Help - Sleep Deprived New Dad Rebalancing

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Angell
Posts: 9
Joined: Thu Jan 21, 2016 1:35 pm

Help - Sleep Deprived New Dad Rebalancing

Post by Angell » Fri May 19, 2017 3:01 pm

My son is 9 months old and does NOT sleep. I am dealing with extreme, long term sleep deprivation and trying to rebalance my portfolio for the first time (joined the Bogleheaded way of investing last year). I’ve made some crazy, sleepy mistakes these past few months and don’t want to make the same with my money, so I’m looking for another set of eyes to keep me from doing something stupid.

Emergency funds: 30k
Debt: Home Mortgage 290k - Interest Rate 4.25 (130k equity)
Tax Filing Status: Single
Tax Rate: 28% Federal, 6.3% State
State of Residence: NJ
Age: 44
Current Asset Allocation (92% stocks [16% international] / 8% bonds)

Retirement assets (500K):

TAXABLE
17% VTSAX Vanguard Total Stock Market Index Fund Admiral Shares (ER 0.04%)
16% VTIAX Vanguard Total International Stock Index Fund Admiral Shares (ER 0.11%)

401k TRowe Price
12% VEXAX VANGUARD EXTENDED MKT INDEX (ER 0.09%)
41% VINIX VANGUARD INST INDEX (ER 0.04%)
8% VBTIX VANGUARD TTL BND MRK INDX INST (ER 0.05%)

NOTE: To approximate total stock market, I’ve used a 4:1 ratio of VINIX:VEXAX.

AVAILABLE 401K INVESTMENTS
RERGX AMERICAN FUNDS EUROPAC GRW R6 (ER 0.50%)
TRBCX BLUE CHIP GROWTH FUND (ER 0.72%)
HMVYX HARTFORD MID CAP VALUE FUND (ER 0.88%)
PRHSX HEALTH SCIENCES FUND (ER 0.77%)
RPMGX MID-CAP GROWTH FUND (ER 0.77%)
OTCFX SMALL CAP STOCK FUND (ER )
VEIRX VANGUARD EQUITY INCOME ADM (ER 0.17%)
VTSNX VANGUARD TTL INTL STK IDX INST (ER 0.09%)
DODIX DODGE & COX INCOME (ER0.43%)
Several T Rowe Price Target funds

All of my contributions these days are going towards my 401k as I am unable to max out my tax free account.

Question(s):
My original plan when I migrated my money from high ER investments was instead of selling stocks to buy bonds, I would slowly increase my bond allocation by contributing all my 401k investments to VBTIX, but that is taking too long. I am looking to rebalance my portfolio from the current 92% stock/8% bond ratio to an 80% stock [20% international]/20% bond ratio (or close to it). In order to do that I pretty sure I need to perform the following:

1) In my 401k account - Sell 3% VEXAX, 5% VINIX and use that 8% to buy VBTIX. This will give me a 4:1 ratio of VINIX:VEXAX and bring my bond allocation to about 16% (close enough) and with all future contributions, including upcoming bonus, going to VBTIX I should reach 20% in the next few months. Does this all sound logical?

2) I also need to increase my international stock allocation to 20%. I prefer not to continue investing in my taxable account until I’m back at a point of exceeding my 401k. Should I start investing in the VTSNX being offered in my 401K or contribute to invest in my already existing Admiral shares in my taxable account (VTIAX)? I’m pretty sure the answer is invest in the VTSNX, but wanted some feedback.

3) Should I be selling $5.5k of my taxable shares per year and contributing to a Roth IRA?

Any comments on my portfolio selections would also be great.

Thanks zzzzzz

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bottlecap
Posts: 4963
Joined: Tue Mar 06, 2007 11:21 pm
Location: Tennessee

Re: Help - Sleep Deprived New Dad Rebalancing

Post by bottlecap » Fri May 19, 2017 3:03 pm

https://www.amazon.com/Becoming-Baby-Wi ... g+babywise

You're welcome. Double check and make sure they recommend it for toddlers, which is about what your son is now...

JT

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rcjchicity
Posts: 109
Joined: Fri Nov 29, 2013 5:07 pm

Re: Help - Sleep Deprived New Dad Rebalancing

Post by rcjchicity » Fri May 19, 2017 3:24 pm

You might hold off on doing anything too complicated financially while you are this sleep deprived. I've been there, and it seriously messes with your mind.

Your invested funds' ERs are good, so it's not like you need to get out of expensive managed funds right away.

Depending on your income, you should do a Roth IRA or backdoor Roth IRA.

The best $500 we spent was on a sleep consultant that was recommended by a friend who also had success with her suggestions. Biggest change was when we always put baby down for naps/bedtime awake.

