Race from $2M to $4M...and Beyond!

[Louise]

I would love the group's opinion on how much cash/after tax money we should have on hand. I think we are probably way under what we should have. I think right now, we might have about 8K of accessible cash and an untapped 100K HELOC available until 2028.

Right now spouse is maxing out his 401K and HSA. Any remaining monthly funds our Roths. In other words, we save plenty, but there's not much left for regular savings.

I'm not crying poor because I am in this group, but it feels like manufactured stress! We have to stick tight to a budget every month. I'm just wondering if we should back off on our 401K contributions? It seems like it would be better to just make sure our HSA/Roths are funded. We don't really make enough to do it all though. Our insurance and property taxes really skyrocketed this year and we would like to do a few things as a family before our nest empties in a couple of years.

Not really enough information to know and it is somewhat a personal decision just as much as it is a financial one, but with a $100K HELOC (for now) that should provide a lot of flexibility in an emergency.  In the past I sued my HELOC to bridge large purchases and sometimes month to month lumpy expenses (i.e. property taxes and insurance due in same month) and then pay it off the next month. 

My view is that the amount of cash that you have should be roughly 6-12 months expenses plus whatever amounts of large items you expect to pay for over the next 12 months (vacation, car, HVAC, etc.)

I forgot to mention that my spouse is over 59.5, so we have  access to a decent pool of money. I think a year in a HYSA would be pretty good, but then that's in his Roth anyway... I think I'm just overthinking about this.

[Louise]

I would love the group's opinion on how much cash/after tax money we should have on hand. I think we are probably way under what we should have. I think right now, we might have about 8K of accessible cash and an untapped 100K HELOC available until 2028.

Right now spouse is maxing out his 401K and HSA. Any remaining monthly funds our Roths. In other words, we save plenty, but there's not much left for regular savings.

I'm not crying poor because I am in this group, but it feels like manufactured stress! We have to stick tight to a budget every month. I'm just wondering if we should back off on our 401K contributions? It seems like it would be better to just make sure our HSA/Roths are funded. We don't really make enough to do it all though. Our insurance and property taxes really skyrocketed this year and we would like to do a few things as a family before our nest empties in a couple of years.

This actually came up with my spouse and I yesterday!

We were discussing some upcoming unanticipated lumpy expenses (healthcare, car repair, etc...) and noted that we feel cash poor despite having plenty of money in 401K's, Taxable Brokerage, Roth IRA's, and House Equity. We continue to max 401K's because of the immediate tax savings.

We decided just to sell some appreciated equities in the Taxable Brokerage, and... problem solved.

Psychologically, it's kind of hard to sell stocks when you've been buying them for years, but being cash poor when you've got money just seems king of... silly.

JGS

In our case, I think it's really because I want to spend (I didn't say we, because it's really me)! I'd like to take a nice overseas trip before our child leaves for college, maybe a couple of home improvement projects, etc. I kind of wish we had less in an IRA and more in a taxable, but I'm not sure that's best either. Unlike most people here, I can be a little impulsive and the IRA kind of acts like a guardrail for me.

[Bateaux]

What's happening y'all.
Some crazy stuff since my last posting about a boat. In fact I was on board a boat I pretty much had decided to buy. 29K for a 24 foot, 2015 Sea Hunt with a 2019 250 Suzuki outboard and a great aluminum trailer. Call from the wife came in that our son a cancer survivor has some reoccurance of cancer.  She said cancel the boat and focus on our son. I couldn't argue so I drove away from a great deal on an awesome boat. The day before I was on a 64 mile Florida off road bicycle ride in 96 degree heat. I got dehydrated and was rolling around cramping in a ditch. A caring individual drove by on an ATV and handed me cold water and pickels with juice from his cooler. I was able to complete the ride but with pain. I'm 56 and should be out on powerboats with cold drinks, not peddling a bike through sand in dangerous heat. Anyway, I digress.
Back to the son. He's going to need surgery and treatment, but it looks promising.  We went to MD Anderson in Houston last week. They are getting treatment plans together.  I booked our stay there in an Extended Stay hotel, because it was the closest place and looked good in pictures. It was a dump. I realized once there that there is a really nice hotel a block further away, The Blossom.  My son and I walked there to see what luxury looked like. It was so nice. I'd already paid for that night, our last night there, but considered just booking it for the last night anyway. We have to return to MD Anderson the first week of July and I'm ready to book the Blossom right now. This is what the money we saved is for. Will we get a boat for Florida? Probably. For now our focus is getting our son well again and helping him with his expenses.  We're pretty positive that he'll be OK. My point is, this is why I worked till 55 to lock in healthcare and a pension for life. In my first 15 months of retirement,  I haven't spent even a 2 percent withdrawal rate. If anything, our withdrawal rate is dropping.  We bought a boat for the Louisiana house last year and I paid off some stuff.  I've pulled 30k this year thus far and it's almost July! I would have pulled another 30K for the boat I didn't buy. So I've pulled less than 1 percent this year thus far. I'm back in Florida this week solo to do some yard work and more bicycling. I'll try not to dehydrate and cramp in a ditch again.

