Essential questions:
- How do I best optimize my investing strategy to receive all available credits AND save on lifelong taxes?
- Should I favor Roth or traditional 401k contributions in light of new tax laws?
- I pay $0 in Federal taxes. How do I best maximize this rarity?
Life situation: MFJ (me 37 and spouse 34). Three kids (9,7,6). One income.
State of residence: AR (low COL area)
Gross Salary: $70,000 annually. No bonus or other income.
Monthly Expenses (discretionary/utilities is averaged over the last 6 months):
Mortgage (3.125 interest rate) - $780
Cell Phone - $26 (two republic phones)
Internet - $26 (teaser rate - but I call annually to keep it)
Natural Gas - $50 (average)
Electricity/water/trash/sewer - $150 (average)
Groceries + eating out - $700
Gasoline: $100
Tutoring - $85/month
Misc. - $100
TOTAL Monthly Budget: ($2017 - we aim for $2k total monthly spend)
Additional annual spending (including home/car insurance, property taxes, vacation, and misc. pop up spending): $5000
Debts:
Mortgage: $90,347 remaining ($155,000 home value)
Credit Card: $892 (we run everything on CC and pay off monthly)
Assets:
Checking - $1,400
Roth IRAs - $129,600
401k - $41,032
HSA - $39,896
529's - $24,993
Two paid for cars - $10,000
TOTAL Assets: $236,921
Other relevant information:
- Our basic strategy has been to max out 401k (traditional) at $18K, HSA at $6,900, and throwing all remaining money into our Roth IRA (sometimes maxing, sometimes not depending on what life stuff comes up). We typically save $30k - $35k annually.
- We only spend $1k annually on health insurance (super lucky)
- With one income and three children, we never have any federal taxes withdrawn from my paychecks.
- My spouse will be starting a teaching degree this month (will graduate in 2020).
- Overall life goals: Be a great Dad and Husband. Retire early around
age 50 - 55
Please help me optimize so I can retire earlier. Thanks in advance for taking the time to look and share your knowledge.