Author Topic: Question from baby stubble  (Read 23264 times)

Jay72

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Re: Question from baby stubble
« Reply #50 on: May 14, 2014, 06:58:16 PM »
Fellow Mustachites,
    Was wondering if anyone else, had any suggestions, about where I should put my extra income savings at?  Put ALL of it into TSP savings, most in TSP and rest into a Roth/Index fund, or ALL into a Roth/Index fund.  Thank you all for your suggestions.
     J

zurich78

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Re: Question from baby stubble
« Reply #51 on: May 14, 2014, 07:20:14 PM »
Fellow Mustachites,
    Was wondering if anyone else, had any suggestions, about where I should put my extra income savings at?  Put ALL of it into TSP savings, most in TSP and rest into a Roth/Index fund, or ALL into a Roth/Index fund.  Thank you all for your suggestions.
     J

No pro here, but if I were in your situation, here's what I do.

- Put in all of the extra income in to paying off your CCs.

- Take the extra income and fund your emergency fund.  You only have $2K.  That's like 1 month of expenses.  IMO, you should have 6 months of living expenses stashed away in some liquid form (savings account for example).  There is a lot of debate on how much you should have in cash (some people say 3 months with everything else invested), but if it makes you feel more comfortable to have access to cash for emergencies only, make sure you have 6 months cash available to you.  Some people prefer to see 8 months saved here.  Once you've done that....

- Fund your 401K up to the match (5% I think from reading the posts)

- Then I would fully fund a Roth IRA.  It grows tax free.

- If you still have money leftover, I'd allocate a higher percentage in to my 401K and if you still have money left over, put it in to investments (index funds, etc).

This method works for me, because like you, or so it seems, stability and peace of mind is important.  So for me, getting rid of the non-mortgage debt first, making sure I have enough funds available for emergencies, maximizing retirement, growing wealth is the way I prioritized it.
« Last Edit: May 14, 2014, 07:25:27 PM by zurich78 »

RetiredAt63

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Re: Question from baby stubble
« Reply #52 on: May 14, 2014, 09:16:00 PM »
The idea of a hurricane scares me silly, and yet my house is on Leda clay, which has been known to swallow houses, roads, etc. (no I am not joking, Google Leda clay and see what it can do) - we all have some thing to worry about  ;-)

Re the dog harnesses, we live in different countries, so no guarantee they would be the same even if the same brand.  Just inspect them for quality - are the straps strong with no imperfections that would weaken them?  Is the stitching strong and even? Are they adjustable so the fit will be good?  Are the materials appropriate (you don't want stretchy). After all, they will serve the same function as our seat and shoulder belts.  This is not the time to shop at the Dollar Store.

Re money, the obvious is always a good place to start - pay off debt, especially CC debt, have an emergency fund. If I were in your territory I would have some emergency money in cash instead of depending on an ATM machine, but what do I know?  We managed for three weeks without electricity back in 1998 ("The Ice Storm") but just ended up using tellers instead of bank machines.  Anyway, there are lots of good money management threads on the Forum, the big trick is to start thinking about it instead of going along in the regular spendy rut.

All the best

Retired,
    Wish you could help out with Hurricane season, quickly approaching.  Thank you for the advice, about the dog collars.  I guess I need to start doing the search, for the full body harnesses, before we get into the swing of things.  Any particular brands that you recommend?
     J

Jay72

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Re: Question from baby stubble
« Reply #53 on: May 15, 2014, 09:04:14 AM »
Retired,
     Is there any way, to mitigate the house being on this 'Leda Clay'?  Did you build it there, or is it a subdivision 'tract' housing? 
     I will keep an eye out....not at the Dollar General store, for a couple of full body harness leashes.  Something tells me it's going to be expensive, hopefully not.
     In regards to the money, except the CC/house, I have no other debt to speak of.  I have an Emergency fund (some in ATM, with rest in a good place), although several people are saying to get a HELOC, and use THAT as my Emergency fund.  I'm kind of against this idea, since the bank can cancel this at any time (maybe just as you need it), and what happens if you need the cash NOW, and not MAYBE next week, after the bank paperwork is done. 
     Since you live up 'North', I can imagine some of your 'Ice Storms'.  As you say you couldn't see living here because of Hurricanes, honestly, I couldn't see living up there, when the temps drop below 0 degrees Farenheit.  True, the 97 degree temps., and 99% humidity DO get on my nerves, every now and then, but you used to it after a while.  THank you again for your advice, if you have any other, let me know.  Take care.
      J

