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11

Case Studies / Check-up after a few crazy years.

« Last post by WN48I1TH on Today at 01:57:01 PM »

Life Situation:
In the Before Years, spouse and I had modest public sector jobs in a MHCOL city, kept expenses low, no kids, cheap apartments. Then: COVID, first kid, cross-country move, me getting a higher paying job, spouse leaving a job, buying a first house, fixing things in that first house. Now we are emerging from that upheaval and the dust has settled somewhat. Looking for a gut check on where we stand today.

Married.
Me: 37. Spouse: 36. Dependent: 4 y.o. (not expecting any more). Midwest MCOL.

Gross Salary/Wages:
TOTAL: $125,000 annual (My salary + spouse freelance) / $10,416 monthly

Me: $110,000 W2. (I've also received annual stock awards of ~$10k/year, vesting quarterly over 4 years, but am not including them in this number.). I'm 2.5 years into a corporate job after 10 years in a much lower paying public sector position. Relatively stable company/position in a somewhat volatile industry.

Spouse: Has been building a freelance book of business since stepping away from FTW a few years ago. $12k in 2022, $16k in 2023. Clients are all stable, return customers. Also a way to keep foot in industry while also caring for the kid.

Individual amounts of each Pre-tax deductions (monthly)
401k: $1,120 + $390 match
HSA: $400 + $200 EC
FSA: $390 (daycare)
IRA: $1,166 (Spouse and I both maxing out. Have done Roth, considering doing traditional this year, so putting it here.)
TOTAL: $2,976 + $590 match

Adjusted Gross Income:
$7,440 monthly

Taxes:
Annual (from 2023 returns):
FICA: $7,584
Federal: $11,545
State: $4,751
TOTAL: $23,880 / $1,990 monthly

Note: 2023 taxes included $24,000 of capital gains. Might not be that high this year, but likely still 5-figures as I offload company stock.

Current monthly expenses:
Mortgage    $1,444
Prop. tax + insurance    $529
Daycare    $337
Groceries    $500
Household, general     $300
Electric, gas, water/sewer, phone, internet    $375
Insurance (auto, life)    $135
Home Mntnce (needs)    $250
Home Imprvmt (wants)    $115
Clothes    $80
Auto+Bike maintenance    $75
Gas    $75
Health    $50
Travel    $375
Eating out    $175
Gifts    $100
Donations    $125
Entertainment    $100
Other    $300
TOTAL    $5,440

Assets:
IRAs: $195,000 (SWTSX - Schwab total market)
Roth IRAs: $200,000 (SWTSX)
401k: $47,000 (VINIX Vanguard SP500)
HSAs: $75,000 (SCHG Schwab large-cap growth)
457: $30,000 (Small cap fund through former employer. Limited options. Stuck there to retain the 457 withdrawal privileges.)
Brokerage: $62,000 ($45,000 SCHG, $17,000 APPL) Have owned the APPL for a long time. Have been slowly selling down.
Work ESPP/RSU: $35,000: I have been cashing these out once they hit LTG tax status.
529: $4k
Cash: $5,000
TOTAL: $653,000

House purchased for $370k in 2022.

Liabilities:
Mortgage
-Original: $297,000 30 year loan. 15 years @4.125, then adjusts to market rate. Will likely move, refinance or pay off before then.
-Current balance: $287,000.


Notes
-We’ve kept cash to a minimum lately. Brokerage and HSAs are effectively our EF pools, if needed.
-Spouse currently working ~10 hours/week. Will likely grow freelance business and/or find HT or FT work in late 2025 when our kid goes to school.
-I have ~$1.1m in life insurance (including work coverage), spouse has ~$700k.
-Goals: Hazy at best. If spouse’s employment bounces back quickly, work goes well for me, and the charts stay smooth, we could be 7-10 years out from having 25x spending, especially if we attack the mortgage at the end. If those things don’t pan out, I can’t complain: We’d still be in a pretty good place. Kid being in school and whatnot may mean some work just makes sense for those years anyway — maybe that means some part-time work paired with time available to be, well, available for kid activities.

