Need some advice on my financial situation

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tRacer4201
Posts: 4
Joined: Fri Jan 19, 2018 3:01 am

Need some advice on my financial situation

Post by tRacer4201 » Sun Feb 04, 2018 5:37 pm

Me: 28/F
Status: Single
Kids: None
Salary: $120K
401K: Employer match but not more in Vanguard target date fund
Roth IRA: Maxed for 2017 100% in VOO
Debt: None, paid off the last of my student loans last year (YAY!)
Housing: Rent ($2.5K/month)

VTSAX: $20K
VTIAX: $15K
Vested employer stock: $60K
MSFT: $2K
AAPL: $2K
Emergency savings: $17K

In hindsight, I probably shouldn't have bought individual stocks and should have just put that money into VTSAX.

2018 Outlook:

- I am adding $2K each month to VTSAX
- My biggest expense is my rent ($2,500). It's insane... I know. It's the cost of being close to my work (walking distance). My lease expires soon, and I am moving an hour away. I will save another $1K a month.

Questions:

1. I am net positive on both MSFT and AAPL. Should I sell and put it in VTSAX or just leave alone?
2. I have RSU's with my employer that recently vested. I also have additional vests later this year. As listed above, I am currently holding on to ~$60K that I can immediately sell. Should I sell? If so, put the proceeds into VTSAX?
3. In general, some of the older or more wise investors - what would you do if you were in my shoes? Is VTSAX a good strategy?

On one hand, I feel like I have all my eggs in one basket by doing this. Also, I'm getting additional stock vests, and so I still have future equity unless I leave my job.

Other thoughts:
I started late in investing/saving, as until recently I was supporting 2 other siblings (they're just now wrapping up with college) because our parents aren't around. I feel like financially, I'm very late and behind everyone else.

Helo80
Posts: 701
Joined: Sat Apr 29, 2017 8:47 pm

Re: Need some advice on my financial situation

Post by Helo80 » Sun Feb 04, 2018 6:16 pm

tRacer4201 wrote:
Sun Feb 04, 2018 5:37 pm
- My biggest expense is my rent ($2,500). It's insane... I know. It's the cost of being close to my work (walking distance). My lease expires soon, and I am moving an hour away. I will save another $1K a month.
Why? Yeah, $2500 is high, but you're earning $120k and are within walking distance. Therefore, no gas or transit fees to get to work. I'm not sure how many here would advocate moving an hour away to save $1 grand a month. I would not. From walking distance to 2+ hours commuting every day... I don't know man...

tRacer4201 wrote:
Sun Feb 04, 2018 5:37 pm
Questions:

1. I am net positive on both MSFT and AAPL. Should I sell and put it in VTSAX or just leave alone?
2. I have RSU's with my employer that recently vested. I also have additional vests later this year. As listed above, I am currently holding on to ~$60K that I can immediately sell. Should I sell? If so, put the proceeds into VTSAX?
For both options, generally speaking BHs here do not advocate holding individual securities. If Apple or MS go belly up, you're out everything. That being said, they are both very much not going anywhere anytime soon and kings in the industry. Plus, $4,000 between them is not going to be a huge loss if you were to lose it all. But, keep in mind Yahoo, Nortel, MySpace, etc. once were the hottest things in their industries at one point.

For RSUs, most here would tell you to not be heavily invested in your employer's stock plan. It's generally best to divest away from your employer in the even that if the company fails, you don't lose your job AND your retirement savings. For a while, Enron was a hot stock and we all know what happened to Enron...

tRacer4201 wrote:
Sun Feb 04, 2018 5:37 pm
3. In general, some of the older or more wise investors - what would you do if you were in my shoes? Is VTSAX a good strategy?
VTSAX is a fine strategy. It's a key component of the BH 3 fund portfolio. You may consider adding bonds or an international index fund to your portfolio, but at your age, 100% VTSAX is fine.

tRacer4201 wrote:
Sun Feb 04, 2018 5:37 pm
Other thoughts:
I started late in investing/saving, as until recently I was supporting 2 other siblings (they're just now wrapping up with college) because our parents aren't around. I feel like financially, I'm very late and behind everyone else.

