Mid 30s Crisis: Personal budget, savings and goals

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WhatsIRR
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Mid 30s Crisis: Personal budget, savings and goals

Post by WhatsIRR » Sat Aug 11, 2018 2:34 pm

Sorry this is a bit long and rambling. I’ve had a lot on my mind

I’m new to BH but have always enjoyed personal finance. I’m not completely following BH principles but am using some index funds in the 401k/IRA, the simplicity of BH intrigued me so I am here to learn. I do buy individual stocks since I find the hunt and research enjoyable but may reconsider or dedicate a fixed amount of cash to dabble in.

I’m looking for general guidance and suggestions as I feel like I’m going through an early midlife financial crisis. I think part of it is just my wiring as I always feel like I should be doing better and don’t have enough. Another factor is the wife and I both work in a volatile industry which has been a rough ride the past couple years and probably will continue into the future.

Me: 35 DW: 34 No kids

Salaries:

Me: $200,000
DW: $40,000

Bonuses:

Our bonuses are widely variable, I’ve listed something in the middle:

Me:

Retention: $25,000 (9/1/18, 9/1/19)
Regular: $35,000
RSU: $50,000

Her:

Regular: $5,000

Debt:

Mortgage $195,000 4% 22 years left
Truck $20,000 2% 3 years left

Assets:

Cash: $440,000
401k/IRA: $1,000,000
HSA: $13,000
Taxable: $150,000 (individual stocks; heavily weighted by RSUs I haven’t sold due to bust, looking to exit in 2019)
House: $450,000
House: $100,000(?) inherited. vacant need to do something but not willing to sell yet too much attachment
Real Estate: $75,000 passive in apartment building (cash back 2023)

Contributions:

401k:
Me: $18,500+~$25,000 Company match
DW: $8,000+$1,200 Company match
HSA: $4,500+$2,000 Company Match


Budget:

We have not been budgeting the past few years just trying to live reasonably. I think this has been a source of anxiety for me and I have downloaded and started using YNAB in the last month. Initial pass looks like around $8,000/month in spend. We probably have $1,500/month in luxury that could be eliminated in a tough time.

Goals:

Here is another point that bugs me a little, we don’t have any short term tangible monetary goals. Long term retirement is always there, short of that the only thing would be getting some secondary income to provide a safety net for the next bust. We are happy with our house and if we moved it would probably be a lateral move in price; I am not real comfortable with a more expensive house in this market. Cars are newer with low mileage, I have $6,000/year in the budget for vacation. There is probably some work around the house that we’d like to have done that could become a goal.

Thoughts/Plans

Here is where I am at and am looking for suggestions, I don’t feel like we are on a great track but DW is comfortable with our situation and wants us to reasonably enjoy life. It’s probably good I have her or I’d be a hermit.

Pay off the truck in September with the retention bonus, ATAX on the bonus should be decently close to payoff amount. Pay off the house in May, 2019 if RSUs perform. I vest another grant next year and should be close to payoff amount if we get the market appreciation that is expected. I’m not concerned with company going bankrupt and am willing to ride the stock until I’m happy with the price.

Maintain 18 months emergency fund. Part of this is dual incomes tied to a volatile industry (we we both lost our jobs within 1 week of each other in 2015) and part of this is DW finds peace in the bank account. If we get some reliable secondary income this could be reduced.

Budget $10,000/month (2 paychecks each) this should leave $2,000-2,500 surplus for things I haven’t caught yet in our budget. Once a quarter or so roll the surplus into an investment account.

Use bonuses and 2 paychecks a year for dedicated investments.

With company matches we are putting $~60,000 into tax deferred retirement funding. I have thought about a backdoor Roth but am not sure I want even more money tied up that we can’t use now. I’m tempted to use the surplus into taxable accounts that could be used to get us through another rough spot. We have not maxed her 401k out because I don’t think she could handle going to work every day and not bringing any real paycheck home. It could be a subject we discuss though. Should we be looking at Roths even with the high 401k contributions?

Develop secondary income stream. Looking at passive and managed real estate to diversify out of the market plus money into the taxable account. I think the best bet would be to spend the money needed to get the inherited house rentable. I expect it could bring in $1,500/month but will need to find a manager to verify.

I know the cash is too high, we’ve held it since the past couple years have been so uncertain. We did take the $75,000 out to invest in the apartment recently. We will probably try to DCA some of it and look for properties until we get closer to the house 18 month target.

Anything glaring jumping out? Should I feel more comfortable than I do? I’m not sure what is going on but this has really been on my mind lately.

I am open to all thoughts and suggestions I know BH isn’t big on real estate so I expect some push back there.

Thanks for letting me vent

aristotelian
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by aristotelian » Sat Aug 11, 2018 3:36 pm

You have $1.5M and a nearly paid off house at age 35. What ever your problem is, it is not financial.

