Em is a single mother by choice living in Iowa with her two-year-old daughter and 14-year-old basset hound. Em has crafted her ideal lifestyle and made excellent financial decisions to get to this point. Now, at age 38, she wants our help mapping out the next 40+ years to ensure she makes the best choices for her future and her daughter’s future.

What’s a Reader Case Study?

Case Studies address financial and life dilemmas that readers of Frugalwoods send to me requesting advice. Then, we (that’d be me and YOU, dear reader) read through their situation and provide 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. Visit this page for links to all updated Case Studies.

I probably don’t need to say the following because you folks 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 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. I am not a financial advisor and I am not your financial advisor.

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

Em’s Story

Em’s dog

Hello! My name is Em, I’m 38 and I have one daughter, age 2, and one basset hound, age 14. When I turned 35, and was single, I knew I wanted a family and so decided to have a baby on my own. I could not be happier with this decision! Being a single parent is (very) hard, but I have financial resources, a great support network and a lot of help from my parents, who live around the corner. I work full-time as a Strategic Sourcing Consultant at a bank.

I’m originally from the Midwest; I moved to Iowa in 2004 to attend law school and have lived here ever since. I graduated from college without loans (yay!—also, privilege), and chose to attend law school in Iowa since I got a partial scholarship. I worked throughout law school and was frugal, but I graduated with around $75,000 in loans (gulp). My primary focus from graduation through 2016 was paying those off as aggressively as possible.

I was hired in my current position in 2015. Since paying off my loans in December 2016, and having my baby in March 2018, I’ve been somewhat aimless.  I don’t spend frivolously, but my “Target” and “clothing” monthly line items were eye-opening. I think relatively early retirement is a possibility for me and I’d like to get on track for that. I’m also haphazard in my charitable donations and want to make that more of a focused priority. Basically at this point, I feel like I’ve checked off all of the obvious financial boxes and am trying to orient myself for the next 40+ years.

I love that I have a flexible work schedule and get to work from home one day per week (currently working from home full-time due to Covid). I have lots of time with my daughter and daily involvement with my parents. I love my house, my neighborhood, and my friends. I’m an introvert and love to read, work on small house projects, go for walks and listen to podcasts, do crossword puzzles, play Scrabble… Most of my hobbies are very inexpensive or free.

The downside is that I don’t love my job, and I especially don’t love working full-time. I have a lot of hobbies that I don’t pursue as much as I’d like to because after working, parenting, and trying to keep my house a non-hovel, there just isn’t much leftover.

Em’s Finances


Item Amount Notes
Em’s net income $4,508 Em’s net salary, minus the following deductions: health and dental insurance for Em and daughter; vision & life insurance for Em; 401K contributions (8%), health FSA, childcare FSA, and taxes.
Annual bonus $916 Approximate; it’s usually around $11K after taxes.
Monthly subtotal: $5,424
Annual total: $65,088

Monthly Expenses

Item Amount Notes
Mortgage (including home owner’s insurance & property taxes) $1,758 Re-financed to a 15-year; this raised my monthly amount considerably but it’ll be paid off by 5/1/2034.
Childcare $400 I pay a nanny for one day per week; my mom takes care of my daughter the rest of the time and I pay my mom directly from my daycare FSA.
Groceries $299
Target (including household, personal care, some additional grocery items, etc.) $228 This is what I averaged on my Target Redcard in 2019; a lot of this is necessities but there’s definitely room to cut down.
Vacation $188 Averaged over 12 months; I took two trips in 2019.
Clothing $145 WHOA! This was a shocker to me. This seems like enough to revoke my frugal membership card. It’s probably 2/3 my daughter, 1/3 me, but STILL!
Power $134
Vehicle $115 Gas and usually one repair per year.
Restaurants $55 Take-out pizza once per month ($20) and the occasional meal with friends.
Water $50
Car Insurance (Allstate) $50 This exercise made me realize I need to drop collision coverage; after that, this amount should go down.
Gifts $50 Birthday and Christmas gifts, averaged out.
Toddler Tumbling $42 I’d cut this if my financial situation changed, but my daughter LOVES it and I think it’s good socialization for her.
Charitable donations $41 This needs to be better/more strategic.
Cell Phone (Verizon) $38 I’m on a family plan with my parents and sister; I know this could be lower.
Internet $35 I’ve shopped around; this is as good as it gets.
Pet Expenses $35 Includes two pain prescriptions, food, as well as a generous treat budget :).
Mid-Iowa Fertility-Storage Fee $28 Planning to keep this until 2022 when I turn 40; that’s my deadline for making the decision about baby #2.
Gym $15 Through work; I attend at least 12 times per month so this is worth it to me.
Hulu $13 These are obvious places I *could* cut; but I really enjoy them.
Netflix $9 These are obvious places I *could* cut; but I really enjoy them.
People Magazine $9 These are obvious places I *could* cut; but I really enjoy them.
Monthly subtotal: $3,737
Annual total: $44,844

Mortgage Details

Item Outstanding loan balance Interest Rate Loan Period and Terms Equity Purchase Price and Year
Mortgage on primary residence $172,135 3.75% 15-year fixed-rate mortgage $53,000 Purchased in 2018 for $222,500. I re-financed in 2019 to take advantage of a lower interest rate and converted to a 15-year at that time. Pay-off date is 5/1/2034.

Debts: $0


Vehicle make, model, year Valued at Mileage Paid off?
2009 Toyota Matrix $4,000 110,000 Yes


Item Amount Notes Interest rate/securities held Name of bank/brokerage
Roth IRA $49,623 I max this out every year. Vanguard
401K (through work) $48,245 I put in 8%, work matches 6%
Rollover IRA $43,465 401K rolled over from previous employment Vanguard
Taxable Investments Account $27,850 Taxable investments Vanguard
Savings Account $12,000 This is my emergency fund; probably a little on the low side since it covers only ~3 months at my current spending level, but I would definitely curb my spending in the event of an emergency. Capital One 360
Checking Account $2,000 My primary checking; the amount fluctuates frequently. US Bank
Total: $183,183

Credit Card Strategy

I have an American Airlines Mastercard that I pay off every month. It has a $90 annual fee, but I earn at least one free ticket per year and a free checked bag.

Em’s Questions For You:

  1. How much money should I put towards saving for my daughter’s college vs retirement vs paying off my house? I have some leaks that I’m aware of (ahem, ice cream…) but my only debt is my mortgage.  My budget is not “bare bones” by any means and I know this.
  2. Bubbles in the grass, courtesy of Em’s daughter

    What should I do with any windfalls? I’m very fortunate in that every year I get a significant bonus. While I still had debt, the target of that bonus was obvious. The past few years, I’ve had life expenses (getting pregnant, 20% down on a new house, etc.) and the bonus has been directed towards those. Now I’m not sure where it should go for maximum efficacy. Investments? Retirement? College? This year, I fully funded my Roth IRA with it and purchased new energy efficient windows.

  3. I definitely want to retire before age 65. Mid-50s feel possible. Without a specific target in mind, though, it’s harder to be aggressive with savings. I’m participating in the case study in part to get a handle on this/set a goal/get back on track with spending.
  4. I don’t have a 529 plan set up for my daughter and I have guilt about this. I anticipate having my home paid off by the time she’s in college as well as significant retirement savings. But should I set up a 529? And how much per month?
  5. My wish list item is to hire a cleaning person, which would cost about $200/month. I know this would bring me peace of mind as I feel like I’m constantly battling to keep the house running, but it also feels incredibly frivolous.  What would this do to my retirement deadline? I think it might be worth working an extra year to not feel constantly stressed about the dirt on the floor, dust, etc. but it’s so indulgent…
  6. I want/need to get better about charitable donations. Right now, it depends on who asks and what my checking account balance is at the moment. That’s not a sound financial approach.

Where Em Wants To Be In 10 Years:

1) Finances:

  • Very close to mortgage-free (pay off date is May 1, 2034).
  • Able to afford 2-3 trips annually with my daughter.
  • Focused on a clear retirement date (I don’t think I’m ready to make the significant lifestyle changes that would be necessary to retire by 48, but maybe… ).

2) Lifestyle:

  • I plan to be in the same house in the same city.
  • I don’t see myself getting married, but I’m open to dating or a relationship.
  • I’m reasonably confident I’ll just have the one child, although a second is not entirely off the table.

3) Career:

  • My career is very much a job to me. It has some perks: I like my co-workers, and I rarely exceed a low/medium level of stress. But I would welcome cutting back from 40 hours/week and there are many other areas of life I’d like to explore if I had the time.
  • When I think about not working and having a small child, the list of things I want to do and places I want to go is a long one.

Mrs. Frugalwoods’ Recommendations

Em is doing a fabulous job! She’s made superb financial choices over the years, which enable her to consider different options for her future. I’m impressed by her determination to make things happen and create the life she wants. She wanted to be a mom? She made it happen on her own. She wanted to pay off her debt? She made it happen on her own. I appreciate and applaud Em’s acknowledgment of the privileges that enabled her to do these things, but I also want to congratulate her for her wise choices over the years and recognize the excellent position she’s created for herself.

Em’s Financial Situation

Em has already done all the basic steps of creating a healthy financial life:

  1. She paid off all of her non-mortgage debt
  2. She saved up an emergency fund
  3. She contributes to her retirement accounts
  4. She has a taxable investment account

All very well done! Let’s turn to Em’s specific questions for us today:

Question #1: How much money should I put towards saving for my daughter’s college vs. retirement vs. paying off my house?

If it were me, I would prioritize retirement all day, every day for the following reasons:

  • Clay rainbow by Em

    Em is already on a fairly aggressive mortgage pay-off plan with her 15-year mortgage. I wouldn’t accelerate payments any more than that because a mortgage represents a diversification of assets. Yes, it’s debt, but it’s debt you’re consciously choosing to hold in order to free up your cash for other purposes.

    • A mortgage enables you to diversify what you do with your money. If all of your money is sitting in a paid-off house and you have no emergency fund, no savings, and no retirement/taxable investments, what are you going to do if you lose your job?
    • There are opportunity costs to paying off a mortgage. Namely, you’re missing out on the potential investment returns you’d enjoy if your money was instead invested in the stock market. Mathematically–if you have a fixed, low interest rate mortgage–money is better deployed in the stock market thanks to the average annual rate of return (7%) after many decades of remaining invested. Essentially, money is better leveraged in the stock market than in a paid-off house.
    • A paid-off house isn’t actionable money unless and until you sell the house, at which point you’ll need to pay for another place to live.
    • A  mortgage is an excellent hedge against inflation. Inflation is when money becomes less valuable and the neat thing about a mortgage is that it’s denominated in the dollars you originally paid for the house and so, over time, as inflation increases (which generally happens), the money you’re using to pay off your mortgage is “cheaper.”
    • I’m not anti-mortgage pay-off, but I encourage people to consider the limitations of putting all your money in one illiquid asset. It’s an “all the eggs in one basket” proposal for many folks and, things will not be good if you trip and drop the basket.
  • Em’s daughter can take out loans for college; Em cannot take out loans for retirement. This is the “put your own oxygen mask on first” rationale. Saving for college is awesome, but it shouldn’t come at the expense of your own retirement investments.
    • Think of it this way: your kid would probably rather take out student loans than have you come live with them when you retire because you don’t have enough in retirement savings. Additionally, it seems possible Em’s daughter will qualify for financial aid since Em’s household has one income.
    • In many instances, financial aid doesn’t take into account a family’s assets (such as the equity in your primary residence or your tax-advantaged retirement savings), so Em’s daughter’s eligibility would be based on her one parent’s income. In light of that, it seems likely financial aid would be a possibility for her.
    • That being said, if Em wants to open a 529 for her daughter, there’s really no harm in doing so–in many states, the minimum amount to open an account is very low (like $25) and there’s no imperative to contribute a ton to it.
    • Having a 529 can be a nice way to encourage relatives and friends to contribute to your child’s future on birthdays and holidays as opposed to giving them yet another toy.
    • Here’s my full write-up on why I have 529 accounts for my children and how they work: How We Use 529 Plans To Save For College
  • Investing for retirement is a double bonus: it’s a tax savings now AND money in the bank for your future.
    • The money that Em contributes to her employer’s 401k is pre-tax, meaning she’s reducing the amount of income she pays taxes on.
    • You do pay taxes when you withdraw this money in retirement, but in general, this works in your favor because at that time, your income is low (or non-existent) and so the tax rate is much lower.
    • Em’s employer is matching her 401k contributions, which means she’s getting free money! More about that here.
  • Em also has a Roth IRA (Individual Retirement Account), which is a retirement account that’s post taxes (in the tax sense, it’s the opposite of her 401k):
    • 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.
    • 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 (versus a traditional IRA) depends on your income and your particular tax situation. I like this Nerd Wallet article on Roth IRAs if you want to read more.
    • Em is maxing out her Roth IRA, which means she’s contributing the maximum amount allowed every year. This amount is calculated based on your income and how you file your taxes: see this helpful chart from the IRS.

