Reader Case Study: Artfully Building a Solid Financial Future in Southern Maine

Lynn is an art teacher in southern Maine, where she lives with her husband Lucas, a carpenter, and their ten-year-old son. Lynn loves teaching art but loves creating art even more and would like to have more flexibility and balance in her life.

Case Studies are financial (and life) dilemmas that a reader of Frugalwoods sends to me requesting that Frugalwoods nation weigh in. Then, Frugalwoods nation (that’s you!), reads through their situation and provides advice, encouragement, insight, and feedback in the comments section. For an example, check out last month’s case study.

Case Studies are updated by participants (at the end of the post) several months after the Case is featured. You all requested an easier way to track Case Study updates and I have heard your pleas :)! I’ve created this page, which lists and links to all of the updated Case Studies.

I probably don’t need to say the following because you all are the kindest, most polite commenters on the internet, but, please note that Frugalwoods is a judgement-free zone where we endeavor to help one another, not to condemn.

And a disclaimer that I am not a trained financial professional and I encourage people not to make serious financial decisions based solely on what one person on the internet advises. I encourage everyone to do their own research to determine the best course of action for their finances.

With that I’ll let Lynn, this month’s Case Study subject, take it from here!

Lynn’s Story

Hello Frugalwoods! I’m Lynn, a 39-year-old art teacher living in southern Maine with my husband Lucas (41), our son (10) and our dog (4). We live in a small 100-year-old house in a close-knit neighborhood in the suburbs. My husband and I met in art college and moved to Maine after graduation. My husband took a job as a carpenter and has been building and remodeling houses ever since. I spent years cobbling together various art and non-art related jobs before returning to school to get my teaching certification.

I’ve been teaching art at a public school for seven years and, while I enjoy it, my dream is to someday have my own art center. Once I’ve finished grad school, I’d like to start teaching private art lessons on the side. My hope is that I can slowly take on more classes and gradually transition out of teaching public school.

Lynn & Lucas’ Early Years

Lucas and I got married in 2008 in the most frugal way possible: by our friend’s mom who was a notary public. We said a quick “I do” and then went out for sushi! The following weekend we celebrated with a cookout for our friends and family. Less than a year later, our son was born. The first few years of parenthood were really rough for us financially as we tried to juggle working lackluster jobs and paying for daycare. I worked part time when my son was very little and Lucas worked for a contractor who sometimes went months without paying him.

We managed to pay our bills, but we were always just barely scraping by. I was constantly worried about money, but I got really good at stretching a dollar. I went back to school for my teaching certification when my son was two.

Lynn’s Student Loan Debt

I have student loan debt from when I returned to school the first time around. I’m enrolled in an income-driven repayment plan that qualifies me for Public Service Loan Forgiveness. I’ve been diligent about filling out paperwork and re-certifying every year, but this debt keeps growing and it makes me very nervous. I am on track to have my loans forgiven in four years… hopefully the program is still there when I am done!

Lynn’s Free Master’s Degree

Some of Lynn’s art

I’ve been teaching art for seven years and am currently working on an online master’s degree in Art Education. My school district pays for up to four courses per year, so by stretching the coursework out over three years, I won’t have to pay for a single course. I do have to fly out to the college to take an on-campus studio class this summer and next, so I’m paying for my travel and accommodation expenses. When I complete my degree next summer, I’ll have a Masters plus 30 credits and will move three steps up on the pay scale, which means a raise of approximately $11,000. Lucas and I have never been high earners; my teaching job pays the most either of us have ever made (ha!).

Despite never making a ton of money, over the years we’ve managed to pay off our undergraduate loans, both vehicle loans, and about $6,000 of credit card debt from back when we didn’t have two pennies to rub together. I credit a lot of this progress to You Need A Budget (YNAB), which I began using four years ago. Using YNAB, we were able to move from living paycheck to paycheck, to building up a buffer and smoothing out the inconsistencies in Lucas’ pay.

Lucas’ Career

DIY renovating

My husband is an excellent carpenter, but as a sub-contractor, his career was plagued with highly irregular pay and several dishonest employers. This past year he decided enough was enough and quit to look for a new job. We’d saved up a decent emergency fund and that, combined with a lot of belt-tightening and a few odd jobs, got us through several months with only one full-time income.

After a brief stint as a Maintenance Technician, Lucas realized he could make more money working for himself, and so a few months ago, he started his own business. He’s been a self-employed carpenter for years, but this is his first time working completely solo, and he loves it! It also allows him to be creative in his work, including building decks, remodeling basements, and creating custom trim and cabinetry. So far he’s been landing jobs by word-of-mouth, but we put together a website and business cards as well (if any of your readers have suggestions for other ways to drum up business, please share!).

Unfortunately, being self-employed again means that his income is totally unpredictable. We’ve talked about the possibility of buying an investment property for him to fix up, but even if we borrowed equity from our house, we still wouldn’t have enough capital and the thought of taking on another mortgage gives me hives.

Lynn and Lucas’ House

Lynn and Lucas’ house

We bought our 1920’s 1,100 square foot house back in 2005 during the height of the housing bubble when we were young and optimistic (and clueless) with excellent credit scores and no money down! For almost a decade we were house-poor and underwater as the value of our house plummeted, but we managed to hang in there. We refinanced out of our 30-year mortgage a couple years ago to take advantage of low interest rates and managed to shave off 4 years by switching to a 15-year mortgage.

Since then, the housing market has rebounded and the house is now worth quite a bit more than we paid for it. We’ve done a lot of work to the place and we try to do at least one or two projects per year. This past winter I patched and painted the closets, while Lucas retiled the bathroom and replaced the toilet. This summer we’re painting the formerly faded and peeling yellow exterior a happy blue. We pay for these renovations in cash and do all of the work ourselves.

One renovation we’ve always dreamed about doing is adding a garage/addition to the house. We have no storage in our house other than our small damp basement and a shed, both of which are crammed full of Lucas’ tools. As part of the renovation, we would turn the space above the garage into an art studio. I currently have a small space set up in our enclosed porch at the back of the house, but it is tiny and COLD in the wintertime. I would like to be able to teach private art lessons down the road, and it would be awesome to have a proper studio space.

Lynn & Lucas Love Maine

I love living in Maine. There’s a reason they call it Vacationland – it’s beautiful here! We live fairly close to the ocean and in the summer we go to the beach all the time. My husband takes our son fishing at nearby lakes and streams.  We have family who live up in the mountains and we like to go for hikes in the woods.

In the wintertime we like to sled, skate, and play hockey – every year Lucas builds a skating rink in our backyard. We also like to play nerdy board games!

We try to go on one camping trip every summer. We’ve visited Bar Harbor and Acadia National Park in Maine, the White Mountains of New Hampshire, and this summer we will be camping in Canada along the Bay of Fundy in New Brunswick and Nova Scotia.

Hobbies

Maine!

Now that our son is older, I’ve gotten back into art-making and have sold a few paintings here and there. I like to listen to music and podcasts while I work. In the summertime I paint quite a bit, and usually take an art class or workshop. Unfortunately, during the school year I have much less time for my artwork, other than squeezing in a little between my graduate classes.

Lucas likes to brew his own beer for fun. It’s delicious, but not super cost-effective and it’s one of the first things that gets cut when money is tight. When he was job hunting, he looked into working at a couple of breweries, but the pay wasn’t very good.

Our son plays the drums, and he’s been taking private lessons for the last two years. It’s a great way to channel his boundless energy! At $100/month, these lessons are a huge splurge for us, but one that we feel very strongly about. Since he began, he has learned so much and has really developed a sense of pride in his drumming. I got his drum kit second hand on Craigslist for a steal! Readers who have been paying attention will remember that we don’t have a garage. Our son’s drum kit lives in a tiny office space upstairs; even with the door closed, it’s still a bit loud!

Lastly, I cannot talk about our lifestyle without mentioning our wonderful, crazy, four-year-old black and white lab mix! We adopted her from a local shelter that was having a “puppy sale” – we like to say we got her on clearance! Needless to say, she is worth every penny.

The Downsides

I really enjoy teaching art, I have great students and it’s very rewarding, but the school year can be a real grind. Prepping for, instructing and grading multiple classes of students with a wide range of abilities is challenging. I take a lot of work home with me and I often go to my classroom on Sundays when I need to catch up. And then there’s a lot of other stuff that comes with the job: meetings, emails, reports, data gathering, observations, recertification, etc. It seems like every year, teachers at my school are presented with another new initiative or hoop to jump through (or several). Many of my coworkers are jaded and unhappy.

Lynn’s art

In the summertime, I feel like a completely different person. I “work” throughout the summer on renovation projects and I usually take at least one class or workshop, but my life feels so much more balanced. I actually have time for my artwork, I am able to visit with friends more, and I get to spend real quality time with my son.

I don’t know if I would ever realistically be able to achieve financial independence, but I would like greater flexibility in my life. My someday dream is to open a small art center/workshop with a gallery where people of all ages can take classes, show their work, and become part of an art community.

Where Lynn and Lucas Want To Be In Ten Years:

  • Finances: I would like to max out our IRA contributions and also begin contributing to other retirement accounts (solo 401k, 403b, etc.).
    • In 10 years our son will be 20 and either in college or trade school or working. We have no college savings for him (I have read it’s better to “put your own oxygen mask on first” and we need to catch up on retirement big time). If he chooses to go to college, we’ll encourage him to go to community college and/or state school.
    • Lucas and I have also talked about purchasing a fixer-upper to renovate and then either selling or renting it for a profit.
  • Lifestyle: I would like to be able to travel more. A big trip every year or two, maybe somewhere outside the US. Ideally, I would like to be working less and making more art.
  • Career: I would like to have my own art center. Once I’ve finished grad school, I’d like to start teaching private art lessons on the side. My hope is that I can slowly take on more classes and gradually transition out of teaching public school.

