Laura and her husband Sam live in Virginia with their two young children and one dog. Sam works for the federal government in a law enforcement capacity and Laura works as a full-time stay-at-home parent. Sam is eligible for retirement (with full benefits) in nine years, but the stress of his job has the couple wondering if he can afford to switch to a lower-paying, lower-stress government position in six years. Laura also wants to find a part-time job outside the home to supplement their income. They’d like our help determining the feasibility of their plan for the next nine years.
What’s a Reader Case Study?
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The Goal Of Reader Case Studies
Reader Case Studies highlight a diverse range of financial situations, ages, ethnicities, locations, goals, careers, incomes, family compositions and more!
The Case Study series began in 2016 and, to date, there’ve been 85 Case Studies. I’ve featured folks with annual incomes ranging from $17k to $200k+ and net worths ranging from -$300k to $2.9M+.
I’ve featured single, married, partnered, divorced, child-filled and child-free households. I’ve featured gay, straight, queer, bisexual and polyamorous people. I’ve featured women, non-binary folks and men. I’ve featured transgender and cisgender people. I’ve had cat people and dog people. I’ve featured folks from the US, Australia, Canada, England, South Africa, Spain, Finland, Germany and France. I’ve featured people with PhDs and people with high school diplomas. I’ve featured people in their early 20’s and people in their late 60’s. I’ve featured folks who live on farms and folks who live in New York City.
Reader Case Study Guidelines
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.
There’s no room for rudeness here. The goal is to create a supportive environment where we all acknowledge we’re human, we’re flawed, but we choose to be here together, workshopping our money and our lives with positive, proactive suggestions and ideas.
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 Laura, today’s Case Study subject, take it from here!
Hi, Mrs. Frugalwoods! I’m Laura. I’m 38 years old and am married to Sam, age 41. We have two children: Sylvia (5) and Jack (3). We also have a beagle/dachshund mix, Barkley. Sam and I married in 2015. We were both working for the government at the time. We have lived in Oregon, California, and currently reside in Virginia. Sam is a federal law enforcement officer. I quit my job to be a full-time mom in 2018.
I am considering searching for a part-time job next year as I’m looking for extra income and a mental change of pace. Previously, I was a budget technician for the federal government and would love to find a federal part-time budget technician job in our town. I’m keeping my eyes open, but the positions are rare. I may try to get a bookkeeping job in the private sector. In the meantime, I’m signing up to substitute at my son’s preschool and may look into the gig economy.
If I find a part-time budget or bookkeeping job I would likely need to pay more for childcare. My son’s preschool hours are 9-12, and those aren’t normal business hours, so I would need to switch him into a day care program (part-time day care here is around $600/month, vs. the $200/month we pay for preschool). If I am substituting at his preschool or doing side-hustle gig work, I would only do those while he is in school.
Laura & Sam’s Hobbies
Before kids, Sam and I LOVED to travel. We spent our honeymoon in Patagonia and our babymoon in Iceland. We took road trips around the country, watched the sun rise from the top of Haleakala, and took an eco-tour in Ecuador. We marveled at Machu Picchu and enjoyed all-inclusive resorts in Mexico.
With kids and Covid we have not traveled internationally for the past few years. Both of our families live in other states and we spend Sam’s vacation days visiting family. We would like to travel internationally again once Sam retires and the kids are older.
These days we spend our weekends hiking and exploring the area with our family. We like to bring picnics to the park and let the kids play. I’m in a mom’s club, a book club, and work 1-2 mornings per month assisting with running races. This is fun but it only brings in $50-$100/month, which is why I’m going to start looking for a part-time job with more hours.
What feels most pressing right now? What brings you to submit a Case Study?
Sam can retire at in 9 years, at age 50, and start collecting a pension. He can also start drawing from his TSP at that point. I plugged our numbers into FireCALC and found we have a 100% chance of success at our current spending rate for the next 65 years. Great!
So now I’d like to make a more aggressive financial independence plan.
Sam would like to switch to a lower-paying job within the federal government in six years (once he reaches 20 years in law enforcement). He would work this job until he turns 50, at which point he would retire and start collecting his pension.
Here are the details of his pension:
Sam’s retirement is made up of three portions: pension, social security, and TSP. Each one is supposed to replace about a third of your working income. We estimate the pension to be around 33% of his high-three salary. We are estimating the social security portion low at this time (since there seems to be so much uncertainty about its future) at 20% of his working salary.