Jay72

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Re: Question from baby stubble
« Reply #54 on: May 15, 2014, 09:12:37 AM »
Zurich,
     I have that Emergency fund, but also a long term 'Sesquatration fund', since I work for the Govt., when I was without pay for 17 days, in Oct. 2013.  I will most probably be using this, to pay of the aforementioned CC debt.
     My TSP, I found out is at 6% funded, so I have that covered.  Kind of funny though, I contribute $200/month, my group contributes $74.25/month, and you'd think when I hit 59.5, it would be AT LEAST $200/month after taxes....nope it will be (if current conditions stay the same, and I do not up my deposits) a WHOPPING $44.41/month, after taxes.  Kind of disappointed, with that number, to be honest.  They say, I will be 'funded' into my 90's.  This is great, if I want to spend this, on a gallon of milk, the way inflation/price increases are going.
     Have the Roth IRA going, and will look into that.  Thank you for your advice, if you have any more, please let me know.  Take care.
     J

RetiredAt63

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Re: Question from baby stubble
« Reply #55 on: May 15, 2014, 02:33:51 PM »
Hi J

I paid under $50 for my dog's harness a few years ago, so it shouldn't be too bad.  A lot better than vet bills for a dog not wearing one, hurt in a car accident.

The Leda clay is the old bottom of the Champlain Sea that formed as the glaciers melted.  It is an issue because the salt in it is gradually being leached out now that the area is fresh water, and this changes its chemical properties.  Given that the Champlain Sea covered a large surface area, there is a lot of Leda Clay around here.  The basic safety precaution is to not build near water, and my house is far enough away from the nearest stream that it should be OK.  This is farmland with houses on the roads and fields behind.  Clay does make good farmland as long as it is drained properly.  If no one built on it, there would be a lot of empty space in south-eastern Ontario and south-western Quebec  ;-)   Hey, there is always something - we are also on a fault line and we get earthquakes too (not big ones, rarely over 4).  And re the ice storms, we are fine with winter snow, it is when the temperature is close to freezing and we get rain instead, that freezes, that we are all miserable.  "The Ice Storm" was a bit of a fluke, we had three freezing rain storms over 5 days, so it just accumulated until the power line towers couldn't take the weight.  Usually we see one or two a winter.  I will take snow any day!

http://blogs.agu.org/landslideblog/files/2010/10/10_05-montreal-1.jpg
http://reneschmidt.ca/wp-content/uploads/2011/02/ice-storm3.jpg

0oF is about -18oC - a nice winter day if it is sunny and light winds.  You just dress for it.

Retired,
     Is there any way, to mitigate the house being on this 'Leda Clay'?  Did you build it there, or is it a subdivision 'tract' housing? 
     I will keep an eye out....not at the Dollar General store, for a couple of full body harness leashes.  Something tells me it's going to be expensive, hopefully not.
   
