Hello. (This is a partial repost from the investment alley, and I'm new, so I didn't know th best place to ask for input on this)
I'm new here, but not to investing, since I've always contributed to some type of 401k/pension/whatever when I've had the chance. At present, I'm only contributing about 6% of my income, but I'm hoping that after I finish settling basically the majority of my unsecured debt (this month!?!!) and most of my secured (close to the end of the year, projected), I would like to start dumping money into various investments. Here's the basics of my portfolio:
Income: 2013 - 51k Gross (1st year-2012 was 75% of '13, 2011 was 40% of '13, 2010 was 30% of '13. That's another story)
(AGI was about 48k)
HSA: 1k
401k: 4k
sharebuilder: 500
other savings: 1k
I'm digging out of a hole, 5 years in the making, as a result of not working for 3 years (08-11), so being debt free is more of a priority for me than a goal. That's why my contributions aren't great. My immediate goals are to pay down my car (sorry, don't live in a biker's paradise here), and budget for my only real planned debt: a house/condo. housing and car (today) are 725/mo, and my total bills (minus my debt payoffs) is about 1100/mo. I want to basically nearly pay off my car before I buy my house, after buying my house, finish paying off my car and then attack the house. Take home presently is about 2800/mo*, after HSA, 401k, and insurance. I will say that 'living with parents' is not a long term viable option (as it had been the last 3 years), so housing is a priority.
I read (and listened) to some from MMM, and I understand why in many markets a 130k-260k house might be the best option for many, because of where it'll be and who will be around you (i.e., nicer, safer). However, I will personally say that while I've never considered the places I lived bad, I've never spent more than 45k on a house, and even now, the houses/condos I've considered are 'move-in ready' at 55k-80k, so I don't think I'll go higher on that. Plus, where I work is currently stable, with a long term growth, but since this is aircraft company in an aircraft city, when things go south for the industry, everyone is out in the streets, so to speak. My goal is to settle my total debt by 2019, before the contract is up where I work, and if they decide to cut people loose, I won't care.
Here is the plan:
-pay car down (less than half of what it was bought for, to about 7k-8k), while saving AT LEAST 20% for down (about 15k-20k)
-next year, buy house (target price 50k-65k), and pay down in 2-4 years
-while doing this, try to save a little more (I will probably up 401k to at least 10 percent, but I'm flexible)
here are the caveats:
-I'm going out of country, so I will have that expense this year, I'm saying about 4k-5k (all inclusive, in an expensive place)
-between sharebuilder and savings, I would like to do more investing, but I'm also concerned with how much is best to reserve for when 'something' happens. Conventional wisdom is 6 months salary (likely 28k this year-really?), but I couldn't do that, while doing ALL this, at the same time (or can I?...)
-I'm single, but if I were to marry, I want to be sure marriage itself (i'll worry about the financials for the 'day' then) won't somehow derail any of this, if she's on board with everything. I'm talking from a tax/kids standpoint.
-this is merely a thought, during my financial reversal, I had to cash out my 401k (about 8k) for food in '10. Can I do catch ups, after I max out my contributions, and is there a tax benefit? And what would the cutoff be, since I doubt it'll be this one? (i'm already out 4k in 2014 paying debt-I carried over money from last year to pay it, and where I work, I get paid extra working during my plant's shutdown in dec).
-final point, should it be an option, I can borrow against my 401k (up to 50%) should I desire, but it should be known that it is put back on an after tax basis, and won't be invested while loaned. I would likely only do it for my house, since it has value, and i can put the money back as fast (or slow) as I want. I only bring it up because I can, not because I will.
I say part 1, because this is a starting point. I would like to plan for my (early) departure from the workforce (probably not by 2019, but at least everything is in place by then if I can't), but the funny part is I may not before I'm supposed to, just because of age and health, but I want to at least roll the ball in that direction.
What I'm looking for is whether I'm trending in the right direction with my goals, or if I need to have my head examined by you nice folks. Thanks in advance everybody.
*This number was 2600/mo in other post, but I was wrong. I didn't count my allowance.
