Author Topic: Financial pants party  (Read 1663 times)

in2themild

  • 5 O'Clock Shadow
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  • Posts: 24
  • Age: 35
  • Location: New Hampshire
  • Taking a year off at 29 to travel the country
    • in2themild
Financial pants party
« on: July 03, 2013, 05:52:53 PM »
Welcome to my pants.   As an introvert it is somewhat terrifying and strange to drop my financial drawers to everyone, especially in front of such an enlightened community, and yet I find myself somewhat paralyzed by options here and I think this community will have a lot of good input.

If you have read my profile and initial posts, you know that I am a 29 year old homeless guy just embarking on a continent wide road trip with my long term girlfriend.  We have detached from employment and home ownership.  For purposes of this analysis, we can keep in mind that between the two of us we expect to make about $125K a year starting mid 2014.
I just completed rolling over my old 401K into an IRA and I am trying to decide what to buy with it.  While I am at it I am reviewing what I should do with funds in my money market and Roth IRA accounts, along with the rest of my cash.  Here is how it breaks down:

•   Assets:
o   Road Trip budget: $30K (enough for 9-12 months if we stick to budget) – should be $0 unless we get sick of traveling early
o   Other Cash: BOA $10K  ETrade: $42.5K
o   Money Market:
   ED $2.8K   +38.4%
   GE $1.6K   -36.3%
   JNJ $3.4K   +40.6%
   SIRI $.4K   -7.9%
   SWTSX $14K   +48.3%
o   Rollover IRA:
   Cash $116K
o   Roth IRA
   V $8.4K      +121%
   VIG $11.6K   +18.5%
   NAESX $6.8K   +40.1%
   VFIFX $8.0K   +30.3%
   Cash $6K
o   Truck – 2008 F250 $15K
o   Camper – 2004 Okanagan 80W $10K
•   Liabilities
o   Student loans at 2% - $14K
•   Expected future household income: ~$125K / Year

So – what are your thoughts on what I should purchase with my retirement accounts and/or cash?  I was thinking I wanted to keep it simple with a Vanguard target date retirement fund for the IRA but could also see breaking it up into a dividend appreciation fund or other vehicle.  Should I consolidate investments from my post tax account?  Most of that motley mix of equities is from when I thought I was a badass stock picker right after college (and prior to the financial collapse…doh!).

Some might advise that I pay off the student loan – I could do this, but at this point in my life I like the idea of the cash and the $2% seems trivial….just in case something happens on this trip, you know?   Also, although we are planning to rent for a year or so after the end of the trip, I would like to keep a healthy cash cushion for a house down payment in case our dream property presents itself.

Thoughts?

George_PA

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Re: Financial pants party
« Reply #1 on: July 03, 2013, 08:26:57 PM »
It sounds like your are still a stock trader the way you cite all these ticker symbols with their performance.  Some of those stocks pay a nice dividend, how about not worrying about their gains or losses in price and just hold them for the next 30 years or so to get the passive income dividends.  Its ok to have your regular non-IRA savings in individual stocks because have mixed it around with 10 or so well established companies.

You could sell your SWTSX since its up so much for the year, and its dividend is so low and buy some more higher paying dividend paying stocks.  Also ditch SIRI.  You could add AT&T or Verizon or Altria group (these each pay about 5% per year in dividends) to help get your dividend income up; you should be able to get almost $200/month or so in dividends.  This would help partially offset your food/gas expenses for the road trip.  I would stay away from bonds, junk bonds, and m-REITs due to the risk of interest rates rising.  If interest rates reach a real high point in the next 5-10 years you could load up on some of JNK or REM, for now I would stay away from these.

As for the IRA I wouldn't buy individual stocks, you could probably just buy an index fund or target date fund from Vanguard like you suggested.  Also please keep in mind that masterful savings trumps masterful investing (their is a MMM blog post on this) so always be on the lookout for ways to cut expenses in your life as well.
« Last Edit: July 03, 2013, 08:36:12 PM by George_PA »