How are we doing?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
cashisking500
Posts: 86
Joined: Fri Dec 02, 2016 1:08 pm

How are we doing?

Post by cashisking500 »

I like to check in occasionally with this group, as I great value your input/opinions. Because of this site, we have made a lot of positive moves with our money and it's time to see how we're doing!

Me: 36 years old, Wife: 36 years old
One 2-year old child

Mortgage: $1735/mo @ 2.875%, 30 years (just refinanced)
Car Debt: $385/mo @ 0.9%, 60 months (2020 Honda Pilot) - $22,000 balance
No other debt

Cash savings: $82,000
My 401K: $121,500 (contributing 16% with 0 match currently due to COVID...typically a 5% match from employer)
Wife 401K: $35,000 (contributing 6% with 3% employer match)
My Roth IRA: $50,000 (maxing contribution each month)
Wife Roth IRA: $14,000 (maxing contribution each month)
As a household, we are contributing 20% of our gross monthly income towards retirement

2-year old daughter's 529: $12,000 (contributing $250 per month)

We typically have about $1,000-$1,500 left over each month after all expenses.

How are we doing?
What else could/should we be doing with our money?

Thanks!
flaccidsteele
Posts: 1021
Joined: Sun Jul 28, 2019 9:42 pm
Location: Canada

Re: How are we doing?

Post by flaccidsteele »

You guys look solid imo 🔥

Sucks about the 0 match, but whatever

Congratulations!
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
k b
Posts: 125
Joined: Tue Oct 15, 2013 8:43 pm

Re: How are we doing?

Post by k b »

If your jobs are stable, you could open a brokerage account and invest some of the spare (ie., 82k LESS 6 months' expenses) cash in the 3 fund portfolio. Every few months, you could keep adding to this portfolio with any further spare cash you have then.

Good luck. You guys seem to be doing fine!
Topic Author
cashisking500
Posts: 86
Joined: Fri Dec 02, 2016 1:08 pm

Re: How are we doing?

Post by cashisking500 »

Thanks. You bring up a good point that I should have included. $11,000 of our $82,000 cash is in invested in a 3 fund portfolio at Vanguard. $10,000 is sitting in a boring Chase savings account and the rest is in a high-yield (haha) savings account.
User avatar
Watty
Posts: 20709
Joined: Wed Oct 10, 2007 3:55 pm

Re: How are we doing?

Post by Watty »

cashisking500 wrote: ↑Sat Sep 12, 2020 10:41 am Car Debt: $385/mo @ 0.9%, 60 months (2020 Honda Pilot) - $22,000 balance
....
Cash savings: $82,000
.....
What else could/should we be doing with our money?
You are doing great!

Even though it is just at 0.9% I would go on and pay off the car loan since it sounds like you have the money sitting in accounts that are earning less, and you are being taxed on that meager interest. That might allow you to raise your deductible on the car insurance if they would save you enough money to be worthwhile.

You could then save your "car payment" into a seperate account that would be your car fund so you will have the cash earmarked so you can pay cash for future cars when you need them.

One thing to keep in mind is that since you just refinanced your mortgage the length of your loan was extended and now it will not be paid off until you are 66. There are all sorts of opinions but at least for me having a paid off house made my retirement numbers work a lot better. You might want to keep making your old mortgage payment just so that your house will be paid of when you are younger. An alternative would be to increase your 401k contribution by the amount that your mortgage payment was reduced by when you refinanced.

You did not say what tax brackets you are in but I would take a hard look at maxing out your 401k accounts or putting money into a Roth 401k if you have that. One thing that I did when I was about your age was that I committed to myself to save half of any future pay raises so whenever I got a raise I would go on and increase my 401k contributions so that I never saw that half of the raise.
Lee_WSP
Posts: 3267
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: How are we doing?

Post by Lee_WSP »

Only thing I'd do differently is aggressively pay off the car and then put that same money towards a taxable account.
k b
Posts: 125
Joined: Tue Oct 15, 2013 8:43 pm

Re: How are we doing?

Post by k b »

cashisking500 wrote: ↑Sat Sep 12, 2020 10:53 am Thanks. You bring up a good point that I should have included. $11,000 of our $82,000 cash is in invested in a 3 fund portfolio at Vanguard. $10,000 is sitting in a boring Chase savings account and the rest is in a high-yield (haha) savings account.
Well done! I will then amend my recommendation a bit to say please add proportionally to the 3-fund portfolio once you account for 6-9 months of expenses in the savings (!) account.