So we are looking at the pension replacing about 53% of his three top earning years. His high three average will be at least $105,000. We are estimating $54,965 gross pension income once he reaches 50 (not including TSP or other retirement account withdrawals). Note: He gets a social security supplement from ages 50-62, at which point he collects regular social security. The supplement is paid through his pension, but is based on his social security benefit at age 62, so we are calculating it conservatively in case that amount is reduced in the future.
We would also like to have our house paid off by the time he retires. We will probably spend the money saved from monthly mortgage payments on travel.
What’s the best part of your current lifestyle/routine?
As a full-time mom, I’m able to cook dinner every night, shop during quiet weekday mornings, and allow us to hang out as a family on the weekends without rushing around. I like the slow pace of our life. On Sam’s salary, we can cover our expenses and he is able to max out his TSP.
What’s the worst part of your current lifestyle/routine?
1) Lack of travel.
2) Being so far from our families.
- Sam’s family is 5 hours away by car.
- Mine is on the west coast, so we must fly out to see them.
- Once Sam retires, we will be able to move closer to family if we choose.
3) Sam’s job has a lot of stress.
Where Laura and Sam Want to be in Ten Years:
- Financially independent with work optional.
- Mortgage paid off.
- Traveling more.
- Spending more time with our extended families.
- Able to spend a summer (or a whole year) abroad.
- I would like to work a part-time “fun” job.
- Sam wants to be volunteering or also working a “fun” part-time job.
Laura & Sam’s Finances
|Sam’s Net Income||$5,321||Sam’s net income, minus the following deductions: healthcare, taxes, TSP and FERS (pension) contributions|
|Laura’s Net Income||$100||Laura works 1-2 mornings per month at running races and receives a stipend|
|Item||Outstanding loan balance||Interest Rate||Loan Period and Terms||Equity||Purchase price and year|
|Mortgage||$231,700||2.81%||24 year fixed-rate mortgage||180,000||307k, purchased in 2019 and refinanced in 2021|
|Item||Amount||Notes||Interest/type of securities held/Stock ticker||Name of bank/brokerage||Expense Ratio|
|Sam TSP||$308,000||Sam’s primary retirement account||45% C fund, 25% S fund, 30% target date funds. $259,796 in traditional, $49,014 in Roth||TSP||0.055%|
|Laura TSP||$72,833||Laura’s primary retirement account||65% C fund, 25% S fund, 10% target date funds. $51,345 in traditional, $21,487 in Roth||TSP||0.055%|
|Laura Roth||$25,300||Laura’s Roth IRA||VTSAX (total stock market index fund)||Vanguard||0.09%|
|Sam Roth||$14,000||Sam’s Roth IRA||S&P500 index fund|
|Emergency Fund||$11,000||Emergency fund||Earns 0.30% interest||Capital One|
|Sylvia 529||$5,573||Daughter’s 529||target date fund||VA 529||0.371%|
|Jack 529||$2,781||Son’s 529||target date fund||VA 529||0.371%|
|Vanguard brokerage||$1,392||Taxable investment account||VTI (total stock market ETF)||Vanguard||0.09%|
|Savings||$1,000||Savings at our bank||earns .01% interest||Bank of America|
|Vehicle make, model, year||Valued at||Mileage||Paid off?|
|Toyota Sienna 2015||$16,000||70,000||Yes|
|Ford Explorer 2004||$2,000||101,000||Yes|
|Mortgage||$1,432||Includes escrow account- homeowners insurance and property tax|
|Groceries||$1,200||Includes household supplies, dog food, personal care, and alcoholic beverages|
|Home goods||$390||Includes home improvement items, new dishwasher, driveway stabilization project|
|Spending money||$350||Laura and Sam’s “fun money”, also used to buy each other gifts, our clothing and some personal items|
|Donations to charity||$250|
|Gas for vehicles||$200|
|Kids||$200||Preschool ($133/mo), clothes, kid medicine, baby/toddler gear, etc|
|Entertainment||$134||Includes pool membership (use daily), summer camps|
|Car related||$95||County tax, registration, oil changes, repairs, etc.|
|Medical||$65||included dental work, higher than other years|
|Life insurance||$58||AIG (Laura), Prudential (Sam)|
|I bonds purchase||50|
|Cell Phone||$40||Mint Mobile, Laura and Sam each get 4 GB/month|
|Subscription services||$28||Netflix, Paramount+, Disney+, Peacock|
|Laura Roth contribution||$25|
|Professional liability insurance||$13|
Credit Card Strategy
|Card Name||Rewards Type?||Bank/card company|
|Bank of America (Lauren and Sam)||Cash back||Bank of America (use for daily expenses)|
|United Gateway(SM) Card (Lauren and Sam)–affiliate link||Travel||Chase|
Laura’s Questions For You:
1) Can Sam switch to a lower paying job in 6 years and still retire in 9 years?
