EvrClrx311
Full time employment: Posting here.
- Joined
- Feb 8, 2012
- Messages
- 648
Hi, my name is Evr (29) and I live in the suburbs of D.C. I married young 3 weeks after we graduated from college. DW is a year behind me in age. We have two children (3yrs and newborn) and plan for one more within the next couple years figuring nothing will keep us on our toes like being outnumbered at home .
JOB (110K + benefits)
I am an Engineer and have a very stable position and good opportunity for job growth. My base salary started at 75K (2005) out of school and has risen steadily to 110K (today). I typically get another $15,000-35,000 on top of that in bonuses, overtime and fringe payouts. I've worked for the same company since graduation and although I am not naive enough to think I'll stay with them for an entire career (the average engineer today turns over about every couple years) I am happy and can see myself staying put for at least another 5 years.
DW used to work, but currently stays at home with our kids. Our plan is to have her at home until our 3rd is in kindergarten. Currently we're entertaining the idea of starting a home business that she can manage part time in an area she loves, education.
RETIREMENT ($153,000)
I am honestly ashamed reading others posts about how they have grown their retirement nest eggs, because although I think we're doing extremely well there, it was forced on us rather than something we had any control over. My company had an outstanding retirement package when I started working for them, they set aside 20% on top of employees salaries into their 401(K). Starting about a year ago they dropped that to 9% and now match an additional 5% on 6%. So for the first time in my career I'm finally contributing something towards my retirement, but I've had the luxury of 20% being socked away by default all this time.
My main question below relates more specifically to 401K vs Roth since just last year I starting putting a little bit into a Roth.
OTHER SAVINGS ($19,500 kids college, $12,000 emergency fund, $11,000 taxable investments)
We are putting away $250 a month and $3,000 up front for every child we have. I have decided not to take advantage of 529 plans because I don't like losing that control over the investments, and knowing if my child gets a scholarship I can't just use it to add to my own savings... but we have all of that money being earmarked for our kids' education. Currently the value is $19,500 and is invested according to the acceptable 18 year risk (I don't mind how wild the ride is if it means a better return in the end).
Emergency fund could definitely use some work because it was just devoured by refinance last summer to drop our interest rate from 6.25% down to 4.50%. It's currently sitting at about $12,000 and we hope to get it to $25,000 by next summer.
Other investments are at $11,000 and were also tapped for the refinance. Looking back I wish I had saved the cash instead of reducing our rate. Was nice to see $100,000 in savings/emergency/investments outside of our retirement - but that underwater thing on the house was just getting too emotionally draining (we put down close to $75,000 to make that refinance possible... maybe it wasn't worth the 1.75% rate drop).
EDUCATION
I'm currently enrolled in a master program in Information Security (basically a MS in Hacking), with 3 classes left to complete. I plan down the line to apply for a PhD program in either Physics or another computer related field (the difference between something I LOVE and something I just enjoy). That will probably take a long time with how busy life is these days.
HOME ($375,000 mortgage, $425,000 value)
We bought a house at the absolute worst time, summer of 2005. Back then those foolish lenders (actually, were they the foolish ones or us?) approved us to build a half million dollar townhouse on stated income while DW and I were still in school. We got married 21 days after graduating and signed/moved into our new house 3 days after that. Luckily we had the opportunity to refinance out of the ARM 6 months later when the house appraised for (or at least they told us) 20% higher than what we bought it for. Phew...dodged that bullet. I can see now how foolish a decision that was, but at the time I (we rather) didn't know any better - "you're stupid not to buy a house right now, if possible"
As I mentioned above, we did one more refinance last summer to get our rate down from 6.25 to 4.50. That cost us tying $75,000 into equity, but did reduce our monthly payments by about $800 and a lot less money is being thrown towards interest.
Currently the house situation is in a much more reasonable state, our mortgage is approx $375K and the house is worth $425K (huge improvement compared to just a year ago when we owed $475,000 and the house was worth $390,000. It is due to be paid off when we are in our mid to late 40s, although I don't expect we'll stay put all that time. Our goal is to find that dream home for a bargain over the next 10 years that we can move into and pay down prior to reaching 50.
