Need advice for my situation... | TigerDroppings.com
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dallaslsufan
LA-Lafayette Fan
Dallas
Member since Sep 2004
256 posts

Need advice for my situation...

Here is my situation:

- I am 33 and my wife is 32
- Married w/4 year old twins (Both in private school at $5k/yr.)
- Wife is a stay at home wife and works with me every so often
- House paid for worth about $265k
- $275k in the bank
- Maxed out Roth IRA each year for both my wife and I
- $100k in the bank from previous job and current retirement
- Own my own business and pay myself anywhere between $120-$160k/yr.
- Looking at building a house that will cost in the $400k range and would like to pay cash, but will need to sell this house first in order to do that.
- No debt of any kind

Here is my questions...

1. Even though I am maxing out both my wife and I's Roth IRA (Through vanguard), I feel like I am not doing enough for retirement...What else should I look into doing?
2. What should I do for kids college planning? We live in Louisiana and I will pay an arm and a leg for them to go to private school...I assume they will either #1 Have scholarships when they graduate or #2 Be eligible for TOPS program.
3. I know most people would say get a low with such low rates for your house, but I have had great luck getting to this point by going the Dave Ramsey route. How many of you say pay cash for new house vs. going a different route?

Thanks so much for your input!


RockyMtnTigerWDE
Auburn Fan
TOKEN ROCKY
Member since Oct 2010
50661 posts

re: Need advice for my situation...
If you have had success following Dave Ramsey than why change now? Just curious.


dallaslsufan
LA-Lafayette Fan
Dallas
Member since Sep 2004
256 posts

re: Need advice for my situation...
That is a great question...I guess I am always worried I am not being a good steward of my money.


thelsutigers
LSU Fan
Lubbock, TX
Member since Nov 2009
3265 posts

re: Need advice for my situation...
Try rental properties, where I live in Texas with the oil boom, you can't hardly find places to rent for the oil field workers but you can find land. Build some smaller rental properties and rent.


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barry
Cincinnati Fan
Location, Location, Location
Member since Aug 2006
39915 posts

re: Need advice for my situation...
quote:

- Wife is a stay at home wife and works with me every so often - House paid for worth about $265k - $275k in the bank - Maxed out Roth IRA each year for both my wife and I - $100k in the bank from previous job and current retirement - Own my own business and pay myself anywhere between $120-$160k/yr.


Doesn't sound like you need money advice. With current mortgage rates I see no need to pay cash for the new house. Just put the money from you old house into the new one and finance the rest.


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Poodlebrain
LSU Fan
Way Right of Rex
Member since Jan 2004
16771 posts
Online

re: Need advice for my situation...
You should probably sit down with a good CPA and financial planner and discuss your current circumstances and your goals for the short, intermediate and long terms. They will be able to develop a plan that addresses your goals that provides you with flexibility and tax savings currently while providing you the resources you require to meet your goals for th future.

There are ways to address all of your goals that will not hinder your desire to buy a new home, but you need to analyze them numerically to see if they make sense for you. And the CPA and financial planner can prepare the analyses for you with multiple scenarios for you to consider.


dallaslsufan
LA-Lafayette Fan
Dallas
Member since Sep 2004
256 posts

re: Need advice for my situation...
I already have the meeting set up...Thanks for the advice...Would you suggest a fee based planner or a % guy?


MoreOrLes
LSU Fan
Member since Nov 2008
18389 posts

re: Need advice for my situation...
Well your story depresses me....

Your net worth is 200K+ ahead of me and I'm 41 and wife and I work together. You have done very well for your self. Congrats.


dallaslsufan
LA-Lafayette Fan
Dallas
Member since Sep 2004
256 posts

re: Need advice for my situation...
Thanks MoreOrLess...Not a competition, but I appreciate it...God has blessed our labor and hard work...


