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Re: iwannaretire too
Old 02-10-2007, 02:18 PM   #21
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Re: iwannaretire too

Quote:
Originally Posted by clifp
Life is short, if having a nice dependable car for your wife, adds to your piece of mind, and her comfort level keep one. But downgrade the second. At your age I started buying new cars (or course I paid cash...) but I kept them for 7 or 8 years.
This is very true, however, I would argue that you can get a nice, dependable car for less than $10k...
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Re: iwannaretire too
Old 02-11-2007, 11:20 AM   #22
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Re: iwannaretire too

Thanks to everyone's input, we've decided to fully fund two Roth IRA's thru Vanguard and back off on the 401(k). I just detailed the car that I put up for sale and have already received a couple of inquiries. Wish me luck.
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Re: iwannaretire too
Old 02-11-2007, 11:22 AM   #23
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Re: iwannaretire too

macdaddy - Thanks for cleaning up my spreadsheet numbers.
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Re: iwannaretire too
Old 02-11-2007, 02:02 PM   #24
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Re: iwannaretire too

Ummm, shouldn't the "tithe", by definition, be 10% (of gross)
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Re: iwannaretire too
Old 02-11-2007, 02:11 PM   #25
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Re: iwannaretire too

Here's what I would do. It may not be the right thing for you.

Looks like you have ~1500/mo to spare...

I would save at least $10k in Emigrant/ING/Eloan/igobanking for your emergency fund. Add $500 a month to savings every month.


I suspect that taxes 25 years from now will be higher than taxes today. We need to pay for this war and Medicare drug benefit somehow, and we're not paying for it today. Therefore, I'd fund two Roth IRAs with $4k each before the 25% tax bracket becomes the 30% tax bracket. $666/mo

I would ditch one car, and replace it with a reliable one that costs half as much. If I were buying used I'd look at 3-4 year old Japanese cars that are rebranded as faster depreciating American cars like the Pontiac Vibe (Toyota Matrix), Chevy Prizm (Toyota Corolla), or Ford Escape (Mazda Tribute). I would try to pay it off within a year and keep it for at least 5 years beyond that. Take the current $450 loan payment and add an additional $400/mo for a total of $850/mo. Itís painful, but itís only for a year.

Once the car is paid off, I would take the $450 car loan amount and transfer it to paying down the 2nd mortgage. This is a guaranteed 8.55% return. That's way better than any savings account is paying and way less risky than the stock market. I'd take the additional $400/mo in extra payments and put it in my 401k.

I wouldn't consider paying more than the minimum on the student loan until I have paid off my 2nd, have maxed out my 401k + IRA contributions, and have enough in savings to buy any cars I will need within the next two years in cash with $10k left over.


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