OTHER DEBT
We have one car completely paid off that I'm driving and plan to drive until it dies (8-15 years down the road). The other was a recent purchase that I think we went a little overboard on - a new 2012 Odyssey Touring Elite (price tag around $42,000). We're paying that off over the next 5 years at 1.75% and like the Accord, plan to keep it until it dies - or our kids get to HS age, whichever comes first.
No credit card debt. Never have, never will...
QUESTION
Last year I read a few articles about 401K vs Roth for younger investors. They almost all implied that you need to take advantage of Roth while your income and taxes are low.
I have the ability to switch the 6% I'm putting towards my 401K (that is matched) into a Roth 401K. Is that a good idea in my current situation?
By my calculation, if I continue setting aside 20% a year I'm going to be well into the millions by the time I reach 50 for the 401K... wouldn't it be better to unload the taxes now?
I'm also looking for advice on how not to lose this opportunity to get a leg up on retirement. I know that kids and cars are money pits, and that large houses (particular newly built ones) aren't the best of investments.
I think the main part we need help on is trying to Live Below Our Means. I find that we stretch ourselves thin financially (avoiding the major red flags, but CC debt) on our regular income, and have only been able to build savings through unconventional means (ie: $10,000 fringe payout going straight to emergency fund, $15,000 bonus going straight towards taxable savings, $8,000 tax refund that I've allowed to get abnormally high... on purpose... goes into savings.) Seems the only time we save is when we receive these huge amounts of money all at once. Ironically, even the $500 a month we're putting into the self appointed "college fund" is being stolen from the taxable investment account and shifted over to the fund I've labeled "EF" for education fund... which means, don't touch this ever, even for a refinance .
Its scarey to think that if we had those cash amounts coming in monthly rolled into our income, that it would be spent along with everything else and we'd really be living no different - might have a few more flashy toys, but nothing to show for it down the line. Funny how it disappears without a trace when it drips into the checking account like that. Maybe I need to change my withholding to a number 5 ticks higher (at least we are very good at not spending what isn't there... as in never getting out of control and carrying a balance on the CC)
Longer term, I think our time to really buckle down and surge towards that $1,000,000 mark will be as soon as DW starts working again. I'd like to see if it might be possible to start sooner... I hate knowing that $5,000 saved today will mean who knows how much I don't need to save later... or how many years more I'll have to work to reach that magic number that works for us.
Thanks for reading!
JOB (110K + benefits)
I am an Engineer and have a very stable position and good opportunity for job growth. My base salary started at 75K (2005) out of school and has risen steadily to 110K (today). I typically get another $15,000-35,000 on top of that in bonuses, overtime and fringe payouts. I've worked for the same company since graduation and although I am not naive enough to think I'll stay with them for an entire career (the average engineer today turns over about every couple years) I am happy and can see myself staying put for at least another 5 years.
DW used to work, but currently stays at home with our kids. Our plan is to have her at home until our 3rd is in kindergarten. Currently we're entertaining the idea of starting a home business that she can manage part time in an area she loves, education.
RETIREMENT ($153,000)
I am honestly ashamed reading others posts about how they have grown their retirement nest eggs, because although I think we're doing extremely well there, it was forced on us rather than something we had any control over. My company had an outstanding retirement package when I started working for them, they set aside 20% on top of employees salaries into their 401(K). Starting about a year ago they dropped that to 9% and now match an additional 5% on 6%. So for the first time in my career I'm finally contributing something towards my retirement, but I've had the luxury of 20% being socked away by default all this time.
My main question below relates more specifically to 401K vs Roth since just last year I starting putting a little bit into a Roth.
OTHER SAVINGS ($19,500 kids college, $12,000 emergency fund, $11,000 taxable investments)
We are putting away $250 a month and $3,000 up front for every child we have. I have decided not to take advantage of 529 plans because I don't like losing that control over the investments, and knowing if my child gets a scholarship I can't just use it to add to my own savings... but we have all of that money being earmarked for our kids' education. Currently the value is $19,500 and is invested according to the acceptable 18 year risk (I don't mind how wild the ride is if it means a better return in the end).
Emergency fund could definitely use some work because it was just devoured by refinance last summer to drop our interest rate from 6.25% down to 4.50%. It's currently sitting at about $12,000 and we hope to get it to $25,000 by next summer.