I would do backdoor Roth as the contributions are still liquid and can be taken out any time.

I would also pay off the mortgage and the car. There is no point in holding $400K cash earning less than your debt interest.

HEDGEFUNDIE
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by HEDGEFUNDIE » Sat Aug 11, 2018 3:47 pm

Dude, you have a net worth of $2M at the age of 35, that's got to be in the 90th percentile of people your age.

If I read your post right, you don't know what to spend your money on. If you post a new thread titled "I've won the game, what should I spend my money on?" I'm sure you'll get some good ideas.

Grt2bOutdoors
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by Grt2bOutdoors » Sat Aug 11, 2018 4:35 pm

Hello and welcome to the forum!
Your crisis is not due to financial concerns. It's something else - stop looking at your social media, stop looking at your co-workers, stop watching HGTV.

You are doing fantastic! How many employers offer a $25K match? - I can count them on two fingers, I know of one other company that offers a good match like that, you are the other one.

Take the cash - pay off the house, pay off the truck. Next goal ~ take the monthly payments and funnel them into your account that you will use to accumulate funds for your next real estate investment. Until then, live debt-free, try it, you'll sleep better at night.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

marcopolo
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by marcopolo » Sat Aug 11, 2018 4:57 pm

As others have mentioned, you are doing very well.

I know this is a forum mostly dedicated to saving and investing as much as possible.
But, i would highly recommend that you do not forget to "enjoy the ride".

At your age, with total income well over $300k/yr, and a net worth around $2M, having a vacation budget of only $6k/yr seems, IMHO, to be depriving yourselves a bit unnecessarily. I agree with your DW that you are doing fine and should reasonable enjoy life. You only get one turn on this ride, i think.
Once in a while you get shown the light, in the strangest of places if you look at it right.

2015
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by 2015 » Sat Aug 11, 2018 7:52 pm

A very interesting post. You state you've had a lot on your mind. My gut feeling is the source of your unease is unrelated to money. I would concentrate on investigating what that might be. Ask what drove you to post this, and how is that related to the "lot" that's been on your mind?

Often what we say we are most afraid of is not what we are really afraid of at all. It's very easy to focus on money, because it's tangible. Focusing on the intangible aspect of what money translates into psychologically is much more difficult. It's one of the main reasons why you see so many graphs, charts, and roundabout disagreements here.

am
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by am » Sat Aug 11, 2018 10:29 pm

HEDGEFUNDIE wrote:
Sat Aug 11, 2018 3:47 pm
Dude, you have a net worth of $2M at the age of 35, that's got to be in the 90th percentile of people your age.

If I read your post right, you don't know what to spend your money on. If you post a new thread titled "I've won the game, what should I spend my money on?" I'm sure you'll get some good ideas.
It’s top 2% for 35-39 y/o

Nate79
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by Nate79 » Sat Aug 11, 2018 11:43 pm

To start I would be debt free on Monday with that pile of cash.

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camillus
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by camillus » Sun Aug 12, 2018 12:02 am

WhatsIRR wrote:
Sat Aug 11, 2018 2:34 pm
I am open to all thoughts and suggestions
Are children in the picture for you and your wife?

Do you have any charities or meaningful causes to be a part of?

basspond
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by basspond » Sun Aug 12, 2018 4:33 am

You are doing great. We never really had a budget. What we did was transfer a set amount monthly into a money market in our brokerage account. When it got a certain size we would invest it or used it to buy big ticket items. By the way, pay off your debts and pay for most things with cash. Can’t beat the feeling of being your own master.

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jharkin
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by jharkin » Sun Aug 12, 2018 7:03 am

HEDGEFUNDIE wrote:
Sat Aug 11, 2018 3:47 pm
Dude, you have a net worth of $2M at the age of 35, that's got to be in the 90th percentile of people your age.

If I read your post right, you don't know what to spend your money on. If you post a new thread titled "I've won the game, what should I spend my money on?" I'm sure you'll get some good ideas.
It’s actually 98-99the percentile if you look it up.

This is a classic humble brag post. OPs issue is not that they don’t have enough (they do), their issue is:

1 They don’t have a structured plan.
2 Their high incomes are unstable, not guaranteed.

Luckily making a plan for #1 along with their assets will very easily protect #2.

1 - I’d start by just paying off all the debt tomorrow and making that budget.
2 - With the debts paid I bet that 8k/month "minimum" is now more like 6k so your remaining cash + taxable investments of 370k? represent a 5 year emergency fund - should be enough protection even with very unstable income.
3 -Don't be afraid to use backdoor Roth to move more to tax advantaged, remember all CONTRIBUTIONS can be taken out any time for any reason tax & penalty free.
4 -I'd also have that conversation with your wife about maxing her 401/403 - It wont cut her take home to zero (I'm an in a similar situation with my income 3x wives and we plan to basically put her entire check into deferred eventually- shes a public school employee and gets dual plans).



