At a crossroads

[fidgiegirl]

Isn't it funny, when I found this board and was posting financial stuff, it was that I had carved out $220 a month extra in my budget to pay down $4000 in CC debt. I was 26, single, and in my second year of teaching, bringing home $1600/mo. I gave myself 12 months to do it, and if you do the math, $220 x 12 is NOT $4000! :) I had to hustle, and I did it. It was the beginning of a road, not too short and not too long, out of debt. Now, we are in a completely different place, and thus ............... since I have been missing money talk, here we go!!!! Gotta walk the talk!!!!!! Funny that even though I trust the community, it feels funny to put it out there - like it's only ok for people who are new to the idea of FI or SL to be able to ask money questions. But that's irrational, so here goes.

-Just signed on a new mortgage = $230K @ 3.25%.
-Rental home = owe 75K @ 4.375%. Get $1225 a month in rent. It cash flows due to low mortgage pmts - $577. We pay all taxes/insurance on this property - not escrowed. Have $8000 in business account for "rental home EF." Feeling good about where this business is at right now.
-Small debt to Home Depot = $3000 @ 0%. Will pay with the next two months "missed" mortgage pmts from the refi.
-E-fund $6000
-Car fund $2000
-Contributing $10000/yr. each to a 457 plan
-Contributing $1200/yr. each to a Roth IRA
-Have retirement savings all over the place and not sure what the total is right now.

We spend less than we earn month after month, taking home about $6000/mo. after all deductions/etc.

I guess my question is similar to Jennipurr's recent thread - where next?

By the time the new year comes, we will have some clear choices to make.

First, for sure, is to continue to beef up the car fund. I'd like to get $10K in it.

I'd also like our EF to be more like $25-30K.

After that, max out the retirement vehicles? We have more wiggle room (each can do up to $16K in the 457, and $5K in the Roths), but frankly, I'm not sure I want to put so much in savings into my retirement funds, especially if I can't get to the earnings before a certain age. The hope would be to be retired far before that, so why lock up so much $$$ in those vehicles? MMM is having an impact here on my thinking.

Or, we could laser focus extra funds on either mortgage. We are not sure if there are advantages to leaving the rental mortgage alone (tax-wise) or if it is better to kill it (it is the lower balance and the higher interest rate). Then the rental income can go toward our other mortgage, or to offsetting choices to work part-time.

Kids = BIG FAT QUESTION MARK. If we have them, I think I would die if I had to work full-time. Ok, obviously, hyperbole and we all do what we have to when we have to, but I can barely operate myself throughout the winter months - if you added on sleep deprivation, I dunno . . . . but maybe that's me speaking out of fear of the unknown. There's a woman at work who loooooooves to detail her kid horror stories. They are funny, I'll give her that, but when she tells them, my secret mental list of "have kids: pros/cons" is racking up a million tallies in the CON column. But LOL this isn't a "maybe baby" thread, it's a $$ thread.

Whaddayathink?

[Spoony]

Whaddayathink?

Looks as though you have made great strides. Congrats! My only suggestion is to consider asking for a free portfolio review at bogleheads.org. This is an anonymous free service from a community that specializes in low-cost, self-managed, index-fund-based portfolios. Good luck!

[SteveinMN]

Go, Kelli! :cool:

Couple of thoughts:
- My ex-wife and I were on the fence about kids for years (long story). We had some great encounters with kids; even taught Sunday School (3s!) for years. But, yes, every time a co-worker recounted a sleepless night spent cleaning up -- umm, bodily fluids -- the timetable for having kids seemed to delay itself six months. ;) One point of evaluation is if you can count on DH to assist. Maybe he's more of a night owl than you?
- Retirement: It's not like you can't save for retirement with CDs or equity investments or real estate or T-Bonds or whatever. Certainly there are tax implications for almost any investment. But you earmark funds for retirement without putting them in a vehicle you won't be able to touch for 30-40 years.
- Paying off the mortgage on the rental property does give you some more cash for, maybe, more rental properties, if you are interested in that kind of thing.

It sounds to me like it's time to take a couple hundred dollars and sit down with a tax accountant. You need some solid advice on what actions could cost you money in the long run; it will be highly dependent on your own resources and interests, nothing generic. We don't always DIY home projects or illnesses; IMHO it's time to find someone who knows Minnesota and federal tax law.

[fidgiegirl]

Thanks, Spoony and Steve.