Hahahahahahahahaha....... you're not late. You're ahead of your peers by a huge margin. It's not uncommon to see a post here where people are 45-50 and just beginning to plan their retirement savings. You're see selection bias here and BHs, their retirement savings rates are quite a bit different from the normal population.

NancyABQ
Posts: 211
Joined: Thu Aug 18, 2016 3:37 pm

Re: Need some advice on my financial situation

Post by NancyABQ » Sun Feb 04, 2018 6:18 pm

You didn't ask for advice on this, but personally I would not give up a housing situation where you can walk to work, for one with a 1 hour commute. Unless there are other mitigating factors (reasons you want to live in the location that is 1 hour away)?

Yes, the rent is expensive, but it looks like you have a budget to sustain it and still save plenty of money.

tRacer4201
Posts: 4
Joined: Fri Jan 19, 2018 3:01 am

Re: Need some advice on my financial situation

Post by tRacer4201 » Sun Feb 04, 2018 6:22 pm

NancyABQ wrote:
Sun Feb 04, 2018 6:18 pm
You didn't ask for advice on this, but personally I would not give up a housing situation where you can walk to work, for one with a 1 hour commute. Unless there are other mitigating factors (reasons you want to live in the location that is 1 hour away)?

Yes, the rent is expensive, but it looks like you have a budget to sustain it and still save plenty of money.
I appreciate the advice. With the 1 hour commute each way, my transit costs will be covered by my employer, and so there's no additional cost (vehicle, gasoline, etc.).

My perspective was $1K a month doesn't seem that much, but when I think of it as $12K a year that I could just put in some index fund, it really starts adding up. Regardless, your perspective does make a lot of sense.

tRacer4201
Posts: 4
Joined: Fri Jan 19, 2018 3:01 am

Re: Need some advice on my financial situation

Post by tRacer4201 » Sun Feb 04, 2018 6:22 pm

Helo80 wrote:
Sun Feb 04, 2018 6:16 pm
tRacer4201 wrote:
Sun Feb 04, 2018 5:37 pm
- My biggest expense is my rent ($2,500). It's insane... I know. It's the cost of being close to my work (walking distance). My lease expires soon, and I am moving an hour away. I will save another $1K a month.
Why? Yeah, $2500 is high, but you're earning $120k and are within walking distance. Therefore, no gas or transit fees to get to work. I'm not sure how many here would advocate moving an hour away to save $1 grand a month. I would not. From walking distance to 2+ hours commuting every day... I don't know man...

tRacer4201 wrote:
Sun Feb 04, 2018 5:37 pm
Questions:

1. I am net positive on both MSFT and AAPL. Should I sell and put it in VTSAX or just leave alone?
2. I have RSU's with my employer that recently vested. I also have additional vests later this year. As listed above, I am currently holding on to ~$60K that I can immediately sell. Should I sell? If so, put the proceeds into VTSAX?
For both options, generally speaking BHs here do not advocate holding individual securities. If Apple or MS go belly up, you're out everything. That being said, they are both very much not going anywhere anytime soon and kings in the industry. Plus, $4,000 between them is not going to be a huge loss if you were to lose it all. But, keep in mind Yahoo, Nortel, MySpace, etc. once were the hottest things in their industries at one point.

For RSUs, most here would tell you to not be heavily invested in your employer's stock plan. It's generally best to divest away from your employer in the even that if the company fails, you don't lose your job AND your retirement savings. For a while, Enron was a hot stock and we all know what happened to Enron...

tRacer4201 wrote:
Sun Feb 04, 2018 5:37 pm
3. In general, some of the older or more wise investors - what would you do if you were in my shoes? Is VTSAX a good strategy?
VTSAX is a fine strategy. It's a key component of the BH 3 fund portfolio. You may consider adding bonds or an international index fund to your portfolio, but at your age, 100% VTSAX is fine.

tRacer4201 wrote:
Sun Feb 04, 2018 5:37 pm
Other thoughts:
I started late in investing/saving, as until recently I was supporting 2 other siblings (they're just now wrapping up with college) because our parents aren't around. I feel like financially, I'm very late and behind everyone else.

