I may die poor

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Topic Author
Anonymous122
Posts: 21
Joined: Fri Apr 17, 2020 1:55 pm

I may die poor

Post by Anonymous122 »

I need some help.

I have been reading threads for awhile, and every time I feel I am making progress, I read some more then feel like I am really behind.

Just a run down:

I am 40yo - making 140k a year and live in the bay area. My rent is 2750 a month.

I do own a house in NV (currently renting it out) (owe $260k) but I am upside down $250 a month

So between my upside down mortgage and rent I am spending 3k a month there.

I have all my old 401k's ($150k) in a separate Vanguard VWELX (not contributing to this) current employer 401k is at $20k (VBIAX) and I am contributing $600 per check.(they don't match)

I have an emergency fund of $11k - I do have CC debt of $9k (inherited most from my ex) luckily my interest is only 7% (had the card for a while, always pay on time, and have a credit score around 780) it used to be 19k so I am putting a dent in it.

I guess my question is, what am I doing wrong? I feel like most people my age have at least 300+k in the bank, and at this rate I will have to work until I am 80 and pray social security will be available. Side note: I should be thankful, I became a father at 18, handled my business, took care of him and I am about to help pay off his tuition with an old ROTH. But still feel like I need a little guidance. Should I get out of balanced funds? Do the 80% in a VFIAX and 20% in a short term bond fund like the Oracle recommends?

EDIT:

- After taxes I bring home 6k a month.
- 3k goes to rent/mortgage
- 400 goes to online savings, emergency fund and an account for my niece and nephew
- 250 goes to bills internet, electricity, water, etc
- 225 goes to auto insurance for me and my son
-150 goes to cell phones for me and my son
- 600 goes to groceries and house stuff, going out
- 200 a month in gas
- I pay an extra 500 a month on the credit card
- I plan on moving back to NV one day, house should be paid of by retirement
- Can't refinance because it is a rental property and the rates aren't as low as primary residence

I do agree with the CC debt, but with COVID am I wrong for feeling cash is king for the time being?

That leaves me with around $500/$600 a month

NEW EDIT
I know should pay off my CC, I have the same BofA card for 15 years, I read my statement every month (if I am reading it right, interest charged is "only" approx 150 a month... I know its still money - but its not 9000 x .07 = 630

And yes I pay for a lot of my kids stuff + medical. But he is a full time student with a full time job and pays his own rent and bills - I want to help him have a better start than me.

BTW for those not familiar with the bay - I pay 2750 for a 700sqft apt... it's considered cheap.
Last edited by Anonymous122 on Wed Nov 18, 2020 6:45 pm, edited 8 times in total.
Living Free
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Joined: Thu Jul 19, 2018 7:31 pm

Re: I may die poor

Post by Living Free »

Anonymous122 wrote: Tue Nov 17, 2020 1:41 am I need some help.

I have been reading threads for awhile, and every time I feel I am making progress, I read some more then feel like I am really behind.

Just a run down:

I am 40yo - making 140k a year and live in the bay area. My rent is 2750k a month.

I do own a house in NV (currently renting it out) (owe $260k) but I am upside down $250 a month

So between my upside down mortgage and rent I am spending 3k a month there.

I have all my old 401k's ($150k) in a separate Vanguard VWELX (not contributing to this) current employer 401k is at $20k (VBIAX) and I am contributing $600 per check.(they don't match.. small start up)

I have an emergency fund of $11k - I do have CC debt of $9k (inherited most from my ex) luckily my interest is only 7% (had the card for a while, always pay on time, and have a credit score around 780) it used to be 19k so I am putting a dent in it.

I guess my question is, what am I doing wrong? I feel like most people my age have at least 300+k in the bank, and at this rate I will have to work until I am 80 and pray social security will be available. Side note: I should be thankful, I became a father at 18, handled my business, took care of him and I am about to help pay off his tuition with an old ROTH. But still feel like I need a little guidance. Should I get out of balanced funds? Do the 80% in a VFIAX and 20% in a short term bond fund like the Oracle recommends?
what is the house worth if you were to sell and how much do you owe on it? with real estate prices being high at the moment it might be an opportunity to get out from that house which is cash flow negative.
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bottlecap
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Re: I may die poor

Post by bottlecap »

What do you net after taxes and what are your expenses every month?

I feel like $140k isn’t a super amount in the Bay Area, but then again don’t live there and you should be netting a respectable amount. Between taxes and health insurance, I’m guessing to take home about $100k and you spend a net $36,000 annually on housing, plus maybe another $5,000 on rental upkeep. That leaves $59,000. Where's it going and in what amounts?