Question #2: What should I do with any windfalls?

A chalk rainbow by Em

This is mostly answered above and, if I were Em, I would consider putting this money towards maxing out 401k contributions every year, which is $19,500 for 2020 (more helpful info from the IRS).

Additionally, I’d put some of this money towards increasing her emergency fund, which has $12,000 in it and would cover roughly three months of her spending.

Three months of expenses is fabulous, but it’s on the lower end of what’s considered a stable emergency fund (the standard advice is three to six month’s worth). Since her household is dependent upon just one income, her risk exposure is higher than a dual-income household, which is another reason to have a bigger emergency fund.

In addition to the above reasons for prioritizing retirement, Em is a bit behind on retirement savings given her age. To give Em a general sense on how much she should have saved for retirement at this stage, Fidelity has a helpful rule of thumb:

Aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67.

Since Em is 38, we’ll go with the age 40 metric for simplicity: 3 x $65,088 = $195,264. Em currently has $141,333 (see chart below), so she’s not terribly far off, but could stand to catch up a bit.

Retirement Account Total Notes
Roth IRA $49,623 I max this out every year.
401K (through work) $48,245 I put in 8%, work matches 6%
Rollover IRA $43,465 401K rolled over from previous employment
TOTAL: $141,333

Question #3: I definitely want to retire before age 65. Mid-50s feel possible.

I put Em’s numbers through a FIRE (financial independence retire early) calculator to help us visualize how she might achieve an early retirement. Here’s the result, courtesy of the site Engaging Data:

source: Engaging Data

Em can access this calculator and amend her variables as needed here.

As this graph shows, it should be possible for Em to retire in 16.8 years at age 54 IF all the following happens:

  • Em continues to save circa $25K per year
  • Em’s salary increases by 1% every year
  • Em invests all of the money she saves every year (this plan is predicated upon investment returns and in order to get investment returns, you have to put your money into the market).

This calculation assumes:

  • That Em will continue to spend circa $45K annually after she retires
  • That Em’s annual withdrawal rate from her investments will be 3.6%
  • Based on all of that, her target FIRE portfolio amount is $1,337,500. It’s important to note that this doesn’t allow for inflated spending in retirement. In other words, this is essentially the bare bones amount to sustain her lifestyle in retirement. This dollar amount is inclusive of her taxable investments and retirement investments (her 401k and IRAs)
  • This calculation is done based on historical returns of the stock market, but ultimately, there’s no way of knowing if the market will continue along historical trend lines.

At the end of the day, no one can predict the future and there’s no way to create a bullet proof early retirement number because we don’t know what the stock market will do. What I like about the above calculation is that it projects what would happen if the market is really good OR if it’s really terrible. Were the market to do incredibly well, Em might be able to retire in just 13 years at age 51. Conversely, if the market does terribly, Em’s retirement date might be pushed 23 years to age 61.

The Major Missing Component: Social Security

photo by Em

This calculator doesn’t take social security into account, which means it generates a very conservative estimate. Em should figure out her anticipated social security earnings, which she can do by following these instructions on how to retrieve her earnings tables from ssa.gov (the government Social Security website).

Once she knows her social security estimates, Em might be able to retire even earlier and draw down on her investments more aggressively before her social security kicks in. There’s a FIRE calculator that incorporates social security, which Em can check out here. With the addition of social security, Em’s early retirement prospects are even rosier.

How To Increase The Chances Of Early Retirement

You can do all the fancy math you want, but ultimately, the way to shore up the likelihood of retiring early is to influence the inputs in this equation that YOU CAN CONTROL: your spending and your income. You cannot control the stock market, you cannot control time or inflation. What you can control is how much you spend and how much you earn. The reason I talk about spending so often is that it’s the only variable that YOU and YOU ALONE can control and change, starting right this very minute. Yes, it’s ideal to increase your income, but that’s not always possible and it’s dependent upon someone else (your employer paying you more/a new employer hiring you). Your spending, on the other hand, is entirely within your control. I’m not telling Em anything new and I’m not saying she needs to slash her spending.

Bottom line: it boils down to how much of a priority early retirement is for Em…. and how early she wants to retire.

If Em asserts that early retirement is her #1 goal, then my advice would be the following:

  1. Reduce spending and increase savings.
  2. Explore finding a higher-paying position. Given that Em has a law degree, it seems to me she could likely command a higher salary if she were working in a more legally-oriented field. This could perhaps be at her current company, as I imagine there’s a legal department. Or, it could entail pursuing work at a more traditional law firm. That being said, I understand the importance of good work/life balance and so Em might be happier with the hours and expectations of a legal department within a company as opposed to a law firm.

Em’s Expenses

Em is already pretty frugal and her budget is quite lean. If early retirement weren’t a goal, I wouldn’t even mention her spending. But as noted above, if Em wants to increase the likelihood of her ability to retire in her mid-50s (or earlier), then I suggest she decrease her spending (and increase her income).

Question #4: I don’t have a 529 plan set up for my daughter and I have guilt about this.

Answered above under Question #1.

Question #5: My wish list item is to hire a cleaning person, which would cost about $200/month. What would this do to my retirement deadline? I think it might be worth working an extra year to not feel constantly stressed about the dirt on the floor, dust, etc. but it’s so indulgent…

Em’s daughter’s prints. Little people = big messes

I don’t think this is indulgent, I think it’s Em being honest about what she wants and needs in order to not feel stressed out all the time. Peace of mind is usually worth every penny. This decision is ultimately a question of priorities. Since Em noted that it might be worth it to her to work an extra year in order to hire a cleaning person, I think she has her answer right there. The great thing about the FIRE calculator I linked to is that Em can input different savings rates and see how they impact her timeline.

The other way for Em to approach this is to reduce spending elsewhere in her budget to make room for $200/month for a cleaning person. This is, again, all about prioritization and identifying where it’s most meaningful for Em to spend.

Em noted that the obvious places to cut are her Hulu, Netflix, and People Magazine subscriptions, but I disagree. Those three things only cost Em $31 per month. $31 per month is a REALLY frugal entertainment budget! If it were me, I’d focus on the higher end of Em’s monthly spending and go where there’s the most room to cut and the biggest opportunities to move the needle. Here’s where I’d focus:

  • Target purchases: $228
  • Vacations: $188
  • Clothing: $145
    • TOTAL: $561

I’d put a lot more attention on the line items tallying $561 than I would on the bottom three equally a measly $31. Em wouldn’t need to eliminate these three categories entirely, but in reducing them, she’d easily have enough to cover a cleaning service. And of course if she chose to save even more, she could accelerate/ensure her early retirement goal.

Question #6: I want/need to get better about charitable donations.

I appreciate the thought that Em wants to bring to this aspect of her finances. While a Donor Advised Fund likely won’t make sense for Em from a tax perspective, the mentality of a DAF might be helpful as she maps out her philanthropy. I have several articles about how my husband and I approach charitable giving strategically, which I hope Em finds useful as she crafts her own philanthropic plan:


Here are the things I would do if I were in Em’s position:

  1. Start maxing out 401k contributions ($19,500 for 2020) and beef up the emergency fund.
  2. Determine how important retiring early is and run different numbers to see when retirement would be possible based on different rates of savings and income (with the inclusion of social security).
  3. Explore finding a higher-paying job, possibly in a more legally-focused field to leverage her law degree.
  4. Make a decision about the priority of hiring a cleaning service and either make budget cuts or extend the early retirement date in order to make it possible.
  5. Hire the cleaning person, Em. It’s clear this is a priority for you and you have the financial capacity to swing it.
  6. Create a giving strategy and plan for charitable donations based on Em’s priorities and philanthropic goals.

Ok Frugalwoods nation, what advice would you give to Em? We’ll 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.

P.S. Due to the uncertainty surrounding the pandemic, I’ve had quite a few scheduled Case Study participants reschedule for later in the year, so the Case Study calendar is unexpectedly free right now! If you’ve always wanted to be a Case Study, now is definitely the time to get in touch. If you’ve emailed me in the past regarding being a Case Study and I never responded (because I’m a horrible human being who cannot handle her email) now’s the time to email again!

Update from Em on 9/30/20:

Thank you so much for featuring me; the comments were immensely helpful! My dog passed away peacefully in June, so her expenses have (regrettably) ceased. I hope to have another dog eventually, but not in the near future. Because of that and other savings, my emergency fund is up to $15,000 and I am hoping to get to $20,000 before the end of the year. Other actions I’ve taken:
*Refinanced my house to 2.6%, saving a few hundred per month
*Dropped collision coverage on my car for a savings of $180 per year
*Upped my 401(K) contribution to 10%
*Started a car savings account with the money I’m saving on my mortgage
*Set up monthly recurring donations to the Food Bank of Iowa and Planned Parenthood

Thank you again for featuring me and I really appreciate all of the feedback.

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  1. Wow, Em! You’re doing a great job!

    My thoughts on the 529 are to only worry about it after everything else is fully funded, like maxing out your 401k and such, and also to not worry about funding your daughter’s whole college career. This is only based on my own experience, but I found it very valuable to know from the get-go that I would be fronting my own college expenses—it made it so that I worked my tail off during high school to get a full-ride scholarship, and that I chose an in-state school. My parents did end up kicking in about $200/month to help me with some basic living expenses like food and utilities, but I largely covered everything on scholarship or by working part-time. It was a very valuable life lesson!

    If I were in your shoes, I would:

    1 – prioritize maxing out the 401k,
    2 – cut down on other expenses so I could hire the cleaning lady,
    3 – according to the FIRE chart that Mrs. FW presented, I would see about phasing down to part-time work in 12-13 years and then have the official FIRE date as when the house was fully paid off.

    Best of luck to you and your daughter!

    1. Thanks for your thoughts! Phasing down to part-time work is the dream, this is helping me get perspective on how to get there with a clean house. 🙂

  2. A few thoughts…
    I’d say you have wiggle room in your budget for a cleaner. Not sure how you arrived at $200- I guess it depends on how much cleaning you require. I know how much mess a toddler can make, as I had four kids, but since it is just the two of you, maybe a deep clean once or twice a month from a cleaner, and you can do top up cleaning yourself? Your child will eventually need less constant supervision and learn to tidy after herself.
    I would save up for your next used vehicle, since it’s over ten years old. Hopefully there’s another 100K miles in it, but at that age, if you’re unlucky, you could end up with a repair required that makes you question if the money might be better spent on a newer vehicle.
    Saving for college can be a difficult decision, it’s harder to forecast your child’s post- secondary pursuits than it is your eventual need/desire to retire. You seem very settled on your location, but your child may want to go elsewhere. I live in a different country to my parents, and one of my children lives in a different country to me. If it were me, I’d definitely make sure the savings earmarked for my child’s launch (maybe not just education) into adult life could be used in any circumstance (like location).

    1. Thanks for your thoughts! I got an estimate that a twice monthly deep clean would be $100 per time. I don’t mind daily cleaning (dishes, tidying up, wiping down the bathroom), I just never seem to get to the bigger stuff. And good point on the car; I definitely WANT it to last another 100K miles but there are no guarantees!