I like the idea about seeing the accountant. We have one we like from last year, and I think when tax time rolls around again, we'll float some of these ideas to him - especially about which mortgage it would make more sense to pay sooner.

[daisy]

I've missed the money threads, so thanks for starting one!

It looks like you've done great so far! The concern I have (and you've mentioned) is that I see a lot of debt compared to non-retirement savings. If things really went south for a while, the 6k emergency fund wouldn't last long. I would probably work on building up the emergency fund with regular contributions and either start a non-retirement investment fund or contribute more to the Roths (since you can withdraw your contributions before retirement age).

[iris lily]

The idea of having children and working full time is a horror to me.

Look, I never had a dilemma because I did not want kids and I liked my career, but when I imagine trying to get children moving in the morning to meet deadlines that school and work requires, I just become so tired. Just thinking about it.

You goal is to squirrel away money because for every dollar you save you are closer to being able to walk away from work. You are probably looking for small, more concrete savings goals, so ok--get rid of that mortgage on your rental property. Then your own house's mortgage. Somewhere in there will be car loans to dispense with.

Seriously, you cannot have too much net worth.

[Rosemary]

Sounds like you're doing great and have a good handle on your priorities.

When we were both working before DD was born, we were saving a fair amount of cash in a money market, in addition to having our 401k funds maxed out. I knew that no matter what the future held, I was not going to stay in that job for the long haul. So when returning part-time after maternity leave didn't work out, we ran the numbers and determined that I could quit. Oh, that was a happy day! We ended up spending a lot of that money market savings during the first few years of DD's life, when my DH was finishing his PhD and working as a post-doc, plus we had a long-distance move that was only partially covered by the postdoc position.

I guess what I'm saying is - it never hurts to have some padding in the emergency fund, or a separate savings account.

Do you have any other things you want to save for - places you've always wanted to visit, for instance?

[fidgiegirl]

Hello again all, loving all the replies.

daisy, I'm with you there. EF is priority #1.

Iris Lily, your words have me thinking - "your goal is to squirrel away as much money as possible . . . "

Rosemary, interesting question. I have always wanted to visit Sweden, and we've not traveled as much this last year. So that is something more to think about. But largely, I find my wanderlust gene has been somewhat tamed. I traveled quite a bit in my 20s, and saw some great places, but now flying makes me anxious and I'm not as drawn to travel as I once was. That said, I'm sure it will never be totally squashed! :)

[lhamo]

Did you see the GRS post the other day about how someone got slammed with interest charges on a 0% card due to not understanding how the interest accrued? I'd pay off the HOme Depot card TODAY with your current Emergency Fund. Don't let that sneak up and bite you.

I agree with those who suggest beefing up the emergency fund as a top priority. That will give you a huge amount of wiggle room/safety net when the unexpected happens.

BUT, keep in mind that you can withdraw your CONTRIBUTIONS to your Roth at any time, tax and penalty free -- that means you can put up to 10k/year for you and DH into your Roth and have that be your emergency fund. So I'd do that up to the level you feel you need for the emergency fund. Ours is ridiculously large, but we live in a country where things could get hairy very quickly very fast, and have a large portion of our assets in real estate here, so having a large cash cushion helps me sleep soundly at night. For most Americans I think 6-12 months of bare bones living expenses is a good target. Depending on what kind of car you plan to buy/when you plan to buy it, I would also consider just rolling the car funds into the emergency fund, and maybe pushing it up to 18 months of expenses. Then you pay cash for a good quality used car, and beef the E fund back up after the purchase.

Once that is done, or maybe even simultaneously, I would start putting more into the other retirement accounts. The tax advantages to you as DINKS are going to be significant. And you can always access the money in the future if you really need it at any age via 72(t) rule SEPPs (Substantially Equal Periodic Payments -- covered in YMOYL if you need a refresher on how they work).

Don't understand the tax implications of paying off one mortgage versus the other. Maybe tackle your own first, even though it is bigger. Keep your own house safe and then worry about the rental. But then again, if you can pay off the mortgage more quickly on the rental with the extra income you are getting from it maybe that is the way to go.

Good luck deciding what to do -- great that you guys are in the position to have extra cash to mobilize!

