Hello All!
I'm new here and quite happy to have found this site. Now that I've gone through most of the blog, I have some questions regarding my personal scenario and how to get started in the right direction.
First off, I consider myself and my situation to be very fortunate. I have a very stable and safe job with a great salary in a city with a low cost of living. My wife works too and is able to bring in a reasonable salary as well. We do have two young children who will certainly make things a bit more expensive, but so be it!
Right now we rent a small place for relatively little. It meets our needs quite nicely, but with the two kids we'll be looking to find a modestly larger place to put down roots. Given this, we have been holding on to our cash to have a liquid down payment. We are not in a hurry to move, but we would like to be in the position to be opportunistic when it comes to a home purchase. That could be in the next few months, or it could be a year (or more) from now.
So, here are the quick and dirty details.
Income:
Base Income: ~165k per year combined (pre-tax)
Matched Traditional 401k: ~15k per year combined
Assets:
Cash: 70k!
Roth IRA: 25k
Traditional 401k: 10k
529s: 7k
Rental Property: 100k mortgaged property (10 years into a 30 fixed), rents:expenses slightly positive?
Debts:
5k of student loans at <3%, no hurry here?
Expenses:
~40k per year? I don't have a strong handle on this yet but we do reasonably well.
Of note:
- We have not contributed to our 2016 and 2017 IRAs as we have been saving for a down payment.
- Our likely housing budget will probably be ~400k given where we live.
- Depending on how taxes go, we're probably saving 50k/year beyond our 401k matching contributions. This would be before we buy a house.
- We're in our mid-late 30s. Given that we're not pursuing a grown-up Mustache level of frugality and have two young kids, I would anticipate we're about 15 years out (plus or minus).
So, my immediate questions are:
1) What do I do with all this cash?
2) Do I put 22k into IRAs now, knowing that this likely puts us out of reach of a 20% down payment this spring and summer? Maybe put in 11k and wait and see how house shopping goes before the 2017 contribution?
3) Should we be contributing to our traditional 401ks at the 36,000 cutoff (or higher)? At some point do we worry about over-maxing the 401k before 59.5? (We would likely want to help the kids with at least some college costs.)
4) In searching for a house, would there ever be a scenario where we'd be willing to put 10 or 15% down and then aggressively pay to 20% to quickly cut off PMI? I assume not unless the opportunity was truly special.
5) I anticipate that my wife and I would do fine living at or below the 15% bracket upon retirement. Is it worth it to invest in any regular investment accounts now?
I imagine this might be pretty basic stuff. Fund the IRAs, max out the 401k, no need to rush into a new house so why hurry. I just don't know how to handle such a large fountain of cash being thrown at us, what a great problem to have. The kids do complicate things a bit assuming we want to have some money for them for college. I also realize that getting a handle on our expenses will be more important in the long run, but that's going to take a little time. As I said, we already do pretty well: functional used cars, cook at home, short commutes, dumb phones only, no cable TV, walk for most shopping trips, not really in to 'stuff' for us or the kids, but I'm sure there's always places to improve!
Thanks for letting me share and thanks in advance for any help!