33, with some questions if you don't mind

[Mudd]

Hello ! My name is Mudd (long story on that one) and I've been lurking here for about a year after finding you guys while on the Simple Living website. My wife and I are 33. We live in a less expensive area of the country with our 2 children. I am a district attorney. The second half of the TV show law and order is what I do for a living. Although at times stressful -homicide/rape trials and boring(paperwork days), I mostly enjoy my w*rk. Still other than being married I can't see doing anything for another 20 or so years. This is our financial situation:

Mortgage-160,000 (worth about 220k)
SL 16000
That's it for debt.
Assets
28k in our Roths
21k in my 457
17k in Mrs. Mudd's 401
13k in a rollover Roth

79 total for retirement

25k in various Cash, ING, MM, Checking
7k in ESA/529's
2 paid for cars and a houseload of other junk.

Considering starting at ag 27 spent a lot on fertility and adoption fees, we always made saving a priority.

My goal is financial independence. I can't believe the feeling I now have with the extra cash in ING. I see the light and w*rk has been more enjoyable with the cushion. I think I'll always dabble in law to keep busy. Some people I work with do 1 week on/ 1 week off. To me that sounds perfect when the kids are older, but at 55-I'm gone.

We are currently putting away (with Mrs.'s match) 18k a year for Retirement.
13k a year in savings (mostly ING-due to election cycles I want a big cushion).
4k a year into college.
and lastly an extra $100 a month towards mortgage.

Also if I work until 55 I would get medical for life and a 60k a year non-Cola'd pension.

My questions (sorry for going on so long)

1. Are we doing o.k.? My goal is to be able to easily walk at 55, but if the city gets rid of medical benefits, then 50 (I would then get my pension at 60). By 50 house should be paid off or at worst a mortgage less than 50k

2. Once I get 25k in the ING alone (17k now) I was thinking of investing in Vanguard Index funds. Would this be prudent?

3. I am planning on never receiving SS, my pension, or inheritances(probably get at least 250k total inheritances, but not relying on it). But with my county pension am I saving too much? or not enough? Combined my wife and I make 120k, but I just received my last raise ever except for Cost of living (which in the last 4 years we got one at 1.8%). Maybe when I get closer to 50 I'll start counting more on the pension. Wise or foolish?

4. My philosophies with money come from LBYM, Dave Ramsey, and the wealthy barber book. I've purchased and read ESRBob's book and loved it. When is Nords coming out with a book? (seriously I'd buy it)

5. My philosphy on life is that my Dad died last year at 61 after battling cancer for 8 years. Up until the last few months of his life he lived a great life. My goals personally are to be prepared for the future, yet live in the now-that's why I try to smile while I'm paying up the wazoo for a Disney trip for the fam this year.

Thanks for all the great ideas I've gained from this forum. My short term goal is to be 35 w/ no debt except the mortgage/ 100k in retirement/ and 25k in ING. Your responses would be greatly appreciated.

Mudd

 

[SteveR]

Hello ! My name is Mudd

I'm sorry.

Seriously, welcome to the board. I'm sure others will be along soon to offer their welcomes and ideas on your information.

Mortgage-160,000 (worth about 220k)
SL 16000
That's it for debt.

25k in various Cash, ING, MM, Checking
7k in ESA/529's
2 paid for cars and a houseload of other junk.

My goal is financial independence. 

Good goal to have. FI is pretty much a requirement to ER. Working in ER is a favorite past time by several members of this board and as you know is highly recommended by ESR Bob in his book. If it makes you happy then go for it.

We are currently putting away (with Mrs.'s match) 18k a year for Retirement.
13k a year in savings (mostly ING-due to election cycles I want a big cushion).
4k a year into college.
and lastly an extra $100 a month towards mortgage.

Also if I work until 55 I would get medical for life and a 60k a year non-Cola'd pension.

1. Are we doing o.k.?  My goal is to be able to easily walk at 55, but if the city gets rid of medical benefits, then 50 (I would then get my pension at 60).  By 50 house should be paid off or at worst a mortgage less than 50k

Your house payment can easily be gone by then by putting in more that you are per month but I would build up an Emergency Fund of at least 3-6 months of basic living expenses in a MM or similar account first. Then you can work on the other stuff includeing your SL debt.

2. Once I get 25k in the ING alone (17k now) I was thinking of investing in Vanguard Index funds.  Would this be prudent?

You can do that now. Many have low minimums of $2k-3k so you could open one now.

3.  I am planning on never receiving SS, my pension, or inheritances(probably get at least 250k total inheritances, but not relying on it).  But with my county pension am I saving too much? or not enough? Combined my wife and I make 120k, but I just received my last raise ever except for Cost of living (which in the last 4 years we got one at 1.8%).  Maybe when I get closer to 50 I'll start counting more on the pension.  Wise or foolish?

