New Investor Wants Boglehead Wisdom

[Seriously]

Greetings, Bogleheads!

This is my first post on this forum. I'm a fairly new investor who's been doing a lot of reading here, the wiki, and elsewhere. I'm hoping that I can get some insight on my situation from your collective wisdom. Thanks in advance!

My Situation
Age: 24
Filing Status: Married, filing jointly
State: Ohio resident
Brackets: 25% federal / 3.521% state
Income: $80,000/year total
Desired AA: 75/25 (or thereabouts)
Desired International: about 30% of equities
Current Allocation Plan: 27% large cap, 15% small cap, 25% international, 8% REIT, and 25% bonds.

Current Assets
Emergency Fund: $3,100 (savings account, about 2 months of expenses)
HSA: $4,200 (not invested)
My Employer 401k: $3,400 ING U.S. Stock Index Portfolio Institutional Shares (no symbol given for this)
My Wife's Employer 401k: $400 ING U.S. Stock Index Portfolio Institutional Shares (no symbol given for this)
My Roth IRA (with Vanguard): $3,600 Vanguard Total International Stock Index Investor Shares (VGTSX)

Current Debts
School Loans:

• $2,500 at 6.8%
• $3,700 at 2.25%
• $4,200 at 6.8%
• $5,200 at 6.0%
• $5,200 at 5.6%
• $8,000 at 6.8%
• $4,100 at 8.0%
• $3,470 at 8.0%
• $3,100 at 5.0%

Current Budget Surplus
Approx. $2,000/month

Funds Available in 401k Plan through ING (no symbols given for any of these)
*My wife and I are employed at the same place, so we have the same funds available

• ING Fixed Account 3.0%
• ING Money Market Portfolio - Class I (0.34% ER)
• ING PIMCO Total Return Portfolio - Initial Class (0.58% ER)
• PIMCO VIT Real Return Portfolio - Admin Class (0.65% ER)
• ING Solution 2015 Portfolio - Initial Class (0.89% ER)
• ING Solution 2025 Portfolio - Initial Class (0.97% ER)
• ING Solution 2035 Portfolio - Initial Class (1.03% ER)
• ING Solution 2045 Portfolio - Initial Class (1.04% ER)
• ING Solution 2055 Portfolio - Initial Class (1.04% ER)
• ING Solution Income Portfolio - Initial Class (0.83% ER)
• ING T. Rowe Price Capital Appreciation Portfolio - Service (0.90% ER)
• Eaton Vance Large-Cap Value Fund - Class R (1.23% ER)
• ING U.S. Stock Index Portfolio - Institutional Class (0.26% ER)
• Pioneer Equity Income Fund - Class Y Shares (0.77% ER)
• American Funds The Growth Fund of America - Class R-4 (0.69% ER)
• ING T. Rowe Price Growth Equity Portfolio - Initial Class (0.74% ER)
• Columbia Mid Cap Value Fund - Class A Shares (1.19% ER)
• Franklin Small Cap Value Securities Fund - Class 2 (0.92% ER)
• ING Baron Growth Portfolio - Initial Class (1.00% ER)
• ING Russell Mid Cap Index Portfolio - Class I (0.45% ER)
• ING Russell Small Cap Index Portfolio - Class I (0.48% ER)
• Wanger Select (0.92% ER)
• American Funds EuroPacific Growth Fund - Class R-4 (0.85% ER)
• ING Oppenheimer Global Portfolio - Initial Class (0.75% ER)

My Thoughts
We have no immediate plans for children or to buy a house or car. Our current plan of attack is to pay off the loans in order from highest interest rate to lowest. My wife and I agree that paying off the loans frees up extra income and gives us peace of mind. We're currently deferring enough of my paycheck to get the match on the 401k. I think we're making the best choice in the 401k accounts by going with the US stock index fund. They all seem pretty expensive compared to Vanguard funds. So I figure we can keep that in the 401k, and the other index funds will be in the Roth. Of the $2,000 monthly budget surplus, $1,500 is going towards extra payment on the loans, and $500 is going into the Roth IRA. At the moment, that $500 is just going into the International Index (VGTSX), but I plan to split it once there's enough money in there.

