Author Topic: Airing out finances. 401K/new living budgeting.  (Read 4946 times)

zoochadookdook

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Airing out finances. 401K/new living budgeting.
« on: February 19, 2020, 02:24:49 PM »
Hi,

Deets:
27/Single

Current Income
$4000 take home/month after insurance/HSA contribution (200/300) taken out.

Current Assets:
70k liquid
About to get 85k from sale of old house
35k roth
4k HSA
Car/junk etc (4000)

Current Debt
3000 old med bills (pay 200/month no interest)

Current expenses
$80/month gas
$500/month roth contribution
$600/month rent (sucks-need to move more on that)
$200 groceries
$300 assorted (getting that knocked down, it's been expensive moving and getting living stuff)

total: 1700 or so
4000-1700= 2300

Previously another 1200 or so was going to my mortgage, utilites, property taxes etc. As the house is being sold the 2nd of march I'm not counting that going forward.


SO current things I'm looking at

1) Living expenses. Right now they're relatively low, however the commute is an hour both ways and I'm living with a friend/coworker who isn't quite adapt at living alone-which makes it suck. I'm looking to move and was wondering what I should set my budget for (either renting or buying a rental/duplex and renting one of the units while I live in). I like the idea of owning rentals long term and have no qualms about keeping a house as a LTI but being new to town and with everything selling so quick-it is intimidating.

2) I've never contributed to my 401k. I am now offered one with no match via employer. I haven't been contributing as it's John Hancock and all the fees are high. I have way too much liquid just sitting in a HYSA for my liking. Should I say screw it and max the 401k regardless and grab the tax advantage? Or would i be fine just throwing a sum in VTSAX or similar but?



Any advice is appreciated.

six-car-habit

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Re: Airing out finances. 401K/new living budgeting.
« Reply #1 on: February 19, 2020, 03:40:23 PM »
-is the commute 1/2 an hour each way, meaning 1 hour total driving each day ?
- What do you mean by your living with co-worker who is "not adapt at living alone" , do you mean "not adept" ? , does it matter - you arent living alone, you're living together in the same place...

I suggest locating the neighborhood you want to move to 1st, find the local real estate offices, ask if they perform property management, and if so, get their list of available rentals. Combine that with searching the MLS listings for duplexes

Maybe open an IRA in a low fee account 1st. Then put money into the 401K if you can find a relatively low fee vehicle, in the Hancock offerings. Cram $$ into there, and offset it with the $70K in savings if your finances get tight.

 Why not just pay off the old medical bills, and get that over with ?

ysette9

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Airing out finances. 401K/new living budgeting.
« Reply #2 on: February 19, 2020, 10:05:37 PM »
This is a good resource for figuring out whether to invest in a crappy 401k plan or not


https://www.bogleheads.org/wiki/401%28k%29#Expensive_or_mediocre_choices

“A reasonable rule-of-thumb is to consider investing in a taxable account if the product of the extra costs and the number of years you will stay in the plan exceeds one and a half times your combined federal and state tax rates on qualified dividends over your working career. That is, if you pay 1.70% expenses rather than 0.20%, and you pay 15% federal tax on qualified dividends, plus 5% state tax, you should still invest in the plan unless you are reasonably certain that you will stay with the employer for more than 20 years for a net loss of 30% (actually 26% because of compounding). If you pay no state tax, you should still invest in the plan unless you are reasonably certain you will stay more than 15 years.”
« Last Edit: February 19, 2020, 10:07:58 PM by ysette9 »

zoochadookdook

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Re: Airing out finances. 401K/new living budgeting.
« Reply #3 on: February 25, 2020, 01:54:48 PM »
-is the commute 1/2 an hour each way, meaning 1 hour total driving each day ?
- What do you mean by your living with co-worker who is "not adapt at living alone" , do you mean "not adept" ? , does it matter - you arent living alone, you're living together in the same place...

I suggest locating the neighborhood you want to move to 1st, find the local real estate offices, ask if they perform property management, and if so, get their list of available rentals. Combine that with searching the MLS listings for duplexes

Maybe open an IRA in a low fee account 1st. Then put money into the 401K if you can find a relatively low fee vehicle, in the Hancock offerings. Cram $$ into there, and offset it with the $70K in savings if your finances get tight.

 Why not just pay off the old medical bills, and get that over with ?