BTW, working full time with kids is not so bad if you are in a place where childcare is not ridiculously expensive, or if you can work a flexible job/hours. I probably would have died if we had stayed in Manhattan, but life with kids here in China has been pretty good. Stressful at times, yes, especially when they were little, but also a lot of fun. And I think MSP sounds like a good, low-key place to raise kids. I'm tempted to move there just so I could hang out with you and Stella!

lhamo

PS: IF you want to get REALLY daring, post your current budget and let us find places to help you cut. I dare you ;)

[try2bfrugal]

After that, max out the retirement vehicles? We have more wiggle room (each can do up to $16K in the 457, and $5K in the Roths), but frankly, I'm not sure I want to put so much in savings into my retirement funds, especially if I can't get to the earnings before a certain age. The hope would be to be retired far before that, so why lock up so much $$$ in those vehicles? MMM is having an impact here on my thinking.


At current interest rates 800K (the MMM retirement amount from my understanding) in bonds or CDs will get you 8 - 16K a year in interest, which might be enough to cover private health insurance plus deductibles and co-pays for a family with age 50 something parents and kids. That leaves zero leftover for food, shelter, vacations, etc. Maybe I'm missing something, but I don't see 800K @30 making a lot of sense over a 60 year retirement horizon, at least under current economic conditions and health insurance costs.

Plus if you really fully retire at 30 you probably won't have much in the way of pensions or Social Security credits. If you and a spouse received 20K a year in combined pensions and 45K in combined SS benefits at 65, over 30 years, the payments would come to almost $2M, not including reinvestment of any of the money. That is a lot of money to forego by retiring at 30. People have a hard enough time getting by on SS. It would be really tough for most people not to have much in the way of SS at all to look forward to at 65ish.

If you are in a high state and federal tax bracket, maxing out retirement accounts is usually a solid financial move because of the tax savings and ability of the money to grow tax deferred. If you can retire early there currently are numerous loopholes to get the money early without paying a penalty. Plus retirement account money doesn't count against financial aid for college if you do have kids.

[Stella]

And I think MSP sounds like a good, low-key place to raise kids. I'm tempted to move there just so I could hang out with you and Stella!


That would be so fun. MSP is a great, low-key place to raise kids.

I like Iris' comment about just squirreling away money. You seem to be in a really good place, actually, whether or not you have kids.

I will say, for the record, that I have not found parenting to be quite as angst ridden and unhappy as some people seem to. A lot of those of us who enjoy it overall don't say as much because it sounds like bragging. I have more kids than average and I get a daily nap, have time for my hobbies and social time with adults and quiet alone time. Sure, there are bad days, but that's true no matter what you do.

[Kat]

You have been given a lot of good, solid advice here, fidgie. I don't have much to add except to say that it seems to me you are doing a great job financially and are well on your way to transitioning into part time or quitting work altogether if that is what you want. I just made this change over the last year myself and am not nearly in as good of a place as you are. I find your post really inspiring. :-)

And I know that you said this isn't a "kid post," I do want to echo Stella's sentiments regarding parenthood. I heard all sorts of horror stories about children before I had DD. I even had a friend tell me not to have kids because "they will ruin your life." I remember feeling upset when I heard that. How sad for his children that he felt that way about them. So I was nervous when I was expecting DD--nervous about the changes that were coming, nervous about the kind of mother I would be. And I have to say that being a mother is one of the most fulfilling roles in my life. DD has brought me so much joy; I just can't imagine my life without her. Sure, there are challenges from time to time, but as Stella said, that is true no what what course your life takes.

I'm not trying to tell you that you should have kids. Obviously, that is a personal decision that you and your DH need to make for yourselves, and if you decide not to, there is nothing wrong with that! I'm just trying to say that there are many parents who view their children positively and feel they only enrich their lives.

If I were in your position financially (and I wish I was! ;) ), I would pay off that Home Depot card and then keep putting money aside for a car and the emergency fund. Then I'd see where I was at in terms of moving to part-time work. Really, you're in a great place, and all your hard work is going to pay off in the form of options for the future. You are right on track to have the life you want--whatever that is.:)

[Float On]

Wow! You are in a wonderful spot.

[herbgeek]

Its great that some parents who really wanted and like their children have spoken up, I wish every child could be fiercely wanted and cherished.

That said, I've known a number of people over the years who've had children because "it seemed like time" or "its the thing to do" or "we're getting pressure from our parents for grandchildren" or "My job isn't fulfilling and I need an excuse to quit". And I feel sad for those children.

One can have a full, happy life without children. I do. Conversely for those who really really want to be parents, having children is a wonderful blessing.

[cattledog]

Its great that some parents who really wanted and like their children have spoken up, I wish every child could be fiercely wanted and cherished.