Lucas and Lynn’s Finances

Income

Item Amount Notes
Lynn’s net income $2,899 Lynn’s net salary minus the following deductions: health and dental insurance, FSA, union dues, car insurance through Horace Mann, and taxes
Lucas’ net income $2,526 This is the average of Lucas’ pay over the past 3 months of working for himself, minus the following deductions: self-employment tax, tools and materials, insurance, etc. His average over this past year with several months of unemployment was $831.53
Miscellaneous income $338 Includes art sales, tax refunds, interest, gifts, rebates, etc.
Monthly Subtotal: $5,763
Annual Total: $69,156

Expenses

Item Amount Notes
Mortgage $1,318 This includes property tax and insurance. We have about 12 years left on our mortgage. We have a 15-year fixed-rate mortgage at 2.75% with $128,076 left to pay.
Groceries $546 We shop at Hannaford’s and BJ’s Wholesale.This includes coffee, beer, dog food and some household goods.
Lucas IRA automatic deposit $300 With Betterment. I recently starting contributing the dollar amount of my former car payment as well as what we used to pay for cable.
Lynn IRA automatic deposit $300 See notes above.
Gasoline for cars $210 Lucas drives a lot for work. We also frequently visit friends and family who live anywhere from 30 minutes to 3 hours away from us.
Lynn’s Student Loan Payment $171 With FedLoan Servicing. I’m enrolled in an income-driven repayment plan that qualifies me for Public Service Loan Forgiveness. I’ve been diligent about filling out paperwork and re-certifying every year, but this debt keeps growing and it makes me very nervous. I am on track to have my loans forgiven in four years. This monthly payment will decrease soon since our income dropped significantly this past year.
Home Maintenance $154 For repairs and renovations. This year we did a small bathroom reno and are currently painting the exterior of our house.
Car Maintenance $147 Repairs, inspections, registrations, oil changes, tolls, etc. for both vehicles
Heating Oil $144 Maine is cold. This amount also includes a furnace cleaning.
Cell Phones $137 T-Mobile. This total includes five lines: Lynn, Lucas, Lynn’s dad, a friend who pays for his portion of the bill, and a line for our son’s tablet. *I just read the Frugalwoods MVNO article and will look into this pronto!*
Medical $121 Includes medical and dental copays, prescriptions, contact lenses etc.
Son’s Drum Lessons $100 Our son has been taking drum lessons once a week for two years now. This is a pretty big splurge for us but one that feels very worthwhile.
Clothing $94 For all three of us. This seems high to me, but because I went many years buying very few items, I am having to replace a lot. I HATE clothes shopping and if I find something I like that fits well, I will often buy two. I have been dabbling in thrift store shopping and the online store ThredUp.
Restaurants $89 We eat out about twice a month. We try to pick food that we wouldn’t make at home (sushi, Thai, etc.).
Utilities: Electricity $87 Our electric used to be much less, but we started running a dehumidifier and a sump pump in our damp basement, which both eat a lot of electricity.
Vacation $83 This money goes toward our annual camping trip as well as smaller day trips. Two years ago we travelled to California to visit my sister and her family. Eventually I would like to be able to afford to travel more.
Internet $66 This is High Speed internet through Spectrum. We’re looking into a competitor to see if we can get a cheaper rate.
Utilities: Water $63 This is usually lower except in the winter when Lucas floods the backyard skating rink.
Birthdays, Gifts, Holidays, Parties, etc $62 Birthday parties, shower gifts, Easter, etc. Honestly this seems SO high to me, but both my best friend and my sister had babies in the last year, so that’s a big chunk right there.
Son’s miscellaneous $55 School supplies, allowance, hot lunch once a week at school, iTunes song purchases for drum practice, occasional book fair purchases, etc.
Pet expenses for our dog $54 Includes pet medications, veterinary costs, and general supplies
Christmas $47 Gifts, Christmas tree and decor, stamps for cards, etc. We only buy gifts for the kids in our families, but our families keep growing!
Family Entertainment $38 Bowling, mini-golf, movies, etc.
Life Insurance (both Lynn and Lucas) $34 We each have a $200k term life policy through Horace Mann.
Household Goods $30 Usually bought at Target. Toothpaste and other toiletries.
Lucas’ Stuff $22 Beer-making supplies, art supplies, fishing license, etc.
Lynn’s Stuff $22 Art supplies, school fees, plane ticket for summer course
Haircuts $15 I cut both my husband and my son’s hair. I get my notoriously disobedient hair cut about five times a year by my very talented (and inexpensive) stylist.
Charitable Giving $15 Toys for tots, GoFund Me, and other small donations. Eventually I would like this category to be larger.
Netflix $9 We recently cut cable and are funneling the $50/month savings into our IRAs.
Monthly Subtotal: $4,533
Annual Total: $54,396

Assets

Item Amount Notes
Joint Checking Account $9,808 This is our everything account for: bills, savings, etc. I’ve been trying to build it back up to at least a 3 month buffer. This account earns 4% interest through our credit union up to $15,000.
Lucas’ IRA $9,103 Through Betterment
Lynn’s IRA $6,894 Through Betterment
Lucas’ Business Checking Account $3,242 This account is for Lucas’ tools and materials, taxes, insurance, etc. This account will accrue interest once it reaches $5,000.
Lynn’s Pension 401(a) TBD (see notes) Lynn’s teacher pension is based on the following formula: Average of 3 highest paid years x Years of service x .02. I’ll be eligible for this at age 65.
Total: $29,047

Debts

Item Amount Notes
Lynn’s Student Loans $34,205 Average interest 6.3%. I pay $171/month in an income-based repayment plan. The balance on this loan keeps growing. If all goes well, it will be forgiven in four years through the Public Service Loan Forgiveness program.

Vehicles

Vehicle Valued at Notes
Hyundai Santa Fe Sport 2014 $10,000 78,000 miles; paid off as of this spring
Toyota Tacoma Access Cab 2008 $7,000 140,000 miles; paid off

Lynn and Lucas’ Questions For You

1) How should I prioritize saving for:

  • Emergency Fund
  • Retirement
  • Future renovations and/or investment properties?

2) Should we get a Home Equity Loan?

  • We’ve decided to hold off on this for now, but, would it be wise to pull equity from our home for a garage addition (or another investment property?). We have about $100,000 in equity.
  • We could also sell our house and find a different home that meets our garage/studio needs, but we really like our neighborhood and the real estate prices around here are getting pretty crazy.

3) Investment Property: to piggyback on the Home Equity Loan question, how do people with lower incomes get into investment properties without taking on significant debt?

Mrs. Frugalwoods’ Recommendations

Lynn and Lucas’ pup

Lynn and Lucas are doing a great job. In reading through this Case Study, it’s clear to me that Lynn has put a lot of effort into turning around their finances and, in doing so, she’s put herself and her family in a great position. I feel like we’re at the beginning stages of an epic success story for Lynn and Lucas if they keep doing what they’re doing.

They’ve been judicious about paying down debt, careful with their spending, smart about saving for retirement, and wise about buying a home they can afford. They’ve paid off their cars and their credit cards, both of which took a lot of work and both of which they should be incredibly proud of!

Lynn’s Student Loan Debt

Lynn mentioned that her student loan debt makes her nervous, but, I think she’s doing the right thing. She’s enrolled in the Public Service Loan Forgiveness program and her loans are on track to be forgiven in four years. This is great news!

Lynn was smart to seek out PSLF and to make qualified payments on her loans all these years. I get the sense that having this debt hanging over her head bothers Lynn, but I think she just needs to tough it out for another four years. The amount of her debt ($34,205) dwarfs their assets and so, in my opinion, the best option is for her to bank on PSLF in four years.

Brilliant Job On The Master’s Degree

Lynn made the perfect, ideal, A+, #1, chief, top, and otherwise best decision here: she is getting her master’s degree for free AND her employer has a transparent pay scale that she will ascend once she completes her degree. I am (usually) against people getting graduate degrees when they’re paying themselves and when there’s no clear career imperative or salary bump associated with the degree. What Lynn is doing is an obvious slam dunk: free school that will = an $11,000 increase in her salary. WAY TO GO, LYNN!!!

Self-Employment

Lynn’s art

I love Lynn’s dream of teaching private art lessons and having more time to create her own art. However, I’m a bit concerned about the fact that this arrangement would entail both Lynn and Lucas being self-employed.

Primarily, my concern is that both of their jobs are not very recession-proof. In an economic downturn, people often cut their spending on discretionary activities. And, for the most part, home renovations/remodeling and art lessons are discretionary. In a bad recession, it’s possible both Lynn and Lucas would struggle to attract clients–just because of the nature of their professions.

Doors in Lynn and Lucas’ house

Conversely, if Lynn is working as a teacher, she’s much less likely to lose her job in a recession, which would allow the family to weather a period of less work for Lucas. I don’t say this to scare Lynn, or to put her off her self-employment dream, but, it is a very real consideration. At this point, and as Lynn noted, her job is a good counterbalance to Lucas’ self-employment since it’s safe and stable. I’m not anti-self-employment (I’m self-employed, after all!), but I am cautious about self-employment that entails risk and variability, which both carpentry and art entail.

If Lynn and Lucas are able to save up a significant amount of money–perhaps enough to keep them afloat for a year or more without work–then, I think the idea becomes a lot more feasible and a lot less risky.

Another possibility here is to consider Lynn transitioning to self-employment after their mortgage is paid off in twelve years. To be clear, I’m not advising they put extra money towards their mortgage now (because they need to deploy their capital in other ways and they have an amazingly low interest rate of 2.75%, which is just incredible!). But, once the mortgage is paid off, their expenses will be a lot lower, their risk level will be lower, and dual self-employment might very well feel a lot more tenable.

Another Very Smart Thing Lynn Did

Lynn did another very smart thing that I want to highlight: once she paid off her car AND cut cable, she began contributing that $600 to her and Lucas’ IRA accounts. This is such a perfect example of transforming your finances. Instead of losing $600 a month, she’s now investing it to provide a secure future for her and her husband. I want to reiterate what an incredible difference these types of tweaks can make. Over the course of just one year, she and Lucas will sock away $7,200 for their retirement. In two years? $14,400. That’s a serious amount of money. Way to go, Lynn!