* EDITed to add some more specific advice *
Last edited by jharkin on Sun Aug 12, 2018 7:46 am, edited 1 time in total.

bgf
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by bgf » Sun Aug 12, 2018 7:06 am

wow that's an awesome company match.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

gmc4h232
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by gmc4h232 » Sun Aug 12, 2018 7:38 am

jharkin wrote:
Sun Aug 12, 2018 7:03 am
It’s actually 98-99the percentile if you look it up.
Where do you look it up?

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jharkin
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by jharkin » Sun Aug 12, 2018 7:47 am

gmc4h232 wrote:
Sun Aug 12, 2018 7:38 am
jharkin wrote:
Sun Aug 12, 2018 7:03 am
It’s actually 98-99the percentile if you look it up.
Where do you look it up?
https://dqydj.com/net-worth-by-age-calc ... ed-states/

I realize other posters beat me to it, probably using the same tool.

WhatsIRR
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by WhatsIRR » Sun Aug 12, 2018 4:01 pm

2015 wrote:
Sat Aug 11, 2018 7:52 pm
A very interesting post. You state you've had a lot on your mind. My gut feeling is the source of your unease is unrelated to money. I would concentrate on investigating what that might be. Ask what drove you to post this, and how is that related to the "lot" that's been on your mind?
I think the driver is that I currently feel the least secure in our future than I have at anytime other time in my 13 year career. I look back at what we have earned, spent and saved and find myself asking if we have done enough to secure a good future. The feeling of limited security and stability is driving me to re-evaluate and see what I can do to find a way to create some stability.

camillus wrote:
Sun Aug 12, 2018 12:02 am
WhatsIRR wrote:
Sat Aug 11, 2018 2:34 pm
I am open to all thoughts and suggestions
Are children in the picture for you and your wife?

Do you have any charities or meaningful causes to be a part of?
Children are probably not in the future. Never say never and at this point it may be adoption but I have never had a strong paternal instinct.

We donate some through my work and occasional one off that pop up but nothing that we are actively involved with.
jharkin wrote:
Sun Aug 12, 2018 7:03 am

It’s actually 98-99the percentile if you look it up.

This is a classic humble brag post. OPs issue is not that they don’t have enough (they do), their issue is:

1 They don’t have a structured plan.
2 Their high incomes are unstable, not guaranteed.

Luckily making a plan for #1 along with their assets will very easily protect #2.

1 - I’d start by just paying off all the debt tomorrow and making that budget.
2 - With the debts paid I bet that 8k/month "minimum" is now more like 6k so your remaining cash + taxable investments of 370k? represent a 5 year emergency fund - should be enough protection even with very unstable income.
3 -Don't be afraid to use backdoor Roth to move more to tax advantaged, remember all CONTRIBUTIONS can be taken out any time for any reason tax & penalty free.
4 -I'd also have that conversation with your wife about maxing her 401/403 - It wont cut her take home to zero (I'm an in a similar situation with my income 3x wives and we plan to basically put her entire check into deferred eventually- shes a public school employee and gets dual plans).



* EDITed to add some more specific advice *
Post wasn’t meant as a humblebrag, from what I had read in my short time here we seemed to be the norm or even on the low end with all the docs posting up.

Points one and two are on the mark. We are actively working a plan but it is still in its infancy stages.

Debt free budget would probably be in the $6500/month range with the option of getting to $5500-6000 if we follow through with a few more cost reductions that we are discussing.

lostdog
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by lostdog » Mon Aug 13, 2018 10:55 am

Is social media and comparing yourself to others affecting you?

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gunn_show
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by gunn_show » Mon Aug 13, 2018 11:26 am

WhatsIRR wrote:
Sat Aug 11, 2018 2:34 pm
Here is where I am at and am looking for suggestions, I don’t feel like we are on a great track but DW is comfortable with our situation and wants us to reasonably enjoy life. It’s probably good I have her or I’d be a hermit.

Anything glaring jumping out? Should I feel more comfortable than I do? I’m not sure what is going on but this has really been on my mind lately.

Thanks for letting me vent
Anything glaring jumping out? Yes, I chopped down your post to the glaring remarks. "don't feel we are on a great track" after posting at early mid-30s as millionaires... yes something is glaring all right:
aristotelian wrote:
Sat Aug 11, 2018 3:36 pm
You have $1.5M and a nearly paid off house at age 35. What ever your problem is, it is not financial.

I would do backdoor Roth as the contributions are still liquid and can be taken out any time.

I would also pay off the mortgage and the car. There is no point in holding $400K cash earning less than your debt interest.
OP when was the last time you took a vacation? Honest question. Something is going on inside, and it has absolutely nothing to do with financial concerns. You are in the 1%.

