What do with excess cash?

[clutchy]

So I know this is a personal question/decision but I'd just like to get some input.



Refi'd down to 3.25% fixed.  No fees/no additions to principal.

It's a 30 year but I've been considering various steps to wealth and retirement.

1. pay down house live cheaply; win.
2. take money saved on reduced payments, invest, live cheaply; win.

I can't really decide what I want to do.

I'm 32.  Our net worth is $135,000.  Not great but ok I guess.


My biggest concern is that my wife is not on board  with lowering spending in general.  I've read quite a few articles on here and hedonic adaptation describes my wife and  I pretty well.  We generally have increased our spending in accordance with any raises and the only real reason with have some decent cash and net worth is b/c I made my wife aggressively add to her plan.  I'd already been doing it so we're done really well with that.

I need to get our expenses down and start saving more.  We could save 50% but 40% is probably realistic.  I'd like to retire in 15 years but I'm not sure if that's an option.  It appears to be a a little unrealistic at this point.


so after this meandering post... I'm going to have about $170 extra a month and was considering instead of putting it against the mortgage to start investing again.  I'm an public accountant and have been relatively successful with investing and I think that's the direction I'm leaning.

comments?

[Spork]

I'm not a financial expert... but I am a cheap ass bastard and have saved a piece of every dollar I've earned (with a few stupid interludes here and there to remind me I can be stupid if I try hard enough.)

I'll let the experts speak on the specifics...

I'm 32.  Our net worth is $135,000.  Not great but ok I guess.

but not an awful place to start from.  At about that age, I was just off a divorce and Net Value 0.  Fast forward about 20 years and I am ever-so-close to the end of the tunnel.... and I haven't done it "fast and hard" the way some do. 

My biggest concern is that my wife is not on board  with lowering spending in general.  I've read quite a few articles on here and hedonic adaptation describes my wife and  I pretty well.  We generally have increased our spending in accordance with any raises and the only real reason with have some decent cash and net worth is b/c I made my wife aggressively add to her plan.  I'd already been doing it so we're done really well with that.

I don't mean to be mean or be a complainypants or whatever, but... this is something that you're going to need to deal with.  You're either going to need to find some middle ground where you can save enough to make you feel comfortable and she can spend enough to be comfortable... or ... well, bad things are going to happen.  Trust me.  Read back to the "just off a divorce and Net Value 0" part.

You guys need to be partners in this... and if you can both be savers... you'll be awesome.  If you can reach some middle where you're both happy, you can still make things work.  If you're playing tug-of-war, you're both going to feel badthings™ for each other.

sorry... am I being a Debbie Downer here?

[RoseRelish]

If you want to save 40-50% and your wife wants to save 0-5%, then meet in the middle at 25%. You'll be saving at a solid clip and both win.

[clutchy]

Meet in the middle.  Interesting idea.


Spork; I think you're spot on.  It's something we need to talk about and I'll definitely address it to her.  We're adults; we'll sit down and talk about it.

In the interim I think I'll just force compliance on myself and then talk to her about where we can meet in the middle.

[momo]

Absolutely agree there must be a meeting of the minds to creating lasting harmony. I feel it is all about creating a mutual partnership where both partners agree on what is important this is especially true with finances.

Have you read the following articles?
http://www.mrmoneymustache.com/2011/04/25/having-the-talk-with-a-current-or-potential-mate/
http://www.mrmoneymustache.com/2012/03/22/selling-the-dream-how-to-make-your-spouse-love-frugality/ and http://www.mrmoneymustache.com/2012/03/27/selling-the-dream-of-financial-independence-part-2/ and http://www.mrmoneymustache.com/2011/06/05/mrs-money-mustache-eliminating-lady-temptations/ and http://www.mrmoneymustache.com/2011/09/06/how-much-is-that-bitch-costin-ya/


One tool that might help you is this video, it is great iceberg breaker!
http://www.youtube.com/watch?v=9XRPbFIN4lk&feature=youtu.be

Let us know how it goes and the progress made. Cheers!

[StetsTerhune]

"My biggest concern is that my wife is not on board  with lowering spending in general."

It took a while before I could get my wife on board with the idea of "lowering spending in general." Lucky for us money isn't generally spent. Money is spent on specific things for specific reasons. If you figure out what your wife (and you!) is wasting money on and why, you can take steps to eliminate the reasons and opportunities to waste money.   Some things are probably actually important to her, or you, and aren't going to change much (this is how 30% of my current budget ended up being allotted to travel), but a lot of things (e.g. food expenditures) you can probably get the same enjoyment out of with 20% of the money and a little planning. Try making that happen for a month without mentioning money (Hey honey, I want to explore cooking this month!). Once you have experience with spending more efficiently and life being just as good, you can phrase "we should spend less" as "we should be smarter with our money" instead of "we should have a crappier lifestyle" (which I guarantee is wht she currently is hearing the conversation as.

[Spork]

One other idea...  One of my "aha moments" along the way was (at about your age) going to a financial planner and having him run the numbers.  I actually went to one of those that would love to sell you financial instruments -- and I'd actually suggest one of the "fee only" kind.  (I actually lucked out because I happened upon a good one that probably gave advice that was contrary to his employer's wishes... but I digress...)

The act of digging through your actual expenses and seeing it in front of you can be life altering.  When you sit and see "we make a combined income of $100k a year (or whatever) and we manage to spend.... $100k a year" ... it can really change you (and hopefully your wife).   

When you further drill down and say "and we spent it on .... "  and then you cannot actually complete that sentence because you just don't know where it went.... that can be a life changer as well.

Our  advisor basically showed us (with real actual numbers) if you just put away X... you can achieve Y by the time you are 50.

Now... you can also do this totally on your own...  It really is just an exercise in tracking expenses.  A financial planner isn't necessarily required to just track down what you spend where.... but it might be a good "disinterested third party" for the two of you.

[clutchy]

thank you again everyone for the input.

I appreciate all the thoughtful comments!

[travelbug]

As a wife, but one in control of the finances and a mustachian, I would say that I can understand a little.

Perhaps budget in an allowance to start with that she can spend on whatever she wants to, it may be a bit higher than what you would like it to be at first but it's also a great way for her to be able take stock of the value of the things she desires.

We also make smaller goals on the way to FI, more obtainable ones. Like when we paid off the mortgage we each had a gift in mind as a reward. It moght not work for everyone but DH and I were happy to forgoe many things to reach this point and then choose a special momento each.

We also have 1, 2, 3,5 etc year goals that we re evaluate each year. It's fun. Holidays, spending, donating, saving, investing; it's all there.

For us, paying the mortgage off was a huge mental jump for us but we are in Australia and cannot claim any interest back at all.

Good luck.