  3. Wow Em you are doing so great! As a fellow mom of an almost two-year-old I have a 529 for him but only deposit money specifically intended for him (ie. birthday checks) and occasionally a small portion of windfall money I receive. I’m also hoping that when he’s a little older it will be a good tool to teach him about finances (ie. having him split his birthday checks between his 529 and spending money or something). In the same boat re: my Target RedCard – I’d like to think it’s mostly diapers but to be honest there’s probably a few too many candles/fancy lotions/cute toddler outfits in there ;).

    1. Thank you, I’m finding all of this feedback to be immensely helpful! A 529 for gifting purposes seems good—we certainly have enough toys. 🙂 The Target RedCard always shows how much you “save” with the 5% off but I was horrified when I actually did the calculation on what I spent! m the RedCard, but man,

      1. We have our 529 through fidelity and you can set up the website to send links to grandparents etc. I have a friend who loves her Fidelity rewards card and has the rewards go into their 529 – she feels like her cash back used to “disappear” but with this system she’s sure they are invested.

        A while back I just stopped going into target (long enough that they sent me a letter reminding me that I had a Target card) and am amazed at how much I save – not sure what I was buying that I just didn’t need, exactly. It used to be I went for a few things and $200 later I left the store. Now that I’ve stopped going for so long when I do need to go it’s less of a fun adventure and more able to just dash in and out. I guess I broke the habit.

  4. I agree with Mrs. FW that the PEOPLE subscription isn’t impacting your bottom line much.

    But I cut out all magazine subscriptions a few years ago for different reasons: they got read, then either recycled or donated. So much paper for a bunch of ads for stuff I don’t want or need.

    So now I do an occasional magazine binge. I go to the local public library and spend a couple hours reading magazines. I catch up with old favorites and sometimes find a new gem.

    Your library probably has a story hour so the little one can enjoy that for a bit while you browse. She may not be old enough quite yet to be left at story hour (even though you’ll still be in the library) but she soon will be!

    One more idea for free entertainment!

    1. Thanks for the thought! I love my library–we currently enjoy toddler storytime on a weekly basis, although definitely still with supervision ;). I love magazines and have cut back to get to *just* People (and HGTV as a recurring gift), but I’d definitely enjoy a good free binge!

    2. To piggyback on that, your library might have a magazine app where you could just read entertainment mags for free! My library offers Flipster, I know RB Digital is another magazine app.

  5. I agree that if having a cleaner significantly improves your quality of life, then go for it. I’m sure it would free up time that you could spend with your daughter, friends and/or family or just doing something more meaningful. You may be able to shop around and get a better deal or have them come by once a month instead of weekly or biweekly. One of my friends said having a cleaner improved her relationship with her partner and was worth it if only for savings in therapy!

  6. If Em is having a hard time mapping out how she’d like to be more charitable, she could consider setting up a monthly, recurring donation to the charity of her choice. Most nonprofits have this as an option on their online donation form. In Em’s description, her donations seemed to be dependent on what was left in her checking account at the end of each month. If she set up a recurring donation, it would be easy to add that as a line item in her budget so that her giving is consistent and planned.

  7. Really impressive planning, Em! For me, sometimes Target becomes entertainment. I’ve tried various strategies including not getting a cart when I walk in. Sometimes it works. But just being aware of the problem area can help you become more vigilant. Or set a $30 limit when you walk in. Those big red carts just beg to be filled up!

    1. Since COVID-19, I’ve been using Target’s free curbside pick up and oddly enough, my spending at Target has decreased…. Perhaps that would be a multi-beneficial option.

    2. I agree with Laura! It turns out most of my Target spending was actually window shopping – now that I don’t see it, I don’t buy or miss it. I’m planning to use curbside or order specific items on the website or Amazon going forward.

  8. Quick question for Mrs. Frugalwoods! You mention that one quick rule of thumb is to “Aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67.” Should this be net salary or gross? I noticed you used Em’s net income in it, and I realized maybe I’ve been getting this number wrong the whole time. (And, if it is indeed net salary, would you recommend pulling out what we put into a Roth IRA post-tax?) Thanks for the help!

    1. I always found this advice confusing too since FI folks tend to spend just a fraction of their income!

      1. Definitely! I had always thought it was gross salary, which is a lot harder to accomplish, I think! (We’re close to on-track for that but not quite hitting it. If it’s net, though, we’re in much better shape.)

    2. I’ve always counted that as gross salary, not net. While harder to achieve, a much ‘safer’ amount for us in terms of goals.

    3. On the fidelity website which was mentioned in the comment it says “recommend that you save an amount equal to your salary.” To me that means it’s the gross amount they’re referring to.

  9. I know the conventional advice is to hold a mortgage and invest in the stock market, but I don’t think it’s a bad time to pay off that debt either. Market is very volatile right now, and there is some savings to be had for paying off interest early. We paid our house off a few years ago – saved hundreds of thousands in interest and now our monthly housing costs are limited to taxes and maintenance (we live in an expensive urban area and would otherwise pay $3-4K/mo in rent). Something to consider, especially if you plan on staying in your house for awhile.

    1. One of the easy way to save on that target and clothes budget is to commit to only buy second hands. Especially with young kids , put the word out that you are happy to get hand me down for your child. This will free money for a cleaning service. A fast saving is buying some frozen pizza and keeping them on hand instead of ordering. With a law degree , my husband manages 450.000 a year, but that’s working 70 hours a week at least.

    2. I agree Sarah. We are mortgage free and feel safe and secure owning our own home. I encourage everyone to be debt free including mortgages.

      Em I think you are amazing. You do so well. My 2c worth are: I would encourage you to stay away from Target, shops are addictive and you always buy a lot more than you need:) Re charity giving, I actually like your approach and I don’t think you are drifting at all. I have one or two charities I make a donation to if I have money available at that time. Otherwise my main donation is my time, I do pro bono work for people who need it – you have incredible skills you can use to do pro bono. I would also suggest you look at a trade where you donate legal or financial support to exchange for the cleaner… All the very best:)

    3. This is terrible advice especially since IA is a high tax state. If instead of paying off the mortgage she focuses on maxing 401k not only would she get higher return she would avoid the high income tax there

  10. One way to cut down on the “impulse” buys from Target could be to switch to a less tempting shopping location/format – ordering bulk/necessities online or for instore pick up so you just get what’s on your “needs” list and don’t get sucked into “wants”.

    If you don’t see it, you won’t spend it! You could also consider using the cash shopping method instead of just withdrawing only the amount you can spend and then not using a card at all.

    1. Definitely sound advice—I haven’t been going due to the pandemic, have gotten most of the necessity purchases at the grocery store/Amazon, and am spending much less since the grocery store does not tempt me the way that Target does. 🙂

  11. Hand-me downs. While your daughter is young and doesn’t care – tell the world you are open to receiving hand-me downs. I had four kids and for many years I pretty much only bought them socks, underwear, and shoes. Only rarely did have to buy them clothing – and even then – there was someone to pass it down to.

    1. We do pretty well on hand-me-down clothes, but I don’t really think about specialty items (swimsuits, sunhats) until I need them and shoes really add up! I definitely get drawn in with the cute clothing items and all of a sudden I’ve spent $75 to get free shipping…Vigilance!

      1. Would you be able to make some cash reselling those items? It takes some time, and now is not the greatest time to start, but facebook marketplace or a site like poshmark could put those items back in circulation and net you a little cash. I have friends who basically keep a rolling account for their kids, the money from selling the too-small items goes to fund the next size.

    2. I agree. Kids grow out of clothes so fast. Hand me downs, or Thrift Stores, including Good Will great place to buy.
      P.S. Mrs. FG, how do we contact you to sign up for Case Study. Thanks

  12. Em, you are ROCKING it!! I think I’d take some of that $561 in miscellaneous Target runs, etc., and put it toward your emergency fund, then start a savings account for a new car (perhaps with the savings you get from dropping collision coverage on your Toyota). Try an online bank for savings if you haven’t already. Most are offering much higher savings rates than brick-and-mortar banks.

    In addition, take another look at that travel credit card. Why not call them and see if they can waive your annual fee? You sound like a good customer and I’m sure they would work with you. The money you save on the annual fee could, again, be split between your emergency fund and your new car fund.

    Check out the consignment shops in your area for gently used kids’ clothes, books, & toys. They saved me a small fortune when my kids were small. And remember your local library, as another poster said. Story hour, loads of books/DVDs/etc., for free — it’s a steal!

    Back in the day, we were in the same boat as you were with charitable donations. We decided to get a grip, and donate only to organizations that either meant something to us personally, or that were in our community so we could see where our money was going. You might decide to do the same — a local food pantry, for instance, or an organization that serves families in some way.

    Get the housecleaner… you’ll never regret it. I had one for several years when the kids were in school and it was a godsend.

    Wishing you and your daughter all the best!

    1. Thanks so much for the support. I have dropped collision (savings of $180/year) and am definitely going to tighten up the Target/clothing spending, and allow myself the house cleaner. Looking forward to the peace of mind. 🙂

  13. A few things to keep in mind:

    1. Retirement in her mid 50’s means figuring out living expenses and health insurance before access to Medicare, social security and retirement accounts becomes available. Make sure there is money available in non retirement accounts to live on before those accounts become available.

    2. College loans aren’t quite as available to college students these days. All students qualify for appx. 5k per year in federal loans. Anything beyond that needs to be either co-signed by someone or (more often) the loans taken out by the parent instead. Private schools will expect parents to fill out the CSS, and house value + savings + retirement savings will count more significantly. I would not count on much financial aid with the kind of savings she is already doing.

    In state tuition + housing/meal plan will easily run 15-20k per year now, and will be more expensive in 15 years. I’d open the 529 now, encourage Families to contribute for for birthdays and holidays and find a way to set aside some savings here monthly, even if it’s just $50-$100.

  14. I agree, great job Em. I would add to your consideration disability insurance. Being a single Mom, if you become disabled this would be a major assault. It might be available through work. If so, if memory serves and you need it, benefits will be taxable and non portable. If purchased on your own benefits are, I believe, tax free and obviously portable. This knowledge is from distant coursework and I am not an insurance professional, but I believe it is worth your serious consideration. All the best. Paul

    1. I concur re: disability. Just remember that where the plan is from determines if proceeds are taxable or not. I’d also look outside of work for life insurance. Group term life used to be very reasonable but that has changed in the last 20 years. My suspicion is Em can get more coverage for the same amount (or less) than today. Too many employer sponsored plans are priced for converting to whole life (never a good buy IMHO). Or are universal/variable life – again, not a good choice IMHO if this is your primary policy.

  15. Great job funding the retirement!
    Look at getting magazines (print or electronic) from your public library! Also see what they have for streaming and movies (Hoopla, Kanopy).
    Will your childcare situation and costs change for preschool? $42 for tumble class will activities costs go up in the next year?
    Set up the 529 and tell relatives you did it. We have one and the grandparents have put more money into it then we have.
    Clothing we take advantage of thrift stores, consignment, swaps, local parent facebook groups, buy nothing groups, tag sales for child and adults. This will free up some money to put toward the cleaner.
    Get the house cleaner! My child is 6 and we started with biweekly cleaning 4 years ago after I had emergency surgery with a 20 month old and it is the best money we spend. My child not the toilet scrubbing needs my limited energy after work. Clean house makes us happier, healthier and more time to play together.

  16. Another SMC here! Congratulations on building a wonderful life with your Daughter!! I Wanted to share my perspective on some of these questions.

    For college, think seriously about doing early retirement or reduced work by the time your Daughter is a junior in high school. Then your lower income will help with getting more generous financial aid. I think retirement assets and primary residence are also viewed more favorably in terms of aid than other assets, but check on it. If you were to concentrate on retirement assets and your Daughter gets financial aid through grants and federal loans, the loans will be deferred until 6 months after she graduates. By that time you will be ~58 and very close to being able to access your retirement assets, if you want to and are able to help her with paying off loans.

    It looks like your only life insurance is through your company. It is SO important as a single parent to make sure that your Daughter will be financially taken care of if something happens to you. Private life insurance is inexpensive at this age, as Long as you don’t have health issues, and you don’t want to end up in a situation years from now where you have lost your job or want to leave it but now have health issues that keep you from getting insured (or just older so that it is more expensive). Think about what it would realistically cost for your parents or other family members to raise her to 18, plus college costs, financial help you would want her to be able to access later in life, etc.

