Twins stretch couple's $110,000 income thin

  @Money June 6, 2013: 1:26 PM ET

With twins, Rachel Hopper and Josh Williams, 39 and 38, now have a bigger family and a tighter budget.

(Money Magazine)

For years, Rachel Hopper and Josh Williams had hoped for a sibling for their son, Espen, who was born in 2005. So the Minneapolis couple were thrilled when they learned that Espen would have two sisters: twins Elsa and Rory, now 1.

"It's wonderful -- and it's very hard," admits Josh.

Where they stand
Home value $175,000
Retirement plans $60,000
529 college savings plan $5,000
Total Assets $240,000
Credit card debt $7,800
Personal/car loans $37,200
Student loan debt $49,600
Mortgage/renovation debt $138,300
Total Liabilities $232,900

The couple's income of $110,000 (Josh is a city planner; Rachel works for Minnesota's Department of Natural Resources) is stretched to capacity. They struggle to cover all their costs, including day care for the kids -- $376 a week -- and a loan for a car that comfortably fits the whole family.

No longer saving for retirement, they have also depleted their cash stash and racked up $7,800 in credit card debt. "We're smart people with good jobs," says Josh, "but we're living paycheck to paycheck."

Time for a new game plan, says Indianapolis financial planner Elaine Bedel: "What may have worked for their family of three isn't working for their family of five."

Three fixes

Squeeze the budget. Over the next two and a half years, Josh and Rachel must focus on eliminating credit card debt and creating an emergency fund -- even at the price of delaying other savings, says Bedel. "They're in a precarious situation," she adds.

They now put $575 a month toward their card debt. Though their budget is tight, the couple should be able to pay down an extra $300 by utilizing Rachel's upcoming raise and trimming some discretionary spending. That would erase the balance in 10 months.

The high cost of autism

Create a cushion. Once the credit card is zeroed out, that $875 should go toward emergency savings.

Related: Earning $221,000 and paying two tuition bills

Bedel recommends three months of living expenses, or $18,000, knowing that Espen's 529 plan could also be tapped if needed (though they'd incur taxes and a 10% penalty on earnings). This will take about 20 months to build.

Catch up on retirement. In 2016, Josh and Rachel should redirect the $875 to their retirement plans, for annual savings of roughly $13,000 pretax; they should also up their total contribution 2% annually. Combined with Social Security, that should give them $50,000 in annual after-tax income (in today's dollars), provided they retire at 70.

Related: How to bring your spending under control

A wildcard: If they stay with their employers, their pensions could provide significant income. But Bedel hopes they will find new jobs. Josh could earn 15% more in the private sector, which would seriously ease the family's budget. To top of page

Send a letter to the editor about this story to

Overnight Avg Rate Latest Change Last Week
30 yr fixed4.41%4.44%
15 yr fixed3.33%3.31%
5/1 ARM3.34%3.55%
30 yr refi4.39%4.41%
15 yr refi3.31%3.30%
View rates in your area
Find personalized rates:
Rate data provided
CNNMoney Sponsors
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.