Author Topic: Newb with a (long) question regarding "liquid" savings vs retirement savings  (Read 1911 times)

FriedaClaxton

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Hi there!

So, I am kind of new to this site, I try to follow along, but, admittedly, I am a moron with money.  I have a point to the Iliad, but first some background.

 I was never taught money management, and at this age I refuse to say out loud, we basically live paycheck to paycheck. Our combined income is over 100K and we have no real debt, besides the house, but we don't really have savings worth a damn either.  I buy what I want when I want, we both do, really, and I have ZERO impulse control. That goes basically for spending AND eating (which is ridiculous when I am stressed out--and right now my stress is at 11!)  My day job has a fully funded pension, plus pays for our insurance entirely. No premiums at all. That's awesome.

My husband on the other hand is a saver, not quite a miser, but definitely "frugal" and contributes the max possible from his check to his 401k, and pays for us to have additional secondary coverage. (His is his primary, mine is his secondary, and vice versa. And lets just say that's been RIDICULOUSLY helpful due to two major medical emergencies that would've destroyed us otherwise.)

We also contribute to two Roth IRAs that he pays $400 per month for each of us on direct deposit through our Edward Jones advisor who we really like. We have a total of like $300K in our Edward Jones account due to his prior 401K (from his prior job) and our Roths. Mostly his, and like 40K of mine. Without HIM doing that I would have diddly for retirement beyond my pension and a small 401k IRA I had from an old job that did very little in the way of matching.

Here's the issue and why I joined and posted:  We have some big purchases we need to make in a short span that cropped up ahead of "schedule".  I want to know how we should handle budgeting--since frankly we've never had one, and if you think it is worth cutting down that $800/mo total to the Roth IRAs to build the liquid savings up and to handle these big purchases. We have such a significant retirement that barring a MASSIVE issue in the markets, I think it would be significant growth for us (he has it as "Aggressive" which makes me a little uncomfortable considering how big of a hit I took at my previous job in 2008).

  • --We have roughly 20K in savings, about 2K to pay off on a credit card (easily done from savings right now) and just had to shell out 4K on an AC (leaving the 20K/18K after cc) that we hoped we'd be doing NEXT year vs this year. 
  • We also need to replace his car--ok I say replace, we have been sharing ONE car for 4 years, his has been dead in our driveway for that long. We've done OK with one car, however his job may be moving him at the end of the year  to another city and he will absolutely NEED a car in that city. Where we live has equally non-existent public transport, and is an equally non-bike-friendly city. He refuses to finance a car, even at 0% for maybe a year, and pay in huge chunks over that year. I see the point in paying cash, but we don't have that to shell out right up front, and our credit is fantastic.
  • We SHOULD have that kind of cash liquid, combined we make well over $100k. We just burn it all on crap, mostly food, and then any impulsive crap I buy--makeup and whatnot (my side gig is in the wedding industry, and is design related mostly but I work with brides in two different capacities.)
  • We also just BOTH lost our computers in the last week to catastrophic failures. I do side work on mine, and that's going to be a $5K drop in a heartbeat since I need to max out everything on a new Mac laptop to run my software (and my last one was refurbished and was nothing but trouble the entire 9 years. I spent almost as much in repairs as we did paying for it!) and while a desktop would grant the most POW-AH, I need the portability for meeting with clients and making changes on the fly. I can't have them in my home for all consults since some of them are not in town and my husband works from home and that causes privacy concerns with his conference calls.

I've had the luxury that I can use my work PC to use my graphics programs in a pinch bec my company pays half of my CreativeSuite subscription since I do graphics for my job at work sometimes, but I cannot get away with doing this work at my day job nor do I really have time.  We thought I could wrangle using his for it in the meantime...and unfortunately his died this weekend. They were 9 years old and 6 years old respectively. Mine was already on fumes for years, we waited for Apple to release new laptops FIVE-EVER, and of course now that they have, we don't have enough "liquid" to pay for that, plus a car, and then the AC happened. Thankfully not the entire HVAC but the furnace is within the next 5 years.

So...finally the point:
--should we cut off the ROTH Contributions of $800/mo briefly? Is that prudent?

And what is the best option for learning to budget? I've used Mint and frankly it sucks. I like that it auto imports, but sometimes it double and triple posts things and categorizes things so absurdly. 

I am trying to look at YNAB which seems INSANELY complicated for me, and I've considered the Dave Ramsey Total Budget app as well as something called TillerHQ which basically aggregates all your stuff into a Google Sheets document for you.  I know YNAB gets raves around here, but it is NOT intuitive to me.

So basically help me, I am a moron with money. There is simply no reason I should feel broke and live like a queen at the same time.

ixtap

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You just need to choose one budget style/app and get to know it. Trying to find the perfect one is just procrastination.