You may be "behind" many here, but you’ve faced some headwinds, done the right thing, and actually weathered them alright. You have some retirement funds and should have equity in a house in Nevada for now. You may not be collecting your mortgage payment in rent there, but presumably you are paying down principle as well. You aren’t technically "upside down." There are many 40 yo's doing worse than you.

You don’t give your asset allocation and I haven’t memorized ticker symbols, so I can’t give advice there. But to make progress outside of home equity, you’ve got to save. There no two ways about it. Can you do that somehow?

JT
HomeStretch
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Re: I may die poor

Post by HomeStretch »

Welcome to the forum!

Your post includes a lot of good detail but it’s hard to figure out how much you are saving annually, whether you have an emergency fund, marginal tax rate, etc. For best feedback, consider posting using the “Asking Portfolio Questions” template found here: https://www.bogleheads.org/wiki/Asking_ ... _questions

A few thoughts on your post:
1. Try not to compare yourself to others especially internet strangers. In my opinion, envy and comparisons that leave you coming up short can rob a lot of joy from your life.
2. Pay off the 7% credit card debt ASAP even if you have to reduce unmatched 401k contributions to do so.
3. Sell the NV property. Don’t subsidize someone else’s housing costs.
vas
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Re: I may die poor

Post by vas »

Its never too late to improve your situation.

First, square away that 7% credit card. I've seen people post about 0% balance transfer cards. Perhaps you can find something like that to keep the interest down until you get it paid off.

Why do you keep the house in NV with the negative cash flow? Unless you plan to return and live there again in the near term I'd give serious consideration to selling it.

You will not get ahead on $140K a year in the Bay Area. As Woody said:

"California is a garden of Eden, a paradise to live in or see
But believe it or not you won't find it so hot
If you ain't got the do re mi"

True then, true now. Consider the financial impact of plying your trade in Austin or Salt Lake.

Good Luck Sir
runner3081
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Re: I may die poor

Post by runner3081 »

Track your spending, every penny, for a year or two. Then figure out what you can cut back to fund your retired self!
z3r0c00l
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Re: I may die poor

Post by z3r0c00l »

Pension? Social Security? Home equity?

I doubt you will die poor but there are opportunities to save more. You earn much more than the average American and can certainly have a few million by 65.

Lots of things to consider, such as selling the house in NV. I would pay off that CC debt immediately, even going so far as to pull a few thousand from the emergency fund. Investment choices are a minor concern right now, you need to earn and save money at a level that meets your expectations.
aristotelian
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Re: I may die poor

Post by aristotelian »

HomeStretch wrote: Tue Nov 17, 2020 7:37 am
A few thoughts on your post:
1. Try not to compare yourself to others especially internet strangers. In my opinion, envy and comparisons that leave you coming up short can rob a lot of joy from your life.
2. Pay off the 7% credit card debt ASAP even if you have to reduce unmatched 401k contributions to do so.
3. Sell the NV property. Don’t subsidize someone else’s housing costs.
+1, exactly what I was going to say. Regarding the credit card, the whole point of EF is to prevent you from incurring credit card debt. This is the emergency! Use your EF and make replenishing the EF your top priority going forward.

Building up equity in real estate is not worth it if it is reducing liquidity, especially for someone without a lot of savings. Rentals should be cash flowing positive.
goblue100
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Re: I may die poor

Post by goblue100 »

Nothing wrong with dyeing poor as long as your living was rich.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns
fleetwdl
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Re: I may die poor

Post by fleetwdl »

I had about $25k in retirement at age 40, and have a couple $M plus some pension and SS now. Get yourself debt-free and cash flow positive--you'll be fine.
2Scoops
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Re: I may die poor

Post by 2Scoops »

I’m pretty new to the forum but recommend reading as much as you can on here to get a full understanding of how to make decisions in the future to achieve a goal. Writing an IPS and reading the Wiki will certainly help you on that journey.

I would do what the others have recommended already. Pay off the credit card ASAP and get rid of the rental property. This will free up cash flow and allow you to start building for the future.
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JoeRetire
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Re: I may die poor

Post by JoeRetire »

Anonymous122 wrote: Tue Nov 17, 2020 1:41 am I am 40yo - making 140k a year and live in the bay area. My rent is 2750k a month.

I do own a house in NV (currently renting it out) (owe $260k) but I am upside down $250 a month
So why do you own it?
I have an emergency fund of $11k - I do have CC debt of $9k (inherited most from my ex) luckily my interest is only 7% (had the card for a while, always pay on time, and have a credit score around 780) it used to be 19k so I am putting a dent in it.
Why don't you just pay it off?
I guess my question is, what am I doing wrong? I feel like most people my age have at least 300+k in the bank, and at this rate I will have to work until I am 80 and pray social security will be available.
You are only 40.