    On that note, as a single parent you absolutely must have a will and power of attorney etc paperwork taken care of. It is more complicated than with a married couple where the surviving spouse would automatically have rights to everything. A good estate attorney will be able to walk you through everything and help you figure out who will make decisions, how you want money to be set up (trusts etc). It I worth every penny.

    I would not want to switch jobs while my child is 2 years old, even if it is for more money. It doesn’t seem worth the stress and inevitable longer hours when you are starting something new. As she gets a little older and starts going to school, you will see when the timing feels right for a new challenge.

    Get The Maid 🙂

    1. Thank you! I’m set on the will, power of attorney, etc. front—I took care of it with an estate attorney shortly after my daughter’s birth and you are absolutely right, 100% worth it for the peace of mind. Unfortunately I have an underlying health issue which makes additional life insurance prohibitively expensive (while not impacting my daily life at all). In addition to adding more to retirement and to my emergency fund, I’m now 100% committed to reducing Target expenditures and getting the cleaning service. 🙂

  17. You are doing a great job of saving but I am afraid it would be a bit too frugal for me. I strongly believe in having some experiences while you are young enough to enjoy them. They don’t have to be expensive ones but if you are worried about a $35 dollar expense for Hulu and Netflix I can only imagine you are not having much fun in your life. You are also going to want/need to give your daughter some fun experiences too and I am not talking Disneyland. Interactive experiences are much better education wise and can be accomplished with simple things like camping, hiking, local travel, etc.

    The only other thing I see that would possibly help is changing that 15 year mortgage for a fixed rate 30 year. You seem to have enough will power to plan your own “15” year mortgage without putting yourself into a spot where you HAVE to pay a higher mortgage no matter what. If there were a down turn in your circumstances a 15 year mortgage would be much harder to pay. The difference in interest between the two is nominal so I would suggest a 30 year mortgage and pay extra every month (after adding to your emergency fund). Just make sure you send it to the mortgage company clearly marked as “APPLY TO PRINCIPAL ONLY”. You accomplish the same thing as far as paying off the home and it gives you flexibility for things such as needing a newer car or beefing up the emergency fund, or a vet bill? You could possibly afford that cleaning lady too although I thought $200 a month was kind of a lot but what do I know.

    As far as the college fund I agree with Mrs. Frugalwoods. Your daughter most likely will qualify for a student grant (not loan. Avoid them if at all possible) and you can still save in a 509 for her other expenses such as housing and such. Windfall money is a great way to save for a 509. I did it with tax returns. Three years in a row during a time when I had pretty big returns and I was able to use that money to help my daughter out her whole college career. I live in Washington State so depending on what the rules are in your state put the 509 in your name. You will probably have to name the child it is meant for but by putting it into your name the money is technically yours and shouldn’t count as her income when it comes to applying for grants and such. Anyway just make sure you are familiar with the ins and outs of how that works. Ask a tax adviser if you must. I found that working part time while going to college was good experience and kept my student focused as opposed to partying. She still had some fun but she also learned to be responsible for herself. She also graduated with NO DEBT. Another way to get up to 2 free years of college is to look into Running Start if you have it where you live. Here in Washington a student can go to a community college starting in their Junior year of high school and earn college and high school credit simultaneously graduating from high school at the normal time AND starting college as a junior with 2 years of college credit. Great way to get those pre-requisites out of the way and the child still lives at home saving even more money. That said, my daughter only did that her senior year. She wasn’t quite ready emotionally in her junior year. Still a good deal.

    1. It’s not very Frugalwoods to assume Em is boring and no fun because she doesn’t spend obvious money on entertainment.

    2. Oh, I definitely believe in spending money on fun experiences! The vacation money is towards a beach trip we’re supposed to take this summer, and I’m willing to play for classes or other things she might enjoy as she grows older. We’re not promised tomorrow and I want our todays to be enjoyable, too. We go to all the parks, pay to swim at the local pool (and get an ice pop!), etc. A lot of things she really enjoys are cheap ($4 for the children’s museum) or free at this point (splash pads, mall play areas, swinging at the park). I’m hoping as she grows older the money I currently spend on childcare can go towards activities that will likely be more expensive.

    3. Stating that someone will definitely quality for a college grant/scholarship is a pretty dangerous assumption to make. Unless Em lives in a state that guarantees grants/scholarships for academic or has free community college regardless of financial need, grants are never guaranteed. Given that public university budgets never really recovered from the 2007 recession and state budgets are likely to be going though another round of cuts due to the COVID-19 recession, I don’t see public education getting cheaper any time soon. Also, tuition and housing at a public university is already $20k-$30k a year, a part time job making $10 an hour is barely a dent in that. (Part time jobs are still good but you can’t pretend that they’ll pay for anything but part of your cost of living any more).

  18. With the exception that I’m married w/a stay at home dad husband, I could have written a lot of this, so I’m listening too. I also have an old car that’s fully paid off and still in good shape but I have a savings account where I put away about $13k for a new-to-me car when I need it someday.

    I know people say that paying off the mortgage isn’t always a good idea, but I bought a condo in 2010 that in retrospect was overvalued (I sold it in 2018 and bought a house last week). The market in my area was very unstable for a solid decade post 2008 (and still, IMO, never recovered). For a while I was underwater on it, and I desperately wanted to sell it and I couldn’t until I had enough equity. There is something to be said for knowing you can bug out of your property easily. For me the peace of mind is worth the 15 year mortgage, considering that the monthly payment is still less than my rent was. Sure, I could risk it and put the money in the market and then pull from the market to pay the mortgage if I had to sell and was underwater but that’s a bitter pill to swallow.

  19. Looking through your budget, it doesn’t appear that there are many places to cut expenses. It looks as though you have your priorities straight, but that you fall into Target’s traps easily – aren’t we all tantalized by their $1 bins, etc.? I’d recommend maybe picking out what you need online and then picking up your purchase at the door if they offer this option. That will reduce the cute but unnecessary things you find and pick up anyway.

    I don’t think your entertainment (subscriptions) and restaurant expenditures are high enough that you need to scrap them, unless you find they no longer serve your interests. The only other option I could see would be splitting these accounts with a friend or seeing if your library offers the magazine online. But neither is essential for your savings. However, you can definitely reduce the clothing expenses. Check your local Buy Nothing Project to see what others are offering. Facebook also has clothing swap or giant rummage sales, at least in my area, so maybe check those options too. My guess is your 2-year-old doesn’t need all new clothes, so see what you can get for free or cheap from others. If you want to give intentionally, you can gift her old clothes to pregnancy crisis centers or places for abused women with children. The Salvation Army is also great. Or share them on your Buy Nothing Project.

    Maybe you can travel hack a little more to get some more free travel, but I don’t think $188/mo is horrible either. Still, maybe you can reduce it a bit.

    Regarding the bonus, since you have a goal of retiring before 65, I’d suggest putting all or at least most of it into your retirement savings. If you want to add to your daughter’s future 529, maybe add $500-1000 to her account. While I realize there are no loans for retirement, it doesn’t hurt to help your daughter plan for college. You could easily add $50 per month to a 529 for her AND receive a tax benefit. Then once per year, add a bit of your bonus. Since it’s bonus money and not income that you depend on, it’s best to save it to meet your goals. You won’t miss it anyway, so sock it away.

    Keep up the great work! Also, you mentioned the possibility of child #2. Maybe rework those numbers before deciding to add another child? I commend you having a family on your own, but I can’t imagine how tough that must be to juggle everything as a single mom. I’m glad your family is nearby to help. It sounds like you have a great situation in life overall. Best wishes to you!

    1. Thank you so much! I know if I proceed with child #2 the retirement age would get pushed out. I’d love another baby, but the money, time, and my general bandwidth are all factors that have me leaning towards just the one.

  20. Hi Em! I’m also a 38 year old single mother by choice with a deadline at age 40 for deciding on baby No. 2! I say go for it with the housekeeper. I had the same feelings of it being indulgent and unnecessary and thought that if I would just organize and do a little at a time, etc. etc. that it would be fine and I just needed to get better at it. In the end, I just hired the housekeeper and don’t regret it for a second. I no longer need to spend my weekend mornings cleaning bathrooms or thinking about folding and putting away laundry- I just relax on the porch with my coffee and a book and enjoy the day going on bike rides with my son. The time value I gained is well worth the money I spend. Plus- there is a really wonderful feeling about coming home to a clean house on the days she comes.

    I feel you on the clothes! We do hand me downs a lot but honestly, Target is our go to for clothes- they’re so inexpensive and they fit him so well. We used to buy a wardrobe for the warm season and one for the cold season with only necessities purchased in between. I still try to do that but now that he is 6 and is growing so fast there are times when I have to buy new pants or shoes before the next season because he outgrows them.

    One last thing- I contribute $50/month to my son’s 529 plan and his godparents and grandparents contribute a lot too. I would say most of what is contributed is from others. One of his godfathers contributes a few hundred dollars a year at Christmas and his birthday. I chose the 529 because it benefits me with state taxes. I work in two states so my son has one in each state- not ideal but it lowers my taxes due in each state.

    1. It’s not indulgent at all, most especially if one isn’t going broke in service of it. As a single parent, whether by choice or for any reason, you are trying, in some ways, to do the home admin and parenting that is generally done by 2 people, even if they don’t live together. This is not to suggest that it’s less-than, only that a single parent’s time is very, very scarce and something that frees it up and reduces the stress / workload, can only be a huge win. It’s not just about the clean house, it’s about the ability to put some of the many plates that you spin down for a while, for yourself and for your child or children.

      I think Em, with her very modest and moderate outgoings generally and her savings and obvious knack for planning and taking seriously her future and the future of her child, has every good reason to employ someone to alleviate some of the admin that goes with life.

      If she wanted to, she could cut a proportion of the shopping for clothes to at least partly offset this cost. That’s what I’d do in her situation.

      I would also start a 529, even if the contributions were very modest and not intended to cover all and every cost her child might ever incur around education. Even if she chucks in a few dollars every now and then and encourages close friends and relatives to do the same, it would be a nice pot to put towards some tertiary education one day, without being intended to be too lavish.

      1. My son entering school was the catalyst for the housekeeper. I was saving on child care so it seemed like diverting the funds there was the most reasonable decision. I wish I could divert more of the “admin” that goes on with life 🙂

    2. Wow! So many similarities. The overall comments have pushed me towards “it’s okay to get a housekeeper” and I am very excited for my cleaner future!!! 🙂

  21. Sounds like you are very happy with much of your life! Have you looked seriously at changing jobs? I don’t think that was mentioned, and you might be able to make a change without moving to another city or going back to school. Or see if there are ways to shift your job to emphasize the more positive parts of your work? Maybe when the quarantines lift, you could negotiate to work at home another day a week if that is better for you and if your employer sees it is a good thing?
    Do some long term, worst-case scenario thinking. Mentioned above were things especially important for a single parent, like long term disability and long term care insurance, life insurance, will, guardianship. Your parents might not be available for childcare or after-school care for the whole of your daughter’s schooling. Do invest in friends with small children to build your support network.
    Look ahead to upcoming replacements: car, all that house stuff like roof and appliances and furnace. You can cover them, certainly, but do plan for them.
    In another fifteen years, the whole model of American higher education might have changed significantly, including (I Hope!) how it is funded. The 529 plan doesn’t have to be a major priority.

    1. Just what I was thinking Heidi — so very excited to see where we will be in higher education in fifteen years!!

  22. Hey I want to congratulate you on motherhood and doing really well. Listen, this may conflict with advice you’re getting but I will say on the backend of parenting, with my oldest going to college in two years, I wish I had saved college more aggressively and earlier. The reality we are facing is that financial aid is minimal and scholarships are a pittance at public schools. If I could go back and do it over I would open the 529 early and I would chuck money into it every month without fail. I would definitely, definitely cut down on what you’re buying at target for your child and put that money in that college savings account instead. I understand the wisdom of getting your own retirement ready and you should do that. But your child is young and you have time to really accumulate some money to help her. We just saw a financial advisor who said the biggest red flag in our picture was a very small college savings and we don’t even intend to pay for all of college — we just want to help. I know it seems tight but if I could go back and cut out some of the clothes or activities or toys and put $20 or $30 a month into a 529 I sure would. And every monetary gift I got from relatives that wasn’t designated for a specific something from them.

