After Waking From Financial Hibernation, I Need Suggestions (long).

[GatorBuzz]

I found this site after looking through Andrew Tobias’s site. I’m really thankful I did. It’s been extremely informative. Now, for my story.

I was financially ignorant for the first 31 years of my life. Never thought about retirement or saving really until about a year ago. Then I had to figure out what this investing world was all about. I grew up in a relatively poor, blue-collar family so I was never really taught “the system” growing up. As with most things, it took me a while for the financial light to come on and to really pay attention to my own (and now family’s) financial future. Maybe it was the birth of my daughter. I don’t know. Anyway, as result of this revelation, I’ve done the following over the last eight months or so:

• Read Tobias’s TOIGYEN.
• Read The Millionaire Next Door
• Read Your Money or Your Life.
• Asked many questions of a good friend who is a financial advisor (taking his official Financial Consultant exam in early June).

Based on the above, I have done the following:

• Opened two Roth IRAs, one for my wife and one for me, maxing them both out for the year at 4,000 this year. They are both in Vanguard Target/Retirement Funds.
• Maxed out my 401k to the company’s matching, which is 10% of my salary with a 50% match from the company.
• Put $3,000 in Vanguard’s Total International Index Fund.
• Put $10,000 in a Rainy Day Fund in ING Direct’s Orange Savings at 4.5%.
• Have about $8,000 now in my 401k.
• Began making our will and other legal documents with WillMaker.
• In the process of getting Term Life insurance for wife and I through USAA.
• Paid off all debt, except house and a new car (used late model 4Runner with low miles) we had to buy b/c my old one was totaled. I’m paying the car off fairly quickly and am down to 16k. I’m going to pay $2,000 a month for the next eight months to wipe that out.

Now, our demographics:
Location: North Florida
Ages: I’m 32 and DW is 29.
Home: Own a house with $143,000 on mortgage but with about $160,000 in equity.
Household Income: about $100k-105k combined (wife works part time, so that child doesn’t have to go to daycare)
Monthly Expenses: Roughly $3300
Children: 1 daughter, 11 months old, will probably have two more over the next six or seven years.
Expected FIRE date: Not sure. I’ve been playing around with the FIREcalc, but I’m just not sure. I’d like to see where I am in a year of saving/investing and they maybe calculate. I’m really new to this, so I don’t want to make assumptions out of ignorance.

Lastly, we are in the process of remodeling our house to sell in about a year. We bought a fixer-upper, and b/c I grew up in a construction worker’s household am able to do almost all of the work myself. We plan to do this again with another fixer upper and between the two profits (this house and the next one) hope to have a house paid off in four to five years. In case you’re wondering, the huge Florida real estate bubble that burst is not in my neck of the woods up here. That is more in central and south Florida. Housing is still affordable and in relative demand in my area.

My questions: Any of you see any glaring omissions that I should consider? Does everything above seem on the right track? Any suggestions? Any further reading suggestions?

Thanks in advance.

[crazy connie]

You are awake! That is the biggest and the 1st step. Continue your educational campaign. The decisions you have shared with us appear to be well founded. Keep learning and tweaking the plan in an evolutionary fashion and avoid knee jerk decisions. You will do just fine! CONGRATULATIONS!!!

[yakers]

I like that you have become more aware and put saving on autopilot. All that is left is to continue the plan and leave something to live on nicely now too. Its the journey.

[Kamwak]

Great story GatorBuzz...I didn't wake up until I was 40...you will get to FI quicker than you think. I am now 53 and will be retiring at 55 1/2. Keep reading and planning. This website is a terrific education. Keep it going...you have MO on your side now!

[lswswein]

You are on the right track. Remember there is no maigc bullet! Keep saving and make sure you DCA into your Taxable accounts also. Good luck with the fixeruppers

-h

[racy]

Looking good. One thing you might check is your insurance on cars & house. You can save money by raising your deductibles and/or examining whether or not you really need comprehensive on an old vehicle, etc. Do as much self-insurance as possible. (Take the savings and invest it. Possibly in a B share of Berkshire Hathaway... get on the winning side of the insurance game!)

[GatorBuzz]

Thanks very much for the encouragement! It's great to find a forum like this. Outside of one friend, who I mentioned above, I don't really have anyone to discuss these things with. Most of my friends are where I was mentally a year ago. When I try to talk with them about what I'm doing they look at me like I'm some kind of counter-culture maniac. Either that or they are totally disinterested. Either way, glad I found this group. Thanks again for listening and the encouragement.

racy, I will definitely look into those suggestions. Thanks for your input and insight. I really appreciate it.

[jIMOh]

Originally Posted by GatorBuzz

I found this site after looking through Andrew Tobias’s site. I’m really thankful I did. It’s been extremely informative. Now, for my story.

I was financially ignorant for the first 31 years of my life. Never thought about retirement or saving really until about a year ago. Then I had to figure out what this investing world was all about. I grew up in a relatively poor, blue-collar family so I was never really taught “the system” growing up. As with most things, it took me a while for the financial light to come on and to really pay attention to my own (and now family’s) financial future. Maybe it was the birth of my daughter. I don’t know. Anyway, as result of this revelation, I’ve done the following over the last eight months or so:

• Read Tobias’s TOIGYEN.
• Read The Millionaire Next Door
• Read Your Money or Your Life.
• Asked many questions of a good friend who is a financial advisor (taking his official Financial Consultant exam in early June).

