The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: N on November 19, 2013, 01:38:11 AM
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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.
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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.
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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!
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