Hello, this is my first post and would like to share a bit about us. My husband is employed in real estate field (various jobs) and I as an accountant in Southern CA. We’ve been working nonstop since high school in a company as self-employed until recently when I started a fulltime job in 2018.
After reading this forum and various blogs and calculating our assets and expenses, we realize that we don’t seem to be on track to retire at all especially with the inconsistent income. Aside from real estate, we really have no clue on much else. We would like to ask the community for your advice on how we can consolidate our funds and hopefully be FI in 20 years.
Life Situation: File Married Separate, Husband (36), me (32). Planning to have children soon. H works various hours about 10 hours daily.
Gross Salary/Wages:
H: $50,000 (Self Employed/Average) / year
Me: $47,000 / year
Taxes:
H: $14k (Varies, this number is being used for budgeting purpose)
Me: $10k (Fed & SS: $8/CA: $2k)
Total Taxes: $24k/year
Deductions:
Traditional 401k: $235/Month (6%), Employer match 3%
Roth 401k: $350/Month (9%)
Total: $7,050 | $587.50/Month
Adjusted Gross Income:
H: $36k (We budget this amount annually, Anything extra goes to paying off debt or various savings)
Me: $30k
Total: $66k | $5,500/Month
Expenses:
Mortgage, property tax, Ins: $1,700/month
Utilities: $300/month
Gym: $40/month
Auto Ins: $110/month
Cell Phone: $160/month (6 lines - family)
Health Ins for both: $900/month (we both have medical issues)
Mother’s Term Life Ins: $150/month
Universal Index Life Ins (both): $750/month
Household & Food: $500/month
Auto Fuel: $400/month
Total Expenses: $61,320 | $5,110/Month
Emergency Expenses:
$6,000/Annual due to doctor’s fees
In 2018, we spent $50,000 to remodel the home that we are currently live in (will never do this again)…
Assets:
Trad 401k: $6,200
Roth 401k: $2,300
Roth IRA: $11,000 Mutual Funds
Roth IRA: $5,600 Various stocks
Roth IRA (H): $3,500 Mutual Funds
2 2008 Lexus: $8,000
1 Honda Civic: $3,000
1 Honda Civic: $1,000 (Will Sell)
Home’s Equity: $360,000
2 HSA: $5,000 (been reduced due to the medical expenses in 2019)
Emergency Fund: $5,000
Total Assets: $410,600
Liabilities:
Mortgage $238,000 ($272,000, Originate date 2013, $1200/month, remaining 23 yrs)
Credit cards & Personal Loans $18,000 down from $36,000 earlier this year (various movements of funds around to various credit cards, interest is less than 3%)
Questions:
1) We are looking for advise on how to consolidate our various investments in order to obtain FI. The reason why we had so many investments because we did not have 401k in the pass 10 years and the mutual funds that we currently have are very slow to grow and low dividends disbursements. Regarding personal Roth IRA’s, should we consolidate the personal Roth IRAs into two Vanguard / Fidelity accounts and purchase VTI or other Fidelity funds?
2) Regarding 401k, would it be best to invest in traditional 401k or Roth 401k? I would like to eventually max out the 401k contribution. Currently, 6% is being invested in traditional 401k and 9% into Roth 401k. Should I continue to invest in 401k?
3) Our major expense that deplete our cash is the life insurance. We purchased these 2 years ago with built-in retirement options because we had no 401k and didn’t really maximize our Roth IRA because the increase was so low, and purchasing more properties was not possible due to the low cash reserves for down payments.
One insurance is $800,000 and the other is $250,000. If you’re familiar with IUL, supposedly we only purchase the difference between the growth cash value and the insurance value down the line. This will keep the cost of insurance lower than the actual amount. Now, we are regretting it after learning more about other investment options. Cancelling it now will not be an option due to the huge cancellation fee. Should we cancel these down the line?
4) We are anticipating to bring home $20,000 or more on top of the number we have above. These incomes tend to be in lumpsum that’s why we don’t know how to exactly budget these. We tend to just pay off debt or spend quite a bit. Besides maximizing the Emergency Funds, HSA, and Roth, how should we turn these extra incomes to produce passive income without having to wait until we turn 59 ½ to withdraw the funds so that we can eventually be FI in hopefully 20 years if not earlier especially now that we are in a bull market?
Thank you for taking your time reading and helping us.