My Questions

• What is the best way to acquire all of the funds that I'm currently missing? Is there an order any of you would suggest?
• I'm currently planning to keep it simple by holding a small cap index fund and a total international index fund, as well as a total bond market index fund, although I've also been considering adding a large and small value. Is tilting this way worth it? Should I wait until I have a bigger pool before worrying about it?
• The HSA money could be invested, but I figure that keeping it as another emergency fund is a better idea, since our emergency fund isn't too big, right?
• Is there anything you would do differently? I'm open to all suggestions!

Please let me know if you have any questions!

Thanks,
- C.J.

[Duckie]

Seriously, you want an AA of 75% stocks, 25% bonds, with 30% of stock in international. That breaks down to 52% US stocks, 23% international stocks, and 25% bonds. Because of the amounts in your accounts this AA isn't going to be correct for a couple of years, but you're young. You have time.

His 401k -- $3.4K -- 46%
21% (INGIX) ING U.S. Stock Index Portfolio Fund Institutional Class (0.26%)
25% (IPTIX) ING PIMCO Total Return Portfolio Fund Initial Class (0.58%)

Her 401k -- $0.4K -- 5%
5% (INGIX) ING U.S. Stock Index Portfolio Fund Institutional Class (0.26%)

His Roth IRA at Vanguard -- $3.6K -- 49%
49
% (VGTSX) Vanguard Total International Stock Index Fund Investor Shares (0.22%) <-- This is way overweighted for now, but there's nothing you can do because of fund minimums.

Her Roth IRA at Vanguard -- $0 -- 0%
0% (VTSMX) Vanguard Total Stock Market Index Fund Investor Shares (0.18%)
0
% (VEXMX) Vanguard Extended Market Index Fund Investor Shares (0.28%) <-- Roughly 80% large caps (ING U.S. Stock Index) plus 20% mid/small caps (Extended Market) makes up the total US stock market. Add this (or switch to this from TSM) when the Stock Index assets get up to $12K.

My comments/questions:
• With $40K in student loans and $1.5K extra per month you'll have that all paid in a couple of years. I recommend the following order for extra payments:

$3,470 at 8.0%
$4,100 at 8.0%
$2,500 at 6.8%
$4,200 at 6.8%
$8,000 at 6.8%
$5,200 at 6.0%
$5,200 at 5.6%
$3,100 at 5.0%
$3,700 at 2.25%

• An alternative is to use (ISZIX) ING Index Solution 2025 Portfolio Fund Initial Class (0.97%) in the 401ks and (VTHRX) Vanguard Target Retirement 2030 Fund (0.17%) in the Roth IRAs for a while until you get more assets.

• How much are you planning to contribute to the following annually?

His 401k -- $?? (plus $?? match)
Her 401k -- $?? (plus $?? match)
His Roth IRA -- $??
Her Roth IRA -- $??

Your questions/comments:
• What is the best way to acquire all of the funds that I'm currently missing? Is there an order any of you would suggest?
-- Put the bonds in His 401k and stop putting money in international in his Roth IRA for now. See below.

• I'm currently planning to keep it simple by holding a small cap index fund and a total international index fund, as well as a total bond market index fund, although I've also been considering adding a large and small value. Is tilting this way worth it? Should I wait until I have a bigger pool before worrying about it?
-- Tilting may or may not be worth it, but you don't have near enough assets to worry about it now. When you get to $50K you can revisit the question.

• The HSA money could be invested, but I figure that keeping it as another emergency fund is a better idea, since our emergency fund isn't too big, right?
-- If you withdraw the money for other than medical needs are there taxes and penalties to be paid? What is it in now? Although it's an asset it is not part of your retirement portfolio for rebalancing purposes.

• Of the $2,000 monthly budget surplus, $1,500 is going towards extra payment on the loans, and $500 is going into the Roth IRA. At the moment, that $500 is just going into the International Index (VGTSX), but I plan to split it once there's enough money in there.
-- Stop buying in His Roth IRA for now. Save up the $500 per month for six months and then open Her Roth IRA with the $3K and put it in Total Stock Market. Your international is way, way overweighted. Stop adding to it until you have things a little more in line with your proposed AA.

Something to think about.