Newbie from Texas that needs guidance...

[Ninepoint5]

Hello all...

I discovered this site after reading a story regarding money and retirement on another site and someone had mentioned to checkout early-retirement.org in the comments. So here I am. After spending a few day of reading the various topics and headlines, I realized ( I had a pretty good feeling) how behind my family and I are behind and saving for the day we hang it all up. I am a natural born saver that is married to a natural born spender. Typical ying/yang! I will say my "ying" is seeing the light and knows how important it is to join the right side of saving!!!



Background:
Married 42 year old w/ two kids, one in the final semester in college, the other is 7. My mortgage is the only "debt" I have (approx. $225k), single income of $115k w/ my wife going back to teach in a year.



I didn't start getting aggressive with my 401K (max out) until a few years ago w/ $80k saved. I am behind the curve, this I know. Looking for ideas to get to par and maybe ahead of the game.


Thx for your time and any suggestions would be greatly appreciated....

 

[MBAustin]

Welcome, ninepoint5! You are not too late - many people don't wake up to what they need to do for retirement until they hit 60!

The main thing you can do now (besides max out your 401k) is to get a handle on your spending. Track everything in detail for at least several months and then look to see where you can adjust to increase your investments outside your 401k. Get educated about the basics of IRAs (probably Roth in your case) and asset allocations and start investing on a regular basis.

This assumes that you already have a decent emergency fund. When your spouse goes back to work, try to live on your current income alone and save the 2nd income (with an allowance for those work related expenses such as clothes and commuting).

We're a pretty friendly bunch so ask away!

 

[aja8888]

Ninepoint5, lots of Texans here! Glad you joined.

I have a soft spot in my heart for Midland/Odessa after 30 years in the oil business.

 

[Car-Guy]

Ninepoint5, lots of Texans here! Glad you joined.

I have a soft spot in my heart for Midland/Odessa after 30 years in the oil business.

+1 Welcome from a native Texan.... Odessa seems to be a world away from me but it's still Texas.

The main thing you can do now (besides max out your 401k) is to get a handle on your spending. Track everything in detail for at least several months and then look to see where you can adjust to increase your investments outside your 401k. Get educated about the basics of IRAs (probably Roth in your case) and asset allocations and start investing on a regular basis.

I second the max out your 401k.... Mine grew to well over a million before I retired and it's still growing today a decade after retiring.

I am a natural born saver that is married to a natural born spender. Typical ying/yang! I will say my "ying" is seeing the light and knows how important it is to join the right side of saving!!!

IMO, it's good for a married couple to have a spender and saver... Need the balance to enjoy life...

 

[OldShooter]

... any suggestions would be greatly appreciated.

"If You Can" by William Bernstein https://www.etf.com/docs/IfYouCan.pdf (free 16 page download)


"The Coffee House Investor" by Bill Schultheis https://www.coffeehouseinvestor.com/ (This is Bill's first book; read it before reading his second one.)


"The Bogleheads Guide to Investing" by Taylor Larimore et al https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0470067365

 

[Ninepoint5]

Welcome, ninepoint5! You are not too late - many people don't wake up to what they need to do for retirement until they hit 60!

The main thing you can do now (besides max out your 401k) is to get a handle on your spending. Track everything in detail for at least several months and then look to see where you can adjust to increase your investments outside your 401k. Get educated about the basics of IRAs (probably Roth in your case) and asset allocations and start investing on a regular basis.

This assumes that you already have a decent emergency fund. When your spouse goes back to work, try to live on your current income alone and save the 2nd income (with an allowance for those work related expenses such as clothes and commuting).

We're a pretty friendly bunch so ask away!

I do appreciate the feedback and welcome! Emergency fund is well in place and my initial plan of attack is once she gets back into teaching is to apply 50% or more of her funds into paying off our mortgage in 5-7 years. After that, take all funds and attack retirement savings into overdrive.

 

[Ninepoint5]

Ninepoint5, lots of Texans here! Glad you joined.

I have a soft spot in my heart for Midland/Odessa after 30 years in the oil business.

Well, this place sure has changed over the last 10-15 years that is for sure!

 

[aja8888]

Well, this place sure has changed over the last 10-15 years that is for sure!