      J

Jay72

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Re: Question from baby stubble
« Reply #56 on: May 16, 2014, 06:53:37 AM »
Retired,
     Thank you again, for your information on the dog collars.  It is appreciated.
      As for the cold, are you trying to tell me, that 0 degrees F (here in the U.S.), with sun and light winds is a 'nice winter day'??  I recently got back from Afghanistan.  When we flew from our FOB (Forward Operating Base), which is the base we flew out of, for coming out of country, into Kazakistan (Outside of the Old Russian Gulag are).  When we left, early in the A.M., it was in the low to mid 20's, when we stepped off the plane in Kazakistan, it was under 0 degrees.  Now for a boy, from Southern Louisiana, a little town across from New Orleans....THAT IS COLD!!!  It was SO COLD, that at night, I was in a sleeping bag, inside a heated tent (we had to move a couple times, b/c the Army heaters broke down), and where the tents joined, snow was actually pushing it's way inside of the TENT!!  The temp that night, was -15 degrees F, that night.  There should be some type of training, for southern folks (below the Mason-Dixon line, etc.), about going to the head, in -15 degree F weather.  This is common sense for you, but just to give you a 'heads up', NEVER, I mean EVER (after washing your hands, in the 'Latrine'), should you touch a stainless steel door handle, to close it.  My hand froze in the blink of an eye.  So here I am, in a foreign country, at 0200 in the morning (with military patrols patrolling the area), and I'm stuck to a 'latrine' door.  I had 2 options, I could spit on my hand, to release myself (which is nasty and unhealthy), or I could rip it off the handle....I chose the latter. 
      Don't even get me started on the Port-O-lets (commercial bath rooms) on the base!!
      Anyway, thank you again for your helpful information.  Take Care.
      J


     If anyone else, have any ideas, in regards to extra money storage, please do hesitate to drop me a line, and let me know.  Thank you.

Jay72

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Re: Question from baby stubble
« Reply #57 on: May 19, 2014, 06:55:15 PM »
Fellow Mustachians,
     I wanted to thank you all, for your help, and especially your suggestions.  They have helped me, in my opinion, to get ready for my early retirement.
     This last blurb, after my myriad of public and private conversations will be my last, on this topic (unless I need some more help).
      If after you read the previous conversations, if other suggestions come to mind, please let me know. 
      And again, thank you all, for your suggestions and help.  All the best.
      J

Catbert

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Re: Question from baby stubble
« Reply #58 on: May 20, 2014, 09:12:14 AM »
When you retire, converting your TSP balance to an annuity is generally not a good idea...at least at the moment.  The amount you get in the annuity is dependent on interest rates at the time you convert.  As you know interest rates are still near historic lows.  Great when you're getting a mortgage but bad when buying an annuity.  The interest rate situation might be better (higher) when you retire

Generally your better off leaving money in TSP until you are ready to start taking it out and then rolling to an IRA.

Jay72

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Re: Question from baby stubble
« Reply #59 on: May 21, 2014, 04:35:24 AM »
Mary W,
     When you say an annuity, you're speaking of my monthly TSP payments, correct? Honestly, if you read the aforementioned posts, about the amount I'll be receiving, it's kind of pathetic.  I was told the reason the amount was small, is because the monthly payment, will go up to the age of 100 years old.  So I think I will take your advice and roll it over, as you suggest, in the meantime I'll try to ramp up the deposits into that account.
     Again, thank you for the advice.  Best wishes.
     J

Nords

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Re: Question from baby stubble
« Reply #60 on: May 21, 2014, 05:11:56 AM »
Mary W,
     When you say an annuity, you're speaking of my monthly TSP payments, correct? Honestly, if you read the aforementioned posts, about the amount I'll be receiving, it's kind of pathetic.  I was told the reason the amount was small, is because the monthly payment, will go up to the age of 100 years old.  So I think I will take your advice and roll it over, as you suggest, in the meantime I'll try to ramp up the deposits into that account.
     Again, thank you for the advice.  Best wishes.
     J
J, there are a few reasons to consider leaving your money in the TSP. 

In your case, have you made tax-free contributions to the TSP while you've been deployed to a combat zone?  (Those would show up on your TSP statements.)  The TSP is tracking the tax-free basis (and its tax-free withdrawals) and will make sure that you don't pay any taxes on those withdrawals when you start RMDs.  I don't know how that's handled in a "civilian" IRA, but my guess is that it's not handled at all.  If you roll out of the TSP then you'll pay more taxes than necessary.

The TSP has the world's smallest expense ratios for passive index funds.  Admittedly there's not a lot of difference between numbers like the TSP's 0.02% and Vanguard's 0.07%, but that tiny difference adds up very quickly over a decade or two.  You'd be paying an extra $10K or more in expenses.