The safest way would be to not count on the pension and figure your income stream needs from other sources. If it does come through for you then you can live higher on the hog. The worse case would be you saved too much. Nothing is a sure thing these days.

4. My philosophies with money come from LBYM, Dave Ramsey, and the wealthy barber book. I've purchased and read ESRBob's book and loved it.  When is Nords coming out with a book? (seriously I'd buy it)

I can see it now "Underwater ER" or "How to Submarine Your Retirement" Just kidding Nords.

5. My philosphy on life is that my Dad died last year at 61 after battling cancer for 8 years.  Up until the last few months of his life he lived a great life.  My goals personally are to be prepared for the future, yet live in the now-that's why I try to smile while I'm paying up the wazoo for a Disney trip for the fam this year.

Save for tomorrow but live for today is a good combination for a balanced life. I never want to be on my death bed saying "I wish I had....."

My advice is to save enough to cover your expenses for 3-6 months; pay off the SL debt, keep funding the other things you already are funding and once the debt is paid focus on saving in a variety of Index funds. Live below your means and save at least 70% of each merit or COLA increase. Don't get in debt but don't save so much you cheat yourselves out of living while your kids are young. Tomorrow is not promised to any of us.

Good luck and welcome.

 

[Gumby]

My advice is to .... pay off the SL debt 

I would want to know the relative interest rates of the student loan and mortgage, as well as whether he can deduct the student loan interest, before making a decision on where to direct any extra debt reduction payments.

 

[justin]

I'd take part or most of the 13k/yr going to ING and redirect it to Vanguard index funds now. You've got a $25k cash cushion already built - I assume plenty for 3-6 months of living expenses.

You've got a 20 year time horizon, so I'd be mostly in stocks at this point, assuming you don't mind the day to day volatility. Dollar cost average into the stock indexes at VG. After 20 years, you'll have a lot of money.

 

[Mudd]

I locked my SL in at 4.0%, and can deduct. With ING giving 4.35% I was going to keep loading up in ING.

Thanks for the advice. I'll start looking into the VG funds now.

Oh yeah one dream I forgot to mention. I am currently in negotiaitions to purchase a 67 Mustang from a family member. That is 5000-6000 dollars I can't wait to invest in next spring(usually get about 1500-2000 tax return + savings).

Thanks for the replies
Mudd

 

[Rich_by_the_Bay]

Welcome to the board. You'll be glad you found it -- I was. I share your unusual syndrome: I really like my work, too, just have a little too much of it. I'm 57 looking to semi-retire in 3 years, so at the other end of the specturm time-wise.

Here are some random thoughts on your questions. Smarter members will surely fill in the gaps.

1. Are we doing o.k.? My goal is to be able to easily walk at 55, but if the city gets rid of medical benefits, then 50 (I would then get my pension at 60).

If you haven't played with it, try FireCalc. Don't be afraid to play some wild "what ifs" and you'll soon get a sense for what it takes.

The thing is that it can appear almost hopeless at first -- you are saving what seem to be obscene amounts and get nowhere. However, the beauty of compounding is that the bigger it get, the bigger it gets, if you know what I mean.

2. Once I get 25k in the ING alone (17k now) I was thinking of investing in Vanguard Index funds. Would this be prudent?

Absolutely. It's how you allocate that counts; no shortage of opinions on that one around here.

3. I am planning on never receiving SS, my pension, or inheritances(probably get at least 250k total inheritances, but not relying on it). But with my county pension am I saving too much? or not enough? Combined my wife and I make 120k, but I just received my last raise ever except for Cost of living (which in the last 4 years we got one at 1.8%). Maybe when I get closer to 50 I'll start counting more on the pension. Wise or foolish?

Every buck saved now is worth alot more at FIRE than a buck saved when you're 50. I'd go nuts now, though not to the point of having a lousy life. If you miss a month's target here and there, no big deal.

Good luck with the plans.

 

[Texas Proud]

I would check ING for fees.... I have a friend and a sister with 403(b)s in ING and their fee is very high!!!

My sister's is 1.25% for fees, plus a .25% for record keeping... You would think that ripping you off for 1.25% you would be able to keep records, but maybe not..

 

[brewer12345]

I would check ING for fees....  I have a friend and a sister with 403(b)s in ING and their fee is very high!!!

My sister's is 1.25% for fees, plus a .25% for record keeping...  You would think that ripping you off for 1.25% you would be able to keep records, but maybe not..

OP is talking about ING bank accounts, which have no fees. However, they have fallen behind on raising interest rates along with competitors.

 

[Coach]

OK if I call you Harcourt? The board has to be full of geezers who will get the joke

The fact that your're actually planning for FI puts you in a real minority among your peers. For that alone I think you are doing ok.

I envy you. I wish I'd been that smart at 33.

Coach

 

[SteveR]

OK if I call you Harcourt?  The board has to be full of geezers who will get the joke

The fact that your're actually planning for FI puts you in a real minority among your peers.  For that alone I think you are doing ok.

