Friday, July 22, 2016

Finding Money to Invest on a Budget

As a New Jersey teacher that is married with two children one of the biggest challenges I face in finding the money to invest. My salary is very much a middle class salary.  My expenses are high. I try to cut costs, but there are certain things I can't compromise.

1. House size

We live in a decent townhouse near a train station and a good commute away from my school. It is also a short distance from my mother who has had some health issues. We probably could downsize in order to save. Maybe we should. However, I the location is very important to me and the space matters to my wife. Especially since we have enough room to take in my mom if needed. Our rent is high and it takes a good chunk of our salaries.

2. DayCare -- Daycare has become like college tuition. But the people that are watching our children isn't something we are willing to compromise. Unfortunately we cannot get free care from our relatives full time. So unfortunately it often seems like a second mortgage payment.

3. Other Investments -- I'm not a financial expert. I don't even play one on TV. I am learning and starting to understand some of the basics. But I'm not by any means ready to take responsibility for my entire families portfolio. I'm just not there yet and may never be there. So my wife and I are hoping to soon own a house. The majority of these savings are being invested through Betterment. I also have a modest Roth IRA through Betterment that I'm using to supplement my income.

So where is my investment money coming from?

1. Monthly budget -- I have allocated $30 a month to deposit into Robinhood. That's not near enough. So I have done other things to add to the costs.

2. Revenue from past investments -- I have a small amount of money invested in Lending Club Notes. I have been taking the monthly revenue there of about $20 per month and investing it in Robinhood. This gives me a solid $50 per month.

3. Summer Break -- Being a teach has its advantages. Not driving to work during the summer saves me about a tank of gas per month. That's another $20 per month I can invest in Robinhood.

4. Eating cheap -- I'm at an age that I can't eat like a college student all the time. But nothing wrong with Peanut butter and jelly for one or two meals a week.

5. Grandparents -- The newborn baby has brought temporary 2-3 days of help from my mom and in-laws.They often bring food.  Not shopping for the whole week allows us to save money and prevent waste.

6. Being a stay-at-home dad has been a huge cost savings. For the summer. No mortgage payment. My wife also staggered her leave around my summer. I then will take a delayed family leave in mid-September through October. This allows us to skip September and October daycare costs. Though I will be getting paid at a lesser rate when I'm on leave it is still a huge cost savings. That said most of this savings is just going into our bank. Our monthly daycare is about to double and this will help us pay those costs for he rest of the year.

7. Summer shaving and haircuts. School being out for the summer means I can walk around with facial hair and delay haircuts by a few weeks. This isn't a huge savings but every dollar helps.

8. Mentoring and Class coverages -- As a teacher I often have a chance to make a little extra cash. New teachers need mentors. That is an extra 500 over the course of a year. and since it is unexpected it is investment money. On the flip side if we are short on substitute teachers I can give up a plan period to cover a class and make extra-cash. Again since this is found money, it can go right into the investment fund.

9. Free entertainment for my toddler. Instead of paying money I have a friend with a pool, I take my daughter to parks, I take advantage of free trips to Sesame Place gifted by my aunt. My mom is a retired elementary teacher and I let her shower my daughter with free gifts.

10. Dividends -- They aren't much now but I'm just starting out. The good news is everything I get can be reinvested.

Reasons to be optimistic. I'm scraping dollars just to get started but I have reason to be positive. In the next 5 years my family income will only increase. Daycare will be off the books, student loans will be paid, we will be home owners and no longer paying high cost of rent. There will be a lot more to invest and I will be a much smarter investor.

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