29 years old, newly married. [Update 2 years later]

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Topic Author
Lrt12
Posts: 34
Joined: Mon Jan 15, 2018 2:20 pm

29 years old, newly married. [Update 2 years later]

Post by Lrt12 » Mon Jan 15, 2018 3:53 pm

EF: 6 months expenses in high yield savings account
Debt: Mortgage 181,000 remaining at 4.125% (30 year fixed)
Tax filing status: MFJ
Tax: 22% federal, 5% state
State of residence: AL
Age: 29, DH is 28
Desired asset allocation: 85% stocks / 15% bonds
Desired international allocation: 20% of stocks

Portfolio (~92k):
Her 401k (TSP)- employer matches 5% (6% of 401K is Roth, the rest is traditional. Current contributions set to traditional)
G fund (Government securities): 12% (0.04%)
F fund (Fixed Income): 5% (0.04%)
C fund (Common stock): 35% (0.04%)
S fund (Small Cap stock): 18% (0.04%)

Her Roth IRA
VTSAX: 18% (0.04%)

His Roth IRA
VTIAX: 12% (0.11%)

Contributions
New Annual Contributions
18,500 + ~5,800 employer match Her 401K
5,500 His Roth IRA (backdoor)
5,500 Her Roth IRA (backdoor)
Her HSA: $2700 (employer provides $750 pass through); DH’s insurance premiums paid by his employer- not eligible for HSA (individual deductible of $1,000)

I have a vested, COLA pension that will replace approximately 1/3 of my income with retirement age of 57. I have a stable, federal government job that brings home 68% of the household income. DH started his job full time last month (previously part time while finishing an internship/school). The position is stable within his company but unstable industry (commercial and residential building). No kids at the moment with plans to have a child within the next 2 years. We are newly married and recently finished paying off $24,000 of DH’s student loans. DH is on board with current goal of ~50% savings rate (expenses include 10% of net income to tithe each month).

No plan for a car within the next 5 years. House built in 2015 with major ticket items remaining under warranty. Live in a nice, LCOL area.

Questions:
1. DH does not have a 401K through his employer. After maximizing tax advantaged space listed above, we will have ~$3300 additional each month to invest. I welcome thoughts as to the best way to allocate these funds.
2. Any other comments or recommendations regarding asset allocation?
3. Admittedly, I have a lot to learn in terms of the tax code. However, it does seem that Alabama is now recognizing HSAs, and thus I will be able to take advantage of the triple tax benefit. I plan to pay our medical expenses out of pocket. Please let me know if it looks like I can allocate funds more efficiently to minimize my tax bill in any way.

I have learned a lot from this forum over the past ~6 months, and I am thankful to have stumbled upon it. I appreciate your time.
Last edited by Lrt12 on Thu Apr 23, 2020 2:04 pm, edited 2 times in total.

TheAncientOne
Posts: 140
Joined: Wed Jul 19, 2017 8:53 pm

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by TheAncientOne » Mon Jan 15, 2018 4:15 pm

Lrt, I only wish I had been on the ball as much as you are at your age. I'd guess you're at the 95th percentile plus in terms of money management for a couple still in their twenties. It's been my perception that too many people here get so carried away with minimizing taxes that they lose track of their objectives. In your situation, I'd just open up a taxable brokerage account and put those monthly savings into one or two index funds. The main benefit of the index fund is not just that the fees to operate them are lower but also so are capital gains taxes due to low portfolio turnover. Then all you need to do is sit back and hope for a bear market while you're still young so that you can add to your portfolio at sharply reduced prices!

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

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by Duckie » Mon Jan 15, 2018 7:38 pm

Lrt12, welcome to the forum.
Lrt12 wrote:After maximizing tax advantaged space listed above, we will have ~$3300 additional each month to invest. I welcome thoughts as to the best way to allocate these funds.
In a taxable account for long-term investing the best options are a total US stock index fund and/or a total international stock index fund. You could also use that extra $3.3K to pay down your 4.125% mortgage. Or split the difference and use half for investing and half for the mortgage pay-down.

ellsbebc
Posts: 58
Joined: Mon Feb 02, 2015 11:45 am

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by ellsbebc » Mon Jan 15, 2018 10:59 pm

@lrt12 -- I commend your efforts in achieving such a strong financial position at your age. I would recommend you max your HSA so you fill all tax advantaged accounts. It then comes down to your level of debt aversion (payoff mortgage) and projections on future returns (will investments exceed 4.15% mortgage rate over the next 30 years).

