Hello!
Long time reader but I'm finally at the point where I'm not quite sure what to do next, I recently have been lucky enough to get a job which boosts my income quite a bit and will be very stable, but have questions especially in regards to my current investments and better managing taxes which I don't know much about. My long term goal is to be FI at 40 and be semi-retired in Hawaii, I'm currently 27.
Here is my current situation:
- No debt besides a mortgage
- 150k/year salary + another 100k-200k in stock (RSU) once a year depending on which way the wind blows
- 700k (small) house with 415k left on the mortgage, its a 5yr ARM at 2.75%, I live in a high cost/tax area
- 110k in 401k (75% in FCNTX, 20% in VIIIX and 5% in VEMPX)
- 25k in Roth IRA (all in VFINX)
- 10K in a HSA (half in cash incase I actually do get sick, and half in some mutual funds)
- 170k in various stocks
- 40k in savings/cash
- I married with no kids (don't have plans to), my wife makes 50k, and currently has 25k in a rollover ira, its all also currently in VFINX
In terms of monthly expenses, we don't spend money on anything crazy, we don't have cable, we go out to a resturant or fast food once or twice a week, otherwise we eat at home. On average our electricity and water average out to about $100 a month over the year, mainly in summer to water the lawn, and winter to heat the house. Car insurance and phone are both $100 a month. Property tax+home insurance ends up at about 9k a year. Spend 2-3k a year on a vacation/travel/misc. If someone wants more detail I can provide it, but besides the travel/misc I don't think there is much to cut back on, but maybe I'm being naive...
My wife and I monthly take home income, after taxes, insurance, 401k & HSA (maxing both of those out), employee stock plan (not including the RSUs), about 8k. Since we end up in the highest tax bracket when the RSUs are included, does anyone have a good plan or tried to raise your federal tax exemption (I currently have 2), to be paid more upfront and hopefully make a bit off some interest and then pay the larger tax bill? Or any other tax saving tips besides what turbotax already tells me?
Since we can't contribute to a Roth IRA, I'm contributing to a traditional IRA and converting it over to a Roth IRA and taking the tax hit, I was never really sure if this is the best thing to do, but since I'm still young, I figure whatever growth I gain will offset the current tax amount. Does anyone think converting my wife's IRA to a roth will be worth it? She hasn't added any additional cash to her IRA this year, does it even make sense to do that at this point or does just a general brokerage account make more sense?
I have thought about moving to a cheaper area, but I like my job and it happens to pay well, downside obviously is the cost of living is crazy. But I don't want to have to do a really long commute and at this point since our mortgage payment is low, I think it makes sense to stay put. I'm not to worried about my house losing value, prices have stayed pretty consistent where I am. Ideally I'd just either refinance in a few years and then sell the house when I want to move.
So I guess my overall questions does anyone have any better suggestions for investments? Should I just do a lazy portfolio? And with my situation does anyone have any tips to lower taxes?
Finally figured I throw this out there, does anyone think it makes sense to just purchase a house in Hawaii now, while I do have an income and can probably afford it on our income, and then possibly just rent it out while I'm not there? The goal would be to just pay it off by my mid-late thirties. I wouldn't be going for anything on the beach or anything, so that should keep living costs down quite a bit. Or is this just a really antimustachian idea...
Thank you!!!!