Author Topic: Seeking advice on my promotion  (Read 1111 times)

aaronr

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Seeking advice on my promotion
« on: December 10, 2016, 09:53:25 AM »
Hello!

First a bit about me.  I'm 40 years old and have been obsessed with MMM for the last couple years. When I came across the site I felt that I had found my kindred spirit.  It also inspired/validated an approach I was considering for my family and I.  Speaking of family there's 3 of us my wife, 8 year old daughter and myself.  We are a single income family and my wife home-schools our daughter.

So, Here's what we achieved so far in the last 18 months...
  • Moved from a 2100 sq ft home to 1000 sq ft.  I've completely remodeled the home myself.
    The home is now within 5 miles of work, grandparents, and my daughters home-school hybrid school.
    We sold our 2nd vehicle and I now bike to work everyday.
    This all allowed us to now save 1 of my paychecks every month.
    I'm now investing that additional money myself in Vanguard funds.
    My goal is to retire before I turn 50.

Here's the question...
I was just promoted from senior security engineer at the credit union I work at to VP of Information Security.  This promotion comes with a 35% increase in salary and the potential for a 20% bonus each year.  A good problem to have.  Obviously our lifestyle and behavior is not going to change other than bumping our travel fund from $500 a month to $700 a month.  With this income I'm a little concerned about my skills and approach to investing, I don't really have any other than what I've read online.  I'm considering a 1-time deep dive with a fee-only financial planner which will cost me about $800.  Is this money well spent or would I be better served elsewhere?  I have a lot more questions but this is the primary thing rolling around right now.

overwhelmed

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Re: Seeking advice on my promotion
« Reply #1 on: December 10, 2016, 04:15:43 PM »
Here's the question...
I was just promoted from senior security engineer at the credit union I work at to VP of Information Security.  This promotion comes with a 35% increase in salary and the potential for a 20% bonus each year.  A good problem to have.  Obviously our lifestyle and behavior is not going to change other than bumping our travel fund from $500 a month to $700 a month.  With this income I'm a little concerned about my skills and approach to investing, I don't really have any other than what I've read online.  I'm considering a 1-time deep dive with a fee-only financial planner which will cost me about $800.  Is this money well spent or would I be better served elsewhere?  I have a lot more questions but this is the primary thing rolling around right now.

First - congratulations & sounds like you are doing great.
Second - I have no business providing you specific advice.
Third - I'm going to make a suggestion anyway.

If I understand your question correctly, you are concerned that your knowledge and understanding of investing is not sufficient based on the increased amount you will have to invest? Are you comfortable with how you are currently investing with your 1 paycheck per month? Have you created your IPS yet? Are you thinking that the investing choices you are making today should be different with your raise? Are there specific things you think you should change or feel particularly hesitant about?

I don't feel very confident in this area yet so I have been making sure I am reading the Investor Alley forum & clicking on the links that are often provided by forum members to help expand my knowledge. I see you are obsessed with MMM, do you feel as though even after pouring through all of the questions, advise, wisdom and links that you are still lacking confidence in your knowledge?

From other posts I have read, you may find that the financial planner isn't Mustacian & generally serves clients that are much more spendypants than you. It would be unfortunate if the recommendations they make may not really fit with the lifestyle you have chosen. Do you have a specific person in mind? Are you comfortable with their knowledge and experience?

I would suggest, digging a little deeper here (especially in Investor Alley) to see if you become more confident in your understanding and knowledge. If after that you still feel as though you need to a meeting, schedule it?

Best case you have more confidence in yourself & save yourself $800, worst case you have learned more, are still feeling hesitant & then make the appointment.

ruraljuror

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Re: Seeking advice on my promotion
« Reply #2 on: December 10, 2016, 09:03:43 PM »
Congrats on your great situation. I'm interested to know how you know the fee only advisor will cost $800? Have you met him/her already? If you have, you're the best judge as to whether or not they can provide at least $800 in benefit to your family. I've never worked with an advisor (other than the folks administering our 457b retirement account at work), but I would think you could "interview" them regarding their ability/experience in helping people like you and the MMM crowd.

mxt0133

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Re: Seeking advice on my promotion
« Reply #3 on: December 10, 2016, 10:36:18 PM »
I'm considering a 1-time deep dive with a fee-only financial planner which will cost me about $800.  Is this money well spent or would I be better served elsewhere?  I have a lot more questions but this is the primary thing rolling around right now.

Unfortunately only you can answer the question if spending $800 on a 1-time fee only financial planner is worth it or not.  Your going to have to pay up if you want to find out.

I can give you a run down of what $800 would get you.  You will have to do most of the work with regards to collecting information for the planner to review.  They will ask you what are your priorities and goals are, then analyse the collected information if your will achieve those goals or not.  They can help you make decisions by helping you weight the alternatives but ultimately you will be making the decision. 

Here a general run down of what they can help you with.

  • Insurance needs
  • Estate planning
  • Retirement planning
  • Savings goals for car/house/kids college
  • Monthly cash flows
  • Tax planning/optimization

However for $800 one time fee, there is nothing they can really tell you that you can't find out on the internet or this forum.  What they will do is present you a bunch of ideas and hope that you come see them again or convince you to have them manage your money for a fixed yearly fee.

You are already a BADASS based on what you have been able to accomplish without a financial planner.  I doubt if the financial planner can really tell you anything that you already don't know.  You can get that travel budget down by a minimum of a grand or two with a bit of travel hacking.  Do that math if you bank the increase and bonus can you retire in 10 years? 

lhamo

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Re: Seeking advice on my promotion
« Reply #4 on: December 11, 2016, 06:10:11 AM »
First, go here:

http://jlcollinsnh.com/category/stock-investing-series/

Read the whole series, start to finish.