DW and I are in a very similar situation (financial and age) as you. We are only a few months into home ownership but plan to have a similar discussion once expenses settle in. Our mortgage rate is 3.75% and my current inclination is to invest our excess monthly income.

You are in a strong position to capitalize on the time value of money.

GreenGrowTheDollars
Posts: 446
Joined: Fri Dec 18, 2015 11:09 pm

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by GreenGrowTheDollars » Mon Jan 15, 2018 11:49 pm

I'd split the $3K/month as a third, a third, and a third: 1/3 into a taxable investment account, 1/3 into additional mortgage principal, and 1/3 into growing the EF towards a year of expenses. Reasoning:
- Extra cash cushion will really help when you have a child, especially if you end up with a tough pregnancy or if you want more time at home after the baby is born. And, since your husband's industry is cyclical, building towards a better cash position could help you ride out the downturn...and there will, at some point, be another real estate downturn. There always is.
- Reducing mortgage principal reduces risk and also makes it more likely that you are not upside down in the house when that real estate downturn occurs. Under the new tax code you are likely going to be taking the standard deduction, so no tax benefit from mortgage interest and state taxes would be my guess.
- Investing the remaining thousand in a taxable account begins to build the third leg of the stool. I wish we had more in taxable investments and proportionately less in tax-deferred accounts given the MRDs that we'll be facing in a few years.

You are in such a great position right now. Nice to see a young couple starting out in such a strong way financially!

Topic Author
Lrt12
Posts: 34
Joined: Mon Jan 15, 2018 2:20 pm

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by Lrt12 » Tue Jan 16, 2018 6:48 am

Thanks for the replies. I have certainly been debating paying down the mortgage versus taxable investing while maintaining our overall AA. I have read numerous threads on that on this forum and see it is usually case specific and liquidity must be considered. It seems that we could be mortgage free in a little under 4 years. However, I like the idea of diversifying between taxable and mortgage.

Definitely will consider the impacts of the pregnancy and possibly needing to be off work longer than planned. If I have to take extended time without pay that will possibly require some pulling from the EF. Right now I have 14 weeks of paid vacation accrued.


My HDHP is self only. DH has a separate plan that has the premiums paid by his employer. I was under the impression that my 2700 + my employer’s $750 would hit the self only maximum of $3450 for 2018.

Prior to discovering Bogleheads, I was with a financial planner who actually advised me to contribute to taxable prior to maximizing my 401K (TSP). :oops:
Last edited by Lrt12 on Tue Jan 16, 2018 8:16 am, edited 1 time in total.

Frisco Kid
Posts: 410
Joined: Sun Nov 16, 2014 6:18 pm
Location: San Francisco Peninsula

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by Frisco Kid » Tue Jan 16, 2018 7:49 am

Since DH recently started a job in a volatile industry and you are newly married with plans to start a family soon makes sense to me to have liquidity as my top priority. Half to increase emergency fund and half to taxable?

mouses
Posts: 4127
Joined: Sat Oct 24, 2015 12:24 am

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by mouses » Tue Jan 16, 2018 8:26 am

I'm concerned about your plan to pay medical costs out of pocket. One disaster and you're wiped out. That's like not insuring your house against fire, etc. Fall down the stairs, cancer diagnosis, car accident.

Topic Author
Lrt12
Posts: 34
Joined: Mon Jan 15, 2018 2:20 pm

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by Lrt12 » Tue Jan 16, 2018 8:49 am

@Frisco kid Liquidity has definitely been my main concern with regards to paying extra towards the mortgage. I will continue to hold my bonds in my 401K for tax efficiency so our taxable account will be 100% stocks. I am thinking aim for 1 year of expenses in taxable account before paying extra towards mortgage. Thoughts?

@mouses I have an HDHP through my employer and DH has health insurance through his employer. Our out of pocket maximum together is $9000. I have a $1500 deductible (employer contributes $750) and he has a $1,000 deductible. When speaking about paying medical expenses out of pocket I was referring to rather than pulling from the HSA. Of course the HSA can be another layer of security and used for medical expenses in case of an emergency as well.

