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Hi from Orange County
Old 11-07-2013, 02:08 AM   #1
Confused about dryer sheets
 
Join Date: Nov 2013
Posts: 6
Hi from Orange County

Hi I just wanted to introduce myself since I've been trolling and reading and trying to learn and motivate myself.

I'm 32 with a 33 year old wife and 5 month daughter.

My annual salary is 115k. My wife makes 58k. But she will stop working early 2014 to be with our lovely daughter for a year. This was my request.

Debts:
Rav4EV car lease 16, 830 for 34 more months.
Mortgage: 190k, 14 years left on a 15 year fixed 3.25%. Unfortunately the townhouse was purchased for 369k and probably worth 300k now.
Nanny (for now): 1,800 / month

Assests:
100k liquid
70k in muni bonds in money market acct
215k in IRA
10k in Roth IRA
A decent amount of stock options in a start up company.

In the next year we're hoping to move to a larger house and rent the town house out. Budget of 600k.

My next milestone is 250k on my IRA. Hopefully we can stay on this path and at least be comfortable if nothing else.

This forum always motivates me and gives me more pressure to keep at saving. One thing about me is that I decided a year ago that I was tired of losing money in the stock market, which explains the conservative muni bonds. I only trade in my IRA and for some reason I make better decisions when its retirement money instead of cash in my pocket. Hopefully FIRE is feasible without much money market investing. Anyhow just introducing myself and willing to listen to any words of wisdom you want to impart.

-D
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Old 11-07-2013, 08:49 AM   #2
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Location: Charleston, SC
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Studying up on investing in your spare time will pay you better dividends than just about anything else. Simple, time-tested approaches to long-term investing can be far better than active trading in any account, be it taxable or retirement.

At your age, you are going to have either save an awful lot more money, or learn to invest in stuff that has better returns than the muni bonds. It is that simple.

We have a thread around here with suggested reading material; I would recommend you check out a few of them and read those on nights when the baby keeps you awake!

And welcome!
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Old 11-07-2013, 09:32 AM   #3
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Quote:
Originally Posted by BigDandLilD View Post
One thing about me is that I decided a year ago that I was tired of losing money in the stock market, which explains the conservative muni bonds.
-D
Hello there and welcome!

The major market indices have been doing well for the last few years. If you've been losing money, this would seem to be a good argument in favor of indexing. Why not just index as much of your portfolio as you are able, after having come up with an asset allocation?

I am definitely not opposed to the idea of trading in individual equities but if you've been doing this in the current/recent market and have been losing money, maybe that strategy is not for you.

There are people who fund their retirements (or plan to do so) using fixed income instruments but to do this, you have to save up a whole bunch more than if you plan to have a healthy dose of equities in the mix. It sounds to me that because trading individual stocks didn't work out for you, you have gone to the other extreme with the munis. Perhaps it's time to come out of hiding and consider another approach?

Anyway, best of luck and a hearty welcome.

PS - I just re-read your post and now see that you only have a portion in munis. Sorry for that - am still waking up and didn't thoroughly read your post before replying. My comments on indexing still stand though.
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Old 11-07-2013, 10:01 AM   #4
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Join Date: Jan 2013
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Quote:
Originally Posted by BigDandLilD View Post
Debts:
Rav4EV car lease 16, 830 for 34 more months.
I hope you realize that leasing a car was a mistake and do not ever lease a car again if you want to have an early retirement. This car is way too expensive in relation to your income.

With regards to losing value on your townhouse, don't sweat about it. Everyone did. Just look forward and go on with what you have.

Do you really need to move to a bigger house? It seems to me that you are already spending too much on housing. 600K would be way to much to spend on housing in relation to your income. Especially when your wife stops working, you will not be able to afford this, even if you can get a mortgage. To me, buying a big home could be the biggest financial mistake of your life.

I am asking you to question some of these major spending decisions. It seems that you are making spending decisions that are not in line with your income and priorities.

If your priority is your daughter and you want your wife to have more time with her, that is great. Almost 20 years ago, I cut down my work hours after my first child was born, made half as much as I had, derailed my career somewhat, but have no regrets. It was the right thing for us. I may not have a fancy window office because I am working only part time, but I would rather see my children than see out a window. But, I also recognized that that choice had ramifications. I would not have the money to move up to a bigger home and have expensive cars.