That said, I've known a number of people over the years who've had children because "it seemed like time" or "its the thing to do" or "we're getting pressure from our parents for grandchildren" or "My job isn't fulfilling and I need an excuse to quit". And I feel sad for those children.

One can have a full, happy life without children. I do. Conversely for those who really really want to be parents, having children is a wonderful blessing.

I agree. Not to veer off subject, but I've always found people who complain (about kids, family, whatever...) seem to enjoy having a certain amount of drama in their lives, so don't let them influence you. My DH and I had a child late in life (not by choice, just the way it happened). Honestly, she has been really easy. Maybe we're lucky, I dunno. We are pretty easygoing people in general though, so maybe that's part of it. I worked FT the first three years of her life. Daycare was very expensive (I'm in MN too), but I made a good salary. I probably would have stayed in my job, if the commute were better (40 min w/o daycare dropoff, an hour w/dropoff). I quit and I hoped to find something PT, but those jobs are few and far between. I'll reconsider after my child goes to school.

[cattledog]

I'd put more money in your Roths, only because you can pull you contributed money out anytime. We have a small emergency fund for that reason (around $15K). Our house is paid off though and we don't have any debt, so our required monthly expenses (food, insurance, utilities) are quite small. I'll tell you what though, not having a mortgage is great. That's definitely something to work for.

[SteveinMN]

And you can always access the money in the future if you really need it at any age via 72(t) rule SEPPs (Substantially Equal Periodic Payments -- covered in YMOYL if you need a refresher on how they work).
The tricky bit about 72(t) payments is that once you start, you can't stop until you reach 59-1/2 (or 5 years from first withdrawal; whichever comes last). 72(t) is our hole card in case all #&*% breaks loose, because once we start, we're in for pulling that amount of money out of our 401(k)s/IRAs monthly for another 5+ years whether we need the money or not. I suppose we could recycle extra money into a Roth, but it's just something to look out for if you pursue that direction and probably will incur its own costs as a low-balance IRA.

[try2bfrugal]

If you do decide to have kids, it isn't necessarily a choice between working full time or not working at all. I either worked from home or did consulting work with a flexible schedule when our kids were school age. If you work for yourself there are many great tax deductions and retirement plan options you can take advantage of. Then if your spouse has health insurance and a steady pay check through a regular job the combination can really work out well.

[rodeosweetheart]

Given your numbers, I would pay off the 3000 HOme Depot with the ER. Currently, it is at 50% of the ER, which means your ER is one month of current income. So if you pay off the 3000 Home Depot, you will still have 3000 ER. And then I would throw it all at the ER until you had a 5000 ER plus 6 months of living expenses. That might take a bit, but I would throw everything into the ER, because you need a cushion, and you have a complicated situation with the rental property and the two mortgages.

After I got the ER to 6 months plus a 5000 cushion, I would then do a car fund.

Then, after I had that, I would pay off the mortgage on the rental property so that it is not a liability that you have to earn money to support. Just thinking about possible job losses or disability or something, the things that we don';t count on but tend to happen to everybody at sometime. And if it bothers you or keeps you up at night, I would pay off the rental prop mortgage instead of doing a car fund, because you can get by with a beater, but you need to keep that property rolling.

[fidgiegirl]

I wish I could reach out and fold you all up in a big virtual group hug!! Here's me, I was nervous about baring the numbers, but you all have been absolutely supportive.

And I'm glad the kid point came up - I'd been wanting to start a thread about it for a while, but hadn't been able to bring myself to do it. Part of the scary part about kids is that I know I don't want to work full time if we have one, but DH teeters on burnout in his job, too, and we couldn't both quit given the current situation (insurance, mortgage, etc.). That's part of why we got the rental ball rolling, to create another stream of income for the future. But also, we're gettin' up there in childbearing terms (he's 41, I'm 34). We'll continue to feel it out. There will never be a perfect time, and we know that. :)

Lots of food for thought. We've made no decisions yet, but will keep you updated. Additional thoughts still welcome . . . :)

[ApatheticNoMore]

I even had a friend tell me not to have kids because "they will ruin your life."

That's what my parents told us when we were children, that kids had ruined their lives and not to ever have kids because they ruin lives.