Topic Author
Lrt12
Posts: 34
Joined: Mon Jan 15, 2018 2:20 pm

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by Lrt12 » Thu Apr 23, 2020 2:03 pm

EF: 4 months expenses in high yield savings account
Debt: Mortgage ~173k remaining at 4.125% (30 year fixed)
Tax filing status: MFJ
Tax: 22% federal, 5% state
State of residence: AL
Age: 31, DH is 30
DD 9 months :D
Desired asset allocation: 85% stocks / 15% bonds

Portfolio (258.5k):
Her 401k (TSP)
G fund (Government securities; 0.04): 19.9k
F fund (Fixed Income; 0.04): 6.4k
C fund (Common stock; 0.04): 70.1k
S fund (Small Cap stock; 0.04): 23.4k

His 401k
DSKIX (S&P 500; 0.58): 28.1k

Her Roth IRA
VTSAX (0.04): 36.4k

His Roth IRA
VTIAX (0.11): 13.4k
VTSAX (0.04): 12.3k

HSA
SPTM (0.03): 12.6k

Taxable brokerage
VTSAX (0.04): 35.4k

529
Vanguard Total Stock Mrkt Idx 529: 0.25k (just started)

Contributions
New Annual Contributions
19,500 + ~6400 employer match Her 401K
19,500 + ~3500 employer match His 401K
6,000 His Roth IRA (backdoor)- maxed for 2020
6,000 Her Roth IRA (backdoor)- maxed for 2020
$7000 (employer provides $1800 pass through) Family HSA- will be maxed by the end of June
Taxable brokerage: likely ~15k this year- will start contributions in June

Life insurance:
Him- 750k ~18 years remaining on 20 year term
Her- 1mil ~18 years remaining on 20 year term


I wanted to post an update and request a review of where we are currently as a family. I would appreciated any input/suggestions. I still have a stable (fed gov) job and my husband is at his same employer which is tied to the housing industry. No one has been laid off at his office. Business has been as usual thus far.

Somethings I have been mulling over that I know are highly personal but would like opinions specific to our current place in life:
1. Emergency fund. I figured I will catch some flak on this. I would appreciate input. My thought is we can pay our bills on either salary and we have taxable brokerage money, HSA, money in the TSP G fund, and last line we have parents that would be willing (and able) to help us out in the short term.
2. 529. Debating padding our taxable a bit more prior to really funding. However, we do intend to pay for college for our children (currently one, want more). We get a state tax deduction for contributions up to $10,000/year.


Appreciate the advice. We would not be where we are financially without the wisdom of this forum.

daheld
Posts: 877
Joined: Wed Sep 13, 2017 8:14 am
Location: Midwest US

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by daheld » Thu Apr 23, 2020 2:14 pm

Lrt12 wrote:
Thu Apr 23, 2020 2:03 pm
EF: 4 months expenses in high yield savings account
Debt: Mortgage ~173k remaining at 4.125% (30 year fixed)
Tax filing status: MFJ
Tax: 22% federal, 5% state
State of residence: AL
Age: 31, DH is 30
DD 9 months :D
Desired asset allocation: 85% stocks / 15% bonds

Portfolio (258.5k):
Her 401k (TSP)
G fund (Government securities; 0.04): 19.9k
F fund (Fixed Income; 0.04): 6.4k
C fund (Common stock; 0.04): 70.1k
S fund (Small Cap stock; 0.04): 23.4k

His 401k
DSKIX (S&P 500; 0.58): 28.1k

Her Roth IRA
VTSAX (0.04): 36.4k

His Roth IRA
VTIAX (0.11): 13.4k
VTSAX (0.04): 12.3k

HSA
SPTM (0.03): 12.6k

Taxable brokerage
VTSAX (0.04): 35.4k

529
Vanguard Total Stock Mrkt Idx 529: 0.25k (just started)

Contributions
New Annual Contributions
19,500 + ~6400 employer match Her 401K
19,500 + ~3500 employer match His 401K
6,000 His Roth IRA (backdoor)- maxed for 2020
6,000 Her Roth IRA (backdoor)- maxed for 2020
$7000 (employer provides $1800 pass through) Family HSA- will be maxed by the end of June
Taxable brokerage: likely ~15k this year- will start contributions in June

Life insurance:
Him- 750k ~18 years remaining on 20 year term
Her- 1mil ~18 years remaining on 20 year term


I wanted to post an update and request a review of where we are currently as a family. I would appreciated any input/suggestions. I still have a stable (fed gov) job and my husband is at his same employer which is tied to the housing industry. No one has been laid off at his office. Business has been as usual thus far.

Somethings I have been mulling over that I know are highly personal but would like opinions specific to our current place in life:
1. Emergency fund. I figured I will catch some flak on this. I would appreciate input. My thought is we can pay our bills on either salary and we have taxable brokerage money, HSA, money in the TSP G fund, and last line we have parents that would be willing (and able) to help us out in the short term.
2. 529. Debating padding our taxable a bit more prior to really funding. However, we do intend to pay for college for our children (currently one, want more). We get a state tax deduction for contributions up to $10,000/year.


