Author Topic: What to do with my money?  (Read 1404 times)

RookieStache

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What to do with my money?
« on: April 21, 2017, 09:23:03 AM »
First post! I have always been frugal but having my first child 6 months ago has really made me motivated to attempt to make the best decisions with my families money. I will breakdown my situation in hopes of getting some advice from you wise Mustache Members...

I am 28 years old, Wife 27, daughter 6 months. My salary is $50,000 (expect 4-5% raise each year) with hers being $40,000(salary is stagnant). We live in a city with an extremely low cost of living.
Purchased a house for $155,000 (Appraised at $210,000 last year). Have $110,000 left on a 15 year loan.
Owe $20,000 on new car(2015 model) with 0% interest for 4 more years, 2nd car was paid in cash(2012 model).
We are 50/50 on deciding between private and public schooling (expecting to have 2-3 kids). We live in a city where public schools offer same education as private.
We expect to pay for 100% of college education for children.
75% chance we move to "forever home" in 6-8 years. Would like to have less than $100,000 mortgage, attempting to build housing equity to accomplish this.
We have spent circa $35,000 on upgrading our home the first 3 years we have lived here and don't see any costly housing expenses in the near future. We expect this to increase our ROI.

Debts: $110,000 mortgage and $20,000 car loan. No other debts.

Current monthly investments / expenses:
Mortgage: $1,150
Extra principal payment on Mortgage: $350
Car payment - $350 (ends in May of 2021)
HSA - $200 with $25 employee match
529 College plan - $100 ($1,000 total)
His Roth 401K: 6% with 3% match ($25,000 total)
Her 401k: 6% with 1% match ($10,000 total)
VTSMX Vanguard - $20 - ($3,200 total)
Baby Savings Account - $200 - ($1000 total)

After doing some research, I am planning on moving investments / expenses to the following:
Proposed Monthly Plan:
Mortgage: $1,150
Extra principal payment on Mortgage: $350
Car payment - $350
HSA - $200 with $25 employee match
529 College plan - $100
His Roth 401K: 10% with 3% match (from 6%) (Will attempt to max out 401K when car is paid off in 4 years)
Her 401k: 6% with 1% match ($10,000 total)
VTSMX Vanguard - $20 - ($3,200 total)
Baby Savings Account - $100 (instead of $200)
Open up ROTH IRA - Max out at $5,500 a year

Notes:
- I understand our 401Ks are lacking but we found it difficult to contribute the amount we wanted with our careers not starting until 24-25 years old on top of purchasing and fixing up a house and purchasing a much needed new car.

- I understand investing all disposable income in stocks is the better "financial decision" but my wife and I feel much better with the diversified approach. She is extremely risk-averse and throwing everything into stocks would take quite a bit of convincing. 


Do you see anything I am doing that you think I should look at adjusting?

If you were in my situation, what would you do differently?

Thanks in advance for the advice!



RWD

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Re: What to do with my money?
« Reply #1 on: April 21, 2017, 10:01:43 AM »
You should probably be investing in a Traditional 401k instead of Roth 401k. You may also be better served by Traditional IRAs instead of Roth IRAs. By the way, you can open one for both you and your wife, bringing your contribution maximum to $11k. You should definitely take advantage of tax sheltered investments before paying extra on your mortgage (I'm assuming you have a reasonable interest rate).

dhlogic

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Re: What to do with my money?
« Reply #2 on: April 21, 2017, 12:45:10 PM »
You're in a good position to really accelerate your savings.

Your proposed monthly plan can be covered by your salary alone. I would consider looking into ways of increasing the savings rate now instead of later and working towards maxing HSAs, 401ks, IRAs, etc. for both you and spouse.
« Last Edit: April 21, 2017, 12:46:44 PM by dhlogic »

BigHaus89

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Re: What to do with my money?
« Reply #3 on: April 21, 2017, 02:07:56 PM »
You should probably be investing in a Traditional 401k instead of Roth 401k. You may also be better served by Traditional IRAs instead of Roth IRAs. By the way, you can open one for both you and your wife, bringing your contribution maximum to $11k. You should definitely take advantage of tax sheltered investments before paying extra on your mortgage (I'm assuming you have a reasonable interest rate).

+1. Tax savings for a Traditional 401k and T IRA would be huge.