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Wife and I are 31, she makes low 40's I have a base of mid 60s but actual can be higher. This is about 2x what we've made in the past couple years so we're really feeling like we're getting ahead now, finally.
88 in 401k invested in around 30 Latin America and the rest in a money market type "stable value fund".
48 in Roth IRA is mostly Canadian mutual fund
28 in brokerage account is just sitting there
3 in a company stock option that I think are vested but not sure, we get statements but I'm a little confused
97 in cash is just sitting there
For debt I owe 7 and my wife owes around 15 in student loans, these are at low low interest like 2.5% or so.
Not sure what our credit looks like, to be honest this year we opened up about 4 new credit cards each to get free money this year. Earned 2400 in cash rewards and just put things like electricity bills on them. Basically we pre-paid a lot of bills and earned cash, had to pay anyway why not get free money I figured.
Last year we bought a new car and I have an older car, so no car payment, we have around 125 left on our house w/ a 15 year mortgage and it's valued around 170 +/- @ 3.6% after paying it down last year to refi. We do not plan to stay here for the foreseeable future.
Maybe to some our savings aren't significant but to us it's now getting to be a lot of money and I don't want to waste it and I'm having a hard time keeping track of it. Seeing how we earned $300 in interest last year on our money makes me sick, and the stock market is basically a up and down game that I can't bare to watch anymore.
Trying to find some longer term-ish places to put money where it can grow, or maybe invest in something like flipping a house etc.
Thoughts, what would you do? Monthly bills, no idea, I hate to admit it, but I don't know what they run a month. I don't really keep track. I hope for around 3k but that is probably on the low side. Here are most of them. Not really looking to cut anything at this point.
1200 mortgage/HOA fees
130 electricity
110 for cable, internet, block buster rentals
100 cell phone
350 student loans
500+ food includes eating out
165 for cars (gas, registration, insurance)
500-1000+ extra fun purchases (tools for me, clothes for her, etc)
So maybe 3000-3500 in living expenses roughly unless we make big purchases (ie had to buy a new laptop a few days ago because I cracked the screen on my other one). Take home would be around 6500 after deductions on a bare min month it looks like.
Anything over that and the extra goes to savings, on top of putting 10% into the 401k plus an 8% company match.
Also looking for legal ways to start to reduce our income taxes, would love to buy something down instead of paying tax.
Is that $97,000 just sitting there? I would pay off the student loans which will still leave you over $70,000. Put $30,000 of it in an emergency fund. Max out your 401K contribution.
401K- Put remaining 58k into an Asian equity fund and a US High-yield fund or tell us the exact options and we can choose for you.
125k in brokerage and cash - allot 25k for emergency fund (6-9 months of expenses, and take into account the potential that your expenses rise in coming years - what if you have children and that leads to more expenses like life insurance or your higher income gives you carte blanche to spend more),
Rest of brokerage into some combination of: Asian equity, high-yield, tech fund, oil fund - these are my picks for outperforming sectors in 2013- high-yield is really my pick within an overall unattractive bond world just because you should have some fixed income exposure - but would put high-yield in 401k if possible due to high tax burden.
Real estate is an option - if in your area you can achieve an 8%+ rental return on asset, it's a good return even after taxes. the negatives are pain of upkeep and being a landlord and the 5-6% exit cost- how much a negative depends person-to-person. Another variable is whether you can get a mortgage as an investment property in your area.
I'm not so sure on the Asian funds. I had been heavily weighted toward Asian funds and recently pulled out. There are a lot of unknowns over there especially China which is the big one.
I'm not so keen on maxing out my 401k. I really see no reason to do so at this point, I think I would be better focused on finding other places to invest even with the after tax money. I have lots of choices in my 401k but view the stock market as a sort of legalized ponzi scheme, and wanted to reduce my exposure to it.
As far as life insurance goes, I have a policy thru my employer for 3x my salary, so we're talking around 200 for that, plus our assets so my wife would be looking at around 450 in assets not counting equity in the house. I feel that is plenty, don't you?
My risk level is high but what I am seeing nowadays is high risk and little return. Stock market goes up and down up and down, seems pretty high risk to me and has returned very little. I would almost prefer to wait a couple years and when the stock market goes TU go chips in like I did on the last crash.
Paying off the student loans is probably a good idea.
There will be a big crash in China at some point, but they are about to rev it up again, and the China internal market was one of the worst in the world in 2012.
401k- you are getting a very strong match, one of the best in the employer marketplace- this is a strong incentive to send at least 8% into. That said, it's understandable to want to build spendable, accessible wealth outside a retirement plan. I would say weighing the two factors, I would still do 8%+ unless you had kids soon and a big expense rise.
I don't view the stock market at all as some dangerous game. I view it as the only way to participate in corporate profits that are the highest as a part of the economy in at least 50 years. There are little to no transactions costs and tons of liquidity unlike real estate. You have to be savvy to avoid fees and not to be screwed and no doubt institutions have an easier time making money, but the stock market is a core mechanism for wealth creation that is foolish to avoid.
If you don't like the markte gyrations, don't look at it- review it a few times a year. When you enter is up to you- entering later after a decline (and it's likely 2013 will spend some time negative for the YTD) is a perfectly legitimate short-term bet to make.
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