Appreciate the advice. We would not be where we are financially without the wisdom of this forum.
Only input I have is to consider refinancing that loan. We recently went from a 30 year 4.25% to 20 year 3.25%. Original loan had 28 years remaining, though we had paid off about 38% of the principle. It will save us a ton of money in interest over the years and cost the equivalent of about 1 monthly mortgage payment. I would recommend you consider refinancing.

pseudoiterative
Posts: 26
Joined: Tue Sep 24, 2019 6:11 am

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by pseudoiterative » Thu Apr 23, 2020 3:34 pm

Lrt12 wrote:
Thu Apr 23, 2020 2:03 pm
1. Emergency fund. I figured I will catch some flak on this. I would appreciate input. My thought is we can pay our bills on either salary and we have taxable brokerage money, HSA, money in the TSP G fund, and last line we have parents that would be willing (and able) to help us out in the short term.
It looks like the taxable brokerage money is 100% stocks. I'd be a bit concerned about planning to withdraw money from the stock market as a response to an emergency situation where you need the cash. For stock investments, since prices offered by the stock market can be so volatile, a rule of thumb is to avoid putting yourself in any situation where you are forced to sell stock regardless of what the market price is. With the economic events this year as an example, it is plausible that a recession could cause stock market prices to crash 50% and also cause job loss -- and then you're one unexpected large expense away from needing to sell a bunch of stock at a 50% loss to cover expenses.

Maybe first decide what minimum level of emergency fund you should maintain (e.g. perhaps the six months of expenses from the old post) and then decide how to store it. Store it somewhere where it can be easily withdrawn at short notice, and is not likely to lose a lot of value -- so a bank savings account is reasonable (especially with the standard government guarantee insuring the bank account). Storing a portion of emergency funds as government bonds in a taxable brokerage account may also be a reasonable idea, provided your brokerage account will let you sell and withdraw cash promptly in an emergency situation.

retired@50
Posts: 2495
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by retired@50 » Thu Apr 23, 2020 3:41 pm

Lrt12 wrote:
Tue Jan 16, 2018 6:48 am
Prior to discovering Bogleheads, I was with a financial planner who actually advised me to contribute to taxable prior to maximizing my 401K (TSP). :oops:
The planner would recommend such a strategy because they likely get paid based on how much you put into the taxable account (under planner's control), instead of how big your 401k account (TSP) is. This action alone seems to indicate that they weren't acting in YOUR best interest.

Regards,
This is one person's opinion. Nothing more.

Wolfpack2463
Posts: 36
Joined: Wed Jun 27, 2018 8:20 am

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by Wolfpack2463 » Thu Apr 23, 2020 3:48 pm

daheld wrote:
Thu Apr 23, 2020 2:14 pm
Lrt12 wrote:
Thu Apr 23, 2020 2:03 pm
EF: 4 months expenses in high yield savings account
Debt: Mortgage ~173k remaining at 4.125% (30 year fixed)
Tax filing status: MFJ
Tax: 22% federal, 5% state
State of residence: AL
Age: 31, DH is 30
DD 9 months :D
Desired asset allocation: 85% stocks / 15% bonds

Portfolio (258.5k):
Her 401k (TSP)
G fund (Government securities; 0.04): 19.9k
F fund (Fixed Income; 0.04): 6.4k
C fund (Common stock; 0.04): 70.1k
S fund (Small Cap stock; 0.04): 23.4k

His 401k
DSKIX (S&P 500; 0.58): 28.1k

Her Roth IRA
VTSAX (0.04): 36.4k

His Roth IRA
VTIAX (0.11): 13.4k
VTSAX (0.04): 12.3k

HSA
SPTM (0.03): 12.6k

Taxable brokerage
VTSAX (0.04): 35.4k

529
Vanguard Total Stock Mrkt Idx 529: 0.25k (just started)

Contributions
New Annual Contributions
19,500 + ~6400 employer match Her 401K
19,500 + ~3500 employer match His 401K
6,000 His Roth IRA (backdoor)- maxed for 2020
6,000 Her Roth IRA (backdoor)- maxed for 2020
$7000 (employer provides $1800 pass through) Family HSA- will be maxed by the end of June
Taxable brokerage: likely ~15k this year- will start contributions in June

Life insurance:
Him- 750k ~18 years remaining on 20 year term
Her- 1mil ~18 years remaining on 20 year term


I wanted to post an update and request a review of where we are currently as a family. I would appreciated any input/suggestions. I still have a stable (fed gov) job and my husband is at his same employer which is tied to the housing industry. No one has been laid off at his office. Business has been as usual thus far.

