Erica Vikander and Drew Smalley work for themselves and do what they love.
30-year-old Vikander is a professional snowboarder on a free-rider world tour, jumping down cliffs and crevasses down the steep mountain face. Smalley, 37, is in the photography and graphic design business.
The couple live in Hood River, Oregon and want to buy a home in the area for less than $ 225,000 over the next three to five years.
Mr. Smalley earns about $ 50,000 a year. His monthly income fluctuates, but his annual income has been stable for the past two years. Vikander earns about $ 30,000 a year from prizes, sponsorships and social media promotions. Most of her income comes at the beginning of the snowboarding season.
She has $ 5,000 in her savings account and $ 6,000 in her checking account. Mr. Smalley has $ 5,000 in his business account and $ 4,000 in a Roth IRA.
Earlier this year, Mr. Smalley invested $ 15,000 in his business, borrowed $ 36,000 from his family and repaid it at 8% interest within 60 months. He currently pays his family $ 2,000 a month, but recently repaid his debt faster using the $ 3,200 he received from the Federal Covid-19 Relief Bill. The couple’s only other debt is Vikander’s car lease, which is $ 5,500 unpaid. Smalley also owns a 2014 pickup truck.
Monthly costs include $ 1,150 for rent, $ 1,000 for groceries, $ 300 for gas, $ 280 for car insurance, $ 245 for car insurance, $ 225 for utilities, $ 200 for takeaway, $ 140 for telephone, and $ 58 for dental insurance. .. The couple does not have health insurance. Vikander does not contribute to savings on a regular basis, and Smalley invests the additional money he has at the end of the month in his business.
Allan Roth, financial adviser and founder of WealthLogic LLC in Colorado Springs, Colorado, praises Mr. Morley for having little debt other than his business. He says their top priority should be to buy health insurance.
“Health is more important than wealth,” Ross said, adding that they are making big bets, especially because backcountry snowboarding can be dangerous. Couples covered by joint health insurance under the Affordable Care Act are encouraged to individually investigate all options, including purchase insurance, as they live together as cohabitants. With a post-subsidy government-sponsored silver plan, the couple can pay around $ 550 a month, he says. You should also consult with an authorized insurance broker.
Ross urges the couple to review their costs. The additional funds can be used to pay health insurance and repay debt. He suspects they may have underestimated or omitted some significant spending, such as clothing, recreational, drug, or car maintenance costs. However, on their current expense list, he believes there should be a surplus of about $ 35,000 a year to repay or save debt. They need to look at their bank account and credit card statements to help identify which discretionary spending can be easily reduced. Ross also suggests that Smalley take a close look at his business investment to see which ones are rewarded and which ones are not worth repeating.
Their next priority should be the repayment of business debt. If Mr. Smalley can continue to pay $ 2,000 a month for his loan, Mr. Ross says, it should pay off in about a year and a half, including interest.
Vikander, on the other hand, needs to start securing a portion of his income each month. She needs to maintain a $ 11,000 cash cushion and save enough extra money to buy the current car ($ 13,000) or another used car once the lease ends in November 2022. Loan payments, assuming he continues with the current payment schedule and amount.
If the couple can continue to secure $ 2,000 a month after the loan is repaid, Ross says it will be $ 48,000 in two years. This is more than enough for a 20% down payment on the house. If Vikander spends less on his car, he could save even more.
Mr. Ross is currently in debt, as the couple currently lacks access to an employer-sponsored 401 (k), which means free money from employer-matched contributions. He argues that repayments should take precedence over retirement savings. Indeed, after buying a home, they should prioritize tax-friendly savings for retirement, Ross says.
“The house should be enjoyable and generally appreciated by the price,” he says.
Ward is a Vermont writer. She can be contacted at firstname.lastname@example.org.
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Professional snowboarders and photographers do what they love. Now they want to buy a house.
Source link Professional snowboarders and photographers do what they love. Now they want to buy a house.