- Sam enjoys the diversity of his duties, but the stress is starting to outweigh the job satisfaction. He originally planned to work until age 50 (which would be 23 years in law enforcement), but we’re now wondering if we can afford for him to switch jobs in 6 years and then start collecting a pension in 9.
- He would stay within the federal government and so would keep the same retirement/TSP/healthcare/all other benefits. The main change would be a major salary reduction, probably around 30%, which means his monthly net take-home would be somewhere around $3,724.70.
- What are some financial options for bridging the gap in his salary for those three years
2) Where can we cut expenses so we can save money?
- I have been underestimating the amount we spend annually.
- After completing this exercise for our Reader Case Study, I realize we’re not as frugal as I thought.
- I need some suggestions on places we can trim the budget.
- We moved from a rural part of California to a city in Virginia three years ago to be closer to amenities. With this move to civilization, we’ve been spending more on restaurants and shopping trips. I’d like to reduce our spending so we can save more.
3) Have we become house poor?
We used to be good savers. Now, I feel like we are living paycheck to paycheck. The major things that have changed in our lives are: 1) I quit my part-time job, 2) we moved to Virginia and bought a house, 3) we added a second child (although I don’t think the second child has impacted our finances all that much).
- I’m looking for a part-time job soon. As I mentioned, our spending has increased since we moved to a town, and we will try to be more aware of that this year.
- That leaves our home. We became homeowners three years ago and I feel like it has sucked us dry. In the past 3 years we have put the following cash into our home:
- down payment (61K)
- new roof (10K)
- new HVAC (9K)
- new garage doors (3K)
- driveway stabilization project (3K)
- new dishwasher (1K)
- new refrigerator (2K).
- Last year we spent $200/month at home improvement stores on supplies for home projects.
- Our monthly mortgage payment with escrow is $1,432.
4) How do you determine if you should move to a smaller/cheaper home, or try to cut expenses at your current one?
- I think we will move closer to one of our families once Sam retires.
- We are not sure where yet though. If we move closer to Sam’s, our cost of living will decrease. If we move closer to mine, it will stay about the same.
Liz Frugalwoods’ Recommendations
I’m thrilled to have Sam and Laura as our Case Study today and I want to thank them for putting themselves out there and sharing their story with us! Laura and Sam are in good shape and I’m impressed with their forethought in mapping out Sam’s final nine working years. It’s so much easier to chart a tenable path when you have time on your side. I’m delighted to dig into this challenge today!
Laura’s Question #1: Can Sam switch to a lower paying job in 6 years and still retire in 9 years?
Let’s break it down! Laura estimates that switching jobs would reduce Sam’s income by about 30%, which means he’d have a monthly net take-home of somewhere around $3,724.70. Since this would still be a position within the federal government, his benefits would remain the same and he wouldn’t lose out on any accrual years towards his pension. This would also mean he’d continue contributing to his retirement accounts at the same rate, which makes that calculation a wash. What we need to address, then, is their cash flow.
Given that this is six years in the future, we can assume inflation will play a role here and his salary will be higher, as will their expenses. Since we can’t know what those numbers will be, we’ll use this calculation of 30% less than his current net salary as well as their current expenses. While the actual numbers will likely be different in six years, we can assume the percentages will be the same.
Their current spending is $5,383, which means they couldn’t make it on Sam’s proposed reduced salary. However, there are a number of levers we can pull to bring Laura and Sam’s expenses into alignment with this proposed new income.
Laura’s New Job
In six years, both of their children will be in school, which means no more preschool costs and, more time for Laura to work. I think much of this question will be answered by the type of job Laura secures and how many hours a week she chooses to work.
It seems entirely reasonable that she’d earn at least the $1,658.30/month needed for them to break even on their expenses [$5,383 (expenses) – $3,724.70 (Sam’s new salary) = $1,658.30]. Since this is six years in the future, we’ll assume Laura will have secured a new job by then and the couple will have a clearer picture of their combined monthly income.
The second way for them to make up this gap leads us right into…
Laura’s Question #2: Where can we cut expenses so we can save money?