Vols&Shaft83
Tennessee Fan
Member since Dec 2012
24635 posts

re: Need advice for my situation...
Dude you're a Rockstar, congrats on your success. Keep doing what you're doing, it's working. As far as college planning is concerned, have you looked into 529 savings plans?


foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
31306 posts

re: Need advice for my situation...
quote:

3. I know most people would say get a low with such low rates for your house, but I have had great luck getting to this point by going the Dave Ramsey route.


Be aware that Ramsey's advice makes more sense when your interest rate is higher. But not really now.

Let's assume you are in the 25% tax bracket. That means if you get a mortgage at 3.5%, your equivalent after-tax rate is only 2 5/8%. For 30 years. Do you believe inflation will stay that low for 30 years? If not (and most don't) then a mortgage is financially smart. Note that a 15 year note for a lower rate is not as good b/c you are paying extra for a negative real ROI.

FWIW I got a 30 year at 3.25% and have no intention of ever prepaying for this reason. It would actually be a zero or negative real return on equity to do so.


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dallaslsufan
LA-Lafayette Fan
Dallas
Member since Sep 2004
256 posts

re: Need advice for my situation...
I looked at the 529 plan, but you loose it if the kids don't take advantage of it. That was my concern...We are getting them a great education and I would assume they would get scholarships...That is the hope.


tiger91
LSU Fan
South of Lafayette
Member since Nov 2005
13739 posts

re: Need advice for my situation...
Well, LA has TOPS ... who knows if it'll be around when your kids are in need of it though. And yes, they're getting a good education but I've found that schools are getting stingy with scholarships (I have a senior at LSU .. and fyi, ULL was WAY more generous than LSU with an offer).

We have a 529 and haven't used a penny yet for this first kid. He did well and had random small scholarships that helped and we've just paid the rest out of our normal money. #2 will probably need a good bit of it but by the time #3 comes, she'll be the only 1 left and our home will be paid for so I'm not as worried.

You're self employed? So are we. We max out the ROTH every year and put money into a SEP the years that we qualify. We max that out in qualifying years.

(eta: qualified expenses for 529 I'm understanding = tuition, fees, books, room/board, I was even told laptops (?)
This post was edited on 4/7 at 6:03 pm


Vols&Shaft83
Tennessee Fan
Member since Dec 2012
24635 posts

re: Need advice for my situation...
That was my hesitation too. I took one for my nephew because I don't trust my sister to plan ahead.


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dallaslsufan
LA-Lafayette Fan
Dallas
Member since Sep 2004
256 posts

re: Need advice for my situation...
I am self employed...I own a small construction business with 10 employee's...I am 33% partner....I was kind of pushed into a 512i plan at work and it turned out to be a rough option...I am switching over to a 401 offering this month...Working on that now actually...I will be maxing out what I can put in there as well.


Vols&Shaft83
Tennessee Fan
Member since Dec 2012
24635 posts

re: Need advice for my situation...
I'm doing a Roth, SEP, and rental real estate. The goal is to have them out earning me in the next 5 years. you're so close to that tipping point and you're only 33. you're kicking arse man.


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FredSecunda
LSU Fan
Baton Rouge
Member since May 2005
7166 posts

re: Need advice for my situation...
Your house is paid off and you are 33? That's incredible. Congrats man.

I'd maybe suggest selling your home, putting half down to build a new one, and letting the rest of the cash from the home sale work for you in whatever avenue you choose.

Good problem to have.


BACONisMEATcandy
LSU Fan
Delta, Amex, & Über Threads
Member since Dec 2007
42704 posts

re: Need advice for my situation...
quote:

You have done very well for your self. Congrats.


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Weaver
Southeastern LA Fan
Mandeville, LA
Member since Nov 2005
22478 posts

re: Need advice for my situation...
quote:

dallaslsufan




True OT baller...I am 38 and single and no where near where you are just on my income.


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Jake88
George Mason Fan
LSU/Saints Fan
Member since Apr 2005
11258 posts

re: Need advice for my situation...
Scholarships don't pay for everything. The money from a 529 plan can be used for rent, books, fees, etc. La start savings 529 will also match folks with high income 2%.

If your beneficiary doesn't use it, you don't lose your money, you lose your money's tax exempt status.


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