[Geppetto]

@Bateaux
This is Exhibit A to MMM's Position of Strength view of personal finance. Getting to relax and do what you want is great, but achieving a Position of Strength is what I think it's really about. A position from which to fire all imaginable artillery at the worst of what life can bring to you and the people you care about. If the worst never comes, that's a bonus. But it probably will in one form or another.
Best wishes for a full recovery for your son.

[jeroly]

I would love the group's opinion on how much cash/after tax money we should have on hand. I think we are probably way under what we should have. I think right now, we might have about 8K of accessible cash and an untapped 100K HELOC available until 2028.

For me, answering this question depends on what you mean by 'cash [...] on hand' - do you mean in checking accounts? Actual cash? Bond funds?  Money market funds?

Personally I don't think you need much cash if you've got liquid investments and especially if you have an HELOC. 

I am at around 63% equities these days and much of the other 37% is in money market funds so I don't currently need to sell equities or cash out bonds or bond funds to fund my ongoing expenses.

I try to keep between $5k --> $10k in my checking account at any given time, backed up by a good chunk of my non-equity money in MM's that I could pull out if necessary if I want/need to make an unplanned purchase. Housing costs are on autopay from the checking account. I know it's not the most efficient from an interest income perspective but I prepay my Medicare and Medigap for the year in January so I don't forget and don't have to worry about forgetting; it's not a big number so it probably costs me around $100 in lost interest income for the year versus keeping it in MMs and withdrawing each month's charges as they come due.

I try to keep around $200 in the house so I don't have to dash out in a panic to hit up an ATM to pay the housecleaner when she comes.  That's just about the only thing I need cash for these days.

I personally find that when I have a big chunk of change in the checking account or a lot of cash in my wallet then I'm much more tempted to make purchases.  If I have to take the extra step of pulling stuff out of Vanguard then I'm much less likely to buy whatever I'm lusting after.

I'm just wondering if we should back off on our 401K contributions? It seems like it would be better to just make sure our HSA/Roths are funded.

It probably makes sense to have some money in after-tax for easy access early in FIRE, but not to the extent that you forego any 401(k) matches.  It's great to fund your HSAs and Roths but that's not necessarily a substitute for having direct access to the funds - and as those are the best ways of getting tax-free growth you would be giving up those tax-free gains with any withdrawals.  Look at stuff elsewhere on this site as well as Bogleheads about investment order, but I think the advice you'll find will be that it's probably approximately best to (a) fund your 401(k)'s so as to at least get all matches, (b) max out HSA, (c) divvy up the rest of available savings into either Roth or 401(k) (depending on your anticipated tax situation in retirement) and after-tax brokerage.

