Thanks very much for your time and expertise.
Life Situation: I'm 31, my wife is 32, filing jointly, two kids (9 and 6), living in Michigan.
Gross Salary/Wages: Mine = $123,000, my wife’s = $57,500
Pre-tax deductions: We max out my 401(K) every year and my employer doubles the first 5% = $12,300/year. Other pre-tax deductions = $409/month health insurance, $45/month dental, $40/month FSA, $60/month parking for work.
No other ordinary income, taxable investment accounts, or rental income.
Current expenses:
Mortgage (15 year, 3.375%, $165,500 left, current home value ~$245,000) P&I = $1,409/month
Property taxes = $5,500/year = $458/month
Homeowner’s insurance = $730/year = $61/month
Groceries = $980/month
Health insurance = $409/month (pre-tax deduction)
Entertainment/shopping = $400/month – inflated this year because of 10th anniversary trip to Mexico with the Mrs., sans kids. First of its kind and last until we ring in the big 2-0.
Food away from home = $250/month
Target = $200/month = mix of groceries, clothes, gifts
Gifts = $200/month
Kids Activities e.g. summer camp, babysitting = $160/month
Gas/Electricity = $145/month
Gas = $130/month
Charity = $120/month
Car Insurance = $105/month
Medical expenses = $70/month (big dental expense this year)
Car maint/repair = $60/month. (2002 Nissan Sentra, 2004 Chrysler Impala spend a decent amount of time in the shop)
Internet = $65/month
Family gym membership = $62/month
Home furnishings = $60/month
Work parking = $60/month (pre-tax deduction)
Life insurance = $55/month ($750K 20 yr. term for me, $500K 20 yr. term for my wife)
Utilities – water = $55/month
Alcohol/bar = $50/month
Dental insurance = $45/month (pre-tax deduction)
Flex Savings Account = $40/month (pre-tax deduction)
Long term disability insurance for me = $30/month
Supplemental life insurance for me = $20/month (Additional $500K policy through my work)
Misc. = $125/month
Assets:
TIAA-CREF 401(a) = $100,000, 70% equities, 30% intermediate term-bonds, all index funds. 10% employer contribution.
TIAA-CREF 403(b) = $70,000, 80% equities, 20% intermediate term-bonds, all index funds. Maxing out.
Son (9 yrs old) 529 = $15,000, gets $450/month. Target date fund aligned with college years.
Daughter (6 yrs old) 529 = $11,000, gets $350/month. Target date fund aligned with college years.
Vanguard Roth IRAs for me and my wife = $32,600 total - VASGX. Maxing both.
Ally.com online savings = $26,000
PNC free checking account = $4,000 average balance
Liabilities:
Mortgage: originally 30-year term, 4.625%, purchased Sept. 2013 for $227,500 with 10% down. Zero-cost refinance June 2015 when balance was $198,875 to 15-year term, 3.375%. Current balance = $165,500 because we’ve been pounding the principal.
Specific Question:
At our current spending level, we have ~$2,000 leftover each month after fully funding my 401(k), both of our Roth IRAs, and contributing $800 to our kids’ 529s. If early retirement is our primary financial goal, but we expect to make a final move in 4-5 years and spend ~$375,000 on a house located within walking distance of both of our jobs, what is the best plan for those extra funds, both before and after the move? My wife’s employer offers a bad 401(k) plan with no match and high-expense funds (cheapest index fund = 0.5% + mandatory 0.8% advisor fee) so it’s a bitter pill to swallow. I’m also not sure that we should continue to max her Roth vs. go with a Traditional IRA because of our tax bracket.