I am a private school teacher, age 45, new to the forum. My wife is 40 and a software engineer. Right now we are trying to retire when my youngest completes high school, he's 3 - so in 14 years (maybe sooner if my school is not a good fit for him) The idea being that he can get free tuition as long as I'm employed there (I have been there 21 years already). Currently, tuition is 17k so who knows what it will be in the future. I also have a 5 year old son, who I also hope goes to my school.
My wife would retire when I do, but might scale down to part time in the last 5 years I'm employed.
MA resident. We do not plan to move or have any more kids. House is right size for us, 1500sq ft with half acre yard in semi-farming community. We do not plan to change jobs until we retire - its possible, but unlikely as we both love our employment situations.
Gross Salary/Wages: Me: 72k/yr, Wife: 102k/yr
Pre-tax deductions: Me: 403b pretax 15% (6% matched by employer then an additional 3% on top), Wife: 401k pretax 143k (5% matched by employer then an additional 5% on top of that). Me: dental insurance, Wife: Health Insurance
Other Ordinary Income: PV solar panels generate SRECs averaging $1,625/year. Should get SRECS for seven more years. Should break even with installation costs in another 3-4 years. Also have a chevy volt (plug-in electric hybrid) and get nearly all of its fuel from my solar panels and from being able to plug in at work.
I also save a couple thousand dollars per year by heating with wood as all the wood I get is from free sources. We very rarely use the electric clothes dryer now. Might even sell it.
I'm starting to go through all my junk and put stuff on craigslist. All that money will then be invested.
Qualified Dividends & Long Term Capital Gains: NA
Rental Income, Actual Expenses, and Depreciation: NA
Current expenses: Last 6 months
Mortage: $12,4k (extra principle-only $8,250) We expect the house to be paid off in ~3 yrs. I currently owe 48k.
Car Loan (0% interest) $3,700 (When car is paid off in 2.5 yrs, will sell my wife's car, currently 10 yr old toyota matrix with 130k, and by a 3-4 yr old vehicle that can cart the four of us and a dog and maybe some camping stuff - so maybe a prius V - but not settled on model. Will pay cash and have no loan.
Childcare $8,250
Food
Groceries $2,900
Restaurants & Fast Food $1,300
Alcohol $100
Gasoline $650
Car Maintenance $200
Life insurance $500
Car Insurance $1,350 (2014 chevy volt, 2005 toyota matrix, 2000 GMC Sierra)
Home Insurance $1,100
Cell Phone/Data Me & Wife $780
Cable $420
Water & Sewer $260
Electric & Heat $625
House Cleaning $850
Gifts: $400
We plan on using the rule of 55 to start getting money out before retirement age, but perhaps we can do better.
We are considering getting rid of cable. I got rid of my newspaper subscription. We plan to eat out/use fast food half as often as we currently do. I think that is realistic for now.
I have 40k in a money market. About 15k will go back into the house with improvement projects in the next 6 months. I want to have 15k for emergencies and upexpected events - Parents overseas are getting old, etc. That leaves us with 10k for immediate investments, plus what craigslist gets me.
Questions:
1) What should be our first two or three priorities for investing the 10k and any money we start saving from cutting expenses? I don't want to use it to pay off the mortgage faster since we are already doing that and its only a 2.5% rate set to go up in 3 years. Should it be maxing out 401k/403b? Opening a Roth IRA and maxing that out this year? Something else?
2) What else do you think we should consider cutting back on?
Many thanks.