Author Topic: now that Im out of debt, what do we do next?  (Read 2047 times)

N

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now that Im out of debt, what do we do next?
« on: November 19, 2013, 01:38:11 AM »
Hi Mustachians,

so...we no longer have credit card or medical debt. yay! but I dont know what our next steps should be.

Husband is turning 50 in 6 mo. He works full time. Right now he contributes 100$ each week to his SEP IRA, and his employer adds 3% of his pay (roughly 40$/week) I believe that the limit for contributions to the SEP is 25% or something like 49K whichever comes first. This year his overtime dropped significantly and I dont know if that will ever come back. Im not super confident about his job security-the place he works is owned by a couple and has only 5 employees. I fear it could go under. My husband also has health concerns and its a real possibilty he will require major surgery in the next 5 years, with at least 2 months off after to recover. His job is discontinuing to offer insurance and we have to buy coverage in the next month. I think our kids will be able to go on the state plan (according to income levels etc) for 80/mo combined. The lowest quote I got for the two of us on a plan is 360$ month. Not sure if we will get any tax breaks on it.

I am almost 40 and I am a stay at home mom with our two kids, and we homeschool, so they are home with me all day, too.  I do not have a steady income, though I can usually earn 100-200$ a month at various side gigs.

We have a combined 38K approx in Ira savings. I have not contributed to my own IRA for 10 years when I stopped working.

We have 4k in cash, which I expect to use to move (deposit, first month, movers) in the next 6 months.

I estimate that after we move, depending on rent, we will have 600-700$ a month to save/invest

During the next 3-4 months, I think I can save up about 6K (including tax refund, possible bonus) and maybe a little more.

I figure we will almost certainly have to pay the 6K deductible for husbands health care in 2014. I want to have a cash fund that would cover that,plus a cushion for other emergencies, let say 10K total. I think this is doable. of course, that wouldnt really be enough if he has to take 2 months off of work (no pay) or more, or loses his job. so there is that.

What I dont know is if we should start maxinng my husbands SEP. Its with Vanguard in a couple of investor funds.
Should we also make contributions to an IRA for myself?

OR should we just start a vanguard index fund account and put all the extra (beyond cash fund) there? or max the other iras and if there is leftover, start vanguard index

sigh. I need a crystal ball. 

Is this beyond the scope of "ask a mustachian"?

thanks in advance for your time and thoughts.

sunshine

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Re: now that Im out of debt, what do we do next?
« Reply #1 on: November 19, 2013, 05:46:04 AM »
Hi there! Big congrats to you two for getting out of debt !!!  I'm new here myself and not real confident in investing. I could be way off since I am new here but I would only invest what he needs for the match. It seems there are a few possibilities on your horizon that would make me want a larger pot of savings before worrying about investing. However I am a security freak. I'd shoot for 6 months of bare bones expenses and your hubbys medical deductible since you are a one income family.  After you have a bigger safety net I would hit the investing.

Bbqmustache

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Re: now that Im out of debt, what do we do next?
« Reply #2 on: November 19, 2013, 05:58:46 AM »
You will have emergencies in your future, a couple you even know about.  I'd suggest throwing a lot (6-12 months of income) into an Emergency Fund before you start investing.  When that is fat and happy, then attack retirement goals with big fat wads of money.  Good luck!

Check out my blog on this and other financial topics:  http:www.financialliteracyconversations.wordpress.com