Also, if impulse shopping is a problem for you, have a no spend week while you figure out the budget. It will help you break a habit.

RidetheRain

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      Ok, lots of stuff in here. I'll try to break it down.

I buy what I want when I want, we both do, really, and I have ZERO impulse control.

...

My husband on the other hand is a saver, not quite a miser, but definitely "frugal" and contributes the max possible from his check to his 401k, and pays for us to have additional secondary coverage.

In cases where you have no impulse control I usually recommend cash-only. It makes you feel like you are giving up more money. Since DH is a saver, maybe just give the cards to him instead of cancelling.

We also contribute to two Roth IRAs that he pays $400 per month for each of us on direct deposit through our Edward Jones advisor who we really like. We have a total of like $300K in our Edward Jones account due to his prior 401K (from his prior job) and our Roths. Mostly his, and like 40K of mine. Without HIM doing that I would have diddly for retirement beyond my pension and a small 401k IRA I had from an old job that did very little in the way of matching.

It's nice that you like your EJ advisor. I'm sure he likes your money too. Depending on the cost you might want to look into low-cost Roth IRA options. Betterment has been getting a lot of press around the forum lately, but do your research.

  • --We have roughly 20K in savings, about 2K to pay off on a credit card (easily done from savings right now) and just had to shell out 4K on an AC (leaving the 20K/18K after cc) that we hoped we'd be doing NEXT year vs this year. 

An emergency savings account helps you not at all when you don't spend it in an emergency. If you're comfortable with the remaining amount then pay off your credit cards immediately. Do not add to your debt. Debt is an EMERGENCY.

  • We also need to replace his car--ok I say replace, we have been sharing ONE car for 4 years, his has been dead in our driveway for that long. We've done OK with one car, however his job may be moving him at the end of the year  to another city and he will absolutely NEED a car in that city. Where we live has equally non-existent public transport, and is an equally non-bike-friendly city. He refuses to finance a car, even at 0% for maybe a year, and pay in huge chunks over that year. I see the point in paying cash, but we don't have that to shell out right up front, and our credit is fantastic.

Why does he NEED a car in a new city? I would do what you can to not NEED a car because it is a luxury and should be viewed that way. Moving to a new city is the perfect opportunity to find the best place to live near work and grocery stores.

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[li]We also just BOTH lost our computers in the last week to catastrophic failures. I do side work on mine, and that's going to be a $5K drop in a heartbeat since I need to max out everything on a new Mac laptop to run my software (and my last one was refurbished and was nothing but trouble the entire 9 years. I spent almost as much in repairs as we did paying for it!) and while a desktop would grant the most POW-AH, I need the portability for meeting with clients and making changes on the fly. I can't have them in my home for all consults since some of them are not in town and my husband works from home and that causes privacy concerns with his conference calls.[/li]
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As a computer engineer, I call bullshit. I know of no software that requires a maxed out $5K mac. For reference, my SO does digital modeling and video editing for work on his laptop. What software are you running? It might be that you only need some of the upgrades depending on the type of work. You might even be better off in a non-mac.


So...finally the point:
--should we cut off the ROTH Contributions of $800/mo briefly? Is that prudent?

And what is the best option for learning to budget? I've used Mint and frankly it sucks. I like that it auto imports, but sometimes it double and triple posts things and categorizes things so absurdly. 

I am trying to look at YNAB which seems INSANELY complicated for me, and I've considered the Dave Ramsey Total Budget app as well as something called TillerHQ which basically aggregates all your stuff into a Google Sheets document for you.  I know YNAB gets raves around here, but it is NOT intuitive to me.

So basically help me, I am a moron with money. There is simply no reason I should feel broke and live like a queen at the same time.

I would not stop contributing to your investments. I would stop buying junk as you have noted throughout. Sell stuff if you have to. Budget software is probably a good bet for you. Pick something and stick with it. If you have trouble getting started then try something with video tutorials or classes. I know YNAB offers classes free if you purchase the software and I know others also do this.

boarder42

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Your EJ advisor is likely draining your money much faster than he's helping it grow.  Those guys are probably some of the worst investment people to have your money with. 

The first thing you should do is Read JL collins stock series and move your money ASAP

Laura33

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No, you should absolutely not cut your Roth to pay for stuff.  You are complaining that you already feel broke despite making six figures because you have no impulse control and buy too much stuff.  So your solution is to save even less, so you can buy even more stuff?  Listen to what you are saying -- how does that make any sense?  You have a big fire looming; you need to be calling the fire department, not breaking out the cans of gasoline.

