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How am I doing Financally?
Old 04-07-2017, 11:43 AM   #1
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How am I doing Financally?

Hello Everybody,
I am Bob, 36 yrs old living in San Jose with my wife (homemaker, she is 31 yrs old) of 7 years. No children yet hopefully soon. I would like to know how I am doing and if I am on the right track for retirement.

Here are my financial numbers:

Bank Balance (Emergency Fund + couple other known future medical expenses) : 50K

Retirement: ~$210K -- Mostly invested on Index funds and low-cost mutual funds. (I put ~14% of my income + get a 5% match from company).

Other Investments:
Mutual Funds: ~$205K -- Index funds in Vanguard
Stocks: ~$57K
HSA: ~$6,500.

Monthly expenses (including rent, utilities and variable expenses) $3400

I am very thankful for any advice or help you can offer.

Thanks,

Bob.
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Old 04-07-2017, 12:10 PM   #2
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Off to a very good start with almost 12x expenses in savings/investments. Your expenses will go up with kids, but this nice stockpile will grow even with much lower ongoing contributions. 57K in stocks--employer stock?

What percentage of your income are you saving? Just eyeballing the split of investments, it could be an additional 20% after your 401k contributions/match? If so, that's very impressive in HCOL area.

Of course, a home purchase in your neck of the woods would change things quite a bit. Is that in the plans after child[ren]?
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Old 04-07-2017, 12:29 PM   #3
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You are doing swell. You are 36 and worth a half million.

When I was your age I had saved in today's dollars approximately... let's see, adjust for 22 years of inflation at 3%, add in dealer prep, undercoating, stem lube, carry the two... zero.

I didn't start taking action about retirement until my early forties, so the earliest I will get out is about age 60. You will beat that by a country mile.

Congratulations on your progress so far. I hope your family dream turns out to be the miracle that you deserve.
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Old 04-07-2017, 12:40 PM   #4
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As others have said, you look to be doing well overall. The only issue that sticks out for me is housing. What are you planning to do? Are you going to stick around the bay area at least until retirement? Over the long run buying in the bay area has beaten renting. Are you waiting for the next downturn?
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Old 04-07-2017, 12:43 PM   #5
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Thanks MdleErth and 2017ish!

To answer your question 2017ish, the Stocks were from company grants and some stock purchase plans.

My one other expense that I am not showing here is that I am helping out my mother with $1000/month.

I have not thought about home purchase yet (I am new to the area, moved from the Carolinas 6 months ago due to job). The home prices here are crazy expensive (~700K-1 Million). I don't think I could afford a home in this area, and it is scaring me to throw $1M for a house. How do people afford houses here? I asked the "How am I doing" question is because of this. I thought I was doing pretty pathetic financially thinking a lot of people who are in my income range own houses and I can't even think about it.
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Old 04-07-2017, 12:48 PM   #6
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My son and his wife are coming up on 30 and starting to plan for a family. They make nominally great money in San Fran and Mountain View, but presently plan to move somewhere "cheap" like Seattle or Toronto with the arrival of child[ren].

If you came from Carolinas (Raleigh?), it is indeed a different world!
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Old 04-07-2017, 01:10 PM   #7
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Yup, prices here are high but they are driven by the income of engineers and those working for the tech companies. If you aren't in that industry then you aren't likely compensated enough for the high cost of the area. Engineers fresh out of school are making $100K+ at Google, Apple, Facebook, etc. Senior engineers make much more. Add in the bonuses and stock and those can be more than the salary (multiples of it). If you're not in that sort of income range then buying here / staying here long term is likely not a good financial choice. The only other reason to stay would be if you have ties to the community and want to stay for that.

So, if you do plan on staying you want to think about buying. You need to be careful about what and where you buy. Before the last downturn (2008) houses 2 hours drive from the centre of the action had been driven up beyond all reason and they tumbled. Houses in the core of Silicon Valley kept much of their value.

You might wait for the downturn and you might save by doing so but it depends on how far away it is. I looked at buying in 1999 and thought that prices were too high. I did buy in 2002 after the dot com collapse of 2001 brought the prices down but not to the levels of 1999. I should have bought in 1999.
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Old 04-08-2017, 07:17 AM   #8
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Quote:
Originally Posted by MoneyNovice View Post
Hello Everybody,

I am Bob, 36 yrs old living in San Jose with my wife (homemaker, she is 31 yrs old) of 7 years. No children yet hopefully soon. I would like to know how I am doing and if I am on the right track for retirement.



Here are my financial numbers:



Bank Balance (Emergency Fund + couple other known future medical expenses) : 50K



Retirement: ~$210K -- Mostly invested on Index funds and low-cost mutual funds. (I put ~14% of my income + get a 5% match from company).



Other Investments:

Mutual Funds: ~$205K -- Index funds in Vanguard

Stocks: ~$57K

HSA: ~$6,500.



Monthly expenses (including rent, utilities and variable expenses) $3400



I am very thankful for any advice or help you can offer.



Thanks,



Bob.

One question is what percentage of your salary are you saving? In other words what is your income? Depending on that income, owning a home even in SF is doable. DS and his wife are 32 and 31, live in Boston and are about to hit $500,000 in net worth. But a part of their NW is earmarked for a house down payment. They anticipate spending upwards of $800,000-$1,000,000 for a house. So their joint income presently feeds the down payment fund at an aggressive rate in addition to retirement saving and some after tax savings. Once they transition to a mortgage, the amount they are saving for the down payment will become the monthly budget for mortgage payment including insurance, taxes and HOA's. You seem to have made the decision that DW will not work. That is a lifestyle decision that is personal but it does affect the amount you can save.


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Old 04-08-2017, 12:09 PM   #9
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36 and worth~$500,000 is a great start.

However, once children come into the picture it totally changes the whole picture. I don't have any experience in that area, but my friends that have kids tell me it extends retirement out by 5 years per kid.
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Old 04-08-2017, 12:16 PM   #10
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Welcome, Bob. I'd say you are off to a great start. The financial habits you have already developed to get to this point will serve you well as you go forward. If I understood your earlier post correctly, your stock position is in your employer's stock. If so, I would recommend diversifying out of that to the extent you can. Should your employer fall on hard times, you could lose your job and your investment. See, e.g., many Enron employees.
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Old 04-08-2017, 05:24 PM   #11
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My wife and I work & live in the Bay Area and we have a similar housing dilemma. We both work FT and our combined income is 300k+. Pay 3k for a one bedroom apt and get killed with income tax or buy a 1mm+ home. We can't decide if its better to buy or rent. It feels like a bit of a bubble (housing is selling 20-40% over list) even though I feel if any economy can support it it's the Bay Area. All I can say is if your family and roots are in NC, maybe leverage your high income here and buy some property in NC?
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Old 04-09-2017, 12:29 AM   #12
Confused about dryer sheets
 
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Thanks Golden, Gumby et al.
Someone was asking me how much I make. I make ~130K a year (before taxes). I save ~20% of my take home salary

Bob.
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Old 04-09-2017, 01:25 AM   #13
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Quote:
Originally Posted by Mdlerth View Post

When I was your age I had saved in today's dollars approximately... let's see, adjust for 22 years of inflation at 3%, add in dealer prep, undercoating, stem lube, carry the two... zero.
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LOL...I see we had the same Financial Advisor
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Old 04-09-2017, 05:21 AM   #14
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Thanks Golden, Gumby et al.

Someone was asking me how much I make. I make ~130K a year (before taxes). I save ~20% of my take home salary



Bob.

Then I agree, a house in SF is not in your future.


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