I am a little unclear on the recommendation to pay off the car loan (never used one - I am one of those who buy lightly used cars on full payment) if it's only 0.9% p.a., if the 3-fund portfolio will earn more on average. Is it that one would rather not have debt (which I understand) or is 0.9% not really 0.9%? Thanks.
z06ray
Posts: 129
Joined: Tue Jul 09, 2013 11:24 pm

Re: How are we doing?

Post by z06ray »

Eligible for HSA?

Why not max out your 401k? It doesn’t look like you are taking advantage of all eligible space
Topic Author
cashisking500
Posts: 86
Joined: Fri Dec 02, 2016 1:08 pm

Re: How are we doing?

Post by cashisking500 »

z06ray wrote: ↑Sat Sep 12, 2020 12:32 pm Eligible for HSA?

Why not max out your 401k? It doesn’t look like you are taking advantage of all eligible space
Yes, I am. I'm currently putting $70 per paycheck into HSA. Should I consider maxing that (or as close to as possible?)
Lee_WSP
Posts: 3267
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: How are we doing?

Post by Lee_WSP »

cashisking500 wrote: ↑Sat Sep 12, 2020 12:45 pm
z06ray wrote: ↑Sat Sep 12, 2020 12:32 pm Eligible for HSA?

Why not max out your 401k? It doesn’t look like you are taking advantage of all eligible space
Yes, I am. I'm currently putting $70 per paycheck into HSA. Should I consider maxing that (or as close to as possible?)
Yes.
tashnewbie
Posts: 826
Joined: Thu Apr 23, 2020 12:44 pm

Re: How are we doing?

Post by tashnewbie »

You don’t say what your marginal tax brackets are. But generally I’d recommend maxing all tax-advantaged space (401k, HSA, etc) before doing taxable investing, depending on what your goals are.
pasadena
Posts: 651
Joined: Sat Jul 02, 2016 1:23 am
Location: Washington State

Re: How are we doing?

Post by pasadena »

tashnewbie wrote: ↑Sat Sep 12, 2020 1:25 pm You don’t say what your marginal tax brackets are. But generally I’d recommend maxing all tax-advantaged space (401k, HSA, etc) before doing taxable investing, depending on what your goals are.
Me too. I would start by diverting the spare monthly income to beef up your wife's 401(k) contributions (same % as yours) and the HSA as much as possible (can be very useful with a toddler, and a very very good retirement vehicle if not).

Then I would invest all of the $82k minus 6 months of expenses.
Last edited by pasadena on Sat Sep 12, 2020 4:32 pm, edited 1 time in total.
User avatar
wander
Posts: 3264
Joined: Sat Oct 04, 2008 9:10 am

Re: How are we doing?

Post by wander »

No life insurance?
Topic Author
cashisking500
Posts: 86
Joined: Fri Dec 02, 2016 1:08 pm

Re: How are we doing?

Post by cashisking500 »

wander wrote: ↑Sat Sep 12, 2020 2:29 pm No life insurance?
Yes, we have ample term life insurance
User avatar
wander
Posts: 3264
Joined: Sat Oct 04, 2008 9:10 am

Re: How are we doing?

Post by wander »

I think you are doing fine. Not great. I don't know about your income, but with your networth, I would buy a used car.
BradJ
Posts: 415
Joined: Sun Jan 21, 2018 6:06 pm

Re: How are we doing?

Post by BradJ »

I think you guys are doing amazing. One caveat to my opinion, our age and savings almost line up perfectly. It seems like you are hitting all the milestones, so I will only add save about 1,500-2000 and get a will and trust written up. It is one of those financial check offs you do once and it’s over.
User avatar
4nursebee
Posts: 1569
Joined: Sun Apr 01, 2012 7:56 am
Location: US

Re: How are we doing?

Post by 4nursebee »

I'm not sure how you are doing. Not enough info. Savings seems ok, we saved more as a percent.
I considered refinancing a while back, found it a BAD financial move int he big picture of things. I wonder about that for other people als.
Pale Blue Dot
User avatar
camillus
Posts: 721
Joined: Thu Feb 28, 2013 9:55 pm

Re: How are we doing?

Post by camillus »

I might max the HSA (from payroll) and then your 401ks, then Roths.

I might pause 529 contributions until you can max the above.
student
Posts: 5162
Joined: Fri Apr 03, 2015 6:58 am

Re: How are we doing?