I really can't imagine how I'd make kids work with a career of any sort anyway, full time work and having kids sounds crazy!! And few and far between are the careers that will allow you to work part-time, corporate america is really not ok with the idea (trust me, I've tried it, and they told me I'd always be a second class worker, first to be let go etc., and it's all true). So no, I dont' have one of those careers in which it's ok (I wish I did, if I found such I might switch, not for kids but because it's what I want, but they are very few in number). And a few years out of the job market and then going back full time has the disadvantage of having to overcome the prejudice of employers thinking your skills are now obsolete.

[MaryHu]

Having kids in the US is so much more stressful and expensive than in countries that have universal health care and good support systems for parents like paid leave, decent child care etc.

Years ago one of the Anne Landers/Dear Abby sisters took a poll. The question was "If you had it to do all over again, would you still have kids?" The responses were overwhelmingly "No!" by about 70 to 75%.

If you decide to have kids make sure that
1) you really want them for all the right reasons
2) you can afford them

Just don't let anyone pressure you and remember that not having children is a perfectly legitimate choice and you can be very happy without them.

And before anyone thinks I'm a child-less misanthrope: I have one child (35) whom I love dearly but given the way his life has turned out, I sometimes wonder if I didn't do him a disservice bringing him into this rotten world.

[try2bfrugal]

This article has some food for thought on having kids....

http://www.thedailybeast.com/newsweek/2008/06/28/having-kids-makes-you-happy.html

"In Daniel Gilbert's 2006 book "Stumbling on Happiness," the Harvard professor of psychology looks at several studies and concludes that marital satisfaction decreases dramatically after the birth of the first child—and increases only when the last child has left home. He also ascertains that parents are happier grocery shopping and even sleeping than spending time with their kids. Other data cited by 2008's "Gross National Happiness" author, Arthur C. Brooks, finds that parents are about 7 percentage points less likely to report being happy than the childless.'

[Rosemary]

Hmm. Well, I can say that being a parent has taught me more than any other thing I've ever done in my life; that my daughter brings the truest joy I have ever known; and that I am happier now than I've been at any other life stage.

[Kat]

There is a great deal of scientific data suggesting that children do not make use happier. I know a woman who never really wanted kids but gave in to pressure from her husband and her parents. She didn't like children, but everyone insisted it's "what you do" and "even if you don't like kids, it's different when they are yours." Well, for her, it wasn't. She did not enjoy being a mother and ended up leaving the family when her son was two. Her ex-husband is now raising him. She is a prime example of someone who was not happier having a child.

I do find it interesting that a lot of the studies (or at least the ones that I have seen) examining the link between parenthood and happiness are conducted here in the U.S. Given that we, as a culture, try to "do it all," I honestly don't find the results all that surprising. I know that I would report being unhappier now than before if I hadn't made some big life changes when DD came around. It would be hard to feel happier adding another person to a life already bursting at the seams with stress and busyness. Things would just get even more busy and stressful. I wonder if any similar studies have been conducted in other countries--maybe one with more support and resources for families as Mary Hu suggested, or even what we think of as a "third world country." A friend of mine visited Kenya on a mission trip last year and remarked on the slower, less materialistic way of life as well as the happiness of the people.

[cattledog]

That's what my parents told us when we were children, that kids had ruined their lives and not to ever have kids because they ruin lives.

I really can't imagine how I'd make kids work with a career of any sort anyway, full time work and having kids sounds crazy!! And few and far between are the careers that will allow you to work part-time, corporate america is really not ok with the idea (trust me, I've tried it, and they told me I'd always be a second class worker, first to be let go etc., and it's all true). So no, I dont' have one of those careers in which it's ok (I wish I did, if I found such I might switch, not for kids but because it's what I want, but they are very few in number). And a few years out of the job market and then going back full time has the disadvantage of having to overcome the prejudice of employers thinking your skills are now obsolete.

Aww, that is such a sad thing to hear from your parents!

I agree with you about the PT work also. II worked in a tech field and I know I'm done. Not only because I will have had a few years away from the workforce (if I even decide go back to work- my DH likes having more free time also!), but also because I'm over 40. I'm hoping for something PT that will allow me to clear about $500/mo and can be done during school hours. I'd like to put a little more away for my DD's college education. I'm not sure if that's realistic though.

[Rosemary]

cattledog, I'm looking for that sweet spot in the job market, too, and so are many of my friends. It's a difficult position to find in my experience.

[cattledog]

Rosemary, I'm not holding out too much hope that the perfect PT job is out there. I also would like to be home for my daughter before/after school too. That probably doesn't mesh too well with working anyway.