Somethings I have been mulling over that I know are highly personal but would like opinions specific to our current place in life:
1. Emergency fund. I figured I will catch some flak on this. I would appreciate input. My thought is we can pay our bills on either salary and we have taxable brokerage money, HSA, money in the TSP G fund, and last line we have parents that would be willing (and able) to help us out in the short term.
2. 529. Debating padding our taxable a bit more prior to really funding. However, we do intend to pay for college for our children (currently one, want more). We get a state tax deduction for contributions up to $10,000/year.


Appreciate the advice. We would not be where we are financially without the wisdom of this forum.
Only input I have is to consider refinancing that loan. We recently went from a 30 year 4.25% to 20 year 3.25%. Original loan had 28 years remaining, though we had paid off about 38% of the principle. It will save us a ton of money in interest over the years and cost the equivalent of about 1 monthly mortgage payment. I would recommend you consider refinancing.
+1

We just refinanced a 30 yr 4% (28 years remaining) to a 20 yr 3.125% for zero cost. I would look at either a 20 or 15 year if you can swing the payment.

BrklynMike
Posts: 51
Joined: Wed Oct 05, 2016 1:38 pm

Re: 29 years old, newly married. [Update 2 years later]

Post by BrklynMike » Thu Apr 23, 2020 4:08 pm

Looks like you guys are doing great. I question the allocation in your TSP, no international is a tad concerning and for the sake of simplicity I'd probably adopt a target date fund. I would be really curious to see what your income / budget is because I'm seriously impressed by your savings. I actually was hoping to show this post to my wife, but she'll write it off unless she can see the budget. . .
"In a world of uncertainty, one should focus more on the consequences than the probabilities." - Benjamin Graham

Topic Author
Lrt12
Posts: 34
Joined: Mon Jan 15, 2018 2:20 pm

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by Lrt12 » Thu Apr 23, 2020 7:54 pm

Wolfpack2463 wrote:
Thu Apr 23, 2020 3:48 pm
daheld wrote:
Thu Apr 23, 2020 2:14 pm
Lrt12 wrote:
Thu Apr 23, 2020 2:03 pm
EF: 4 months expenses in high yield savings account
Debt: Mortgage ~173k remaining at 4.125% (30 year fixed)
Tax filing status: MFJ
Tax: 22% federal, 5% state
State of residence: AL
Age: 31, DH is 30
DD 9 months :D
Desired asset allocation: 85% stocks / 15% bonds

Portfolio (258.5k):
Her 401k (TSP)
G fund (Government securities; 0.04): 19.9k
F fund (Fixed Income; 0.04): 6.4k
C fund (Common stock; 0.04): 70.1k
S fund (Small Cap stock; 0.04): 23.4k

His 401k
DSKIX (S&P 500; 0.58): 28.1k

Her Roth IRA
VTSAX (0.04): 36.4k

His Roth IRA
VTIAX (0.11): 13.4k
VTSAX (0.04): 12.3k

HSA
SPTM (0.03): 12.6k

Taxable brokerage
VTSAX (0.04): 35.4k

529
Vanguard Total Stock Mrkt Idx 529: 0.25k (just started)

Contributions
New Annual Contributions
19,500 + ~6400 employer match Her 401K
19,500 + ~3500 employer match His 401K
6,000 His Roth IRA (backdoor)- maxed for 2020
6,000 Her Roth IRA (backdoor)- maxed for 2020
$7000 (employer provides $1800 pass through) Family HSA- will be maxed by the end of June
Taxable brokerage: likely ~15k this year- will start contributions in June

Life insurance:
Him- 750k ~18 years remaining on 20 year term
Her- 1mil ~18 years remaining on 20 year term


I wanted to post an update and request a review of where we are currently as a family. I would appreciated any input/suggestions. I still have a stable (fed gov) job and my husband is at his same employer which is tied to the housing industry. No one has been laid off at his office. Business has been as usual thus far.

Somethings I have been mulling over that I know are highly personal but would like opinions specific to our current place in life:
1. Emergency fund. I figured I will catch some flak on this. I would appreciate input. My thought is we can pay our bills on either salary and we have taxable brokerage money, HSA, money in the TSP G fund, and last line we have parents that would be willing (and able) to help us out in the short term.
2. 529. Debating padding our taxable a bit more prior to really funding. However, we do intend to pay for college for our children (currently one, want more). We get a state tax deduction for contributions up to $10,000/year.