Alrighty, let’s review Lynn’s specific questions.

Question #1: How should I prioritize saving for:

  • Emergency Fund
  • Retirement
  • Future renovations and/or investment properties?

Dog! A good reason to have an emergency fund!

Lynn pretty much answered her own question here with this outline of savings priorities. She is spot on that these are the three basic areas where she and Lucas should focus their savings efforts.

Emergency Fund: Lucas and Lynn have $9,808 in their checking account. At their current rate of spending ($4,533 per month), this would cover them for about two months, which is an excellent start! Lynn already identified that a goal of hers is to build this account up to cover three months of spending, which is $13,599. I think she’s correct that this is a priority, especially given the variability of Lucas’ income. Having a larger buffer will give them more peace of mind and will make them less likely to ever go into credit card debt again. Takeaway: Funnel all extra money every month into this emergency fund until it reaches $13,599. Replenish as needed.

Retirement:  Lucas and Lynn both have individual retirement accounts (IRAs)–way to go! Their IRAs are with Betterment, which is a robo advisor. This is fine; however, it’s likely they’re paying higher fees than they would if they managed their IRAs themselves, such as through a brokerage like Fidelity or Vanguard.

I’m including the below rundown on IRAs versus Roth IRAs for Lucas and Lynn to review and for anyone else whose curiosity is piqued (I know, I know, what could be more exciting?!? Don’t answer that).

Traditional IRA  (Individual Retirement Account):

  • A traditional IRA is a retirement account that’s pre-tax.
  • This means you don’t pay taxes on money you put into an IRA, but you do pay taxes when you withdraw the money in retirement. In general, an IRA is a good idea if you’re trying to reduce your current tax bill (and if you think your future tax rate will be lower).
  • There are no income limits. Anyone can contribute to a traditional IRA.
  • You need to be age 59.5 before you can withdraw money penalty-free (although there are exceptions).
  • More about traditional IRAs here.

Roth IRA (Individual Retirement Account):

  • A Roth IRA is a retirement account that’s post taxes.
  • This means you pay taxes on the money you put into a Roth IRA, but you don’t pay taxes when you withdraw the money in retirement. In general, a Roth IRA is a good idea if you think your tax rate is likely to be higher in the future (it’s basically the opposite of a traditional IRA).
  • A Roth IRA grows tax free.
  • You need to be age 59.5 before you can withdraw money penalty-free (although there are exceptions).
  • Your eligibility to contribute to a Roth IRA depends on your income and your particular tax situation. Higher income individuals are not allowed to contribute to Roth IRAs.
  • I like this Nerd Wallet article on Roth IRAs if you want to read more.

Two other options for Lucas are SEP IRAs or One-Participant 401(k)s (often called solo 401ks). These are both retirement accounts geared specifically towards people who are self-employed.

At this point, Lucas and Lynn have a little bit of room to contribute more to their retirement accounts each month, but I encourage them to first build up their emergency fund.

Asset Allocation and Money Management 101

In addition to an expense review, I’ve started including an overall asset allocation review in every Reader Case Study to help folks track where they are. Below are the basic money management steps I advise just about everyone to follow. I’ve made notes of where Lynn and Lucas are on each step and where they can focus more attention.

  1. Track your expenses religiously. Know exactly what you’re spending every month. If you’re not tracking your spending, you can sign-up for the free service Personal Capital, which is what I use and recommend for expense tracking (affiliate link).
    • Lynn and Lucas do this through You Need A Budget (YNAB), which is fine, but which does have a subscription fee. If they’re comfortable converting to a free service (such as Personal Capital), that could be an area where they could save a few bucks.
  2. Pay off high interest debt. List all of your debts in a spreadsheet and sort by interest rate. Prioritize paying them off in order of highest interest rate first.
    • I discussed above that it’ll likely be best for Lynn to wait for PSLF to eliminate her student loans.
  3. Build an emergency fund. An emergency fund should be kept in an easily-accessible bank account, such as a checking or savings account, NOT in investments, retirement funds, or cars/houses/expensive china. An emergency fund is money you can access immediately in an emergency. I recommend saving three to six months’ worth of expenses (meaning three to six months worth of what you spend every month, which is why it’s important to do #1: track your expenses).
    • Lynn and Lucas’ figures are noted above.
  4. Contribute to retirement accounts. Especially if your employer matches your contributions, putting money into a 401k or 403b is a no-brainer. Here’s more on why: 401ks Are Your Friend: Demystifying Personal Finance Part 3.
    • Lynn and Lucas’ figures are noted above.
  5. Start investing! Investing in the stock market is how you grow your wealth. Without this crucial step, you won’t reap the advantages of compounding interest and you’re unlikely to build your net worth in a meaningful way. I personally invest in low-fee total market index funds through the brokerage of Fidelity. Vanguard offers a similar product. You can do this yourself (it’s just like any other form of online banking) and there are more details here: For the Love of Frugal Hound, Manage Your Money Yourself! (by following The Simple Path to Wealth).
  6. Explore other options for investing in order to achieve diversification. After completing steps 1-5, you should continue investing in your low-fee index funds (and rebalancing them) on a regular basis (I recommend automating this process) and you can also start to look around for diversification options. This might include, for example, real estate. Mr. FW and I rent out our home in Cambridge, MA for a profit. Renting a property can be a fabulous financial decision and it can also be an absolutely abysmal one. It depends on many factors, including the rate of return you’d receive. For more on renting out properties, I recommend the site BiggerPockets, which discusses real estate investing.
  7. Analyze your income. Concurrent with all of this should be an analysis of your net income (that means the dollar amount you bring home every month, minus taxes and any other withholdings). In some cases, the best route to financial stability will be to increase your income while also lowering your expenses. Income is the crucial second piece to this equation and, the more you make, the more you can save. That’s a solid math fact.

Question #2: Should we get a Home Equity Loan?

Lynn and Lucas camping

To pay for a garage or an addition to their house, my answer is no. Why? A garage or an addition won’t directly add to their income, but getting a Home Equity Loan will directly add to their debt.

An addition could generate income through Lynn’s potential future of teaching private art lessons. However, I think it’s a bit too amorphous and speculative to link a Home Equity Loan to that potential future income. If Lynn were already teaching private lessons and knew what her revenue was, it’d be a little easier to justify a Home Equity Loan.

Here are the reasons why I almost always veto Home Equity Loans:

  • They often include bunch of fees: annual fees, transaction fees, closing costs, and more.
  • They charge interest.
  • You could lose your home. A Home Equity Loan borrows against the equity you have in your house and so, if you fail to make payments, the bank could repossess your home.
  • Note: there are subtle differences between Home Equity Lines Of Credit (HELOCs) and Home Equity Loans, namely that a Home Equity Loan is usually a lump sum paid all at once and it often has a fixed interest rate.

Question #3: To piggyback on the Home Equity Loan question, how do people with lower incomes get into investment properties without taking on significant debt?

They don’t. There’s really no way to get into real estate investing without either: 1) massive capital; or 2) debt.

I get the sense that Lynn and Lucas are debt-averse and, if you’d like to avoid debt, then real estate investing is probably not for you. However, if Lucas and Lynn would be comfortable carrying debt, then it’s possible they could significantly grow their wealth through real estate investing. Note that I said “possible.”

If this is something Lucas and Lynn want to pursue, I highly recommend they start doing research into the business side of real estate investing to determine if they’re comfortable with that aspect of it, alongside their proficiency in the construction/renovation side of things. Lynn mentioned that the market is getting pretty crazy where they live and so another aspect of their research will need to be whether or not they’ll be able to buy something cheap enough to actually yield a profit if flipped or rented.

Another consideration here vis-a-vis Lynn’s interest in self-employment: a bank is unlikely to lend you money to purchase an investment property if you don’t have a W2 income.

Expenses

Lynn and Lucas are already living a pretty frugal life, so I don’t necessarily think that cutting expenses will move the needle all that much for them. However, you know I love a good expense review, so let’s get to it!

In every Case Study, I like to point out that what you choose to save or not save is a very personal decision. Cutting every last expense is NOT the right answer for everyone and I am NOT an advocate for making yourself miserable in the process of achieving financial stability. I AM an advocate for values-based, goal-oriented spending. I think it’s important to assess whether all of your expenses bring you fulfillment and a good return on your investment.

I think it’s also important to question if your rate of savings will help you to achieve your long-term goals. But what you spend on? That’s a very personal choice and one you have to make for yourself. My job is to identify areas where you might be able to save, but only you can decide what level of savings is right for you.

If you’re struggling with where to save more and how to map out a longterm financial plan, I encourage you to take my free 31-day Uber Frugal Month Challenge.

I’ve combed through their expenses and identified several areas of discretionary spending where they could save:

  • Cell phones: Lynn noted that she read my recent article about MVNOs (companies that re-sell wireless service at deep discounts) and I strongly encourage her to make the change! I pay $10.65/month with the MVNO Ting, which re-sells T-Mobile and Sprint service. MVNOs are the TJ Maxx of the cell phone service world–it’s the same service, just a whole lot cheaper (those are affiliate links).
  • Clothing: at $94/month this isn’t astronomical, but, it is a discretionary expense (to an extent). I think that being aware of this amount and looking for ways to thrift/do hand-me-downs could be advantageous.
  • Restaurants: similar to clothing, at $89/month, this isn’t huge, but it is discretionary. One thought here: Lynn mentioned several times that she’d like to be able to afford to travel more and, if they stopped eating out and instead saved this money in a travel fund, they’d have $1,068 saved up in just one year, which could equal a pretty nice vacation.

These are the only major expense categories that jump out at me. I think switching cell phones will be the easiest way to save an extra $100+ per month.

Summary

Lynn and Lucas are on the right track. They are doing all the right things: they’ve paid off all of their debt (except for Lynn’s student loan), they’re contributing to IRA accounts, they have an emergency fund that they plan to increase, and their spending is low. I think they’re a perfect example of how it’s possible to turn around your finances and put yourself in a great position. Lynn and Lucas are at the beginning of a longterm success story. If Lynn and Lucas keep doing what they’re doing, they’re going to be in fantastic shape.

