30 , married with two children in South Louisiana

At 30, my networth was close to zero and my household income was $45K. My earned income has never approached what the OP and his wife make and today at 46 I am financial independent and work by choice. I also lived comfortably and did not deprived myself. It can be done very easily on his income so I do not understand the first response to his post.

Your expenses seem pretty reasonable and well below your means. Congrats on getting such a great early start! You are light years ahead of most 30 year olds I know.

lucky_reaper said:

Also, papadad111
Yes wife and I currently have life insurance . I am insured for a total of 1.75 million and wife is at 500k. It's mostly term with a whole policy I started when I was 18 working on oil derricks.

Click to expand...

Did you use a life insurance calculator or two? The wife's looks a little thin considering you have two kids.

Hermit
The majority of my life insurance is provided at extremely low cost through my company so I simply take advantage of it . My wife's is also provided through hers and she is at the top tier they provide.

Lucky,

You're doing great. Some miscellaneous thoughts.

If any of the student loans are at low interest rates, I would not be in a hurry to pay them off. Is the interest tax-deductible or does it phase out in your case? Too late now, but you may have been better off to take a cash out refi for $260k and use the proceeds to pay off the student loans and car loans. Then you would have 3.5% cost of money that is fully tax deductible.

I agree with others that it doesn't make sense to count on the pensions at this stage. Once you're vested, if they are financially secure you can factor them into your planning, but at this point they are gravy.

Given your income, tax deferral is your best friend, and the 401k contributions help there. Also, max out Roths for each of you if you can. If either of your employers offer a HSA, jump on that too.

You may find good muni bond funds attractive for some of your taxable savings.

Since you have had the whole life policy quite a while now, it is probably worth keeping if it is with a solid company. Look at the increase in cash value last year compared to the premiums that you paid less the cost of term for the amount of coverage that you have. If the increase in cash value exceeds the premiums less the value of the insurance coverage, then IMO it is a keeper. In fact, even if it is close it may be a keeper as it may crossover soon.

Finally, get a hold of Quicken and put together a plan using Quicken Lifetime Planner so you can see how regularly saving and investing in no-load, low-cost mutual funds can make your dream of early retirement a reality.

P.S. Don't forget to have a bunch of fun along the way too. You never know, life could be short but it is prudent to prepare for it being long too.

Pb4uski
The interest is tax deductible and the wife and I thought about adding the other debit to the refi but decided against it.
When I get home today I will open two iras today with vanguard. I know the limit is 181000 for a couple but is that adjusted growth income? Will my contributions to 401k bring the wife and me below the 181000 is what I need to look at. Again I'm very new to this.
My whole life is through State Farm and I got it at $59 a month for 250k 13 years ago.

The link below may be helpful. Any 401k contributions that you make would reduce your MAGI and reduce the chance of your Roth contributions being limited so it may be to your benefit for both you and your wife to max out your 401k contributions assuming that neither of you have a "crappy" plan (poor investment choices, high fees, etc). I know that my employer only matched in periods that you contributed so it was best to spread your contributions over the whole year.

Retirement Topics - IRA Contribution Limits

Pb4uski
That link is very helpful! Looks like if I max out both our 401ks that will drop our agi to under the 181k roth limit. Thank you.

Update:
Payed off student loans yesterday and also opened two Roth IRAs . Car will be payed off here in next two months . Also maxed wife 401 k contribution out and also did mine.I want to thank everyone for all the advice I really , really appreciate it all!

Fermion said:

We had a negative net worth at age 30, a zero net worth at age 34 and now have about $1,300,000 net worth at age 43 with a income not much different than the OP. No children though.

What worked for us was making $200,000+ and living on $40,000.

Click to expand...

^ I would have lived more like this. We had kids in a high cost of living area, so $40K might not have been possible, but in hindsight I wish we had watched our expenses closer over the years as our income went up. I would have chosen earlier freedom and FI over stuff. I also would have lived in a smaller house that took less time and money to maintain.

I am not so sure about the 529 plans. If you decide to retire early before the kids are in college and have your assets in financial aid exempt asset classes, you may be able to qualify for financial aid.

daylatedollarshort said:

.

I am not so sure about the 529 plans. If you decide to retire early before the kids are in college and have your assets in financial aid exempt asset classes, you may be able to qualify for financial aid.