What's happening y'all.
Some crazy stuff since my last posting about a boat. In fact I was on board a boat I pretty much had decided to buy. 29K for a 24 foot, 2015 Sea Hunt with a 2019 250 Suzuki outboard and a great aluminum trailer. Call from the wife came in that our son a cancer survivor has some reoccurance of cancer.  She said cancel the boat and focus on our son. I couldn't argue so I drove away from a great deal on an awesome boat. The day before I was on a 64 mile Florida off road bicycle ride in 96 degree heat. I got dehydrated and was rolling around cramping in a ditch. A caring individual drove by on an ATV and handed me cold water and pickels with juice from his cooler. I was able to complete the ride but with pain. I'm 56 and should be out on powerboats with cold drinks, not peddling a bike through sand in dangerous heat. Anyway, I digress.
Back to the son. He's going to need surgery and treatment, but it looks promising.  We went to MD Anderson in Houston last week. They are getting treatment plans together.  I booked our stay there in an Extended Stay hotel, because it was the closest place and looked good in pictures. It was a dump. I realized once there that there is a really nice hotel a block further away, The Blossom.  My son and I walked there to see what luxury looked like. It was so nice. I'd already paid for that night, our last night there, but considered just booking it for the last night anyway. We have to return to MD Anderson the first week of July and I'm ready to book the Blossom right now. This is what the money we saved is for. Will we get a boat for Florida? Probably. For now our focus is getting our son well again and helping him with his expenses.  We're pretty positive that he'll be OK. My point is, this is why I worked till 55 to lock in healthcare and a pension for life. In my first 15 months of retirement,  I haven't spent even a 2 percent withdrawal rate. If anything, our withdrawal rate is dropping.  We bought a boat for the Louisiana house last year and I paid off some stuff.  I've pulled 30k this year thus far and it's almost July! I would have pulled another 30K for the boat I didn't buy. So I've pulled less than 1 percent this year thus far. I'm back in Florida this week solo to do some yard work and more bicycling. I'll try not to dehydrate and cramp in a ditch again.

@Bateaux ... man that sucks. I wish the best for your kid and it's great that you're not only available to help financially, but you can also be physically present -  we sometimes forget, when doing our FIRE calculations, that it's a great gift to be able to be there for others, which couldn't happen as easily if we're still w#$%ing away most of our days.

[2sk22]

I would love the group's opinion on how much cash/after tax money we should have on hand. I think we are probably way under what we should have. I think right now, we might have about 8K of accessible cash and an untapped 100K HELOC available until 2028.

Right now spouse is maxing out his 401K and HSA. Any remaining monthly funds our Roths. In other words, we save plenty, but there's not much left for regular savings.

I'm not crying poor because I am in this group, but it feels like manufactured stress! We have to stick tight to a budget every month. I'm just wondering if we should back off on our 401K contributions? It seems like it would be better to just make sure our HSA/Roths are funded. We don't really make enough to do it all though. Our insurance and property taxes really skyrocketed this year and we would like to do a few things as a family before our nest empties in a couple of years.

In the link I posted above,  (see this), Christine Benz says:

And if I were to analyze the biggest financial “mistakes” that my husband and I have made over our investing lives, I’m quite sure holding too much cash would be one of our biggest. It certainly detracted from our investment returns, especially when you consider how low safe yields were over the past few decades. Yet our cash—like the cash in the Bucket approach that I often write about—provides us with a big intangible benefit: peace of mind. If we’ve needed to buy a car or if our old house has required an expensive repair, we’ve had the funds to cover the expense without raiding our long-term accounts. I’m OK with that trade-off.

I am in agreement with Christine Benz on this: being able to hold cash is indeed a luxury but, if you can, its well worth it for peace of mind.

[tooqk4u22]