Here’s the summary of my advice:

  1. Student Loan: continue making qualified payments in the PSLF program and apply for loan forgiveness in four years.
  2. Emergency Fund: work to build their emergency fund up to at least three months’ worth of expenses.
  3. Retirement: once the emergency fund is fully funded, direct more money into their retirement accounts.
  4. Expenses: investigate switching cell phone service over to a much cheaper MVNO. Consider clothing and restaurant expenses–might these go toward vacation travel instead?
  5. Self-employment for Lynn: consider the ramifications of two variable-income careers and what level of savings would make Lynn and Lucas feel secure and confident before taking the dual self-employment leap.
  6. Put yourselves on autopilot: Lynn and Lucas are doing so many things perfectly right now and, for the most part, they just need to keep on keeping on.

Ok Frugalwoods nation, what advice would you give to Lynn? She and I will both reply to comments, so please feel free to ask any clarifying questions!

Would you like your own case study to appear here on Frugalwoods? Email me (mrs@frugalwoods.com) your brief story and we’ll talk.

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90 Responses

  1. CA says:

    We are recent transplants to Maine – and hope we never have to leave! They have said they live in Southern Maine – I wonder if Lucas works in Portland at all? Portland has a SEVERE labor shortage (particularly for good carpenters and home renovation folks), and we ended up having to bypass several good properties when we were house hunting because there was no way we could have hired someone for projects that were outside of our abilities to do (especially with an out of state move). Our own decision process buying from out of state was one that I’m sure people might question – but I’m a medical resident and knew I wouldn’t have much time after residency started 7/1 (to rent and then move) and it made sense for us! I think it would definitely be worth his while to talk to someone the realtors here – I think he could build his business quite well with word of mouth that way. Heck – I have 2 projects I’m on the hunt for help with!

    • Lynn says:

      Thanks for your suggestion about contacting local realtors! We will definitely be looking into that!

      • Anne says:

        Consider looking into Google Adwords to build up the business since you already have a website. Phrases that are specific “Portland renovation carpenter flooring” etc may be inexpensive.

      • Katie Camel says:

        I second reaching out to realtors for referrals. My brother is a self-employed contractor and gets most of his work through word of mouth, but some realtors will refer him. My friend is a realtor as well and constantly refers her contractor to clients. Buying a home that needs work is such a daunting undertaking for us not-so-handy people, so having a good referral is priceless!

        Also, my brother has a Facebook page where he posts his jobs as he’s working on them. That has helped his business grow too. One last thing, my brother buys homes and either flips or rents them, so his relationship with realtors really helps with this part of his business. You might not be ready to take on this role yet, but after exploring whether or not rentals are something you want to do, it will help to already have these relationships in place with realtors.

        I also second Mrs. FW’s recommendation that you remain employed in a W-2 job, since that will help you not only provide a buffer during economic downturns, but to get the mortgages if you decide to go into real estate. That steady income now will help you plan your finances much more easily for the foreseeable future and get you where you want faster. Plus, you probably have great health benefits. Who knows where health care is headed anyway?

        And that brings me to my last point. As a self-employed contractor, your husband faces tremendous risk of incurring an on-the-job injury that could leave him out of work for quite some time. With that loss of income, you would definitely need the guarantee of W-2 income. This has happened to several self-employed contractors I know, so it’s a very real risk that I’m sure you’re aware of. But I just want to mention it because of the huge impact it could have on you and your dreams.

        My guess is you’ll have more flexibility with time once your graduate program is over and you can focus on your art instead. You might find that fulfilling enough that you don’t need to leave your W-2 job. No situation is perfect, but the steady income is an enormous relief.

        Good luck to you!

  2. Lauren says:

    Hi! An idea for Lynn is to brush up her resume and look into moving to a new school district or leaving public education altogether. The company Carney Sandow is a great start…they are headhunters for private schools. New England has lots of these independent schools, and a good art teacher is hard to find! Maybe a change in employment might jump-start something new.

    • Lynn says:

      Thanks for your comment, Lauren! You know, what you said is really resonating with me. I think I’m beginning to realize that I might be a little burnt out on my school rather than my job itself. Wow. A lot to think about.

    • brooklynexpat says:

      That’s not a bad idea, but private schools pay less than public in many states (like mine). While you typically have fewer students and more time to devote to them, you also are expected to contribute considerably to the school outside of class: advising clubs or coaching, chaperoning events, etc. The time commitment is unlikely to be less going from public to private.

    • Jennifer says:

      Moving to a private school might result in losing qualification for PSLF, so be careful with that jump.

  3. Jenny says:

    Why are they including Lucas gas and car registration as household expenses. As self employed he should really study up on all the things that are business related expenses and have benefits to claim tax wise but can only do that pulling those expresses out of lumped in with household.

    • Lynn says:

      Hi Jenny, thanks for your comment! I know our accountant has Lucas write off his mileage rather than his gas. I’ll ask him about the truck registration, he may write this off too. Oddly, while I manage most of our day-to-day budget, he’s the one who is really on top of the tax stuff!

      • LongTime Frugal says:

        There are numerous expense deductions as well as depreciation available to Schedule C filers. I have always had the W-2 job which my spouse was self-employed. We *never* deducted home office space as it has to be recouped when you sell your home. Depreciation rules changed with the “tax act” of 2017. I would suggest finding a qualified CPA.
        And I will caution you on a few things – first being the less taxable income, the smaller your social security check will be. An economic downturn can negatively affect your husband’s ability to collect social security disability “Generally, you need 40 credits, 20 of which were earned in the last 10 years ending with the year you become disabled. However, younger workers may qualify with fewer credits.”. The “employer” part of your husband’s self-employment will result in a lower number being shown on your social security statement.
        We never incurred any expenses, business or personal, that we could not handle out of my paycheck. Any profit from my spouse’s business went back into his business. We soon became our own bank for the business (never needing to borrow).
        I carried all the medical/dental/vision benefits and the added benefit of matching funds in my retirement account (and a couple cash benefit pensions). I too urge you to not take the leap to self-employment at this point in your life. Not only can an economic downturn be bad, a health issue can also wipe you out.
        If your husband is Schedule C, I strongly suggest business liability. I would not pay for unemployment to cover your husband. Realize that if Schedule C, your personal assets are subject to a lawsuit.

  4. Robin says:

    Instead of the equity line for the garage/art space, I wonder what the cost would be for you guys to winterize the porch that is currently used for your art? There is a wonderful wall-mounted electric heater (hard-wired or plug-in options) from http://www.eheat.com that we use which,along with some serious insulation work, should make that space more user friendly! You could then, possibly, start your 1 on 1 art classes. In the future, if you do end up building the garage/art space, you would have the porch as additional living space. Also, I’m not sure how close you are to a college, but a friend of ours made extra money teaching a summer class at a 2-year college. Whether it is a “for-credit” course, or maybe a community education class, it could be an option for extra cash, or in our friends case, a lead-in to a full-time college teaching gig!

  5. Tara Zoltek says:

    I would agree that keeping the teaching job for a while is a good buffer, plus a provider of reasonable health insurance, so it would be very difficult to lose if both were self-employed.

    Have they looked at garage “kits”, or even additional shed kits? There are a lot of pre-fab shed/office kits or at least directions on how to build additional office space (MMM even did an article on one). There are tons of websites dedicated even to converting simple sheds into insulated spaces. I know they say they have one shed, but adding another, if there is space on the property, isn’t unheard of. If a prefab shed could be acquired, that then your husband could retrofit with insulation and electricity, plus maybe a propane heater, it might give you better art studio space to continue your work away from the house. I’ve seen large prefab sheds with windows and all necessary items (outside of insulation and drywall for finishing inside for non-storage use), and for $2,000 or so in price, it’s a heck of a lot cheaper beginning than adding a large two-story garage structure. But if land space is a premium, I could see this not being ideal.

    I also think you’re doing great on the retirement planning. One thing to keep in mind regards to college is that when your son is of age, there will be significantly fewer children around going to college. This is actually a major issue for small, less prestigious institutions that is only going to get worse as we have fewer young people and less immigration filling the youth gap. As such, I could see changes to a lot of colleges in general and there may be more scholarship opportunities available to increase attendance (at least at schools with enough of an endowment to do so), so I wouldn’t worry about saving for college at this or any time. Your retirement is most important because you cannot depend on your son to take care of you as an adult.

  6. My mother-in-law is a watercolor artist, and she actually does workshops at public schools, libraries, art centers, etc., many of which pay pretty well (plus lodging/travel/food), and it also allows her lots of time to work on her artwork, as her schedule is variable. I think she started getting most of her exposure through joining Watercolor Societies, entering art contests (and winning), and doing free community events. Maybe for now, try to pursue building up your expertise, clientele, public exposure, etc., while you still have your full-time job. Then, once you’ve been banking that extra $11K for a few years, maybe start putting out feelers for workshops or such you could possibly teach.

    Best of luck to you! And I’m totally jealous of where you live—we’ve always wanted to visit Maine!

  7. Zoe says:

    Hello, Lynn I just love the 1st painting you have above. Could I commission something similar? I’m looking for a piece of art to hang in my living room. I like what you have up there but I have an inspiration photo with more red in it (think Colorado Red Rocks). I’d love to talk more about this potential commission, perhaps Mrs. Frugalwoods can share my email address with you from the backend of my comment. Let me know!

  8. Sarah says:

    Hello there! I have to admit, I didn’t read EVERYTHING, but I did have an idea. How sold are you on staying in your current house? If you said you love it and never want to leave, I missed that part, sorry. With a carpentry-savvy Lucas, what about selling the house and moving, maybe to one that needs a little TLC that Lucas can take care of? I’m new to this so maybe that’s a bad suggestion… I mean, maybe the cost of moving outweighs what you might make on the sale of the house! Just a thought. NOTE TO MRS. F.: How can I get my own case study with you? I’d LOVE your advice!!!!!!!!

