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Message
Help with budgeting/finances strategy
Posted on 7/3/18 at 1:02 pm
Posted on 7/3/18 at 1:02 pm
Would love to get input from the MB on our current allocation of funds!
Currently have 2.5 months of joint salary in an emergency fund (4 months of just mine. 6.5 months of just hers)
I contribute 11% + 4% match into my 401k, and also receive an additional 5% contribution.
She contributes to LASERS.
After all budgeted items are accounted for, this is what we have:
Debt
Mortgage: $852/mo (4.25% interest)
Vehicle: $489/mo (1.9% interest)
Rental Property: $351.90/mo generates $650/mo (5% Interest)
Savings:
We both Max Roths: $916/mo
Insurance: $223/mo - $100k term and Whole, each. (can't wait to get eaten alive for this one
)
529+Kid Savings: $200/mo
When that is all said and done, we have about $500 of free cash flow per month.
What would you do with it?
More on the mortgage? More on the rental property? Should I increase 401k contributions (or maybe decrease them to just the match and allocate it elsewhere?), orrrr do we just keep on keeping on?
WWMTD? TIA!
Currently have 2.5 months of joint salary in an emergency fund (4 months of just mine. 6.5 months of just hers)
I contribute 11% + 4% match into my 401k, and also receive an additional 5% contribution.
She contributes to LASERS.
After all budgeted items are accounted for, this is what we have:
Debt
Mortgage: $852/mo (4.25% interest)
Vehicle: $489/mo (1.9% interest)
Rental Property: $351.90/mo generates $650/mo (5% Interest)
Savings:
We both Max Roths: $916/mo
Insurance: $223/mo - $100k term and Whole, each. (can't wait to get eaten alive for this one
) 529+Kid Savings: $200/mo
When that is all said and done, we have about $500 of free cash flow per month.
What would you do with it?
More on the mortgage? More on the rental property? Should I increase 401k contributions (or maybe decrease them to just the match and allocate it elsewhere?), orrrr do we just keep on keeping on?
WWMTD? TIA!
9
Posted on 7/3/18 at 1:06 pm to LSUengineer12
Go on a nice vacation twice a year
Posted on 7/3/18 at 1:11 pm to LSUengineer12
Enjoy life. Use the $6K on whatever you like to do...or let it accumulate in a saving fund and then use it on something you both love.
Posted on 7/3/18 at 1:14 pm to gizmoflak
So... "Vacations" is an item in our budget that we throw some money at each month. We enjoy traveling and wanted to be sure those trips aren't funded via emergency funds, etc.
I guess we could always up it.
I guess we could always up it.
Posted on 7/3/18 at 1:19 pm to LSUengineer12
Do you have disability insurance? What about an umbrella policy?
You mentioned term and whole life but not these. Is $100K term enough for your family if you were to die tomorrow?
...you know the typical feelings towards whole life.
$1M umbrella policy can be had for less than $200 a year and is a great peace of mind. It requires the top end auto coverage to be eligible.
You mentioned term and whole life but not these. Is $100K term enough for your family if you were to die tomorrow?
...you know the typical feelings towards whole life.
$1M umbrella policy can be had for less than $200 a year and is a great peace of mind. It requires the top end auto coverage to be eligible.
This post was edited on 7/3/18 at 1:22 pm
Posted on 7/3/18 at 1:23 pm to lynxcat
I have short and long term disability with work. I contribute extra so that I would receive the max benefit in the result of an accident.
I'm going to be honest when I say I'm not familiar with Umbrella policies.
ETA: I also have additional group term life insurance through work.
I'm going to be honest when I say I'm not familiar with Umbrella policies.
ETA: I also have additional group term life insurance through work.
This post was edited on 7/3/18 at 1:29 pm
Posted on 7/3/18 at 1:27 pm to LSUengineer12
Umbrella policies kick in if the damages from say a auto accident exceed your coverage on your auto policy. It’s a way of protecting wealth and is very cheap.
I have a work policy as well but may be worth looking into a supplemental disability plan. The cost is really dependent on how much you are insuring but you can generally keep it under $100 a month for a few thousand in monthly benefit to retirement.
Overall, you sound like you are in a great place financially so I’m just listing a couple other areas that are sometimes overlooked.
I still say you and your wife should enjoy yourselves with whatever is left over
I have a work policy as well but may be worth looking into a supplemental disability plan. The cost is really dependent on how much you are insuring but you can generally keep it under $100 a month for a few thousand in monthly benefit to retirement.
Overall, you sound like you are in a great place financially so I’m just listing a couple other areas that are sometimes overlooked.
I still say you and your wife should enjoy yourselves with whatever is left over
Posted on 7/3/18 at 1:31 pm to lynxcat
I appreciate the advice. I have a close friend in the Insurance industry, and will check into umbrella policies. Thanks!
Posted on 7/3/18 at 2:29 pm to LSUengineer12
i don't think of my finances on quite the granular level that you do, but if it were me, i'd just stash the extra money until the right opportunity for investment opened up. for instance, you already have a rental, so you are familiar with that type of investment. save the $500 for a while until you see the right property for your next investment.
the other option may not be quite as popular here, but enjoy some modest change to your lifestyle that this additional $ affords you. maybe a maid, lawn guy, boat or whatever it is that would give you more joy out of life. it's ok to spend your money to buy yourself time or on things you enjoy imo.
the other option may not be quite as popular here, but enjoy some modest change to your lifestyle that this additional $ affords you. maybe a maid, lawn guy, boat or whatever it is that would give you more joy out of life. it's ok to spend your money to buy yourself time or on things you enjoy imo.
