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Old 09-18-2013, 11:02 AM   #1
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Hello

Very recently found this message board and reading as much of it as I can as my wife and I plan for ER down the road.

About me - 33, wife 31, and we have an infant son and will probably have at least one more child. I am a federal employee and she works for an association - we live in the DC metro.

Assets - Combined 180k between my TSP (140k) and her 401k (40k). Total HHI is about 180k before taxes and we put about 30k into our pretax accounts each year. We owe just under 400k on our house worth just under 500k on a 3.75% 30 year mortgage (28.5 years left), and we are making additional principal payments that would have the house paid off in about 13 years from now. A few months' expenses in cash but otherwise no other major assets.

Debts - 8k in student loans for the wife, about 60k for myself (of which I will pay about half, the other half being discharged in approximately 8 years). 20k owed on a car loan with ~4 years left. No other debt.

Overall plan - Best case scenario I would like to work until about 50, wife can retire then too or keep working if she enjoys it at the time. Hard to predict where she will work in 17 years. Plan on contributing to pretax accounts until age 45 and then focus on building the ER egg that will take us until we draw from our retirement accounts at 65. House will be paid off when I am 46 and should have no student loans or other debt by then so our expenses should be relatively low. At 50 or whenever our children are out of high school will sell the house and move to a much lower COL area within Virginia to maintain residency while they are in school (state schools). After that who knows.

Hoping we can make it, we are just plugging away. I need to learn more about anything we can do to maximize the likelihood of best case scenario happening. I know we have a long road ahead but at the same time it looks like a reasonable plan using fairly conservative projections. Thanks to everyone for all of the great info and discussion on this site!
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Old 09-18-2013, 11:25 AM   #2
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Welcome!! You guys are off to a great start, for sure.

My question would be why worry about paying the house off in 13 years if you're going to be working for 17 more? At that interest rate, assuming you are an equity investor, you're giving up 2-3% or more growth on that money for the next 17 years. Definitely focus on paying down that higher interest debt, but with a 30-year fixed at 3.75%, I would argue to reduce your extra principle payments such that it's paid off in 17-20 years (rather than 13). Just my opinion, but it could net you thousands of dollars for your nest egg.

Otherwise, it looks like you guys have a great plan. Leverage that TSP, baby. Can't beat it!
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Old 09-18-2013, 12:15 PM   #3
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Quote:
Originally Posted by nash031 View Post
Welcome!! You guys are off to a great start, for sure.

My question would be why worry about paying the house off in 13 years if you're going to be working for 17 more? At that interest rate, assuming you are an equity investor, you're giving up 2-3% or more growth on that money for the next 17 years. Definitely focus on paying down that higher interest debt, but with a 30-year fixed at 3.75%, I would argue to reduce your extra principle payments such that it's paid off in 17-20 years (rather than 13). Just my opinion, but it could net you thousands of dollars for your nest egg.

Otherwise, it looks like you guys have a great plan. Leverage that TSP, baby. Can't beat it!
You know, that's a very good point. We bought into the house when it was appraised at 420k, and it has appreciated substantially since we bought it (500k might be a little optimistic but 480k is not) with an FHA loan. Obviously we are carrying MI and our current payment plan puts us just over 22% equity against the original appraisal at the 5 year mark so we can drop the MI. I just continued the numbers out from there using these extra payments and it had us paying it off in 13 years. You are right from a numbers perspective it might make sense to time it more closely to when I retire and ease back on the extra principal payments once we drop the MI, and use that cash to invest.
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Old 09-18-2013, 01:01 PM   #4
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Welcome aboard, whipsaw. You're doing great. Sounds like you are going to fit right in here.

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