I agree that your Reserve pension makes a TSP annuity redundant, especially when you add the impact of Social Security.  But you still have reasons to stay with the TSP.

Investing is hard for most people.  The military's special compensation systems make it harder.  Your lack of "spare" time makes it harder still.  You have an unusually complex mix of assets and you might not have the financial knowledge to manage them on your own.  You should strongly consider seeking the advice of a financial advisor with experience in military assets.  People who come to mind include Rick Ferri, Jason Hull, and Eric Haas.

Jay72

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Re: Question from baby stubble
« Reply #61 on: May 21, 2014, 09:10:39 AM »
Nords,
     Thank you for the information, as always.
     Who are these Gents, that you are speaking about?  Rick Ferri, Jason Hull, and Eric Haas.  Are these TSP experts or military retirement experts?
     Again thank you for the help.  Take care.
     J

Nords

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Re: Question from baby stubble
« Reply #62 on: May 21, 2014, 01:38:30 PM »
Nords,
     Thank you for the information, as always.
     Who are these Gents, that you are speaking about?  Rick Ferri, Jason Hull, and Eric Haas.  Are these TSP experts or military retirement experts?
     Again thank you for the help.  Take care.
     J
They're all financial advisors and military veterans who run low-fee firms offering advice or management. 
http://www.portfoliosolutions.com/who-we-are-2/staff-bios/
http://www.HullFinancialPlanning.com
http://www.AltruistFA.com

Jay72

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Re: Question from baby stubble
« Reply #63 on: June 19, 2014, 01:52:06 PM »
Fellow Mustachites,
      Hello, I hope you all are well. 
      I would like some advice on where to put my 'Emergency Cash', in case of job lay off.  I work for the Federal Government, and unfortunately last year, as I'm sure you all know, our Uncle decided to close down for 17 days.  I had enough money in my main account, to not have to worry about touchng this money, but think I can earn better interest than where it is at currently.  I have 10K in a USAA savings account, earning about $1.59-$1.79/month interest (variable), and was wondering if anyone had suggestions on where to put this, for better interest returns, but still grab the principle, if Uncle decides to close shop again.
     As always, any advice you can give me, would be extremely appreciated.  Hope to hear from you soon. 
     J

Emg03063

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Re: Question from baby stubble
« Reply #64 on: June 19, 2014, 11:21:10 PM »
Assuming you've paid off your credit card since last post (if not do that first), I'd put it into the house mortgage and open a HELOC for your cash needs in case of another shutdown.

http://www.mrmoneymustache.com/2011/04/22/springy-debt-instead-of-a-cash-cushion/
« Last Edit: June 19, 2014, 11:25:59 PM by Emg03063 »

Jay72

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Re: Question from baby stubble
« Reply #65 on: June 20, 2014, 08:27:24 AM »
EMG,
     Thank you for the reply.  To answer your question, yes I have taken care of the $4K cc debt, so that is not the problem.  As far as a HELOC is concerned, how long (on average) does it take to receive money from this HELOC??  Would I be able to put my hands on it immediately, or would I have to wait a week or longer?  I was thinking of putting it into CD's, but again I can't 'get my hands on it immediately', if I need it.
      If you, or anyone, has answers to the above questions, please let me know.  Thank you.
      J

Jay72

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Re: Question from baby stubble
« Reply #66 on: June 22, 2014, 05:58:39 PM »
Mustachians,
     I received one reply, from EMG, on what I should do with my extra $10K.
     If you could give me your suggestions, it would be greatly appreciated.  Thank you again.
     J

aj_yooper

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Re: Question from baby stubble
« Reply #67 on: June 22, 2014, 06:31:20 PM »
Your emergency fund is not an investment fund so keep it liquid, like CDs, etc.  Shop for them and form a ladder of maturities so you can get a little more interest.  Be happy that you have the cash. 

I would not put it on the mortgage and open a HELOC.  Those loans can be called typically (mine is callable). 

