? I use Mint but there are lots of other tools out there. That is the first step in figuring out how much you will need to retire. Your housing costs are low and going out once per week is reasonable, so unless you have a lot of junk from Target/Amazon you are doing just fine.
I ran your crude scenario in cfiresim.com and made some guesses. In 15 years of saving $70k/yr, indexed to inflation, you should have around $2.25M. Assuming your spending at that point is $80k/yr (big guess on my part since you don’t specify what you think your spending will be), you have a 92% chance of portfolio success for retirement from 2035 to 2080. This assumes a default 75/25 fixed stock/bond portfolio.
If you can provide more specifics then we can give much better answers.
How long have you been making this kind of money? To me your net worth seems pretty low considering how inexpensive your housing is and how much you are bringing home together. You also have a good amount of debt outside of the mortgage so you might need to look at your cash flow and see if you need to dial back the savings to make sure you aren’t running a structural deficit.
Definitely work on getting your wife to max put her 401k. That will do so much good for your joint financial position. The size of your take-home paycheck is pretty much meaningless; I like the idea of finding something better to focus on, like how much is getting funneled into an investment account and watching that grow.
....
Car Insurance $167.06 This should come down when car paid off? No collision? Car Payment $427.29 Could pay this upfront with EF to free up cashflow for 401k Car Repair / Licenses $92.78 Is this for 2 vehicle? Isn't your car new? Car Replacement Fund $171.43 20k every 10 years? Child Care $527.00 Using an FSA, expect 590 per month - Low, congrats! Clothing $82.16 Seems high? is this temporary? Debt $166.60 Student loans - currentl 0% - convert to 401k / taxable when finished Doctor / Dentist $197.79 Not using HSA savings Fuel $45.90 Groceries $847.18 This is really high! Especially when combined with eating out budget! Health Insurance $0.00 Nice! Home Insurance $0.00 WIll be 180 p/m from september Home Supplies $239.90 Been uprade various home needs (electircal etc.) Life Insurance $154.29 Expecting a $90 average p/m Medicine $86.35 Not using HSA savings Miscellaneous $88.59 What is this? Mortgage / Rent $1,898.11 Will be down to $1433 p/m (Great, Up that 401k!!) Home Maintnance $29.28 Pet expenses $216.65 Have pet insurance at around $33 per pay period. Pet food around $50 p/m, pet insurance keeping other costs down Property Tax $287.53 half way through the year, likely $340 p/m Other_5 $103.57 One off, I just applied for US citizenship at a cost of $725 Personal Care $32.22 Retirement Fund $1,428.57 Savings not expense Taxes $121.43 What is this? Util. Electricity $114.01 Util. Gas $94.07 Util. Phone(s) $124.62 expect to be down to $35 p/m Great! Util. Water $81.21 Util. Alarm $31.85 Agree this is probably unnecessary, are you in high crime area or creates other savings? FInance Fees $93.85 What is this? - $0.00 Charity $16.57 Cleaning $17.85 Every now and again we need help with a cleaner. We are exhausted Dining $323.34 With that grocery bill this could be less! Pack your lunches!! Discretionary $1.19 Fun / Entertainment $56.50 Furniture / Appliances $72.57 Gifts Given $142.36 Seems high! Baby Education $400.00 What is this? Util. TV / Internet $64.36 COmcast ($40), netflix etc. Do you get much use from these subscriptions? Travel $166.18 parking, hotels, transit etc. Mainly a week vacation coming up Subscriptions/Dues $33.13 can any of these subscriptions be eliminated? HSA $362.96 If this is not a contribution, then not an expense or income - no net change in net worth Vacation Fund $171.43 How is this different from travel above? Major Home $1,866.97 How is this different from home maintenance above?
....
Car Insurance $167.06 This should come down when car paid off? No collision? Car Payment $427.29 Could pay this upfront with EF to free up cashflow for 401k Car Repair / Licenses $92.78 Is this for 2 vehicle? Isn't your car new? Car Replacement Fund $171.43 20k every 10 years? Child Care $527.00 Using an FSA, expect 590 per month - Low, congrats! Clothing $82.16 Seems high? is this temporary? Debt $166.60 Student loans - currentl 0% - convert to 401k / taxable when finished Doctor / Dentist $197.79 Not using HSA savings Fuel $45.90 Groceries $847.18 This is really high! Especially when combined with eating out budget! Health Insurance $0.00 Nice! Home Insurance $0.00 WIll be 180 p/m from september Home Supplies $239.90 Been uprade various home needs (electircal etc.) Life Insurance $154.29 Expecting a $90 average p/m Medicine $86.35 Not using HSA savings Miscellaneous $88.59 What is this? Mortgage / Rent $1,898.11 Will be down to $1433 p/m (Great, Up that 401k!!) Home Maintnance $29.28 Pet expenses $216.65 Have pet insurance at around $33 per pay period. Pet food around $50 p/m, pet insurance keeping other costs down Property Tax $287.53 half way through the year, likely $340 p/m Other_5 $103.57 One off, I just applied for US citizenship at a cost of $725 Personal Care $32.22 Retirement Fund $1,428.57 Savings not expense Taxes $121.43 What is this? Util. Electricity $114.01 Util. Gas $94.07 Util. Phone(s) $124.62 expect to be down to $35 p/m Great! Util. Water $81.21 Util. Alarm $31.85 Agree this is probably unnecessary, are you in high crime area or creates other savings? FInance Fees $93.85 What is this? - $0.00 Charity $16.57 Cleaning $17.85 Every now and again we need help with a cleaner. We are exhausted Dining $323.34 With that grocery bill this could be less! Pack your lunches!! Discretionary $1.19 Fun / Entertainment $56.50 Furniture / Appliances $72.57 Gifts Given $142.36 Seems high! Baby Education $400.00 What is this? Util. TV / Internet $64.36 COmcast ($40), netflix etc. Do you get much use from these subscriptions? Travel $166.18 parking, hotels, transit etc. Mainly a week vacation coming up Subscriptions/Dues $33.13 can any of these subscriptions be eliminated? HSA $362.96 If this is not a contribution, then not an expense or income - no net change in net worth Vacation Fund $171.43 How is this different from travel above? Major Home $1,866.97 How is this different from home maintenance above?
Overall - it looks like a few of your expenses are about to decrease which will allow you to max those retirement accounts.
The biggest area I see for you to cut back is your food bills - seems really high for 2 1/2 people. Maybe try to limit yourself to $1000 max, then try to get down to maybe $700-$800 including eating out. Plenty of people on the forums with multiple kids and $400-$600 food expenses. That is a lot of dough to be saved!!
Otherwise I could see you cut your car insurance in half, clothing budget by $10-$20, gifts budget by $40-$50, get rid of the security system - maybe that saves you another $150-$200/mo.
Overall I could see you easily cut $500-$600 out of your budget.
One thing I would recommend doing is creating a 'target budget' based on these number, expected future expenses, etc. Then see what the most you can save is. Then set your savings to maximum. Make sure to account for things like a new HVAC every 10-15 years by saving for it each month.
We keep 4 buckets of money - short term expenses (monthly) in checking - long term expenses (1-5 years) in savings - emergency fund in separate savings - all other savings in retirement accounts or taxable brokerage. Brokerage, retirement fund, emergency fund, and long term expense contributions are fixed, all money goes into checking then gets distributed to other accounts. Anything leftover stays in checking unless I reach 3 months expenses, then I sweep a month's worth into the emergency fund or brokerage.