Appreciate the advice. We would not be where we are financially without the wisdom of this forum.
Only input I have is to consider refinancing that loan. We recently went from a 30 year 4.25% to 20 year 3.25%. Original loan had 28 years remaining, though we had paid off about 38% of the principle. It will save us a ton of money in interest over the years and cost the equivalent of about 1 monthly mortgage payment. I would recommend you consider refinancing.
+1

We just refinanced a 30 yr 4% (28 years remaining) to a 20 yr 3.125% for zero cost. I would look at either a 20 or 15 year if you can swing the payment.
I agree. Missed pulling the trigger last month when rates were lower. I have not seen the rates other people have been getting for no cost for my area code and LTV. House is worth ~255k. Currently seems like I will have to pay to get a decent refinance which still will be worth it I’m sure but dragging my feet. We are 5 years into the 30 year loan.

We do itemize deductions due to charitable contributions. It seems like it may be worth it to pay some points to get a lower 15 year rate and then keep the mortgage the full 15 more years.

Topic Author
Lrt12
Posts: 34
Joined: Mon Jan 15, 2018 2:20 pm

Re: 29 years old, newly married. [Update 2 years later]

Post by Lrt12 » Thu Apr 23, 2020 8:53 pm

BrklynMike wrote:
Thu Apr 23, 2020 4:08 pm
Looks like you guys are doing great. I question the allocation in your TSP, no international is a tad concerning and for the sake of simplicity I'd probably adopt a target date fund. I would be really curious to see what your income / budget is because I'm seriously impressed by your savings. I actually was hoping to show this post to my wife, but she'll write it off unless she can see the budget. . .
Currently international is in DH’s Roth IRA. Admittedly I don’t fully understand, but I had read there were some issues with the TSP international fund such that Vanguard’s fund would be a better choice until the TSP is updated. We don’t use a target date because we plan to hold all bond funds in my 401k (TSP).

We grossed 229k last year.
In the last 6 months since our daughter started daycare we have spent 56k per Mint. Does not include health insurance premiums (taken from my paycheck pre-tax).
Expenses that are probably specific to us (totals in the last 6 months)-
Adoption expenses: 6800
Infertility treatment (on hold due to COVID): 9000
Tithe: 7200

So, outside of those expenses spending ~5500/month.

General breakdown
PITI: 1,116
Daycare: 925 (we have spent an extra ~2100 in childcare since the shutdown)
Groceries/household supplies/diapers/formula: 800
Phones:80
Doctor/pharmacy/gym: 300
Gas/insurance/parts: 300
Internet:55
Utilities:230
Netflix/Spotify: 26
Eating out/dates: 150
My budget and baby budget: 200
DH budget: 300
The rest- life insurance, home/lawn maintenance, vet, etc.


I track everything we spend but doing this on my phone so that is the overall gist. Happy to answer any more questions/provide more detail if needed.

Topic Author
Lrt12
Posts: 34
Joined: Mon Jan 15, 2018 2:20 pm

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by Lrt12 » Thu Apr 23, 2020 9:06 pm

It looks like the taxable brokerage money is 100% stocks. I'd be a bit concerned about planning to withdraw money from the stock market as a response to an emergency situation where you need the cash. For stock investments, since prices offered by the stock market can be so volatile, a rule of thumb is to avoid putting yourself in any situation where you are forced to sell stock regardless of what the market price is. With the economic events this year as an example, it is plausible that a recession could cause stock market prices to crash 50% and also cause job loss -- and then you're one unexpected large expense away from needing to sell a bunch of stock at a 50% loss to cover expenses.

Maybe first decide what minimum level of emergency fund you should maintain (e.g. perhaps the six months of expenses from the old post) and then decide how to store it. Store it somewhere where it can be easily withdrawn at short notice, and is not likely to lose a lot of value -- so a bank savings account is reasonable (especially with the standard government guarantee insuring the bank account). Storing a portion of emergency funds as government bonds in a taxable brokerage account may also be a reasonable idea, provided your brokerage account will let you sell and withdraw cash promptly in an emergency situation.
[/quote]

Yes taxable is all in stock. We have 4 months expenses in a HYSA, so it is liquid. I guess my thinking is if we lose one job we don’t have to pull from EF. If we both lose our jobs, with unemployment, we have about 6 months. Then with half our current taxable and half our current hsa that would get us about 4 more months although admittedly not ideal. I am definitely considering increasing. Just going through my first market turmoil while invested/ working and finding myself sleeping well at night with our current set up.

