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From the description of the take home income, I suspect OP will be bumping up against the income limits for Roth IRAs in 5 yrs or so.
Take a look at this info, once you get to a certain income level ,some retirement vehicles just aren't worth the restrictions. For instance, I only put in for the company match on my 401k because the expense ratios for the funds they offer are insane. I do have a low cost index fund choice in my IRA that I try to max out per year in addition to the 401k match.
Honestly OP, I'd say look into getting a financial planner, then do what a lot of my friends do: Give the planner a small % of what you have available, and see if they are doing a good job. If you're happy with it, then you can always adjust accordingly. A FP will help you see stuff you didn't think you had to worry about later. Moreso than an internet forum anyway (not knocking any of the kind people here
Definitely get the maid! I suggest a service because then you do not have to withhold and report taxes. Unless your rent includes lawn service or you like to garden for relaxation, hire that out, too.
What do you do for child care? If a nanny or au pair would be a consideration, then preparing the evening meal could be part of that person's duties. DH and I were fortunate to have a nanny who did it all: child care, laundry, and light housekeeping. Ours lived in.
We think we have prepared for everything, but life likes to throw us curve balls. My career took a detour because my older son developed childhood leukemia (ALL) and I cut back on my work. That caused a drop in income that there was no way to make up. He did well with treatment and I subsequently ramped it back up again.
I was fortunate that I did not have to work while I was in college. My parents could not afford to help me much, but I went to a a state school and had scholarships that covered tuition. I ended up borrowing very little. That was also a long time ago. I do think it would have been difficult to get the GPA I had if working had been necessary.
Speaking of which, do you and/or your spouse have education loans to pay off?
We do the pre-school shuffle, it's a pain as there's always a pick up or drop off lingering, but I'm not sure we are at AuPair level just yet.
Sorry to hear about your kiddo, I am glad to hear he recovered.
Yeah, the Spouse did work much more than I in undergrad and her GPA wasn't nearly as good as mine (of course her grades did get better as she figured out college even though she was juggling four jobs her last year, so who knows right)
Quote:
Originally Posted by ncole1
You don't use your take home pay to pay taxes.
It was a joke. The bump in pay really increases our tax exposure, and our effective tax rate goes through the roof, but I'm glad to have that problem. There are some people who feel that their contributions to society end at their tax bill (I'm mostly one of those guys, having been "shared" with multiple Charities after donating to a few that I thought were worthwhile, so now we just sponsor a summer experience for a few hardworking kids at a proverty stricken high school, no more sharing of information, no more hounding for cash, and no scope creep, just kids getting to see what hard work can bring them by getting to enjoy more of America than their socioeconomic status typically would permit).
Quote:
Originally Posted by KathrynAragon
Prepare for the future, which is always uncertain.
Just because you max out your retirement contributions doesn't mean that you can't still save money.
Pay off all debt.
Pay cash for everything, including big ticket items.
Save for kids' educations.
Spend money on vacations with those kids - as many as you can afford to take. These travel experiences are pure gold when it comes to raising kids.
You or your wife could become unable to work. Prepare for that possibility.
No debt other than a small car note (I make more on CD's than I pay in interest, so it's best to take advantage of the delta.
Definitely going to do the 529 thing, and vacations are a must.
Quote:
Originally Posted by pacific2
Everyone has offered great suggestions. Also remember to always live far below your means, and never buy as much a house as you can afford.
We plan on it. We've lived below our means since graduating undergrad (lived modestly in undergrad too, but I'm sure you cant claim to be living below your means when you are taking on debt). We were talking of saving up for a few years to get a 20% down payment saved up on a second home (although our first home would still be a rental). Get a nice place somewhere we'd want to live forever and rent it out until we retire (kind of sounds awful now that I'm typing it down, so much wear and tear).
Quote:
Originally Posted by Augiec
From the description of the take home income, I suspect OP will be bumping up against the income limits for Roth IRAs in 5 yrs or so.
