M$D: 12/19/2039
Meet Fred
Age: 28
Fred’s main concerns, in her words:
My wife and I went from DINKs (Dual Income No Kids) to a single income with twins in February this year. We are both 28 years old with just under $80K net worth including home equity on $60K income (down from $110K). Our only debt is the mortgage, approximately $115K, and saving 12% of income into Roth 401k before 3% company match. My company also offers a pension once you reach 5 years of service (current tenure is 2.75 years). The plan is for my wife to start working part-time for her dad’s company making about $25K/year.
Our twins were born on February 6th, 2016 and we are trying to figure out where to save the excess income once she starts working again. With the drop in income we have been siphoning off savings at about $1,000/mo. We both agree we need to reimburse our savings account to replace what we have siphoned off first but cannot agree on what to do next. Should we pay even more on our 15 year mortgage, add more to IRAs, add more to 529 plans, or save additional money for experiences?
Long term goal is to be financially independent by 50. We are currently projected to pay off the mortgage in 13 years but hoping to have it paid off by 40 which would be a year earlier. This would leave a decade to aggressively save to add to our investments to help achieve this goal.
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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.