33 year old single mom of 2 kids...beginning her journey!

[Freedombound]

Hi,

As stated above, I am a single mom of 2 boys (7 &3) and I stumbled upon this website a couple of days ago. I am excited to find people who think like me....people who don't want to work their whole life and retire broke.
Here is my situation... unfortunately, I would like to be further along in my journey, but this is how it stands:
Home- mortgage $65,500... value $85,000
Student loans- $31,500 in deferment, repayment beginning in July '08
Car- owe $6,500... value same (will payoff 1/09)
403b- $350.00 (just started contributing)
Savings acct- $565.00

My biggest challenge is income, which should be going up in the next year. I am good at managing what I have and I am very content with what I have. I am also very willing to sacrifice to get ahead. I would like to "retire" at 45... at first that doesn't seem likely, but I am one of those people that doesn't have a high maintenance lifestyle (lucky me!). Even though I am a simple person, I definitely want enough money to be able to travel and enjoy life. I hope to learn from others experiences and advice and am happy to be here....Thanks in advance

[Walt34]

Welcome to the forum. What you want to do can be done and you're smart to think of it now and plan ahead. I also had to start over from scratch at age 34 when the ex-wife bailed when I refused to take a loan for a trip when we were already flat broke. So I know what that feels like.

Admittedly it was easier for me, no children and I have a pension plan that is rare anymore (100% COLAs) and lifetime medical/prescriptions for 30% of the group premium.

But at least you won't end up like one couple DW and I know - 60 years old and $500K in debt to finance a lavish lifestyle.

[Arc]

Hi Freedembound - more than half the battle is having a plan and it looks like you are there. I admire your willingness to take control of your financial future! You will learn most of what you need to know right on this board. Keep at it and good luck!

[Moemg]

Welcome with your attitude I know you'll make it . I was a single Mom in my mid 30's when I started getting serious about saving .So if I could do it so could you !

[growing_older]

Welcome. This is a good place for fondling like minded folks (with a variety of opinions) and great for bouncing ideas and getting suggestions. I'm a single dad of 2 kids slightly older than yours, so I can appreciate your situation.

With student loans in deferment, does that imply you are starting or about to start some new employment? With little savings, you might want to consider building up a cushion for everyday emergencies before you tackle some of the other steps to FIRE (debt reduction, retirement savings). Whatever you feel comfortable to share about your situation, you'll likely find plenty of helpful suggestions.

[Freedombound]

The loans have been around for a while, unfortunately. I didn't start trying to "get myself" together until about 5 years ago. I bought a house and had big plans. Then the "unplanned" happened and I had a 2nd son.. things have been really tight since then, as daycare, diapers, etc. is very expensive. So I put my loans on economic hardship deferrment. I will start repayment in July '08, but it will be based on my income. I am currently taking classes for another position within my company and once I finish and start the new position, I will get a substantial increase... about $14k more per year.

[Texas Proud]

Freedombound...

First, welcome to the board...

Second, good luck in your pursuit...

But... and this is a hard one to swallow, but with the sketchy info you gave nobody can tell you if you can 'do it' or not.... but I will say that unless you make a LOT of money and spend very little, your retirement age is a bit 'low'..

You have two kids which take a lot of money... you have about $100,000 debt with about $1,000 in savings...

Put together a plan on what you can save and what you must spend... and then add a few luxury items (do not put off living as you might not make it if something bad happens)....

Then do some calculations on what your 'number' is... and how to get there... but doing it in 12 years is almost impossible unless your 'plan' is to marry a rich guy... sorry to be blunt...

BUT DO NO GIVE UP... you should be able to make a good dent in the number you need in the next 12 years... and starting NOW is better than starting in 5 or 10 years....