Instead of comparing yourself to others, you should be deciding on your own financial goals and figuring out how to achieve them. You have plenty of time to do so.

If you can't figure it out on your own, consider spending some time with a fee-only fiduciary financial adviser.

You may need to work until you are 80, but most likely not.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
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Tamarind
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Re: I may die poor

Post by Tamarind »

Anonymous122 wrote: Tue Nov 17, 2020 1:41 am I need some help.

I have been reading threads for awhile, and every time I feel I am making progress, I read some more then feel like I am really behind.

Just a run down:

I am 40yo - making 140k a year and live in the bay area. My rent is 2750k a month.

I do own a house in NV (currently renting it out) (owe $260k) but I am upside down $250 a month

So between my upside down mortgage and rent I am spending 3k a month there.

I have all my old 401k's ($150k) in a separate Vanguard VWELX (not contributing to this) current employer 401k is at $20k (VBIAX) and I am contributing $600 per check.(they don't match.. small start up)

I have an emergency fund of $11k - I do have CC debt of $9k (inherited most from my ex) luckily my interest is only 7% (had the card for a while, always pay on time, and have a credit score around 780) it used to be 19k so I am putting a dent in it.

I guess my question is, what am I doing wrong? I feel like most people my age have at least 300+k in the bank, and at this rate I will have to work until I am 80 and pray social security will be available. Side note: I should be thankful, I became a father at 18, handled my business, took care of him and I am about to help pay off his tuition with an old ROTH. But still feel like I need a little guidance. Should I get out of balanced funds? Do the 80% in a VFIAX and 20% in a short term bond fund like the Oracle recommends?
Well, most people your age have as little or less in savings than you do. But most people your age also make much less than you do. You had less ability to contribute when you were young, which usually helps people compound their savings, because you had a child early - well done supporting him! The next step is to get your house in order so that he doesn't have to support you in 30 years time.

I would not worry about your investment mix right now. That is not the issue. You have a cash flow problem somewhere.

I agree with the advice to sell the rental in NV and pay off the credit card now. But I think it's worth a few days of interest to figure out what is up with your budget before you make those moves.

Can you lay out your expenses in more detail beyond rent/mortgage? Where is the rest going?

If that feels daunting, start here: what would you have to cut to max out your 401k ($212 more per check) and also max out your Roth IRA ($500 per month)? How hard would it be for you to free up another $924/month?
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1789
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Re: I may die poor

Post by 1789 »

Comparing yourself to other people will never make you happy. I would recommend quit that mindset if possible. If not possible please make it possible.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
cableguy
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Re: I may die poor

Post by cableguy »

Stay calm. All will be well.

Pay down the credit card debt. Get rid of that.

See if you can sign the NV house over to the tenant? See if they want to buy it for the amount you owe? Put some effort into selling that house. Make that a priority. Don't do anything short sighted here that saddles you with a big debt....but get rid of it.

Make the above your priority and you'll be fine. You are doing great. Stay positive.
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Brianmcg321
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Re: I may die poor

Post by Brianmcg321 »

Way too much debt.

You should read The Total Money Makeover by Dave Ramsey. It will get you back on track.

You just need a more defined plan with your money.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.
Crow Hunter
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Re: I may die poor

Post by Crow Hunter »

Anonymous122 wrote: Tue Nov 17, 2020 1:41 am I need some help.

I have been reading threads for awhile, and every time I feel I am making progress, I read some more then feel like I am really behind.

Just a run down:

I am 40yo - making 140k a year and live in the bay area. My rent is 2750k a month.

I do own a house in NV (currently renting it out) (owe $260k) but I am upside down $250 a month

So between my upside down mortgage and rent I am spending 3k a month there.

I have all my old 401k's ($150k) in a separate Vanguard VWELX (not contributing to this) current employer 401k is at $20k (VBIAX) and I am contributing $600 per check.(they don't match.. small start up)

I have an emergency fund of $11k - I do have CC debt of $9k (inherited most from my ex) luckily my interest is only 7% (had the card for a while, always pay on time, and have a credit score around 780) it used to be 19k so I am putting a dent in it.

I guess my question is, what am I doing wrong? I feel like most people my age have at least 300+k in the bank, and at this rate I will have to work until I am 80 and pray social security will be available. Side note: I should be thankful, I became a father at 18, handled my business, took care of him and I am about to help pay off his tuition with an old ROTH. But still feel like I need a little guidance. Should I get out of balanced funds? Do the 80% in a VFIAX and 20% in a short term bond fund like the Oracle recommends?
If you were comparing yourself to me, you might consider me "rich".

But, if I am comparing myself to you, I consider you far more rich than myself, because you are 7 years younger and I will never have children.

