Hello, my name is Rich.

[Darkrose50]

Hello my name is Rich (30).  My wife Anita (27) and I have a combined annual income of $75,000.  We have about $50K (spread among $20K in a 401(k), $3K in a 403(b), $7K in a pension, $15K in mutual funds, and $5K in cash).  My wife recently inherited $144K from her grandfather.  We have about $20K in student loans.  We have a 30-year mortgage at 5.875%, we have 28 more years on, owe $150K, and the home is worth about $250K.

Anita’s grandfather was a wise man who turned 50 shares of AT&T into a million dollars by opening a bank account, depositing his stock dividends in that bank account, using that bank account to diversify into stocks that pay dividends, selling those that no longer pay dividends, and putting that money into the dividend bank account.  He never added money of his own beyond those 50 shares.

I have always been preoccupied with ensuring a stable retirement.  Wedding expenses, a home purchase, a layoff, and going back to school have slowed things down a bit for us.   We do not yet have children as my wife has one more, part-time, semester till she gets her master degree in reading education, and then we will start trying for children.   Currently we are saving $200 a week in after tax mutual funds (I know, I know).  I will be eligible for contributing into my companies 401(k) plan on the last day of July (they match 20%, with a maximum of $2K).  I plan on contributing 99% of my income at that time to get the full company match for the year.

We have been thinking of getting a financial advisor (or whatever they are called), and have talked to a good half-dozen.  We are meeting with another on Thursday.   This is the one my company just picked after a lengthy interview process, and I am hopeful.

 

[JPatrick]

Welcome to the board darkrose.  Looks like you are off to a great start.
I would recommend that in your quest for financial advice  you look into what Fidelity or Vanguard will do for you for free.
Both are great companies with more than enough no load/low fee choices for anyone.

 

[Nords]

We have been thinking of getting a financial advisor (or whatever they are called), and have talked to a good half-dozen.  We are meeting with another on Thursday.   This is the one my company just picked after a lengthy interview process, and I am hopeful.

Welcome to the board, Rich. You guys are well on your way.

Don't get derailed by a financial advisor. Free consultations or company-paid advice can help, but you can do just as well on your own (if not better) while saving a ton of money. The vast majority of this board's members do not use financial advisors.

Hopefully you've stashed that inheritance in a money market or CD and given yourselves a year to decide on issues like your volatility tolerance and your asset allocation. Half of that process is reading websites like these or books like Bernstein's "Four Pillars"...

 

[Darkrose50]

She inherited the last installment about three months ago. Right now it is in a money market fund. My wife is understandably concerned with maintaining her inheritance, and would like to opt for a conservative investing approach with this money. Our investments otherwise would be less conservative. I suppose we need to talk over what she considers conservative with the financial planer, and nail it down. My mother-in-law and brother-in-law are coming to talk with the financial planers as well. I am distrustful of salesmen, or anyone who stands to make money off of me. However, it may be for the best to obtain a financial planer as my mother-in-law does not grasp finances to the least, and my brother-in-law needs to hear more options than a bank account. Putting my (wife’s) money where my mouth is may be in the families best interests. If we go with them, we can always fire them. I will check on the process of doing so before hand.

 

[gindie]

If you are set on meeting with a financial planner, please try to do it with a FEE-ONLY planner.  This is a type of planner whose only interest is planning your financial future and not selling you ANYTHING.  They can suggest products to you, but you are on your own to pursue them.

Please keep us informed how your meeting turns out.  If you want to bounce the planner's suggestions off of us, we will be happy to listen.

 

[Howard]

The Investment that lets you sleep tonight may not let you sleep 20 years from now..

There is no Investment for all seasons, but there is a season for all Investments.

Asset Allocation.

 

[NYCGuy]

Rich,

Congratulations on a fine early start! One option to consider is to keep the inheritance or part of it for an emergency fund that could be in T-bonds/bills/savings account/cd etc. Since you are young and already know first-hand the joys of a layoff, having the security of two years of income in ready funds will give stability to your family finances. Of course, in that case you wouldn't earn much more than the inflation rate so the inheritance would not contribute much in the long run to your retirement goals. An adequate emergency fund would be only part of a larger plan to achieve your financial goals.

But economic life is full of ups and downs. When I bought my home in 1988 (at the top of that housing boom) I paid only 1.7x my annual income because, although I was doing well financially, my job didn't seem secure. Sure enough, in 1991 I was laid off in the local recession and was unemployed for the next two years. However, I was able to wait it out and not lose my apartment because I had two years' income in savings. Since then I have always kept available at least one years' income. Most families do not maintain an adequate emergency fund because they can never get ahead of their expenses sufficiently to establish one. You are in the fortunate position to consider doing so.

As far as financial planning, my own impulse is to read everything I can that seems relevant and to regard educating myself in investment as a second job. Not everyone has an interest in investing, but if you are willing to devote time and energy you are likely to be better off. I have seen a lot of people suffer from the advice of "experts," some of whom were my employers. Believe me, none of them would have improved upon your wife's grandfather's plan.

In any event, good luck with your project. Having focus and determination is probably 80% of what you need to get there.

