Hello.
I'm new here, but not to investing, since I've always contributed to some type of 401k/pension/whatever when I've had the chance. At present, I'm only contributing about 6% of my income, but I'm hoping that after I finish settling basically the majority of my unsecured debt (this month!?!!) and most of my secured (close to the end of the year, projected), I would like to start dumping money into various investments. Here's the basics of my portfolio:
Income: 2013 - 51k Gross (1st year-2012 was 75% of '13, 2011 was 40% of '13, 2010 was 30% of '13. That's another story)
(AGI was about 48k)
HSA: 1k
401k: 4k
sharebuilder: 500
other savings: 1k
I'm digging out of a hole, 5 years in the making, as a result of not working for 3 years (08-11), so being debt free is more of a priority for me than a goal. That's why my contributions aren't great. My goal is to pay down my car (sorry, don't live in a biker's paradise here) and budget for my only real planned debt: a house/condo. housing and car (today) are 725/mo, and my total bills (minus my debt payoffs) is about 1100/mo. I want to basically nearly pay off my car before I buy my house, after buying my house, finish paying off my car and then attack the house. Take home presently is about 2600/mo, after HSA, 401k, and insurance. I will say that 'living with parents' is not a long term viable option (as it had been the last 3 years), so housing is a priority.
I read (and listened) to some from MMM, and I understand why in many markets a 130k-260k house might be the best option for many, because of where it'll be and who will be around you (i.e., nicer, safer). However, I will personally say that while I've never considered the places I lived bad, I've never spent more than 45k on a house, and even now, the houses/condos I've considered are 'move-in ready' at 55k-80k, so I don't think I'll go higher on that.
Here is the plan:
-pay car down (less than half of what it was bought for, to about 7k-8k), while saving 20% for down (about 15k-20k)
-next year, buy house (target price 50k-65k), and pay down in 2-4 years
-while doing this, try to save a little more (I will probably up 401k to at least 10 percent, but I'm flexible)
here are the caveats:
-I'm going out of country, so I will have that expense this year, I'm saying about 4k-5k (all inclusive, in an expensive place)
-between sharebuilder and savings, I would like to do more investing, but I'm also concerned with how much is best to reserve for when 'something' happens. Conventional wisdom is 6 months salary (likely 28k this year-really?), but I couldn't do that, while doing ALL this, at the same time (or can I?...)
-I'm single, but if I were to marry, I want to be sure marriage itself (i'll worry about the financials for the 'day' then) won't somehow derail any of this, if she's on board with everything. I'm talking from a tax/kids standpoint.
-this is merely a thought, during my financial reversal, I had to cash out my 401k (about 8k) for food in '10. Can I do catch ups, after I max out my contributions, and is there a tax benefit? And what would the cutoff be, since I doubt it'll be this one? (i'm already out 4k in 2014 paying debt-I carried over money from last year to pay it, and where I work, I get paid extra working during my plant's shutdown in dec).
-final point, should it be an option, I can borrow against my 401k (up to 50%) should I desire, but it should be known that it is put back on an after tax basis, and won't be invested while loaned. I would likely only do it for my house, since it has value, and i can put the money back as fast (or slow) as I want. I only bring it up because I can, not because I will.
I say part 1, because this is a starting point. I would like to plan for my (early) departure from the workforce, but the funny part is I may not before I'm supposed to, just because of age and health, but I want to at least roll the ball in that direction.
What I'm looking for is whether I'm trending in the right direction with my goals, or if I need to have my head examined by you nice folks. Thanks in advance everybody.