[FinanceDude]

Quote:

Originally Posted by Freedombound Hi, As stated above, I am a single mom of 2 boys (7 &3) and I stumbled upon this website a couple of days ago. I am excited to find people who think like me....people who don't want to work their whole life and retire broke. Here is my situation... unfortunately, I would like to be further along in my journey, but this is how it stands: Home- mortgage $65,500... value $85,000 Student loans- $31,500 in deferment, repayment beginning in July '08 Car- owe $6,500... value same (will payoff 1/09) 403b- $350.00 (just started contributing) Savings acct- $565.00 My biggest challenge is income, which should be going up in the next year. I am good at managing what I have and I am very content with what I have. I am also very willing to sacrifice to get ahead. I would like to "retire" at 45... at first that doesn't seem likely, but I am one of those people that doesn't have a high maintenance lifestyle (lucky me!). Even though I am a simple person, I definitely want enough money to be able to travel and enjoy life. I hope to learn from others experiences and advice and am happy to be here....Thanks in advance

First of all, congrats on realizing that it will take some sacrifice to get on the path to your dreams, many folsk never even think those thoughts.........

You mentioned you are finishing school so you will get a better job with your company that will pay you $14,000 more a year.

1)If you do not have one, you need a budget and to track your spending.

2)You need to find a way to get 3-6 months living expenses saved in a money market acccount as soon as it is feasible to do so.

3)Do you have any life insurance? Find out about your group benefits plan at work. You probably will be able to buy some more coverage for very cheap. Also look at some term insurance outside of your company, as group benefits will not be portable if you leave the company.

4)Do you have disability insurance through work? This is key, if you can't work for any reason, you still have bills to pay. Check on that at work.

5)As far as the 403B,is there a company match? You should defer at least up to the match amount. Obviously, more will get you to your goal quicker, but you have a lot of things to work on, and you can always up your 403B deferrals going forward.

6)Retiring at 45 may be a little optimistic, a lot depends on how much you will be willing to sacrifice NOW to get to that goal. However, if you "miss" the mark, and it's 48 or 52, I don't think that's too bad........

After all, most folks in the US think "early retirement" is being 64 years old..........

Best of luck........lots of folks here will help you.........

[simple girl]

Quote:

Originally Posted by FinanceDude 3)Do you have any life insurance? Find out about your group benefits plan at work. You probably will be able to buy some more coverage for very cheap. Also look at some term insurance outside of your company, as group benefits will not be portable if you leave the company.

I agree. FYI, when we compared our work life insurance plan to insurance outside the company (both term life), there was no comparison! We were able to get much more coverage for less $ going outside the company.

[Freedombound]

Just wanted to say thanks for all the feedback. It is interesting to hear the different points of view. Here are a couple of things that people were questioning:
403b does not match at all- company offers a pension @ 5% of my income per year. Vesting after 5 years.

my current income is $26k, without any overtime (will probably make $30k this year)...once I transfer positions, income will go up to $40k (next year)

I do NOT plan to marry rich... I can't even respond nicely to that one, so moving on.....

I do have disability insurance and life insurance thru my job, but I am looking at additional term life outside of work.

Kids are expensive, but I don't believe in most of the junk that everyone thinks is neccessary to raise kids (ipods, wii's, cell phones, 5 different extracurricular activities for each child...etc), so my expenses are pretty basic. Daycare, of course, is the highest and that won't go down until 2010.

[aaronc879]

Well, i'm 5 years younger than you and have a net worth of over $100K more than you (only $10K in home equity) and i'm optomistically hoping to retire at 49. I don't see any way you'll be able to retire at 45 on your income starting at your age. However, your used to getting by on very little so if you use all or very nearly all of your $14K raise to increase your saving and not your spending then you may be pretty well off by 45 and able to retire in your early 50's.

[Texas Proud]

Quote:

Originally Posted by Freedombound 403b does not match at all- company offers a pension @ 5% of my income per year. Vesting after 5 years. I do NOT plan to marry rich... I can't even respond nicely to that one, so moving on.....

WOW... are you sure it is 5% per month? That would mean a 100% retirement in 20 years (or course, maybe you are fire, police or military)....

If so, then I would say you should be fine after working your 20 years... especially if they use your final income (3 or 5 years or whatever) to calculate your pension...

The 'marry rich' was a joke...

You are right.. the kids do NOT need all that stuff...

Good luck... with the pension... you are sitting pretty...

[Ed_The_Gypsy]

You might find it instructive to go back a few years in the archives here and look for interesting threads. There is a lot of good stuff between the bad jokes and hijacked threads. Be selective.

Good luck. You are going to need it.