    1. I second this. We saved a little early on for both of our sons, but then life got in the way 😉 and we stopped contributing. We had exactly one year paid for #1 son, and #2 son is just graduating and we have about one year for him. They both work part time and we are paying as we go with no loans yet. It’s essentially like paying an extra mortgage payment every month, but worth it to us, as our goal for them is to be self-sufficient!

  23. Hi! Thank you for sharing your story.
    I have 2 things to offer:
    1) The 529 plan. I put thousands away into a 529 plan for each of my kids since they were born. The money grew and I was able to pay for their degrees entirely so even they did not have scholarships they each graduated debt free which I think you will agree is an enormous boon in starting out as an adult. They have a jump start on their own financial freedom. And I was able to make this work even though I had an average salary (less than 6 figures) and my husband was a stay at home dad – so one salary and 2 kids plus husband to support . I think a 529 plan is the best gift you can give your children and if its making you feel guilty then maybe it is better to at least set one up. I was able to do this while maxing out my 401 K by spending less which leads me to
    2) The $299 on groceries and $228 RedCard spending. I don’t know what a RedCard is and I may be wrong, but it sounds like it is designed to suck you in to spending more. For comparison we spend just under $200 a month for both groceries and household items and clothes per month for two adults. I get my clothes from clothing swaps often really nice items that were hardly worn. The advent of FB Marketplace and Buy and Swap sites make it really easy to reduce spending.

    1. I agree – we started 529s for both our kids when they were toddlers. Started small at 25$ each per month and then it grew as our salaries grew. My MIL also gifted them each year with cash which we put into their accounts. Both kids are graduated college (son in 2019; Daughter in 2015) and we were able to completely cash flow my son’s from the 529 . My daughter went out of state, so we were able to pay about two years worth – she took loans on the rest including grad school.

      We are in Iowa too and I highly recommend Iowa’s 529 program – we did it based on their age, so it get less risky the closer they get to college which saved our bacon with my daughter as she started school in the recession.

      Take advantage of Iowa’s ability to take college courses while your child is in high school. Both my kids walked in with close to a years worth of credit and that too, will save lots. Scholarships are not generous and if you are middle income, there is not much available to you.

  24. As someone whose parents opted to save for their own retirements rather than my college fund, I can confirm that you should not at all feel guilty about that choice! I did wind up with a sizable chunk of student loans, but was lucky enough to find the FIRE movement almost right after college and was be aggressive in getting them paid off while still beginning to save for my own retirement. I have no regrets about taking out student loans and feel no resentment or any negative emotions towards my parents for that decision.

    Also, I think you’re the only person I’ve ever come across who has a similar perspective on parenting, so I just wanted to say thank you for the validation! I’m only 27 and don’t want a kid quite yet, but I do know that I don’t want to be in a relationship but do want to be a mother and was honestly not sure if that was a valid or even possible choice.

  25. Hi Em!

    You’re doing incredibly well. As someone who has considered being a single mom by choice, your story is inspiring! Just wanted to be one more voice encouraging you to MAX THAT SUCKER OUT when it comes to your 401k! It will make all the difference in your retirement savings. Try to beef up your E-fund to six months. This will also help it double as a ‘sinking fund’ for a car downpayment, new HVAC, etc while also leaving you with extra in case of income loss.

    I also largely agree with Ms. FW recommendations.

    Go for the cleaning lady once you adjust your 401k. Totally and completely worth it.

  26. You have done such a great job! Way to go!! I have 2 children in college. When they graduated we gave them both $5000. Both chose to go to community college and work part time. My son will graduate with his Bachelors degree next spring with zero student loan debt. My daughter just received a full transfer scholarship to a 4 year college. She, too, will graduate debt free. Did it take hard work? Yes. But it can be done. Also, as the 53 year old mother of 5 kids age 22-15 I can tell you that despite my best efforts our house was messy and disorganized many times and it caused me stress. However, looking back, even if I had had the financial resources, I would have spent $2400 a year on something more meaningful and long lasting. Best of luck to you!

  27. I’m just so excited to see a single mother by choice on here:-):-):-) When I was pursuing that path it would have meant so much to me to see an example of another normal, awesome, woman whose life took her on the path of being a wonderful single mom. As for as your financial questions go….I really prioritized anything that had to do with preserving my sanity and ability to sleep. I think for me realizing that I was going to be my child’s only parent meant that I really internalized that I needed to make sure I was able to function optimally, and, I wanted to really enjoy the early years. So I give you encouragement with the housecleaner. All the best to you and your family:-)

  28. Another Single Mother by Choice (SMC) here! I have two children, one is now 20 and just finished his sophomore year at college, the other is 17 and a junior in high school.My first was born when I was one week shy of 40 and the other when I was 43. Have never, ever regretted the decision to add a second child!! I can’t imagine being an only child when parents get old (us) – it was always so helpful to me to have my siblings as my parents aged I wanted to be sure my older son was not alone later in life. As far as the 529 goes, I would definitely start one. Just do $50 a month or whatever you are comfortable with -but try to increase while they are young- kid costs have gong up for me as mine have grown – it really can’t hurt and tax free grown is a great advantage. I think it helps to have a bit of a general goal about how much you want to save for their college tuition. Do you want to pay for all of a 4 year private college? 2 yrs at a private college, 4 yrs at a public university? 2 yrs a t public university. Many choices! It seemed overwhelming to me 20 years ago, but I decided that I would TRY to save enough for two years for each at our public university (UMass) and that they could get loans for the rest, and it has worked -also the older one has received a significant merit scholarship that pays for half his tuition/room and board so he has only taken the 5K federal loan offered to all kids which I think should help build his credit (he is a real saver and already has 10k in a Roth himself and is already paying off his loan monthly). Good luck- you are doing a great job!

  29. I was thrilled to read your thoughts on mortgage prepayment, then surprised that switching back to a 30 year mortgage was not on your list of suggestions. I’d use the 30 year mortgage payment amount in the calculations to see where she lands. It’s an immediate and obvious source of money she could tap to increase her EF and investment saving NOW. She can always pay off her mortgage in a lump sum after compound interest and the time value of money have worked their magic.

  30. Thank you so much for the feedback. I’ve been responding individually, but they seem to be caught in the review process, so a general comment (which will hopefully publish):
    –Estate planning (will, trust, etc.) has been done
    –Unfortunately I have a health condition which does not impact my daily life, but does make additional insurance cost prohibitive
    –I buy the majority of my daughter’s clothes at a consignment sale and definitely open to hand-me-downs! Last year I got caught with some needed items I’d failed to source ahead of time (snowsuit, swimsuit, sandals…) and also definitely got snared in the occasional impulse purchase
    –Am going to up my 401(K) contributions and target an emergency fund of $20,000 by this time next year.
    I really, really appreciate all of the encouragement, positive feedback, and additional thoughts! Thank you for taking the time.

  31. I think there are very few places you can save beyond Target and clothes. There comes a time in a FI journey when one has to consider the need for increasing income. I can’t say what’s right for you, but I encourage thinking about whether that is something you feel is net positive for your family (once you consider all changes and pros/cons of a new role). You mention some disappointment at not having time for some hobbies/interests/personal pursuits…is your job one with flexible hours? Could you add 30 min to your days and get a half day off once every 2 weeks to make space for some of those things?
    I’m really torn on the paying for college thing. We don’t have a kid yet, but it’s really hard to imagine paying for raising a child, preparing for retirement, AND the absurd cost of college. I think we’re going to have to add small amounts to college savings when we can and ask for portions of holiday/birthday gifts to be aimed towards it. I’d say open an acct, but don’t beat yourself up over how much you can reasonably contribute after beefing up emergency savings and establishing a car replacement fund.
    Some others have mentioned and I think it’s worth seconding- consider how and when you’ll want to spend the money you’re saving and choose the appropriate investments for that. When I met my husband, he had an awesome 401K contribution level, but was completely unprepared for mid-term savings needs pre- mid to late 50s expenses. We are now better diversified and have savings and investment vehicles to support our plans in the next 5-20 years, pre-retirement account penalty access age. It took a year or two to develop those plans and we’ll be funding them for awhile still. But having the plan in place provides me a lot of comfort.

  32. I think you are doing fabulous! But I do see some holes. Especially with an emergency fund of only $12k and you being the only income in the family. Do you have a sinking funds account? This would be an account you save money in for a large home repair or a new car – or anything larger than what would just come out of your monthly paycheck. This could bring you peace of mind to know that if your furnace needs replacing or your car bites the dust that you have money set aside for stuff like that. I find our sinking fund account to bring more peace of mind than our emergency fund. One reason is because it will prevent us from raiding our emergency fund for things that truly aren’t emergencies. Home repairs, new cars, etc should be planned for, though many times they feel like emergencies.

    I actually think that you should start a 529 for your daughter. We never did them for our kids, but I REALLY wish we had. We have done the panic come high school and work extra jobs route to help our kids pay for college with minimal debt. I think even setting aside $100 a month into it will go along way in getting your daughter ready for college. freshman year is typically the most expense (hello high room & board fees!) and if anything $1200 a year would help cover that expense that scholarships (even full rides sometimes) do not cover.

    Yes on the cleaning person for sure. And keep in mind that once your dd starts school you won’t have that $400 childcare fee so that can be funneled to retirement and really be a boost.

    I think coming up with a plan for exactly what you are saving for or donating and setting up direct deposits or payments will help. Making things automated ensures things run smoothly. Good luck, you are doing great!

  33. Em,

    You are doing very well, just two suggestions:

    1. Disability insurance (it’s very important especially since you are a single parent) someone already said this and I second it!
    It’s very inexpensive if your young and healthy and protecting your human capital is as important as your family’s health.
    Read “Your Money Milestones” by Moshe Milevsky for a perspective on your human capital.

    2. Use the $200 a month you are going to spend on a cleaner to pre-pay the mortgage! Live with a little dust (it comes back anyway) and own your home. Nothing is as freeing as getting rid of your biggest monthly bill.

    Good luck,

    Mrs. Gardener

  34. Em, congratulations on everything! As a parent of two debt-free college grads (they are now 24 and 27), I look back now and appreciate that every child is unique, and kids go through various stages. You might actually find that you want to work less while your son is home, and then go back to full time when your son is in college, when he no longer lives with you. I took some time off when my youngest was in middle school and high school, and then went back to full time employment when he went to college, to help pay for it. My husband worked throughout this time, and I realize you may not have this luxury. As kids get closer to leaving, you realize that your time with them is short. Time flies by! Perhaps work part-time when he is younger, and then back to full-time when he is in college, and then retire after he graduates from college. Just one person’s input!! No judgment–every situation is personal. I am trying to provide a different perspective through my lens of experience.

  35. About a year and a half ago my Target did a remodel/ revamp and it’s actually much worse- aisles are always blocked by workers or stuff waiting to be stocked, there are almost no full-service checkouts and instead some ill-working self-serve checkouts. It’s now annoying to go in and it’s saved me so much money!

  36. I’m going to speak to the housecleaner question: YES. DO IT! I was previously a single mom working full time with a young child (preschool age). I was exhausted and overwhelmed. I hired a housecleaner and it was truly an act of self-care. We can’t do it all by ourselves. It’s one less thing on your plate and as a single, working mama, you have A LOT on your plate!

  37. Hi Em, from another lifelong-Midwesterner/current Iowan!

    I think you’re doing really great. I’m 30, and I would love my finances to look like this in 8 years. I also think it’s fantastic that you were able to pursue your family and career goals on your own.

    I totally get that feeling of aim-lessness. My husband and I are spending more now because we can, because we’ve knocked out goals like debt repayment and buying a house. With a mortgage rate as low as yours, I agree that it doesn’t make sense right now to pay down the mortgage any faster.

