Earned Income:
• I work in the power generation industry as an engineer. My earned income is 105K
Expenses:
• Primary Residence Monthly PITI : 1427 (including $70 PMI for a couple years)
• Student Loan payments: 346
• Car Insurance: 47
• Gas: 100
• Car Payment: 0
• Groceries: 300
• Eating out: 200
• Bars and night life: 100
• Cable / internet: 120
• Electric: 120
• Water: 40
• Phone: 0 (company paid)
• Other: 1000 (this includes quite a bit of home improvement, travel and vacations, hobbies, auto maintenance, etc.)
• Total expenses come out to around 4K / mo
ER Expenses:
Not much different than today’s expenses minus the student loans and mortgages. Some stuff may shift around, but the overall number will be around 3K per month, livin’ large.
Rental Property
• Income from roommate at primary residence: 600 (likely to end soon)
• Monthly rent from rental property: 1445
• PITI: 1060
• Other expenses (estimated long term monthly average): 320
• Cash flow wise, the rental property is around break even. This is a long term investment for debt paydown, inflation hedging, and possible rent and home value appreciation.
Assets
• Roth IRA: 58K (Vanguard VTIVX)
• 401K: 157K (Also primarily in a low fee target retirement fund)
• Savings account: 25K
• Primary Residence: 160K
• Rental Property: 190K
• Truck: $2.5k
• Total Assets: 590K
Liabilities
• Primary Residence: 151K (15yr mortgage at 3.25%)
• Rental Property: 153K (30yr @ 4.7%)
• Student Loans: 29K (average interest rate around 4%)
• Total Liabilities: 333K
Savings Plan:
Currently I am maxing out my 401K at work, plowing 18% of my pretax income into a mix of index funds labeled as a target retirement fund. My company generously contributes another 6% on my behalf. I am maxing out a Roth IRA through Vanguard as well, and a company sponsored HSA, into which my company pays 700/year.
The remainder goes into my savings account, currently earmarked for a real estate purchase. In the past year and a half, I used this account to purchase a rental property and refinance my (formerly underwater) primary residence. I am looking for another single family home to move into and renovate for a future rental. I don’t mind property management and plan to carry it as a part time job through retirement.
My current savings plan breaks down as follows:
• Debt Paydown: 13% of income
• Pretax retirement and HSA: 21% plus 6% match
• After tax retirement: 5%
• After tax cash savings: 20%
• Total Savings Rate: 55-60%
I know there are some super smart people on this forum. I'm looking for advice on the following:
• Feel free to critique my spending, I can take it. Keep in mind that suggestions may have to pass through the wife.
• I am currently 32 years old and would like to retire at 47. Is the structure of my savings plan right for this?
• At some point should I stop contributing to the tax advantaged accounts and save in a taxable account?
• What might my withdrawal plan look like? How can I avoid heavy fees and taxes on early withdrawals?
Thank you in advance,
Thoughtful Mule