[larknm]

For me with every decision, the bottom line is, if either one of us were alone, either living alone or sole long-term earner, could that person afford to carry out this decision?

[Spartana]

Kids = BIG FAT QUESTION MARK. If we have them, I think I would die if I had to work full-time. Whaddayathink?

Wow Fidgiegirl, you are doing great on all the financial stuff. I love to go thru people's finances and see where good old minimalist me would make cuts but can't really see any on yours. So I'll tackle the kid question;

First off, whether you and DH decided to have kids or not, and whether you or DH decide to stay home with kids, before you decide see what it would be like to live on one income. Also "practice" what your life and expense would be like with kids. The cost of everything that's needed to raise kids from needing a bigger house and car to more food, clothes, utilities (all those poopy diapers need extra hot water! and electric!), medical and dental expenses, the toys and school supplies, etc.. The list is endless I'm sure. So pretend you only have one income and all those additional out going expenses. Just put that other money aside for now. Doing that will help you decide if you or dh can stay home with kids (I also wouldn't work if I had kids) or had to work full or part time.

The second thing is age. I don't know your age but I think you are fairly young. However, getting pregnant becomes more difficult once you are over 30 and something like only 1% of all eggs are viable after age 35 - also an age when the instance of birth defects rise. Also be aware that, while unlikely, something may happen to your body as you get older that won't allow you to have kids. This happened to me when I was around 29 or 30. Just stopped having a period and that was it - never again. For me that was great because I didn't plan to have kids, and no more periods or the need for birth control was awesome. While this isn't very likely, it does happen so if you DO have a strong desire to have kids, don't put it off for too long just for financial reasons. You guys are doing so great in that area that you'll make out just fine - albeit a tighter budget then you are use to.

As far as the desire to have kids (or not) well I agree with the other's here who said that a life without kids can be just as great (maybe greater depending on your own kid-desires) as one with children. I have never had a desire for kids except for the passing fancy (and a small yearning) for cute toddlers and babies (and I am maddly in love with Stella's little Charlotte who I believe must be the cutest baby on the planet!). But i cure that with a quick drive by my local high school with all the kids hanging out front :0! So I'm happy with my choice (or the choice that was given to me) and what you ulimately decide should be based on what you really want in life - in ALL aspects of life - because only you know what's important to you and dh.

[ashem37]

You're doing great! It's so unfair that women have to deal with this biological clock crap. I think you're smart to be really thinking the whole thing through. While kids don't "ruin your life", they certainly change life as you know it. Everything is affected, from your sleep, your relationship with your spouse, your finances, your patience, your freedom to leave the house whenever you'd like or to take uninterrupted showers. That being said, I knew that starting a family was more important to me than furthering my career, going on big vacations, growing our savings, etc. I was ready to focus on somebody besides myself (though I didn't REALLY understand the extent of it, but who does?). I knew that I would sell everything I owned before going back to work after my first child was born. We saved $25,000 before I had her, which we really needed while we adjusted to one salary. Now that my kids are 4 & 8 and are both in school, I finally have some time to myself and it is LOVELY. The dirty diapers and sleep deprivation doesn't last forever, and the sweetness and humor usually outweighs the bad stuff. I'm probably going to go back to work in the next year or so, and we plan on saving almost my entire salary. I wouldn't change a thing. Just trust your instincts. If you decide not to have biological children, you can always adopt if you change your mind.

[Fawn]

......But i cure that with a quick drive by my local high school with all the kids hanging out front :0!

The high school kids that you really want to spend time with are down in the band room.

[artist]

Well by maxing out retirement accounts you are taking advantage of compounding interest. Making interest work for you and IMO that is the best reason why you should put the money into those accounts.

Another thing to consider is paying down exhisting debt. You still have mortgages on both the rental and your primary home. There is no real advantage to holding onto the mortgages longer than neccessary.

JMO

[dado potato]

What is the rationale on the car fund? I assume the goal is to be able to replace a vehicle which is owned outright with another vehicle, paid for with cash.

Have you looked at Blue Book values on the trade-in value of the owned vehicle and the "dealer price" of the projected replacement vehicle? With the difference between these values in mind, do you have an estimate for when (in therms of mileage on the odometer or the calendar) you expect the replacement should occur.