I really appreciate Laura’s candid remark:
I have been underestimating the amount we spend annually. After completing this exercise for our Reader Case Study, I realize we’re not as frugal as I thought.
Same girl, same! I too used to underestimate our spending. Actually, I underestimate our spending TO THIS DAY. This is why I track my spending like a hound dog tracks a hamburger. Most of us human people have a limited/nonexistent capacity to accurately predict our monthly spending. This is why there are lots of free services and software that will track your spending for you. I use and recommend Personal Capital because it’s free and easy to use (affiliate link).
I congratulate Laura for sticking with this exercise and doing the difficult work of facing their expenses head-on. The first step is to know what you’re dealing with. The second step is to decide if you want to make changes–Laura articulated that she does–so we’re onto the third step: making a plan!
Ideas for reducing expenses
As you all know, I am not the judgy queen of how you should spend your money. I don’t care how you spend your money. I care if you are able to reach your goals in a fiscally responsible way. Given that, I view my role as identifying where people can save more money. Your job is to decide which pieces of my advice to follow as matches your priorities and preferences.
I was able to get their monthly spending down to a hair under Sam’s projected new salary ($3,724.70), but it’s tight and I had to eliminate a lot of joyful things that I know I personally would be sad to eliminate (restaurants, fun money, entertainment, etc). That being said, it is technically possible for the family to live on this amount every month and maintain their retirement contributions. However, they will have a lot more breathing room if Laura gets a job.
Here’s what I came up with:
|Item||Amount||Notes||Proposed New Amount||Liz’s Notes|
|Mortgage||$1,432||Includes escrow account: homeowners insurance and property tax||$1,432||This is a fixed cost that can’t be changed.|
|Groceries||$1,200||Includes household supplies, dog food, personal care, and alcoholic beverages||$750||I know this is tough with inflation, two kids and a dog, but this seems like the area most ripe for potential reduction. I’ll include some recommended reading below.|
|Home goods||$390||Includes home improvement items, new dishwasher, driveway stabilization project||$0||Can this be paused for all non-necessary expenses? I 100% agree that a dishwasher is a necessity, but if other things crop up that aren’t “mandatory,” this is an area for savings.|
|Spending money||$350||Laura and Sam’s “fun money”, also used to buy each other gifts, our clothing and some personal items||$0||Unfortunately, this is the easiest item to eliminate.|
|Donations to charity||$250||$250||I’ll leave this as is, but this is another discretionary area that could be reduced/eliminated/suspended for a time|
|Restaurants||$201||$0||Sadly, this is another one ripe for the chopping block.|
|Gas for vehicles||$200||$200||This is a fixed cost that can’t be changed.|
|Kids||$200||Preschool ($133/mo), clothes, kid medicine, baby/toddler gear, etc||$133||Since preschool fees are the bulk of this line item, I doubt there’s a ton of room for reduction. But, if they’re not getting kids’ clothes/toys/gear used, now’s the time to start. I’ll post some recommended reading below.|
|Entertainment||$134||Includes pool membership (use daily), summer camps||$0||Using a pool every day sounds like this is a good bargain! If the desire is to keep this line item, they can look at other categories to reduce.|
|Electricity||$121||$121||Have they done an energy audit on their home? Are there any insulation/weatherization measures they could take to reduce their bill?|
|Car insurance||$101||GEICO||$101||Have they shopped this around lately? It’s always work checking to see if there are better deals available.|
|Vacation/travel||$100||$100||Since Laura articulated that travel is one of their top priorities, I assume they don’t want to reduce this line item.
Again, if this is a priority to keep, look at other categories for reduction.
