Almost halfway, recommendations for the other half

[Monopod]

Hey there o’ merry band of mustashians and facepuncherinos!
I’m looking for a check up on how I’m doing and some specific advice, questions at the end.  I’m currently 34, Dear Wife is 35, and Dear Baby is 1.5.  We could potentially have another DB, but still undecided.  We are living in an average COL area (Upstate NY) and plan to stay here.

I’ve always been frugal and a good saver.  DW is becoming a better saver and spender and I have used many of the techniques in the “How to Convert your SO...” (Thank you!).  I had come across Get Rich Slowly and MMM many years ago but didn’t realize FIRE would be a real possibility for me.  About two years ago I was telling a college friend about my lifestyle and he asked if I was specifically mustachian – I checked back in, did some calculations, realized FIRE was not that far off, and started to make changes – increased 401k contributions, lowered costs, a little credit card churn, etc.  The last few 2-3 years have been very good for my income as well, so that doesn’t hurt.   

I’d like to become FI and potentially change careers to something I enjoy more with less stress, and preferably be part time.  I have a couple of hobbies and volunteer areas that I would prefer to spend my time, in addition to my personal relationships.

Because of our different saving/spending styles, DW and I contribute to a joint account for family expenditures and keep separate accounts for personal spending.  This keeps us from having to discuss every personal expenditure.  This case study includes our joint account spending and my personal spending.

Income:
Me: $98,000 + 10% bonus. Changed jobs in Jan 2019.
DW: $60,000

My annual paycheck deductions
Taxes: 21806
Health Insurance: 5547   
H S A: 500 in addition to the out of pocket expenses below
Retirement: 13720   I realized I wasn’t maxing and am maxing this year.  The change in job threw me off and I didn’t check in earlier.
Dependent care FSA: 5000   Goes toward daycare below
Joint: 33000 My contribution to the joint account


Current assets:
My Retirement: $422,000 – mix of 401K and Roth.  Low Expense ratio index funds
DW Retirement: $78,000
Taxable: $25,000 – mix of things
CD/P2P Lending: $28,000
Cash: $26,000
FSA: $6,000   From a high deductible plan years ago
529 for DB: $4,000
Dependent FSA: $2,000 – cashing this out for 2019

Total usable assets: $507,000

My overall asset allocation with all accounts is:
Domestic stocks: 46%
International stocks: 30%
Bonds: 19%
Cash: 5%

Debts/cars
Mortgage: $82,000 @ 3%, 7 yrs to go.  Bought for $175,000 in 2011.  Planning on staying put for the next 30 years.
2017 Honda Civic Loan: $10,000 @ 3.25%, $330/month, 2.5 yrs to go, 40,000 miles - Bought new for $20,000 in 2017, pre-MMM re-reading.  Will keep for 10 more years.
Credit cards: $5,000 –  they are paid monthly automatically and will paid out of cash in January.  I do most of my charitable giving and gifting in December.  This year I realized just how much of a chunk that was, and may get a rewards card for that in 2020.
2008 Chevy Cobalt: $0, 170,000 miles   Paid off long ago.  Just passed inspection, so hopefully good for another year!  I want us to decide on DB2 before getting a new car.

Total debts: $97,000

I track all out of pocket expenses so I can go into more detail if needed. 
Annual Expenses for 2019 (Joint account)
529: 2040
Booze: 534
Internet: 866
Car: 5010   Monthly $330 Payment on Civic, $75 insurance for both.
Day care: 7829   3 days/week.  My mom does 2 days/week
Restaurants: 1374
Fun: 582   Comic books, Netflix, local activities, random stuff
Groceries:   5366   DB added about 900/year, previously averaging ~4400
Health care: 1109 additional out of pocket expenses
House projects: 5892   New mattress, painted a few rooms, replaced water damaged floor in bathroom, tools, housewares, etc
Mortgage: 18343 Monthly 1530, $940/590 (PI)/(TI)
Phone: 964 Both of our cell phones through Verizon prepay
Taxes: 1100 Additional taxes out of pocket
Utilities: 2334   Natural gas + Electric
Vacation: 1256   Didn’t do much this year with DB, usually this category is much (>5K) higher
Total: 55000, monthly 4600


Annual Expenses for 2019 (personal)
Car: 1246   Fuel and repairs.  Repairs minimal in 2019
Gift: 1785   Big year here for DW, my dad, and family
Donation: 1602   
Garden: 954   Hobby 1
Restaurants: 463
Fun: 802   Random stuff, activities, haircuts, etc.
Wine making: 403   Hobby 2
Vacation: 1300   Wedding for the college friend mentioned above!
Total: 8555, monthly 715
I have some cashflow, so when my bank account gets "too high" I put it into some type of investment.  This is usually every couple months.

