I've started by laying out my financial goals and my questions for the hive mind to consider, and then provide a pretty full account our current financial picture. Thank you VERY MUCH for helping me think this through. I also have to believe that I'm not the only one thinking about the next inevitable (in my opinion) recession.
My financial goals:
1. Keep spending low so that I don't need gazillions of dollars when I retire to live the way I'm living now. I'm happy and have MORE than enough.
2. Support my son (now 21) to get through college. I will not be paying for any of my other kids to go to school. My ex will pay for my daughter, and my step kids are not on my payroll. :)
3. Work at my current job, which is wonderful but pretty demanding, for the next 5 years and SAVE SAVE SAVE (I should add that my work add an additional 10% of my salary to my 403b=$12,200 a year. It's unreal!)
4. At 55 go down to 50% work with my current employer. I'd actually like to have the option to quit all together, but will likely not do that. I'm a consultant and would be able to go to 50% while still holding on to all of my benefits. I enjoy my work, but want to do all of the other things I love doing more than I can now. Pottery, gardening, volunteering, playing music, etc. My husband is 10 years younger than me so he will be working for many more years--ha ha!
What's keeping me up at night/QUESTIONS:
1. From the super smarties out there, what do you see in my current investing that you think is good or not good? I enjoy managing our money and investments, but am just self-taught. What do you see or notice that gives you concern? How could I be doing better use my little soldiers to make even more little soldiers?
2. OHMYGODTHENEXTRECESSIONISCOMING! Do you agree? I'm old enough that I have seen the cycles many times before and I'm starting to get the "feeling". I've been doing some reading and it seems like there's a good chance we'll see a recession in 2020. In the past I've welcomed recessions because it was a great time to BUY! My retirement was so far out, I felt confident that whatever I lost could be earned back with patience and perseverance.
But now, I'm thinking that I can't really afford to lose 40% of my investments just a couple years before I cut back my work to 50% (or less). What do you think about this and what should I do? Again, my husband is only 41, so his investments are not a concern for me regarding the next recession. Does it make sense at some point later this year to move more of my 403b into bonds? Help!
Also, I have saved money for my son's college tuition in a 529 plan. I have moved it to very safe investments because he's actually in college now, but the money is still sitting there. I'm thinking I should work on moving all of that out of the 529 and into my high yield savings account to protect it. I'm going to spend it down in the next 2 years and can't afford to lose a big chunk of it. Am I being an alarmist? I tend to have a high risk tolerance, so it's weird and different to be feeling like I may need to move some things around before the recession hits.
Here are (almost) all the numbers
Life Situation: I am married (2nd time for both of us). I am 50 and he is 41. He has two kids (10 & 12), I have two kids (17 & 21), and in any given tax year at least 2 are claimed as dependents. I am paying for my 21 year old college tuition. We live in Tucson, AZ.
Gross Salary/Wages: ME: $128,000; HIM: $63,000
Pre-tax deductions:
We have both been maxing our 401ks each year (mine is actually a 403b because I work in the nonprofit sector), FSA is about $6,000, husband pays for health insurance pre-tax, mine is provided by my employer.
Rental Income:We have a guest house that we built a couple years ago and are renting it out on Airbnb when family/friends aren't staying. We are netting about $25,000 a year on this.
Gross Salary+Rental: $216,000
- Pre-tax deductions: $51,440
Adjusted Gross Income: $164,556
Current expenses:
Non-discretionary:
Mortgage (inc. escrow & insurance): Principal=$802; Interest=$863; Escrow=$438; TOTAL=$2103
Student loans: $460
Utilities (water, electric): $330
Fire service & waste management: $75
Car insurance: $143
TOTAL: $3111
Discretionary:
Cell phones (6 lines!!! 2 adults & 4 kids. Don't even get me started on whether a 10 year old needs a smart phone. They don't! But it's my husband's kids, so it's his decision.) $160
Internet: $65 (I am a consultant and do a lot of video conferencing and training so I need strong internet)
Food: $900 (groceries and eating out)
Home maintenance: $200
Gas: $200
Donations: $150
Support for college son: $500
Pet food and care (2 dogs and 2 cats): $80
TOTAL: $2255
Miscellaneous (travel, larger home improvement projects or repairs, gifts, etc.): $400
TOTAL SPENDING AVERAGE/MONTH: $5766
Assets:
Me:
403b w/OneAmerica:$375,500 (currently allocating 100% to State Street Equity 500 index fund, hold 58% in this and 42% in American Funds American Balanced R3) Maxing out this year at $25,000
Roth w/Ameritrade: $46,500 (Invesco QQQ trust) Maxing out this year at $7,000
Trad IRA w/ Ameritrade: $11,500 (Invesco QQQ trust)
529 college savings plan for oldest son: $21,000
High yield savings account: $9,000
Husband:
401k w/Fidelity: $87,500 (current allocations: 15% Legal & General Future World Developed Climate Change CIT Class A; 25% Dodge & Cox Income Fund; 60% Vanguard Institutional 500 Index Trust) Maxing out this year at $18,000
Roth w/Fidelity: $1,200 (Fideility 500 Index Fund) Maxing this out this year at $6,000.
Stock granted by employer: $11,500 (Starbucks)
Joint:
Lending Club: $7,000
Other savings: $5,000
Home value: $510,000
Cars: they're old and we'll drive them into the ground, so not including
TOTAL: $1,006,950
Liabilities:
Mortgage:
Currently owe $258,700
20 year-fixed @ 3.99%
15.75 years remaining if we pay minimum
$2,103 a month payment
School loans:
Me: $9,634 @ 3.125%
Monthly payment $265 with 24 more months
Husband:
$5,760 @ 5%
Monthly payment $195, not sure how many months to pay off because I don't have access to this account
No credit card or car loans--we don't believe in this kind of debt
We have a HELOC for emergencies, but have never used and have 0 balance