Commute is currently an hour each way as well as being 20/30 from just about everything (gym nightly). I'd be saving an hour-hour and a half daily off moving closer.

No as in he's never had to live out of house. This means while I cook, clean, don't really intrude on his life; his narcasssm and inability to recognize even basic "adulting" tasks makes it a shitty toxic place to live. I get passive agressive comments coming back late no matter what I was actually doing (I have hobbies, he has none). It's just not a good living scenario when I'm trying to find a spot I consider a home/don't feel like it's having a negative impact on choices I make on a day day basis.



Life in Balance

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Re: Airing out finances. 401K/new living budgeting.
« Reply #4 on: February 25, 2020, 04:13:27 PM »
How are rental prices close to work?  If you could find something walkable (a studio or 1 BR apt) and for a decent price, I'd move.  Gaining back two hours a day + not having to put up with roommate would be worth it to me even if rent went up a bit.

ysette9

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Re: Airing out finances. 401K/new living budgeting.
« Reply #5 on: February 25, 2020, 04:16:06 PM »
How are rental prices close to work?  If you could find something walkable (a studio or 1 BR apt) and for a decent price, I'd move.  Gaining back two hours a day + not having to put up with roommate would be worth it to me even if rent went up a bit.
I agree with this. Reducing my commute has led to vast improvements in my quality of life.

Don’t jump into the decision of whether to buy or not by having a bad commute and bad roommate. Fix those issues by finding a better rental and then take your sweet time deciding whether to buy or not.

TomTX

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Re: Airing out finances. 401K/new living budgeting.
« Reply #6 on: February 27, 2020, 06:22:07 PM »
Yeah, your best move right now is to GTFO of your current rental and into something walking/biking distance from work with a more pleasant environment. Regaining two hours a day is HUGE, whether for relaxation, exercise, self improvement or a side gig.

zoochadookdook

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Re: Airing out finances. 401K/new living budgeting.
« Reply #7 on: February 28, 2020, 05:26:52 AM »
How are rental prices close to work?  If you could find something walkable (a studio or 1 BR apt) and for a decent price, I'd move.  Gaining back two hours a day + not having to put up with roommate would be worth it to me even if rent went up a bit.

So the rental numbers for what i'd need look around 900-1000/month. That's not a 2 bed; just a decent single bed (not sure if garage or not). Plus utilites I factor around 1200/month.

2 hours a day and having a life outside someone elses sounds nice lol

zoochadookdook

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Re: Airing out finances. 401K/new living budgeting.
« Reply #8 on: February 28, 2020, 05:28:54 AM »
Yeah, your best move right now is to GTFO of your current rental and into something walking/biking distance from work with a more pleasant environment. Regaining two hours a day is HUGE, whether for relaxation, exercise, self improvement or a side gig.

Directly downtown is definitly the most expensive option. I'm personally not a big.....uhm like city/people person so the whole living side by side thing is something I'm eying up.

EngineerOurFI

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Re: Airing out finances. 401K/new living budgeting.
« Reply #9 on: March 06, 2020, 01:14:28 PM »
This is a good resource for figuring out whether to invest in a crappy 401k plan or not


https://www.bogleheads.org/wiki/401%28k%29#Expensive_or_mediocre_choices

“A reasonable rule-of-thumb is to consider investing in a taxable account if the product of the extra costs and the number of years you will stay in the plan exceeds one and a half times your combined federal and state tax rates on qualified dividends over your working career. That is, if you pay 1.70% expenses rather than 0.20%, and you pay 15% federal tax on qualified dividends, plus 5% state tax, you should still invest in the plan unless you are reasonably certain that you will stay with the employer for more than 20 years for a net loss of 30% (actually 26% because of compounding). If you pay no state tax, you should still invest in the plan unless you are reasonably certain you will stay more than 15 years.”

+1 to this advice - I was going to link the same.

