Background
My husband and I got married last year and we recently had some discussions that lead to him basically giving me access to all his accounts and asking/telling me to take over finances for us indefinitely. I know very little about finances and investments outside of the resources in the sidebar here. I've been trying to learn and I have most of the basics I think, but I'm having trouble with the details and will probably post several times here with more specific questions. For now, I am just trying to get a general understanding of what I need to do to get us on the right track. For what it's worth, we both came from middle class families (maybe lower-middle? I don't really know where the lines are), we were able to go to college on scholarships and come out with very little in the way of student loans. We're very grateful for what we have...but we have no idea what to do with it.
Personal details
Age: 30 (both of us)
Occupations: Software developers, but my husband has not been working (since December)
Income: $100k pre-tax ($66k take-home w/o 401(k) contribution) for me, I expect my husband will add at least $75k pre-tax when he gets a job
Debt: Mortgage with $161k left on it, $1350/month but I overpay to $1600 (maybe I don't need to anymore? I initially did it to get rid of PMI). We have a roommate that pays $500 in rent, so it works out to $13,200/year and includes property tax and insurance. No other debt.
Other Expenses: Last year we spent somewhere around $63k total, but that included all of our wedding costs. We usually spend closer to $42k combined (including mortgage).
Goals: I own the house we live in now, but we are looking at selling it and buying/building a house in the next couple years (likely more expensive). We also plan on having a kid in the near-ish future (like 3-5 years maybe). We're both frugal people, so outside of the house looking like we might splurge, we'll probably aim to retire early over buying expensive things.
Current idea of a plan
Step 1. Invest money in existing accounts
We both have ROTH IRAs and multiple 401(k)s, but recently discovered that we forgot to invest some of that money...looking at how the rest of our accounts did last year, maybe that was a good thing. Regardless, we need to invest that money and make our IRA contributions for 2019.
Step 2. Figure out where to put cash beyond our emergency fund
We have an embarrassing amount of money in cash just sitting in bank accounts. I know we need to move that into investment accounts but I don't know what the best way to do that is. We have a combined $235k, most of it in 2.1% APY savings accounts at least. We could use it for our house down payment, but since that won't be for another year and we'll be selling our current house anyway, I assume it's better to invest it. What kind of account is best for post-tax cash to go into?
Step 3. Increase 401(k) and HSA contributions
I was putting in 5% to my 401(k) and am going to up that to 15%. I am also increasing the amount that goes into my HSA to $3000/year. My husband was putting 5% into his 401(k) as well, and I think had some additional ROTH contributions for some reason he can't remember, so he was putting in both pre-tax and post-tax money. I'm still learning about the difference to determine what he should do when he gets a new job. How do I know how high we can go with our contribution percentages?
Step 4. Consolidate bank accounts
Husband has five bank accounts, so we're going to consolidate those into 3 by transferring all of his money from his old bank to his new(ish) credit union which is the same one my accounts are at (but I think I'll keep our accounts separate for now). We both also have a high-interest savings account at Discover. Down the road, I plan on opening a joint account so that we can easily split costs - it will become our main bank account with side accounts for our personal money. We each have two 401(k)s at this point (and presumably my husband will have a third soon) so at some point I need to look into consolidating those as well.
Step 5. Pick better investments
Neither of us had any idea what we were doing when our 401(k)s were created - they're invested kind of randomly. A couple of them fit our retirement targets at least, but the others seem to be allocated for someone more conservative. I'm learning about three-fund portfolios and will post another time about specific funds to switch to. For now, I can't figure out what my Fidelity 401(k) is actually invested in, it just says "Target Retirement 2050" and doesn't have an explanation of what stocks/bonds/mutual funds it actually consists of - so if someone can enlighten me on that, I'd appreciate it.
Well that ended up being pretty long. I hope it makes sense, thank you in advance for any advice/knowledge you can give me!
Submitted May 06, 2019 at 09:18PM by TheAmazingJunimo http://bit.ly/300m4Pq