Specific Question(s):
-We’ve maxed out Roth IRAs for years. Thinking about switching to Traditional this year to cut down on a tax bill that’s been creeping up. We aren’t projecting income in retirement to be higher than current income. Counterargument?
-Company stock and spouse freelancing are places where I’m not sure we’re doing taxes 100% optimally. Time to find a tax planner (and how)?
-We each have old Universal Life insurance policies. Monthly premiums of $30 per month for $200k of coverage apiece. Been thinking about stopping that coverage, replacing the amounts with term policies if needed, and deploying $10k cash balance elsewhere (currently it earns interest at market rate, which mostly covers the premiums). Any counterargument for keeping this, or should we just cut the cord? Obviously term is the better insurance deal, but trying to think slowly about any long-term advantage to passing $ to our kid in a more tax-efficient way (or something like that) before making a move.
-Asset allocation (including allocation among account types): Glaring holes? Too low on cash?
                  

12

Ask a Mustachian / Re: Reverse DCA on Employer Stock

« Last post by leevs11 on Today at 01:54:40 PM »

Well, just do it immediately, then.  Get closure from that chapter of your life, and this decision that hangs over you enough that you asked for a second opinion about it.  Or, tie it to some non-market thing: 1/4 every Wednesday.  Of half every other Friday.  Not too often, and not something that keeps you thinking about the price.

One other factor: it's earnings season.  Will they report earnings in the next 28 days?  It's of course your call, but you might want to finish before then, or sell 1/2  before and 1/2 after.

I've been sitting on this damn thing for two years now. I'm ready to close this chapter.

Earnings is next Thursday. I think that's why I'm debating it so much.

13

Ask a Mustachian / Re: When should I start buying bonds?

« Last post by FireLane on Today at 01:54:16 PM »

The usual advice in these situations is that you don't start out by contributing 100% to stocks and then add bonds later on (unless you're building a bond tent, but that's something specific you do when you're approaching your retirement date).

Instead, you should decide on an asset allocation in advance, and every dollar you invest should follow that allocation. So for example, if you want to be 80% stock and 20% bonds, 80 cents of every dollar you contribute should go to your chosen stock fund and 20 cents to your chosen bond fund. If your portfolio drifts from those percentages, you contribute more to the fund that's under-allocated until you're back on target.

80/20 is what I use. From what I've read, it's almost as good for growth as 100% stocks, but with less volatility. But this depends a lot on you - on how aggressive you want to be and whether you have the temperament to stay calm in the face of market swings.

14

Off Topic / Re: Electric Cars: Can they finally become popular in the United States?

« Last post by GuitarStv on Today at 01:53:00 PM »

So -If the world stops using crude oil as much for transportation, how will the big oil companies react?  Will they find new uses for crude oil other than making products that burn?  Could the crude be used to make building materials, for example.  PVC  lumber is kind of good as it is waterproof.

Until everything in our world stops being made of plastic, I wouldn't be worried about oil disappearing any time soon.

15

Welcome and General Discussion / Re: RAV4, CRV, Forester or something else?

« Last post by Encinoman45 on Today at 01:51:37 PM »

Rav4 ICE 2022 and up would be my pick. Reliable 2.5 NA 4cylinder and 8 speed trans. Super fuel economy in the high 30s highway. Dual Injection. 2019-2021 have roof rail leaking issues with a dubious TSB to fix. This was quietly redesigned for 2022 and some of the torque vectoring AWD systems on the Adventure trim had some issues in early years. The Hybrids have issues with the main power cable corroding in areas with salt on roads costing 4-6K to replace out of warranty. Google Rav4 cablegate. But as said 2022 and up ICE is super solid with the all new redesign bugs worked out.

CRV with the 1.5 turbo I would avoid. Fuel dilution issues and reports of bad head gaskets are starting to come up with higher mileage and I dislike CVT trans.

CX5 are decent but a little cramped with tiny infotainment screens. I also dislike Direct Injection only due to carbon buildup on valves eventually. Mazdas are also notorious for rust issues if exposed to salt.

Forester I would possibly consider only if in a heavy snow area due to the superior AWD system. Otherwise I'm not a fan of the boxer engines prone to headgasket failure, direct injection and CVT transmissions.

I wouln't trust any Hyundai or Kias due to their horrible track record.

16

Off Topic / Re: Electric Cars: Can they finally become popular in the United States?

« Last post by pecunia on Today at 01:44:21 PM »

So -If the world stops using crude oil as much for transportation, how will the big oil companies react?  Will they find new uses for crude oil other than making products that burn?  Could the crude be used to make building materials, for example.  PVC  lumber is kind of good as it is waterproof.