OP @zoochadookdook - Not sure if you defined how "high" the fees are....what are the fees in your 401(k) plan?  You have no other fund options within the plan that are lower fees?  If they're THAT high, you may actually be able to push HR/company to move to new plan with lower fees.  Forum and internet has lots of examples where this is successful.  If it's a small business, you could even appeal to the owner and show them how much they can save themselves by moving to Guideline 401k or something similar.  If it's a large company, I think you can go to ombudsperson or similar in order to push from perspective that they have a legal fiduciary obligation to make sure the plan is set up, monitored and managed for the “sole benefit” of the employees. I wouldn't get that firm with a small company - small, tightknit company I would go with the "Hey, this is good for you personally".

https://www.cnbc.com/2018/05/09/401k-fees-are-falling-due-to-lawsuits-over-charges.html
https://www.entrepreneur.com/article/295621

Retireatee1

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Re: Airing out finances. 401K/new living budgeting.
« Reply #10 on: March 07, 2020, 07:33:47 AM »
I've been taking some of these case studies and importing them into my own tool that I've developed (the Retireator).  Now the expenses you've reported seem absurdly low to me and are probably not realistic for long-term planning.  That said, I've run a quick simulation which has you able to retire in a little under five years.  I've attached it if you care to use it as a starting point (Microsoft Excel for Windows required).  It needs to be sobered up a bit.  :-)

« Last Edit: March 14, 2020, 02:28:28 PM by Retireatee1 »

zoochadookdook

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Re: Airing out finances. 401K/new living budgeting.
« Reply #11 on: March 11, 2020, 11:54:27 AM »
I've been taking some of these case studies and importing them into my own tool that I've developed (the Retireator).  Now the expenses you've reported seem absurdly low to me and are probably not realistic for long-term planning.  That said, I've run a quick simulation which has you able to retire in a little under five years.  I've attached it if you care to use it as a starting point (Microsoft Excel for Windows required).  It needs to be sobered up a bit.  :-)

Current expenses
$200/month transportation (60 insurance/80 gas/60 set aside for repairs)
$500/month roth contribution*may lump contribute the 5k soon with the market supressed so this won't be until next year
$600/month rent (will go up to around 1100/1200 with all bills when i move by next month-cheapest I can find is around 850-900 1br 1bth apartment or a dumpy house for 1000) This also has me sort of tossing around buying.
$200 groceries
$300 assorted (getting that knocked down, it's been expensive moving and getting living stuff)
200 healthcare/300 HSA contribution (taken out pre tax)

total: around 1800 not including the roth (I will be lumping that)

I'm at $4000 take home after tax/healthcare withdrawls

Let's give a 200 cushion and say I'm at 2000 after all expenses.

It's not my permanent/retirement expenditure; but it's enough for me to live on and be happy for now so take that as you will.
« Last Edit: March 11, 2020, 11:57:03 AM by zoochadookdook »

laurapalmer89

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Re: Airing out finances. 401K/new living budgeting.
« Reply #12 on: April 28, 2020, 06:54:17 AM »
This is a good resource for figuring out whether to invest in a crappy 401k plan or not


https://www.bogleheads.org/wiki/401%28k%29#Expensive_or_mediocre_choices

“A reasonable rule-of-thumb is to consider investing in a taxable account if the product of the extra costs and the number of years you will stay in the plan exceeds one and a half times your combined wow writing  service with good grades federal and state tax rates on qualified dividends over your working career. That is, if you pay 1.70% expenses rather than 0.20%, and you pay 15% federal tax on qualified dividends, plus 5% state tax, you should still invest in the plan unless you are reasonably certain that you will stay with the employer for more than 20 years for a net loss of 30% (actually 26% because of compounding). If you pay no state tax, you should still invest in the plan unless you are reasonably certain you will stay more than 15 years.”

+1 to this advice - I was going to link the same.

OP @zoochadookdook - Not sure if you defined how "high" the fees are....what are the fees in your 401(k) plan?  You have no other fund options within the plan that are lower fees?  If they're THAT high, you may actually be able to push HR/company to move to new plan with lower fees.  Forum and internet has lots of examples where this is successful.  If it's a small business, you could even appeal to the owner and show them how much they can save themselves by moving to Guideline 401k or something similar.  If it's a large company, I think you can go to ombudsperson or similar in order to push from perspective that they have a legal fiduciary obligation to make sure the plan is set up, monitored and managed for the “sole benefit” of the employees. I wouldn't get that firm with a small company - small, tightknit company I would go with the "Hey, this is good for you personally".

https://www.cnbc.com/2018/05/09/401k-fees-are-falling-due-to-lawsuits-over-charges.html
https://www.entrepreneur.com/article/295621

Thanks. Useful links and advice. This all new to me, so research is very important