    Shoring up your cash reserves is a good idea – we’re doing that too because who knows what this economy will bring? My husband and I have a “bare bones” spending amount that represents what we’d resort to if one of us lost their income, so it might be worth calculating that for you and basing your emergency fund goal on 6 months x your bare bones budget. Your Roth IRA contributions can be withdrawn in an emergency without penalty if you had to, but you probably don’t want to take money out of the market right now if you can avoid it.

    The stock market looks scary right now, but if you aren’t planning on retiring for at least another 10 years, it’s probably not a bad time to stick your investments in the market. It’ll be a wild ride in the near term, but we can expect the money to grow in the long-term. And remember that your long-term investments can definitely serve as college savings for your daughter, should she decide to go to college. I haven’t looked into Iowa’s 529, but it’s worth comparing that against just getting a regular taxable investment account.

    Also? I’m not the most frugal but I think that if getting cleaners gives you more time and energy for your daughter, that may very well be worth it. Toddler years are hard, because they need so much attention. My husband and I have talked about getting cleaners while we’re working and have young kids so that we can invest more time into our family. If that’s something you want to prioritize, there’s nothing wrong with hiring help.

  38. I agree with everything that Mrs Frugalwoods has said. I personally would forego the magazine in paper form. I would take the online version at usually a lesser price and you pick and choose what you read and look at. I would start a 529 but as one other person stated, use gift money to fund it for now. I admire all that you have accomplished on your own. Kudos to you! I worked with a nurse who did much of what you have, only she became a registered nurse which pays far less than an attorney but she accomplished early retirement at age 60. Her small home was paid for, she bought a few years old car and kept it 10 to 15 years. She had a weak stomach so did not ever eat junk food or drink alcohol which saved her a lot. She invested heavily from her salary into the stock market. She did end up getting a pension worth several hundred dollars a month to her. She had to pay cobra from age 60 to 65 when she qualified for Medicare. She also, about 8 or 9 years ago, bought an annuity with some of her money because she was afraid of outliving her money with the stock market tanking back then. She is not concerned with leaving money for an heir, only that she have enough to last her until she is mid 90’s. She is 80 now and having a few medical problems with an expensive monthly med which hurts but she will be ok financially. She has taken cruises and trips when she first retired, now she cannot due to a foot issue. I only mention all of this because it is possible to retire early but perhaps not as early as you would like to. I know Elizabeth mentioned inflation. I read an article from Darrow Kirkpatricks blog where he did a look back on his spending and found that inflation does not affect everyone the same. Yes, it may be 2 to 3 percent a year for some but not others. Like he stated, if eggs go up in price, they cut back eating them or eliminate altogether. Clothing that cost a certain amount 10 to 20 yrs ago, can be bought for same price or less now. Bread that was a dollar a loaf can be found today for a dollar or less at bread stores that sell excess. Auto prices have increased but now there is more choice to style so instead of buying the higher end, you can buy a smaller less equipped model for the same as a higher end model back then. You can carryout instead of eating out. Meds are definitely more expensive but there are choices there too with sponsored meds by various stores like samsclub, Walmart and Publix. Children can be clothed for nearly nothing if you are a careful shopper/thrifter. My mother purchased many of our clothes at goodwill. I cannot remember all of the things he mentioned but in thinking about it at the time, I realized our inflation was minimal because I do exactly as he does. His blog is written mostly by Chris marmula now but you can still find postings from Darrow. I also think a cleaning person is extravagant unless you have someone in once a month maybe. I have a 200 dollar robot vac that is awesome. I think Rosie is worth 200 a month, she vacuums far better than me, then I just run a mop over the floor and that jobs is done. I think the main things for someone wanting to retire is to be able to live on defined money, money that comes in every month without drawing from retirement money for at least the first 10 to 15 years of retirement, that way you do not have to sell your stocks or bonds in a down period. Downsize your home or find a way to rent out part of it if needed. You have a degree that could earn way more money and benefits and possibly a pension, I suggest you look around for that opportunity and do not allow for lifestyle inflation if you do find something better. Good luck to you.

  39. My only suggestion is to look into the world of travel reward cards a bit more. I think you can do a lot better than the AA card you already have. It shouldn’t be too difficult to cover 2 trips per year with the points you’d earn from sign-up bonuses and your normal spending. That would free up $188 of the $200 for a cleaner. Alternate Netflix and Hulu months (can’t watch both at the same time, anyway), and you’ve got the full $200 covered.

    1. Thanks! Pre-child I was very good about the hacking and then she was born and I just stayed on the last card I’d ended up with. This is inspiring me to get back to it—it wasn’t very time consuming and I was able to take some very epic frugal trips!

  40. Just adding a suggestion on the television & streaming… We live in California and have an Amazon Prime account so we’re able to stream videos and television shows that are included for free (we rarely do pay-per-view shows) One of our adult daughters has a Netflix account and granted access as the account allows 4 devices to connect at the same time (even from different locations as long as devices are linked to the account). Our other adult daughter has a Disney account and has us allowed us access as it works in similar fashion. My suggestion for anyone including Em to ask family or friends if they would allow access to their subscriptions. I’m sure Em could also do something like this with the People account too!
    I’m all down for bartering or chipping-in for things if it can save money!

  41. Congrats on all of your accomplishments!! Just a couple quick points. I would aim for an emergency fund of $25,000. Once you hit that, then focus on a separate home repair and new car savings fund. I think the rule of thumb for a home repair fund is 1% (minimum) of the home value per year, so in your case about $2,500 annually. So maybe set aside about $200 per month for home savings and $200 for a new car, which you’ll need eventually. You probably don’t want to be draining your emergency fund (or taxable investments) for home repairs and a new car, which aren’t truly “emergencies.” For the cleaner, maybe start out with just one deep cleaning per month and see how that works for you — perhaps spending $100/month rather than $200 would be enough to improve your stress about keeping up with the house. You can always up it to twice a month if once isn’t enough.

  42. Just adding a suggestion on the television & streaming… We live in California and have an Amazon Prime account so we’re able to stream videos and television shows that are included for free (we rarely do pay-per-view shows) One of our adult daughters has a Netflix and Hulu accounts and granted access as the accounts allow 3-4 devices to connect at the same time (even from different locations as long as devices are linked to the accounts). Our other adult daughter has a Disney account and has us allowed us access as it works in similar fashion. My suggestion for anyone including Em to ask family or friends if they would allow access to their subscriptions. I’m sure Em could also do something like this with the People account too!
    I’m all down for bartering or chipping-in for things if it can save money!

  43. Speaking as a former librarian, I encourage you to Really get to know your local library! You can read new magazines for free, maybe check out last month’s issues, maybe buy older ones from the Friends of the Library Bookstore if you really like the ink-on-paper version. Libraries also have a LOT of ‘stuff’ (technical term) available digitally; movies, books, magazines, music, reference material, etc.

  44. Wow Em! I love your attitude. It’s nice to hear I’m not the only frugal person that is trying to minimize the target line item in budget. You’ve been disciplined and forward thinking in your approach, which Is so admirable. One thing that stuck out to me was that you pay a fee for your credit card, it’s not a lot of money, but have you explored other options recently?

    1. I haven’t, I’ve had this card for a few years and not thought much about it. Adding credit card research to the to-do list!

  45. Hi Em, We add 50 each month to our daughter’s 529 and i would put everything at low risk since you are looking at long term, we had something at medium risk over a year ago and ended up not gaining anything that year because of markets. The amount you could increase and in lieu of presents that end up taking up space and aren’t long term you could always suggest that people fund her account to help her later. One year our daughter decided to have a fundraiser for the pandas as well so there are those options, we don’t do yearly birthday parties and keep it simple. Possibly reading more about minimalism might help with frugality and spending with clothing. I know it is an extremely personal decision but I would consider the health risks and dangers of having another child at 40, plus then adding in all the expenses of baby life would put you further out for retirement and possible saving of another 529 for college or look into fostering or adopting if that may be right for you. I agree with the lady who mentioned digital library – there are tons of resources including movies. Depending on your vacations think about what you want out of them, for us it usually involves traveling being the major expense because of distance to family or friends (We are a retired military family). I try to buy food there and make our meals, snacks, tea bags including bringing a packit on the airplane for snacks or a cooler for road trips. I pre pack food and usually end up with more than needed but it gets eaten. We usually try to go ‘out once or twice depending on location and celebration. We like a certain hotel chain so with the yearly fee on the card I get a free night every year. I also would earn points with their credit card and pay off each month. If you try a card that has the rewards you want you could pay your utilities with it to make more with your money. As others suggested – we usually keep one video account active at a time – we rarely watch shows.

  46. I funded a 529 for my son, who is graduating this year, it has about 65,000 in it. And now he has decided not to go to college or trade school….he’s going to apply to county fire academies, which are free….so we are now left with 65,000$ that we will have to pay taxes on and a penalty to get access to the money. Just saying having a college fund is not a guarantee that it will be used.

    Em, do you buy your daughters clothing new? If so, you’ll save alot of money at thrift shops or yard sales (they’re the cheapest)….I’m not a Target shopper, maybe if you just stop visiting you’ll save money that way.

    1. Definitely cutting back on Target trips will help! Some of that is necessities (diapers, contact solution, toothpaste) but certainly not the whole amount and lots of good suggestions here for shrinking it.

      I buy the majority of my daughter’s clothes from a twice annual consignment sale, but seem to buy a few additional things per month which add up (shoes, swimsuit, etc). I really was surprised at the total so will be paying a lot more attention to that going forward.

    2. Can your 529 for your son be used for future grandchildren? I do not know particulars but what an awesome gift that money would grow into for future grandchildren. I would research the rules on it

    3. Gretchen, you may want to do research on if you can use the 529 for books or living expenses for the fire academy. Also, jobs like police or fire have early retirement rates ( and sometimes disability) he may end up using it to retrain for a second career or to get the education to move up within the fire ranks. I would hold off on saying oh, it’s not usable, and also find out if it’s eligible to be be reassigned to another family member.

  47. Em, you’re doing an amazing job, kudos! People have some great comments here so I only have two POV’s to add. One, you don’t have any guarantee that your daughter will want to go to college. Our son had little interest in college although he made good grades, and he hasn’t used his degree since – good thing he got a free ride (dad had an employee benefit that covered tuition and son lived at home). The other is that many people who turn to house cleaning are not folks with a lot of money, so $200/month is helping someone else’s bottom line. It’s not charity but you’re supporting a small independent business. Good luck with your plans!

  48. There is only one thing that doesn’t appear to be covered and that is where do the kid(s) go after school when you are working. There comes a kid age where they can’t be trusted to be responsible (other kids will influence them) and you can’t really stick your mom with the pre-teen and teen age years which are the most difficult. As a divorced mom with no help or concern from the ex (which suited me fine) I solved that problem with sending my two to boarding school for high school. I had a neighbor who did the same thing with her one child. Is it a perfect solution? – no – it’s a way to have adult supervision and activities for a good part of the waking hours in a place where (at that time) they could not have cars at school (now it may be very different). In any event, my only suggestion is to think about your options for the pre-teen and teen age years and factor that into your plans. This is costly, and both my kids had to work part time to help pay for it, but it is a viable answer. Otherwise you are doing great and Liz’s suggestions are spot on.

  49. I agree with Soggy Suzzi. There are serious costs after the pre-school years in the way of after school activities, sports, and summer activities, etc. At the time, my husband was doing photography so his time was flexible. Plus, the kids did a neighborhood swim team. That kept them busy and healthy throughout the summers while under adult supervision.

  50. Great job! I might have missed it, but you might want to consider refinancing. We are trying to refinance for an interest rate of 2.5 percent for 15 years.

  51. Em, you’re doing an amazing job with your finances. I have nothing to add on that front since you’ve received so many valuable comments from others. I wanted to comment on the legal field. I’m an attorney and wife/mom. I now work for the government in large agency. Working at a private firm will definitely take you away from the life you have now. It’s a big boost in salary, but at a cost. It wasn’t for me. Coming I half day Saturday and working until 8 I’m on some weekdays wasn’t for me. I make a six figure salary at a federal government position (not always easy to come by, but I was lucky). Being able to go home at a set time, not being contacted in the weekend, having a work and personal life balance are all immensely valuable to me. I couldn’t go back to a private sector legal job now. In fact, my friends from law school who are in private firms are looking for jobs in nonprofits and government. Just my two cents.

