35 with Retirement on my Mind..

[JoshTrent]

Hello..
I have been trolling for a while (and will for a while more). I am Josh.. I am married (5 years this December) with 2 kids (2 years & 7 months). We live in CO. I work (about $70,000 a year with Salary & Commission) my wife is a stay at home mom & is the CFO of the House. She is a RockStar & is way more frugal than I am. We have a strong budget, which we review every month. Expenses are kept to a minimum, however we do have enjoy our lives & our boys! Our short term goal is to pay off the house, and we are on target to have the mortgage paid in 5-6 years. After that.. who knows! Here is my info:

Assets
- House - $235,000
- 401(k) - $120,000 (90% Stocks MF, 10% Bonds MF) with 13% contribution & 3% match
- Roth #1 - $17,000 (Self Directed with earnings @ 12% a year) with $5k contribution
- Roth #2 - $8,000 (100% Stock MF) with $0 contribution
- 529 - $3,500 (100% Stock MF) with $1.2k contribution annually
- Cash on Hand - $10,000 (MMA - Emergency Fund)
- Cars - Who cares right? They are paid for!

Liabilities
- Mortgage - $165,000 ($185k, 4.875%, 30 year, with 3 years gone)

We both have Life Insurance - $500k on me & $300k on my wife. These are 20 yr term policies we picked up 2 years ago.

We run a surplus of about $35,000 (after taxes) a year. That money has been used for Home Upgrades (windows, landscaping, flooring, etc) as the house was a bit of a fixer-uper, we also travel once a year to Europe (to see the wife's family), and some Debt payment (student loans - we killed Sallie!).

I don't know what else to say.. I don't know if we will be able to retire early, but I figure we are on track to retire at some point!

Thanks for having me!

 

[Packman]

Welcome to FIRE, Josh. A family of 4 on $70,000 of income with the savings you have accumulated - is fantastic. And no car payments - how will the banks ever make money with you around? You are on your way! Keep saving, watch the budget and enjoy your ER when it comes.

By the way, I'm from Colorado too - the greatest state in the land.

 

[obgyn65]

Welcome, Josh. It seems you are on track to FIRE.

 

[chinaco]

Welcome.

You have a nice start! Stick with it!

 

[travelover]

Welcome. I'm impressed with your savings rate.

 

[WhoDaresWins]

Welcome, Josh! You and your wife make an amazing team. It is heartwarming to read of your success, and I think you are on track for a great retirement in the future.

 

[JoshTrent]

Thanks Everyone!

 

[myself]

Josh, congratulations, it sounds like you're doing great!

I'm just curious though. On an income of about $70,000, and 401K contributions of $9k/yr, and presuming 6 years is the mortgage payoff, that amounts to $27,500/yr for the mortgage (not counting interest).
Then of course there's SS/Medicare ($5,355).
That's $41,800/yr. Which would only leave $30,000 for food/clothing/electricity/heating/etc.
So how do you have about $35k/yr after taxes left?

I honestly am glad that you are able to save as much as you are, I just can't see how you can payoff the mortgage lien in 5-6 years IMHO.

Hello..
I have been trolling for a while (and will for a while more). I am Josh.. I am married (5 years this December) with 2 kids (2 years & 7 months). We live in CO. I work (about $70,000 a year with Salary & Commission) my wife is a stay at home mom & is the CFO of the House. She is a RockStar & is way more frugal than I am. We have a strong budget, which we review every month. Expenses are kept to a minimum, however we do have enjoy our lives & our boys! Our short term goal is to pay off the house, and we are on target to have the mortgage paid in 5-6 years. After that.. who knows! Here is my info:

Assets
- House - $235,000
- 401(k) - $120,000 (90% Stocks MF, 10% Bonds MF) with 13% contribution & 3% match
- Roth #1 - $17,000 (Self Directed with earnings @ 12% a year) with $5k contribution
- Roth #2 - $8,000 (100% Stock MF) with $0 contribution
- 529 - $3,500 (100% Stock MF) with $1.2k contribution annually
- Cash on Hand - $10,000 (MMA - Emergency Fund)
- Cars - Who cares right? They are paid for!