Take a look at this info, once you get to a certain income level ,some retirement vehicles just aren't worth the restrictions. For instance, I only put in for the company match on my 401k because the expense ratios for the funds they offer are insane. I do have a low cost index fund choice in my IRA that I try to max out per year in addition to the 401k match.
Honestly OP, I'd say look into getting a financial planner, then do what a lot of my friends do: Give the planner a small % of what you have available, and see if they are doing a good job. If you're happy with it, then you can always adjust accordingly. A FP will help you see stuff you didn't think you had to worry about later. Moreso than an internet forum anyway (not knocking any of the kind people here
Thanks, I'm sure those guys will a come a knocking soon, so I should go find a good one before the bad ones find me.
Thanks all. I know this is a good problem to have, but it is a hard shift from having a purpose for most of your income to having more spare cash than you have utility for. As much as you'll groan I do think I'll be buying the spouse a sporty coupe of some sort to drive on nice days, just driving is an interest of ours and our current cars are both just practical numb metal boxes with wheels.
We do the pre-school shuffle, it's a pain as there's always a pick up or drop off lingering, but I'm not sure we are at AuPair level just yet.
Sorry to hear about your kiddo, I am glad to hear he recovered.
Yeah, the Spouse did work much more than I in undergrad and her GPA wasn't nearly as good as mine (of course her grades did get better as she figured out college even though she was juggling four jobs her last year, so who knows right)
It was a joke. The bump in pay really increases our tax exposure, and our effective tax rate goes through the roof, but I'm glad to have that problem. There are some people who feel that their contributions to society end at their tax bill (I'm mostly one of those guys, having been "shared" with multiple Charities after donating to a few that I thought were worthwhile, so now we just sponsor a summer experience for a few hardworking kids at a proverty stricken high school, no more sharing of information, no more hounding for cash, and no scope creep, just kids getting to see what hard work can bring them by getting to enjoy more of America than their socioeconomic status typically would permit).
No debt other than a small car note (I make more on CD's than I pay in interest, so it's best to take advantage of the delta.
Definitely going to do the 529 thing, and vacations are a must.
We plan on it. We've lived below our means since graduating undergrad (lived modestly in undergrad too, but I'm sure you cant claim to be living below your means when you are taking on debt). We were talking of saving up for a few years to get a 20% down payment saved up on a second home (although our first home would still be a rental). Get a nice place somewhere we'd want to live forever and rent it out until we retire (kind of sounds awful now that I'm typing it down, so much wear and tear).
Thanks, I'm sure those guys will a come a knocking soon, so I should go find a good one before the bad ones find me.
Thanks all. I know this is a good problem to have, but it is a hard shift from having a purpose for most of your income to having more spare cash than you have utility for. As much as you'll groan I do think I'll be buying the spouse a sporty coupe of some sort to drive on nice days, just driving is an interest of ours and our current cars are both just practical numb metal boxes with wheels.
In your first post they were safe and reliable cars, now they're just practical numb metal boxes with wheels. Ahh the human mind.
Stop worrying about materialism and ego, then you will know what to do with the extra income.
__________________
"The man who sleeps on the floor, can never fall out of bed." -Martin Lawrence
In your first post they were safe and reliable cars, now they're just practical numb metal boxes with wheels. Ahh the human mind.
Stop worrying about materialism and ego, then you will know what to do with the extra income.
Safe and reliable is also numb and practical.
I could care less about materialism, but I will speak to ego:
We have a wall of excellence in our home office, it's full of plaques and nicely printed pieces of paper in second hand frames, and it's these pieces of paper, or rather the achievement they represent that makes up my ego. Any idiot can go out and buy a nice looking car, but education must be earned.
I'm sure there are some MMM followers here, and I get that, but driving isn't always about getting from A-B, there are times where you just want to row through gears while letting the tail end of the car loose just a bit. This doesn't have to be expensive, the most tracked car is a Mazda Miata (how's that for image), and that's one of a half dozen on the list of cars to try out once everything else is worked out.