 

[brewer12345]

But economic life is full of ups and downs.  When I bought my home in 1988 (at the top of that housing boom) I paid only 1.7x my annual income because, although I was doing well financially, my job didn't seem secure.  Sure enough, in 1991 I was laid off in the local recession and was unemployed for the next two years.  However, I was able to wait it out and not lose my apartment because I had two years' income in savings.  Since then I have always kept available at least one years' income.  Most families do not maintain an adequate emergency fund because they can never get ahead of their expenses sufficiently to establish one.  You are in the fortunate position to consider doing so.

NYCGuy, would you care to comment a little further on your experience with prolonged unemployment? Were you out of work so long because the local economy was so bad, a particular indstry in the dumps, etc.? What did you do to get through that period? What finally broke the spell?

I have to admit that this is the one scenario that would cause me some diffficulty. I maintain pretty decent e-funds, an untapped HELOC, a sizable taxable account, etc., but prolonged unemployment would definately retard my progress.

 

[NYCGuy]

NYCGuy, would you care to comment a little further on your experience with prolonged unemployment? Were you out of work so long because the local economy was so bad, a particular indstry in the dumps, etc.? What did you do to get through that period? What finally broke the spell?

I have to admit that this is the one scenario that would cause me some diffficulty. I maintain pretty decent e-funds, an untapped HELOC, a sizable taxable account, etc., but prolonged unemployment would definately retard my progress.

Brewer,

My expertise in 1991 was specialized and appropriate for a certain size of organization in financial services here in NYC. I was fully aware of the risks of specialization and felt that I was compensated to take them. In 1991 the city had a "middle class manager" recession which described me. The company I was working for lost 80% of its revenue and laid off half of their staff before they got to me. I should have seen it coming, but I am afraid I was something of a boiled frog. As I recall, hiring picked up in about 1994 in general. It was just that time when I saw a job ad in the NY Times for which I was perfect. Got the job and the career has been pretty much humming since then. It was a difficult time.

Financially, I got through that period mostly by using up my savings, but had to withdraw some Keogh money and pay the penalty. By the time I was hired my Keogh assets were down to about 40k. I didn't have health insurance during that time and never carried a credit card balance. I never investigated a HELOC, but under the lending standards of the time I would not have qualified without an income.

In my judgment most people don't have a sufficient emergency fund to cover loss of income, which is more likely than either death or major health problems, at least for a young person.

 

[Darkrose50]

Hello my name is Rich (30).* My wife Anita (27) and I have a combined annual income of $75,000.* We have about $50K (spread among $20K in a 401(k), $3K in a 403(b), $7K in a pension, $15K in mutual funds, and $5K in cash).* My wife recently inherited $144K from her grandfather.* We have about $20K in student loans.* We have a 30-year mortgage at 5.875%, we have 28 more years on, owe $150K, and the home is worth about $250K.

Anita’s grandfather was a wise man who turned 50 shares of AT&T into a million dollars by opening a bank account, depositing his stock dividends in that bank account, using that bank account to diversify into stocks that pay dividends, selling those that no longer pay dividends, and putting that money into the dividend bank account.* He never added money of his own beyond those 50 shares.

I have always been preoccupied with ensuring a stable retirement.* Wedding expenses, a home purchase, a layoff, and going back to school have slowed things down a bit for us.* *We do not yet have children as my wife has one more, part-time, semester till she gets her master degree in reading education, and then we will start trying for children.* *Currently we are saving $200 a week in after tax mutual funds (I know, I know).* I will be eligible for contributing into my companies 401(k) plan on the last day of July (they match 20%, with a maximum of $2K).* I plan on contributing 99% of my income at that time to get the full company match for the year.

We have been thinking of getting a financial advisor (or whatever they are called), and have talked to a good half-dozen.* We are meeting with another on Thursday.* *This is the one my company just picked after a lengthy interview process, and I am hopeful.

We invested $120,000 of the inheritance money into the Vanguard LifeStrategy Growth Fund about 14 months ago. We bought a new 2007 Toyota Carola for $14,400 in total. We also installed a new furnace, and air-conditioner (I don’t remember but I think it was about $5,000). We put the rest of the money into a savings account. So far, so good.

• We have a household income of ~$73,040.
• The Vanguard LifeStrategy Growth Fund is now at $148,949.64.
• We have $4,576.03 in Vanguard Wellington Fund Investor Shares.
• My wife has a few grand in her 403(b) accounts.
• My 401(k) has skyrocketed up to $26,656.87.
• We have ~$10,000 in checking and saving accounts
• My sister is awful with money. Knowing this full well we decided to bail her out of credit card hell, and loaned her ~$23,000 though Circlelending.com (now VirginMoney or something) at a 9% interest rate (a lot better than the 20-something-percent per-month rate she was paying), over 20-years.
• I cashed out the pension, and used it to help fund the CircleLending loan.
• I don’t rightfully know my student loan amount is currently, but pay off the minimum automatically, and figure at the low interest rate (Something like 3%) I will not pay this off early.
• 30-year mortgage at 5.875%, we have 24 more years on, owe $141,865.53, and the home is worth about $260K.