|Car related||$95||County tax, registration, oil changes, repairs, etc.||$95||This is a fixed cost that can’t be changed.|
|Water||$87||$87||This is a fixed cost that can’t be changed.|
|Internet||$79||$79||This is a fixed cost that can’t be changed.|
|Natural Gas||$69||$69||This is a fixed cost that can’t be changed.|
|Medical||$65||included dental work, higher than other years||$65||This is a fixed cost that can’t be changed.|
|Life insurance||$58||AIG (Laura), Prudential (Sam)||$58||This is a fixed cost that can’t be changed.|
|Gifts||$50||$35||This is a really reasonable amount to spend on gifts ($600 annually), but it is a discretionary line item that could be reduced if needed.|
|I bonds purchase||$50||$0||Not sure this is the best use of their money right now (more on this later)|
|Cell Phone||$40||Mint Mobile, Laura and Sam each get 4 GB/month (affiliate link).||$40||Great job using an MVNO!!!|
|Subscription services||$28||Netflix, Paramount+, Disney+, Peacock||$0||Could they choose just one service for a lowered bill?|
|Laura Roth contribution||$25||$25||Fixed expense|
|Professional association||$15||$15||I take it Sam’s work doesn’t reimburse him for these costs?|
|Professional liability insurance||$13||$13|
|Monthly subtotal:||$5,383||Monthly subtotal:||$3,699|
|Annual total:||$64,596.00||Annual total:||$44,388|
Some inspiration for reducing groceries, eliminating restaurant meals and buying kids stuff used:
- How To Stop Eating Out According To Frugalwoods Readers
- Our Complete Guide To Frugal, Healthy Eating
- How to Thrift Like a Rockstar: Plan Ahead, Buy Ahead and Focus on Depreciation
- How To Find Anything and Everything Used: A Compendium Of Frugal Treasure Hunting
I also suggest they take my free Uber Frugal Month Challenge to help them identify other areas for savings.
Setting their expenses and income aside, let’s take a look at where Laura and Sam’s money is hanging out.
Between their two accounts, Laura and Sam have a total of $12k in cash. This is their emergency fund, which means it should cover 3 to 6 months’ worth of their spending. At their current monthly spend rate of $5,383, their emergency fund would cover just over two months for them, which means its on the slim side. Ideally, Laura and Sam should work to build this cash savings up to a full three months worth, if not more. The rationale behind an emergency fund is that it’s your “oh rats” money.
An emergency fund is there for you if you:
- Unexpectedly lose your job (layoff happen, people)
- Something horrible goes wrong with your house that needs to be fixed ASAP
- Your car breaks down and must be repaired
- You’re hit with an unexpected medical bill
- Your dog gets quilled by a porcupine and has to go to the emergency vet
As you can see, an emergency fund is not for EXPECTED expenses, such as:
- Routine maintenance on a car, such as oil changes and brake pads
- Anticipated home repairs, such as boiler servicing/chimney sweeping
- Planned medical expenses, such as LASIK eye surgery
An emergency fund’s reason for existence is to prevent you from sliding into debt should the unforeseen happen. It’s your own personal safety net. It’s also calibrated on what you spend every month, so the less you spend, the less you need to save up.
Liz’s Suggested Next Steps:
- Increase this amount to cover a full three months of expenses (at the very minimum)
- Consolidate cash accounts into one high-interest savings account, such as the American Express Personal Savings account, which–as of this writing–earns 1.90% in interest (affiliate link). This means that in one year, their $12,000 would earn $228 in interest!
Between their TSPs and Roth accounts, Laura and Sam have $420,133 in retirement investments. This is great and it doesn’t even account for Sam’s generous pension and anticipated social security! Laura said, “We are estimating $54,965 gross pension income once he reaches 50 (not including TSP or other retirement account withdrawals).” Based on what she shared, Sam would also receive a social security supplement from ages 50-62, after which he’ll receive regular social security.
This also doesn’t account for:
- Laura working
- Sam working a part-time “fun” job
Assuming they are not fully retired at age 50, it seems entirely possible their combined incomes could cover their spending and they could allow their retirement funds to remain invested until they do fully retire.
Since I don’t know the intricate details of Sam’s pension, he and Laura should comb through it carefully and, if possible, schedule a meeting with their HR/benefits administrator to ensure they understand it fully. It sounds like they may have already done that, but I just want to note that pensions are notoriously complex to decipher. Since it’s a pension through the federal government, I imagine there are ample educational resources available that’ll help illuminate all of the intricacies.
A few questions to ask:
- Is the pension inflation-adjusted?
- How does the pension pay out in the event of Sam’s death?
Taxable Investments: $1,392
While I commend Laura and Sam for opening a taxable investment account in a low-fee total market index fund, I don’t think this is necessarily the best use of their money right now. A taxable investment account is something you want to do AFTER you’ve fully funded your emergency fund and are easily cash flowing your monthly expenses.
Investing your money in the stock market is a long-term proposition and it’s not a place to park money you might need in the near term. There’s absolutely nothing wrong with letting this account sit there and ride, and if it were me, I wouldn’t prioritize adding more money to it right now.
