I (32M), Data Engineer with a former income of $175k but got laid off and took a Remote Data analyst role for $82k (better than $0 income) spouse (32F) makes $80k with potential to grow
Combined Finances
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Cash account: $92k
Investments (mostly 401(k) and IRA): $420k
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Only debts are mortgage $507k (5.75%), solar loan $40k (4.99%) and revolving credit card used for household shopping but statement balance paid off every month.
We’re in the first year of the solar loan so all payments are going to interest (did not do much reading of the loan term, my mistake)
We pay $550 extra on mortgage ($4k), invest $300/month for our 2 kid’s custodial account and $1k into a joint non retirement brokerage account for ourselves
Last night we decided the following:
1. Stop maxing 401(k) and just do 6% for full employer match
2. Move to spouse insurance without HSA option (we used to max HSA as well)
3. Pay $5k from my severance towards solar loan principal and increase the monthly payment from $168 to $500
4. Reduce kids investment from $300 to $150 (2 kids $75 each)
5. Reduce our monthly investment to $500
I’ll keep applying for role within my previous income or stack multiple remote jobs (lay off thought me a lesson)
Is our new adjustment doable on our current income? What would you do differently?
Thanks for reading and I’ll be reading your comments and answering any questions you may have 🙏🏿
Posted by dboat10
2 Comments
I would:
– continue maxing 401k
– Stop paying extra to mortgage ($550 saved)
– Stop kids investments ($300 saved)
– If needed stop investing into brokerage account ($1k saved)
– If possible stay with HDHP plan for HSA contributions, unless the premium difference is too much
Hopefully this is temporary and you can at least get a decent raise at your new work next year.
I think the problem with asking for any advice with the info you’ve given is that you haven’t given us any insights on your long-term life goals.
Want to retire early? Well don’t scale back on maxing out the 401k and your own investments
Want your kids to have a guaranteed more solid outcome on life? Don’t stop those investments
The income hit isn’t the problem here (imo) – its your lack of a clear path forward for what you want to prioritize with your finances. And only you can answer that.
Even though Im taking a big paycut soon, I plan to cut back on eating out/car spending/rent all because I want to prioritize retiring early. Its easy for me to decide what ‘Quality of Life’ hits to take because I know my long term goal will always be the same