  9. JD says:

    Lucas and Lynn are doing a great job and I agree with Mrs. FW’s analysis and her recommendations. My sister teaches art privately in the summers in addition to teaching art in public school. She hopes to transition to giving full-time private lessons, but that is only after she retires from teaching public school. I’ll admit, public school drives her crazy sometimes, but she loves her students there. She also already has a house with a little space in it to teach privately. Might I point out, that in 8-10 years, their son will probably be leaving for college or starting out his own career, which will leave, I presume, a bedroom that will be open? It may not be ideal for them to use a portion of their own house for her studio, but it is a possibility.
    You are doing an excellent job, Lynn and Lucas!

  10. Debra Jacobs says:

    Sounds like you’re on your way, Lynn! One suggestion to make travel more affordable – get a Chase credit card, like Chase Sapphire Preferred, and have Lucas buy all of the materials for his jobs on it. Pay it off in full every month! If you make the minimum spend in the first three months, you’ll get a lot of “Ultimate Rewards” bonus points, which you can redeem for airfare and/or hotels. Check out the free online course about this at https://www.choosefi.com/all-articles/travel-rewards/. I’m not connected with them in any way, just thought the course was great and learned a lot from it! Will be sending my daughter to New Zealand for free this year.

    • Lynn says:

      Thanks Debra, this is a really great idea! We put most of our household purchases on our debit card because our checking account pays 4% interest, but we have to hit 20 debit transactions or more per month…but I never thought to have Lucas charge his materials to a rewards card – super smart!

  11. Jwheeland says:

    I know it feels like a long ways off – but Lynn’s pension is so baller! School district pensions are relatively secure (compared to private sector pension). So, I don’t think it’s unreasonable to think it that it will be there for Lynn when she retires. Between social security and Lynn’s pension, they should have a really solid foundation for a traditional retirement!

    Valuing pensions is a bit amorphous – Finacial Samurai had a good post on it – but the amount of retirement savings needed to replace the pension is significant. And, the return of the pension is guaranteed compared to the stock market. Assuming the master’s degree bump of $11,000 and that Lynn is taking home approximately 75% of gross pay that put’s her earnings around $57,000 a year. Assuming Lynn’s salary grows with inflation and she stays till 65 – $57,000 times (32 years times .02 (which is .64) = $36,480 or 3040 a month FOR LIFE!

    But how much retirement saving would it take to replace that $36,480? If you use a very conservative return (like a US. Treasury Bond) of say 3% then it would take about ($36,480/rate of return .03) $1,216,000! Paradoxically if you assume a higher rate of return like from the stock market then the pension is “worth” less. Let’s say a 7% return = $521,000!

    On Lynn’s current level of income, this amount of retirement saving would be difficult. Therefore, pension FOR THE WIN!!

    • Lynn says:

      Thank you for your comment and for running the math for me! This is definitely giving me a lot of food for thought! I think if I take a step back and look at the big picture, I do have a pretty sweet gig. I think in a few years if I’m still not totally happy, looking for a teaching position in another district (as another commenter mentioned) might be the way to go.

      • Cici says:

        You will probably not do better, financially speaking, than by sticking w/your public school teaching job. Past a certain point in a teaching career (generally +5 years), especially outside of a major metropolitan area, the pension and benefits offered by your job are hard to match (as others have said). I think you need to look for ways to make your job more bearable for the next 10-15 years. Maybe you could cut back to 60-80% after you get the loan forgiveness? Maybe you can save up and take a year’s leave of absence to try something new? Maybe you start “caring less” and not working 120% from Sept.-June? And, yes, looking for a job in a different district is a good place to start. If your spouse were not self-employed, it might be worth sacrificing the security of your current work … but relying on two self-employment incomes seems stressful … and it sounds like that uncertainty was what drove you to get your teaching credential in the first place. Good luck to you! I think you’re a wonderfully talented artist. Signed, a fellow public school teacher

        • Lynn says:

          Thanks for your comments, Cici – you’re totally right about the working 120% thing…it does get draining. I think I worry that if I start “caring less”, I’m going to end up grumpy and resentful like my many of my coworkers. Kids deserve teachers who want to be there.

          • SJ says:

            Are you able to take time to do stuff that really fills you up? Teachers and parents give, give, give, and a combination of doing stuff that brings you joy and a daily gratitude practice might help you slog through the years in teaching where the BS of the bureaucracy really wears folks down. Thank you for being such a dedicated teacher.

  12. Emily says:

    Great job, Lynn! One more consideration for you: if you have a teaching job and a union, what do your pension options look like? My family of teachers have benefited a ton from pensions in retirement. I’m wondering if there are a certain number of years of service needed to vest at various levels. Just a thought. Good luck!

  13. Kristen says:

    My husband started his own handyman business about four years ago, and business turned out to be really good after about a year, all word of mouth referrals. One huge boost for business was getting in with several local realtors, so after a house inspection, they hand him the deficiencies list and say “Make my problems go away!” Good business and the bill is paid by the title company as soon as closing happens. My husband also learned that he needed to charge more. He’s ended up raising his rates a few times since he found out that other local handymen were charging more. One downside for us has been self-employment taxes. It’s completely worth it to get good bookkeeping software, learn good bookkeeping skills, and have a good accountant. Wishing you all the best!

    • Lynn says:

      Thanks Kristen! I love the suggestion that you and another commenter mentioned about contacting local realtors and we will look into this ASAP! Like your husband, Lucas recently raised his rates too, and his clients haven’t even batted an eyelash – apparently, he’s still cheaper than most other area companies.

  14. Emily says:

    Maine! We hope to find ourselves living back there soon! I have a family member who works in a Maine school system. A couple of things to consider: I think drawing a teacher’s pension requires you to forgo social security, so that’s something to keep in mind, as you may find you are setting yourself up for either a small teachers’ pension (only 30% of your pay if you work for 15 years) or a small social security benefit (would your time teaching be entered as $0 earning years for social security purposes?- not sure how this works). And this may be moot if you plan on getting out of teaching sooner rather than later, but I think you can take your pension without penalty at age 62 (10% penalty for each year before that, at least those used to be the rules).

    Regarding PSLF, it might be worthwhile to look into whether or not teachers are actually getting their loans forgiven. I’ve heard the federal program has issues, and we’re getting to the point where the program is about ten years old and people should start to have loans forgiven. Some research might tell you if it’s actually happening and whether or not you can rely on it. Not trying to be a downer, just realistic! That said, I think most income based repayment plans do forgive loans after 20-25 years, regardless of public service. It’s a lot of extra time to pay a few hundred dollars each month but that forgiveness may be more reliable. Although you may have to pay taxes on the amount that is forgiven.

    Not sure how close you are to Portland (or maybe even Portsmouth!), but you may be able to ask other artists in the area about teaching opportunities outside of mainstream school jobs. There are a few art/tech high schools in Portland and some community colleges (one in South Portland and one in York county, I believe). And there’s the Maine College of Art in Portland. They might have more flexible teaching positions that suit your interest in art without the other requirements you don’t love at your current job. It may also be worthwhile looking at private schools, maybe Waynflete or something similar. Regarding personal development, I believe there are brief artists’ residencies downeast- an artist friend of mine attended a brief (1-2 weeks?) one in the Camden/Rockport (?) area. And perhaps you can show some of your art at an art gallery on a First Friday in Portland (the first Friday evening of every month they do a lot of free art-related things in Portland).

    I think those are all of my random thoughts on teaching and art and loan forgiveness. I’m sure you and your family will continue to thrive but wanted to share in case they’re at all helpful! Best of luck to you!

    • Lyna says:

      “Regarding PSLF, …look into whether or not teachers are actually getting their loans forgiven.”
      For your peace of mind, I would try to plan for a ‘worst case’ scenario, if the loan forgiveness falls flat. Higher monthly payment? Longer payment time? On the other hand, if you build an extra cushion that loan forgiveness makes unnecessary, it will be easy to apply that to your other financial plans.
      (also a vote here for winterizing your ‘art porch’! Are you on Etsy?)

      • Caitlin says:

        As someone who recently applied for PSLF (and was denied, but is appealing it–long story but my situation is different), it really sounds like Lynn has all of her ducks in a row here in that each year she is getting her eligibility certified. The teachers’ unions in particular are fighting hard for PSLF to continue to be available, and since she only has four years left I feel confident that she will have the loans forgiven.

        I wouldn’t necessarily recommend that someone starting today bank on PSLF, but Lynn is more than halfway there.

  15. Rebeccah B. says:

    Wife of a former general contractor here. I helped my husband with marketing and adminstration for the two years that he had his business before going back to a full-time job for better work-life balance. While I’m glad that my husband went back to a traditional 9-5, I’m grateful for the experience as it taught us a lot. Here are a few things I learned the hard way in case it might be helpful:
    1) Make sure that you have a really good CPA. They can either be your best friend or a nightmare. The first year we were in business, we had one that wasn’t responsive, overcharged us, and made us miss out on tax savings on later years (since we had start up expenses). Our second accountant was wonderful, a huge asset to us, and more than covered the very reasonable cost for preparation by saving us money and helping us make smarter choices.
    2) I would highly recommend the book Mark Up & Profit by Michael Stone (link: https://amzn.to/2Y1Re6s) for help with learning how much he should be charging for markup, accounting tips, etc. His website and newsletter are very helpful and free. Make sure he is charging enough of a markup to cover overhead and help yourselves build up savings for the lean times.
    3) We found our first few customers by advertising on Craigslist. Polish your ads and be sure to have good before and after comparison photos. As an artist, you will have an advantage over most as you have an eye for design. We had about 10 ads on several of the different pages available (small business, local trades, etc.) that we would refresh over a few days. After our first few jobs, we mostly had repeat or word of mouth clients. It’s helpful to also have 4-5 really good portrait photos that you can text clients if they ask. We sent thank you gifts for referrals and after we completed larger jobs.
    4) Trust your gut and interview your clients. Some people are just shopping for numbers or curious. Some clients have unreasonable expectations and will end up taking significantly more time managing their project. Sometimes it’s a good decision to turn down a job, even though it’s terrifying in the moment.
    5) We found that the estimates for work on homewyse.com were incredibly helpful for estimates for our area. We would work up a quote and then compare it to homewyse and it was generally very close to us.