First, figure out what you need now -- not "may" need if things happen, DO need, right now.  That is the computer,* not the car.  Buy the least expensive computer that will run the software you need for your business, period -- no bells, no whistles, just the functionality you need.  Forget Apple (unless your software will only run on Apple).  See if you can find another refurbished option.

Then just start tracking every dime you spend.  Every one.  It really doesn't matter how -- you can do YNAB, or Mint, or Quicken, or a notebook, or whatever.  You need to see what you are blowing the money on before you can fix it.  So don't even worry about the "budget" part right now -- just start building data.  Then, in a couple of months, you can pull up that data and figure out the easiest areas to cut back on (hint: those are generally the ones that trigger a spontaneous "holy shit, I spent how much???").

Then think about what your triggers are to spend.  Stress?  Boredom?  Then plan something else to do when that trigger happens that is completely inconsistent with spending money.  Stressed?  Get up and walk around the block -- and leave the phone at home so you can't just pop on Amazon for a quick sec.  Or turn the computer and electronics off and go sit on the back deck with a glass of wine, or exercise.  Or take up painting or knitting to keep your hands busy.  Etc.  Make it something you enjoy!  You are trying to retrain yourself into a new habit, so find something you don't currently feel you have time for and just DO IT for a few minutes when the urge to buy gets overwhelming.

Then put barriers in your way that slow you down.  If the ease of plastic entices you to spend-now, worry-later, then put your CCs in a bowl of water in the freezer and live on cash only -- as in, you get a weekly allowance in cash for every discretionary thing you want to buy, and when the money is gone, you're done.  If the problem is online shopping, delete all of your CC #s from all websites where you have accounts set up.  If it's cash that runs through your fingers like water, take one CC with you and leave your ATM card at home.  Etc.  Only you know what sets you off, so you are going to need to be the one to figure out what steps will most effectively prevent you from being stupid. 

And then set goals, and reward yourself with something when you make them.  But the key here is to make them really, really easy at first.  Like, if you can take your lunch for a whole week, you get to go out to lunch with your DH on Saturday.  And then, as you get better and better at it, the targets become further and further apart, so you are always challenging yourself.  And you can also do the reverse:  if you cave and buy a $7 sandwich, you donate $7 to some cause you detest.

Finally, do this overtly, with your DH or a friend or something.  Identify your specific goal (the "easy" target from the last paragraph), ask them to hold you accountable, and report on a periodic basis.  Personally, I can bullshit myself very effectively (especially when it's 8 PM and there's ice cream involved).  But I hate failing in front of other people, so going public effectively shames me into playing it straight.

PS:  The others are right about EJ.  But that's "Intermediate Money-ing 207," and you are in "Intro to Saving 101."  Right now, you don't have the financial credibility to tell your DH that EJ is a money-sucking leech who is bleeding you dry (though, obviously, a very nice and personable money-sucking leech).  Get your own house in order, grow up and get yourself under control, do some reading and research (JL Collins is excellent for that), and then, once you've got your budget and cash flow calmed down, bring up the EJ guy.

*As you begin tracking expenses, take a very, very close look at how profitable that side business really is.  If it brings in $2K, but it forces you to linger on all these websites that entice you to drop $3K on shit you don't need, that is not a "business," that is a "hobby."

FriedaClaxton

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      Ok, lots of stuff in here. I'll try to break it down.

I buy what I want when I want, we both do, really, and I have ZERO impulse control.

...

My husband on the other hand is a saver, not quite a miser, but definitely "frugal" and contributes the max possible from his check to his 401k, and pays for us to have additional secondary coverage.

In cases where you have no impulse control I usually recommend cash-only. It makes you feel like you are giving up more money. Since DH is a saver, maybe just give the cards to him instead of cancelling.
I actually keep my cards on his desk save for the Costco card so I can pay for gas. A lot of the spending on impulse is online, not in person.

We also contribute to two Roth IRAs that he pays $400 per month for each of us on direct deposit through our Edward Jones advisor who we really like. We have a total of like $300K in our Edward Jones account due to his prior 401K (from his prior job) and our Roths. Mostly his, and like 40K of mine. Without HIM doing that I would have diddly for retirement beyond my pension and a small 401k IRA I had from an old job that did very little in the way of matching.

It's nice that you like your EJ advisor. I'm sure he likes your money too. Depending on the cost you might want to look into low-cost Roth IRA options. Betterment has been getting a lot of press around the forum lately, but do your research.[/quote]Isnít Betterment a 100k minimum? How would we do that if we donít have the 100K to bring--can we roll that over?

The amount of work our EJ advisor does to earn that keep is ridiculous, so weíve been pretty pleased. Above and beyond.  Enough that my parents switched over.

