Author Topic: 21. Married. Traveling for one year- where to put all extra money?  (Read 967 times)

shellylynn1

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21. Married. Invest or Travel 1 yr?

Life Situation:  21. Husband is 23. Married. Filing Jointly.

Gross Salary/Wages: $83k combined.

Individual amounts of each Pre-tax deductions- Husband contributes 15% gross pay into Roth IRA (employer matches 6%), I contribute 4% Employer 401k, employer matches 4%, 11% goes into Roth IRA, $1300 in HSA/yr, employer contributes $1,000

Other Ordinary Income: Husband flips cars, averages about $15k/year

Adjusted Net Income: $4600/mo + 15k/yr = $5850 average per month


Current expenses: Mortgage: 1540.88( 15 year loan, 3.75% interest, bought in 07/18 and will sell in 07/20, current mortgage is $125,000)
                            Tithe: $480
                            Utilities: $200
                            Gas: $150
                            Groceries: $300
                            Phone: $100( straighttalk)
                            Wifi: $78 (lowest plan available, only 1 provider in area)
                            Insurance: $180
                            Gym: $55
                            Netflix/Hulu: $21.40
                            Dates/Eating out: $100
                           Personal Spending total: $200

Total expenses: $3405.28
                           
                         

Assets: House: valued at $190k
           Cars: $20k
           Combined 401k Accounts: $27,000
           Savings: $68,900
           Checking: $4,000
           HSA: $2,120
         

Liabilities: Mortgage: $125,000

We are torn between what we do with the extra money per month. We want to travel the world for 1 year, in July 2020 as we will be moving/planting ourselves in our hometown surrounded by family once finished. Currently we live 3.5 hours away due to our jobs. We are budgeting about $40k for the year long trip. We already have that saved plus some. We also plan on buying a house once we move home, with as much $$ down as possible. We are estimating about $150k for that house. Do we invest, pay down the mortgage, put the money into a HYSA? Torn at where to put this because of our shorter-term goals..

reeshau

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Re: 21. Married. Traveling for one year- where to put all extra money?
« Reply #1 on: May 22, 2019, 06:29:36 AM »
July 2020 is one year away.  I assume your return after one year of travelling is July 2021.

Both of these are short-term things.  Anything involved in paying for your travel, or settling in to your new hometown should be liquid, and safe.  Buy a CD of an appropriate term, to get above 2% interest.  But nothing more exotic.  Anything else, and you are taking a risk with your future home.

Don't forget about your "start up" costs:
--agent commission and closing costs on your current home
--storage of things while you are away, and moving them to your new home
--living expenses while getting established in your new home  (e.g. housing, expenses while job searching, if you don't have arrangements with your current employer)

MoneyizHere

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Re: 21. Married. Traveling for one year- where to put all extra money?
« Reply #2 on: May 22, 2019, 09:43:02 AM »
Y'all are young and doing good on the saving.  Really accelerate your retirement accounts with your extra cash right now. 
You have enough liquidity for your 1 year of travel already - so no need to add to that immediately accessible cash on hand.
Agree to ladder your $ for CD's- keep 42k of it on 3 month incremental ladders and your balance of cash on longer term- to coincide with your travel plan next year - think maybe 18 month CD since you'll have a 3 month rolling Ladder up and running already- this way you always have access to $10k of cash every three months when you make a decision to keep in cash or roll it. 
With sale of your current home - you'll have enough for downpayment on your new home.  Definitely do not pay down the mortgage since you're looking to sell in short term. 
So you don't need the $ immediately - tuck it under the retirement blanket and let her sleep till she's a big and fat.  If I were you  - I'd bump it up max out the 401k right away (you've got enough cash already). 



robartsd

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Re: 21. Married. Traveling for one year- where to put all extra money?
« Reply #3 on: May 22, 2019, 10:12:37 AM »
I agree with @MoneyizHere, you have enough cash already:

I estimate that your mortgage balance will be down to about $118k by July 2020. Proceeds of sale: $190k - 118k mortgage - 10k transaction costs = $62k.

Money you need in safe accounts after you sell your home:
Travel money - $40k
Down payment & closing costs on $150k home - $45k
Moving/Storage expense - $5k
6 Months expenses emergency fund - $20k

Total - $110k

$110k - 62k proceeds = $48k that you need saved by the time you sell your home. You have over $70k in bank accounts now.

You should be pumping as much money as you can into tax advantaged accounts. Your current savings could be put into as CD ladder, used to chase bank account sign up bonuses, or just parked in the best savings account you can find - the difference between these strategies is small relative to the difference between using your tax advantaged space or not.

nyfireguy

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Re: 21. Married. Traveling for one year- where to put all extra money?
« Reply #4 on: May 22, 2019, 10:23:47 AM »
My opinion is you only live once... It's important to save for the future but life is crazy and you never know. Have you given some thought to 6 months of travel and save so you can do some of each? That would be my suggestion aka best of both worlds to some degree