Hahahahahahahahaha....... you're not late. You're ahead of your peers by a huge margin. It's not uncommon to see a post here where people are 45-50 and just beginning to plan their retirement savings. You're see selection bias here and BHs, their retirement savings rates are quite a bit different from the normal population.
Appreciate all the advice. I do already have VTIAX in my portfolio. Is that a good balance with VTSAX?

student
Posts: 2075
Joined: Fri Apr 03, 2015 6:58 am

Re: Need some advice on my financial situation

Post by student » Sun Feb 04, 2018 6:32 pm

tRacer4201 wrote:
Sun Feb 04, 2018 5:37 pm
I started late in investing/saving, as until recently I was supporting 2 other siblings (they're just now wrapping up with college) because our parents aren't around. I feel like financially, I'm very late and behind everyone else.
You are not late. At your age, I was a graduate student. Almost 25 years later, I do not make what you make on my 9-month college teacher salary. Max your contribution and invest in low cost mutual fund, you should do fine.

Congratulations on your success.

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Watty
Posts: 13439
Joined: Wed Oct 10, 2007 3:55 pm

Re: Need some advice on my financial situation

Post by Watty » Sun Feb 04, 2018 6:50 pm

tRacer4201 wrote:
Sun Feb 04, 2018 5:37 pm
- My biggest expense is my rent ($2,500). It's insane... I know. It's the cost of being close to my work (walking distance). My lease expires soon, and I am moving an hour away. I will save another $1K a month.
When people say an hour commute that usually means an hour on a good day with a good commute, longer once or twice a week when it is not so good, maybe two hours a couple of times a month when it is bad, and every year or so a commute from hell.

One other big problem with a long commute is that the times can be unpredictable and if you need to be at work at 8:00 AM for an important meeting you will need to leave for work very early to be sure of being at work on time. If you want to be home at a certain time to meet someone to go out in the evening that can be a problems to.

A commute that long is also not good for your health since by the time you get home at night there is a big temptation to just get take out food and little time left to get some exercise or even just take a walk.

That would be miserable.

Helo80
Posts: 701
Joined: Sat Apr 29, 2017 8:47 pm

Re: Need some advice on my financial situation

Post by Helo80 » Sun Feb 04, 2018 6:51 pm

tRacer4201 wrote:
Sun Feb 04, 2018 6:22 pm


Appreciate all the advice. I do already have VTIAX in my portfolio. Is that a good balance with VTSAX?


My mistake... missed that. Yup, VTIAX is a great international fund.

Are you maxing your 401k? I see you're maxing your Roth IRA.

Leemiller
Posts: 1005
Joined: Sat Jun 01, 2013 12:42 pm

Re: Need some advice on my financial situation

Post by Leemiller » Sun Feb 04, 2018 7:06 pm

I would never add that kind of commute to save 1k a month given your circumstances. It will be a huge drain and prevent you from staying later and arriving earlier when needed. Also, it will be harder to date or see friends after work.

I would immediately sell the company stock, since my understanding is that you’ll take the tax hit either way. Too much concentration for your net worth. I guess it would be good to know what your goal is for this money? Downpayment? General savings?

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htdrag11
Posts: 1047
Joined: Wed Nov 02, 2011 9:22 pm

Re: Need some advice on my financial situation

Post by htdrag11 » Sun Feb 04, 2018 7:10 pm

You're not late, plus you are helping your siblings, great karma.

As for commuting, our daughter used to travel an hour and she hated the traffic. Her rent is a bit higher than yours, but she loves it (works from home in her new job).

You are a bit aggressive on the international side, kind of like 40%. Most folks go with less, like 20-30%.