Yep! The "revisit" of the Permian Basin brought EVERYBODY back for oil and gas fever once again. Haha, I've seen sleepy Midland/Odessa and the new one.

$400/night for a Holiday Inn Express room anyone?

 

[Telly]

I do appreciate the feedback and welcome! Emergency fund is well in place and my initial plan of attack is once she gets back into teaching is to apply 50% or more of her funds into paying off our mortgage in 5-7 years. After that, take all funds and attack retirement savings into overdrive.

Midland/Odessa... hmm... hmm... Oh Yeah! Monahans Sand Dunes, and the Meteor Crater!
We paid off our mortgage about 15 years before I Early-ER'd... but that was a 10% mortgage from the late '70s. There are a lot of discussions here (over and over!) about to pay off, or not to pay off mortgage. It's not a slam-dunk decision, depends on many things particular to the person's situation and interest rate.

If you don't pay it off early, you have $ to invest after-tax, maybe into something like Vanguard's Growth Fund Index, which throws off very little capital gains yearly, so you won't get dinged badly by cap gains every year in a taxable account. I recommended it for DW's recent inheritance. As usual, all details should be investigated by the individual before making investment choices.

 

[Ninepoint5]

Well, we are not at the $400 a night destination since pandemic. However, we are a steady $200 a night at the same hotel. Are you still at the Woodlands? I am a fan of that part of Texas. I got a good buddy that is a managing partner at Lupes Tortilla Factory there at Woodlands....

 

[4legsgood]

Hi,

If, as is common, your wife as a teacher will get a 457 deferred comp plan, that has a separate contribution limit and you can defer $20,500 -in addition- to any 401k or 403b type plan limits. Maxing out all types of deferral accounts would be a quick way to sock away dough!

 

[gamboolman]

9.5,

Howdy and welcome from another fellow Texan

You have come to the right place to get excellent advice and if you want it - feedback on your specifics.

Your at a good age to engage and certainly not too late.

ms gamboolgal and I did not really start learning about FIRE and getting ready for retirement until I was in my latter 40's and really did not get serious until about age 51. Retired at age 61.

ms gamboolgal was a teacher also. But only for afew years - as she moved overseas with me and that was that for her teaching.

Suggest you post your particulars in the format suggested and your realistic expenses - you will get excellent feedback. Thats what we did and it was a big help in getting us ready to retire.

We started out our married life out in Midland - Permian Basin in 1982 and was out there in the Boom and then the Bust.
Spent 43 years working the Oilpatch all over Texas, the Gulf Coast and living in Africa for near the last 20 years before retiring earlier this year 1-Feb-21.

All the best in your FIRE pursuit.

 

[aja8888]

Well, we are not at the $400 a night destination since pandemic. However, we are a steady $200 a night at the same hotel. Are you still at the Woodlands? I am a fan of that part of Texas. I got a good buddy that is a managing partner at Lupes Tortilla Factory there at Woodlands....

Yes, still here in The Woodlands after 30 years and boy this place has grown since we got here in 1991. Yeah, that $400/night was back just before Covid hit and one had to book a room 2 weeks in advance. We go to Lupe's once in a while. Good place!

Good luck with your FIRE efforts!

 

[travelover]

........... my initial plan of attack is once she gets back into teaching is to apply 50% or more of her funds into paying off our mortgage in 5-7 years. After that, take all funds and attack retirement savings into overdrive.

With interest rates so low on mortgages, that might not be the best approach. I'd concentrate on putting money into a nationwide or worldwide stock index fund. At this point in your life, you want to leverage the next 20 years with compounding earnings. Your house will appreciate regardless if you own it or the bank owns it.

 

[Ninepoint5]

9.5,

Howdy and welcome from another fellow Texan

You have come to the right place to get excellent advice and if you want it - feedback on your specifics.

Your at a good age to engage and certainly not too late.

ms gamboolgal and I did not really start learning about FIRE and getting ready for retirement until I was in my latter 40's and really did not get serious until about age 51. Retired at age 61.

ms gamboolgal was a teacher also. But only for afew years - as she moved overseas with me and that was that for her teaching.

Suggest you post your particulars in the format suggested and your realistic expenses - you will get excellent feedback. Thats what we did and it was a big help in getting us ready to retire.

