Income:
100K/year = $5500/month net after health insurance, retirement plan, and 5% to 457 plan
Monthly Expenses:
Fixed:
$1050 mortgage
$500 utilites, HOA, phone, etc
$500 food
$200 gas
$100 maintenance
$25 clothes
$50 dog
$550 auto loan
Total Fixed Expenses: $2475
Variable:
$500 Saving extra towards mortgage into a side account not towards actual loan.
$500 Saving extra towards auto loan into a side account not towards actual loan
$1000 Smoking cigarettes & hanging around with people I don't like in general
$1000 Hobbies - home remodeling, camping & outdoor gear, and working out to offset the effects of smoking
Total Variable Expenses: $3000
Assets:
$130,000 403(b) - Stocks, Defined contribution plan(10%employer / 7% employee contribution = $1500/month)
$92,000 457 - Invested in stocks, $400/month contribution. This was from an old 401(k) converted to a high fee IRA that I moved to current employers plan so I could more easily contribute to it
$7,000 - Savings
Total $229,000
(Both retirement accounts have very little investment options, like 6 categories, but fees are low & I can change investments easily. I work for government so not eligible for social security & have no pension)
Liabilities:
$182,000 - home loan @ 3.5% on $260,000 house = $78,000 equity. Lived there 11 years & most recently refinanced in 2011. This doesn't make sense to pay off so I invest any extra payment.
$7000 - auto loan @ 5.5% on 2008 Toyota Tacoma
Total: $189,000
I'm 36, work as an engineer, & just recently paid off my credit cards and saved enough to pay off my car loan.
I've been adjusting my budget and need some good advice so I don't do anything rash after scrimping & saving for so long.
My goals are to be debt free and retire as early as feasible.
I really want to pay of my car, because I don't like having debt in general, and I have enough saved to do it. The excitement of paying it off all at once would be great & would also leave me an extra $550/month to save. However, it seems more prudent to keep the money I have as an emergency fund & use it to grow more money while I gradually pay down the loan. Any thoughts, and what kind of account can I use to invest money that has fairly quick access in case of emergency?
I have also been thinking of converting the 457 account to a Roth type account, but not sure if this is a good idea at this point. My thinking is in retirement it would be nice to have taxable and non-taxable withdrawals so I could adjust my yearly tax liability if needed. The bad thing is there's no Roth 457 through my employer, so I would have to convert to a Roth 401k or something equivalent & then I'd lose the penalty free withdrawal of the 457 in case of emergency.
Anyone know of any calculators that can tell me how much I could convert a year to minimize the tax burden (I plan on paying the tax separately not using money from the account).
Thanks!