    I wish you both the best of luck!

  16. Karen says:

    Lynn: You weathered some real challenges, you stuck it out when the mortgage was underwater and now look! You stuck it out with the student loans and are only 4 years away from paying it off! Getting a masters mostly paid for, wow! I agree with Liz, you are primed to reach a greater earning potential through your public school job with the salary bump. Take those summers to keep up with prof. development and even work summer art camps (they often will pay for your child to attend).

    I agree with Liz that you need to build up more assets before diving into investment properties but you are so well suited with your husbands contractor skills to either flip or be landlords, but it will take more time to pay off the student debt, increase your salary, and delve into a side gig as an art tutor. I am the “steady” paycheck in my family as a public school teacher, and I understand the grind, I really do, but the certainty of it outweighs the risks of walking away from it in my opinion. You really are lining yourself and your family up for a very fulfilling life in a place you love surrounded with people you love. Keep at it, you are a rock star!

    • Lynn says:

      Thanks Karen! This Frugalwoods Reader Case Study has been a great pep talk! 🙂 It’s good to hear solid advice from a fellow teacher. One of my grad school professors (who is around my age) and I were talking this week about how much we both struggled when we first got out of art school. It reminded me that one of the big reasons I got into teaching was for that stability I now have.

  17. Kate says:

    Lynn, you are a rock star!! I’m going to add my voice to the “winterize your back porch” chorus. Also, I totally hear your concerns about your public school career. I too disliked my public school teaching job, but it allowed us to stay afloat when my husband;s former employer closed up shop 5 or 6 years ago. So keep fighting the good fight. I did teach part-time at a community college, and that added to our cushion. The only thing is, how will the extra work for you impact your son? In other words, let’s say Lucas is doing a side job and you have to teach that night (and they’re almost all night classes) — is your son old enough & sensible enough to stay home by himself? That is an important consideration.

    Keep up the good work. You are doing everything right!

    • Lynn says:

      Good point, Kate. Since my son started school, Lucas and I have always staggered our schedules so that someone was always home for him (his grandfather lives nearby and helps out too). I think realistically I won’t be able to start the private lessons as a side hustle for a couple more years. Maybe once my son is in high school it will make a little more sense.

  18. Jennifer says:

    You guys are doing great. It’s not easy to be frugal in Maine–we’re at the other end of the coast from you–in Blue Hill. We also moved here after getting married 19 years ago. We weren’t prepared for much higher the cost of living is here than the Midwest!
    Also, I’m pretty confident that you’re husband is going to be able to grow his business even if a recession hits. There are not nearly enough carpenters and tradespeople in our area and I suspect it’s an even bigger issue in Southern Maine.

    Good luck with everything!

    • Lynn says:

      Thanks for your comment, Jennifer! Yes, Maine can be pretty pricey! I was just in the midwest for my graduate class and I was pleasantly surprised by how many things that were cheaper (groceries, going out to eat, etc.). Back home, I am currently waiting with great anticipation for a discount grocery store that is supposed to be built nearby!

  19. Stephanie says:

    Unless l completely missed it, I don’t see disability insurance anywhere. You are far more likely to be disabled than die. It is expensive but worth every penny if you have an illness/accident and can no longer work.

  20. Merry says:

    Lynn, your art is beautiful! Do you sell from a website or at a location in the Portland area?

    • Lynn says:

      Hi Merry, thank you so much! I do have a website, but I’m trying to keep it private for the anonymity of this case study. I’m thinking I will set up an Etsy shop for my Case Study update 🙂

  21. 1. Your art is beautiful. 2. Wow – gorgeous home! 3. I absolutely love these reader case studies (they’re my favorite!), but oftentimes, I don’t find them very relatable from a financial standpoint. This case study, though, is very similar to our own situation (I’m 40, my partner is in his 40s, we’ve turned our finances around in the last two years but have a ways to go, I quit my job three months ago to take a career break and we’re currently living on one income, I’m trying to start a small business, we’ve got about $37K of student loan debt, etc), and I find the similarities kind of comforting, especially in light of Liz’s positive and encouraging advice.

    I don’t really have any suggestions to add, as it seems like you’re doing everything right. I just wanted to say that I’m cheering you and your husband on. In particular, I hope he finds great success with his business, and you, with your art.

    • Lynn says:

      Thanks so much for your comment! I agree, it’s really comforting to read about others who are in similar financial situations. Sounds like we’ve hit a very similar phase in our lives! I appreciate all the love and support here – sometimes frugality can feel a little lonely!

  22. Chrissy says:

    Is there a website where we can see (and perhaps purchase) some more of Lynn’s beautiful art?

    • Lynn says:

      Hi Chrissy, thank you so much! I do have a website, but I’m trying to keep it private for the anonymity of this case study. I’m thinking I will set up an Etsy shop for my Case Study update 🙂

  23. I think sometimes we are in such a bubble in the personal finance community (especially the FIRE subset). Compared to MOST Americans, they are doing pretty darn decently – especially with the mortgage payoff in sight.

    That said, I absolutely agree with the no on the HELOC and focusing on the pathway that Liz suggests. It’s amazing how much you can get done on a lower income once you stay focused.

    PS I would highly recommend checking out the76kproject.com because they have a very similar situation to your own, just in a different area of the country. Having someone else’s story you can relate to is always so helpful, IMO.

    Good luck, you’re doing awesome. Remember that you are SO far ahead of many, even if it doesn’t feel like it. Onwards and upwards 🙂

    Ps – the best gift you can ever give your kid is to have them not need to worry about you financially in old age. Not a paid for college education.

    • Lynn says:

      Thanks for your comment Angela! Yes, I’m really conscious of how good we have it, even compared to where we were ten years ago but especially compared to people who are struggling. I have students who come from absolutely awful situations, and it’s always a big reality check for me. I think one thing I realized when writing my case study was how much I love our little life!

  24. Anne says:

    Consider putting you emergency fund is a high interest online saving account like Ally. It’s still easy to access and $13000 at 2% is nothing to sneeze at.

  25. Whitney says:

    As the mother of an 11 year old son as well, I noticed two things that could maybe be cut from expenses. Why does he need data/a phone line for a tablet? My son uses wifi at home and plays games that don’t require internet when we’re out and about. Also, could his drum lessons be decreased to every other week to cut the cost in half?

    • Kate says:

      I was also thinking even when out, you’d probably be able to get by using the tablet by running a mobile hotspot from your phone (assuming you can do that).

  26. Joseph says:

    A few thoughts off the top of the head.

    For Lucas: find your local real-estate investors association; offer your services, either directly to landlords or to property-management companies, whom you find there.

    For both: research possible paths forward with insights from Coach Carsen’s articles https://www.coachcarson.com/best-real-estate-investing-strategies/ and Action Economics’ experiences https://actionecon.com/category/rental-properties/ . No idea whether these will spark anything, even if only a choice to lay aside real-estate for now!

  27. Ginger says:

    I’m going to be a bit harsher than Mrs. Frugalwood, your husband’s income will fluctuate more than it has in the last 3 month and that needs to be accounted for. In reality, you should, for piece of mind, have your income cover base expenses. Mrs. Frugalwood already is FI, plus her husband does cover all her expenses. What happens if your husband breaks his leg? Which comes to next point, both of you need disability insurance. You may have it through your job, but your husband needs it ASAP. He should be able to pay for this via his “company”. You may need to see an accountant.
    We have two kids and cat and spend less in groceries. That is something you can cut down at least $25/month which can go to the expense of disability insurance. Next move your IRA from Betterment to Vanguard. The only use of Betterment is in a taxable account, you do not need to pay the extra fees. Lucas’ cost for gas, other than to the first site and last should be against his profit so you do not be pay taxes on it. Cut that from his income and only include personal spending in your person budget. As someone who is left employed, he needs to make sure those are separate.Next as someone else said, your son does not need data. He can use wifi and cut an additonal #25 from that. You are now at $50 towards disability insurance with no effect to your lifestyle (and possible more given the decrease in taxes if you take off your husband’s work expenses before paying taxes on his profit. Which adds on, I’m betting his phone is used mostly for work, deduct that percentage from his income as well, prior to pay taxes. $94/month for clothing is insane, my husband and I make double what you make and spend less for all four people in my house. Cut that by about 1/2. You are at $100 of savings. Same with restaurants, we go out once a month. Cut that in half too ($45). You still have “Family Entertainment”. So you are up to $144/month minus the cost of disability. You are still short living on your income. Which given the riskiness of self-employment you need to do. You have a small emergency fund, no back up taxable account and a kid. Once you increase your income with the Master’s, you’ll be closer but still, not covering 100%. You are likely to be about $2000-3000 short, but that will be for the year not 3 months.
    And here is the thing you’ll hate the most. Keep teaching, have fund over the summer, do your art then. Don’t quit. You need your income to live and to retire, If you want to quit early, start looking if you employer has 457. If it does, put every penny extra into that and you might be able to quit if that can support you once your mortgage is done and you have 20 years in teaching to get a decent pension.

    • Lynn says:

      Thank you for your feedback Ginger, even if unnecessarily harsh (ouch!), you have a lot of good suggestions. I do want to clarify that I do not hate teaching, I actually enjoy it quite a bit, I’m just looking for more flexibility in my work.

      • LongTime Frugal says:

        Do your research on disability plans (self-pay) – they are not inexpensive. You will need to determine what annual amount you need AND the elimination period (how long you wait before collecting). Also ensure you plan is “own occupation” not total disability. SSDI is pretty much total disability which is *not* what you are trying to insure. Depending on your policy, your premiums may be based on $25K a year but if your husband has been making less than that, you may not (and probably will not) collect at the $25K rate. We had disability for my spouse for a number of years. When the 2008 recession hit and new home construction became virtually non-existent, we dropped it.