If I were in your shoes, I would pay off the credit card with my emergency fund and try to get that house sold unless you have plans of moving back to Nevada in the next 5 years and just live below my means and keep saving.

For reference, although I am a "multimillionaire", I have never made as much money as you do right now.

Until my wife and my own recent promotions, our combined income was less than you are making now.

It can be done, don't get discouraged, and don't forget your blessings. You have more than you realize.
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dziuniek
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Re: I may die poor

Post by dziuniek »

Post the details of the house purchase, equity now, zillow value and what your current mortgage terms are.
Housing has been on the up and up and mortgage rates fell a lot.

I just locked a 2.375% 30year fixed yesterday! - This feels like free money.... at these rates.

Maybe refinancing is an option?

Also, I second paying off the CC with Emergency Fund or using a balance transfer for 0% on a new card. Then again, the balance is so small - I would just funnel the money there instead of the 401k - only because you don't have a match... - You could do this pretty quickly.

You're not really behind. Remember this is bogleheads.... not the real world :)

Look up / google the Net Worth and Income calculator from new york times to give you a better idea where you are compared to reak folks*. :)
sschoe2
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Re: I may die poor

Post by sschoe2 »

Your 401k investments VWELX and VBIAX are very conservative for a 40 yo I'd go more aggressive with higher stocks for growth.

I'd definitely lose the NV property unless you plan to live in it in the near future.

$140k is a decent amount in most areas of the country but COL in the bay area eats a big chunk of it. If your job is higher enough paying in that area to justify it, then it makes sense. Otherwise I'd look for a job with a higher pay/col ratio. Any chance of getting a job near the NV property and living there instead?

It is touch to get more specific without seeing your budget.
Topic Author
Anonymous122
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Re: I may die poor

Post by Anonymous122 »

bottlecap wrote: Tue Nov 17, 2020 7:35 am What do you net after taxes and what are your expenses every month?

I feel like $140k isn’t a super amount in the Bay Area, but then again don’t live there and you should be netting a respectable amount. Between taxes and health insurance, I’m guessing to take home about $100k and you spend a net $36,000 annually on housing, plus maybe another $5,000 on rental upkeep. That leaves $59,000. Where's it going and in what amounts?

You may be "behind" many here, but you’ve faced some headwinds, done the right thing, and actually weathered them alright. You have some retirement funds and should have equity in a house in Nevada for now. You may not be collecting your mortgage payment in rent there, but presumably you are paying down principle as well. You aren’t technically "upside down." There are many 40 yo's doing worse than you.

You don’t give your asset allocation and I haven’t memorized ticker symbols, so I can’t give advice there. But to make progress outside of home equity, you’ve got to save. There no two ways about it. Can you do that somehow?

Thanks, I appreciate the comment. In CA the State tax is 13.5% I basically get two 3k checks a month from work. one goes to rent/property management - the other is split between savings, bills, living expenses. I wish I took home 100k!
bloom2708
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Re: I may die poor

Post by bloom2708 »

Pay off the credit cards today. Having $2k cash is enough to get rolling again.

Sell the NV house.

Look to reduce rent. I know it is HCOL, but there might be cheaper options.

Save more. Spend less.

You'll be fine, but it will take some work. Landing here should help. Dive in. Welcome.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
sd323232
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Re: I may die poor

Post by sd323232 »

wow, your rent + 250 on your mortgage is 50% of your pay. this is the problem, go get roomate or two, sell ur house, do whatever you can to get your rent/mortgage under 25%.
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cheese_breath
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Re: I may die poor

Post by cheese_breath »

Anonymous122 wrote: Tue Nov 17, 2020 1:41 am ... My rent is 2750k a month....
???
The surest way to know the future is when it becomes the past.
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Sandtrap
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Re: I may die poor

Post by Sandtrap »

Consider a portfolio review in the forum/wiki format (Non narrative) for comprehensive and actionable input.

You can edit your original post using the pencil icon😃
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Watty
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Re: I may die poor

Post by Watty »

Anonymous122 wrote: Tue Nov 17, 2020 1:41 am I am 40yo - making 140k a year ......

So between my upside down mortgage and rent I am spending 3k a month there.
You have identified $36K in your spending so that leaves about $104K unaccounted for.

A lot of that goes for taxes and unavoidable expenses like utilities but the first thing to do is to figure out where the rest of the money is going so you should track every dollar you spend for at least a few months to figure out where your money is going.

It may seem like everyone makes a lot more than you in the Bay Area and some of the posts here are mind boggling(I lived in the Bay Area long ago) but you are really pretty solid middle class according to this article I just googled.

https://sf.curbed.com/2019/2/25/1823982 ... rea-salary

One problem with the Bay Area is that you will not be able to afford a house there but you can save and build up your savings and then retire in a less expensive area where you can buy a nice house for less than than what a downpayment on a house would cost in the Bay Area. At some point before then it may also make sense to move to a less expensive area before you retire.