That much cash with a truck loan? Why? Pay it off. Pay off the mortgages. Fix up the house and rent it out, will give you a project.
lostdog wrote:
Mon Aug 13, 2018 10:55 am
Is social media and comparing yourself to others affecting you?
I think so, as he posted this before I hit submit on my responses:
WhatsIRR wrote:
Sun Aug 12, 2018 4:01 pm
Post wasn’t meant as a humblebrag, from what I had read in my short time here we seemed to be the norm or even on the low end with all the docs posting up.
This is a very large forum, unless you are a doctor, why are you comparing yourself to them? You are not the norm, and neither are high earning doctors. You are all in the top 1%. The norm or low end for American's is earning $45k a year, not $300k with millions in the bank. You get that, right?

Back to the vacation question... ?
"The best life hack of all is to just put the work in and never give up." Bas Rutten

Beach
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by Beach » Mon Aug 13, 2018 11:39 am

jharkin wrote:
Sun Aug 12, 2018 7:47 am
gmc4h232 wrote:
Sun Aug 12, 2018 7:38 am
jharkin wrote:
Sun Aug 12, 2018 7:03 am
It’s actually 98-99the percentile if you look it up.
Where do you look it up?
https://dqydj.com/net-worth-by-age-calc ... ed-states/

I realize other posters beat me to it, probably using the same tool.
Is the proper way to calculate this by subtracting your mortgage debt from your savings? Or would you add your equity in the house, plus savings? Or just ignore the house all together?

financeguy88
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by financeguy88 » Mon Aug 13, 2018 11:50 am

My synopsis is that you don't have enough to FIRE based on current living situation and feel insecure about your job / career prospects and worry if you get laid off you won't be able to find a similarly paying job.

Working in a volatile area myself I can somewhat relate to the high net worth / high income but perpetual job insecurity.

What helps is to think about the fall-back. In the worst case scenario, you will still be completely fine as you can just downsize your life and be happy.

Also focus on figuring out a way to make your income less volatile. Maybe that means a career switch or developing some skills that make you more marketable. Both of these things will help.

WhatsIRR
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by WhatsIRR » Mon Aug 13, 2018 12:50 pm

lostdog wrote:
Mon Aug 13, 2018 10:55 am
Is social media and comparing yourself to others affecting you?

Very limited social media exposure. No FB, no Twitter, IG is used to follow companies not people primarily. BH is the only financial community I have participated in, all other online activity is hobby based.
gunn_show wrote:
Mon Aug 13, 2018 11:26 am
WhatsIRR wrote:
Sat Aug 11, 2018 2:34 pm
Here is where I am at and am looking for suggestions, I don’t feel like we are on a great track but DW is comfortable with our situation and wants us to reasonably enjoy life. It’s probably good I have her or I’d be a hermit.

Anything glaring jumping out? Should I feel more comfortable than I do? I’m not sure what is going on but this has really been on my mind lately.

Thanks for letting me vent
Anything glaring jumping out? Yes, I chopped down your post to the glaring remarks. "don't feel we are on a great track" after posting at early mid-30s as millionaires... yes something is glaring all right:
aristotelian wrote:
Sat Aug 11, 2018 3:36 pm
You have $1.5M and a nearly paid off house at age 35. What ever your problem is, it is not financial.

I would do backdoor Roth as the contributions are still liquid and can be taken out any time.

I would also pay off the mortgage and the car. There is no point in holding $400K cash earning less than your debt interest.
OP when was the last time you took a vacation? Honest question. Something is going on inside, and it has absolutely nothing to do with financial concerns. You are in the 1%.

That much cash with a truck loan? Why? Pay it off. Pay off the mortgages. Fix up the house and rent it out, will give you a project.
lostdog wrote:
Mon Aug 13, 2018 10:55 am
Is social media and comparing yourself to others affecting you?
I think so, as he posted this before I hit submit on my responses:
WhatsIRR wrote:
Sun Aug 12, 2018 4:01 pm
Post wasn’t meant as a humblebrag, from what I had read in my short time here we seemed to be the norm or even on the low end with all the docs posting up.
This is a very large forum, unless you are a doctor, why are you comparing yourself to them? You are not the norm, and neither are high earning doctors. You are all in the top 1%. The norm or low end for American's is earning $45k a year, not $300k with millions in the bank. You get that, right?

Back to the vacation question... ?
We did Nashville in November, Little Rock in March for a conference, DC for the 4th of July and have a Mexico trip with some friends in a few weeks.

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GoldStar
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by GoldStar » Mon Aug 13, 2018 1:50 pm

WhatsIRR wrote:
Sat Aug 11, 2018 2:34 pm

Anything glaring jumping out?
The only thing that glaringly jumps out at me is all the cash you are holding onto - and the reason you are doing so is because you perceived some uncertainty in the last couple of years (More uncertain that any other other two years in the last 50 years? that can be debated but not here). With that much cash I also don't get the car debt.

