Topic Title: Reader Case Study - How much cash should we keep and how much to invest from my paycheck.
Life Situation: IRS filing status, number & ages of dependents, and anything else (state/country of residence, age, etc.) you are comfortable sharing.
I am 34, and my wife is 29. Married filing jointly. No kids. Living in United States.
Gross Salary/Wages: Before any deductions
My salary - $75,577 per year
Wife's salary - $10 per hour, comes up to around $1200 per month take home pay.
Individual amounts of each Pre-tax deductions 401k, HSA, FSA, IRA, insurance, etc. - whatever you have
Maximized my Roth IRA
Contributing 23% of my paycheck to 401k, very close to maxing out.
No Roth IRA
Contributing 6% to 401k to get company match.
Other Ordinary Income: None
Qualified Dividends & Long Term Capital Gains: All dividends and capital gains are being reinvested.
Rental Income, Actual Expenses, and Depreciation: None.
Adjusted Gross Income: $91,190
Current expenses: Provide breakdown and relevant details. Aim to have “Miscellaneous” somewhere ~2.5%. Much lower and you may be providing too much detail, much higher and you have an obvious problem of not understanding your spending.
Mortgage/Rent - None. Paid off our home this year
Utilities - $200
Food (Groceries and eating out) - $300
Internet - $54.99
Home insurance - Around $1300 per year
Property taxes - $2500 per year
Cell phone - $110
Fuel - $50
Miscellaneous expenses - $200
Total per month - $1232
Assets: Amount & description - include current asset allocation plan if you have one
Checking - $8,212.52
Savings - $30,031.94
401k [FUSVX, VISVX, FGOVX, FSTVX(Not contributing), FSIVX(Not contributing)] - $32,857.67 (This is my 401k)
Roth IRA [VFFVX (Not contributing to this anymore), VBMFX, VTSAX] - $20,788.46
Taxable investment [VTSAX]- $10,081.42
Cash - $107.00
Overseas - $421.09
Home value - $178,621 (Zillow estimate)
Total - $281,121.01
Liabilities: Description, original loan amount, rate, original length, and monthly payment (which should be consistent with a spreadsheet PMT calculation). Add current balance and time remaining if close to final payment.
Specific Question(s): Providing a detailed breakdown is important, so is asking for specific information so we know what kind of help/advice you are looking for.
My specific question is this - how to invest/save my paycheck. I get paid $3481 per month. I am setting aside $900 per month for Roth IRA contributions, home insurance and property tax. We can live on my wife's income without too much trouble. Given this situation, what is the best way to allocate $2581? Should I continue to add more money to the savings account? If so, how much is recommended? If not, should I invest everything in the taxable investment account? These are the questions I have been trying to answer for a while now, and I have been unsuccessful.
And in your personal opinion, how much would you allocate for frivolous spending, if at all?
You insight into this is much appreciated.