Newbie Here

[cyndo]

Hi y'all. I discovered this forum recently and have made the decision to actively participate some.

A bit about me. I (38), my husband (32) and our two kids (5 and 3 1/2) live in expensive California. I'm a SAHM, DH works in technology. We have approx. $120k in 401(k), about $8k in stocks and we just put $180k down on our house, with a mortgage of $365k (which isn't bad for California!). No other debt or car payments and we don't expect to need a new car for a few years, at the earliest. We also have about $7k in savings, but we keep that for emergency house repairs and the like and don't consider that part of our long-term savings. We want to make sure we have enough set aside for emergencies and travel so we, hopefully, won't have to touch our retirement savings. Additionally, we have about $5k saved for our kids' college in 529 plans and about $1k saved for them.

Right now, we live a bit below our means, but would like to conserve and save more.

 

[yakers]

Welcome from another California person. My wife retired a few months back & I have a year or so to go. One kid still at home, a senior in HS, I guess that makes my wife a SAHM for the first time in many years. It sounds like you have the basics covered in LBYM, no debt except for mortgage, an emergency fund and the start of savings. I do not know if you ar exactly racing towards ER but that is not a necesary goal and there will be a lot of interesting life & expenses with a couple preschoolers in your life. If you have particular questions about investments, this is a good place. If you have any other questions this may be a good place too (see Other Topics)

 

[cyndo]

Welcome from another California person. My wife retired a few months back & I have a year or so to go. One kid still at home, a senior in HS, I guess that makes my wife a SAHM for the first time in many years. It sounds like you have the basics covered in LBYM, no debt except for mortgage, an emergency fund and the start of savings. I do not know if you ar exactly racing towards ER but that is not a necesary goal and there will be a lot of interesting life & expenses with a couple preschoolers in your life. If you have particular questions about investments, this is a good place. If you have any other questions this may be a good place too (see Other Topics)

Of course, ER would be great, but it is too early to figure that one out. My husband would like to go into business for himself eventually and we have $50k coming this December in the form of a retention bonus that's going right into savings for the short term in case he wants to branch off on his own. I would love information on how to invest the after-tax money should we decide not to self-employ right now.

 

[Nords]

Welcome to the board, Cyndo. It sounds like you're doing great.

I would love information on how to invest the after-tax money should we decide not to self-employ right now.

I'd max out all the tax-deferred investments, and have you looked at an asset allocation guide like Bernstein's "Four Pillars"?

 

[brewer12345]

Of course, ER would be great, but it is too early to figure that one out. My husband would like to go into business for himself eventually and we have $50k coming this December in the form of a retention bonus that's going right into savings for the short term in case he wants to branch off on his own. I would love information on how to invest the after-tax money should we decide not to self-employ right now.

With one income, a substantial mortgage and two small children, I would keep the bonus money tucked away in a savings account or money market fund. You definately want an "in case of emergency, break glass" fund. Is that mortgage fixed or adjustable?

You should also probably read up before investing after tax money in anything.

 

[cyndo]

With one income, a substantial mortgage and two small children, I would keep the bonus money tucked away in a savings account or money market fund. You definately want an "in case of emergency, break glass" fund. Is that mortgage fixed or adjustable?

You should also probably read up before investing after tax money in anything.

Fixed mortgage at 6%.

 

[brewer12345]

Fixed mortgage at 6%.

Good for you.

You might also consider taking out a HELOC. Most banks will do it for nothing (no fees) and it is an excellent source of liquidity "just in case". Naturally you don't have to tap it if you don't need it. I keep it as a backstop and never draw on it.

 

[cube_rat]

... live in expensive California.

I'm sorry

I'm a fellow Californian also working in IT making what some people on the outside would consider a butt load of money. Unfortunately, my salary is just getting by in the SF Bay Area.

Welcome to the forum!

 

[JPatrick]

Welcome Cyndo
Money markets are pretty much good as gold, so don't let that cash of yours sit in a traditional savings account.
You sound quite savy so I'm assuming you guys have laid on at least a million in cheap term insurance.
The only other thing I would mention applies to everyone in your age bracket, and that is to be sure to take a small part of the retirement bucks and invest it in something a bit north of the center of the risk curve.  

 

[brewer12345]

You sound quite savy so I'm assuming you guys have laid on at least a million in cheap term insurance.

I almost forgot!  In addition to life insurance, your hubby should definately have disability insurance.  This is a must!  If his employer does not provide, start shopping with MassMutual, Guardian and Northwestern Mutual.

 

[cyndo]

Good for you.

You might also consider taking out a HELOC. Most banks will do it for nothing (no fees) and it is an excellent source of liquidity "just in case". Naturally you don't have to tap it if you don't need it. I keep it as a backstop and never draw on it.

We did this when we lived in our last house and have been talking about it, but since we moved in March we haven't actually done it.

 

[cyndo]

I almost forgot! In addition to life insurance, your hubby should definately have disability insurance. This is a must! If his employer does not provide, start shopping with MassMutual, Guardian and Northwestern Mutual.

We have lots of insurance. Since I don't have an income, and will be missing years' worth of work experience by staying home, this was a must for us. I don't want to be in financial straights should something happen to my husband.

Regarding our investments, we have most of it invested pretty agressively; we figure we have years to make back money should we lose it and in the meantime we can hope to reap some nice returns.

Regarding retirement, we aren't counting on any SS since we think it will be in shambles by the time we can get to it. I may run into a fair inheritance, unless nursing homes take my parents' money from them, but that's another thing we aren't even considering. (Who knows, it may be used for my mother-in-law who is 60 and has about $3k in a 401k and about 80k in home equity. That's it! She was a single mom who never earned much, so any SS payments will be low. On the opposite end, my parents did the RE thang and 14 years later still make more money each year from their investments than they spend. They are the best at LBYM.)

 

[cyndo]

I'm sorry

I'm a fellow Californian also working in IT making what some people on the outside would consider a butt load of money. Unfortunately, my salary is just getting by in the SF Bay Area.

Welcome to the forum!

Ain't that the truth! We moved to Sacramento from the Bay Area 5 1/2 years ago because of that reason.

 

[Intuit]

Hi Cyn and welcome to our little corner of the world. Sounds like you guys have options that most people your age only dream about. And also good role models with your parents FIRE'd. You mentioned that you guys have "lots of insurance", hopefully that includes insurance on you. Many people feel that a nonworking spouse would not need life insurance as they do not contibute a salary. This is a huge mistake since there would be a great deal of expense in taking care of the DC.
Again, welcome to the forum.

 

[larry]

Just my 2 cents but if you intend to save for college/weddings I'll venture to say that you'll need $50-$100k saved up by the time they're ready for college. We're doing a wedding for $6500 and 4 years of college @ $19k (apply for as many scholarships as possible). It's never too early to start saving for college.