Author Topic: Financial reassesment  (Read 432 times)

dragonwalker

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Financial reassesment
« on: May 10, 2019, 11:13:22 PM »
I'm 31 and live near Los Angeles working at a new job making about $55K annually with a 60% match on 401K contributions up to 8%. I rent every month pay $555/month which includes all utilities. My total expenses per month excluding rent are about $800. No children, single. I have no debt. A family member of mine recently died and I inherited a check for $31K which I have now   

Currently I have (excluding the inheritance):
$35K cash @ 2% savings
$142K-Vanguard brokerage account all in VSTAX
$50K- Apple stock ($20K cost basis)
$9K- Boeing stock (bought @$378)
$9K-Citibank stock ($5K cost basis)
$125K- former employer 401K in a S&P 500 type index fund (0.09% expense ratio about half in Roth dollars)
$3K- current employer 401K
Currently putting away 10% into my company Roth 401K, plan to increase to 14% to get maximum company match once eligible for match in October. Company contributes an additional lump sum $5K to 401K annually. 
Auto transfer of $75 weekly from savings to Vanguard account
I'm working on getting a higher position to increase cash flow.

Not quite sure what to do with the inheritance money. The market recently has been really volatile especially now with the looming trade war with China. I don't think dumping into VSTAX is necessarily wise now. I could increase my auto transfer to a high amount to spread the contributions over a period of time. I could just leave in savings or maybe lock it up into a 1-2 year CD maybe getting closer to 3%. I don't have any short term high expense plans for the money. There is a possibility I might be using $4-20K to go back to school but that would be over a several year time period. I know some might suggest IRA contributions but I'm not really comfortable with that because I'm going to have less flexibility on how I can use the money and I want to be able to use it penalty free (I realize I am sacrificing some future gain for this sense of security but I will pay that price).

Eventually a good portion of this money will be used for a home purchase but not until a need develops such as having my own family or a housing market crash creates an opportunity. A big concern of mine is my thinking that a housing market crash will probably take down VSTAX to a point which I will be taking a significant loss. Unless the buying opportunity is truly incredible I am generally adverse on cashing out on to great a loss to put down on a home. With this in mind how could I best protect what I have while providing some hope of purchasing a home when the next bubble bursts? Another big question is I believe I will have to do this on my own without help from a significant other so it's all on me! 
 
« Last Edit: May 10, 2019, 11:16:38 PM by dragonwalker »

Financial.Velociraptor

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Re: Financial reassesment
« Reply #1 on: May 11, 2019, 07:52:58 AM »
By my back of the napkin math, you have about two years expenses in cash/ef.  That is plenty.  How much would you need for a downpayment on a house?  LA I hear is an expensive housing market.  Would you be able to get a fannie mae 3% down loan or would you need 20% down?

More quick math indicates you can save better than half your salary.  That's great!  It is the biggest driver to FIRE and your other considerations are really sort of moot so long as you can keep that up.  It just won't move the needle for you to "optimize" around the edges with such a great savings rate. 

Regarding locking money up in tax advantaged accounts, read the sticky thread about withdrawing before eligibility age without penalty.  There are strategies... https://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/