    • Pixie says:

      Your comments about Mrs Frugalwoods’ situation (whatever the Frugalwoods’ situation might be) are compeletely irrelevant to the case study and I wish you would delete them.

  28. Carrie says:

    I am employed and my spouse is freelance. I definitely also have the itch to be self-employed in the not-too-distant future, and I absolutely know what you mean about every year there being somewhere between one and seven new hoops to jump through. But am not sure I’ll be able to give up the relative security of employment anytime soon, especially since both my husband and I have some health issues. One thing I thought about when reading the case study is that you will be done with your master’s fairly soon — the grind may not seem so bad when you’re not taking courses all the time, and you may be able to teach some of the private classes and help establish/nurture an art community in addition to your day job when you’re done with school. As I’m sure you know, making your passion into your job can be great, but it can also suck all the enjoyment out of your passion. Private classes may not be as enjoyable if you are stressed about whether you will make enough of a profit to live off of.

    I love the idea of a shed or winterizing your porch that others have suggested.

    • Lynn says:

      Thanks for your comments, Carrie! Yes, you are right about the grind not feeling so intense once I’ve finished my master’s degree. I’ve been at it for two years now (only one more to go!) and I have to remind myself that I won’t always be stretched so thin!

  29. Amanda says:

    You guys were very intentional to get where you are currently. Well done. The refi to 15 yr mortgage really stuck out to me. If you can stick with teaching until that mortgage is paid off you will have more cash flow and could start saving for an investment property to buy cash, and then flip, or rent- no debt. Or maybe take a teaching role at one of the private schools that would provide you housing, then you could rent out your home for profit $$ If you work at college your son could go to school for free, but then you would be giving up your pension I assume. Networking with other trades people might be helpful for referrals or for bartering. I attended a happy hour once hosted by a realtor, and that’s how we met a local hair stylist, roofer and electrician when we were new to town and just bought a house. I can’t wait to hear your follow up.

  30. Tina says:

    Learn to make those things you go out to eat for! Ain’t no party like a temaki sushi party!
    https://www.thespruceeats.com/temaki-hand-rolled-sushi-party-tips-2030925

  31. Christy Jones says:

    Please be cautious leaving public education when applying for PSLF. You must be employed in public service for the next four years AND continue to be employed in public service when applying for and receiving the loan forgiveness. I, myself, am a teacher and am also in the PSLF process and have done extensive research. Sounds like you’ve done a good job staying on top of the required forms – good for you! Just be sure you don’t leave public service until the loans are actually forgiven.

    • Lynn says:

      Hi Christy, don’t worry, I am totally planning on staying put until those loans are paid off! I also want to take advantage of my raise for as long as I can. In order to keep my raise from affecting my IDR plan, I will need to funnel quite a bit into pre-tax retirement accounts.

  32. Diane says:

    This wasn’t a main question but your life insurance looks a bit lean. 10-12x annual income for that earner is what I have heard.
    I wouldn’t consider investment property while still in debt. It could be great or could be loss, and I love the extra cushion of at least 3 mos emergency fund and being debt free. Could you save up lump sum in case your loans aren’t forgiven? I believe there is a 1% success rate at people applying and the government isn’t known for helping finances.

    • LongTime Frugal says:

      I think 10-12x annual is a bit high but I do think Lynn’s policy should be higher. She is the W-2 earner. If she were to pass away, her husband would not only have to cover their monthly expenses but medical/dental/vision and the loss of other benefits from her job (pension). In addition to the term life we had outside my employer, I was covered for 5x my salary until the kids graduated college. And both insurance plans are thru her employer. Some employer provided policies *can* be converted when employment ceases. Over my career, I’ve yet to find this to be anything but a bad deal – expensive.

  33. I am married to an art teacher and I am self-employed for the last sixteen years. Our incomes will be similar once you get that raise. We have zero debt most years but my goal is to save a full six months income to feel secure. While your husband’s business can be up and down, it’s important for him to always focus on sales. Even when the business is doing well, you have to be looking for the next job/ next sale. I pick one office day a week to make calls/write newsletters/and just plain hustle up work. Maybe try sending out a e-newsletter with handyman tips. Things that seem mundane about contracting for your husband might be enlightening to others and people love HELPFUL emails vs solicitation. Focus the newsletter on helping tips…something people would want to share. Send that newsletter out to your list monthly or bi-monthly. It will help you stay top of mind. Then grow that list. Make sure his google listing is accurate and working for you. I second the idea about Craigslist and realtors. Lynn, it’s amazing you are getting that masters degree for free and that it will increase your salary. I spend a lot more on groceries per month so I feel like you are killing it there (we spend $800-900). I think you are placing obstacles in front of having your own art studio…use that porch and winterize it. Can you have an art camp there? My husband did Tuesday afternoon art lessons after school and included our two kids. He has five paying students at our dining room table from 4-5pm at $25/week and we make an extra $400/month (after art supplies expenses)– he has considered a week long art camp utilizing his school’s facility (for free) and making additional vacation money. Parents are always looking for activities for their kids and for camps in the summer. Tap into some private school’s in your area for students. My husband doesn’t bring home homework, though… I thought that was one of the benefits of being an art teacher… less grading– he does open critiques in class and he gets all his extra grading/admin work done during a prep period. Wondering if you could reclaim some of that time? He rotates his curriculum every three years…so his curriculum is changing but also repeats— in other words, he’s not reinventing the curriculum every year. Great job. You guys will be fine. Great job on the 15 year mortgage and rate (wow)! and once those student debts are paid off it will feel like a huge weight off your shoulders.

  34. Kate says:

    One thought I have about how people who don’t have tons of income get into rental properties is to buy a multi family house, live in one portion, and then rent the other. It would be easier to qualify for the mortgage as a primary residence than as an investment property (lower downpayment and interest rate) but as someone else said, if you love your house that may not be for you. I know some folks in the Boston area (different real estate market obviously) who live basically mortgage free that way. Also, you’re doing amazing!

  35. Lisa says:

    I live in the Pacific NW and here are my thoughts. Great art! Could you barter a piece of your art for some drum lessons?

    Since your retirement is based upon your highest 3 earning years I would complete the (free) masters and keep teaching for at least 3 years to increase your retirement amount. It also provides you with stable income during that time.

    Based on knowledge from my husband being a contractor (he passed away) and us being landlords, I would look into using a portion of your home equity to build the garage with an apartment, or 2 smaller apartments, on the 2nd floor that you can rent out. If it would pay for itself, annual gross rent times 7-8 years, it would be a go. Then split the ground floor between the tools and art areas. Your husband’s business (and if you have a rental business from the apartment) needs a good accountant so you’re sure to take all the deductions you legally can. And as H business grows you could take over the apartment for larger art classes and work towards you being self-employed. Do A LOT of research to make sure being a landlord is something you really want to do. Don’t rent to family or friends and consider a property manager.

    I have friends, both retired art teachers, that built an art center after they retired. Activities at the center keep them busy year around.

    • Bri says:

      I second Lisa’s thoughts here on the garage becoming your rental, rather than investing in a whole new property. When you suggested it, I imagined that your husband could quite possibly do the majority of this work, and, it could be done inexpensively in stages as you were able to afford it. You have already budgeted for renovations throughout the year so you could transition that fund to be your garage fund. I agree with the advice to avoid going into major debt for this because the big picture focus should be for long term wealth building and debt payoff!

      One way to catapult your earnings would be to utilize your summers to earn some extra income using any number of the ideas generated here in the FW community that center around art creation. That extra income will boost your savings goals and free up other income for this project. I think you should do that anyway in lieu of quitting your teaching job right away because you have a TON of positives to staying, including a better pension the longer you stay WITH the benefit to long breaks where you can seek fulfillment, create art, and generate income.

      Assuming the garage idea really appeals to you I believe you can get there! As Lisa said, I think designing the upstairs as a studio apartment is ideal because it can generate income. An open studio design is an inexpensive design can be almost immediately rented long term or as an airbnb in that incredible area, but then later down the road can serve as the art studio as well. You could convert that space to host workshops etc. It is even possible to run said workshops in the garage space WHILE renting the upstairs. Even more income! If this is your forever home, that apartment could be a long term income generator, or a caretaker’s quarters in older age. It would increase the value of your property overall in case you did ever sell or downsize.

      There is always a way! I think you have a lot of options between your husband’s skills, your talent, and a wealth of potential all the way around. We’re rooting for you!!

  36. Rebecca Munger says:

    Hi Lynn, you asked about other ideas to promote your husbands business. My husband also has a small construction company and we found that some of the best advertising comes from recognition of his work truck. We plastered the name of the business and phone # in large print (and logo) over the entire truck
    Every square inch if it. We get more folks that say hey, you’re the humble hammer guy, I see your truck all over town. We’ve had many people call right from their cars as they see the truck on the road. It will have initial expense, but i think it was worth the one time expense. Good luck. Your hard work will pay off.

  37. Anne says:

    A few thoughts… as I understand it, you only have about 1.5 years left of your masters program. Once that is done you will have your time back in the evenings and summers. And as your Son gets older, he will need you around less as well. When you look at the timeframe of your mortgage, in 12 years it will be paid off and your Son will (hopefully) be done with his education. At that time perhaps you could look at the pension differential for retirement and reevaluate whether to keep teaching now that you have more free time, or to move in another direction. But I would put that “off the table” until then – there are simply a lot of unknowns and restrictions on your finances during the next 12 years.
    Looking through your Budget, you may want to combine some of these items. Just as being too general in your categories keeps you from understanding where your money is going, having too many categories (such as 2 categories for gifts vs Christmas gifts, dining out vs family entertainment vs travel) can make it seem like everything is too small to reduce, and thus you have your Budget expand based on dozens of tiny expenses that ultimately add up.
    Remember that this is about composing a life, not a career. What you do 40 hours a week, even if it is currently grating on you a bit, is not what makes up the majority or your life or your happiness in it. In fact, part of your love and passion for creating art may come from that this is something you currently choose to do for yourself out of love. If you left your job and relied more heavily on producing art for your income, your relationship with the time and effort you spend on it would likely change, and the pressure could make it much less enjoyable.
    Finally, you do not need to create a designated space in order to hold private art classes. I have gone to classes taught at someone’s kitchen table, which worked quite well. And many public schools have Teachers and community members that teach paid art courses after school hours in their classrooms – it can be a way of teaching in an environment that is already set up, and where the school is also advertising to the students and community.

