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.
Topic: Race from $2M to $4M...and Beyond! (Read 1633660 times)
