Mid-30s, family of 3, just getting on the FIRE planning bandwagon

[wallymama]

Hi everyone!

Excited to finally join the forum after lurking forever.

My DH and I are in our mid-30s and are just now gaining some traction (ever so slooowwwly) and making FIRE plans. We have one child who is 4 - she will be our only.

I feel like we're behind, mainly because we've had significant medical expenses every year for the past decade (like $5-10k OOP). I have had a slew of healthcare issues, tack an adoption onto that, and we've spent a fortune it seems. We've been fortunate to be able to cash flow all of those expenses, but it has put a damper on our ability to add to savings and retirement.

Here are our deets:

DH gross income: $75,000
DH net income: $50,000

*I became a SAHM when we adopted our daughter. However, two years ago I started a side hustle. I have netted about $18k each year since then. Given my health issues and our plan to homeschool, this income is not necessarily guaranteed going forward. So I don't typically count it in our "income" if that makes sense.

Debts:
Student loan: $11,000 @3.5%, $130 per month
Car: $9800 @1.99%, $270 per month
Mortgage: $144,000 @3.625, $850 per month (PITI), 27 years left of 30 year loan

Assets:
Car: $16,500
Truck: $3,000
Business checking: $18,000
Savings: $5,000
Stocks: $10,000
DH 401k: $40,000
Home: $180,000

Monthly budget is right at $4,000. We use YNAB and do a zero-based budget. YNAB tells me our net worth is just north of $100,000. We live in the Midwest so COL is relatively low. My health expenses are just kicking our butts - we paid $3k just this month. Luckily, we just hit our max OOP so everything from here on out (except scripts) will be covered 100% for the rest of the year.

Questions:
Husband's income fluctuates, but averages out to $4,000 per month. Winter and spring can be slow for him, but summer and fall are very busy and that's when he makes the bulk of his income. Because of this and my health stuff, we both feel more comfortable having a buffer savings.

However, we would like to be rid of the debt as well as up our retirement contributions (just upped DH's contributions to 11% when he received his COL raise), save for our daughter's college, etc. We would like to retire early - nothing too crazy early - maybe 55, but not sure that's even possible. We would also like to increase our travel. My health has prevented much travel up to this point, but it's important for us to make those memories with our daughter.

I feel like we have sooo much to accomplish financially and I get bogged down in the details. Do you think we should drop some savings on the debt or keep throwing money into savings or retirement? If you were us, what advice would you give to get on a better financial trajectory?

[wallymama]

Are we totally screwed?

[lemming]

Welcome and good for you planning your future. Maybe no one here remembers being 30 something and don't know how to start to advise-so just welcome!
My thoughts. Quit counting your cars as assets. Congrats on the new adoption and hope your health stabilizes. Buy the best insurance you can afford so your medical costs don't eat up your savings.

[Bamaman]

Health issues, co-pays and deductibles are unavoidable, and improving your health is your first priority.

If your health allows, you may can make a more positive step to improve your fiscal health if you are able to go back to work.

When your daughter gets to kindergarten age, consider mainstreaming her in regular school unless there are extenuating circumstances. Our daughter required home schooling, and we greatly regret ever taking that direction.

[FUEGO]

Quote:

Originally Posted by Bamaman When your daughter gets to kindergarten age, consider mainstreaming her in regular school unless there are extenuating circumstances. Our daughter required home schooling, and we greatly regret ever taking that direction.

Sorry to sidetrack the OP's discussion, but can you elaborate? Are you saying you homeschooled at first and greatly regret the decision to have homeschooled her initially?

[cooch96]

Your health is of highest importance. You need it and your family needs it. I'd focus on that. Don't stress out, you seem to be doing quite well.

$18k is a reasonable emergency fund considering you have a cyclic income and high, unpredictable expenses. All your debts are at decent rates, so you can take a measure of pride in that. I cannot predict future returns in the market, but chances are you'll do better by contributing as much as you can to the 401k.

May I ask what you're invested in specifically? Many here would advise a balanced fund of funds. Make sure the fees/expenses are low. Have you seen this forum's suggested reading list?

Welcome! Glad to have you.

[COHgirl]

Your husband's average monthly salary is equal to your budget, is what I understand?

I'm no expert, my advice is free, and you get what you pay for
If all your bills are covered by your husband's pay, sock away all of the money you make on the side. I think you have the right idea of never seeing the COL raise coming home in the paycheck. Just because you get extra money doesn't mean you have to spend it.

I always slept better knowing I had money in the bank even though I was still paying off debt. Stress is bad for your health.

[Golden sunsets]

Wallymama; As others have said, your health issues are paramount and take priority over fiscal concerns. But that issue aside, have you made the decision to be a SAHM based on your health? If not then I would say being a SAHM may be a luxury you can not afford? What is the reason you have decided to home school? Are the schools in your area so bad that you can't consider public school? Why does your husband get a COLA if he is self employed? Just trying to understand his situation. Who's debt is the school debt? Answers to some of these questions may help to better understand your situation. But the bottom line I think is that you have an income problem, not a spending problem. What can you do to increase your income? If you can't return to the workforce due to health issues, is your side hustle capable of growing to any significant degree? If not, most would say that your reentering the workforce, is perhaps the single best way to affect your income.