  • --We have roughly 20K in savings, about 2K to pay off on a credit card (easily done from savings right now) and just had to shell out 4K on an AC (leaving the 20K/18K after cc) that we hoped we'd be doing NEXT year vs this year. 

An emergency savings account helps you not at all when you don't spend it in an emergency. If you're comfortable with the remaining amount then pay off your credit cards immediately. Do not add to your debt. Debt is an EMERGENCY.[/quote]So--do you qualify needing to buy the car and computers as Debt then? Bec the 2K is already handled (credit card) as is the AC. Like I already paid the AC off pending clearance of the check, and the cc bill is scheduled.

  • We also need to replace his car--ok I say replace, we have been sharing ONE car for 4 years, his has been dead in our driveway for that long. We've done OK with one car, however his job may be moving him at the end of the year  to another city and he will absolutely NEED a car in that city. Where we live has equally non-existent public transport, and is an equally non-bike-friendly city. He refuses to finance a car, even at 0% for maybe a year, and pay in huge chunks over that year. I see the point in paying cash, but we don't have that to shell out right up front, and our credit is fantastic.

Why does he NEED a car in a new city? I would do what you can to not NEED a car because it is a luxury and should be viewed that way. Moving to a new city is the perfect opportunity to find the best place to live near work and grocery stores.[/quote]Literally not an option. If he lives near work thereís NOTHING he can walk to/bike to, and would get killed trying. If we live near development, he has a 10 minute drive minimum no traffic involved.

We live in a city that has virtually no public transport, none near us anyway, nor any grocery stores/walking to work nearby, ability to bike in. The new one is even worse given where the office is located. Both are total car situations. It would be ideal if we had the option to be near transit there, but thereís really none near there.  We talked about getting a condo/apartment near my office a while back but after several attempts, we couldnít sell our house, and the best option after a recent attempt wouldíve lost us over 45K from what we paid without a gut remodel of the kitchen, and even then, all the agents we met with told us the best estimate after that was still what we paid.  Our suburb is just going downhill, tons of stuff closed and moved out, nothing is coming in. There are 6 houses for sale on our street. 1 finally is under contract after 5 months after reducing their price almost 60K and itís been completely remodeled to the studs. 
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FriedaClaxton

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Your EJ advisor is likely draining your money much faster than he's helping it grow.  Those guys are probably some of the worst investment people to have your money with. 

The first thing you should do is Read JL collins stock series and move your money ASAP
I guess I need to understand how I am not seeing the drain? They just changed how they do things because of the law on fiduciaries and if fees aren't in your best interest, how is that legal?


RidetheRain

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I'd say that the car is a "maybe" expense and is not debt because you might not need it. The computer is still questionable, I'm not convinced you need a 5K computer. I'm pretty sure you could "get by" with something in the $1k range. Even less depending on the program requirements.

I second Laura33 on the online shopping issue. Delete all the cards from all your websites. Don't let your browser save them. Don't memorize the numbers. If you like online shopping and you've practiced your willpower, put things in the cart then close the tab. It's just like shopping, but free!

For what it's worth Betterment doesn't require 100k. I started with $400. But, don't blindly go into Betterment. It's not best for everyone. I found that service aligned for me, but there is definitely contention depending on the amount of money you plan to put in and your level of comfort with investing in general. Do your research!

ixtap

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Your EJ advisor is likely draining your money much faster than he's helping it grow.  Those guys are probably some of the worst investment people to have your money with. 

The first thing you should do is Read JL collins stock series and move your money ASAP
I guess I need to understand how I am not seeing the drain? They just changed how they do things because of the law on fiduciaries and if fees aren't in your best interest, how is that legal?

Many advisors are restructuring to avoid the rules. They just don't offer the kind of products that would require disclosures, rather than helping you understand what is actually in your best interest.

RidetheRain

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Your EJ advisor is likely draining your money much faster than he's helping it grow.  Those guys are probably some of the worst investment people to have your money with. 

The first thing you should do is Read JL collins stock series and move your money ASAP
I guess I need to understand how I am not seeing the drain? They just changed how they do things because of the law on fiduciaries and if fees aren't in your best interest, how is that legal?

Many advisors are restructuring to avoid the rules. They just don't offer the kind of products that would require disclosures, rather than helping you understand what is actually in your best interest.

Generally speaking, it's probably not best to count on big companies to be honest when obscuring the facts will make them a great deal of money. Consider that they probably hired the nice advisor specifically because he's personable and friendly - I'm guessing he's either fairly attractive for his age or looks like what you'd expect a nice high-up manager would look like too. It's all designed to make you feel good about buying their services. You need to look past the bullshit and see what's actually going on. It might be fine, it might not, but adding in that you like the guy was a big red flag since it's not at all relevant and implies that you are being taken in by the marketing of his position.