Trying to determine our next move...

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
jason.durby
Posts: 5
Joined: Wed May 20, 2020 8:54 pm

Trying to determine our next move...

Post by jason.durby » Wed May 20, 2020 9:33 pm

This my first post. I'm trying to figure out our next move or figure out a way to optimize my family's finances. Here's our situation:

Emergency funds: Yes through portfolio

Debt: We have a 30 year fixed rate mortgage for $380k with about $340k left after 4 years. Interest rate on the house is 3.25%. No other debt. Maybe $1,000 dollars across all credit cards that we pay off every month. House market value is $415-425K right now.

Tax Filing Status: Married Filing Jointly

Tax Rate: 19.9% Federal, 0% State

State of Residence: Texas

Age: Me = 36 / Wife = 31
My salary: $180,000 Gross (w/yearly bonus)
Wife salary: $90,000 Gross (w/ her business income and part time hospital work)

Portfolio

Regular Checking Accounts: $22,000
High Yield Savings: $58,000 (@ 1.5 APY)
Brokerage: $39,000 total = $23,000 in cash / $16,000 in actual positions (AAPL/KMI/OXY/TELL/XOM & Oct 2020 SNAP 17 P)
Deferred Stock: $23,000 payments in 2020, 2021, and 2022 in vested company stock ($23,000 based on current company stock price)

My Vanguard 401K = $285,000 (VIRSX 25% / VITFX 15.1% / VTRLX 24.9% / VITLX 24.9% / VTTWX 10.1%)
Contributed $9,000 of pre-tax in 2019 which was matched fully by 6% salary company match

Wife Fidelity 403B = $45,000 (OVZP 100%)
Contributed $1,448 of pre-tax in 2019 which was matched fully by 6% salary company match. Sparse contributions because she's only part-time.

My TD Ameritrade IRA = $60,000 (All cash currently, waiting for a time to reinvest all of this. This was a pension that came from a previous job that I rolled over into an IRA in 2016)

My wife (age 31) and I (age 36) live in Dallas and bring in between $12-13K combined after tax each month. I also get bonuses twice a year. I work in oil & gas and my wife has a small health business and works shifts at a hospital. Our monthly budget is around $9K and this includes all bills, projected groceries, children costs, entertainment, house things, clothing, gifts, Amazon, etc...

Question:

We’ve been struggling with the next move for our finances. I thought about paying down our house faster in blocks but the interest rate on the loan is pretty low so I keep thinking it would be good to keep the liquid assets liquid with everything going on.

We’ve also thought about getting a rental home ($100-150k value) for each kid of ours over time and then selling it for college costs or giving it to them to manage once they become 18. I've had a rental home before and it's kind of a pain but they are fairly safe investments.

I've also thought about taking the $40k in the brokerage account and just putting it in the high yield account but I keep hoping that the market will bottom out eventually so I can invest all of that money in index funds and large cap growth.

Reading this situation, what would be a good next move?
Last edited by jason.durby on Thu May 21, 2020 4:22 pm, edited 2 times in total.

tashnewbie
Posts: 349
Joined: Thu Apr 23, 2020 12:44 pm

Re: Trying to determine our next move...

Post by tashnewbie » Thu May 21, 2020 8:40 am

Welcome to the forum! I'll leave the details to more experienced users. Off the top of my head, these seem like things you can consider to increase efficiency:

1. Put at least half of the checking account balance into your HYSA, unless you need a really high cash buffer in your checking account. Leaving $10k there would give you 1 months' expenses as a buffer. You didn't mention how stable/secure you think your jobs are. It might be worth considering keeping 12 months of an emergency fund in your HYSA. If you moved $10k into your HYSA ($70k total), you'd have about 8 months of expenses there.

2. I would prioritize maximizing the 401k contributions before investing in a taxable brokerage account, assuming the 401k options are at least decent. This would mean contributing beyond the match.

HomeStretch
Posts: 4620
Joined: Thu Dec 27, 2018 3:06 pm

Re: Trying to determine our next move...

Post by HomeStretch » Thu May 21, 2020 9:12 am

Welcome!

For best feedback, consider editing your original post to provide additional information in the “Asking Portfolio Questions” format found here:
https://www.bogleheads.org/wiki/Asking_ ... _questions

The $60k in your high-yield savings account is a good “emergency fund” as it represents almost 7 months of living expenses.

You have $2k - $3k each month plus your bonuses to invest. Is that all for retirement or do you have other short-to-medium term goals you are saving for, such as house/car purchase, education, etc.?

For long-term retirement savings:
1. Increase your deferrals to your employer plans to the 2020 limit of $19,500, if eligible.

2. Do you contribute the annual limit to IRAs?

3. Do your employer plans offer a mega Backdoor?
https://www.bogleheads.org/wiki/After-tax_401(k)

Topic Author
jason.durby
Posts: 5
Joined: Wed May 20, 2020 8:54 pm

Re: Trying to determine our next move...

Post by jason.durby » Thu May 21, 2020 4:19 pm

Thanks for the information. I also reformatted my initial post using the suggestions! Thanks for that.

In regards to goals, our ultimate goal is have enough college fund for both of our kids to go to public colleges in Texas. We would love to have 4 years worth for each kid but it isn't necessary. In regards to the extra money, we're just planning on saving it and maybe using it on an investment property like a beach house that we can market and rent in the future. We love our current house, plan to be in it for a long while and eventually we want to pay it off but we're not hyperfocused on that goal.

I will look try to increase the deferrals to the 401K, I know we're throwing away free money here. In regards to the IRA, it's just been sitting there, I've bought and sold funds, I need to find a better strategy for it.

I'm not sure on the backdoor plan, I'll have to check. Thanks for the link.

mortfree
Posts: 2320
Joined: Mon Sep 12, 2016 7:06 pm

Re: Trying to determine our next move...

Post by mortfree » Thu May 21, 2020 6:47 pm

When I felt like I had too much money I started maxing my 401k.

This year the limit is 19.5k

Do that.

Problem solved

Post Reply