It is all about prioritizing and choosing what is important in your life. Your daughter will be much happier having more time with mom than with having a bigger home.

Have you started a 529 plan for your daughter? Your daughter will be much happier with a college education than with a bigger bedroom.

Be aware that even though your wife will not be working, you can still contribute to a Roth IRA for her. I would recommend that you contribute to any tax deferred plans up to a company match and then do your Roth IRAs before putting more in tax deferred.

Best of luck to you!
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Old 11-07-2013, 12:33 PM   #5
Confused about dryer sheets
 
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Thanks for all the constructive criticism. That's why this is such a great forum.

With respect to my money market investing, you all are right, I need to get back on the horse. I got greedy and slightly burned and got gun shy. I perform very well in my IRA with a mix of growth stocks and covered call plays, my 1 year return is in the 35% vs. the S&P 19.34%. I stopped investing in my money market to "protect" myself but probably did more damage. I had one bad covered call with Diamond Almond company, in heavy and bamn, financial fraud lawsuit with stock price plummeting. But looks like I'll be getting something back from them in the form of a class action lawsuit. It's a sign... At the minimum I should have money following the indices.

Yes the next house could be a bit cheaper. The Cerritos, Cypress, and La Palma are quit pricey but our hope is to get something in the 500k level.

Leasing the car was a tough decision. But the math worked out right for the time being. I had a 2009 Honda Accord Coupe that wasn't working for the new family, sold that for $10,500. The lease was 17,325 for 36 months and 2,500 credit from state, and carpool sticker. Those who live in California realize the blessing of the carpool sticker as it means more time at home with daughter. Add in that I get free charging at work, so I only charge at home on weekends. It ended up a wash in the near term. In the long term I don't have a car after 3 years.

Also, I considered my job also an investment as I work for one of the commercial space companies (run by a car company CEO) and the vested portion of my stock options are currently an unrealized 200k or so. But I might make the change back to one of the big aerospace firms soon to get more stable work hours and enjoy time with my daughter.

I plan to post some updates, next one after the beginning of year life events, to see if I'm making progress or not.

*Cheers!*
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Old 11-07-2013, 12:39 PM   #6
Confused about dryer sheets
 
Join Date: Nov 2013
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Also tax wise, maybe 2014, I'll convert some of my IRA to ROTH IRA when our income will be lower without wife working.
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Old 03-17-2014, 03:31 PM   #7
Confused about dryer sheets
 
Join Date: Nov 2013
Posts: 6
Latest update:
I've made the move to a more conventional company with standard work hours. My annual salary is 120k. My wife is currently at home with our little one.

Debts:
Still have the Rav4EV Lease, yes I know it's an arm and a leg, but it gives me the carpool sticker and that's worth gold to me.
Purchased a single family home with 380k mortgage. (20% down) Was able to get something under just 500k, which is a steal in our area.
Kept the 2bdrm townhouse with 190k mortgage and am negative 250 a month on it. (The rent covers mortgage and property tax, I still pay HOA out of pocket). However, the property value has risen to where I am almost to the original purchase price. If it reaches 400k, I will sell.

Assests:
19k liquid (need to build up this emergency fund again after the house purchase)
20k in muni bonds and S&P, NASDAQ, DOW ETFs in money market acct (building up my ETF Asset Allocation a little each month).
258k in IRA
10k in Roth IRA
Most recent in-house valuation of my stock options from previous company looks like ~175k profit if I cashed them out.

Since posting in Nov I've found the courage (thanks to your comments) to invest in ETFs again with my money market account. Kept the good growth on the IRA. I do have a big AMT tax bill waiting for me in 2015 because of my exercised ISOs. I currently see my wife staying home for 6 months or so and re-entering the work force before the end of 2014. New job has a 401k match (75 cents for each dollar) up to 8% of my salary so I'll get some more retirement funds. Contributing in Roth IRA for wife this year. Also joined the HSA insurance plan for our family, which helps bring down taxable income.

I know some of these decisions aren't exactly the path to FIRE (EV car lease, upgrade from 2bdrm townhouse to a single family home), but it seems right to me. As always any advice or guidance is appreciated and forces me to think critically about

Cheers!
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