Next Financial Move, advice needed

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
Jeninoregon
Posts: 2
Joined: Sun Apr 14, 2019 1:58 pm

Next Financial Move, advice needed

Post by Jeninoregon » Sun Apr 14, 2019 2:18 pm

I am trying to figure out my next move financially. I'm trying to decide if my husband and I should open Roth IRAs this year, pay additional on our mortgage, and if i should sell some stock that i am holding through an employer ESPP.

Our Situation:
Married, no kids(no plans to have any), ages 30, and 36. Both employed full time in very stable jobs.
Gross income is $100k combined
401ks are at $63k combined (increased contribution to 20% for me, and $400 for hubby this year)
ESPP $36k (still contributing 20% per paycheck, very stable company, dividend rate of 2.67, discount is 15%, about $8k a year)
Mortgage is $149k (only debt, 3.875 interest rate, valued at $300k)
Emergency Fund is at $20k
Monthly expenses around $2700
Take home around $4473

So we have been thinking about whether or not we should both open Roth IRAs, we could max them out with our cash flow throughout the year, or i could sell some stock to fund them as i worry about having too much of our money in my employer stock even though i am not worried about the viability of the company. I don't see any reason to discontinue the ESPP as it acts as a bit of a savings account.

We have also been considering paying additional on our mortgage but this may be more of a peace of mind decision than a financial decision.

We are finally at the point where we are not saving for a big purchase or building up our emergency fund and are unsure of the best place to put our money. Any recommendations or advice would be much appreciated.

deltaneutral83
Posts: 1068
Joined: Tue Mar 07, 2017 4:25 pm

Re: Next Financial Move, advice needed

Post by deltaneutral83 » Sun Apr 14, 2019 3:25 pm

The first thing I would do is redirect any and ALL contributions you'are making in your ESPP to funding Roth's. Then I'd play the balancing act of the amount above the match(es) in your respective 401k's to get as much of my money "home" into the Roths at 12% marginal tax rate without cramping lifestyle as you're savings rate is good. If you all gross $100k with just the Std Deduction you and spouse have great opportunities to get a lot of the $12k you can put into Roth(s) at 12% with 401k contributions and any other payroll deductions. Getting money into Roth's at 12% over 22% is worth more than any discount on ESPP to me. You've put more stock so to speak into the ESPP than the average BH would contemplate IMO.

At your income, putting monies into a Roth at 12% would be something I'd do over paying down the mortgage with income taxed at 22%.

Topic Author
Jeninoregon
Posts: 2
Joined: Sun Apr 14, 2019 1:58 pm

Re: Next Financial Move, advice needed

Post by Jeninoregon » Sun Apr 14, 2019 8:27 pm

Thanks for the reply. After doing taxes this year we upped our 401k contributions to lower our taxable income into the 12% bracket as we planned to sell stock this year and were hoping to avoid any long term taxes on gains.

I agree that I am holding too much stock and you bring up good arguments for the roth ira especially since I hadn't thought about it in terms of tax brackets.

Post Reply