We started out our married life out in Midland - Permian Basin in 1982 and was out there in the Boom and then the Bust.
Spent 43 years working the Oilpatch all over Texas, the Gulf Coast and living in Africa for near the last 20 years before retiring earlier this year 1-Feb-21.

All the best in your FIRE pursuit.

I do appreciate you taking the time in responding to this fellow Texan. I will post particulars as suggested ( I guess I missed that thread) in hopes for more detailed feedback.


Well, I was born and raised here. Been through the trails & tribulations, ups/downs, growth & lack of infrastructure of the area. If you haven't been back since the 80's, you wouldn't recognize the area. Although I am not in the oil industry ( i am the outlier) , we are all impacted by the industry one way or another.

 

[Car-Guy]

Yes, still here in The Woodlands after 30 years and boy this place has grown since we got here in 1991.

Newcomers .... I can recall when The Woodlands was just a dream and Spring Tx was about as far north as any "housing editions" could be found between Conroe and Houston.... And there were not many homes in Spring at that time either. Speaking of Conroe, in the early 70's I hunted dove many weekends on 20,000+ acres of public land that is now known as Lake Conroe. That's all pretty much 25 to 75 deep water now.
I can recall coming across survey markers out in the middle of that land while hunting.. Later I was told those markers were set out by Army Corp of Engineers for the Lake's water boundaries. Pretty amazing to me at the time that they could figure that out for such a large area....

 

[Ninepoint5]

9.5,

Howdy and welcome from another fellow Texan

You have come to the right place to get excellent advice and if you want it - feedback on your specifics.


Suggest you post your particulars in the format suggested and your realistic expenses - you will get excellent feedback. Thats what we did and it was a big help in getting us ready to retire.



All the best in your FIRE pursuit.

A few of the specifics I left out are as follows:


Desired retirement age of 60-62ish


Mortgage of $225k w/ $150k of equity


Emergency fund of $15K


TD account w/ $10k ( started this during pandemic)


Income=$7300/ month bring home
Exp= $5800/month


Again, the better half to start back teaching next year w/ an income of $55k/ year. Hope this is enough info to gain better feedback.

 

[aja8888]

Newcomers .... I can recall when The Woodlands was just a dream and Spring Tx was about as far north as any "housing editions" could be found between Conroe and Houston.... And there were not many homes in Spring at that time either. Speaking of Conroe, in the early 70's I hunted dove many weekends on 20,000+ acres of public land that is now known as Lake Conroe. That's all pretty much 25 to 75 deep water now.

I'm "New" but DW got here in 1975. We were married in 1996 at the Yacht Club at Bentwater, right where you probably used to hunt!

 

[rodi]

Hi,

If, as is common, your wife as a teacher will get a 457 deferred comp plan, that has a separate contribution limit and you can defer $20,500 -in addition- to any 401k or 403b type plan limits. Maxing out all types of deferral accounts would be a quick way to sock away dough!

One of the advantages of both of you maxing out your 401k/457/retirement plans is that it also reduces your available spending. If you can squeeze out some more to pre-fund your 7 year olds college (eg 529). I found that when I retired I was used to spending a *lot* less than our income would suggest because I'd been deferring income to retirement savings, 529's, and extra mortgage payments. We were literally living on 45% of our gross salaries (our spending included taxes).

The big advantage of that is that you don't need as large of nest egg if your spending is smaller. If you're spending and want to keep spending $60k/year you need less than if you're spending and want to maintain $150k/year. You need an even bigger nestegg if you want the super fat fire.

 

[Ninepoint5]

Newcomers .... I can recall when The Woodlands was just a dream and Spring Tx was about as far north as any "housing editions" could be found between Conroe and Houston.... And there were not many homes in Spring at that time either. Speaking of Conroe, in the early 70's I hunted dove many weekends on 20,000+ acres of public land that is now known as Lake Conroe. That's all pretty much 25 to 75 deep water now.
I can recall coming across survey markers out in the middle of that land while hunting.. Later I was told those markers were set out by Army Corp of Engineers for the Lake's water boundaries. Pretty amazing to me at the time that they could figure that out for such a large area....

Fascinating! I love hearing the history of how things come about or developed into what they’re today