Click to expand...

My experience with 529's was that they were cumbersome to use. Only certain defined expenses qualify, and generally only if paid to a educational institution. Generally books, computers and tuition are covered, in some cases room and board but generally only when the child is living in student housing (1st year in many cases). Timing of expenses and tax documentation was a headache. I started late so the tax break was minimal for the hassle.

Forbes online has some really good articles on financial aid. I also borrowed some books from the library, but I didn't think they had anything Forbes didn't and the Forbes information was more condensed.

UPDATE:
Student loans are paid off
Car is paid off
Both Roth IRAs fully funded(2013 and 2014)
Both 401ks are maxed out
Cash on hand is low due to all of this {sad face}, but we are currently saving 5000 cash every month. We are currently looking into investment accounts to put some of the excess cash, any recommendations?

Sounds like you've done a nice turn around. Continue to save save save, keep your expenses low, and you'll be sitting sweet.

Are you planning on helping your kids with college? If so, you might want to start 529's for them. It's after tax money, but like a ROTH, it's growth is tax free as long as you use it for qualified educational expenses. And like a ROTH, the earlier you start it - the better advantage of compounding.

Other than that - start your after tax investment accounts. Folks around here tend to migrate to Vanguard, Schwab, Fidelity, and TDA for their low costs, DIY, options. Figure out an asset allocation (at your age, you can be pretty aggressive, perhaps even all equities) and find low expense index funds that match that allocation.

What do you do down here in South Louisiana? Do you work in a plant?


Sent from my iPhone using Early Retirement Forum

Yes plant worker

lucky_reaper said:

Debts … 33k @ 2.99% - car…. I currently have a "beater" work truck I bought new in 2003 and a 2006 truck also purchased new I use as a second family vehicle.

Click to expand...

You owe - or, now that you have just paid it off, recently owed - $33,000 on an eight-year-old truck?

Unmmmn ...... No. Lol. I have 3 vehicles the 33k was for a car I bought for the wife. Beater truck I take to work, I have another truck I use as another family vehicle and the wife's car. All paid off .

Pay off student debt as soon as possible...it's been what 10 years since college? Never let any debt get that old.

LBYM, you and the mrs. make enough to have fun inexpensively.

Track your progress monthly. If things arent improving, adjust.

Be patient...investing takes time.

lucky_reaper said:

I have 3 vehicles the 33k was for a car I bought for the wife. Beater truck I take to work, I have another truck I use as another family vehicle and the wife's car. All paid off.

Click to expand...

Three vehicles is at least one too many for a two-adult family hoping to build wealth and RE. Sell one and put the cash raised towards investments, or apply it towards your debt.

We are new to the investment / 401k / financial independence / early retirement scene and would love to hear everyone's advise on how to invest, finances and life.

Click to expand...

I didn't see anything about a taxable or IRA account. You NEED investments, badly. This is the time to grow your portfolio and be as aggressive as you can be in that endeavor. It depends on your risk tolerance, but just to ballpark it, you should be at least 50-60% stocks.

Cash on hand is low due to all of this {sad face}, but we are currently saving 5000 cash every month. We are currently looking into investment accounts to put some of the excess cash, any recommendations?

Click to expand...

Target retirement fund if you are less interested in managing money. If you want to get froggy with it, buy the SP500 index and throw out covered calls 2% OTM. If you don't know what that is, you have some reading to do.

You may find good muni bond funds attractive for some of your taxable savings.

Click to expand...

Dear. god. no. When rates rise, you are going to get slaughtered.

1 year update

401k #1 44000
401k #2 26600
Roth #1 11600
Roth #2 11100

Cash 15000

Debt
Home 161200

So far not to bad for one year. Several unexpected cost arose as well as a couple of surgeries.
Also took a beating in energy both in investments and at work. [ lesson learned ]

Income is down a bit at 176000.

Goals:
Set up eTrade account
40000 total savings





Sent from my iPhone using Tapatalk

Awesome great job


Esc

Great job on the income front. My advice is to try live off no more than the lower income and save the other. Then you will never get into what Elizabeth Warren calls the two income trap.

2.25 year update

401k 1 76000

401k 2 55000

Roth 1 19000

Roth 2 16000

Debits

Home 149000

Income is at 180000


Sent from my iPhone using Early Retirement Forum