With having a kid early and a divorce your savings may not be where you would like them to be but you have $170K in retirement accounts and you are almost out of debt. Many people your age have a mountain of debt and a large negative net worth and even if they drive better cars you are likely a lot better off than a lot of people you might envy.
Anonymous122 wrote: Tue Nov 17, 2020 1:41 am I feel like most people my age have at least 300+k in the bank,
Not even close.

https://www.marketwatch.com/story/here- ... 2020-11-16
Anonymous122 wrote: Tue Nov 17, 2020 1:41 am I do own a house in NV (currently renting it out) (owe $260k) but I am upside down $250 a month
As others have asked why do you not sell it?

Most housing markets are really strong right now if not outright hot so it may be easy to sell right now. If you wait a few years then decide to sell it then you could find yourself trying to sell it in a bad housing market.

If you are paying a mortgage that is $250 a month more than the rent then you are also not building up reserves for inevitable large repairs and vacancies so it is actually a lot worse than that.
Anonymous122 wrote: Tue Nov 17, 2020 1:41 am But still feel like I need a little guidance. Should I get out of balanced funds? Do the 80% in a VFIAX and 20% in a short term bond fund like the Oracle recommends?
As others have said more information is needed to give you better investing guidelines but a target date fund is a good generic choice for money in retirement accounts.

The biggest thing that you need to focus on is living a modest lifestyle and living below your means. You can look up the statistics but lots of people in the Bay Area live on a lot less than you make.

It would be good to find a credit card with a lower interest rate that has a no fee transfer and roll your credit card debt over to that then pay it off as soon as possible. You have a gross income of almost $12,000 a month so even after taxes and your core living expenses you have a lot of disposable income so you should be able to pay it off pretty quickly.

If you have a problem with spending and being able to pay off your credit card each month then go to paying cash as much as possible and save the credit cards for emergencies only.
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F150HD
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Re: I may die poor

Post by F150HD »

wondering why the CC debt wasn't swapped to a 0% card some time back....
DesertDiva
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Re: I may die poor

Post by DesertDiva »

You have 27 years until you are at full retirement age. Follow the advice given so far. Focus on what you can do. Find a way to lower your expenses and continue contributions to your retirement plan. Keep yourself marketable in your field and be open to new opportunities.
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CyclingDuo
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Re: I may die poor

Post by CyclingDuo »

bloom2708 wrote: Tue Nov 17, 2020 9:10 am Pay off the credit cards today. Having $2k cash is enough to get rolling again.

Sell the NV house.

Look to reduce rent. I know it is HCOL, but there might be cheaper options.

Save more. Spend less.

You'll be fine, but it will take some work. Landing here should help. Dive in. Welcome.
:sharebeer

Boom!
"Save like a pessimist, invest like an optimist." - Morgan Housel
Jags4186
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Re: I may die poor

Post by Jags4186 »

Look to relocate/new job. $140k at a startup in the Bay Area, unless you have a potential RSU lottery ticket, just doesn’t cut it.
GreendaleCC
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Re: I may die poor

Post by GreendaleCC »

Anonymous122 wrote: Tue Nov 17, 2020 9:07 am
bottlecap wrote: Tue Nov 17, 2020 7:35 am What do you net after taxes and what are your expenses every month?

I feel like $140k isn’t a super amount in the Bay Area, but then again don’t live there and you should be netting a respectable amount. Between taxes and health insurance, I’m guessing to take home about $100k and you spend a net $36,000 annually on housing, plus maybe another $5,000 on rental upkeep. That leaves $59,000. Where's it going and in what amounts?

You may be "behind" many here, but you’ve faced some headwinds, done the right thing, and actually weathered them alright. You have some retirement funds and should have equity in a house in Nevada for now. You may not be collecting your mortgage payment in rent there, but presumably you are paying down principle as well. You aren’t technically "upside down." There are many 40 yo's doing worse than you.

You don’t give your asset allocation and I haven’t memorized ticker symbols, so I can’t give advice there. But to make progress outside of home equity, you’ve got to save. There no two ways about it. Can you do that somehow?

Thanks, I appreciate the comment. In CA the State tax is 13.5% I basically get two 3k checks a month from work. one goes to rent/property management - the other is split between savings, bills, living expenses. I wish I took home 100k!
CA income tax is 13.3% for income over $1M.
Last edited by GreendaleCC on Tue Nov 17, 2020 10:50 am, edited 1 time in total.
7eight9
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Re: I may die poor

Post by 7eight9 »

I didn't see where the house in Nevada is located but if it is in Las Vegas it might be worth more than you think.

