emergency fund nearly funded, seeking help to optimize future savings

[PathtoFIRE]

Hi all, I've been following along for the past few months, and feel like I generally at least know of most of my options, but we are about to finish funding our emergency fund by the end of August, and wanted to see if anyone has any suggestions.

Current savings:
-401k(me)/TSP(DW): maxing at $35k/yr total, and we get about $15k/yr matching ($50k/yr)
-Taxable advisor-managed Fidelity joint account: $3k/mo
-529s for 2 kids: $150/mo
- ~6k/mo excess which goes into our essentially 0% savings account emergency fund

Plan starting in September:
-Continue 401ks
-Increase taxable advisor-managed to $4k/mo
-add 3rd 529 for 3rd kid, fund all 3 at $1k/mo combined
-pay down personal 15k loan at 4k/mo (no interest, but just want to get rid of)
-once above loan is paid, save 4k/mo in a taxable Vanguard account
-will NOT prepay mortgage or student loans at this point

Other info that may be of help:
Taxes: solid 33% marginal federal bracket, no state income taxes (TX), $12.5k/yr property (I know, I know, to be addressed after we've lived in the house for 2 years come May 2014)
Ages: 34, 32, 4, 2, 3mo
Debts: mortgage is 4.25% and large, $150k in student loans at 3.25%
Savings: $105k in 401k/TSP, $90k in IRAs (all deductible contributions), $80k in taxable Fidelity, $5k in 529s, $80k emergency fund (by 9/2013)


Other possibilities:
-Emergency fund: the amount is non-negotiable right now, but have been looking at alternative places to put. I was thinking about short term treasuries or a high-yield savings account. The issue is that we use BoA and have their platinum service, which requires at least $50k balance in your accounts, and I'm not really sure what we lose if we allow this to lapse. Our mortgage rate was based on being in the program, but I don't think that can go up, and our favorite rewards credit card is part of this as well.
-Backdoor Roth: I asked our advisor, and they seemed uncomfortable with the vague legality. I know my 401k allows me to transfer my IRA, but I'm not sure if the federal TSP program would allow my wife to do the same, anyone know?
-HSA: seems like a great way to save, but as far as I can tell, my work only offers traditional health plans, so no-go for now
-Real estate: DW is not comfortable being a landlord, so for the moment this is a no
-Non-deductible IRA: my understand from a previous post that I commented on was that there was no real advantage to using this over a taxable account if you are not going to do the backdoor Roth
-Get rid of advisor: DW agrees this will probably go upon early retirement, but for now we both like having someone to help us evaluate and to bounce ideas off of. I rationalize it as a kind of diversification, where only a part of our savings will be managed and we'll manage the rest, which reduces the overall cost.


Well there's a snapshot of my current and future savings plan, would anyone do anything significantly different? Thanks for all your help.

[mowgil]

1-Why is the emergency fund amount non negotiable? That is a lot of cash doing very little in terms of building wealth. If you really need that kind of money for an emergency fund, I would still switch to either a high yielding savings account, or consider starting to move some of the fund (incrementally) into something like I bonds which are inflation adjusted. Another possible alternative would be to get a line of credit against your home so that you have access to emergency cash without it sitting doing nothing.
I highly doubt the benefits for your bank account are so good that they are worth the earnings the idle cash is missing out on.

2-What sort of fees are you paying on the advisor & managed funds? The fees make a big difference over time so you should really take the time to A-Know exactly how much the fees are, and B-figure out if you can get the same peace of mind in terms of bouncing ideas off of someone at a better price.

There is more optimization that could occur but only if you are comfortable making such changes. The two above are IMO fairly easy and painless changes. One other easy thing to do would be take an hour to research HSA accounts. A quick google search returned non employer options at multiple banks, including your own. This has the potential to reduce your tax liability.

Final thoughts, You are saving 145K annually excluding matching? but you haven't told us your income (aside from a ball park based on marginal tax rate) or consumption habits. Regardless your savings rate is much higher as a % of income than the average person so you are on the right track, but is a lot easier to find places to optimize when we can see the whole picture.

[aj_yooper]

Good on maxing the 401k s and getting the match too!  You are epic $ amount savers too!

It is not clear how you want to optimize your EF if you are tied to BoA.  I would explore the fine print with that.  The size of the EF is to taste.

You have less space to invest as you are not eligible for Roths or a HSA.  I like that you are doing 529s as they give some tax free returns for your family. 

IMO, paid advisers, unless they are the likes of William Bernstein, are not a good idea.  Advice on taxables is pretty simple, IMO.  Go to Bogleheads at:  http://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit  The adviser's (presumed 2%) fee seems like a waste to me.  Find a real friend to talk to about investing; the adviser is not a buddy, but a guy trying to make bucks off you.  From your account to his.  Simple.

For the EF, you could look into EE bonds or maybe tax free municipals (?) or ladder CDs. 

I understand you want to put money away now as fast as you can so that you can get closer to ER, but the only spot you can do that in now is your taxable account so you need to be careful what you do there. 

Personally, I dislike paying interest so I would start hosing the mortgage and SL too, but not everyone does that (but MMM does).

It looks like you have a good start on your investments towards FI, but, if your monthly expenses are high, the stash gets multiplicatively larger.  Are you comfortable with your monthly costs? 

[madage]

Regarding the 529 accounts - where are they? Since you're in Texas and pay no state income tax, there's no incentive to us Texas' (terrible) 529 account. I highly recommend Utah Education Savings Plan. Very low fees combined with excellent fund choices.