tl;dr: My wife starting working (65k), putting out salary around 200k combined. We already max our Roth IRA, 401k, have no debt, and have decent cash savings (details below) - how do we decide what to do next?
(I want to say that I can't help but to feel lucky with my financial situation at the moment, and this all feels like a humble-brag sot of post - in particular our budget, which I feel proud of in particular because I think we live a very modest life for our income. That said, my partner and I are super frugal people, and as I mention below I don't think this income level will last, so I'm genuinely looking for advice on what we should do to be smart about this opportunity while we have it!)
Thank you all for your time / reading. I have read the side bar, in particular the "prime directive" and have lived by it the past 4 or 5 years. Also, if possible as you are giving advice keep in mind that my relatively high income level will likely drop down substantially at some point in the next 2-5 years - my job is stressful, and while I'm challenged and learn a ton all the time, it's at the cost of having high anxiety constantly. So I'd prefer to plan for eventually cutting my salary in half or worse.
Basic Info
| Data point | Value |
|---|---|
| Age | 33 |
| Gross Income (combined, before tax) | 200k |
| MONTLY Take home income (before Roth IRA or other contributions, AFTER 401k) | ~8750 (somewhat of an estimate) |
| "surplus" (after other savings goals - rough estimate) | 2500 |
Budget Info
| Expense | Month budget |
|---|---|
| Rent | 1100 |
| Groceries | 325 |
| Eating out | 305 |
| Utilities / bills (includes phone, internet, netflix, etc) | 280 |
| Shopping / hobbies | 180 (normally go over by at least 100) |
| Entertainment (movies, local activities, etc) | 200 |
| Gas / fuel | 85 |
| Car / Rental insurance | 50 |
| Bars / alcohol | 40 |
| public transit | 30 |
| Coffee shops | 25 |
| "everything else" (i.e. a plane ticket home, or Christmas presents during xmas, etc. Normally get close to this :( ) | 600 |
Current Savings
| Savings account money goes to | Month budget |
|---|---|
| Travel | 1400 |
| Emergency Fund | 250 |
| Save for a new car | 225 |
| Roth 401k | 995 |
Current retirement and savings accounts (note: I know these aren't huge, given our current income, but our income wasn't so high until very recently, and we paid off about 50k of student loans with money we had been saving for a while, so it really wasn't until very recently that we've been saving so aggressively) - Note cash is mostly in Ally accounts at 1.15% (or whatever it is at the moment!)
| Type (combined for my wife and I!) | How much |
|---|---|
| Emergency | 14k |
| Travel or house down payment | 33k |
| New car | 4k |
| Pet emergency fun | 450 |
| 401k (99% in Vanguard Targeted Retirement) | 60k |
| Roth IRA | 60k |
| Misc | 6k |
We have 0 debt, besides CC which we pay in full monthly
OK, so that's a breakdown of our budgets / spending / savings. At this point, our only real financial goal would be to save for travel / life experiences, and if possible retire early (again, note that we likely will not always make this much money, I could easily see our gross income dropping to the 100k level).
Some specific questions:
- Should we just take all of the extra money we have every month and put it into another vanguard target retirement account that has no tax advantage?
- We have SOME interest in owning a house, but probably not where we actually live. I know this is a pretty classic "if you don't want to have a business as a landlord you shouldn't buy rental property" stuff, but I'm wondering if this might be a decent "risky" investment for our extra cash over the next few years?
- I feel like we have a lot of cash sitting around right now. I know there is no magic answer here (if you want cash because you want to be able to travel in a few years for an extended period, you shouldn't put it in the stock market), but I guess I'm looking for a "what would you do?" sort of answer / advice. There is a decent chance we DON'T use that money for travel in the next 2-4 years, in which case the money is just sitting around for 2-4 years.
- Any other specific advice regarding the fact that we might end up making a lot less money in the future once I get burned out at work? For example, one thing I'm trying to do is make sure we have enough in savings so that we could time my leaving of my job with enough in cash to max out our 401k for that year while we transition, i.e. increase our contributions at our company to put the full 18k in in a short period of time before leaving. But any other advice like this?
Thanks for reading!
Submitted July 17, 2017 at 10:04AM by pfthrow4823 http://ift.tt/2t83DHo
