Entry-Level but with Investments -- What Now?

[punnymustache]

I'm working on a longer post, but for now I figured I would stop lurking and say hi.

I'm 26 and married. My not-so-secret dream is to work 30 hours or less a week by the time we have children. Right now I work about 40 and am the primary breadwinner in our household. Because of the combination of the aforementioned goal and fact, I've taken a keen interest in financial independence this year.

Here's where we're at, big picture:

50k in loans

25k in checking/saving
400k in investments
approximately 60k in combined income

A certain amount of familial gifts have been promised us this year, with 1/2 being dumped directly into the investment account (my spouse's) and the other 1/2 going to me. I don't count on money I don't have, but given the gifters' situation, this is very likely to happen.

My spouse works some weeknights and most weekends, and I work weekdays 8-5. I'm at the beginning of my career, and I would like to figure out what we need to do to get to a financially stable enough place so that I can cut down my hours to part-time in the next 5-10 years (or at least find a work situation where I can work through all or part of the weekend to actually have some time with my SO during the week). A lot of this will depend upon me growing my career in the right direction.

I'm in the process of getting our budgets in the same arena using mint.com so we can actually take a look at what we're spending. I was able to save consistently between $800-$1000 a month, but when we hit our Emergency Fund goal this money is primarily going to be reallocated to my 401k.
SO seems to break even each month or save a little, though I'll know more soon. If more figures would be helpful, let me know and I can try to track them down.

So as you can see, there are two things going on here: On the one hand, we're just starting out in our careers, entry-level, with student loan debt that we're paying, modest monthly savings, and lofty dreams of financial independence. On the other, we're already backed by 400k in investments and have been told we will receive more than our salaries in gift money this year, half of which will go directly into my bank account or any other account I wish it to go to.

So what do I do now? Thinking about personal finance as a series of stages, I'd already mastered the Don't-Carry-Credit-Card-Debt stage before meeting my spouse (SO has never carried a balance, either). Our cars were both purchased with cash, and while I might want to replace my car in the next year or few, I would only buy one that I could afford to buy with cash. (I currently drive a '98 Honda with something over 200,000 miles on it--it needs some work but is still running.) The next stage I guess is retirement investing--which like I said I will start doing April 1st and most likely will finish 2013 having maxed out my 401k and IRA or Roth IRAs for both of us. Then I guess I start my own investment account? Or tuck money away for a house? I feel like I accidentally "leveled up" a little too early--it's great, but I am in a bit over my head here.

Big picture, or specific advice: How do I make sure that I make the smartest moves possible in service of my eventual goal to move from breadwinner to part-time employment?

[meadow lark]

When is your spouse going to make more money, or will he/she ever make more?  Do you anticipate continuing to get financial gifts from your family, or is this a one time thing?  I think as long as you manage to keep saving your gifts, and not using them to inflate your lifestyle, you will have no problem moving to a 30 hr or less work week.  Good luck!  We always had at least 1 parent work part-time until our son was 16, and it is so worth it!

[punnymustache]

My spouse is just starting out in an artistic, gig-based work (I use the following term loosely) environment. Quarter to quarter, my SO has been doing better and better, but at this point some of the smaller gigs have fallen off, so I am hesitant to extrapolate much yet. We've both only really been working since Q3 2012, which makes future projections for both of us pretty difficult.

That said, my spouse is friendly, ambitious, and talented. I am hoping but not wagering that that will be enough to kick SO's earning at least comfortably past 20k. This will also be more of a marathon--SO would be happy to keep up this work and work as hard or harder forever and jokes about never retiring.

For the short term, I've also suggested substitute teaching and other "day gigs" that could fill some of SO's free time and that I think would be a good fit personality-wise. I'm not sure what the market is like around here, but I might bring that up again.

We're treating the gifts as one-time things, but my understanding of the situation is that this is the optimal tax-friendly way for SO's (fairly young) parents to get a jump start on distributing out their estate, so it's not impossible that these gifts will keep coming in future years until and unless they get everything where they want to get it. The rest of the gift, which we've already received, is a regular gift from an older family member. So, nothing to treat as guaranteed, but it's just sinking in that there's every possibility that money will just sort of follow me around like a puppy... as someone from a solidly middle-class upbringing, this is a very weird thought.


I'm personally just coming out of a period of extreme budget consciousness that involved minimum wage retail and living on the absolute lowest amount of supplemental grad school loans that would let me pay rent. I made sure that SO and I moved into an apartment we can afford. I think twice about anything I want to buy, but am not afraid to buy nice things (especially marked down at places like Home Goods or Unclaimed Freight), especially if they mean buying fewer crummy things in the long run.

What's nice about that is that I'm not tremendously interested in most trendy consumer goods. I've held off this far on a smart phone. I do plan to get a bike soon, used if I can. Like I said, my big ambitious plan, assuming all the money comes through for 2013, is to use the money to let me dump 10k extra into my 401(k) than I was planning to, and then use part of the rest of it to fully fund IRAs for the two of us. And then probably put the rest or most of the rest of it aside in a CD or savings account for a mortgage.

I really appreciate your response. I have been feeling extremely isolated because of the strangeness of our financial state right now. I feel like I can't exactly talk to my friends, who're battling student loan debt and also just starting out, about my confusion as to how to best save unexpected windfalls.

[Reepekg]

Congratulations, it sounds like you have luxury problems and are well on your way to your goal if you aren't there already. If you're already pulling in 4%, 16k, annually in investments, it sounds like you could already go from 40 down to 30 without noticing much of a difference.

The biggest hurdle is not letting lifestyle inflation creep in now that you feel like you can afford it, although it sounds like you've got the frugality thing figured out. I also like, I think it was brave new life, who was saying how they spent a lot of time learning how to invest as they considered themselves a professional capitalist. I'm in my 20s as well, but I have much less to invest than you're talking about, so it is actually kind of nice that I can figure things out and make some mistakes when only a few thousand is on the line. If I were in your position, I'd consider it a job and invest a lot of time learning how to manage the stash now that you already have it.

Don't worry too much. You're in a great spot.