Short story: We've been debt free with a healthy savings rate for a while. We've been satisfied with our savings rate and haven’t thought too much about taking the fastest route towards FIRE. We need help figuring out how to be more efficient with how and where we’re investing our money.
Monthly income after deductions:
Husband: $2481 (works part time at 75%)
Me: $4825
Extra: $835 (this is money from my FIL. It’s mostly regular, but not always)
Total: $7306 - $8141
Monthly Expenses including savings:
Total monthly expenses: $4153
Total monthly savings: $4041
Breakdown of Savings:
Extra Mortgage Payment: $400
My IRA: $458
His IRA: $458
Index Fund: $1250
529: $100
Savings: $450
Savings Deductions from paychecks before tax:
My Pension: $500
HAS: $225
Husband’s 401k: $200
Assests:
My Vanguard Target Retirement Fund (VFORX): $29,604
Husband’s Vanguard Target Retirement Fund (VFORX): $29,294
Vanguard Total Stock Market Index Fund (VTSAX): $45,805
Husband’s Charles Schwab 401K: ~$10,000
FNBO and Credit Union Savings Accounts: $47.440
My and husband's HSA: $5,000
529: $4657
House: $350,000
Total: $521,800
Liabilities:
House $215,000 @4.5%
Net Worth: $306,800
We’re really looking for advice on how to maximize our savings plan in this case study so I have not provided a breakdown of our expenses. I’ve come to realize that we’ve been saving not from a numbers perspective, but from what feels good. I like that we’re saving in a way that spreads everything out. I also like paying down the mortgage a little even though I know the numbers don’t make sense. I haven’t liked the idea of maxing out our 401Ks because I wouldn’t like seeing my husband’s salary at almost nothing and it would leave us little left over to invest elsewhere. I’m ready to let go of all of the emotional reasons for why I invest and do it from a numbers perspective only.
We have a larger amount in our savings accounts and want to continue to put money in those accounts even though they earning very little interest because it includes our emergency fund, cash for replacing our vehicles (vehicles are 10+ yrs old), a landscaping project coming up, C-section for our 2nd baby in July (~$3,000 not covered by the HSA savings) and maternity leave. We have been putting the money from our FIL in our savings because of our large expenses this year.
Our goals are to save in a way that is more tax efficient, possibly buy a rental property in the next 5 yrs (thus needing a funding plan for this), and to be able to retire in 10 yrs or less. Our expenses have gone up and down due to our expanding family so we haven’t set a date or gotten too specific with numbers for FIRE.
How can we save better to meet our goals and decrease our tax rate?