New life as single mom- how to optimize/will I be ok?

[Anonymous]

You’ve got this! Great job on higher salary and paying off car. Repeating advice above:

-401k up to match
-ER fund in hysa of 6m to 1y
-Then max out your 401k in an index fund or age based index
-After daycare ends: savings account for upcoming known big expenses such as bathroom renovation, appliances & some to 529 if ER fund and 401k are maxed
-keep your low mortgage house!

[Anonymous]

Anonymous wrote:Newly single mom, two kids under 6yo. 34 years old.

Money:
Salary $135k (net $8k per month)
Retirement $80k (was making only 80k until this year)
House $100-120k equity
College savings $5k
Equity award in company that should be worth at least $100k but hopefully more, two more years til fully vested

Monthly Bills:
$2600 mortgage, taxes, home insurance, utilities
$1650 daycare (7 more months)
$600 groceries + house items
$350 misc kids activities/needs
$150 car insurace + gas
$150 phone/internet
$150 dog food + meds

Debt:
$230k left on mortgage

Bigger looming expenses:
My oven is original from the 1960s, fridge and dishwasher from the 90s
Dryer is also from the 90s
Bathroom needs updated at some point, suspect mold/mildew remediation needed behind the wall

Bigger expenses already handled:
Car paid off this year, less than 10 years old, low miles
New roof, siding, gutters last year
Moved to tankless water heater / new furnace two years ago

I know that I need to focus on retirement first then college second. I don't believe it's realistic I can fully fund college for two kids. Any other specific advice? Should I make extra mortgage payments to pay down faster or is that money better put in retirement if my mortgage rate is 3%? The end in sight for daycare feels hopeful too. Where is it best to build an emergency fund- in a HYSA? Trying to educate myself, have been following this forum for a while.

-Child of two city workers who only taught me that money goes in a savings account and a pension will cover retirement (I don't have a pension).

Did your husband die or do you mean “divorced mom?”

[Anonymous]

Anonymous wrote:

Anonymous wrote:shouldn't you be getting child support?

He's unemployed

If dad is in picture you are not a “single mom.”

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:shouldn't you be getting child support?

He's unemployed

If dad is in picture you are not a “single mom.”

Unemployed Dad is a net negative

[Anonymous]

Get college contribution written into decree. He should be paying child support out of UE with a balance accruing. Not all on you.

[Anonymous]

I’d dial back on kid activities and put them in aftercare instead.

[Anonymous]

You really need to find a wealthy man as soon as possible.

[Anonymous]

Anonymous wrote:The money in retirement will grow slower than the money in your regular investment account and Roth IRA. Money in regular investment account is not taxed until you sell the stock/ETF and even then, it can be nearly 0% plus whatever your state tax is. You are in total control of your money here, but max out Roth first.
The money in retirement accounts, traditional IRA and 401k, will be taxed higher than long term capital gains in investment account.
Traditional IRA and 401k have fees, rules, bad investment choices, penalties, RMD. The match and the tax deduction do not make up the negative aspect of those retirement accounts. The money you lose in the two retirement accounts, will compound forever for someone else.
Do not get sucked in by the match and tax deduction. 529 is just as bad if not worse.
Investing is not a rocket science. You will learn so much and will get much better returns than the bank/administrator. They are not allowed to invest the way that is best for you. You are. They don't know your personal situation. They do bare minimum for everyone while getting max fees.
Learning how to invest should be your focus. This is something you hand down to your kids.
$20k a year into Voo, VTI, and QQQ in Roth and regular account the next 20 years and you are all set.
I retired 5 years after I started to invest. What I learned is more valuable than the money I have now. 401k has never taught anyone anything. perhaps to stay away.
While you wait for the daycare to end, learn all about personal finance from books and even youtube.

Love this comment. Very valuable information.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:shouldn't you be getting child support?

He's unemployed

If dad is in picture you are not a “single mom.”

What if I have 100% parenting, he's unemployed and too broke to pay anything, and facing legal charges?

He's is alive.

[Anonymous]

Anonymous wrote:You've done great work with your student loan, home ownership, and paying off your care.

You should prioritize maxing out retirement contributions, adding to an emergency fund until you get to 6 months of expenses, and saving a token amount into the kids' 529 plans. Once you have an adequate emergency fund, increase 529 contributions.

I agree that you are doing well.

You sound like a mature, responsible adult.

I was a single mom also, and did not start saving for my child’s college until she was seven, and at the beginning it was only $50 a month! By the time she was going to college , I was naming a lot more and could save a ton more.

I agree with what others have said, and have confidence in your judgement and capabilities. Focus on succeeding at work and as a mom (your kids could even win scholarships !) Good luck!

[Anonymous]

Anonymous wrote:You’ve got this! Great job on higher salary and paying off car. Repeating advice above:

-401k up to match
-ER fund in hysa of 6m to 1y
-Then max out your 401k in an index fund or age based index
-After daycare ends: savings account for upcoming known big expenses such as bathroom renovation, appliances & some to 529 if ER fund and 401k are maxed
-keep your low mortgage house!

You are doing great! I agree with this EXCEPT I'd suggest building a small fund (after you have an emergency fund of six months or so) for "anticipated big expenses." Having $2k-$5k already set aside and available if the fridge dies or the car needs work will bring you a lot of peace.

[Anonymous]

Anonymous wrote:

Anonymous wrote:shouldn't you be getting child support?

He's unemployed

Oh man, you hit a jackpot didn’t you?!?!

[Anonymous]

Anonymous wrote:Op here- forgot I also paid off my student loans this year!

Good for you Op!!! I’m rooting for you

[Anonymous]

Anonymous wrote:

Anonymous wrote:The money in retirement will grow slower than the money in your regular investment account and Roth IRA. Money in regular investment account is not taxed until you sell the stock/ETF and even then, it can be nearly 0% plus whatever your state tax is. You are in total control of your money here, but max out Roth first.
The money in retirement accounts, traditional IRA and 401k, will be taxed higher than long term capital gains in investment account.
Traditional IRA and 401k have fees, rules, bad investment choices, penalties, RMD. The match and the tax deduction do not make up the negative aspect of those retirement accounts. The money you lose in the two retirement accounts, will compound forever for someone else.
Do not get sucked in by the match and tax deduction. 529 is just as bad if not worse.
Investing is not a rocket science. You will learn so much and will get much better returns than the bank/administrator. They are not allowed to invest the way that is best for you. You are. They don't know your personal situation. They do bare minimum for everyone while getting max fees.
Learning how to invest should be your focus. This is something you hand down to your kids.
$20k a year into Voo, VTI, and QQQ in Roth and regular account the next 20 years and you are all set.
I retired 5 years after I started to invest. What I learned is more valuable than the money I have now. 401k has never taught anyone anything. perhaps to stay away.
While you wait for the daycare to end, learn all about personal finance from books and even youtube.

Love this comment. Very valuable information.

Not all correct though. Retirement accounts really depend on your employer. The match IS worth it because that’s free money. At least do that much, most financial advisors will say the same. As for whether it will grow or not, it depends on if you are able to choose the fund and the fees. My employer has a Roth 401k which means it can grow and I can take it out untaxed. Mine is currently invested in the S&P500 with a low fee.

In addition to the PP’s about why you might not invest in a 401k, is that if you want access to the money before you reach the age of 59.5. So I will invest in mine to the employer match and then put the rest in my Roth IRA and taxable.

[Anonymous]

Great job OP. Start saving for retirement and put off buying a new car for as long as possible. You will do great. Can paternal grandparents chip in (especially for college)?