I envy you.  I wish I'd been that smart at 33.

Coach

Count me in the geezers who used to be amazed at Star Trek.


For the "younger crowd"....

Harcourt Fenton "Harry" Mudd was a notorious con artist encountered on numerous occasions by the crew of the USS Enterprise. His interstellar exploits began when he deserted his nagging wife Stella on Earth sometime in the mid-23rd century, and became a peripatetic grifter who roamed through the galaxy practicing various cons, schemes and scams.

 

[macdaddy]

Mudd I have always been curious, as a district attorney can you set up a part time practice outside of work hours to do freelance legal work for clients (if there is no conflict of interest... maybe estate planning stuff)?

 

[spideyrdpd]

I guess one would have to be a trekky to now remember that harry Mudd was harcourt ?

Is 25k a magic number? I would leave that alone and start the index fund asap and have it be an automatic plan that comes straight out of checking .

I would also put the roths on automatic.

Sounds like your doing well already !

 

[maddythebeagle]

What are you investing in with the 457 plan...? Many of these have some good index funds with low fees. My plan has 4 index funds with fees ranging from 0.02-.10%...also this is a good place to put money if you want to retire early since you can take money out at seperation of service....I would really hit it hard...

 

[Mudd]

MacDady- Can't do DA work on the side where I'm at. Some smaller towns you can. When I "retire" I plan on getting some malpractice ins. and dabbling in the law mostly to keep social right now.

Spideyrdpd- The 25k is not a magic number per se. We auto invest for the max of 2 roths, a 457, a 401, and $600 a month for ING. My wife is 95% with the plan, but if I auto invest anymore she may mutiny. 25k saved is her wow number. Once we hit that 'll be going for the VG Index funds.

Maddy- My 457 doesn't have the most choices. We went Dreyfus Small Cap(15%) Fid Contrafund(20%) Fid Eq Income(25%) Fid. Puritan Fund (10%) Gartmore Midcap (10%) Temp Foreign Fund (20%). I got this mix from a FP that has worked with my family for years. Pretty decent returns.

Whenever I plan future values, I never count on over an 8% return. Usually also run numbers for 5% return.

Has the new FireCalc confused anyone else? Where do I put in expected pension numbers? The old FireCalc I believe I've understood, this one confuses me.

Sorry more of a Star Wars guy, not a trekkie, but I'll have to look into the mudd thing on Star Trek.

Thanks so much for all the responses
Mudd

 

[Rich_by_the_Bay]

Has the new FireCalc confused anyone else? Where do I put in expected pension numbers? The old FireCalc I believe I've understood, this one confuses me.

On the expenses tab, you can enter amounts to decrease or increase your withdrawals starting at a specified year. For a pension, just DECREASE your withdrawals by your annual pension income, and check Adjust for Inflation if it's COLAd.

You can use the same technique for kicking up your withdrawals after your exhaust your post-tax savings and have to start allowing for taxes.

 

[Martha]

Mudd I have always been curious, as a district attorney can you set up a part time practice outside of work hours to do freelance legal work for clients (if there is no conflict of interest... maybe estate planning stuff)?

I think that would be a bit like a proctologist doing neurology on the side.

 

[Mudd]

Martha- Although I have stuck it to defendant's in criminal cases, I've never considered myself a proctologist. You are definitely correct, people always say the smartest you are as a well rounded lawyer is the day you take the bar exam. Someday I'd like to learn (re-learn) other types of law. Challenging, but fun.

 

[justin]

Martha- Although I have stuck it to defendant's in criminal cases, I've never considered myself a proctologist. You are definitely correct, people always say the smartest you are as a well rounded lawyer is the day you take the bar exam. Someday I'd like to learn (re-learn) other types of law. Challenging, but fun.

I wouldn't call DA's bottom dwellers of the legal profession by any means. Now, PI ambulance chasers just might be the "proctologists" of the legal profession. They certainly are the butt of many jokes.

 

[Martha]

   You are definitely correct, people always say the smartest you are as a well rounded lawyer is the day you take the bar exam.  Someday I'd like to learn (re-learn) other types of law.  Challenging, but fun.

For sure.

This morning I had a contact question that involved parol evidence and integration issues. I went cross-eyed and gave it to my summer clerk. He researched the issue and had a memo to me with recommendations in an hour and a half.

Next thing you know, I will have a Rule of Perpetuities issue or the Rule in Shelley's case will become important.

 

[justin]

For sure.

This morning I had a contact question that involved parol evidence and integration issues. I went cross-eyed and gave it to my summer clerk. He researched the issue and had a memo to me with recommendations in an hour and a half.

Next thing you know, I will have a Rule of Perpetuities issue or the Rule in Shelley's case will become important.

Or maybe the Erie Doctrine.

 

[Martha]

Or maybe the Erie Doctrine. 

Yes there is federal common law. There must be, damnit.