The other thing is the RSUs. Sounds like you are hoping the price will got back up. Are you prepared to lose that $150K?

I don't see the reason why you started to budget - if you aren't planning a family you seem to be doing fine without a budget. Do you have a goal you aren't telling us about? trying to get to financial-independence soon or something?

Phronesis
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by Phronesis » Mon Aug 13, 2018 1:52 pm

OP, might it be that this concern with financial security is a bit overblown? You're three years younger than me with way more - I'm about 40% of your worth, salary, spending, and saving but with kids - and I believe we're on track to retire in our early fifties. It strikes me, the amateur psychologist, that if you're this concerned with your finances now, it won't end the anxiety until you've totally won the game. But when will that be? And when do you just let go and feel grateful that, realistically, you're one of the richest persons not just in the world, but all of human history? Not compared to Bezos, but... 5 BILLION people live on less than $10 a day. A single good or bad day in your portfolio is unfathomable movements of money to billions of people. What I'm saying is... enjoy your life! You're good to go!

I had similar feelings about 8 years back. I went full Tyler Durden and got myself punched in the face - I started boxing. Then I read the Stoics. Very transformative. I'm not recommending you do those things. No, my point is that, IMO, the best way out of your funk is to find your own way to challenge yourself and grow personally.

Count of Notre Dame
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by Count of Notre Dame » Mon Aug 13, 2018 3:19 pm

Grt2bOutdoors wrote:
Sat Aug 11, 2018 4:35 pm
Hello and welcome to the forum!
Your crisis is not due to financial concerns. It's something else - stop looking at your social media, stop looking at your co-workers, stop watching HGTV.

You are doing fantastic! How many employers offer a $25K match? - I can count them on two fingers, I know of one other company that offers a good match like that, you are the other one.

Take the cash - pay off the house, pay off the truck. Next goal ~ take the monthly payments and funnel them into your account that you will use to accumulate funds for your next real estate investment. Until then, live debt-free, try it, you'll sleep better at night.
Most medical practices owned by the physician allow the doctors to max out the employee + employer federal limit of ~$54k each year. My employer also provides a 15% of compensation match but I work for a large mutual fund complex (not Vanguard!). The employers are out there that make this possible, but you need to look in certain industries.

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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by bloom2708 » Mon Aug 13, 2018 3:34 pm

Pay off the house and truck.

If you are thinking about have a kid or 2, now is the time. It will change your focus from inward to outward (kids).

If no kids in the picture, then figure out why you are saving money. Retiring early? Set a date 5 years from now and quit for 1 year.

If that doesn't take, find a lower stress job. Good luck!
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

WhatsIRR
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by WhatsIRR » Mon Aug 13, 2018 3:35 pm

GoldStar wrote:
Mon Aug 13, 2018 1:50 pm
WhatsIRR wrote:
Sat Aug 11, 2018 2:34 pm

Anything glaring jumping out?
The only thing that glaringly jumps out at me is all the cash you are holding onto - and the reason you are doing so is because you perceived some uncertainty in the last couple of years (More uncertain that any other other two years in the last 50 years? that can be debated but not here). With that much cash I also don't get the car debt.

The other thing is the RSUs. Sounds like you are hoping the price will got back up. Are you prepared to lose that $150K?

I don't see the reason why you started to budget - if you aren't planning a family you seem to be doing fine without a budget. Do you have a goal you aren't telling us about? trying to get to financial-independence soon or something?
Cash is a security blanket especially for DW. We both lost our jobs within 1 week of each other in 2015 and the company I am now with has had 2 rounds of layoffs since 2016 for close to a 30% RIF. I’d like to walk it down closer to a 18 month emergency fund but it is going to take work getting her comfortable not seeing that number in secure funds.

Truck will be paid off by the end of the month.

RSUs are $95,000. Current company is up 13% previous company is down 75%. I’ve lost enough on it that I’m willing to roll with it to see what happens, prices have stabilized and have climbed slightly. Both have “Buy” ratings by most pundits (for what that’s worth). I’ll probably keep them until I can TLH and wipe out both.

Budgeting is for my peace of mind to know where funds are going and to verify we haven’t went crazy somewhere. FI is always a goal, not in the FIRE sense but to help through if I get caught up in a round of layoffs. We are not expecting another round but you can never be sure.
Phronesis wrote:
Mon Aug 13, 2018 1:52 pm
OP, might it be that this concern with financial security is a bit overblown?

I had similar feelings about 8 years back. I went full Tyler Durden and got myself punched in the face - I started boxing. Then I read the Stoics. Very transformative. I'm not recommending you do those things. No, my point is that, IMO, the best way out of your funk is to find your own way to challenge yourself and grow personally.
Probably, I’m trying to rationalize and work through it with the help of the good folks here. Unfortunately until I achieve that I’m going to have some nagging voices in the back of my head.

Good to see another combat sports guy, I train and occasionally compete in BJJ.

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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by LadyGeek » Mon Aug 13, 2018 4:05 pm

I removed several off-topic posts. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.

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Meg77
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by Meg77 » Mon Aug 13, 2018 4:17 pm

Welcome! Nothing wrong with looking to improve or optimize your situation. Lots of people on this forum are doing better than most, but that doesn't mean we don't have anxiety around money, career, life, and all the rest.

1. Pay off the truck today.
2. Pay off the house this month.

This will leave you with $225K in cash, an emergency fund of 28 months according to your calculations. Except without a truck or mortgage payment it's probably more like 3 years+. With those two moves you got rid of excess cash, slashed your monthly expenses, and eliminated ALL debt without even dropping cash below $200K. That should leave both you and your wife with plenty of financial peace of mind.

3. Start maxing out her 401k. The tax benefit is worth it in your tax bracket, and you have more $ than you know what to do with anyway after tax. If you share finances and have a joint budget then it doesn't matter whose paycheck is higher or whose is nonexistent. Make a joint budget on YNAB and a joint net worth statement and look at that. Give each other set spending allowances that have nothing to do with each other's net pay. If she still feels weird having such a small paycheck, make sure she's having no tax withheld and up your withholding instead to give her a little boost.

4. Do backdoor Roths. Roths are super flexible, and you can take the contributions back out any time tax and penalty free (not the earnings though). No reason not to do it.

5. As the RSUs vest and you sell them off, consider diversifying into real estate either directly or through partnerships. Nothing wrong with a good ole index fund brokerage portfolio though. Nothing left to do but pile up money if you don't have kids! You've checked off all the "normal" financial goals.

Now a couple of thoughts on the non-money stuff. First, I relate to your feelings, really. I'm also mid 30s, dual income no kids (and none planned), $2.5MM net worth, and get anxious about where to go from here and what the point is, etc. So with that said:

A. Loosen up the spending reigns if it's causing marital friction. Your savings rate is over 50%, which is great, and your wife has a point. You can afford some lifestyle stuff, especially if you don't plan to have kids. You and she should write a list of your values (friendship, adventure, health/wellness) and find ways to spend according to them (social events, travel, organic food/yoga classes).

B. Be careful turning a sentimental property into a rental. You'll be upset when people trash it, and it'll be harder to stay objective/rational about the investment potential. Keep it if you want, but might be best to ultimately sell.

C. Read some FIRE blogs for inspiration and perspective. You have enough, and you could retire right now if you really wanted to and never earn another dime and live comfortably the rest of your life. People live on a lot less, after all. Not saying you have to of course, but knowing you could and reading about people who are doing it should put your mind at ease.

:beer
"An investment in knowledge pays the best interest." - Benjamin Franklin

3funder
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by 3funder » Mon Aug 13, 2018 4:23 pm

aristotelian wrote:
Sat Aug 11, 2018 3:36 pm
You have $1.5M and a nearly paid off house at age 35. What ever your problem is, it is not financial.

I would do backdoor Roth as the contributions are still liquid and can be taken out any time.

I would also pay off the mortgage and the car. There is no point in holding $400K cash earning less than your debt interest.
+1.

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roymeo
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by roymeo » Mon Aug 13, 2018 4:59 pm

There's some contradictions in your thinking, IMHO.

You feel the need for a huge cash buffer because our jobs are in an unstable environment.
You play at stock picking.
(Maybe also throw in: You felt the need to hold on to all those RSU's. But I can't tell exactly your reason for that, guessing it's the magic gambling energy.)

So rather than owning the whole market and a sensible stock/bond split (?) for your age/assets/ability to risk/willingness to risk/desires for retirement, I feel like you're gambling, feeling nervous about it, and greatly overcompensating on the other side.

(For some reason the cash position reminds me of the Parable of the Talents, https://en.wikipedia.org/wiki/Parable_o ... s_or_minas. And I just noticed this: "at the median yearly wage of $26,363, a talent would be valued at about $500,000." so we're even talking about the same ballpark of value.)
The sewer system is a form of welfare state. | -- "Libra", Don DeLillo

Phronesis
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by Phronesis » Mon Aug 13, 2018 5:20 pm

WhatsIRR wrote:
Sat Aug 11, 2018 2:34 pm
Phronesis wrote:
Mon Aug 13, 2018 1:52 pm
OP, might it be that this concern with financial security is a bit overblown?