Las Vegas’ housing market streak ‘makes no sense.’ Are we in a bubble?
https://www.reviewjournal.com/business/ ... e-2184069/
I guess it all could be much worse. | They could be warming up my hearse.
Independent George
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Re: I may die poor

Post by Independent George »

Anonymous122 wrote: Tue Nov 17, 2020 1:41 am I guess my question is, what am I doing wrong? I feel like most people my age have at least 300+k in the bank, and at this rate I will have to work until I am 80 and pray social security will be available. Side note: I should be thankful, I became a father at 18, handled my business, took care of him and I am about to help pay off his tuition with an old ROTH. But still feel like I need a little guidance. Should I get out of balanced funds? Do the 80% in a VFIAX and 20% in a short term bond fund like the Oracle recommends?
1. First and foremost, you're not doing anything wrong! You're earning a good salary (albeit in a crazy expensive location), you're saving money every month, you're paying down your debts, and you already have assets to your name. Most importantly, you raised your son to adulthood. Those are all things to be proud of.
2. Stop comparing yourself to an idealized image of yourself that did everything right and never made a single mistake in his entire life. That guy is a smug jerk, but, more importantly, entirely fictional. Stop talking to your imaginary friend.
3. The very first thing to do is write down all of your expenses in a month - and I mean everything, including the $3 you spent on coffee and donuts that one morning you were starving and behind schedule. You can't make any progress until you have a clear picture of where you are currently. If you're anything like me, you probably spend a few hundred dollars about $5 at a time.
4. Next, list that spending in order of priority. Housing, utilities, food, insurance, and vehicle come first (and in roughly that order). That is the stuff you can't live without, though you may be able to squeeze a few extra dollars out of it.
5. The difference between your income and that number is pure arithmetic. Now compare #4 to #3. That will tell you exactly where and how much you can cut.

Everything else is academic. We can help you, but it all starts with having an accurate picture of where you currently are.
Dyloot
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Re: I may die poor

Post by Dyloot »

Anonymous122 wrote: Tue Nov 17, 2020 1:41 am I need some help.

I have been reading threads for awhile, and every time I feel I am making progress, I read some more then feel like I am really behind.

Just a run down:

I am 40yo - making 140k a year and live in the bay area. My rent is 2750k a month.

I do own a house in NV (currently renting it out) (owe $260k) but I am upside down $250 a month

So between my upside down mortgage and rent I am spending 3k a month there.

I have all my old 401k's ($150k) in a separate Vanguard VWELX (not contributing to this) current employer 401k is at $20k (VBIAX) and I am contributing $600 per check.(they don't match.. small start up)

I have an emergency fund of $11k - I do have CC debt of $9k (inherited most from my ex) luckily my interest is only 7% (had the card for a while, always pay on time, and have a credit score around 780) it used to be 19k so I am putting a dent in it.

I guess my question is, what am I doing wrong? I feel like most people my age have at least 300+k in the bank, and at this rate I will have to work until I am 80 and pray social security will be available. Side note: I should be thankful, I became a father at 18, handled my business, took care of him and I am about to help pay off his tuition with an old ROTH. But still feel like I need a little guidance. Should I get out of balanced funds? Do the 80% in a VFIAX and 20% in a short term bond fund like the Oracle recommends?
I'm about your age, make about the same money, live in the same area.

At this point, with your current account balances, it'll be more about contribution rate to your retirement account than picking the right investments. Between Federal and State Income taxes, you do pay a lot in taxes. Every dollar you contribute to your 401k plan right now will cost you only about .65 cents on the dollar in your take home pay (see: Progressive Tax).

If I were you, I would start by eliminating expenses and gradually increasing your 401k contributions up to the annual max. It would be a big jump--nearly $1600 a month instead of $600--but it will make a big difference for growing your retirement nest egg.

Housing is a huge issue in the Bay Area. If there's a way for you to rent a place with one other person you could shift those savings immediately to the 401k. I know roommates aren't always great, but you may find a better situation for yourself in the short-term and be able to get your own place again in the future (perhaps with a new significant other who can pay half the rent).

Last--and this may be a non-starter for you--you may want to consider preserving your Roth savings instead of paying down your son's tuition bill. I understand if you're not willing to do so.

Keep at it. This is a total grind.
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unclescrooge
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Re: I may die poor

Post by unclescrooge »

Replace your bond fund with a target retirement date fund.

Your $250/mo cost to carry your NV house likely includes principle pay down, as well as depreciation losses. If you plan on moving back there, I would keep it.
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arcticpineapplecorp.
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Re: I may die poor

Post by arcticpineapplecorp. »

Ad has been said, sell the house. It makes no financial sense and could get you needed funds to put towards retirement.