Given that you have only $17k in emergency funds, I would unload some of your vested RSUs and raise your cash position closer to $60k, kind of like 6 months of your salary.

SimplicityNow
Posts: 433
Joined: Fri Aug 05, 2016 10:31 am

Re: Need some advice on my financial situation

Post by SimplicityNow » Sun Feb 04, 2018 7:17 pm

tRacer4201 wrote:
Sun Feb 04, 2018 5:37 pm
Me: 28/F
Status: Single
Kids: None
Salary: $120K
401K: Employer match but not more in Vanguard target date fund
Roth IRA: Maxed for 2017 100% in VOO
Debt: None, paid off the last of my student loans last year (YAY!)
Housing: Rent ($2.5K/month)

VTSAX: $20K
VTIAX: $15K
Vested employer stock: $60K
MSFT: $2K
AAPL: $2K
Emergency savings: $17K

In hindsight, I probably shouldn't have bought individual stocks and should have just put that money into VTSAX.

2018 Outlook:

- I am adding $2K each month to VTSAX
- My biggest expense is my rent ($2,500). It's insane... I know. It's the cost of being close to my work (walking distance). My lease expires soon, and I am moving an hour away. I will save another $1K a month.

Questions:

1. I am net positive on both MSFT and AAPL. Should I sell and put it in VTSAX or just leave alone? It's not a huge amount so you could leave them as is and count them as your 5% play money. I personally wouldn't add to them.
2. I have RSU's with my employer that recently vested. I also have additional vests later this year. As listed above, I am currently holding on to ~$60K that I can immediately sell. Should I sell? If so, put the proceeds into VTSAX? You increase risk because your retirement savings and your salary are both dependent on one source, your employer. I think most would say to diversify into something else.
3. In general, some of the older or more wise investors - what would you do if you were in my shoes? Is VTSAX a good strategy? VTSAX is a a good core component of a portfolio.

On one hand, I feel like I have all my eggs in one basket by doing this. Also, I'm getting additional stock vests, and so I still have future equity unless I leave my job.You are actually spreading out your eggs over thousands of companies by investing in VTSAX

Other thoughts:
I started late in investing/saving, as until recently I was supporting 2 other siblings (they're just now wrapping up with college) because our parents aren't around. I feel like financially, I'm very late and behind everyone else.On the contrary you started early. Kudos to you for helping out your siblings.

jtopicz1
Posts: 17
Joined: Sun Jul 20, 2008 11:03 am

Re: Need some advice on my financial situation

Post by jtopicz1 » Sun Feb 04, 2018 7:54 pm

I agree with what others have said, that commute may save $1000 a month, but is that the only option to cut down housing? Assuming you work 20 days a month, that's $50 a day in exchange for two hours of your time. I can't see it not getting old, quick!

Do you have to go that far out of the area for any savings? Could you go 20 minutes and save $500?

blastoff
Posts: 192
Joined: Thu Jan 19, 2012 12:04 pm

Re: Need some advice on my financial situation

Post by blastoff » Sun Feb 04, 2018 8:06 pm

Agree with others. I would avoid a 1 hour commute.

If you made 50k and this would really make a difference I might consider it.

Perhaps there is a compromise in location (closer than 1 hour) or a non driving (good public transit?) commute?

onourway
Posts: 1100
Joined: Thu Dec 08, 2016 3:39 pm

Re: Need some advice on my financial situation

Post by onourway » Sun Feb 04, 2018 8:14 pm

Agree with the others. $1000/month is a bargain to save 2 hours/day of commuting. Focus your savings elsewhere.

perl
Posts: 130
Joined: Mon Apr 28, 2014 12:46 pm

Re: Need some advice on my financial situation

Post by perl » Sun Feb 04, 2018 8:33 pm

Agreed on keeping the short commute.

Instead of putting 2k/month in a taxable account, you should max out your 401k first. You're passing up tax deferral that is valuable in your tax bracket.

Are you eligible for an HDHP and HSA?