I had similar feelings about 8 years back. I went full Tyler Durden and got myself punched in the face - I started boxing. Then I read the Stoics. Very transformative. I'm not recommending you do those things. No, my point is that, IMO, the best way out of your funk is to find your own way to challenge yourself and grow personally.
Probably, I’m trying to rationalize and work through it with the help of the good folks here. Unfortunately until I achieve that I’m going to have some nagging voices in the back of my head.

Good to see another combat sports guy, I train and occasionally compete in BJJ.
Sweet. I can hang with blue belts and some purples, but I'm mostly a stand-up fighter. Good for you, man. I'm not too smart, so I can't help with the financial questions. What I can say is that you're like my richer doppelganger. I wouldn't be here if I didn't have nagging voices, too. My point is that it's better to deal with the voices than to worry about the finances. You look solid. If you're looking to FIRE, work toward it but don't worry about it. Worry about how to pass guard!

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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by DrivingFun » Tue Aug 14, 2018 9:51 am

am wrote:
Sat Aug 11, 2018 10:29 pm
HEDGEFUNDIE wrote:
Sat Aug 11, 2018 3:47 pm
Dude, you have a net worth of $2M at the age of 35, that's got to be in the 90th percentile of people your age.

If I read your post right, you don't know what to spend your money on. If you post a new thread titled "I've won the game, what should I spend my money on?" I'm sure you'll get some good ideas.
It’s top 2% for 35-39 y/o
Honestly this read like a troll post if I ever seen one.

am
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by am » Tue Aug 14, 2018 10:12 am

DrivingFun wrote:
Tue Aug 14, 2018 9:51 am
am wrote:
Sat Aug 11, 2018 10:29 pm
HEDGEFUNDIE wrote:
Sat Aug 11, 2018 3:47 pm
Dude, you have a net worth of $2M at the age of 35, that's got to be in the 90th percentile of people your age.

If I read your post right, you don't know what to spend your money on. If you post a new thread titled "I've won the game, what should I spend my money on?" I'm sure you'll get some good ideas.
It’s top 2% for 35-39 y/o
Honestly this read like a troll post if I ever seen one.
This forum is overrun by these type of posts by extremely wealthy outliers and financially set retirees who feel insecure or want to brag about their circumstances. You know the ones where someone has a pension covering their expenses with a 7 figure portfolio asking if they’ll be ok? Or the guy in this post. There are more average joe retiree forums like the one on city data where you get a more realistic perspective.

alter
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by alter » Tue Aug 14, 2018 11:00 am

This crisis is too large for anyone to overcome.

You may want to consider plan B:

https://en.wikipedia.org/wiki/Seppuku

SouthernCPA
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by SouthernCPA » Tue Aug 14, 2018 11:40 am

Nice humble brag, OP.

chicagoan23
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by chicagoan23 » Tue Aug 14, 2018 12:25 pm

WhatsIRR wrote:
Sat Aug 11, 2018 2:34 pm
Sorry this is a bit long and rambling. I’ve had a lot on my mind....

I’m looking for general guidance and suggestions as I feel like I’m going through an early midlife financial crisis. I think part of it is just my wiring as I always feel like I should be doing better and don’t have enough.....

We have not been budgeting the past few years just trying to live reasonably. I think this has been a source of anxiety for me....

Here is another point that bugs me a little, we don’t have any short term tangible monetary goals. Long term retirement is always there, short of that the only thing would be getting some secondary income to provide a safety net for the next bust.....

I don’t feel like we are on a great track.....

Anything glaring jumping out?
As pointed out repeatedly above, the glaring thing that is jumping out is that you are suffering from a financial anxiety disorder. It's good that you recognize that, and it's not necessarily a bad thing if it encourages smart behavior without paralyzing your life.

I would go ahead with your budget plans, and try to stick to them. Getting a firm control on spending may help with your anxiety disorder. I would also keep your cash pile as is and just keep rolling it over in T-bills or something. Not the best financial move but having half a million in cash may also help with your condition. Your debts are insignificant to you and are at low rates; you don't need to be in a hurry to pay them off.

Could you be doing better? Probably, with that income and lifestyle, but all of us could probably be doing a little better in all aspects of our lives. Even if you could be doing better, keep in mind that you are still doing great. Try to focus on that fact, rather than the people who are doing better than you. There are always going to be people who are doing better than you.

If you're looking for short-term goals, try to start hitting bigger numbers, and write down how you anticipate you will feel once you hit them. So, if you say you want $4 million by 40 and that will make you feel financially secure, or if you want $10 million by age 50 and then you will be independently wealthy, write that down. Then when you hit those numbers (and you will) if you are still feeling anxiety then look at what you wrote earlier and try to reconcile those thoughts. Good luck to you.

gotester2000
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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by gotester2000 » Tue Aug 14, 2018 12:46 pm

I suspect the OP's post is due to the uncertainty of his career and a looming fear of the end of the road for him.

