I am 41, married and have 3 children – ages 7 1/2, almost 4, and almost 2. We are saving for retirement and to fully fund public college for all of the children (we are in Virginia and have some good state schools here). Here is where we stood at the end of March:
Checking: $6,500 (this may have been before our mortgage came out for the month. We usually have between $2K and $4K in here)
EE Bonds: $25,000 (this is our emergency fund. These are old bonds that have matured but are still earning interest. As they stop earning interest, I will probably put them in laddered CDs or something similar.
Mutual Fund: $19,000 (this account was opened ~18 years ago. I used to send a couple hundred to it per month. Haven’t in at least 10 years). This is for any future big expense – a car, a new deck, backup emergency. Not really sure.
My Roth IRA: $55,000 (I put in $5,000 per year)
My 401(k): $101,000 (I am currently not working so this won’t change much other than earnings or losses until I go back to work – hopefully in 1 ½ years)
Husband’s Roth IRA: $32,000 (puts in $5,000 per year)
Husbands 401(k) - $150,000 (he will be putting in the max per year $16,500)
Home: Our home is worth about $550,000 according to our latest assessment in January. (It’s a very modest 1950’s ranch. Home prices are still crazy here in Northern Virginia). We paid $290,000 in 2000.
Condo: We own a 1-br. condo in South Florida. Mother-in-law uses it for the winter. She covers expenses. It’s worth about $20,000. We paid $34,000 in 2003
Cars: Our cars are worth only about $10,000 between them. They are 2001 and 2002. We will probably need to replace one of them within 2-3 years. The other has relatively low mileage, but is small – so it’s a good commuter car.
Child 1: Education Savings Account (ESA): $16,000 (we add $2,000 each year)
Child 2: ESA: $6,500 (we add $2,000 each year)
Child 3: ESA: $4,100 (we add $2,000 each year)
Mortgage for our Home: We owe $141,000. We have a 15-year mortgage at 4.75%. It will be paid off in 8 ½ years (November 2017)
Home Equity Loan: We owe $8,500. This is our “mortgage” on our condo. Because it was a fairly small amount, it was cheaper and easier to do a home equity loan than a mortgage. Rate fluctuates. Now at 3 ½% or thereabouts.
Short-Term Goals: I want to have the home equity loan paid off by December 2010. We’ve been putting about $400-$500 per month toward it. We can go lower or higher as needed. Minimum payment is under $200. I know it’s a low percentage rate and it’s tax deductible, but I just want to be done with it. It’s a psychological thing.
Intermediate Goals: We don’t do any savings per year other than retirement and the ESAs for our children since we are living on just my husband’s income for the time being. I know we will have some big expenses coming up in the next few years as our children get older such as braces, religious school and membership fees, new car(s), childcare fees for child #3 a couple of years for when I go back to work, and who knows what else.
I am hopeful that my income will be able to cover all new expenses. I hope to work 24 hours per week with my old company. This is questionable right now as my boss told me they are currently laying off people, but expect to have work by next year. But who knows? I worked for them full-time from 1998 until 2001 and then part-time from 2002-2007 when my last child was born. I’m still technically employed there on an hourly basis but they have no hours to give me which is fine for now.
Long-Term Goals: When our mortgage is paid off, I want to put that money toward college as $2,000 per year won’t cut it to cover college. When our mortgage is done, it will free up about $1700 per month and we will be done about 3 years before our oldest goes off to school.
I’d like for us to retire when the last one is finished with college – so in about 20 years. At that point, there is a good chance we’d move away from the high-priced DC area where we live. We’d probably keep a house somewhere up North (probably between Pennsylvania and North Carolina) and spend the winters in Florida (hopefully in a nicer condo than what we have, but it will do). We’d also like to travel.
I will probably track our financial progress quarterly as that is what I usually do on an Excel spreadsheet. This is the first time I have written everything out though with my ideas and thoughts and it was helpful to put into words some of our goals, expenses, etc. I am sure I will come up with more expenses.
Buy Used, Invest the Difference