Appreciate your input.

daheld
Posts: 877
Joined: Wed Sep 13, 2017 8:14 am
Location: Midwest US

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by daheld » Fri Apr 24, 2020 7:18 am

Lrt12 wrote:
Thu Apr 23, 2020 7:54 pm
I agree. Missed pulling the trigger last month when rates were lower. I have not seen the rates other people have been getting for no cost for my area code and LTV. House is worth ~255k. Currently seems like I will have to pay to get a decent refinance which still will be worth it I’m sure but dragging my feet. We are 5 years into the 30 year loan.

We do itemize deductions due to charitable contributions. It seems like it may be worth it to pay some points to get a lower 15 year rate and then keep the mortgage the full 15 more years.
Definitely look again. Our original mortgage was held by US Bank and I used them to refi purely out of convenience (and because closing costs were similar). Just looked at their website and a 20 year refi is back down to what it was when we did ours (3.25%). Don't let the lack of "no cost" loans scare you away. People who get a no cost refi either wind up paying those closing costs as a part of the principle they borrowed, or are at a higher rate because of it. Like I said, we paid what is essentially the equivalent of one mortgage payment (ok, ok--1.5 payments) to close our refi. We'll break even in a couple years and save a TON of money in interest over the years. If you're going to stay in the home, it'll likely be worth it.

As an aside, I'm also a fed. I saw someone mention it earlier, but you might consider the TSP target date funds.

bikesandbeers
Posts: 98
Joined: Thu Jun 13, 2019 2:08 am

Re: 29 years old, newly married. [Update 2 years later]

Post by bikesandbeers » Fri Apr 24, 2020 8:07 am

Keep looking at refinance options, shop around. You should be able to get a low refinance in the low 3.x%. Nothing wrong with some fees if you are going to stay in the house for a while.

There are lots of thread on why you shouldn't consider your home as part of your investment portfolio, but you could be looking at a $20-40K guaranteed savings by refinancing

Topic Author
Lrt12
Posts: 34
Joined: Mon Jan 15, 2018 2:20 pm

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by Lrt12 » Fri Apr 24, 2020 10:02 am

Definitely look again. Our original mortgage was held by US Bank and I used them to refi purely out of convenience (and because closing costs were similar). Just looked at their website and a 20 year refi is back down to what it was when we did ours (3.25%). Don't let the lack of "no cost" loans scare you away. People who get a no cost refi either wind up paying those closing costs as a part of the principle they borrowed, or are at a higher rate because of it. Like I said, we paid what is essentially the equivalent of one mortgage payment (ok, ok--1.5 payments) to close our refi. We'll break even in a couple years and save a TON of money in interest over the years. If you're going to stay in the home, it'll likely be worth it.

As an aside, I'm also a fed. I saw someone mention it earlier, but you might consider the TSP target date funds.
[/quote]


Will keep looking. I definitely need to pull the trigger. Thank you.

As far as the TSP target date- My plan is to hold all our bonds in the TSP. That is why I haven’t used a target date. If I am missing something on that I am certainly open to suggestions.

daheld
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Location: Midwest US

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by daheld » Fri Apr 24, 2020 10:25 am

Lrt12 wrote:
Fri Apr 24, 2020 10:02 am
Definitely look again. Our original mortgage was held by US Bank and I used them to refi purely out of convenience (and because closing costs were similar). Just looked at their website and a 20 year refi is back down to what it was when we did ours (3.25%). Don't let the lack of "no cost" loans scare you away. People who get a no cost refi either wind up paying those closing costs as a part of the principle they borrowed, or are at a higher rate because of it. Like I said, we paid what is essentially the equivalent of one mortgage payment (ok, ok--1.5 payments) to close our refi. We'll break even in a couple years and save a TON of money in interest over the years. If you're going to stay in the home, it'll likely be worth it.

As an aside, I'm also a fed. I saw someone mention it earlier, but you might consider the TSP target date funds.


Will keep looking. I definitely need to pull the trigger. Thank you.