Before adding more to this account, I suggest Sam and Laura:
- Build up a more robust emergency fund
- Create a monthly budget that fits within Sam’s projected new salary
- Identify Laura’s future job and salary, which’ll help tremendously with items 1 and 2
I have the exact same recommendations regarding the 529 College Savings accounts for their kids and the I-Bonds account. Focus on stabilizing the cash situation first, ensure you’re able to live within the new proposed family income, then turn your attention to these extra investment vehicles. These things are the frosting on top of a well-baked financial cake. Can’t put the frosting on a half-baked cake! Ok that’s a terrible analogy and now I want cake…
Laura’s Question #3: Have we become house poor?
I see this question as the culmination of everything we’ve discussed thus far. Laura and Sam are stretched every month to meet their regular expenses, which puts them in a somewhat precarious position. I think they will feel more secure when they identify areas for saving, determine Laura’s next job and are able to easily cover their spending each month. I suggest they hold off on all non-emergency house repairs for the time being.
Obviously stuff that’s a safety hazard must be addressed, but they don’t have the cash to pay for elective repairs/remodels at this point. Home ownership is expensive and annoying a lot of the time and it’s important to delineate between “nice to haves” and “must haves.” We could all spend all of our money on our homes if we wanted to because there’s always more to do! But it’s important to take a breath and consider whether something is a requirement or a desire. And, be assured that contractors and realtors will tell you that EVERYTHING is a safety hazard that MUST be addressed ASAP!!!!
Here’s some house stuff that’s not an emergency:
- Installing new windows because your current windows aren’t 100% energy efficient
- Patching holes and painting
- Installing new light fixtures to improve visibility
Here’s some house stuff that would constitute an emergency:
- A tree falls on your roof
- A moose bashes through your kitchen wall
- Your boiler breaks in the middle of winter
There’s obviously a balance to strike between preventative maintenance (i.e. cutting down that dead tree BEFORE it falls on your house), but I find folks often go too far in this direction. Be honest with yourself about what must be done versus what would be nice to do.
It sounds like Laura and Sam completed a lot of necessary deferred maintenance on their home:
- down payment (61K)
- new roof (10K)
- new HVAC (9K)
- new garage doors (3K)
- driveway stabilization project (3K)
- new dishwasher (1K)
- new refrigerator (2K)
Hopefully they can take a break from these expenses for awhile. These are all MAJOR repairs/appliances, so hopefully these’ll last them for awhile. I also commend them for their ability to pay for all of this without going into debt. Very, very well done!!!
Laura’s Question #4: How do you determine if you should move to a smaller/cheaper home, or try to cut expenses at your current one?
Time. Unless you’re a real estate investor/house flipper/have $$$ to burn, you can’t buy and sell houses at a rapid rate.
If you churn through houses, you’ll lose money to:
- Down payments
- Closing Costs
- Realtor Fees
- Interest Rate Changes
Laura and Sam bought their home in 2019 and have an interest rate of 2.81%, which is the LOWEST interest rate we will probably see in our lifetimes. For comparison, interest rates are currently at ~6.9%. This disparity alone forecloses the idea of Sam and Laura moving right now.
Other reasons why they shouldn’t move:
- The housing market is still red hot (although it may be cooling…. ), which makes it great for sellers/terrible for buyers
- They plan to move in nine years when Sam retires. They would very, very likely lose money if they moved now and moved again in nine years. It’s just too tight of a turnaround for them to recoup the expenses of buying and selling.
- Identify areas to save and create a monthly budget that fits within Sam’s proposed new salary so they can feel confident in this future plan. Doing this will also allow them to…
Build up a fully-funded emergency fund of three to six months’ worth of their spending.
- Laura should proceed with her job search. Once she’s settled in a new position, the couple will have a clearer sense of their combined monthly income, which’ll help with items 1 and 2.
- Consider consolidating their cash into one high-interest savings account.
- Pause adding to the taxable investment, 529 and bond accounts until #1-3 are completed.
- Ensure they’re well-versed on the intricacies of Sam’s pension and ask all the questions they can think of.
- Stay in their current home and pause all non-emergency repairs/remodels.
- Enjoy life and pat themselves on the back for being in a fabulous financial position, poised to retire early!
Ok Frugalwoods nation, what advice do you have for Laura? We’ll both reply to comments, so please feel free to ask questions!
Would you like your own Case Study to appear here on Frugalwoods? Apply to be an on-the-blog Case Study subject here. Hire me for a private financial consultation here. Schedule an hourlong call with me here, refer a friend to me here, or email me with questions (email@example.com)