Post by student »

You did not mention your income but saving 20% of it is excellent. This website says your household net worth is in the top 10% of your age group. https://dqydj.com/net-worth-by-age-calc ... ed-states/ So I would say you are doing great.
Dopey
Posts: 171
Joined: Thu Oct 25, 2012 8:41 pm

Re: How are we doing?

Post by Dopey »

Tough to say without an income number. Are your balances from two $50k jobs? One $80k job? Two Drs with $350k?

My balances are quite a bit higher at a slightly younger age, more kids, & 1 income of about $115k. But everyone’s life story is different. Our mortgage is about 1/3 of yours & you have significantly more left over cash at the end of the month.

But from this point forward, your percentage saved looks good. Higher than us. Nice job. Plus with the extra cash, you could really make some additional progress in areas that you want.
User avatar
Watty
Posts: 20709
Joined: Wed Oct 10, 2007 3:55 pm

Re: How are we doing?

Post by Watty »

k b wrote: ↑Sat Sep 12, 2020 12:29 pm I am a little unclear on the recommendation to pay off the car loan (never used one - I am one of those who buy lightly used cars on full payment) if it's only 0.9% p.a., if the 3-fund portfolio will earn more on average. Is it that one would rather not have debt (which I understand) or is 0.9% not really 0.9%? Thanks.
They have $82K sitting in a cash account which is likely earning an even lower interest rate.

It is really good to have an emergency fund but if they paid off the car they could quickly save more and get their emergency fund back to where it is now. They would also need a smaller emergency fund since if something happened like they were laid off they would not have a car payment.
User avatar
goingup
Posts: 3909
Joined: Tue Jan 26, 2010 1:02 pm

Re: How are we doing?

Post by goingup »

You're doing great. Why the low percentage contribution for your wife's 401K? Seems like the obvious thing to max out her workplace retirement account.
toocold
Posts: 159
Joined: Sun Jul 23, 2017 9:17 am

Re: How are we doing?

Post by toocold »

I think you are solidly well. Now on opportunities, this will depend on your income. If you make 1M, there are amble opportunities to improve. If you make 40k, you have reached your capacity and can only improve by increasing your income.
User avatar
epicahab
Posts: 203
Joined: Sat Jun 20, 2009 2:29 pm

Re: How are we doing?

Post by epicahab »

Nice job. I'd echo the comments about maxing out your HSA (the best tax-protected type of account in existence) and then honestly I'd start paying off your house with the goal of having no mortgage ASAP.
an_asker
Posts: 2729
Joined: Thu Jun 27, 2013 2:15 pm

Re: How are we doing?

Post by an_asker »

cashisking500 wrote: ↑Sat Sep 12, 2020 10:41 am I like to check in occasionally with this group, as I great value your input/opinions. Because of this site, we have made a lot of positive moves with our money and it's time to see how we're doing!

Me: 36 years old, Wife: 36 years old
One 2-year old child

Mortgage: $1735/mo @ 2.875%, 30 years (just refinanced)
Car Debt: $385/mo @ 0.9%, 60 months (2020 Honda Pilot) - $22,000 balance
No other debt

Cash savings: $82,000
My 401K: $121,500 (contributing 16% with 0 match currently due to COVID...typically a 5% match from employer)
Wife 401K: $35,000 (contributing 6% with 3% employer match)
My Roth IRA: $50,000 (maxing contribution each month)
Wife Roth IRA: $14,000 (maxing contribution each month)
As a household, we are contributing 20% of our gross monthly income towards retirement

2-year old daughter's 529: $12,000 (contributing $250 per month)

We typically have about $1,000-$1,500 left over each month after all expenses.

How are we doing?
What else could/should we be doing with our money?

Thanks!
You are doing awesome (I am comparing with our situation at your age, not rest of bogleheaddom)!

That said - and with the caveat that I have not read the other responses - I have one suggestion. Have your wife full on with her 401k, i.e., max it (same for you, in case that 16% is not getting you to the max).

Check back at the end of the year. If that results in a significant dent in your $82K savings, maybe ratchet down a bit for next year. But as long as your savings is still relatively healthy, I would think moving more to retirement would make sense.

PS: Unless of course, your wife has a poor selection of index funds in her 401k.
an_asker
Posts: 2729
Joined: Thu Jun 27, 2013 2:15 pm

Re: How are we doing?

