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What to prioritize? Or hire a financial advisor?

Posted: Tue Oct 03, 2017 10:04 pm
by Blobber
First time poster, long-time lurker:

Here's the situation, recent promotion and trying to decide what to do next - a) pay off rest of student loans, b) save more for down payment, c) save more for retirement, d) save more for college

and/or e) hire a financial advisor

Mid-30's married couple, two elementary-age kids. Combined income ~180k, expected to increase to ~200k in the next year as spouse also gets promotion.

10-15k - Emergency fund - we could survive on one salary without dipping into this at all (with painful budget cuts)
20k - Down payment/long-term savings

Each have about 20k in retirement savings in various combinations of IRA/Roth/401k, for around 40k total.

Debts:
25-30k total student loans at ~2.75% average interest
~12k car loan at ~3%


So in general we're very comfortable and have enough left over each month to do something with, but what? Regarding housing, we're in a very high cost of living area in California, so a house would be something on the order of 650k+

Thanks in advance for the help!

Re: What to prioritize? Or hire a financial advisor?

Posted: Tue Oct 03, 2017 10:18 pm
by aristotelian
You are in a high tax bracket. Max your 401k's.

Re: What to prioritize? Or hire a financial advisor?

Posted: Wed Oct 04, 2017 12:05 am
by celia
If you focused on debt and could pay it all off in one year, I would do that. It would make your savings goal more obvious to you and would feel good that the debt is gone. If you could do that, you could then save $40K each year for your other goals.

Also save more in tax-deferred accounts since it will lower your income taxes.

Re: What to prioritize? Or hire a financial advisor?

Posted: Wed Oct 04, 2017 12:26 am
by FiveK
Blobber wrote:
Tue Oct 03, 2017 10:04 pm
Here's the situation, recent promotion and trying to decide what to do next - a) pay off rest of student loans, b) save more for down payment, c) save more for retirement, d) save more for college
See Investment Order and Prioritizing investments - Bogleheads.

What do you think of those suggestions?

Re: What to prioritize? Or hire a financial advisor?

Posted: Wed Oct 04, 2017 12:42 am
by badbreath
1, Pay off student loan
2. Retirement to 10%
3. down payment
10. Collage (you can take loans for college but not for retirement) start this later.
45. financial adviser you can do it your self

Re: What to prioritize? Or hire a financial advisor?

Posted: Wed Oct 04, 2017 4:36 am
by basspond
You mentioned this but was not one of the options, tighten your budget 1st, increase retirement savings to 15%, pay off car, pay off student loan, increase your house savings, college savings would be last.

Re: What to prioritize? Or hire a financial advisor?

Posted: Wed Oct 04, 2017 6:44 am
by stevekozak2
1. Pay off car
2. Pay off student loans
3. Increase ER (it seems low for what you are making)
4. Retirement to 15%
5. College funding
6. Everything else

Re: What to prioritize? Or hire a financial advisor?

Posted: Wed Oct 04, 2017 10:04 am
by Blobber
Thank you for the replies so far, very helpful, especially the links FiveK.

We currently are at ~8% to retirement accounts, seems like a general consensus to get that to more like 15%, and also to pay off the debts.

With such helpful advice it seems like a financial advisor is not necessary as well.

There also seems to be a general consensus that college funding is a low priority - could someone give a brief reasoning or a link to a discussion of why this is?

Thanks again!

Re: What to prioritize? Or hire a financial advisor?

Posted: Wed Oct 04, 2017 10:44 am
by FiveK
Blobber wrote:
Wed Oct 04, 2017 10:04 am
There also seems to be a general consensus that college funding is a low priority - could someone give a brief reasoning or a link to a discussion of why this is?
One reasoning: by analogy to "put on your own oxygen mask before assisting others", you "provide for your own retirement plan before assisting your kids' college payments." If you end up doing both, more power to you.

Re: What to prioritize? Or hire a financial advisor?

Posted: Wed Oct 04, 2017 6:31 pm
by delamer
Blobber wrote:
Wed Oct 04, 2017 10:04 am
Thank you for the replies so far, very helpful, especially the links FiveK.

We currently are at ~8% to retirement accounts, seems like a general consensus to get that to more like 15%, and also to pay off the debts.

With such helpful advice it seems like a financial advisor is not necessary as well.

There also seems to be a general consensus that college funding is a low priority - could someone give a brief reasoning or a link to a discussion of why this is?

Thanks again!
You really should sit down and figure out what your personal priorities are. It is easy for others to make recommendations based on interest rates and their personal priorities, but what are yours?

For instance, we put a high priority on paying for our kids' education and were prepared to work longer to be able to do so. So saving for college was important to us. Others might want to retire as early as possible, and direct most of their savings toward that goal.

So what is important to you?

Doing your best to cut expenses to save more in all of the categories you mentioned should be a high priority too.

Re: What to prioritize? Or hire a financial advisor?

Posted: Wed Oct 04, 2017 7:09 pm
by need403bhelp
I am also thinking about priorities (down payment vs college for unborn kids, in my case).

One take away for me: it is not all or nothing. You could even do $100/mo to a 529 if it is not a high priority. You could do more than one priority at a time.

With that said, I do utilize all tax advantaged space available for retirement.