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Posted: 10 Jun 2013 06:50 AM PDT
The following is the latest post in my "Reader Profiles" series. Each post in this series details the financial situation and challenges of an FMF reader. The purpose of this series is to help us all identify with people like us (in similar situations -- not all will be, of course, but eventually I'm sure you will find someone like you here), get to know the frequent commenters on the site, and hear some financial wisdom/challenges from people other than me.
If you're interested in contributing to this series, then drop me an email. The series seems to be very popular with readers and I need a steady stream of new ones to keep it going. Also, please leave constructive comments, questions, and so forth. Simply telling someone what a mess they have, how they have made poor decisions, and so forth is not helpful. There is a way to say, "That was a mistake, but here's what you can do to correct it" that both acknowledges the problem and offers a solution. It's this sort of feedback that this series is intended to solicit. Next in the series is FMF reader TW. He answered my questions (in red below) as follows: Please tell us a bit about yourself. My wife and I are in our early/mid-thirties and have been married 11 years as of June 29th. I am the father of 2.75 kids...that means we have one due in about a month. The oldest is 4.5 y/o while the second one is 20 months. I currently work as a Business Analyst for a very good company and have been here almost 8 years (1.5 years in my current position). My undergraduate education is in General Agriculture and obtained an MBA in 2008...how I went from farming to tech is a long story but I wouldn't mind getting back to my roots some day. My wife holds a Ph.D. from the University of Michigan and currently teaches Chemistry 4 nights a week at the community college. Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.). I am the main breadwinner working full-time while my wife works part-time anywhere from 2-4 nights per week. Since she stays at home during the day this opposite work schedule means we don't have daycare costs which in our area is quite expensive. However it does mean we effectively single parent most of the week since we are rarely together with the kids. After annual bonus I gross ~$65,000 while my wife average gross wages are $12,000 We are also accidental landlords in that we moved 3 years ago due to neighborhood crime and are unable to sell the house since we are underwater (from $175K at the high to a current of ~$94K). We effectively break even on the rent but have a special situation since we bought from a builder running a special to guarantee rent whether or not the tenant pays. They have followed through since the first tenant they placed in the house didn't pay and was evicted after 6 months. We have 3 years left in this agreement at which time we're hoping to sell because the numbers don't make a good rental. I get a 100% match on my 401K up to 4% of my salary and contribute 4% getting an overall 8% after the match. My wife is required to contribute 3% to a state pension that we will never get since she is a part-time employee but we'll at least get our contributions/earnings back at some point. Aside from this we also contribute to an HSA and have a ROTH and a Traditional IRA from when we were childless and both working full-time. Here is a look into our financials, noted items are savings for future expenses: AVG TAKE HOME
Aside from wanting to pay down student loans we are about to make a huge change that could significantly impact our financials. We currently live in Michigan but all our family is in Oregon. My dad passed away recently, my brother had his first baby, my brother in-law will have his first baby soon, and my father/mother in-law have failing health so we've made the decision to sell and move to Oregon. We are doing FSBO and are currently under contract with closing set for Aug 29th. With a baby due in June and two small kids moving/selling is real a challenge. We are selling most all our stuff (furniture, clothing, second car, etc) to save on moving costs and will get some used items from my in-laws once in Oregon. Even with this moving is looking to run us ~$5K. While I am lucky enough to keep my job and work remote my wife is not so we lose her income which is significant. We will also lose some ground to cost of living (COL) since Portland Oregon is estimated to be 15% higher. Another burden is our rental which has become an albatross. We never wanted to become landlords this way but are stuck for now. Our rent is guaranteed until 4/2016 (see above) but barely break even since we pay a management fee of 1 month's rent every two years effectively negating any net gain. All we can do is wait in hopes of a recovery in the local market. We currently owe ~$120K with estimated market value of ~$94K. The mortgage is an ARM which has worked well for the past 10 years but rates won't stay this low (currently 3.25%). We can't refinance since we are underwater and are not eligible for HARP/HAMP since we are not backed by Freddie/Fannie. At best in 3 years we'll owe $109K but would need $117 to break even after realtor's fees and taxes. What are your plans for the future (retire early, build your career, etc.)? I plan to build my career for now and have made steady jumps over the last few years to position myself to do so. I've considered making a move to programming and have taken some into work via Coursera, Udacity and Code Academy. It's slow going working full-time and caring for the kids. With the move to Oregon it might be a good time to test the market to see if I can get another bump in pay/responsibility. My wife and I have talked about getting back to my roots and starting a niche market farm venture. Of course this requires time/money and space all of which are limited right now. However, as we settle permanently in Oregon this will be a driving factor in where we live and how we structure our time/money. What's your best piece(s) of financial advice and/or your general philosophy on personal finances? Do it while you're young and childless. Life before kids is much easier to control your time and your money...not saying kids are bad they just change the dynamic and you no longer have the flexibility of working odd hours or picking up side jobs at a moment's notice. Work like mad before so you don't have to after. Hone your focus and don't try to do everything at once. We only have so much time and energy (both physically and mentally) so think about whether it makes sense focusing time/energy on not buying a $3 latte or is it better to make more money allowing you to enjoy that $3 latte.     |
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