Author Topic: Next steps for 33 year old beginner Mustaschian?  (Read 553 times)

junioroldtimer

  • 5 O'Clock Shadow
  • *
  • Posts: 3
Next steps for 33 year old beginner Mustaschian?
« on: September 15, 2018, 12:26:28 PM »
    Hey guys,

    Hopefully I'm posting in the right place. I'd like some advice from the hivemind (Mustaschemind?) on what I should be doing.

    I feel like I've been doing a mix of a lot of the right things (saving, living below my means, paying off credit cards in full every month) and some of the wrong things (not budgeting, saving to a savings account instead of index fund, etc.).

    As for background, I'm 33 years old with no debt. I make approx $95k per year and I have approx $100k in the bank and no real estate. I was keeping cash liquid to one day buy a house but I think I will be ok renting for the next few years as the majority of my family is out east while I live in Texas. It's not impossible that in the next 5 years I move there.

    My post-tax income every month is approximately $4100. Of that, I'm saving approximately $1300 every month.

    I am contributing the max rate to my 401k and IRA accounts every year. I need a plan for what to do to my cash ($80k currently locked up in a 2% 6 month Ally CD which frees up on 12/25, Merry Christmas to me). I have approx ~$20k in an Ally high-interest savings account for emergencies.

    I currently have three 401ks from past jobs:
    • I have approximately $30k in my work 401k account (currently in a 2040 target date fund)
    • Another $15k from a past job 401k in a separate account. The fees are pretty minimal but I think it'd be a good idea to roll my old one into my new one to keep things simple.
    • Another ~$10k in a traditonal IRA account that I rolled over from my first job into a Chase Traditional IRA account
    I think it makes sense to consolidate all of these into my current job's 401k. Does that sound right?

    I also have another $20k in a ROTH IRA approx 2/3 of which is in an S&P 500 index tracker fund.

    I have an HSA that I've been contributing to for 2018 that I have not needed to tap into this year.

    *Questions for the group*:

    *What should I do with that big chunk of cash? Would it be smartest to put it in post-tax IRA account? What are tax obligations if I ahve to pull that out in a few years to use for a downpayment on a house?

    *From the experienced mustaschios here, anything major standing out that I should be doing? (Budgeting comes to mind -- I do have Mint and it shows alcohol and restaurants as highest amounts every month after $1k in monthly rent).

    *Any obvious things I should be doing that I'm not?

    Appreciate time spent on replies. Cheers.
« Last Edit: September 15, 2018, 12:32:08 PM by junioroldtimer »

nereo

  • Walrus Stache
  • *******
  • Posts: 8238
  • Location: la belle province
    • Here's how you can support science today:
Re: Next steps for 33 year old beginner Mustaschian?
« Reply #1 on: September 15, 2018, 04:26:39 PM »
Step 1:  Read, and understand, the investment order. Ask questions about any particularities.

Step 2: Do not withdraw funds from your HSA; its the best retirement fund you have.  Instead pay out of pocket and save your receipts for later use.  See this article to understand why.

Answers to your specific questions:
1) Save whatever cash you deem necessary for an ER fund.  Put the rest of it to work immediately by investing it following the "investment order" outlined above.  You can do this over a series of months if you like, but studies show that doing it all at once tends to work out better most of hte time.

2) I'd consolidate your old 401(k) accounts by rolling them over into an IRA.  At your income I would be contributing to a tIRA, not a Roth. Here's why.
My biggest question is: What are you spending your money on where your take-home pay is $4100 yet your leftover savings is $1300.  That's an annual burn of about $33k, which isn't bad at all - but a more detailed accounting of your expenses might reveal several thousand in needless spending.  Consider doing a full Case Study for the most targeted responses.

3) Following the Investment Order linked above, your HSA should be maxed out each year and (ideally) not touched until later.  Overall you seem to be doing very well.

I've linked a lot of information in the text above which should answer a lot of your questions.  Let us know what else you need held with after going through it. 
Cheers
~n~

junioroldtimer

  • 5 O'Clock Shadow
  • *
  • Posts: 3
Re: Next steps for 33 year old beginner Mustaschian?
« Reply #2 on: September 15, 2018, 07:33:50 PM »
Thanks nereo, will check out those links and get back to you. Enjoy the weekend.

RyaninLA

  • 5 O'Clock Shadow
  • *
  • Posts: 54
  • Location: Los Angeles
Re: Next steps for 33 year old beginner Mustaschian?
« Reply #3 on: September 16, 2018, 03:25:23 PM »
That 80k is a nice little down-payment so when the CD matures, I would consider other low-risk assets: money market, short duration bonds, another CD, or a mix. I'm currently saving for another rental property and just keep those funds in money market because I want to be able to buy if we have some economic weakness in the next couple of years.

I second rolling 401k to IRA, not your current 401k. You 401k custodian company is hired/paid by your employer and plan rules are set by employers. My last company's 401k custodian was unresponsive and made it difficult for me to access the funds. 401ks also tend to have fewer investment choices than IRAs. The only reason you might want to roll over to a 401k is if you plan to take out a loan since loans aren't allowed from IRAs.

Have you considered buying an owner-occupied rental property in TX with a roommate? Then you would just hold it if you move back East?

civil4life

  • Bristles
  • ***
  • Posts: 272
    • My Journal
Re: Next steps for 33 year old beginner Mustaschian?
« Reply #4 on: September 17, 2018, 12:08:32 PM »
+1 for Nereo