Liabilities
- Mortgage - $165,000 ($185k, 4.875%, 30 year, with 3 years gone)

We both have Life Insurance - $500k on me & $300k on my wife. These are 20 yr term policies we picked up 2 years ago.

We run a surplus of about $35,000 (after taxes) a year. That money has been used for Home Upgrades (windows, landscaping, flooring, etc) as the house was a bit of a fixer-uper, we also travel once a year to Europe (to see the wife's family), and some Debt payment (student loans - we killed Sallie!).

I don't know what else to say.. I don't know if we will be able to retire early, but I figure we are on track to retire at some point!

Thanks for having me!

 

[JoshTrent]

Josh, congratulations, it sounds like you're doing great!

I'm just curious though. On an income of about $70,000, and 401K contributions of $9k/yr, and presuming 6 years is the mortgage payoff, that amounts to $27,500/yr for the mortgage (not counting interest).
Then of course there's SS/Medicare ($5,355).
That's $41,800/yr. Which would only leave $30,000 for food/clothing/electricity/heating/etc.
So how do you have about $35k/yr after taxes left?

I honestly am glad that you are able to save as much as you are, I just can't see how you can payoff the mortgage lien in 5-6 years IMHO.

Hey myself..

That's what I have come to appreciate about this site.. everyone is keeping everyone in check!

I guess I should preface this.. my pay is partly salary & commission. 2010 was $70,900. The 4 years prior to that ranged from $78k-103k. Although I forecast with the previous year's income, I do anticipate my income to increase the next 5-6 years. Our expenses are fixed for the most part, by that I mean that we do not increase spending with increased income.

Here is the spending breakdown (on an annual basis):
Income Tax - $2634 (2010 - God bless deductions & credits!)
SS/Med - $5355 (your figure, so I won't doubt it)
401(k) - $9100
Health - $2626
Roth - $5000
Mortgage - $10,932
Food/Home Supplies/Clothes - $8700
Utils/Internet/etc - ~$2400
Insurance (Car, Life, Home) - ~$2100
Property Tax - $1076
TOTAL - $41733

Considering a difference of $28k for 2010, that would keep us on track for Mortgage pre-payment in ~6 years. Keep in mind that our regular mortgage payment covers interest and a little bit of P.

Please check me on this.. I have been know to mis place a "." or two!

 

[aida2003]

Here is the spending breakdown (on an annual basis):
Income Tax - $2634 (2010 - God bless deductions & credits!)
SS/Med - $5355 (your figure, so I won't doubt it)
401(k) - $9100
Health - $2626
Roth - $5000
Mortgage - $10,932
Food/Home Supplies/Clothes - $8700
Utils/Internet/etc - ~$2400
Insurance (Car, Life, Home) - ~$2100
Property Tax - $1076
TOTAL - $41733

I'm impressed by the expenses for a family of 4!! I'm guessing that $8,700 includes gas for cars too, right? If so, how much do you spend for the gas alone on average? It seems your family is not hit by inflation
Can you give a more elaborate breakdown of Uties/Internet? Just for my curiosity to compare a frugal family's expenses in CO vs. NC .

You're doing great!! If your family is not hit by something unexpected, you'll do great and retire early . E.g. I've considered ourselves a very healthy family by American standards (KWIM??), but out of the blue my DH has been hospitalized for the Guillain-Barre syndrome...scared the living lights of me when he was at his worst. Now he's in the acute physical therapy and I hope and pray for his full recovery.

 

[Sarah in SC]

Can you jack up that 401k contribution? What about a spousal IRA for the wife?
And welcome! As you've no doubt discovered and the old timers will tell you, having a spouse who is on board with saving goals is a HUGE deal.

 

[HatePayingTaxes]

Wow, looks great!! I'm in a very similar situation as you... 2 kids (2 years old and 7 months) and stay home wife and similar age.

Just some things I would add.
1. Build up emergency fund... is 10k enough?
2. 5k roth contribution for your wife. Even though she doesn't have earned income, she can still contribute.
3. Bump up 401k contribution. I'll say 401k contribution is more important than paying off mortgage since your rate is so low and you have years to grow money tax-deferred. Better yet, do roth 401k.
4. Look into state tax deductibility for 529 plan and possibliy start college fund for kids.
5. I know term life premium's been going down so maybe save a few bucks this way.