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Duckie
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Joined: Thu Mar 08, 2007 2:55 pm

Re: Help - Sleep Deprived New Dad Rebalancing

Post by Duckie » Fri May 19, 2017 4:29 pm

Angell wrote:All of my contributions these days are going towards my 401k as I am unable to max out my tax free account.
By "tax free" do you mean a Roth IRA?
In my 401k account - Sell 3% VEXAX, 5% VINIX and use that 8% to buy VBTIX. This will give me a 4:1 ratio of VINIX:VEXAX and bring my bond allocation to about 16% (close enough) and with all future contributions, including upcoming bonus, going to VBTIX I should reach 20% in the next few months. Does this all sound logical?
That's one way to do it.
I also need to increase my international stock allocation to 20%. I prefer not to continue investing in my taxable account until I’m back at a point of exceeding my 401k. Should I start investing in the VTSNX being offered in my 401K or contribute to invest in my already existing Admiral shares in my taxable account (VTIAX)? I’m pretty sure the answer is invest in the VTSNX, but wanted some feedback.
Yes, add VTSNX to your 401k.
Should I be selling $5.5k of my taxable shares per year and contributing to a Roth IRA?
Contributing to a Roth IRA (either directly or through the backdoor)? Yes. Selling in taxable? No. You could have all the taxable dividends funneled to a money market and use that for part of the contribution. The rest would come from income.

You're in the 28% tax bracket. Why can't you afford the $5.5K contribution?

Easy Rhino
Posts: 3202
Joined: Sun Aug 05, 2007 11:13 am
Location: San Diego

Re: Help - Sleep Deprived New Dad Rebalancing

Post by Easy Rhino » Fri May 19, 2017 4:40 pm

oh man, babies that won't sleep are the worst. :beer At least you managed to write up this post successfully!

I would only sell in the taxable account if there's little or no capital gains from it.

Yes to VTSNX in the 401k. It's fine.

Have you considered refi your mortgage? I glanced at the mtg professor website (because I like his search engine) and if everything goes right you might be able to get 3.75% rate with little costs, or even a small credit.

oktax
Posts: 36
Joined: Thu Dec 29, 2016 4:59 pm

Re: Help - Sleep Deprived New Dad Rebalancing

Post by oktax » Fri May 19, 2017 5:16 pm

I was in a similar situation with respect to sleep deprivation just about two weeks ago. Then we decided to use the Ferber method on our 6.5 month old. She's now sleeping 12+ hours per night. Do yourself a favor, read as much as you can about the Ferber method (essentially cry it out but with certain guidelines), and start your baby on this ASAP. Doing it over the weekend is a good idea in case it doesn't take right away. It took ours a few nights to get used to being put down awake, but once she got the hang of it, it's been life altering for me and my wife.

aristotelian
Posts: 3037
Joined: Wed Jan 11, 2017 8:05 pm

Re: Help - Sleep Deprived New Dad Rebalancing

Post by aristotelian » Fri May 19, 2017 5:41 pm

I say yes, yes, and yes. Your plan is perfectly sound.

If you could find a way to increase your taxable by just a bit, you could almost pay off your mortgage...Then you might be able to sleep better (if not your son).

mrsytf
Posts: 209
Joined: Sun Aug 14, 2016 9:04 pm

Re: Help - Sleep Deprived New Dad Rebalancing

Post by mrsytf » Sat May 20, 2017 7:20 pm

3) Should I be selling $5.5k of my taxable shares per year and contributing to a Roth IRA?
I wouldn't sell taxable shares unless I was doing so for tax loss harvesting. If you do not have enough money to contribute to ROTH, you could either scale down 401k contributions (making sure you take full advantage of any match), cut expenses to come up with the $5500k (shop insurance, cellphone bill and cable, reduce eating out, carpool, re-think gym memberships, reduce personal care, refinance mortgage to name a few) or find a way to increase your income to get $5500 after tax (over-time, surveys, consulting, online arbitrage, tradelines, airbnb, uber, fsa or dependent care money).

Good luck with the kid. Been there done that (twice). Finally got it right with the third - basically just ignored him when he cried. After five years, we were just too darn tired to wake up.

aristotelian
Posts: 3037
Joined: Wed Jan 11, 2017 8:05 pm

Re: Help - Sleep Deprived New Dad Rebalancing

Post by aristotelian » Sat May 20, 2017 7:47 pm

mrsytf wrote: Good luck with the kid. Been there done that (twice). Finally got it right with the third - basically just ignored him when he cried. After five years, we were just too darn tired to wake up.
We did the opposite. Just gave in completely and built the kid a bed that was level with ours so he could sleep right next to us, but without bothering us at all. He would come in our room some time between 2 and 4 am and we wouldn't notice a thing. Whatever works!

ThankYouJack
Posts: 1819
Joined: Wed Oct 08, 2014 7:27 pm

Re: Help - Sleep Deprived New Dad Rebalancing

Post by ThankYouJack » Sat May 20, 2017 8:03 pm

I would just focus on your family and getting rest now and not rebalancing. Rebalancing isn't going to make or break your retirement.

We used the Ferber method for my 1st and it worked well. Was painful letting her cry and not attending to her right away, but it was only 1 or 2 rough nights before she started sleeping much better. Also, getting a good sleep consultant / nanny would probably be well worth the $.

Good luck!

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