OP,

Your problem is not money. You can transition to another work. Why think too much of an event that may happen in future and lose your present? Meanwhile become completely debtfree.

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Re: Mid 30s Crisis: Personal budget, savings and goals

Post by tesuzuki2002 » Wed Aug 15, 2018 11:58 am

WhatsIRR wrote:
Sat Aug 11, 2018 2:34 pm
Sorry this is a bit long and rambling. I’ve had a lot on my mind

I’m new to BH but have always enjoyed personal finance. I’m not completely following BH principles but am using some index funds in the 401k/IRA, the simplicity of BH intrigued me so I am here to learn. I do buy individual stocks since I find the hunt and research enjoyable but may reconsider or dedicate a fixed amount of cash to dabble in.

I’m looking for general guidance and suggestions as I feel like I’m going through an early midlife financial crisis. I think part of it is just my wiring as I always feel like I should be doing better and don’t have enough. Another factor is the wife and I both work in a volatile industry which has been a rough ride the past couple years and probably will continue into the future.

Me: 35 DW: 34 No kids

Salaries:

Me: $200,000
DW: $40,000

Bonuses:

Our bonuses are widely variable, I’ve listed something in the middle:

Me:

Retention: $25,000 (9/1/18, 9/1/19)
Regular: $35,000
RSU: $50,000

Her:

Regular: $5,000

Debt:

Mortgage $195,000 4% 22 years left
Truck $20,000 2% 3 years left

Assets:

Cash: $440,000
401k/IRA: $1,000,000
HSA: $13,000
Taxable: $150,000 (individual stocks; heavily weighted by RSUs I haven’t sold due to bust, looking to exit in 2019)
House: $450,000
House: $100,000(?) inherited. vacant need to do something but not willing to sell yet too much attachment
Real Estate: $75,000 passive in apartment building (cash back 2023)

Contributions:

401k:
Me: $18,500+~$25,000 Company match
DW: $8,000+$1,200 Company match
HSA: $4,500+$2,000 Company Match


Budget:

We have not been budgeting the past few years just trying to live reasonably. I think this has been a source of anxiety for me and I have downloaded and started using YNAB in the last month. Initial pass looks like around $8,000/month in spend. We probably have $1,500/month in luxury that could be eliminated in a tough time.

Goals:

Here is another point that bugs me a little, we don’t have any short term tangible monetary goals. Long term retirement is always there, short of that the only thing would be getting some secondary income to provide a safety net for the next bust. We are happy with our house and if we moved it would probably be a lateral move in price; I am not real comfortable with a more expensive house in this market. Cars are newer with low mileage, I have $6,000/year in the budget for vacation. There is probably some work around the house that we’d like to have done that could become a goal.

Thoughts/Plans

Here is where I am at and am looking for suggestions, I don’t feel like we are on a great track but DW is comfortable with our situation and wants us to reasonably enjoy life. It’s probably good I have her or I’d be a hermit.

Pay off the truck in September with the retention bonus, ATAX on the bonus should be decently close to payoff amount. Pay off the house in May, 2019 if RSUs perform. I vest another grant next year and should be close to payoff amount if we get the market appreciation that is expected. I’m not concerned with company going bankrupt and am willing to ride the stock until I’m happy with the price.

Maintain 18 months emergency fund. Part of this is dual incomes tied to a volatile industry (we we both lost our jobs within 1 week of each other in 2015) and part of this is DW finds peace in the bank account. If we get some reliable secondary income this could be reduced.

Budget $10,000/month (2 paychecks each) this should leave $2,000-2,500 surplus for things I haven’t caught yet in our budget. Once a quarter or so roll the surplus into an investment account.

Use bonuses and 2 paychecks a year for dedicated investments.

With company matches we are putting $~60,000 into tax deferred retirement funding. I have thought about a backdoor Roth but am not sure I want even more money tied up that we can’t use now. I’m tempted to use the surplus into taxable accounts that could be used to get us through another rough spot. We have not maxed her 401k out because I don’t think she could handle going to work every day and not bringing any real paycheck home. It could be a subject we discuss though. Should we be looking at Roths even with the high 401k contributions?

Develop secondary income stream. Looking at passive and managed real estate to diversify out of the market plus money into the taxable account. I think the best bet would be to spend the money needed to get the inherited house rentable. I expect it could bring in $1,500/month but will need to find a manager to verify.

I know the cash is too high, we’ve held it since the past couple years have been so uncertain. We did take the $75,000 out to invest in the apartment recently. We will probably try to DCA some of it and look for properties until we get closer to the house 18 month target.

Anything glaring jumping out? Should I feel more comfortable than I do? I’m not sure what is going on but this has really been on my mind lately.

I am open to all thoughts and suggestions I know BH isn’t big on real estate so I expect some push back there.

Thanks for letting me vent
Pay off your house and your truck and don't look back...

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