17

Investor Alley / Re: Most Intriguing Investment Idea of the Day Thread

« Last post by Financial.Velociraptor on Today at 01:40:46 PM »

Article was paywalled for me.  Will check it out later.  Have a funeral to run to.
It's a free article if you set up an account with an email address and log in. Use a throwaway email account if you are afraid they'll spam you.

Weird, I have an actual account and logged in and got the paywall.  I used to be one of those people who wrote amateurish stuff for them.  I tried writing quality for them but it would always get rejected by the editorial staff.  You have to be a little sensationalist to get past the internal censors...

18

Off Topic / Re: Israel vs Hamas

« Last post by bacchi on Today at 01:40:34 PM »

From the news coverage, one might think the protests at Colombia University were a Nazi riot. Classes cancelled. Jewish students saying they don't feel safe. A presidential condemnation of "antisemitic protests". Congressional inquires. Police lines. Etc.

But the photos just look like a bunch a people milling around with a few signs condemning genocide in Gaza. I can't tell for sure, because I'm not there, but so far the painting of these protesters as violent extremists looks like one of the biggest failures of journalism since the Iraq war. People were arrested, but the news doesn't say why. Violence? Trespassing? And which side were the arrested people on?

On the other hand, journalists are reporting chants of "long live the intifada" and behaviors like protestors barricading themselves in buildings. Of course, as with any loosely organized or disorganized protest there are the people holding signs and chanting slogans that are tonedeaf and counterproductive to the overall movement. But we don't seem to be seeing riots except in the word choices of journalists and critics of the protesters.

Agreed.

The only asinine protestors I've read about were outside the campus ground. I.e., not students or faculty.

Jewish Voice for Peace's statement after their members were suspended:

Instead of listening to the calls of Columbia and Barnard students to divest from the genocide perpetrated by the Israeli government, the university has called in the NYPD to arrest students, suspend them and even expel them. At present 85 students, 15 of whom are Jewish, are suspended.

NYPD, on arresting protestors, claimed that they were peaceful.

NYPD Chief John Chell, alongside Mayor Eric Adams, said at a Thursday press conference that the “clear and present danger” was identified and determined by Columbia, not the NYPD. Chell said protesters were “peaceful” and “offered no resistance whatsoever.”

I'm sure some Jewish students and faculty (like Professor Davidai, whose main activity during the last week seems to be hyperbole and FUD) are frightened and/or angry but obviously not all. There was a Seder dinner, attended by Jewish protestors, held in the protest camp. That's not the action of an antisemitic group.

19

Welcome and General Discussion / Re: No Quality EVs Under $60k

« Last post by bill1827 on Today at 01:38:51 PM »

I was at Walmart yesterday and noticed the electric push lawn mowers there are now cheaper than even the cheapest gas lawn mower somehow. ... And assuming the battery lasts the lifespan of the mower they are cheaper to run also.

The battery of a mower won't last the life of the mower.

There's no comparison between the batteries in a car, which are massively over sized and spend most of the time at very low discharge rates, and mowers which have undersized batteries which are discharged at full output until they are empty. The life expectancy of a mower battery is short.

Replacement batteries are also pretty pricey at the moment. Hopefully they'll get cheaper in the future.

True - but I use my mower 14 times a year usually, give or take a couple mows.

I use my car probably 400 times a year.

There is significant difference in usage.

It's not the number of uses that's important but the depth of charge/discharge.

I use my mower about 40 times a year for about 2 hours a time. There are 4 batteries (total 14Ah) which will all be discharged for one cut. I have 2 batteries which have already died.

Can't say that I've noticed any loss through keeping them fully charged, but then I wouldn't.

Of course if you don't use the mower very often and not for long the batteries will last indefinitely.

20

Investor Alley / Re: Inflation & Interest Rates: share your data sources, models, and assumptions

« Last post by Financial.Velociraptor on Today at 01:37:18 PM »

I'm working on solving the mystery of why money supply stopped plummeting, starting in May 2023. I suspect this event had something to do with the shift from rapid disinflation to very slow disinflation a few months later.
[snip]

Your conclusions make perfect sense to me and reflects what I have been saying about the size of the Fed BS being so "large" in relative terms because it logically means someone in the market is getting "Crowded out".  Turns out the Fed may be crowding ITSELF out in the interest markets!