Topic Title: Way forward with many upcoming life changes
Life Situation: Currently engaged (age 29), no children, living in HCOL area with fiance’ (age 28)
Gross Salary/Wages: $8,434 monthly (includes non-taxable income) for me
Individual amounts of each Pre-tax deductions $8 life insurance
Other Ordinary Income: $480/month average (consignment)
Qualified Dividends: $350/ month (6 month average) [capital gains will be calculated for tax season]
Rental Income, Actual Expenses, and Depreciation: $1,000 (Tenant left end of October, vacant now)
Adjusted Gross Income: $9,264
Taxes: $938 (no state income tax for me, partial tax-free income, and numerous itemized deductions (including a 22k MID) give a low tax liability)
Fiance’ Net income: $4,200 monthly average (biweekly paycheck, I don’t have her deductions)
Ave Household net income excluding rental: $13.464
Current expenses: Most are monthly averages
Mortgage: $3220 (no PMI, includes property tax escrow)
TSP Loan: $221
CC1: $225
CC2: $250 (min pmt $185)
Entertainment: $75
Clothing: $30
Dining out: $165 (was $500/month at beginning of year, cut down past 3 months)
Groceries: $250
Gifts: $100
Maintenance: $175 (includes new tools)
General: $30 (haircuts, pedicure, etc)
Travel: $600 ($7000 est. spent Jan-Dec 2017, including trip to Europe, engagement trip, Caribbean cruise, friends’ wedding trips, holiday travel to see family, day trips, and all gasoline for the car)
Electricity: $70
Natural Gas: $35
Motif: $20
Cell Phone: $39.2 for both
Internet: $50
Hulu/Netflix/Amazon (TV): $25
Water: $75
Car Insurance: $37
Est. Expenditure Categories Broken down:
Home Ownership: $3,400
Bills: $350
Debt: $700
Travel: $600
Food: $425
Entertainment: $75
Misc: $160
Not included are limited ticket items, such as the engagement ring, donations, estate sale items that go into our collectible assets, lending money to neighbors/family, casino losses/wins etc. The rest of the surplus is invested or saved.
Assets:
Home: $650,000 (all source estimates range between $630k-$740k)
Checking: $8,000
Taxable Stock Investment Accounts: $80,000
Roth: $66,000
TSP Retirement: $46,000
Business Bond: $10,735 (5% ROI)
Consignment Account: $55,000 (15-20% annual ROI)
Misc. Investment Accounts: $1,500 (includes iBotta, CC rewards, various)
Misc. Alternative Investment: $15,000
Art/Old Map Collection: $2500-$15000+ (very subjective)
10 oz Gold: $12,000
600 oz Silver: $10,000
Other Precious Metal: $8,000
Coin Collection: $10,000+ (relatively subjective, includes currency)
Misc. Collectibles: $5,000 (vintage comics, stamps, diamonds, antiques, etc.)
In-law suite rental: $1,400/month max or air BNB.
RSU’s: $75,000 (Restricted stock units)
Savings: $45,000
401k: $12,000
Car: $8,000
*Note: We intend to semi-pool our resources once married: the car, 401k, RSU’s, and some savings are hers.
Overall: ~$1,100,000 (~$215k highly liquid, $125k retirement funds).
Liabilities:
Mortgage: $593,000
TSP Loan: $32,922 @ 1.86% (Interest is paid back into my account to me)
CC1: $22,100 @ 0% for 82 more years (not a typo)
CC2: $9340 @ 0% for 6 more months (intent is to transfer to another 0% APR, $0 Balance transfer fee)
Est. Net worth: $450-500k.
Specific Question(s): Next year will be a complicated year with numerous life changes. I have made significant financial errors in my past when I was teaching myself about finances and taking risks. I do not want my next year or two to hurt my nest egg that I worked hard to build and rebuild. That is why I would like your opinions and recommendations to proceed and succeed.
I will be getting married next year. The average wedding cost in my area is 45k and no one in either of our families is well off nor could reasonably contribute to a wedding, so that will come out of our nest egg. If you know of any significant wedding savings in the DC area, that would be appreciated, namely catering costs.
I will be resigning from my job in the middle of next year. I was debating going to law school (I have a full scholarship) or attempting to get a government job and the pay cut that goes with it. I estimate the average GS job would pay $5k max a month after all deductions and retirement savings, to include having to pay state taxes now. The third option is that I was looking into buying an unknown franchise and attempting to run a business or two and do ebay/Amazon selling on the side. I can see pro’s to each of these options as well as the potential loss of most of my money. The GS jobs would be limited growth potential and non-stimulating (albeit a seemingly high salary), Law school/MBA would be 4 years with no income from me for a potentially much higher paying job, and the franchise could literally lose my nest egg or triple it. Advice here is greatly appreciated.
I also foresee starting a family in 1-3 years. My p-wife may want to stay at home or keep working after children. She doesn’t like her job too much, but doesn’t want to quit until her RSU’s fully vest in about 2 years. So there is a possibility that neither one of us would have significant employment income in 3 years. Also, kids are expensive, so I have been told. I also don’t want to miss them growing up like my dad did for me, so I don’t like the idea of 10-14 hour work days at a big Law Firm or other employment.
I also will need to replace my roof within the next year or so. I had one estimate state $35,000 and I will get more quotes when Spring hits. No leaks yet, but the home inspector and roof estimator said it is shot and at the end of its life. I keep hoping for a cost effective solar solution (like the Tesla roof), but haven’t found one yet for the DC area. Any suggestions here are greatly appreciated, especially if I can take full advantage of SRECs. My furnace is about 25 years old and I worry that I might need to replace it within those next few years. There is also a large, old tree in my neighbor’s yard that has a decent chance of falling on my house if it ever breaks. They won’t remove it, but it would cause a costly amount of damage. I have never dealt with home owners insurance before, so I hope that is a negligible cost worry for a worst-case scenario.
For my basement, I am debating whether to rent it or do air BNB. For renting, I am legally required to have two exits, which means I can’t lock and block the door from the basement to the main house. Potentially the same issue for any BNB guests (separate entrance outside is the first exit). My fiancé doesn’t like the idea of strangers potentially breaking in and it scares her (our first renter we knew through a coworker). I see it as sitting on $900-$1400 a month (renter) or upwards of $2500 a month (Air BNB). She sees it as a stranger could open the door, take everything and kill us. If you know of any reasonable way to reconcile this, I would be grateful as this is a significant amount of money lost. Also, any input into the renter vs Air BNB would be great. I also want to do some basic renovations and physical upkeep/appliance update, but I see no reason to pump thousands into those projects without know what I am doing with it.
Any while many of you may see 1.1mil in assets, that isn’t as stable as I would hope. Most of it is dependent on the housing market to keep steady or rise over the next decade without another bubble burst. Stock market could falter, alternate investments and new companies utilizing the JOBS act could fail or fraud for potentially 100% loss. I just listed potentially 100k in expenses over the next two years above normal expenses.
As for the lack of retirement contributions, I stopped those earlier this year. I receive no employer match or benefit, so all it does is reduce my tax liability now (or later with Roth). I estimate that my retirement accounts (112k + additional 32k added via the TSP loan over the next 14 years) will be worth over $1m at retirement adding to any social security (if it still exists), pensions, and taxable money. So I figure my last 30 years is set so I just need to figure out my next 30 years. I am happy to answer questions on any of my other investment decisions and willing to listen to others.