If you like what you are reading, consider getting his new(ish) book, The Simple Path to Wealth.

You will probably learn more from reading Jim's stuff than from throwing $800 at a financial planner.  If you still decide you want more sophisticated/credentialed advice, you can then hire the planner with a list of more advanced questions to ask.
Wherever you go, there you are

aaronr

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Re: Seeking advice on my promotion
« Reply #5 on: December 11, 2016, 08:14:40 AM »
All great feedback thanks!!

What I'm hearing is that I should probably put more effort and time into my investment education to gain more confidence in the choices I've been making. 

I haven't spoken with a planner yet.  The $800 is based on online research and what I've heard from others.

Overwhelmed:
Yes, I guess I feel a bit uneasy about the amount of money I'm looking at to invest now.  Before this I did have some head scratching about whether it was the right approach and now this compounds those thoughts. To provide added detail it's a lot of the same discussions I've seen on other threads that don't have a clear answer...
  • Do I pay off the mortgage?
  • Should I max the 401k now? I wasn't doing this before because I wanted to ensure when I hit early retirement i had enough liquid funds.
  • Are my allotments in my 401k, Vanguard and previous retirement accounts setup well?
    • REIT index-8%
    • Bond index-10%
    • international index-17%
    • Total Stock index-65%(Due to lack of options my required retirement accounts this is a mix of Vanguard index and S&P 500)
  • i just liquidized our daughter's education fund due to the poorly state funded program it was in.  Where should this go now as it's just sitting in savings.
  • Should I invest in a rental property given my DIY nature/skills? We live in the pacific northwest and there are a few potential options here that could work.(Right now I view the REIT as my investment in this area)

mxt0133: Thanks for the insight.  On the vacation side my family and I LOVE to travel to enrich my daughter in different cultures.  This is a big part of our happiness quotient. We don't want to wait until she is in her teens before we have these opportunities.  I'm sure we could be more frugal but my wife does a pretty good job of seeking out savings and choosing frugal options. What we've found is that flights to interesting and unique places rather than the normal places everyone else wants to go are expensive.

Lhamo: Thanks, I'll definitely take this advice!

Based on everyone's feedback I need to realize there is no magic bullet answer  here and it really comes down to my family, myself and what we ultimately want which will drive these decisions. I'm sure there is plenty of information on each of the areas above in this forum and will start there. 

Any other words of wisdom would be greatly appreciated! 


overwhelmed

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Re: Seeking advice on my promotion
« Reply #6 on: December 11, 2016, 01:58:26 PM »
Overwhelmed:
Yes, I guess I feel a bit uneasy about the amount of money I'm looking at to invest now.  Before this I did have some head scratching about whether it was the right approach and now this compounds those thoughts. To provide added detail it's a lot of the same discussions I've seen on other threads that don't have a clear answer...
  • Do I pay off the mortgage?
  • Should I max the 401k now? I wasn't doing this before because I wanted to ensure when I hit early retirement i had enough liquid funds.
  • Are my allotments in my 401k, Vanguard and previous retirement accounts setup well?
    • REIT index-8%
    • Bond index-10%
    • international index-17%
    • Total Stock index-65%(Due to lack of options my required retirement accounts this is a mix of Vanguard index and S&P 500)
  • i just liquidized our daughter's education fund due to the poorly state funded program it was in.  Where should this go now as it's just sitting in savings.
  • Should I invest in a rental property given my DIY nature/skills? We live in the pacific northwest and there are a few potential options here that could work.(Right now I view the REIT as my investment in this area)

My suggestion is to take your list of questions & break it down into more manageable chunks.

I would start with Lhamo's link to the stock series. (disclaimer - I haven't finished it myself & was reminded yesterday on another thread).
http://jlcollinsnh.com/stock-series/
Focusing on the Stock series & creating your IPS might be a way to increase your confidence in investing, allow you to see if your AA works with your goals and risk tolerance and modify if needed.

You have a question about paying off your mortgage at the top & rental investments at the bottom. While you certainly can do both, I'm not sure most people could do it at the same time. Doesn't mean both can't happen but you might need to prioritize which you think is more important & create a plan. You may look into both and decide to do neither which works too.
This is the most recent conversation on the topic which pretty clearly explains the different points of view on the topic of paying off your mortgage.
http://forum.mrmoneymustache.com/ask-a-mustachian/paying-off-mortgage/

You may have already done this but I would spend time reading Taxes, Real Estate & Landlording (to work through your rental question) & Investor Alley, there really is a LOT of great information.

Not sure if you created your IPS yet but just in case here is the link for that
https://www.bogleheads.org/wiki/Investment_policy_statement

aaronr

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Re: Seeking advice on my promotion - Thanks!!
« Reply #7 on: December 14, 2016, 08:16:27 PM »
Thanks for the additional feedback Overwhelmed!

I also took lhamo and your advice on Mr. Collins.  Great information. I read through the stock series part way then purchased his book and am just now finishing it up.  it gave me the confidence that I needed.  Thanks again!

  • Mortgage - leavin' it! (it's only $631/month @ 3.125% - Ah the beauty of downsizing)
  • Rental property - nah, keepin' it simple for now
  • 401(k) - maxing it
  • Switching from roth IRA to regular IRA for both wife and I and maxing that too - Gotta keep the taxes in check.
  • The rest will go into taxable - All VTSAX
  • Changing my AA to 90% VTSAX and 10% VBTLX - keep it simple
  • Overall I'll be closing in on 65% investment savings.  If all goes well we'll be FIRE in 8 to 10 years.
  • Now I just need to figure out what to do with my daughter's college funds. I'm thinking a standard Roth for her too but will look at our options first.

1 more time... Thanks! I saved ~$800!!