As far as the TSP target date- My plan is to hold all our bonds in the TSP. That is why I haven’t used a target date. If I am missing something on that I am certainly open to suggestions.
I guess I'm a little confused by your statement. Do you mean that as you get older and your asset allocation trends toward holding more bonds overall, you'll eventually hold all bonds in your portfolio in TSP? I assume this is what you mean because right now your TSP asset allocation is 17% bond/G fund. Holding bonds in tax advantaged accounts is generally recommended, so this makes sense. However, I'm looking at your original post and TSP investments. If you total them, it only accounts for 70% across G, F, C and S funds. I'm guessing you accidentally left off the I fund. Take a look at L2050--it's really similar to what you are currently doing in TSP yourself, but gradually gets more conservative over time. I would say either way is fine, but it's an idea to simplify.

On the refinance--I was amazed at how easy it was. We never saw anybody face to face until the notary came to our house (because of COVID concerns) to sign at closing. We just uploaded needed docs, they requested one additional item, and it was done. I think it took about 3 weeks after we started uploading stuff to close.

BrklynMike
Posts: 51
Joined: Wed Oct 05, 2016 1:38 pm

Re: 29 years old, newly married. [Update 2 years later]

Post by BrklynMike » Sat Apr 25, 2020 7:17 am

Thanks for the details!
"In a world of uncertainty, one should focus more on the consequences than the probabilities." - Benjamin Graham

Topic Author
Lrt12
Posts: 34
Joined: Mon Jan 15, 2018 2:20 pm

Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by Lrt12 » Sat Apr 25, 2020 11:46 am

[/quote]

I guess I'm a little confused by your statement. Do you mean that as you get older and your asset allocation trends toward holding more bonds overall, you'll eventually hold all bonds in your portfolio in TSP? I assume this is what you mean because right now your TSP asset allocation is 17% bond/G fund. Holding bonds in tax advantaged accounts is generally recommended, so this makes sense. However, I'm looking at your original post and TSP investments. If you total them, it only accounts for 70% across G, F, C and S funds. I'm guessing you accidentally left off the I fund. Take a look at L2050--it's really similar to what you are currently doing in TSP yourself, but gradually gets more conservative over time. I would say either way is fine, but it's an idea to simplify.

On the refinance--I was amazed at how easy it was. We never saw anybody face to face until the notary came to our house (because of COVID concerns) to sign at closing. We just uploaded needed docs, they requested one additional item, and it was done. I think it took about 3 weeks after we started uploading stuff to close.
[/quote]

I do not hold any I fund in the TSP. All international is in my husband's Roth IRA at this point. Across all of our accounts, our only bonds will be in the TSP. So, I will need to be more bond heavy in the TSP to account for the stocks in each of our IRAs and my husband's 401k. Thanks for letting me know about your experience with the refinance. Admittedly, not knowing the steps and having not done it before was making me drag my feet.

Fishing50
Posts: 400
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Re: 29 years old, newly married. Need help allocating ~$3300/month

Post by Fishing50 » Sat Apr 25, 2020 2:12 pm

Lrt12 wrote:
Thu Apr 23, 2020 9:06 pm
Yes taxable is all in stock. We have 4 months expenses in a HYSA, so it is liquid. I guess my thinking is if we lose one job we don’t have to pull from EF. If we both lose our jobs, with unemployment, we have about 6 months. Then with half our current taxable and half our current hsa that would get us about 4 more months although admittedly not ideal. I am definitely considering increasing. Just going through my first market turmoil while invested/ working and finding myself sleeping well at night with our current set up.

Appreciate your input.
Yes, do it, get the emergency fund invested. As you said, total stock market equity funds and total intl stock funds are extremely tax efficient and can be held forever.

You don't need an emergency fund with the stability of a government job, high savings rate, and taxable investments. If you incur an emergency expense, you can use a credit card to cover expenses then reduce taxable contributions to pay the bill. If necessary, you can sell taxable assets which you'll have options to pay capital gains or the tax advantage of a tax loss. Consider taking dividends in cash, which can be spent or combined with taxable contribution for a larger tax lot as needed for intl/US asset allocation.

Study Tax Loss Harvesting. We were well prepared for the TLH opportunity in March.

Big ERN article about EF: https://earlyretirementnow.com/2016/05/ ... ency-fund/
It's perfectly legal, go ask the IRS, they'll say the same thing. I actually feel stupid telling you this, I'm sure you would've investigated the matter yourself. Andy Dufresne

psy1
Posts: 162
Joined: Thu Jan 31, 2019 1:40 am

Re: 29 years old, newly married. [Update 2 years later]

Post by psy1 » Sat Apr 25, 2020 2:48 pm

Looks like you are doing great! I would get more term life insurance though. Consider how much money would be required to replace either of your incomes. There are different approaches of course, but I would double it. While you are young and healthy get the longest term available. I wish we got 30 year term when we got 20 year.

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