Now for something that hasn't been said:

Do you need to cash out your Roth to pay remainder of kid's college?

Could kid assume remaining debt and be happy with having most of college paid for by you?

If the amount of debt kid could leave college with is equal to or less than first year's income, s/he'd be ok.

Kid has time to pay off that debt and save for retirement.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
Dottie57
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Re: I may die poor

Post by Dottie57 »

Op, at your age I had about the same amount. Then the dot com crash came and reduced my amount drastically. As someone else said, it is a total grind. What worked for me was to set my savings amount and then the rest of expenses had to fit into the remainder. I put in 15% of income and made about 50k a year at the tome.

If you really want help post your expenses. The forum will make lots of comments.

Dottie

P.s. stop using Credit cards. Sell the house.
oldfort
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Re: I may die poor

Post by oldfort »

Post a budget. In general, being able to save more money through a higher income or lower expenses has a greater impact than your investment choices. With so many people WFH, can you find a cheaper place to live?
JS-Elcano
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Re: I may die poor

Post by JS-Elcano »

deleted
Last edited by JS-Elcano on Tue Nov 17, 2020 4:28 pm, edited 2 times in total.
Marseille07
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Re: I may die poor

Post by Marseille07 »

Not seeing issues with OP's financial situation. The key is to just pay stuff off early & often, save up a lot and invest.
chipperd
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Re: I may die poor

Post by chipperd »

bloom2708 wrote: Tue Nov 17, 2020 9:10 am Pay off the credit cards today. Having $2k cash is enough to get rolling again.

Sell the NV house.

Look to reduce rent. I know it is HCOL, but there might be cheaper options.

Save more. Spend less.

You'll be fine, but it will take some work. Landing here should help. Dive in. Welcome.
+1 on all the above.
Note: If doing the ethically correct thing was profitable, everyone would do it. Not all do, but you did. Nice work, dad!
"A portfolio is like a bar of soap, the more it's handled, the less there is." Dr. William Bernstein
international001
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Re: I may die poor

Post by international001 »

Living Free wrote: Tue Nov 17, 2020 7:34 am what is the house worth if you were to sell and how much do you owe on it? with real estate prices being high at the moment it might be an opportunity to get out from that house which is cash flow negative.
Why? You are also building equity. If you have a 10 years mortgage and a 100% financing it may not be that bad
You should look at the details and make numbers
Monsterflockster
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Re: I may die poor

Post by Monsterflockster »

cheese_breath wrote: Tue Nov 17, 2020 9:33 am
Anonymous122 wrote: Tue Nov 17, 2020 1:41 am ... My rent is 2750k a month....
???
I know right? How did you find something so cheap in the Bay Area?

As a former Bay Area native born and raised I made about the same as you with similar rent before we moved to the coast. As many have said, take a look at what you are spending all your money on. You should be able to max out your 401k and still have a few thousand left over after all your bills. But back and live frugal.

And stop comparing to people here. You don’t ‘now how they got their money, their income or career path. All we can do is make good decisions for where we are at the time.
Ron Ronnerson
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Re: I may die poor

Post by Ron Ronnerson »

$140k income should be plenty if your rent is $2750/month. You need to figure out, in detail, where your money is going and work on slowly increasing your savings rate. You should be fine in the long run if you do that.

For specific steps, I’d do this:
-Go through all your expenses carefully and look to make cuts where possible
-Pay off that 7% credit card as soon as possible with your emergency fund
-Perhaps consider a roommate
-Increase retirement contributions once you’ve lowered expenses (you’ll save a nice amount on taxes as an additional reward)
-Consider generating a side income. I churn credit cards, bank accounts, and brokerage accounts and make about $10k/year from doing this.
-Decide whether it makes sense to keep the house in Nevada

I live in the Bay Area on an income less than yours ($120k/year) and support a family. My housing expense is about the same as yours (around $2800/month for mortgage, property tax, insurance, HOA, and repairs). We save a pretty big percentage of our income in retirement accounts by keeping our expenses low and this also reduces the taxes we owe. It sort of fits together like a puzzle.
Marseille07
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Re: I may die poor

Post by Marseille07 »

international001 wrote: Tue Nov 17, 2020 12:14 pm
Living Free wrote: Tue Nov 17, 2020 7:34 am what is the house worth if you were to sell and how much do you owe on it? with real estate prices being high at the moment it might be an opportunity to get out from that house which is cash flow negative.
Why? You are also building equity. If you have a 10 years mortgage and a 100% financing it may not be that bad
You should look at the details and make numbers
I think it's lopsided that the OP has credit card debt and struggling to save up yet owning a rental property. I understand the upside, but given he's in the Bay Area I don't think he needs to be landlording in NV given their circumstances.
Last edited by Marseille07 on Tue Nov 17, 2020 1:29 pm, edited 1 time in total.
Valuethinker
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Re: I may die poor

Post by Valuethinker »

chipperd wrote: Tue Nov 17, 2020 12:06 pm
bloom2708 wrote: Tue Nov 17, 2020 9:10 am Pay off the credit cards today. Having $2k cash is enough to get rolling again.