Post by an_asker »

Dopey wrote: ↑Sun Sep 13, 2020 7:45 am Tough to say without an income number. Are your balances from two $50k jobs? One $80k job? Two Drs with $350k?

My balances are quite a bit higher at a slightly younger age, more kids, & 1 income of about $115k. But everyone’s life story is different. Our mortgage is about 1/3 of yours & you have significantly more left over cash at the end of the month.

But from this point forward, your percentage saved looks good. Higher than us. Nice job. Plus with the extra cash, you could really make some additional progress in areas that you want.
This is what I meant when I added the caveat in my response. There will definitely be many folks in either direction from you, OP!

But yes, I missed that out - if your situation is based on $200k combined income, that appears meager unless you recently entered the job market. On the other hand, if it is based on, say, $100k combined income, that's fantastic!
k b
Posts: 125
Joined: Tue Oct 15, 2013 8:43 pm

Re: How are we doing?

Post by k b »

Watty wrote: ↑Sun Sep 13, 2020 8:04 am
k b wrote: ↑Sat Sep 12, 2020 12:29 pm I am a little unclear on the recommendation to pay off the car loan (never used one - I am one of those who buy lightly used cars on full payment) if it's only 0.9% p.a., if the 3-fund portfolio will earn more on average. Is it that one would rather not have debt (which I understand) or is 0.9% not really 0.9%? Thanks.
They have $82K sitting in a cash account which is likely earning an even lower interest rate.

It is really good to have an emergency fund but if they paid off the car they could quickly save more and get their emergency fund back to where it is now. They would also need a smaller emergency fund since if something happened like they were laid off they would not have a car payment.
Got it! I was comparing the interest rate on the car loan to potential returns even from a moderate portfolio.

You are comparing the same rate to the cash lying (idle). Even more importantly, you are taking some pressure off any future emergency. Makes sense.
RyeBourbon
Posts: 78
Joined: Tue Sep 01, 2020 12:20 pm
Location: NJ/Philly

Re: How are we doing?

Post by RyeBourbon »

cashisking500 wrote: ↑Sat Sep 12, 2020 10:41 am I like to check in occasionally with this group, as I great value your input/opinions. Because of this site, we have made a lot of positive moves with our money and it's time to see how we're doing!

Me: 36 years old, Wife: 36 years old
One 2-year old child

Mortgage: $1735/mo @ 2.875%, 30 years (just refinanced)
Car Debt: $385/mo @ 0.9%, 60 months (2020 Honda Pilot) - $22,000 balance
No other debt

Cash savings: $82,000
My 401K: $121,500 (contributing 16% with 0 match currently due to COVID...typically a 5% match from employer)
Wife 401K: $35,000 (contributing 6% with 3% employer match)
My Roth IRA: $50,000 (maxing contribution each month)
Wife Roth IRA: $14,000 (maxing contribution each month)
As a household, we are contributing 20% of our gross monthly income towards retirement

2-year old daughter's 529: $12,000 (contributing $250 per month)

We typically have about $1,000-$1,500 left over each month after all expenses.

How are we doing?
What else could/should we be doing with our money?

Thanks!
Did you consider a 15-year mortgage when you refinanced? If you did that, the house would be paid off when your daughter graduates high school.
ETA: Of course you can pay the current one down faster...
zeal
Posts: 246
Joined: Tue Dec 11, 2018 4:28 pm

Re: How are we doing?

Post by zeal »

I would increase contributions to 401ks and HSA (provided they have decent investment options) since you have (A) a 1-1.5k surplus every month and (B) plenty of liquid cash available. I wouldn't worry about paying off the car or house early unless you really want to... Your rates are great.
User avatar
CyclingDuo
Posts: 3685
Joined: Fri Jan 06, 2017 9:07 am

Re: How are we doing?

Post by CyclingDuo »

cashisking500 wrote: ↑Sat Sep 12, 2020 10:41 am Car Debt: $385/mo @ 0.9%, 60 months (2020 Honda Pilot) - $22,000 balance


Cash savings: $82,000


We typically have about $1,000-$1,500 left over each month after all expenses.

How are we doing?
What else could/should we be doing with our money?
Write a check today and pay off the Pilot. Build up the car fund with the $385 per month to be ready the next time around in 10-12 years. Where are you sending the $1000-$1500 each month that is leftover? Direct some of it to your taxable account, maybe some more at the 529.

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
Post Reply