M$D: 6/3/2045
Meet Whitley
Age: 31
Whitley’s main concerns, in her words:
I recently (in May 2016) stumbled across your podcast while searching for podcasts on Minimalism. Your episode with Joshua Becker hooked me in. Since then I believe I have binged listened to probably 70% of all your episodes while working on our (recently purchased) fixer-upper forever home.
We recently returned to my hometown after swearing I never would never (never say never). One of those reasons was a quest for simplicity. After spending most of my 20s working in various marketing/analytics/consultant roles for Fortune 500 companies, I took a few switches into more noble careers because I was unfulfilled helping big companies get even richer. Talk about playing with monopoly money!
When I was 29, I finally got out of a pretty terrible noble job choice that took me from a salary of about 90K to 24K (no that is not a typo). Hindsight is always 20/20 and while I truly thought I was doing good, a little after a year I left to go out on my own running a marketing company for solopreneurs and small (mostly female owned) family businesses. In my first year (only about 8 months of the year) I brought in around 60K, last year 210K and this year on track for about $350K. My take-home is around 5K per month after taxes.
I feel good about my monthly take-home and what it’s able to do for our household. I am currently the breadwinner and only income provider for our household. My husband is weeks(!) away from opening a restaurant – his lifelong dream – and he’s done it before, so he knows what it actually entails. Having been in the trenches of building my own business over the last couple of years I have zero delusions about him bringing in any significant amount of money over the next couple of years.
So my other concern I listed here is really around the idea that I’m not 100% sure what to do re: investing for future. If you’re looking for another book idea, may I recommend Financial Investing/Life for Entrepreneurs/Small Biz Owners? Only somewhat joking, I feel like it’s the wild west for us in terms of figuring out what is needed while also realizing that 2 of our most valuable assets are actually businesses and each of our incomes will increase dramatically in next 3-5 years.
So the ugly as you can imagine in that blip of a year we accrued some debt. We also got married right at the end of that time so that was a factor as well. When we moved out west we went from a 1 car household to a 2 car household (when my dream was/is to be a zero-car household!). At its highest about 2 years ago, we had a little over $60K in debt from credit cards and car payments. We’re now down to about 20K in credit card debt, 11K in car loan, and $104K owed on our house (with equity of about 35K).
Our behaviors are in a good place and with the increased income we’ve had, we’ve been paying down debt and funding retirement/savings. I *think* I have a handle on the rest of our debt (credit card and car) for the next 12-18 months. If my husband doesn’t bring in any money over the next 12 months AND I don’t receive any pay increase, we can payoff the remaining debt and be in the clear (except for the house) by next 4th of July.
My question is, is this the smartest use of our discretionary $1100-$1300 (right now) each month?
That’s including us putting an additional in $300/month into our Emergency Fund which is $2500 right now. We also have another $15K tied up in a CD until March 2017. Even as a pretty risk tolerant person, the amount of money we have in our EF makes me a little anxious, especially as we contemplate the idea of adding a human baby to our portfolio of business babies. And b/c our house was built in the 30s and well, it’s always going to need something over time.
What that is NOT doing is putting any money into our Roth IRAs for a short term. I was maxing mine out each month and my husband putting in ~$200/month. Oh, he had a great financial situation, but was divorced and quite frankly she drained him dry, so we’re starting over there.
I have about $25K in a traditional IRA that was rolled over, 10K in a Roth and he has just about 1100 in his. I know those are low for my age (31) though my thought was to take out that ~$700/month that was going towards retirement for one year and put that extra towards debt so then next year we can max out both of our IRAs and start a Simple IRA with my business which I believe will allow me to put $12,000 in per year. This is where retirement as a small business owner gets a little tricky as I feel like that’s not enough, but my financial advisor said it would be
We are very simple and our biggest discretionary spending item is travel as tis the time for wedding bells and my husband’s family all lives overseas (but we haven’t gone back in nearly 2 years as we’ve been saving and paying down). Once we get out of the hole, we both want to start putting some money towards a travel fund again as its one of the things we most enjoy doing (though have held off on for the last couple of years). That and paying our 30-year mortgage as a 15 year (I couldn’t get a 15 b/c I’m a small biz owner…. ).
Other things we’d like to get into in the next 5-10 years are other avenues of bringing in passive income such as rental properties. There’s a lot of money being pushed into the downtown revitalization of the town in which we now live, and houses are incredibly affordable. We live downtown and are incredibly passionate about the changes that set to happen. While this is the least of our concerns right now, it feels like a way we could actually help contribute to our small-town economy while also bringing us a monthly income in the future. We’ve both been landlords before so realize what it takes and that it’s not at all like it’s portrayed on HGTV 🙂
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Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.