This post was edited on 7/3/18 at 2:30 pm
Posted on 7/3/18 at 2:54 pm to LSUengineer12
quote:
Insurance: $223/mo - $100k term and Whole, each. (can't wait to get eaten alive for this one )
I have no problem with you having WL, I have it myself. But Why in the FK do you only have 100k in Term? With everything you posted( mortgage, Rental, Spouse and Kid, I'm surprised you don't have minimum of $1MM in Term.
This post was edited on 7/3/18 at 2:56 pm
Posted on 7/3/18 at 3:25 pm to bstew3006
Great question.
My answer is that my son will be 8 weeks old tomorrow, and I haven't gotten around to upping my coverage. My term+WL+Group Term is around $500k in coverage, but like you mentioned, I need to up it.
My answer is that my son will be 8 weeks old tomorrow, and I haven't gotten around to upping my coverage. My term+WL+Group Term is around $500k in coverage, but like you mentioned, I need to up it.
Posted on 7/3/18 at 3:25 pm to bstew3006
quote:
I'm surprised you don't have minimum of $1MM in Term.
agree. it's too cheap to not have if you are reasonably healthy.
Posted on 7/3/18 at 3:34 pm to LSUengineer12
With an 8 week old I'd probably want a little more emergency fund then I'd just keep stashing money into some kind of liquid investments account until something comes up.
I wouldn't want to lock any more money into a retirement situation if something happens to your kid, goes to private school, ect.
Keep that money useful for something that may come up with such a big change in your life.
I wouldn't want to lock any more money into a retirement situation if something happens to your kid, goes to private school, ect.
Keep that money useful for something that may come up with such a big change in your life.
This post was edited on 7/3/18 at 3:36 pm
Posted on 7/3/18 at 3:40 pm to LSUengineer12
Are you itemizing deductions on your tax return? If so, then your actual mortgage interest is lower because of the tax subsidy.
But even if not the mortgage interest isn't so high that it's a clear decision to pay down. And at some point it's probably worthwhile to get a HELOC set up even if you don't need one now. It's a cheap source of financing if you do need it, and it's always better to get that set up before you do.
I second the umbrella. They're pretty inexpensive.
But even if not the mortgage interest isn't so high that it's a clear decision to pay down. And at some point it's probably worthwhile to get a HELOC set up even if you don't need one now. It's a cheap source of financing if you do need it, and it's always better to get that set up before you do.
I second the umbrella. They're pretty inexpensive.
Posted on 7/3/18 at 4:45 pm to LSUengineer12
You need to up it ASAP
I'm 36 and pay $74 month for 1.5MM. Now I got this at 33 and its a mix between 10 year and 20 year.
I second the Umbrella, you can have a $1mm Umbrella for $450-500 year
I'm 36 and pay $74 month for 1.5MM. Now I got this at 33 and its a mix between 10 year and 20 year.
I second the Umbrella, you can have a $1mm Umbrella for $450-500 year
This post was edited on 7/3/18 at 4:48 pm
Posted on 7/3/18 at 5:06 pm to LSUengineer12
You're in a good spot and just need to keep the ball rolling.
I agree with others about considering an umbrella policy. It will likely make you up your liability for your auto policies, but liability is your largest "blind spot". Especially with a rental.
I agree about upping your term to around 1MM. At least until you're around 55 then you should be self insured.
I'm curious about your rental as the mortgage is so small. Is it in a "c" level area or lower?
I think someone else mentioned it, but I would have to consider where your tax situation is in regard to the remainder. If you're just above a tax threshold, 401k may be a good idea. I would also consider paying off your home mortgage and leverage up your rental. New tax rules will reduce the number of people itemizing which will neuter some of the mortgage interest deduction.
I agree with others about considering an umbrella policy. It will likely make you up your liability for your auto policies, but liability is your largest "blind spot". Especially with a rental.
I agree about upping your term to around 1MM. At least until you're around 55 then you should be self insured.
I'm curious about your rental as the mortgage is so small. Is it in a "c" level area or lower?
I think someone else mentioned it, but I would have to consider where your tax situation is in regard to the remainder. If you're just above a tax threshold, 401k may be a good idea. I would also consider paying off your home mortgage and leverage up your rental. New tax rules will reduce the number of people itemizing which will neuter some of the mortgage interest deduction.
Posted on 7/3/18 at 6:37 pm to LSUengineer12
First, you're doing great!
When did you get the whole life and what company? I like whole life.
Top priority is upping term coverage to at least 1MM. Call you agent tomorrow!
I also agree with and umbrella policy. I just picked one up for $315 annually. 1MM of coverage.
What type of investor are you? Agressive, moderate or conservative?
I definitely agree with stashing the excess for now to be used for something to better your family like road trip, vacation, investment opportunity. If none of that happens, you can also invest it.
When did you get the whole life and what company? I like whole life.
Top priority is upping term coverage to at least 1MM. Call you agent tomorrow!
I also agree with and umbrella policy. I just picked one up for $315 annually. 1MM of coverage.
What type of investor are you? Agressive, moderate or conservative?
I definitely agree with stashing the excess for now to be used for something to better your family like road trip, vacation, investment opportunity. If none of that happens, you can also invest it.
Posted on 7/3/18 at 7:08 pm to LSUengineer12
Op you are blessed, give something to charity or your church to express your gratefulness
Posted on 7/3/18 at 8:42 pm to LSUengineer12
Look into a taxable account. If you end up retiring early that may be the best place to pull from. It is also a nice place to save money (and have it grow) instead of in a savings account since you have your emergency fund already.
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