This is for reference purposes for me and anyone else who needs it
0. Establish an emergency fund to your satisfaction
We have $1000.00 in a savings account. For when life happens. (I would eventually like to have a bigger buffer to help protect against
job loss.)
1. Contribute to your 401k up to any company match
She is contributing as much as she can to get the match (She can not contribute more). I am halfway to my employer match (as soon
as I get my raise in Oct. I will bump it to 6%)
2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.
We are currently putting every dollar extra toward this, we have a TON of debt that is crippling us. All of my side job and a couple
hundred from our normal take home pay. (I understand that I have skipped ahead here. Our situation is a little more than just black
and white. We have some short term goals in mind that prevent me from putting the full match from my employer for the next 4
months. We have weighed the opportunity cost of this move, and we made a decision that creates the most happiness for us.)
3. Max HSA
I don't think we qualify for this, as we have a $0.00 deductible plan through my wife work. (I might be wrong in not being able to
qualify)
4. Max Traditional IRA or Roth (or backdoor Roth) based on income level
I like the idea of going with a Roth, I don't want to pay taxes on all my gains. If we did decide to max out 2 Roth IRA's for the both of
us, all of the money we are putting toward debt would be applied to this leaving nothing for the rest of the list. How is one expected to
achieve the entire list? (This is where I get stuck in the planning)
5. Max 401k (if 401k fees are lower than available in an IRA, or if you need the 401k deduction to be eligible for a tIRA deduction, swap #4 and #5)
6. Fund a mega backdoor Roth if applicable.
7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.
8. Invest in a taxable account and/or fund a 529 with any extra.
Gross Salary/Wages:
Wife - $23,400.00
Me (primary job) - $33280.00
Me (part-time job) - $9360.00, No benefits here this is just a side gig to help pay off debts that we currently have. (I don't want to keep this long term)
Hello everyone,
I am pretty new to this whole FI and mustaschian philosophy, but I love the idea and wish to seek it out. I read the "Investment Order" several times over and I am currently working on steps 0-2. I may be looking at this list from the wrong angle, but this seems like achieving all of these would be very hard to do at lower income levels like my family... For instance, my wife and I have a combined income of around $66k gross, right now. I see some serious obstacles ahead of us on this list... We are on a $0 deductible insurance plan through my wife's work, so I don't think I qualify for an HSA. We are in the 15% tax bracket, and I am leaning toward contributing to a Roth IRA first prior to maxing out my 401k. That is $11k/year after tax for each of us, then maxing out my 401k would be $18.5k pre-tax. My wife has a Pension where 9.5% of her pretax income goes toward. Just at the 2 Roth accounts and my 401k is close to 50% of our total pay... this seems like a HUGE mountain to climb. At some point I would think I need to quit maxing out the 401k (when I get to the magic "how much is too much" number) to be able to invest that money in a taxable account? Also, I don't think the Mega backdoor Roth applies to my situation given my income. I know most folks on this website seem to make way more money than I think is possible for me to achieve (at least this is what it seems like to me).
I am just seeking clarification on this list for my income level. If you need more information, please ask. I will do my best to answer what ever you need to know.