[wallymama]

Quote:

Originally Posted by cooch96 Your health is of highest importance. You need it and your family needs it. I'd focus on that. Don't stress out, you seem to be doing quite well. $18k is a reasonable emergency fund considering you have a cyclic income and high, unpredictable expenses. All your debts are at decent rates, so you can take a measure of pride in that. I cannot predict future returns in the market, but chances are you'll do better by contributing as much as you can to the 401k. May I ask what you're invested in specifically? Many here would advise a balanced fund of funds. Make sure the fees/expenses are low. Have you seen this forum's suggested reading list? Welcome! Glad to have you.

Initially, we were invested in a target date fund based on DH's anticipated retirement date. Not sure of the proper term. Last summer we switched things to a more aggressive mix - looks like small, mid, and large cap as well as international stocks. This was on the advice of a financial advisor that DH's company brought in. We didn't pay for his advice, but honestly, I don't know how good it is. I do know our balance has improved quite a bit since the switch.

I'll take a look at the reading list too. Thanks!

[wallymama]

Quote:

Originally Posted by Bamaman Health issues, co-pays and deductibles are unavoidable, and improving your health is your first priority. If your health allows, you may can make a more positive step to improve your fiscal health if you are able to go back to work. When your daughter gets to kindergarten age, consider mainstreaming her in regular school unless there are extenuating circumstances. Our daughter required home schooling, and we greatly regret ever taking that direction.

Based on her needs, homeschooling is the best option. I'd prefer not to elaborate on that, but we're committed to homeschooling if at all possible.

[wallymama]

Quote:

Originally Posted by COHgirl Your husband's average monthly salary is equal to your budget, is what I understand? I'm no expert, my advice is free, and you get what you pay for If all your bills are covered by your husband's pay, sock away all of the money you make on the side. I think you have the right idea of never seeing the COL raise coming home in the paycheck. Just because you get extra money doesn't mean you have to spend it. I always slept better knowing I had money in the bank even though I was still paying off debt. Stress is bad for your health.

Thanks for chiming in! We do a zero-based budget, so everything that DH makes gets a category and a job. Kind of Dave Ramsey style. Bills don't typically eat up all of that $4k though. About $1,000 each month goes into sinking funds (car repair, home maintenance, pets, etc). All of the money I make on the side hustle goes into my biz checking account and just sits there. We use that if I have mega medical bills.

[wallymama]

Quote:

Originally Posted by Golden sunsets Wallymama; As others have said, your health issues are paramount and take priority over fiscal concerns. But that issue aside, have you made the decision to be a SAHM based on your health? If not then I would say being a SAHM may be a luxury you can not afford? What is the reason you have decided to home school? Are the schools in your area so bad that you can't consider public school? Why does your husband get a COLA if he is self employed? Just trying to understand his situation. Who's debt is the school debt? Answers to some of these questions may help to better understand your situation. But the bottom line I think is that you have an income problem, not a spending problem. What can you do to increase your income? If you can't return to the workforce due to health issues, is your side hustle capable of growing to any significant degree? If not, most would say that your reentering the workforce, is perhaps the single best way to affect your income.

Being a SAHM was always the goal for us. It took us 6 years to become parents and we were committed to having me home. As my health worsened, it seemed to make even more sense to have me home.

I mentioned this upthread, but the best option for our daughter is homeschooling. Schools are okay around here, but her needs wouldn't be met in school. That's something that we as well as her specialists agree on. So it's a priority to us that we want to make happen if at all possible.

DH isn't self-employed, he works for a mid-sized national company. I started a side hustle a few years ago and am SE, netting about $18k each year from that. All of that goes into savings and is only used to help pay big things like medical expenses. DH gets roughly a 2-3% COL raise each year. We have started just upping his 401k contribution by that amount each year so we never see the raise in his check.

School debt is mine.

Thanks for weighing in everyone! Please feel free to ask if something doesn't make sense.

[cooch96]

Quote:

Originally Posted by wallymama Initially, we were invested in a target date fund based on DH's anticipated retirement date. Not sure of the proper term. Last summer we switched things to a more aggressive mix - looks like small, mid, and large cap as well as international stocks. This was on the advice of a financial advisor that DH's company brought in. We didn't pay for his advice, but honestly, I don't know how good it is. I do know our balance has improved quite a bit since the switch. I'll take a look at the reading list too. Thanks!

Sounds like you're on the right path. Take a few minutes and find out what the fund's fees are. That's the easiest thing to optimize (arguably the only thing). Mega corps offers me a target date fund with an Expense Ratio (ER) of 0.11%. That's pretty low, but you should be avoiding funds that cost more than 5x that. If the fees are low and the target date and asset mix are appropriate, you shouldn't feel obligated to buy anything different, ever.

Take the time and educate yourself on investing. It took me about three months of weekend reading until I understood the basics and was NOT dangerous. It was not intuitive for me, but I suspect most folks would catch on much quicker.

[ivinsfan]

So you have a lot of details to digest.

