First change is a pretty large raise of $15,664/year, but that raise comes with quite a bit of expenses. We bought a second used car with a loan (with a $117 monthly payment), my husband will be commuting about an hour each way along a toll road costing us about $6,200/year. Obviously, with the new car comes a repair fund that we need to fund and car insurance, together costing about $1000. His new job does come with a $400 savings because we don't have to pay student fees. However, students who work as part of their education (like work study) or graduate students don't always pay FICA. Students at my school only paid FICA during the summer so, we need to pay extra FICA costs totally $2690. This means our total increase is $10894. And we have not even gotten into taxes! But I do have a reason for that. We have decided to put all of the raise into my husband's new pre-tax 403b but that means finding other money for our increases. Well, we found that money in what we now save in our Roth IRAs. But is that savings enough? No, it is not. We only save $750/month which is $9000/year. Where can we find the other $1894?
Right now I am not sure, to be honest. But, I don't want to pay the extra taxes, so I need to find the money somewhere. For now, it is coming from our rental income which cuts into our taxable savings, but I am looking at other things to cut, which will be a later post. :)
But on to the millionaire plan:
In order for me, The Frugal Student, to become a millionaire, I (and my husband) pledge to do the following (each year):
- We will be contributing $1303.66/month to my husband's 403b
- I am also contributing 3% to my pension (the max I can).
- We also now have access to a daycare FSA allowing us to deposit $5000/year tax and FICA free for the little frugal baby's daycare.
- We will be putting all of our daycare spending on FIA VISA which will deposit $140/year in my Roth.
- Living frugally.