Author Topic: Small Windfall, Asset Overview, Future Planning, Overall Goals  (Read 3042 times)

SpicyUnagi10

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Small Windfall, Asset Overview, Future Planning, Overall Goals
« on: October 23, 2017, 03:53:57 PM »
I've been basically given a $60,000 windfall; would like recommendations MMM style on how to best tackle opportunities. I will note I have signed on for a solar panel system on my house, which will eat about 33% of this number (cash install, no loans, after all rebates and credits).

Tax Wise, what I have written about below is not including this, primarily because we have both gotten new jobs, with significant raises with in the last few months, so for all intensive purposes, our income this year was only $60,000 with it all shoved into tax deferred spaces, before $60,000 windfall, which helps offset the rest of Cap Gains with solar investment. I've resolved this part already, it's how to use the money effectively, as I've made sure we get every dime, beyond the solar investment. Income reads as over $120K this year, but will have a fed tax liability of $0 or neg, to use rest of solar credit over next 4 years (which most will be right away in Apr 2018).

It will replace 100-102% of the total electrical output I need (75-80% is charging our 2 Chevrolet Volts, somewhere around 12,000 KW annually, generating $1500-1600 in utility bill discounts, or effectively wiping it out to 0, and I get to lock the electrical rate that I pay for 25-30 years, system is 10.23KW, grid tied). Estimated payback in this state is 9-10 years at .14/KW, faster if energy rates move higher faster than inflation, and the state returns to annual net metering (monthly right now). This is fair to me, as we expect to be here, at least that long.

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Overall:


DINKs, late 20s, no student loan debt (children start next year, hopefully!) (Yes, very generous parents, please don't shoot me) (both started working right after college, at 22/23)

We have excellent credit 760+ combined, with her above 800.

Assets:
$268,000 House, ~22% Equity (~$54K, 30 Year Note at $214,400, 3.875% Closing ran about $1800 all after negotiating all the line items (Willing to refinance in Dec before Fed Rate changes prime to lower interest rate, purchased this year)
$11,000 Used Chevy Volt 1 (this is with Depreciation from original price $13,400, with 27K Odo)
$14,400 Used Chevy Volt 2 (same thing, this one was $16,400 with 37K Odo)

Investments:
$85,000 His IRA
$15,000 Her IRA
$11,000 His 401K (new employer this year)
$20,000 Her 401K (new employer at end of month, to roll to VG IRA, 401K sucks on fees, so we use mine)
$7,000 HSA balances

Cash:
$55K ($40K Windfall leftover + additional funds to pay for property tax, and other bills EoY, Emergency Savings, earning 3% on $30K, rest at 1% in banks (LMCU, Ally)) E fund got wiped out early this year due to job loss last Nov, slowly rebuilding before windfall.

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Liabilities&Bills/Month:
$1070 Mortgage
$500 Prop Tax (Before state credits, lottery discounts, married credits)
$280 ~$3000 left on note for Volt 1 (Want to payoff now, 1.99% APR, 3 year note originally)
$350 ~$8000 left on note for Volt 2 (2.19% APR, 3 year note originally)
$120 (Medical, Dental, Vision, Catastrophic Plan HSA, $3K Single Deductible, $6K Family)
$62 Cell Phones 3 Lines $100 Promo at TMobile One, then 20% Lifetime Account Credit, then -$10/line for under 2GB/mo use, (1 Line is free, so no discounts), + state tax.
$35 Internet 15/3 Line from TWC, until we forever lose this price thanks to Charter prob in 2 months
$135-150 Utilities, Effectively $0/month after solar install, with 9-10 years prepaid at today's kw/hr price (Elec, Gas, 95%, 5%, again mostly cars)
$25 Water
$22 Sewer
$221 Insurance (Cars (Full Coverage until <$10,000 assets (1-2 years out, for now on my schedule, unless market responds differently for used car value), and loans are gone), House, $1MM Umbrella Policy, Term Policy (His), $1000 Collision, $500 Comp, $5000 House All Perils, expect basement sewer/sump backup, which is $1000, $5000 yields a savings of $2)
$5 Gas (Vehicles), if we need it, just sits in account, 95% of daily driving requires no gas
$200-250 food, depending on our planned meals weekly
$250 Home Maintenance (House is 10 years old)
$20 Her Gym, uses daily, if not every other day
$60 Her Strength training, once week, always attends
$50 Dog (Food, Meds, Toys, Treats, Allocation for Annual Physical, we do all maint on nails, etc.)
$200 Pocket Money ($100 to each)
$100 Misc (Eat out, personal care products)
$200 Vacation Account

Total: $3970.00

Pants on Fire Liabilities:

$6,600 out on credit card at 0% until Feb 2018, (mostly to cover us when I had very little income from unemployment insurance, and the e fund ran out after 6 months). Will pay in full when due. Pay $250/month at the moment. Thank god I have enough to cover before 22.5% scrape rate, but I have avenues to refi for 12 mo at 1.99% through credit unions, if something catastrophic happens. Haven't paid a dime of interest (yet).