I maintain a "vehicle replacement fund" in federal-tax-free short-term municipal bond fund (Vanguard VWSTX). Based on calculations like the above, I knew I needed to contribute $210 per month to offset the depreciation in trade in value of the owned vehicle. There is now a sufficient amount in the account to replace the vehicle, and I have a friend in the used car business who is "looking" for a car to fit my specifications.

[fidgiegirl]

Fawn, I was one of the kids in the band room. I get that. A quirky and wonderful bunch . . . :)

dado potato, I think our original thinking on the car fund was to not have it lumped in with everything else "savings." My hubby does eBay and it adds up, but only little by little, and when we just empty our PayPal into our checking account, it doesn't feel like it makes any difference. By separating it out into a the specific car fund, his motivation to keep doing eBay is strong. We also siphon off any extras that come our way, building up our car fund more quickly. I've always been a separator of funds. When I was doing my grad program I tried to have everything lumped in but I was terrible at estimating how much I could use for a weekend trip, for example, and how much I would need for tuition 3 months later, and how much car insurance would be when it was due, etc. So I had a lot of separate little accounts and they ensured I had what I would need for each expense.

I like the idea of the Blue Book number hacking. Will give that a try. We're hoping DH's car lasts a lot longer - it's a '96 Accord with about 150K miles. They have gone well over 200K miles, but it also doesn't seem impossible that it could start to need some major stuff here coming up. We have said we need to get a Consumer Reports Buying Guide so that if it DOES conk out (knocking on wood!) we will know what models we'd be happy with and would be ready to rock the search.

[SteveinMN]

We're hoping DH's car lasts a lot longer - it's a '96 Accord with about 150K miles. They have gone well over 200K miles, but it also doesn't seem impossible that it could start to need some major stuff here coming up.
A car fund makes sense -- cars don't always last as long as we'd like and sometimes we have no say about it. The first snowfall of the year, everyone has to remember how to drive. Or realizes the tires which were barely passable in summertime are useless on snow and ice. Sometimes it's not their vehicle that takes the brunt of it. My wife's Accord ('03) died on the highway from a fatal oil spill; it very easily could have been road-hazard damage. If separating the funds is a way to keep the money flowing into it, keep on going.

[Spartana]

The high school kids that you really want to spend time with are down in the band room.

Ha Ha! Once when I was married I thought I was preggers (wasn't) and started paying attention to all the costs for kids stuff - from new born to the teenage years - and it was pretty scary. I know that us simple livers probably have way less expenses then those "normal" people when raising kids but still... pretty shocking number. I wonder what it actually costs to raise a child from birth to adulthood not counting college. Just housing, food, clothes, medical, etc.. Maybe it's not as expensive as it seems.

[SteveinMN]

According to CNN Money (http://money.cnn.com/2011/09/21/pf/cost_raising_child/index.htm), the average child in 2010 cost the average two-parent middle-class household $226,920 between birth and age 18.

(I just had to look that up.)

[Rosemary]

I have never understood those "child cost" estimates. First off, I think they are way off the mark - far too high, unless possibly said child is in private school from K thru 12. Secondly - no dollar amount can measure what I've learned or the joy I have received from being a mother and interacting with my child.

[cattledog]

I have never understood those "child cost" estimates. First off, I think they are way off the mark - far too high, unless possibly said child is in private school from K thru 12. Secondly - no dollar amount can measure what I've learned or the joy I have received from being a mother and interacting with my child.

Maybe they include daycare costs. We've spent close to 40K for daycare, but I always just viewed it as one of the costs of working.

[Tammy]

18 years divided by 226,000 is under 15,000 a year. Or just over 1000 a month. I don't think we spent that much. With 3 kids, the projected cost is more than our income some years ...

I would guess our cost of living went up about 1500 month total when they were all teenagers. We lived pretty carefully, but we did pay for their car insurance, gas, food, health insurance, and basic clothing. They had to pay for their own extras, like entertainment and extra clothes.

[herbgeek]

Those estimates usually include housing costs with the idea that you need a bigger house.

[Fawn]

According to CNN Money (http://money.cnn.com/2011/09/21/pf/cost_raising_child/index.htm), the average child in 2010 cost the average two-parent middle-class household $226,920 between birth and age 18.

(I just had to look that up.)

Yeah. I've seen those same numbers. But we have had a miracle occur here in Illinois. I have raised/am raising four kids as a single parent and my average salary for the past 30 years (DS#1 is 29) is $30,000. :~)


Apparently we parents have some control over how we spend money on our kids.... or kids of single parents just cost less than the two parent variety.