  38. monica says:

    Overall Lynn is doing great! Like others, it seems like keeping her teaching job is very important for guaranteed income, pension potential as well as health care! Seems like Lynn might be able to lower her grocery bill. I live right outside of Boston (very high cost of living area) with two teenage boys, a dog and two cats and spend $450 a month for all groceries, household good, pet food and supplies – this includes everything I buy at Stop and Shop (or other grocery chains), Trader Joes, Aldis, farm stands as well as Costco (where I often buy clothing or small household things like our roomba, sheets towels, pillows, alcohol, so my $450 actually covers more than groceries – I have never parsed it all out to only account for groceries). Good luck!

  39. Melissa says:

    Don’t discount social media as a way to get your husband’s name and work out there. My son has a construction business and that is the only way he advertises. He takes before and after photos of every job. People see the pictures and think- “Hey, I want that done too!” He makes tons of money!!! If your husband can’t make more money being self-employed he might consider working at a home improvement store. They always need competent help and I am sure his average per month will be more than the $800+ amount you listed above.

    I think you need to keep teaching. The health benefits and retirement plan from your job will be hard to beat.

    I would never take out a home equity loan. Save the money to build. The shed idea from above is great because you could buy the shed and fix it up as time and money allow.

    I would also go over your budget and cut 10% from every category that is not essential. If you currently spend $90 on clothing, cut it to $81 etc… Do this for a while, then cut it again until you get the rock bottom amount. There are always ways to save.

  40. Wendi says:

    As a 56-year old Mrs. Frugalwoods fan, I can only say that I agree wholeheartedly with her advice. I remember years ago when my husband and I married. We had about $3,000 in the bank between us and I had virtually the same amount in credit card debit. We have always had 2 incomes, except for one year in which I stayed home with my daughter (2 year old then) and my newborn son, and except for about 2 years after I was laid off from my job. Our nest egg grown over time because we always lived below what we could actually afford. I saved money in our 401ks, and my husband saved money in our regular savings. Between the two of us, we put both of our now adult children through college and could technically retire now if it were not for the extra cost of medical insurance. So… we are waiting. So…what I really want to say is SAVE, SAVE, SAVE. Time will be on your side, and your money will double over time. This couple needs a lot more money in their emergency fund – for house maintenance, car maintenance, and medical emergencies. I would suggest to save extra income rather than spending it on house projects–unless it’s something that is absolutely necessary, like a new heater, for instance. I totally agree about keeping up with the student loan payments so that they can qualify for the forgiveness–and once that is paid (or paid down), pretend they are still paying it, but this time to themselves–into CDs or a fairly safe mutual fund.

  41. Mrs. Gardener says:

    Lynn,

    I love your art work and house!

    Keep doing what you’re doing and don’t quit teaching. You need the steady income/health insurance/loan forgiveness.
    The art center is too vague and risky at this point.

    Sell your art work, do some lessons on the side, save as much as you can, and support Lucas’s business. He made the right decision going into business for himself.

    Interest your son in the business. If I like a contractor (who is middle aged), one of the first things I ask is “Will your son(s)/daughter(s) be joining you in the business?” Our plumber’s daughters are a doctor, lawyer, and CPA but they all know how to unclog a toilet!

    The Frugalwoods community is a definite bubble, so don’t be discouraged if you are sometimes burnt out with work. There are many, many people who are burnt out at work who will never have what you have. To quote Red on That 70s Show, ” That’s why they call it work. If it wasn’t work, they’d call it crazy, happy fun time.”

    • Lynn says:

      Haha! I always loved Red’s character on That 70’s Show! Yeah, I do read a lot of FIRE blogs and it does seem like people in the FI community have achieved “crazy, happy fun time”! But I am lucky to get a little fun time every summer. I smiled at your mention of my husband bringing our son to work – in the spring he brought him along to help install a screen door for a friend of ours. He had him help with the whole process and afterward he split the earnings with him 🙂

  42. Hannah EU says:

    Lynn, there are several people on this comment section alone who want to buy your art – how about setting up a simple web or facebook page where we can find you? It could be a nice source of side-income and a great way to keep you going creatively!

    • Lynn says:

      Thanks Hannah, I do have a website, but I’m trying to keep it private for the anonymity of this case study. I’m thinking I could set up an Etsy shop for my Case Study update 🙂

  43. Rebecca g. says:

    This may have already been suggested (I don’t have time to read all the comments) but have you thought of finding a drumming instructor that would barter with you for either art lessons or husband labor? My sister is a music teacher and her husband is an artist so we get free piano and art lessons for my daughter but bartering May be an option for you.

  44. Kaylin says:

    Hi Lynn! Sounds like you guys are doing great. I am married to a New Jersey public school teacher and I know the job can be so so challenging. It’s very easy to burn out! You sound like a fabulous teacher and conscientious person… but I want to encourage you to stop working unpaid hours at your teaching job. I KNOW this is hard. My husband has done this too. And it might mean letting some things go or not being as thorough as you would like (or even not doing projects your students would really enjoy) but it would likely help alleviate the teacher burn out I am sensing in your post – sorry if this is projection! An art teacher by me actually does an art camp every summer and seems to do well at this. You could probably do this with a small group in your backyard or at a community park? This might meet your need for more income and artistic expression in your life? Just some ideas!

  45. Robert says:

    Hi Lynn,

    Not sure if you’re still looking at comments, but I didn’t see this suggestion thrown out. We have some friends who are in similar careers as you and your husband. The wife is a school teacher and the husband is a contractor. About 10 years ago, the husband had a mild stroke (rare at his age of 38 at the time), and couldn’t work for some time. It put a lot of strain on the family with two small kids. To make ends meet they decided to sell their home (they had about $100K in equity at the time like you) and they bought a fixer upper with the equity. They tightened their belts to live only on her salary for two years while he renovated the home. Then they sold the house for a $100K profit. The key is the profit is 100% tax free as long as it’s your primary residence for 2 years!

    They then put $100K in the bank and used the $100K profit to buy another fixer upper. They’ve done this 5 times now and are currently rehabbing their 6th home. They stay in the same general area so the kids don’t have to switch schools. Not saying this is for everyone, but it works very well for them as the husband is a contractor like yours. He also told me that he makes far more in a house flip working from home with less stress than he was making as a contractor.

  46. Kamille says:

    Lynn – I have not read all the comments here, but I believe forgiven loans are still taxable. IE you still have to pay taxes on the forgiven debt. I do not know the specifics of your program etc, but I think you might ask your accountant about preparing for that tax bill in 4 years.

  47. Rachel says:

    Hi – Love Maine – grew up there and still have parents and siblings living there but it can be hard to earn a living there which is one reason I do not reside there anymore. Agree that it is a surprisingly expensive place to live with heating and food prices on the higher side and as a child of retired parents the taxes are on the high side for retirees. Both parents were state employees – one was a public school teacher and they are both grateful for the pensions so please keep that in mind when thinking of leaving the promise of a steady income later in life, especially if it includes health care!! The idea that many have put forward of doing your art in the summer – especially if you are in Southern Maine and are able to get into shows or perhaps even get a summer storefront (cheap) in an area that has high summer traffic so you could sell to eager tourists would be great. Also parents look for great ideas for summer camps for kids – another need for space/storefront/rental unit that has space for tenant and your art? Would you want to teach art classes over the summer to children? I remember looking for those in my area of Massachusetts when my kids were younger and they were nowhere to be found and I would have paid a decent amount for good classes.
    One point a few others have touched on – and maybe Mrs Frugalwoods would have more contacts in the financial area – but everything I have heard and read about the PSLF program is negative. Something like only about 100 out of tens of thousands of people who have applied for it have actually gotten it. Even if all your ducks are in a row please continue to pay it down and leave it in your debt list as chances are it will not go away. I am sure you have but if not please google all the reliable sources telling of the low payout with it – here is one from CNBC – https://www.cnbc.com/2018/09/21/the-education-department-data-shows-how-rare-loan-forgiveness-is.html

  48. Lauren says:

    Lynn, this is another blogger I follow. She spent ten years building her online art business and then quit her *real world* job. She provides a lot of online lessons on how to make similar life leaps (which, in reality, aren’t leaps so much as slow builds that suddenly seem like visibly dramatic leaps when you execute the dream).
    http://alisaburke.com/

  49. Jenny says:

    Wondering if the state of Maine has some kind of energy efficiency program you can try? In Nova Scotia, Canada we have similarly cold long winters. Our power company offers efficiency incentives such as purchasing and paying for heat pump over a number of years. Small changes like making sure your windows and doors are properly weatherproofed and then slightly pricier changes like making sure you have good insulation can sometimes help bring down home heating costs a lot. Good luck!

  50. Locke says:

    Greetings,

    A few comments from a school district employee. First, I would take a hard look at the Horace Mann auto insurance. I have found that Gieco or Progressive were always the cheapest option for me for home and auto insurance. Second, the $11,000 raise is incredibly significant. My brother graduated with an MFA from UW-Madison and taught undergraduate courses there as adjunct faculty, but he never has been able to make the income that you are going to when you complete your master’s. Art is a difficult field financially – as you already know. Finally, I have put my emergency savings in Betterment with its best-in-industry 2.44% interest rate for savings accounts as of August 3, 2019. You might consider that as well, rather than a checking account.

  51. Debbie says:

    Great job!

  52. Cyndi says:

    On increasing work for your husband’s business, higher end 55+ communities are filled with people who need help, want custom work, and typically have funds to get things done. It’s a niche population, but could keep your husband busy. There are newsletters and websites in which to advertise.

    Barter for a place to teach. Free lessons to a person who has a studio you can use three days or week, or something like that. Or winterize that sunroom. More income is your friend.

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