    1. I’ve actually never held a private sector legal job and I don’t want to. I already feel like I spend a LOT of time working and it’s standard 40 hrs/week. Planning to explore getting a raise in my current position and/or switching positions internally to something higher paid. TBD, but private practice is definitely not the direction I’m heading in!

  52. I would just like to say that as somebody who has a cleaner (one day a week, for one hour, as a team of two, normally but two hours currently as other customers have cancelled her) I think a cleaner is worth every penny and then some. If you like cleaning, great. If you could be doing something with your time that is more financially rewarding, get one. This may well for you up to work an extra day from home if this is at all possible.
    I have the great blessing to be able to work from home full time. However, time spent doing housework is time I don’t spend earning. Therefore, my cleaner pays for herself, effectively.
    I could say so much more, but I would recommend using secondhand clothes resources for your daughter-at her age, virtually everything you get will be unworn, or look unworn.
    It’s great to give to charity, but why not keep to just two favourite charities, who will really appreciate knowing that they have a regular income from you, even if it’s just $10 a month?
    Charities that have a regular income know that they can plan ahead.
    Savings on clothing and charity giving may enable you to pay for the cleaner.

  53. As a mom of 3, one is a current teenage daughter, there are so many expenses you haven’t thought of yet. I started a $25/month wedding budget for my girl when she was born. Then we went through all kinds of dance, gymnastics, soccer, cheerleading, etc. Plan for $200/mo for activities probably from ages 4-18. Get a jump on these expenses now do that it doesn’t blow the budget when you want to retire.

  54. If you want more work life balance, rather than fantasize on retiring early, try to either get a remote job or negotiate with your current job working remotely 3 days a week after covid. This will greatly help your work life balance. Early retirement has become fashionable as of late but the reality is, have you considered what would happen if you live to be 95 years old? Try to either get into a line of work you like better, get promoted into something else or work from home to avoid hating your job and thinking you want to retire early. Personally I work remotely and this has allowed me to travel extensively, spend prolonged period of time in foreign countries and with family. After doing so I realized I don’t want to retire early after all. What the hell would I do all day? Everyone else is working all day anyway. If you retire early and change your mind and want (or need) to work after early retirement, it won’t be so easy to come back, employers don’t like employment gaps and your caree momentum will be lost.
    – State income taxes in your state are high. For this reason you need to max your 401k contribution to the IRS maximum. Time flies and the power of compounding interest cannot be understated
    – Don’t go too crazy with the 529. What if your kid has no interest in college?
    – Get rid of the annual fee credit card, I just called my credit card co and they let me switch to another card with no fee after I threatened to cancel. Then when you are ready to travel open one that offers a bonus.
    – You say you are short on time, in that case pick only one streaming service. I don’t understand why someone needs more than one with the nendless options a singlone provides. If you get bored, switch every couple of months.
    – Eliminate charitable donations at least until you have an adequate emergency fund which I would say is at least twice what you have now.
    -I like what another poster said about considering the cleaning service your charitable contribution. Get cleaning service during the tough toddler years and eliminate in 3 years. Think of it as temporary. Remember it is 2400 a year which means 24k in 10 years. Personally I can handle a little dust in order to keep my money but I understand a single mom wanting one.

    1. 401K contribution is being bumped immediately! 🙂 I currently have two because there is one show on Netflix my daughter loves, and there are a few shows on ABC that I enjoy that I can get on Hulu (I don’t get reception for ABC with my rabbit ears). But there’s certainly an argument for only having one.

  55. A clarifying question – is daycare expense double counted in the financial tables above? It looks as though it’s backed out of your income pre-tax (so reducing your net income), but also included as an expense deducted from your net income. Is the $400 coming out of the FSA? If so, it may be better to show that expense separately. If it’s already accounted for in your net income you actually have more monthly cash to build up the emergency fund quickly, etc., but I could be reading it wrong.

    1. Totally understand the confusion—my mom takes care of my daughter most of the week. I max out the daycare FSA and pay her through that (which is not shown in my expenses because it comes out of my income pre-tax). The full week was too much for her, though, so I hired a nanny to come on Wednesdays. The nanny is the $400/month ($100/day for one day per week). My childcare expense is really around $900 but the FSA amount isn’t included in the budget. Hope that makes sense!

  56. Hi Em, I just wanted to congratulate you on being a single parent by choice. Anyone who has children, knows how hard it is to raise them, and that you need a break from time to time. And here you are, managing everything on your own. My partner and I have two small children and we both work, so we decided to have a housekeeper and it’s really worth it.
    You could also argue that you’ll be providing employment for someone and therefore, you are giving back to your community.
    I would also like to add that it is truly wonderful that you took the time to think about your future, and your daughter’s future, during a time in your life that you might be overwhelmed with the daily chores. I have a lot of admiration for you. Well done!

    1. Thanks for your support! The overall sentiment seems to be that a housecleaner is not so much an indulgence when your children are small and I think if I view it as a change for a few years, rather than a permanent shift, the expense is easier to justify. I love being a mom and am so grateful I have the opportunity!

  57. Hi Em! You’re doing very well – keep it up. As another very happy single mother by choice, i wanted to give a shout-out! I also have a 2 1/2 year-old, and just had my second who is 14 weeks. I am very very happy about having two, since they will have each other when i am out of the picture. The second is much much cheaper than the first because you already have the infrastructure and equipment. Still, if you decide you want another one, you might consider putting some windfall money in a “second child” fund which you can later convert to another 529 if there are leftover funds.

    1. Congratulations on your babies! My two year old still FEELS like a baby to me so it’s hard to envision another one right now but the option is there for a little while longer. A “second child” fund is a good thought; it’s never a bad idea to have money saved up!i have a lot

  58. Hi Em!
    I love your case study and all that you are doing. You are well on your way towards a wonderful future with your sweet daughter. Here are some quick things I might do in addition to Mrs. Frugalwoods’ excellent advice.

    Reducing Expenses / Instant Raise for you (yes! to the cleaner):
    – Living near your folks is a great benefit. I do too. Some of your shopping expenses (Target) may be shared with them perhaps by purchasing in bulk at Costco/ Sam’s Club type retailers and splitting it up. Much cheaper for many products that way! My fam and I share cell phone plans and even live close enough to share internet.
    – Join any sort of mommy group in person or online and start putting out requests for clothing and I’ll bet you it’ll come flowing in. Even just posting on your main page to friends that you’re looking for summer clothes in x-size you’ll probably be surprised. Another cut!
    – You certainly can get creative with the small stuff too: You should be able to get People Magazine (and tons more!) through your library in a digital format and flip through that way! No more old issues to recycle either.
    – If you’re like me you go through phases on particular shows that you binge on for awhile. Why not do Hulu *OR* Netflix for awhile, then just switch to the other as a bit of a treat. Super easy to do and another quick cut.
    – And thanks (?) to COVID you might “enjoy” some temporary cuts to Restaurants, Tumbling, Vacations and even the Gym. The bonus to this is that you may accidentally stumble into alternatives (say in-home videos to work out to, special dinner nights at home, tumbling with the neighborhood kids etc)
    – I’m so glad you prioritize giving! I have been “donating” through Kiva microloans for years. The benefit here is that you get to support all kinds of causes, through individuals all over the world and then your support is slowly paid back to you. At this point my pool of money with Kiva is constantly refilling so that I can turn around and give it away again. It is a super fun part of the month I look forward to and no longer comes out of my monthly budget.
    – ((Similarly, I do support several kiddo’s education through Plan International, a type of sponsorship program and thoroughly enjoy writing letters back and forth drawing pictures etc and have a great image of you and your daughter getting to know a child her age that way ; that would be a fixed cost per month as well and a great experience to boot))
    – You’re also looking to already cut your cell phone potentially and car ins. too! For the cost of one morning with a cup of coffee to make the switch you will have more cuts there. Yay!

    -Yes! I went through a time when it was a great relief to me knowing they were coming to take care of the big stuff. It is always flexible. There are companies that will quote a great price and then you say can we do it for less? and they always can. You may even start chatting with folks at work and find they have a special person who does it independently for less per hour/cleaning. You might spend $200 initially, and then find you are able to reduce that with fewer visits or a lower fee per clean. I started with weekly and quickly realized I was just as happy every two weeks and it saved a lot and I got the same benefit psychologically!

    – I am in agreement that your bonus windfalls (along with any tax refunds, stimulus checks, gifts) can be split towards maxing your deferred comp, while carving off a bit towards your emergency fund. The percentage of each is up to you based on what feels right and provides a sense of progress and security.
    -If it were me, I would say beef up your cash even a smidge extra, preemptively saving towards your future vehicle (I LOVE that you own a Matrix!! Just FYI, my 2004 is still going strong at 280,000 and hasn’t had any major repairs to date – my mechanics are amazed. A Matrix has all the insides of a Corolla – a really great car that you probably have years left with!)
    – Once you have these savings goals set and happening towards your preferred retirement date, then I would carve out a portion of any raises or side hustles to contribute to the 529. I’m not sure I would say much to your kiddo about those savings though since there is a great argument for building up the idea that she has a vested interest in working hard and being creative. Then, you swoop in with unexpected support that she didn’t know was coming – and I think it becomes the best of both worlds. My parents did a similar thing that pushed me to work very hard and pushed me to learn lessons far more valuable than cash.

    For you:
    – If you can find it, take an hour a week to start daydreaming, journaling, searching for new employment. If you aren’t happy, and you already know that, take baby steps towards an all-important pivot. All this planning is great, but how you spend your time and your life energy is more valuable than anything mentioned above. I just started with a list of what I wanted, ended up getting some books (Designing Your Life, What Color is Your Parachute) and ended up with a bullet journal of brainstorming, lists and encouragement to get me to step away from employment I no longer wanted to be part of my story. If you can find that time, you won’t regret it. It’s 100% for you. Maybe these years leading towards retirement will be your best yet!

    Sending you much kinship, love and support!

    1. Thank you so much for the additional ideas and the supportive words! I’m not UNHAPPY at work, there are just other ways I’d rather spend my time; it certainly can’t hurt to spend time pondering alternate options.

  59. Hi Em! Not sure it has been mentioned, but you could refinance again and easily knock off an additional 1%. We were just quoted a 15-year refi for 2.75%. That may free up a few hundred bucks a month to pay!

      1. Seconding this. I’m in Iowa and we just refinanced our 30-yr mortgage from 4.1% to 2.8%. rates are crazy low and I bet you can knock at least a full percentage point off yours.

  60. This case study resonated with me more than most. I’m not a single mom, I have a husband and two kids. But I feel like we are financially in a similar spot – no debt besides mortgage, decent retirement savings, a bit behind on college savings… Here is what we do:

    1. We have 529s for our kids (our kids are 6 and 9 and we started this a few years ago, so not as young as 2) and we contribute $100 per month per kid. It’s a bit of an arbitrary and small amount, but it’s a start and in the next few years will we will start to assess the cost of college and how much we want to contribute for each kid. I am hoping to be smart about it too, and encourage our kids to go to a good state school or one they have scholarships at and not a fancy expensive university.

    2. We are pretty focused with our charitable donations. Now that my kids are in public elementary school, the vast majority of our charitable donations go to the school. We also adopt a family at Christmas and put together food boxes a couple times a year which the kids can help with and it’s more tangible for them than just donating money. And we donate our time by doing the family food sorting day at the food bank once a quarter. My husband tends to give money to every charity soliciting donations but I try to intercept the mail before he sees it and decides he must give $50 to save the dolphins or whatever 🙂

    3. We have a house cleaner and it is life changing. I tell my husband that if I ever leave him, it will be for her! She hasn’t been able to come with our shelter in place rules and I have missed a clean house SO much!

    4. For us, aggressively saving for early retirement is not worth missing out on enjoyment now while we and our kids are young. So we budget for vacations and activities because we value that, while trying to be frugal in other ways (old cars, secondhand stuff).