You're doing an awesome job and, since you have some extra cash at the end of the year, just adding my 2 c.

 

[aaronc879]

I had no idea property taxes were so low in CO. Looks like <.5% of property value. Here in Wisconsin I pay 80% of your property taxes on a property worth 17% of yours. Take it if you can get it. Looks like reasonable spending. Millions spend less for a family of 4 but very few of them have an income as high as yours so good job of LBYM. Looks like retirement in your 50's is doable. Probably late 50's if your planning to fully fund your kids college expenses.

 

[JoshTrent]

I'm impressed by the expenses for a family of 4!! I'm guessing that $8,700 includes gas for cars too, right? If so, how much do you spend for the gas alone on average? It seems your family is not hit by inflation

Basically, my wife pulls out $362.50 - 2 times a month. Food is roughly $200, the rest goes towards everything else. My wife has a Phd in Frugal. I could never make it work (she made me try for a month), but she is simply amazing..

Can you give a more elaborate breakdown of Uties/Internet? Just for my curiosity to compare a frugal family's expenses in CO vs. NC .

Sure - Internet is about $20 a month (for 50MB), as we have a cul-de-sac "Co-Op".
The rest is Gas/Elect & Water. We believe that Sweaters were meant to be worn during the winter, we don't have A/C & the yard is xerioscaped (sp?). We run about $40 in Water, $35 in Electricity & the rest in Gas (only in the winter though). We are closer to $125 in the Summer for these expenses. Additionally - No TV & VOIP that costs us $25 a year.

You're doing great!! If your family is not hit by something unexpected, you'll do great and retire early . E.g. I've considered ourselves a very healthy family by American standards (KWIM??), but out of the blue my DH has been hospitalized for the Guillain-Barre syndrome...scared the living lights of me when he was at his worst. Now he's in the acute physical therapy and I hope and pray for his full recovery.

Thanks! We are blessed to be healthy! We eat right (everything is made at home, so we know what's in it) as my wife is a great cook. DW is Eastern European.. maybe that is our advantage. Her mom is the MOST frugal person that I have ever met. I am always amazed when we stay with her.

Thanks for the comments & good luck to you!

 

[JoshTrent]

Can you jack up that 401k contribution? What about a spousal IRA for the wife?
And welcome! As you've no doubt discovered and the old timers will tell you, having a spouse who is on board with saving goals is a HUGE deal.

Thanks! Yes.. my DW is really a major part of our success. Our decision is to pre-pay the mortgage ASAP & then work on additional savings. Once we get to that point, you better believe we will contribute to her Roth and perhaps open a traditional IRA.

 

[JoshTrent]

1. Build up emergency fund... is 10k enough?

I agree with this point, I don't think it is enough. This is something that comes up at our monthly board meeting and we go back and forth on.

3. Bump up 401k contribution. I'll say 401k contribution is more important than paying off mortgage since your rate is so low and you have years to grow money tax-deferred. Better yet, do roth 401k.

To the DW pre-paying the mortgage is more important. I have conceded this point to her, with the agreement that we will make it up post mortgage. I know that we lose out on compounding, but felt that 5-6 years of compounding won't make up for the disagreement.

This isn't the place for a discussion about what she conceded in the debate..

 

[JoshTrent]

I had no idea property taxes were so low in CO. Looks like <.5% of property value. Here in Wisconsin I pay 80% of your property taxes on a property worth 17% of yours. Take it if you can get it. Looks like reasonable spending. Millions spend less for a family of 4 but very few of them have an income as high as yours so good job of LBYM. Looks like retirement in your 50's is doable. Probably late 50's if your planning to fully fund your kids college expenses.

Market Value & Appraised Value don't match around here.. but funny you mention it, I just got a notice for next year's taxes & the are going down by $23! WOOHOO! Having said that, the school district we live is is quite crappy.

We have already put our kids on the Waitlist for the District adjacent to ours..