Meet Tori
Age: 31
Salary: $5,000 month (net)
Employment: Stay at home mom
Savings and Investments:
- Emergency Fund $20,000
- Retirement $80,000
Debt:
- Mortgage $168,000
Tori’s main concerns, in her own words:
I’m a stay at home mom of a one and two year old but was a CPA for 5 years before motherhood. My husband makes $75k as an engineer. We have approximately $80k saved in IRAs/401ks and put about $1,000 in each kid’s 529 plan each year. We have no debt except our house– we owe $168k and it’s worth about $225k, though we plan to pay it off completely within 8 years or so. We have $20,000 in a savings account as an “emergency fund.” I am concerned that since I’m not working I’m missing out on the best time to be saving for retirement and that we’re not saving enough for the kids college. I want to go back to work to help with that saving but worry that too much of my pay check will go to day care so it won’t be worth it. But I feel like I’ll have to go to work to pay for preschool in the coming years no matter what. I also wonder if my husband is being under paid but I don’t know how to go about finding out what other similar jobs pay without him going through the job search process. Help?
- We have no debt except our house. We owe $168k. We bought it two years ago for $222k. We really, really want to pay it off as soon as possible. We make extra principal payments each month and put extra money (like tax refunds) towards it as often as possible. Assuming I get a decent paying job when my youngest goes to school full time, we should have it paid off in 8.5 years (I made an amortization table cuz I’m a big, fat nerd)
- My husband and I each have one credit card, neither of which we use very often. We always pay them off each month– Seriously. Every month.
- We have one store card (Kohl’s) that we use to get discounts. It is always immediately paid off.
- We don’t actively save for the sake of saving anymore. We have about $20k in an emergency fund but don’t add to it on a regular basis. Unless we have to use it for something– then we’ll add to it till it gets back to 20k.
- Husband’s parents paid for his first undergraduate degree and we took out $20k of loans for him to get his second degree. We paid that off just a few months after he got a job. My parents paid for part of my college while I worked during school to pay the rest. I took out $15k in loans to go to grad school right after I finished my undergraduate and paid that off about 18 months after I started work.
- We own two cars (a 2007 & a 2009) both in good shape with just over 100k miles on each. Both were fully paid off slightly early.
- We contribute $50 to each of our two kid’s college accounts each month. They are given $100 for their birthdays and $500 for Christmas from their grandparents, all of which goes to the 529s.
- I used to contribute to a 401(k) and Roth IRA while I worked. The 401(k) has been rolled to a Traditional IRA and the value of the two combined is about 40k. My husband’s 401(k) is roughly 40k as well.
- I worked in public accounting for 5 years before leaving to be a stay at home mom. I was (and still am) a licensed CPA. I was making something like $55k when I left. I have no idea if I can get that now that I’ve been out of the work force for 3 years. I figure the longer I stay out of the work force, the less likely it is that I’ll make that when I do go back.
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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.