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Hi, I'm 33 y/oand dreaming about FIRE
Old 09-16-2016, 05:52 PM   #1
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Hi, I'm 33 y/oand dreaming about FIRE

Hi All,

I am so glad to find this forum as seeing a lot of members sharing their experience and advice.
I am 33 y/o, married, 2 boys 6-month and 18-month, just started to work 4 years ago as accountant. DW is part-time in medical field.

Assets/liabilities:
- House, cars, and student loans: $150k
- Home equity $120k (current market)
- 401k: $20k
- IRA: $13K
- College fund for boys: $8k
- Emergency saving: $25k
- Monthly expenses $5k

My goals:
- Pay off all loans in next 5 years.
- Max out 401k and IRA, HSA
- Reach FIRE at 57 y/o

I have a question and still dont know what to do:
- Should I use Emergency saving to trim down some loans (all of loans are less than 4% interest)

Thank you so much for any advice and hope our forum will be the place that witnesses successful stories on journey to FIRE.

God bless.
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Old 09-16-2016, 06:00 PM   #2
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Welcome! I personally wouldn't use the emergency fund to pay down low interest-rate loans. That buffer could come in handy in case of major home or auto expenses, job loss, etc.

Looks like you're well on your way! Do you track your expenses, or is the $5K a ballpark number? If you're not already, tracking expenses closely in Mint or Quicken can be very helpful in really nailing down your true spend-rate.
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Old 09-16-2016, 06:07 PM   #3
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Originally Posted by ProspectiveBum View Post
Welcome! I personally wouldn't use the emergency fund to pay down low interest-rate loans. That buffer could come in handy in case of major home or auto expenses, job loss, etc.

Looks like you're well on your way! Do you track your expenses, or is the $5K a ballpark number? If you're not already, tracking expenses closely in Mint or Quicken can be very helpful in really nailing down your true spend-rate.
+1
Emergency money is for emergencies. Can always pay down debt if you have too much money but can never get it back after you use it to pay debts.

On the other hand if you're not able to max two Roth IRAs annually (and you qualify) you could put emergency money there because you can always get your contributions back without tax or penalty. Just can't touch the earnings. Sounds like you're doing that already.
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Old 09-16-2016, 06:18 PM   #4
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I don't see CC debt listed, so assume you don't have any.
I agree with the ROTH idea as a storage spot for emergency $$

With 2 of you working, most emergencies are able to be handled by a CC. But of course you want to pay it off within 30 days.

I think unemployment is the emergency where you would find 25K would help even if you qualify for UI (which is really low by the way).

So you need to keep the 25K hopefully in a 1% online bank account.

At age 33, I was thinking more of how to conquer the world than to retire.

Do you and your spouse each have Term life insurance, it would be very cheap at your age and more important than such aggressive funding the college fund
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Old 09-17-2016, 10:47 PM   #5
Confused about dryer sheets
 
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Originally Posted by ProspectiveBum View Post
Welcome! I personally wouldn't use the emergency fund to pay down low interest-rate loans. That buffer could come in handy in case of major home or auto expenses, job loss, etc.

Looks like you're well on your way! Do you track your expenses, or is the $5K a ballpark number? If you're not already, tracking expenses closely in Mint or Quicken can be very helpful in really nailing down your true spend-rate.

I use excel spreadsheet to track all transactions; however per your advice, I just downloaded Mint and love it. Thanks.


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Old 09-17-2016, 10:55 PM   #6
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+1

Emergency money is for emergencies. Can always pay down debt if you have too much money but can never get it back after you use it to pay debts.



On the other hand if you're not able to max two Roth IRAs annually (and you qualify) you could put emergency money there because you can always get your contributions back without tax or penalty. Just can't touch the earnings. Sounds like you're doing that already.
Thank you for your advice. I decided to not use emergency fund to trim down loans. Even 4% interest loans are not too scary but still bother me sometimes.


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Old 09-17-2016, 11:00 PM   #7
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Originally Posted by Sunset View Post
I don't see CC debt listed, so assume you don't have any.
I agree with the ROTH idea as a storage spot for emergency $$

With 2 of you working, most emergencies are able to be handled by a CC. But of course you want to pay it off within 30 days.

I think unemployment is the emergency where you would find 25K would help even if you qualify for UI (which is really low by the way).

So you need to keep the 25K hopefully in a 1% online bank account.

At age 33, I was thinking more of how to conquer the world than to retire.

Do you and your spouse each have Term life insurance, it would be very cheap at your age and more important than such aggressive funding the college fund

Yes , I put emergency fund in 1% saving account.
DW and I both have term life insurance and we have peace of mind that our boys will be financially covered until they graduate college if anything happens to DW or myself.

I really appreciate all your thoughts and input.


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Old 09-18-2016, 09:19 AM   #8
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Also need to open a brokerage account and start investing with after-tax funds. Especially important for RE before 59.5 years.
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Old 09-18-2016, 04:58 PM   #9
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I also agree on keeping the $25k easily available. Since you own a house you know for certain that eventually and inevitably it will need expensive maintenance like a new roof, furnace, kitchen appliance replacements/repairs, A/C, maybe windows, perhaps foundation work, and the like. What you don't know is when those expenditures will be needed, hence the need for the money on hand to pay for them.

And immediately after all those things happen the transmission on the car falls out onto the pavement.
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Old 09-21-2016, 01:52 PM   #10
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Welcome! Your story is a strange one because it seems like you are a future version of me. I'm 28 and just started a career as an accountant and my wife is finishing PT school (medical field). We have no children currently and have student loan and vehicle debt.

I have a slightly more aggressive goal to retire or have the ability to retire by 45 but other than that pretty similar. I wish the best for you
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Old 09-21-2016, 02:18 PM   #11
Confused about dryer sheets
 
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Welcome! Your story is a strange one because it seems like you are a future version of me. I'm 28 and just started a career as an accountant and my wife is finishing PT school (medical field). We have no children currently and have student loan and vehicle debt.

I have a slightly more aggressive goal to retire or have the ability to retire by 45 but other than that pretty similar. I wish the best for you
Thank you.
You remind me of myself when I was 28 . I read your story and found it very similar as I was not very fortunate at the beginning of my career. But hard work pays off. The most important thing is everyday going home from stressful job to see smiles on my two boys' faces. Hope you and me as others can learn a lot from this forum, from successful members sharing their stories. The forum could be virtual but advice and encouragement are real. Good luck, my friend!
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