Maximize 401 K contributions. Open a 529 savings plan for each child, and contribute the max for each child each year. If you have a health plan that allows you to have an HSA account, open that too and contribute the max to it annually - these are all tax deferred accounts.
Do you have enough disability and life insurance? Disability equal to current income, life insurance ten times current income?
I understand that you don't want to buy a house because you move too often to make it financially feasible. HOWEVER, you are missing out on a big tax deduction, and you're not in the housing market, which historically is a way that people have built wealth. Is there a place that you like to vacation, where you think that you might want to have a retirement home someday? You could consider buying something low maintenance there, and renting it out. Or you could buy a low-maintenance home where you are currently living, and turn it into a rental property when you next move. You could buy a home with a 15 yr mortgage. The first few years, when you are living in it, your payment is largely interest = big deduction. Later on, after you move, it's a rental home - pays off the mortgage. You'd have to have a good property management company. A friend designs his leases for a far away home to have slightly DECREASING rent each year that the tenant stays, so that they will stay longer, so he has less turnover and less maintenance - works very well for him. Eventually, he will move into the retirement home - then it becomes his primary residence, and he can sell it taking advantage of the tax deduction.
Before we started our rental property business (and we own all the rental properties outright), we had a FIVE YEAR emergency fund in savings, because we were dependent upon a single breadwinner. Once we had the second business, with a very regular income stream, we slowly drew down that fund, rolling it into the rental property business for more income, since we now had security if the breadwinner stopped bringing home income.
After you've got all these bases covered, I'd say it's time to have more fun!
It's a good problem to have, but all the information out there seems to be about getting out of debt, or percentage based living, and it just doesn't fit my new reality.
Sorry, I wasn't sure if actual numbers would be seen as a quote "humble brag."
Rent and Health Insurance are covered outside the take home, ownership isn't an option as we move too frequently to break even on the transaction costs of buying and selling.
We are doubling from $5,000/month take home to $10,000/ month take home (and it'll double again in a couple of years).
Our two young kids have zero college savings (I guess that's a starting point, although my partner and I were given nothing by our parents for college so we aren't sure we want to help our kids, we can afford to, but we just aren't sure how that will affect their path).
Savings outside of 401(k) makes up a years expenses, and we are vested in a defined benefit retirement plan that if it remains solvent would provide more than we take home now.
Helping my children with College would be my #1 priority, aside from the obvious of having them in daycare less or not at all if we could afford it. We were poor but it was worth it to raise my own child. Never having to wonder about his welfare. That is the #1 thing to do for your child is spend as much time with them as possible, work less.
Then maybe invest in Real Estate....a few rentals. Something to own in case your children's careers don't work out so they have something to fall back on for them and their own kin. Also make plans to ensure their inheritance now.
After that, I'd plan to retire early even if I loved my career. Work half time just to have time to take care of yourself, be a parent, grandparent, have friends and a normal life. It takes time and effort to eat healthy, grow your own food, exercise hardcore, etc...so my kids first, then my own health second. Hopefully your kids will follow suit with their kids, which usually happens when they are trained well and loved. Hope that makes sense. Congratulations by the way, good for you! And I also love the MMM website. Their mentality fosters a happy life. Also, 85% of those in our town of 5000 are educated. It is more common that not where we live. So don't hold that in too high of regard. And yes, definitely get a housekeeper. Someone who is also willing to run errands if possible
Last edited by MonicaJackson; 05-26-2016 at 11:09 PM..
Buy/rent a safe box. Thru the bank or one that is hidden in the desert
Buy municipal bonds.
Keep maintaining your budget at the 37%.
Higher education for recent H's grads will look at the parents income before considering loans or grants. Oddly your young adult could be denied if you choose not to support their endeavor into college.
Toss some money each month to shelters or causes that improve your community.
I'm one of the few that avoids stocks/trades. Lived thru losing life savings and prefer the cash is king when it's sitting in a metal thing
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