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Income:
$111,000 Gross Income

Main Savings Discounted from Gross:
-$11,000 IRAs (Trad, unless I can keep myself in the 15% bracket for Roth, which is what I normally do)
-$16,000 401ks (Mine is free, Wife's new job will also be free)
-$6,700 to HSAs (Both Singles, will move to my HC EoY, due to new employer no Health Benefits, I have excellent benefits)

Taxes:
$77,300 AGI
-$15,500 in Itemized (State, Property Tax, Mort Interest, Mort Interest will be higher next year, could double up I guess)
-$8,100 Personal Exemptions
=$53,700 Taxed (Until Kids, very hard to reach saver's credit now without, and other sweet credits and deductions to follow later, without massive 401k contributions, which we could do now, but want to prep for kid expenses Y1-Y4 for first child)
 
Effective Fed will be 6-10%
Effective State will be 2-4%

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Other Notes:

Expect to max childcare accounts for deductions, child care credits, maybe reach saver's credit, and possibly earned income credit, both state and fed. Attempting to keep tax liability to a big fat 0%, then start working on Roth steps and other avenues to cover us later in life. Education accounts for college (etc.)

Once vehicles and other outstanding debts are gone, cash goes right back to investments, or e fund, earning at least 1%. First $30K at LMCU gets 3% between our accounts.

I attempt to keep a 35% savings rate, considering long term child raising expenses (though I know the MMM ways to alleviate most of them thanks to this group!) 50%/15%/35% breakdown on gross. 15% grows max to 20% as expenses fall, or we choose to put into investments (which is 90% of the time).

My main goal, was to get us 1:1 on the house liability to all assets and investments, either by aggressively paying down the mortgage if it were a 15 year note (~$500 month/more when possible), or investing all available capital, past child expenses, starting next year (hopefully). We're about $20,000-$30,000 short right now, if you take out the cars as assets. There's of course liabilities on them at the moment as well.

Insurance wise, we have very competitive insurance (home, auto, umb, term life), for what we have to carry. Next best after having it quoted with 30 different insurers (through personal checking around, and independent reps, no one could come within our bill without +20%, nor make as good of a policy). Our state had a massive increase in rate policies this year (around 12% due solely to risk table adjustments, thankfully we are low risk on the new tiers, considering they take credit scores into account).

Roast us please.

Gin1984

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Re: Small Windfall, Asset Overview, Future Planning, Overall Goals
« Reply #1 on: October 23, 2017, 04:06:31 PM »
I don't see much to roast but I'd recommend starting a taxable stock account with the left over $40K windfall money.  Also is there a reason for $16K in the 401ks not $18K?  That would give you 10 months of an emergency fund, less though if you have to COBRA.  I'd also say, unless you need the debts paid down for some reason like one of you plan to become a SAHP, keep investing instead of paying off debt except for that credit card.  Just pay that off.
Btw, what is the break down on income?  Meaning can you both pay the bills on one salary, if the other loses their job?

MDM

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Re: Small Windfall, Asset Overview, Future Planning, Overall Goals
« Reply #2 on: October 23, 2017, 04:09:38 PM »
Roast us please.
Ok: there are no question marks. ;)

SpicyUnagi10

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Re: Small Windfall, Asset Overview, Future Planning, Overall Goals
« Reply #3 on: October 23, 2017, 04:38:41 PM »
I don't see much to roast but I'd recommend starting a taxable stock account with the left over $40K windfall money.  Also is there a reason for $16K in the 401ks not $18K?  That would give you 10 months of an emergency fund, less though if you have to COBRA.  I'd also say, unless you need the debts paid down for some reason like one of you plan to become a SAHP, keep investing instead of paying off debt except for that credit card.  Just pay that off.
Btw, what is the break down on income?  Meaning can you both pay the bills on one salary, if the other loses their job?

Normally, would be 18K, for all intensive purposes, on the 401k.

His Income 60K
Her Income 51K

We can cover them, basically.

Gin1984

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Re: Small Windfall, Asset Overview, Future Planning, Overall Goals
« Reply #4 on: October 24, 2017, 08:02:16 AM »
Then definitely just pay off the credit cards and start a taxable, don't prepay anything else.

Raenia

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Re: Small Windfall, Asset Overview, Future Planning, Overall Goals
« Reply #5 on: October 24, 2017, 08:41:35 AM »
Normally, would be 18K, for all intensive purposes, on the 401k.

You asked for roasting, so I'm gonna pick: the phrase is "for all intents and purposes."  If you'd only said it once I'd have let it go, but it came up twice and just rubbed me wrong :)

As far as what to do with the money, agreed to open a taxable account.  You're already taking advantage of all your tax-advantaged options, and the interest rates on the car and mortgage loans are low enough that it's not worth prepaying.  Make sure to pay off the credit card before interest kicks in, and put the rest toward taxable investments.

Tuskalusa

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Re: Small Windfall, Asset Overview, Future Planning, Overall Goals
« Reply #6 on: October 26, 2017, 01:22:59 PM »
I’m probably the odd person out on this one, but I hate pretty much all debt. I hate owing money to others If I had a windfall, I’d pay off the cars and the credit card. Between that and the solar, you would be very well set up for a low-cost future.

Then you could use your cash surplus each month for savings, so you never take our carloans and credit card debt again!