What's happening y'all.
Some crazy stuff since my last posting about a boat. In fact I was on board a boat I pretty much had decided to buy. 29K for a 24 foot, 2015 Sea Hunt with a 2019 250 Suzuki outboard and a great aluminum trailer. Call from the wife came in that our son a cancer survivor has some reoccurance of cancer.  She said cancel the boat and focus on our son. I couldn't argue so I drove away from a great deal on an awesome boat. The day before I was on a 64 mile Florida off road bicycle ride in 96 degree heat. I got dehydrated and was rolling around cramping in a ditch. A caring individual drove by on an ATV and handed me cold water and pickels with juice from his cooler. I was able to complete the ride but with pain. I'm 56 and should be out on powerboats with cold drinks, not peddling a bike through sand in dangerous heat. Anyway, I digress.
Back to the son. He's going to need surgery and treatment, but it looks promising.  We went to MD Anderson in Houston last week. They are getting treatment plans together.  I booked our stay there in an Extended Stay hotel, because it was the closest place and looked good in pictures. It was a dump. I realized once there that there is a really nice hotel a block further away, The Blossom.  My son and I walked there to see what luxury looked like. It was so nice. I'd already paid for that night, our last night there, but considered just booking it for the last night anyway. We have to return to MD Anderson the first week of July and I'm ready to book the Blossom right now. This is what the money we saved is for. Will we get a boat for Florida? Probably. For now our focus is getting our son well again and helping him with his expenses.  We're pretty positive that he'll be OK. My point is, this is why I worked till 55 to lock in healthcare and a pension for life. In my first 15 months of retirement,  I haven't spent even a 2 percent withdrawal rate. If anything, our withdrawal rate is dropping.  We bought a boat for the Louisiana house last year and I paid off some stuff.  I've pulled 30k this year thus far and it's almost July! I would have pulled another 30K for the boat I didn't buy. So I've pulled less than 1 percent this year thus far. I'm back in Florida this week solo to do some yard work and more bicycling. I'll try not to dehydrate and cramp in a ditch again.

I am glad the prognosis is good and is great to be in a position to help (time and money).  Well wishes your way.

[Bateaux]

@Bateaux
This is Exhibit A to MMM's Position of Strength view of personal finance. Getting to relax and do what you want is great, but achieving a Position of Strength is what I think it's really about. A position from which to fire all imaginable artillery at the worst of what life can bring to you and the people you care about. If the worst never comes, that's a bonus. But it probably will in one form or another.
Best wishes for a full recovery for your son.

Thanks to all of you for the well wishes. I'm confident they will get him cancer free again.
I was Artillery in the Army and that is a perfect description of the position we want to be in. The number one problem most face in medical crisis is how can we fix it. The overbearing question is always how do we afford it. We're going in fighting from that position of strength. Our focus here is the cure and supportive care.
Y'all take care. I'll update when the good news comes.

[Louise]

For me, answering this question depends on what you mean by 'cash [...] on hand' - do you mean in checking accounts? Actual cash? Bond funds?  Money market funds?

Personally I don't think you need much cash if you've got liquid investments and especially if you have an HELOC. 

 

I mostly meant HYSA or taxable accounts. I decided that we will continue on as we have been. What's that expression- you should dance with the date you brought?

@Bateaux Best wishes to your family!

[Fomerly known as something]

Good luck to your son @Bateaux.  When my coworkers wife had treatments at MD Anderson, they ended up staying at a condo in Galveston during the longer stretches so that when they weren’t in treatment they weren’t around other people being treated.  It gave them space for it.

[TempusFugit]

In our case, I think it's really because I want to spend (I didn't say we, because it's really me)! I'd like to take a nice overseas trip before our child leaves for college, maybe a couple of home improvement projects, etc. I kind of wish we had less in an IRA and more in a taxable, but I'm not sure that's best either. Unlike most people here, I can be a little impulsive and the IRA kind of acts like a guardrail for me.

That’s a different question of course than just a cash allocation.

If you and your spouse are not in alignment on actual spending that’s a potential problem.  I think sometimes people get too focused on the financial goals to the detriment of living the life they want to live.  Your kids are only kids once. The chances for a family vacation are limited and it’s easy to look back and regret that you didn’t do some of those things when you had the chance.  Once kids go off to college, it’s a new world. They have their own lives.

Anyone in this group is in the privileged position of being able to afford to take advantage of fleeting opportunities.  Putting things off can become a bad habit that results in later regret.

[Bateaux]

Good luck to your son @Bateaux.  When my coworkers wife had treatments at MD Anderson, they ended up staying at a condo in Galveston during the longer stretches so that when they weren’t in treatment they weren’t around other people being treated.  It gave them space for it.

It's a 5 hour drive from our Louisiana home. It's not too hard to get there since air travel isn't required. I just booked two nights at a nicer hotel ( Double Tree) for next week. We'll probably still book the Blossom eventually. It didn't seem as convenient as the DoubleTree which is only a block or two away.