Sell the NV house.

Look to reduce rent. I know it is HCOL, but there might be cheaper options.

Save more. Spend less.

You'll be fine, but it will take some work. Landing here should help. Dive in. Welcome.
+1 on all the above.
Note: If doing the ethically correct thing was profitable, everyone would do it. Not all do, but you did. Nice work, dad!
I'd agree with all of the above, although I would be wary on trading down on housing costs. You get what you pay for, and your quality of life is in having 1). neighbours who don't disturb you 2). a reasonable commute to work (if you must commute) 3). happy with the entertainment options within reach of where you live/ work (once we get out of lockdown). Doesn't mean don't look around, but if one is happy where one is, that piece of mind makes everything else more possible.

Unless OP plans to return to live in Nevada, he/ she should sell the house (assuming not in negative equity). It's just a drag on building up a retirement portfolio.
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celia
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Re: I may die poor

Post by celia »

I think you're doing a lot better than you think. Remember that Bogleheads are not "average" in any way. They have saved some money, many for many, many years. Compared to the average American, they are doing better. A survey a few years ago showed that 50% of Americans would not be able to cover a $400 emergency bill.

If you don't have a written budget, I suggest you create one. If you already have one, if you post it here, we can look at it and tell you where you could cut/save money. With your high income, you should be able to afford most things. Your housing expenses of $36K a year is affordable for you.
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beernutz
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Re: I may die poor

Post by beernutz »

OP respectfully, you need a budget. https://youneedabudget.com
I use the cloud based version a little bit every day and it is probably the most productive use of $84 I'll incur all year.
If you use it correctly it will tell you where your money is going pretty quickly.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. --Will Rogers
MathIsMyWayr
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Re: I may die poor

Post by MathIsMyWayr »

Anonymous122 wrote: Tue Nov 17, 2020 9:07 am Thanks, I appreciate the comment. In CA the State tax is 13.5% I basically get two 3k checks a month from work. one goes to rent/property management - the other is split between savings, bills, living expenses. I wish I took home 100k!
How can CA tax be 13.5% for $140k a year earning?
BTW, my saving was close zero at your age and I paid expensive private college expenses of 2 kids down the road. What is important is your future earning potential. How stable is your employer, a startup?
protagonist
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Re: I may die poor

Post by protagonist »

Earning $140K/yr, paying about $36K/yr on housing (not unreasonable given your income), that leaves $104K for taxes and other expenses. You should be able to live easily on that and save money. Only 9% of US households are making more than you https://dqydj.com/income-percentile-calculator/ . Let's hope that 91% of Americans don't die poor.

The one thing you are obviously doing very wrong is credit card debt....pay it off in full ASAP. Fortunately it is only $9000.

One possible approach....pay off $5000 immediately from your emergency fund, the remaining $4000 within the next month from income (the sooner the better), and replenish your emergency fund within the next three to six months. Or come up with your own plan, but stick to it religiously until your emergency fund is replenished. It might require tightening your belt a bit over the holidays (COVID is an excellent excuse for that), but soon you will be back to normal and debt-free other than mortgage.

You didn't mention your other expenses, but if you are having that much trouble saving, given your reasonable housing expenses and generous income, you are probably living beyond your means (which I suspect is the case given your rolling credit card debt).

My advice, for what it is worth:
1. Pay off your debt.
2 As Steve Martin is trying to learn, don't buy things you can't afford. https://vimeo.com/199334296
3. Put as much money as you can into your retirement account annually.
4. If you are still having trouble making ends meet and saving money, sell the house in NV and put the proceeds into savings.

At age 40, if you do these simple things, you should be able to look forward to a secure and easy retirement while living a good upper middle class lifestyle in the interim. That doesn't mean driving a new Lexus, vacationing in fancy resorts and sending your kids to expensive private schools. Think Honda, Toyota, Hyundai.

Good luck!
Last edited by protagonist on Tue Nov 17, 2020 2:30 pm, edited 4 times in total.
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JoeRetire
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Re: I may die poor

Post by JoeRetire »

cheese_breath wrote: Tue Nov 17, 2020 9:33 am
Anonymous122 wrote: Tue Nov 17, 2020 1:41 am ... My rent is 2750k a month....
???
VVHCOL...
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
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