Other investments are at $11,000 and were also tapped for the refinance. Looking back I wish I had saved the cash instead of reducing our rate. Was nice to see $100,000 in savings/emergency/investments outside of our retirement - but that underwater thing on the house was just getting too emotionally draining (we put down close to $75,000 to make that refinance possible... maybe it wasn't worth the 1.75% rate drop).
EDUCATION
I'm currently enrolled in a master program in Information Security (basically a MS in Hacking), with 3 classes left to complete. I plan down the line to apply for a PhD program in either Physics or another computer related field (the difference between something I LOVE and something I just enjoy). That will probably take a long time with how busy life is these days.
HOME ($375,000 mortgage, $425,000 value)
We bought a house at the absolute worst time, summer of 2005. Back then those foolish lenders (actually, were they the foolish ones or us?) approved us to build a half million dollar townhouse on stated income while DW and I were still in school. We got married 21 days after graduating and signed/moved into our new house 3 days after that. Luckily we had the opportunity to refinance out of the ARM 6 months later when the house appraised for (or at least they told us) 20% higher than what we bought it for. Phew...dodged that bullet. I can see now how foolish a decision that was, but at the time I (we rather) didn't know any better - "you're stupid not to buy a house right now, if possible"
As I mentioned above, we did one more refinance last summer to get our rate down from 6.25 to 4.50. That cost us tying $75,000 into equity, but did reduce our monthly payments by about $800 and a lot less money is being thrown towards interest.
Currently the house situation is in a much more reasonable state, our mortgage is approx $375K and the house is worth $425K (huge improvement compared to just a year ago when we owed $475,000 and the house was worth $390,000. It is due to be paid off when we are in our mid to late 40s, although I don't expect we'll stay put all that time. Our goal is to find that dream home for a bargain over the next 10 years that we can move into and pay down prior to reaching 50.
OTHER DEBT
We have one car completely paid off that I'm driving and plan to drive until it dies (8-15 years down the road). The other was a recent purchase that I think we went a little overboard on - a new 2012 Odyssey Touring Elite (price tag around $42,000). We're paying that off over the next 5 years at 1.75% and like the Accord, plan to keep it until it dies - or our kids get to HS age, whichever comes first.
No credit card debt. Never have, never will...
QUESTION
Last year I read a few articles about 401K vs Roth for younger investors. They almost all implied that you need to take advantage of Roth while your income and taxes are low.
I have the ability to switch the 6% I'm putting towards my 401K (that is matched) into a Roth 401K. Is that a good idea in my current situation?
By my calculation, if I continue setting aside 20% a year I'm going to be well into the millions by the time I reach 50 for the 401K... wouldn't it be better to unload the taxes now?
I'm also looking for advice on how not to lose this opportunity to get a leg up on retirement. I know that kids and cars are money pits, and that large houses (particular newly built ones) aren't the best of investments.
I think the main part we need help on is trying to Live Below Our Means. I find that we stretch ourselves thin financially (avoiding the major red flags, but CC debt) on our regular income, and have only been able to build savings through unconventional means (ie: $10,000 fringe payout going straight to emergency fund, $15,000 bonus going straight towards taxable savings, $8,000 tax refund that I've allowed to get abnormally high... on purpose... goes into savings.) Seems the only time we save is when we receive these huge amounts of money all at once. Ironically, even the $500 a month we're putting into the self appointed "college fund" is being stolen from the taxable investment account and shifted over to the fund I've labeled "EF" for education fund... which means, don't touch this ever, even for a refinance .
Its scarey to think that if we had those cash amounts coming in monthly rolled into our income, that it would be spent along with everything else and we'd really be living no different - might have a few more flashy toys, but nothing to show for it down the line. Funny how it disappears without a trace when it drips into the checking account like that. Maybe I need to change my withholding to a number 5 ticks higher (at least we are very good at not spending what isn't there... as in never getting out of control and carrying a balance on the CC)
Longer term, I think our time to really buckle down and surge towards that $1,000,000 mark will be as soon as DW starts working again. I'd like to see if it might be possible to start sooner... I hate knowing that $5,000 saved today will mean who knows how much I don't need to save later... or how many years more I'll have to work to reach that magic number that works for us.
Thanks for reading!
Last edited: