Age: 42
Salary: $75,000 base plus sales commission (2011: $45k / 2012: $75k / 2013: $65k[est])
Cash Emergency Fund: Overfunded - $125k cash (see below)
Debt: Car Loan - $31k @ 0.9% - $530/mo / Mortgage $162k @ 4.625% - $1381/mo including PMI and Escrow. No Credit Card Debt. No Student Loans. No consumer loans.
State of Residence: Wisconsin
Tax Bracket: 25% Fed / 6.50% State
Tax Filing Status: Single
Family Status: Single. No Children. One cat.
Desired Asset Allocation: I’d guess around 70% stocks / 30% bonds (advice?)
Cash Savings:
$50,000 at SmartyPig earning 1%
$75,000 in USAA Savings account (earning bupkiss)
$5,000 in checking (average)
Current Retirement Assets:
(Total: approximately $100k not including pension). Dormant accounts are from when I was a state employee 5 years ago and are no longer being contributed to. It makes sense to leave the pension to purr until I reach retirement age, especially in the case I ever go back to working for the state. The 403b could probably be rolled-over somewhere, or just left as is.
Vanguard Roth IRA: $50,600
- 74.2% Vanguard Target Retirement 2035 Fund (VTTHX) (0.18%)
25.8% Vanguard International Growth Fund Investor Shares (VWIGX) (0.49%)
- 100% Vanguard Target Retirement 2035 Fund (VTTHX) (0.18%)
- 100% Fidelity Freedom 2035 Fund (FFTHX) (0.81%)
- Available funds for 401k:
- American Beacon Large Cap Value Fund Investor Class (AAGPX) (0.97%)
Fidelity Growth Company Fund (FDGRX) (0.90%)
Spartan 500 Index Fund - Institutional Class (FXSIX) (0.05%)
Fidelity Low-Priced Stock Fund - Class K (FLPKX) (0.68%)
Morgan Stanley Institutional Fund Trust Mid Cap Growth Portfolio Class A (MACGX) (0.96%)
American Beacon Small Cap Value Fund Investor Class(AVPAX) (1.28%)
Wasatch Small Cap Growth Fund (WAAEX) (1.26%)
American Funds Capital World Growth and Income Fund Class R-4 (RWIEX) (0.80%)
Fidelity Diversified International Fund - Class K (FDIKX) (0.84%)
Fidelity Balanced Fund (FBALX) (0.58%)
Fidelity Freedom 2035 Fund (FFFAX) (0.81%) [Other target date funds as well, with similar expenses)
Fidelity Government Income Fund (FGOVX) (0.45%)
PIMCO Total Return Fund Institutional Class (PTTRX) (0.46%)
Managed Income Portfolio Class 1 (0.71%)
- American Beacon Large Cap Value Fund Investor Class (AAGPX) (0.97%)
TIAA-CREF 403b: $4.7k (Spread across several funds – dormant)
State of WI Employee Trust Fund (Pension): $37k cash out value (dormant).
Other accounts:
529:
- Niece (age 7): $8700 in target age fund
Nephew (age 4): $4200 in target age fund
$5500 annual into IRA/ROTH
Have been doing 6% (to get 3% match) into 401k – have dramatically increased (maxed at 50%) for rest of 2013 (which may come close to annual max depending how long it takes to kick in) and expect to max in 2014.
$150/mo to each 529 account ($75 every other week to each)
Thoughts:
I am not one to sell in a panic. During 2008, I kept contributing as always.
For an emergency fund, I’d like to have about $15k ready-cash for a 3 to 4-month fund, with another $15k semi-liquid available in something that can be accessed readily in 3-6 months. I have credit I can dip into if need be in larger emergency.
I will also maintain about a $15k “fun and hobby” fund to cover larger and perhaps loosely planned events such as vacations (planning Burning Man in 2014), large purchases (say, a new computer or that mid-life crisis motorcycle), or non-emergency home repairs and updates. I know the rule is save now, fun later, but this is important to me to have this kind of flexibility (some recent life events have prioritized this).
That will leave me with about $80k-ish in cash that needs to go somewhere that is not tax-advantaged. I’m thinking a simple 3-fund approach (35% stocks / 35% International / 30% Bonds) with 50% upfront (40k) and then 5% (4k) every month for 10 months. In addition, I’d also put in whatever I would normally have saved as well (so that 4k would probably be more like 7k a month or so). ETFs or Mutuals? ETFs vs Admiral? Mixed?
In 2014 I will max my 401k and IRA/Backdoor-Roth. I’ll continue the two 529s at $1800/yr for each. This is a secret savings for them that I’ll tell them about when they reach 16. I also will use my medical flex spending account to take care of all my anticipated medical expenses (probably about $1200).
Is there (numerically) any reason to pay off the car and/or to dump a crapton into the mortgage? Cashflow-wise it’s nice, but not sure what the numbers say. Personally I hate my house and feel like it’s an anchor and a money pit. A huge part of me would like to dump it and just rent a duplex and not worry about maintenance and such. It also has the benefit of making me more mobile should I want to think about moving (not likely, but right now house and job are what holds me here, so flexibility is nice).