Based on the above, I have done the following:

• Opened two Roth IRAs, one for my wife and one for me, maxing them both out for the year at 4,000 this year. They are both in Vanguard Target/Retirement Funds.
• Maxed out my 401k to the company’s matching, which is 10% of my salary with a 50% match from the company.
• Put $3,000 in Vanguard’s Total International Index Fund.
• Put $10,000 in a Rainy Day Fund in ING Direct’s Orange Savings at 4.5%.
• Have about $8,000 now in my 401k.
• Began making our will and other legal documents with WillMaker.
• In the process of getting Term Life insurance for wife and I through USAA.
• Paid off all debt, except house and a new car (used late model 4Runner with low miles) we had to buy b/c my old one was totaled. I’m paying the car off fairly quickly and am down to 16k. I’m going to pay $2,000 a month for the next eight months to wipe that out.

Now, our demographics:
Location: North Florida
Ages: I’m 32 and DW is 29.
Home: Own a house with $143,000 on mortgage but with about $160,000 in equity.
Household Income: about $100k-105k combined (wife works part time, so that child doesn’t have to go to daycare)
Monthly Expenses: Roughly $3300
Children: 1 daughter, 11 months old, will probably have two more over the next six or seven years.
Expected FIRE date: Not sure. I’ve been playing around with the FIREcalc, but I’m just not sure. I’d like to see where I am in a year of saving/investing and they maybe calculate. I’m really new to this, so I don’t want to make assumptions out of ignorance.

Lastly, we are in the process of remodeling our house to sell in about a year. We bought a fixer-upper, and b/c I grew up in a construction worker’s household am able to do almost all of the work myself. We plan to do this again with another fixer upper and between the two profits (this house and the next one) hope to have a house paid off in four to five years. In case you’re wondering, the huge Florida real estate bubble that burst is not in my neck of the woods up here. That is more in central and south Florida. Housing is still affordable and in relative demand in my area.

My questions: Any of you see any glaring omissions that I should consider? Does everything above seem on the right track? Any suggestions? Any further reading suggestions?

Thanks in advance.

I am 34, and in some ways you are ahead of me (more home equity and you have wills).

I would not concern yourself witha FIRE date, until you have around $1 M saved (12*3300*25), you'll be guessing anyways. Of course if you have no mortgage, this number shoots down considerably ($750,000 if your mortgage payment is 1100 now).

[DangerMouse]

I just want to say well done for your efforts to reform your financial self. Don't be thinking 31 is too late, as we did not get our act together until we were 32 and here we are at 45 able to FIRE if we choose.

[Coach]

GatorBuzz, I think you're doing great. You've got your expenses under control, you're saving a lot, you understand about sweat equity, and you're rapidly paying off what I bet is the last car loan of your life. And you're still young. And way ahead of most of your contemporaries.

And on top of that, you'll raise 3 kids in a terrific personal financial environment and give them a great example for their adult lives.

Without a specific ER date in mind, you can just look at things from the other angle -- FIRECalc is great for projecting a possible retirement date. You'll have a lot of fun in the years ahead watching that date get closer and closer.

What a great start! And welcome to the board.

Coach

[bright eyed]

congrats to you! i don't think 31 is that late either...i am 30 and we are trying to turn this ship around as well and you are well ahead of us. i really wish i had the construction "know how" that you do - that is invaluable!!

[theoldwizard]

WOW ! You went from asleep to full speed ahead. I didn't wake up until I was 45 and now I am 53 and retired !

It sounds like you are doing everything correct. Watch how your money is invested in your 401K. I have dozens of friends at Ford who still have 100% of their 401K in Ford stock (their own choice). Spread your 401K around. Don't be too conservative (i.e. at your age, you can afford to hold less than 20% "fixed income" in your IRAs and 401Ks)

Eventually (maybe another 10-15 years) you will have some "mad money" to play with, but that is something else entirely.

[TromboneAl]

Another book you might enjoy: The Complete Tightwad Gazette

[Meadbh]

Great story GB! You have the right attitude and you and DW are quite young, so you are way ahead already. You have a major asset in your construction skills, which can be leveraged into a real estate portfolio if you choose.

[mickeyd]

Hey GatorBuzz,

It's darn difficult to try to improve on your plan and past actions. You seem to be on the near-perfect track to financial happiness. Congratulations.

Put $10,000 in a Rainy Day Fund in ING Direct’s Orange Savings at 4.5%.

You might consider Vanguard Prime MMF which has a yield of about 5.11% as your contingency fund. (I had to make some suggestion)

[GatorBuzz]

Just wanted to thank you all for your kind words of encouragement and your advice. Both have been extremely helpful. I even showed the wife a few of them, hoping to allay any of her remaining fears of me putting our toe into the investing waters. Thanks again. I really appreciate this group and look forward to a lot of discussions on the boards.