    1. Thank you for these thoughts! St. Jude’s gets me almost every time—I mean, sick kids! Of course they need my money! I’m happy to keep donating there but a recurring, PLANNED monthly amount probably makes more sense than intermittently giving them a few hundred when they ask. 🙂 And I’m very excited for my future, cleaner house.

  61. First off, thank you for this case study!

    I can relate in so many ways. Here are some facts so you can see what I do in my situation: I’m 38, single mom, have a 14 week old daughter, in the process of closing on a condo which I’ll have 50% equity in, own my vehicle outright (2014, 50k miles), no debts, max out my Roth IRA & 401(k) & HSA each year. I did some reading up on the 529s and decided to put $2,600/annum ($100*26 paychecks). I’m also doing some ‘regular saving’ in a normal investment account for her $1,300 ($50*26 paychecks.) But since they aren’t tied to anything it could also double as an emergency fund should the need arise. That’s not nearly enough to get her through college when she’s ready to go, but it’ll provide her a safety cushion. The rest she can do on her own. (I do agree with the comment from another person, that it’s a valuable life lesson to work for what you want/need.) It’ll also not entirely disqualify her from applying for financial aid which is one of the points made against having a 529 plan. I understand that these are small amounts, but time is on her side since we’re getting started early.

    Regarding your case, I’d say one major decision will impact a lot of your goals/wants and that is whether or not you’re having a second child. Regardless of how many children you will have in the end, I agree 100% with Mrs. Frugalwoods: save for your retirement. (I’m also not counting on social security, so whatever does get added in the end is a bonus.)
    Also get a will in place to make sure your hard earned savings aren’t squandered by some strangers when the time comes that you no longer can make decisions for yourself.

    Donations don’t always have to be in form of money. They can also be in form of “sweat equity.” Personally that’s my preference, so I’m just throwing that out there. It can also teach your little one valuable lessons along the way and can be a good way for mommy daughter time.

    I’d not skimp on the vacations, because experiences are priceless and memories will last for a lifetime. It’s also great for bonding outside the daily routine. I do however agree that spending on material things can be reigned in.

    Since you’re already on an accelerated plan to pay off your mortgage, I’d invest the windfalls and make them work for you.

    I do like Laura’s suggestion of having the cleaner come bi-weekly or monthly for a deep clean, if that’s feasible.

    One more comment regarding investing, I greatly dislike fees and try to minimize or avoid them altogether as much as possible. Speaking of fees, annual fees for credit cards for me personally are a no go. They already earn money when I use the card, so why do I have to pay them on top of that? The credit card I have gives my 2% cash back on all I spend. I get that transferred automatically into my savings account. (Disclaimer: I’m not an employee nor am I earning any commissions for mentioning this company, but in case you’re interested the card is Fidelity Rewards.)

    With all the strategizing and planning – it’s ok to live a little as well! I say that to you as much as I say that to myself. 🙂

  62. Hi Em! I know it’s gotten several comments, just wanted to chime in that you might be able to get People Magazine for quite a bit cheaper the next time it’s up for renewal if you call and say you’re cancelling they might give you a deal or get it through a subscription website Bargain Magazine Club lists it for $69.99 for two years which isn’t a huge savings but is something! Another thought is looking at it online I see it on snapchatt and feel like I get all the celebrity gossip I need that way!

  63. My 2nd child is starting the University of Iowa in the fall and I am thrilled that I saved $100/month/kid when they were young in a 529. The money has more than doubled and I am not worried about the next 9 years (2 more kids will start college before our adventure is over). I love helping them get through college debt free.

  64. Em, I love your story and your life! Great job, I love seeing people live with intentionality. My one very minor question is if you have any other stores that could take the place of Target? I had a realization a few years ago that Target was a lot more expensive than I thought it was. It doesn’t seem like it, but $15-$20 shirts add up and I can often find similar items at Marshalls for under $10. There are some items that have slightly better quality at Target, but I find a lot of the things I buy there I don’t plan on keeping for a very long time since they will be outgrown, change styles, etc. My husband and I did all of our Christmas gifts for our nieces and nephew at Marshalls and got around 7 good gifts under $100. I have seen similar toys at target for much more and kids just want something to open they don’t care where it is from.

    I have also found that Target is really smart about marketing and encouraging impulse buys. For home items/appliances I like using Amazon and looking at the reviews and price comparisons. I also like adding it to my Amazon list and then waiting a few weeks to decide if I really want them. That way when I do go to an in person store I only have a few specific things on my list.

    This is very minor and you are already doing such a great job budgeting. Plus depending on the stores in your area or time you have, it might be easier to grab everything in one Target trip. Please follow up and let us know how you proceed!

  65. *The Fertility-Storage Fee is FSA eligible; if you’re not maxing already, make sure to up FSA contributions for 2021-22 accordingly
    *Shop around for refinancing the mortgage, especially on 15-year should definitely be able to find a better rate right now. Use those savings to hire a cleaning person!
    *Bonus: would encourage you to up 401k contributions and use bonus to cover any spending shortfalls (as Bri said, split it towards maxing your deferred comp, while carving off a bit towards your emergency fund). Given your tax bracket (24% Federal and 8.5% Iowa, I believe) it’s worth taking advantage of as much of the tax-sheltered space available to you as possible
    *Iowa 529 plan: you can deduct $3,387 from your taxes each year: https://www.thebalance.com/tax-benefits-of-the-college-savings-iowa-529-plan-795324. If you itemize, you can contribute this much to your daughter’s 529 plan and it effectively nets to $0 on your taxes. Also open the 529 for gift contributions.
    *Charitable donations: I also struggled for a few years with this. I wound up setting my budget for an automatic recurring monthly donation + quarterly ad hoc donation. That way, I know I’m contributing + getting the tax benefit, but I also have some choice for where I want to direct additional funds.

  66. I would not be in a rush to pay off the mortgage. I think a 15 year mortgage (with 14 years to go) is perfect for you. In 2034 your daughter will be 16 and that years income will determine financial aid for her freshman year. And you’ll be 52 maybe downshifting your working life. The missing mortgage payment will help cash flow part of college.

    With regard to the annual bonus and increased 401k contribution, this is what I’d do (I like to play games with myself). Deposit the bonus into your emergency fund (instant larger emergency fund even though its not all permanent). Then auto transfer some into your checking account monthly to offset the extra you’re putting into 401k. But make it less than the extra you’re contributing to 401k. For example, if you need to contribute an extra $700 to get to max 401k then only auto transfer $500. See if you can stretch the budget.

  67. I’m a little late to the comment section but I would like to add my thoughts. First of all, great job Em! I think it’s great that you are going for what you want and trying to figure out how to get there. My other comment is more of a downer. I think you should definitely increase that emergency fund! I thought I had the most stable job in the world, but now my company is closing and I will be laid off at some point soon. I am thankful for my large emergency fund and my husband’s job. Since you are a single income family, I would definitely suggest getting at least 6 months. One other aspect that most people don’t think about is health insurance. If you get laid off you will need to pay for this. This is a struggle for many of my colleagues right now (COBRA at our firm is $1800/month per family). One of the people getting laid off at my firm is a lawyer, and he said so many lawyers are getting laid off right now. Anyway, you never know and I think it would help with peace of mind!!

  68. Hopefully, your 401k at work also uses a low cost investment company like Vanguard. If they do not, lobby for it – Vanguard, Fidelity or Schwab. Asset allocation is a critical feature to grow your assets faster and further. I would use only index funds with the following composition: 70% Total Stock Market (domestic), 15% International Stocks and 15% Total Bond (domestic). This allocation would be across all accounts. The Taxable investment account would be 100% stock for tax efficiency.
    All the best!

  69. Hi Em. I can’t read through all the comments, because I’m also a SMBC of 2 kids….don’t have the time :). Anyway, try the housekeeper 1/month and get your daughter to start getting in the habit of putting things in baskets, folding laundry, etc. Start now, because it’s much harder as they get older. It was a key error on my part! What about preschool costs since your daughter is getting to be at that age? Preschool isn’t cheap, but it is helpful to prepare for kindergarten (primarily for socialization). Especially given preschool, I’d do the 529 as a repository for monetary gifts, and I speak as someone who felt guilty for years for not having it. I do now, but as my older daughter gets closer to college, it almost seems as if you’re penalized for having that savings. IME, I want my kids to study hard to try for merit aid. OR know how to make money to help pay for 1/2 of their schooling. One last thought – another mom told me that 2 kids isn’t double the work, it’s triple :). It’s not, but with 2 kids you go from having a bit of your own life to being completely child-centric. I’m glad I did because I’m older and my kids will have each other (they have cousins but we’re all very far from each other), but it has come at a cost of any personal life. If you have another child, do it soon so they’re closer in age. 5 years is a bit challenging, especially if they’re both girls. Best to you!

  70. Congratulations on being so organised with your finances and in your life. My only advice would be to shop around for life insurance, even if you have an underlying health condition. My husband and I took out independent life insurance and, although his monthly payments were relatively expensive, we both had peace of mind during our children’s school years. Unfortunately my husband just passed away: money doesn’t in any way, shape or form replace him but having a nest egg, in addition to retirement savings, now that my children are grown means that my financial future is secure. I highly recommend exploring your options.

  71. What a wonderful post to have stumbled upon this morning. I, too, am a late-30s woman working on a strategy to become a Single Mom by Choice and have been headed towards a path to FIRE for about the last 7 years. I feel like Em and I probably have so much in common. It really brings me a lot of comfort to know my people are out there, even when we the minority and aren’t always visible. The advice in this post is largely the same I would give. The only thing I would suggest is to investigate another refinancing of your mortgage. I’m not sure the numbers would make sense in your case, but rates are so, so low right now that a refi could drop your interest rate by a whole percentage point or more. It’s worth at least calling 5 mortgage brokers in your area and seeing if they’ll beat each others rates and costs.

  72. Great job!! I should send you my People magazines, I just starting getting them in the mail for now reason, and I don’t want them.

    I read somewhere up above concern about a lack of an Emergency Fund, maybe i misread that, but woudn’t your Roth IRA be a good emergency fund since you can take out your contribution without penalty, just not the growth.

    Do you have any friends who want to help you as a single mother but you don’t want to take them up on it?? If so, if they have Netflix have them share their account with you. I have friends with 3 kids and the cost of the 3rd kinda sent them over and I share my Netflix with them for free, and while it’s not a big expense it helps them out. Also with services like Hulu, if you cancel your services they will offer you the same service for 4.99 or 5.99 to come back, worth checking out.

    Anyway, I’m a bit jealous I didn’t go your route with the kid except in my case it would be adoption and I don’t have the money or family in the area. Single mom is hard but without family around I’m guessing so much harder, glad you have your folks around!!!!

  73. One other thought on the 529’s… I haven’t read through all the comments so sorry if this has been said.
    I have one daughter who is just about to start K and we have been saving what we can into her 529, but are hoping childcare expenses will drop dramatically this year and we can raise our contributions. You’ve got a great deal with $400 a month for child care, but when your daughter goes to Kindergarten you could plan to allocate that $400 a month into her 529 plan.

  74. You’ll get all sorts of wonderful advise from this community. Having been a single Mom, I’m going to address 2 of your issues: 529 for college and the housekeeping.

    I’d suggest setting aside some money for your daughter’s college in something more flexible so you can use it for other goals if needed. Right now with college quite a few years away, a no fee mutual fund outside of your retirement accounts might work. That way you’ll be saving for college but should your priorities or needs change you can use it some other way. Maybe she’ll get great scholarships, maybe your retirement needs will require it… but if you are like me, you probably want to save and contribute to her college. I’m not sure of the tax and financial aid implications of this strategy so you’ll want to do some research. I had some money saved for my son’s college and used it for that but I always knew I could use it for other purposes if needed.

    As for the housekeeping, go for it! You have a lot on your plate and this can take some of that stress off. It isn’t a permanent decision. You can always stop the service if things change, either financially or your daughter is older and you feel that both of you can work together on cleaning. Housekeeping has gotten me through 2 difficult transition times in my life and my finances were never as strong as yours. Coming home to a clean house once or twice a month was great.

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