The first one is the state health, sorry for your troubles, are you capable of working outside the home in a regular job. If not SSI might be the way to go if you have enough quarters in to apply. However to make this work you would need to stop your side job.

How stable it your side job as it seems to be the only area where you can make money to stash away?

Special needs are tough whether it's home schooling or public schooling,24/7 care including schooling of a special needs child is very demanding. I know some special needs family and they struggle with balancing the protective feeling towards their kids and knowing that someday the kids will have to integrate into society.

And no your net worth in not over 100K....take off the worth of your cars and the small amount of home equity you have. the cars will be replaced and the 850 a month on your house payment probably would even cover rental costs and don't forget the fees when selling a house.

Would you minds sharing your DH anticipate FIRE date? I see you ballparked 55 at that time you won't have your house payed off..I don't really see that number in the cards for you unless you can get a big income boost.

[wallymama]

Quote:

Originally Posted by ivinsfan So you have a lot of details to digest. The first one is the state health, sorry for your troubles, are you capable of working outside the home in a regular job. If not SSI might be the way to go if you have enough quarters in to apply. However to make this work you would need to stop your side job. How stable it your side job as it seems to be the only area where you can make money to stash away? Special needs are tough whether it's home schooling or public schooling,24/7 care including schooling of a special needs child is very demanding. I know some special needs family and they struggle with balancing the protective feeling towards their kids and knowing that someday the kids will have to integrate into society. And no your net worth in not over 100K....take off the worth of your cars and the small amount of home equity you have. the cars will be replaced and the 850 a month on your house payment probably would even cover rental costs and don't forget the fees when selling a house. Would you minds sharing your DH anticipate FIRE date? I see you ballparked 55 at that time you won't have your house payed off..I don't really see that number in the cards for you unless you can get a big income boost.

Thanks for weighing in, ivinsfan.

RE: FIRE date - DH enjoys his work and has said in the past that working until "normal" retirement age of 65 wouldn't be a dealbreaker. 65 is probably much more realistic for our situation.

I've worked since I was 14, so I would at least be eligible to apply for SSI. That's not necessarily a route we want to go though. Side job could pretty easily continue to bring in $500 a month with minimal hours on my end.

I nearly died two years ago following post-op complications. So while financial independence is important to us and a worthwhile goal, having the time to spend with our family trumps that. Even if we can't FIRE "early," we still want to get on a better financial path.

FWIW, I did run some numbers through FireCalc (retiring in 30 years, saving $10k per year, annual income $50k post-retirement). According to that, we had a 100% success rate. Right now, DH is contributing roughly $6k each year and his company dumps a portion of his profit sharing in there each year too. It averages about $4-$6k generally, but has been as high as $15k in the past (prior to his employment with the company unfortunately ).

After mulling this over a bit, I don't think we'll drop any more into savings right now. Going forward, if I put the business income towards the debt each month, we should have those paid within a year or so. Then at that point we'll be debt free except the mortgage and have a solid emergency fund. The freed up money plus the monthly business income can then be split between investments and college savings. We thinking of just biting the bullet and upping DH's 401k contribution to 15% now too.

Does that sound like a legit plan?

[ivinsfan]

Yes in 30 years you should have a paid off house and whatever SS benefits are available then, just pointing out 55 might be a stretch.

I wouldn't rule out SSI,and your estimate of earnings is ranging from 18K a year to 500 a month at 500 a month SSI becomes much more attractive. So, on the debt I wouldn't be in a rush on the student loan, if you do get SSI I'm pretty sure there would be some loan relief or interest free payments or something along those lines. I'd just pay the minimum on that loan.

Given you health issues I would build more of a cash fund or go to some Roth money instead of upping the 401. You should qualify for a savers refund on your Roth just guessing without knowing your exact tax deductions.

[wallymama]

Quote:

Originally Posted by ivinsfan Yes in 30 years you should have a paid off house and whatever SS benefits are available then, just pointing out 55 might be a stretch. I wouldn't rule out SSI,and your estimate of earnings is ranging from 18K a year to 500 a month at 500 a month SSI becomes much more attractive. So, on the debt I wouldn't be in a rush on the student loan, if you do get SSI I'm pretty sure there would be some loan relief or interest free payments or something along those lines. I'd just pay the minimum on that loan. Given you health issues I would build more of a cash fund or go to some Roth money instead of upping the 401. You should qualify for a savers refund on your Roth just guessing without knowing your exact tax deductions.

Yeah, 55 would be the ultimate of all stretch goals! And you're suggesting the Roth because we can take contributions out without penalty, right? So we could use it as an emergency fund of sorts if needed?

Good points on the student loan.

Is Vanguard the go-to for opening a Roth?

[ivinsfan]

Yes on the Roth and a 401 is not eligible for a savers credit that is based on AGI...

[wallymama]

Just checked and we don't qualify for the savers credit, but I still think Roth is the way to go with the no penalty w/d on contributions.

Thanks for the kick in the butt everyone!

[cooch96]

I'm a big fan of Vanguard because their fees are currently the best value. I've heard many accounts of folks getting frustrated with vanguard because of poor customer service. I haven't suffered that, but my portfolio is pretty simple.