My Summary
Take home pay: $76,000
Spending: $44,000
Saving: $38,000
FIRE target: $1,070,000
I’m estimating FI in around 6 years.

Questions
1.   How am I doing and general comments?
2.   Any recommendations on asset allocations?
3.   A concern of mine is not enough liquidity outside of the retirement account.  I have heard about the 401K to Roth pipeline.  Comments there?
4.   Recommendations on excess cash flow – pay debt down vs stockpile cash vs invest?  I have used the investment order but now I’m getting indecisive.

[fuzzy math]

If you plan on FIREing jointly you will need to include individual expenses from both of you. What you have calculated as your spending is not your true family spending and thus your FIRE # will be higher. At that point your spending will have to come from one central account so you can budget properly so I'd recommend making the transition sooner than later. My DH and I have fun money in separate accounts for things like food on our own, clothing etc and that's a budgeted amount. Charity, vacations etc should be joint expenses I'd think? It's also a lot easier to underestimate how much you are truly spending if you have restaurant costs (or another category) in 3 accounts. I'm also not sure why your car is personal spending but the civic is joint spending. You should apply some sort of rationality towards what is separate if you want to keep anything that way.

I would personall cut out 529 contributions until your debt (excluding mortgage) is paid off.

Are you happy with your asset allocation? How aggressive do you want to be? You've missed out on a lot of growth with only 40% US mutual funds. I'd also consider just doing traditional 401k since your tax burden is high. The Roth pipeline can be completed when you retire. I'd take that extra $$ sitting around and fund a Roth IRA for 2019, and get a head start on 2020 too. It would be a good idea because you'd be able to draw from the principle in ER while you fill your pipeline.

I think 7 years is more realistic for you to FIRE because your # is low and your home will be paid off at that point. Daycare costs will hamper you over the next 6 yrs if you do have a 2nd kid.

[Monopod]

Thanks for your reply Fuzzy,

We are not planning a joint FIRE right now.  DW has different career and personal lifestyle (consumer spending) aspirations that me and we are OK with that.  That's also why I haven't included her spending - she doesn't budget or track spending.  If I had to estimate, it would be something like this for 2019:

Annual Income: 60K
Taxes: 12K
Retirement savings: 9K
Joint Account: 17.5K
Car: 2.5K (gas/maintenance - stealership rates on maintenance, that won't happen again)
Donations: 2.5K
Student Loans: 5K (Paid off in 2019, yay!)
Everything else: 11.5K (more or less discretionary spend)

The joint account is unwieldy, it's been absorbing categories/partials for most of the last decade.  Vehicle-wise, we have talked about combining all expenses into the joint account and just haven't pulled the trigger.  In the current joint, it is the loan and insurance.  My next car would then come out of the joint account.  We both support different charities.  Eating could be with friends from work.  Vacation would normally all come out of the joint, but 2019 had my buddies un-budgeted wedding so I sprung for that out of pocket.  How much we each contribute has changed over the years as our incomes changed.  I'd want to walk towards a 50/50 split when I FIRE (or take a lower paying/part time/entrepreneurial role) and DW and I have been talking about that.  Having a defined split should help me get a better target for my FIRE number as DW progresses in her career.

I'm considering throwing some cash/bonus at the car loan, just to clear it out.  That would be this year.  That would put us at just the mortgage.  Then Roth.  The 529 is an agreement with my wife.  My parents didn't have much, so I went to the best university I could afford, which was a pretty school good considering scholarships and financial aid.  Loans were minimal and paid off in 2 years.  DW's parents felt guilty that they couldn't give her the full ride.  DB should be covered for much of the cost of many good schools.

Your asset allocation point is interesting, I was worried that I was too aggressive in stocks.  My understanding was that the Non-US stocks should be a significant portion of a portfolio, which have under-performed compared to US.  I have a longer time window than I want to believe.

I do have the feeling that around that 7 year time-frame many of our largest yearly expenses (mortgage, daycare) will evaporate and I'll essentially back in to FI. 

[formerlydivorcedmom]

I think your numbers are still fudgey for long-term planning purposes.

You have included DW's retirement fund in your assets, yet you aren't including her spending, because she won't be retiring when you do.  You also include joint assets (brokerage fund, etc), but what percentage of those will be for "your" retirement versus "hers"?

When you retire (while she continues working), what percentage of the joint expenses will you be responsible for?  Will your stash cover all of that, while she just works to sustain her individual spending?

Those are important decisions for the two of you to make together, and it does impact your planning.