Helo80
Posts: 701
Joined: Sat Apr 29, 2017 8:47 pm

Re: Need some advice on my financial situation

Post by Helo80 » Sun Feb 04, 2018 8:39 pm

Since a lot here are concerned about your commute, even though you're not asking for our personal advice per-say, you're switching up your personal living situation for what sounds like a financial reason.

If your goal is to save every penny and retire at 40 or 45, then by all means, save the $12 grand or get a ton of roommates.

But, if you were genuinely concerned about "starting late" at age 29 and already have a decent piggybank saved up for your age when applied to your cohorts... odds are, you're going to be like a lot of BHs here, continue to live below your means, and then at 50/60, have this multi-million dollar nestegg that you're concerned about spending down.

I'll be blunt with you --- I'm not that much older than you, and I have personally done the 130+ mile roundtrip daily commute that took 2.5 hours; and it was partly for financial reasons, but also multi-factorial. You get used to it, but that was about 12 hours of my life every week dedicated just to mandatory travel.

We're concerned.... that's all... not because we don't want you to save/invest that $12 grand, but long commutes can test your sanity when there is not a slam-dunk reason you have to do it (spouse, financial, waiting for new job, temporary employment, etc.)

Grt2bOutdoors
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Location: New York

Re: Need some advice on my financial situation

Post by Grt2bOutdoors » Sun Feb 04, 2018 8:59 pm

Don’t move an hour away to save $1,000. Keep your apartment.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

bloom2708
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Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Need some advice on my financial situation

Post by bloom2708 » Sun Feb 04, 2018 9:12 pm

Grt2bOutdoors wrote:
Sun Feb 04, 2018 8:59 pm
Don’t move an hour away to save $1,000. Keep your apartment.
+100

Losing two hours commuting every day. Ouch.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

HJG0989
Posts: 131
Joined: Sat Oct 13, 2007 2:18 pm

Re: Need some advice on my financial situation

Post by HJG0989 » Sun Feb 04, 2018 9:35 pm

You are doing very well, congratulations on being so responsible. And, that is really awesome that you helped your siblings out, you sound like a great person.

I echo what others have said, keep your apartment. It has a huge impact on your quality of life and you deserve it.

I would not buy anymore individual stocks in your taxable account. My spouse and I both inherited portfolios with individual stocks when the market was low. I would love to liquidate them and buy index funds but it will take many years due to capital gains. With your income set it and forget it is a good way to go.

Best of luck to you!

Olemiss540
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Re: Need some advice on my financial situation

Post by Olemiss540 » Sun Feb 04, 2018 10:00 pm

perl wrote:
Sun Feb 04, 2018 8:33 pm
Agreed on keeping the short commute.

Instead of putting 2k/month in a taxable account, you should max out your 401k first. You're passing up tax deferral that is valuable in your tax bracket.

Are you eligible for an HDHP and HSA?
This x1000.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

GMT-8
Posts: 124
Joined: Fri Mar 26, 2010 5:11 pm

Re: Need some advice on my financial situation

Post by GMT-8 » Sun Feb 04, 2018 10:06 pm

I'm not sorry to be piling on - but you are the only one with control of your "free" time now. As soon as you move, everyone and every event that affects the traffic will be taking that free time away from you, and they will never give it back - unless you can afford helicopter commuting.

Stay put. Find another place if you have to but stay within 15 minutes if you can. The savings isn't worth it.

TwstdSista
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Joined: Thu Nov 16, 2017 4:03 am

Re: Need some advice on my financial situation

Post by TwstdSista » Mon Feb 05, 2018 6:32 am

Just chiming in re: the commute -- don't do it. Quality of life and all that. The husband and I specifically bought a house near where I work, and near one of his two job locations (the busier one). Yes, there are cheaper places we could live. But our time is valuable to us, and neither of us wants to live in our cars, traffic, at stop lights, etc.

You cannot beat an awesome commute! (certainly not for $1000/month that you can afford and still save)

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