***Edit: link to google drive case study
https://docs.google.com/spreadsheets/d/1K_2Tf221stuJSXGt3-8XmG0i-hIQH0W4dEwwrOW5lPo/edit?usp=sharingSome case study leg work, still a work in progress:
Life Situation: Married filing jointly, no dependents, living in California in air force base housing, I am 26 years old and a resident of NM and husband is 30 years old and a resident of AZ
Gross Salary/Wages: My income is $91,624.00 as an engineer/analyst, husband's is $88,759.56 as an officer in the Air Force
Pre-tax deductions: HFSA-$2,500, Dental/Vision Insurance-$286.44, Military housing allowance-$23,976(we live on base so this is all handed over to housing, covers utilities and residence), Military "subsistence" allowance-$3043.56
Post-tax deductions: R401k-$5,497.44 , Short Term Disability-$96.21, Employee Life Insurance-$117.02, TSP contribution-$xxx, Medical dependent coverage-$xxx
Other Ordinary Income: company 401k contributions-$3664.96, Provide sources and any relevant details, the more the better
Qualified Dividends & Long Term Capital Gains: If these are significant for you
Rental Income, Actual Expenses, and Depreciation: 2015 Income $6,300, Actual Expenses $xxx, Depreciation $xxx
Adjusted Gross Income: This should equal the additions and subtractions above.
Taxes: Federal, state/local, and FICA. These should be consistent with your AGI and Life Situation. For non-U.S. posters, we’ll have to take your word for these.
weekly:
Fed Withholdng 222.74
Fed MED/EE 24.74
Fed OASDI/EE 105.77
CA OASDI/EE 15.34
NM Withholdng 76.10
Plus husband's: xxx
Current expenses: Provide breakdown and relevant details. Aim to have “Miscellaneous” somewhere ~2.5%. Much lower and you may be providing too much detail, much higher and you have an obvious problem of not understanding your spending.
For mortgage payments, separate the P&I (which stop when the mortgage is paid) from the T&I (and anything else) which continue as long as you own the property.--accomplished in spreadsheet (found a $300 escrow overage check that I overlooked in June while digging for this breakdown...this makes me sound unorganized and bad with money.)
Expected ER expenses: N/A 100% medical coverage through the air force
Assets:
2007 Toyota Corolla
Roth 401k
Roth IRA
TSP
Savings
Amount & description - include current asset allocation plan if you have one
Liabilities:
American Express Credit Card: Balance $1,999.82, this card is generally paid off each month but Christmas gifts and vacation/travel expenses carried over into this month-which was one of the eye opening reasons I ended up re-discovering MMM
Southwest Rewards Visa Credit Card: Balance $4,422.27, 0% interest until May 2016, Minimum Payment $44
Student Loan: Original Loan Amount $5,500, Rate 3.15%(fixed/subsidized), 10-Year Term, Monthly Payment $54.51, Current Balance $4,933.13, Pay Off Date 10/2024
Personal Loan: Original Loan Amount $25,000, Rate 2.99%, 5-Year Term, Monthly Payment $449.59, Current Balance $13,011.59, Pay Off Date 06/2018
Truck Loan: Original Loan Amount $35,206.35, Rate 1.90%, 5-Year Term, Monthly Payment $615.55, Current Balance $15,659.45, Pay Off Date 03/2018
Mortgage: Original Loan Amount $113,320, Rate 4.750%, 30-Year Term, Monthly Payment $754.85, Current Balance $104,755.27, Pay Off Date 7/2040
Hello Mustachians,
I am a brand new follower. I read some of MMM's articles a year or more ago and they stuck in the back of my mind but I took no action. I have some renewed interest in tackling debt and striving for FI and finally have my husband on board.
My question: I have been contributing to a Roth 401k with the assumption I'd be in a higher tax bracket upon retirement, I was following the typical financial advice in that respect. My husband contributes to a Roth IRA as well as his TSP(he's in the Air Force) which I believe is also a Roth contribution. We've been contributing at a rate of 14.4% plus my employer contribution (4% flat, not a match) which averages us to 17.4% over the last 3 years (when I graduated and entered employment).
We get hit hard with taxes because we are dual income, no children and our mortgage(which is now an investment property because the air force moved us in 2014) is small enough that we have only ever qualified for the standard deduction.
We are also repaying the debts we managed to rack up over the first 9 years of marriage, last year was the first year we did not acquire any new debt and actually lived within our means. We were planning to get all credit cards paid off last year, but we ended up having to pay for my father-in-law's funeral out of pocket which was a big hit and we lost sight of our finance goals and then way over spent for Christmas and a vacation in December.
As soon as the debts are paid off and if we manage to sell the investment property (it's on the market but not looking good) we could easily be contributing 65% of income to retirement(59% if the property doesn't sell and sits without tenants).
So really to my question: Should I switch all of our retirement contributions from Roth to Traditional? Or should I wait and make sure my mustachian ways kick in first?
So far so good in January, I've cut our grocery and general spending down drastically and made some massive debt payments and it feels good. I forecasted our debt payments for the year and we could tackle all of them (credit cards, personal loan, student loan and an auto loan) by October as long as we keep our spending in check.
Any other questions? Suggestions? Thanks in advance!