Chrissy

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Re: Question from baby stubble
« Reply #68 on: June 22, 2014, 06:46:13 PM »
I second aj_yooper.

Emg03063

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Re: Question from baby stubble
« Reply #69 on: June 22, 2014, 09:40:16 PM »
My understanding is that drawing funds from a HELOC is as simple as writing a check.  If it gets called, you just roll the debt back to a credit card, but I would expect that to be an exceptionally rare occurrence.

Nords

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Re: Question from baby stubble
« Reply #70 on: June 22, 2014, 10:16:28 PM »
... but I would expect that to be an exceptionally rare occurrence.
Just like some HELOC lenders did in 2008.

Emg03063

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Re: Question from baby stubble
« Reply #71 on: June 23, 2014, 08:19:18 PM »
... but I would expect that to be an exceptionally rare occurrence.
Just like some HELOC lenders did in 2008.

Prompted by a decline in house prices that hasn't happened previously since the Great Depression, yes.  I'll take those odds over the risk of principal loss in any investment that is expected to return what I'm paying on my mortgage on a tax adjusted basis any day.

Jay72

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Re: Question from baby stubble
« Reply #72 on: June 26, 2014, 10:33:17 AM »
AJ, Chrissy, Nord, EMG,
     Thank you for the replies.
     AJ, as far as me 'being happy' for having the cash...I guess I am, but am looking to do more with it, than just let it sit in a regular acct. earning .2 % interest, when it could be earning more elsewhere.  I figure it should be working for me, since I am still working...no vacations for Jay, so no vacations for my dinero, especially since I sweated my backside off for it, in Aghanistan, for over a year.
     Again, thank you for your suggestions.  If any one else would like to add something to the conversation, it would be greatly appreciated.
     J

Jay72

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Re: Question from baby stubble
« Reply #73 on: November 23, 2014, 05:49:02 PM »
Mustachians,
     Long time...no write. Apologies for that.  Just wanted to give you a heads up, and ask your advice on something.  You can follow the thread to see previous conversations, and financial status, as of last year/earlier this year.
     After a long time coming, as many of you suggested, I sold my truck and have $10k in the bank.  The question is, what to do with it.  CC situation is taken care of, so I was thinking investing in an Index fund, with Vanguard.  Again, wanted to get your opinion on the matter.
     Apologies for the shortness of the post, but many thanks for any advice you may have.  Hope to talk to you soon.
     Jay

Chrissy

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Re: Question from baby stubble
« Reply #74 on: November 23, 2014, 06:48:08 PM »
Sounds good.  Have you funded your ROTH for 2014?  If not, I suggest you buy the index fund at Vanguard in a ROTH.  Add $5,000 for 2014 now, and add $5,000 for 2015 in January.

Jay72

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Re: Question from baby stubble
« Reply #75 on: November 24, 2014, 04:19:57 AM »
Chrissy,
     Thanks for the reply,  My Roth is fully funded for this year.  After I fund it for 2015, what to do with the remaining $5K?  Should I just leave it in bank account?  Any information would be appreciated.  Talk to you soon.
      Jay

Chrissy

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Re: Question from baby stubble
« Reply #76 on: November 24, 2014, 12:06:43 PM »
As I understand it, you've paid off your credit card, have an emergency fund of $10,000, you're getting the maximum match on your TSP, and you've already funded your ROTH for 2014.  Is all this correct?

If so, I suggest you put the other $5,000 in Vanguard in the same index fund.

If you want a suggestion for an index fund, VTSMX is very popular with people on this site.  It is a slice of the entire market, so you are very well diversified even though you're only buying one fund.

Also, you were asking about getting a better return on your emergency fund cash...  I suggest a CD or a CD ladder (6 mo, 12 mo, 18 mo).  You can break them in an emergency... you'll lose the interest, and you might even have to pay a penalty--read  the agreement, and ask questions to find out--but you can still get at the cash if you need it.

WAY TO GO!  You're making great strides and getting your financial house in order!