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  • docnews
    replied
    IMHO: Dump advisor, dump taxable into student loan. Dump 401k into sep. Fill up tax advantaged accounts. I personally have no problem with someone investing in tax advantage accounts while not paying off lower interest loans (in fact I've done so), but when it comes to managed taxable stock picking, not so much. Look at this way: with the 1% advisor fee you have to beat a guaranteed 5.5% in the market without even considering the taxes. Plus this year you should basically be able to eliminate student loans.

    Leave a comment:


  • PhysicianOnFIRE
    replied
    I would roll the 401(k) and your SEP-IRA into your new employer's 401(k).  That would allow you to do a Backdoor Roth for you and your wife at $11,000 per year.  Continue to fund taxable after you've made the Roth contributions each year.

    I would guess you could continue to roll over $ that you contribute to the SEP into the 401(k) but I'm not sure about that.  If you've got SEP or any other traditional pre-tax IRA, the backdoor Roth doesn't work.  But you can shelter your IRA by rolling it into the employer 401(k) plan.

    You didn't mention disability insurance.  I'm guessing you've got it, but definitely look into that if you haven't.

    If there's no penalty to paying off the student loans, you've got 4.5% guaranteed return there.  That's pretty good these days.

     

     

     

     

     

     

     

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  • Rando
    replied
    You're doing some good things but this would be my $ 0.02...

     

    - you don't say if you are maxing out your tax-advantaged investments.  At your income level that would be my first goal.  This web site has many ideas on how to do so and I'd refer you to that.  Your wife is also working so you should be able to almost double what you can put away tax-free or deferred.

     

    -  yeah the cars are probably too much but at your income level you can manage that.  I hope you enjoy them a lot.

     

    - there's always an argument on whether to pay off debt or use funds to invest.  I am in the "debt is bad" camp.

     

    -  your taxable investments raise some questions.   I think most people here or at Bogleheads would say to use either index ETFs or index mutual funds with a low expense ratio as you can get, and use a low-cost brokerage like Vanguard.  Stick to a plan then follow it.  Your adviser's 1% is actually a big chunk of your profits, plus if he is doing much trading the commissions can add up and there can be tax concerns.  Having said that there are some people that probably need an adviser.  My feeling is that if you know enough to tell if your adviser is doing a good job you know enough to handle it yourself.

     

    -  remember your financial adviser is not your best buddy, he's a guy you are hiring to do a job.

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  • nyu04
    replied




    I’m debt averse so I would pay off yours debts with your taxable account funds assuming you love the cars otherwise strict budget and pay off all the debts except the mortgage.  Would as well maximize all retirement accounts and start 529s.  The key is the budget!  Be your financial advisor and bank.. No more loans and interest payments unless it’s coming to you perhaps on p2p?  You’re at this site and with continued reading..  doing your own personal finance will be easy and rewarding.  No one will do it better than you and you will save a bunch with those ridiculous fees!
    Click to expand...


    Hi Luck,

    Overall, you already have the right idea.  You understand that your 2 car loans are quite expensive but like you said, it is what it is at this point.   It is easy for us/others to say "hey you should sell your fancy cars and buy a 2k beater car and/or ride a bike to work" but it's a very personal decision between you and your wife.   Some people love fancy cars/boats (insert extravagant objects here) and yet some can care less.  Only you two know where that balance point may be.

    Having said this, I agree with Dr. Thomas (quoted above) that if your emergency fund is in place, I would use some of your assets from the taxable account to pay off your debts.  At least some of the student loan/car debt since it's a guaranteed return in this market.  I would also start a 529 plan immediately - hopefully you're in a state that will give you a tax break on 529 contributions.  If not, you may want to keep it simple and use the Vanguard 529 (Nevada).

    The good news is that you are still young and still have plenty of time to adjust course.  Continue reading/learning and you guys will be fine.  Congrats on the new baby on the way!

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  • G-pathy
    replied
    Holy luxury cars Batman!  Are those beasts giving you enough pleasure to pay another mortgage?

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  • Sajimone
    replied
    I'm debt averse so I would pay off yours debts with your taxable account funds assuming you love the cars otherwise strict budget and pay off all the debts except the mortgage.  Would as well maximize all retirement accounts and start 529s.  The key is the budget!  Be your financial advisor and bank.. No more loans and interest payments unless it's coming to you perhaps on p2p?  You're at this site and with continued reading..  doing your own personal finance will be easy and rewarding.  No one will do it better than you and you will save a bunch with those ridiculous fees!

    Leave a comment:


  • luckbeatsme
    replied
    When I first graduated residency, I went with an advisor through Ameriprise since one of my mentor's used him.  He started me on a variable life policy and several investments.  He then quit Ameriprise and I got assigned to another advisor.  At that point, I left Ameriprise and found another advisor on my own through a colleague who was very happy with him.  He does manage my accounts and charges 1% of funds until funds reach $1 million.  He hasn't sold me investment products per say, but has invested in multiple individual stocks.  I have asked....he wants me to roll my 401k/403b into the SEP.  He was the one that advised I pay minimum on loans and shelter more into investments...

    As far as savings, I set aside 25-30% a month for retirement.  Fixed expenses are approx $11k/month.

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  • scbunker
    replied
    Also what does your monthly spending/savings look like?

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  • scbunker
    replied


    I do have a financial advisor.
    Click to expand...


    What are you calling a financial advisor? He manages your accounts and charges you a fee? He sold you assume investment products? Have you asked him/her these questions? Why or why not, what was his/her response?

    Leave a comment:


  • luckbeatsme
    started a topic my situation and your advice/thoughts

    my situation and your advice/thoughts

    I figured multiple people would want to post their financial situation here and others can give advice/thoughts on how to improve.  So, i'll start it off...definitely has room for improvement, but not sure in what order.

    Debt:

    Student loans - 190k, financed through DRB at 4.5% over 10 years

    Car loan - 77k at 1.8% over 6 years and 55k at 2.9% over 5 years

    Mortgage - 345k at 3.625% over 15 years

    Investments:

    SEP IRA - 47k

    401k/403b - 78k, need to roll it over this month as employer changed, was thinking of rolling it into my SEP?

    Taxable account - 162k

    Credit Cards:

    3 with balances, but all at 0% interest since I bought furniture/mattresses/etc

    Otherwise, credit cards are paid in full.

    I have a 3 month emergency fund currently, but my plan is to take it to 6.  I do have an HSA with 5.7k in it.  I make approx. 500k/year combined W2 and 1099 income.  I'm 33, and an ER doc, finished residency in 2013.  I know I should have not bought expensive cars at this stage and just been paying down student loans, but it is what it is now.  I have a 2 mill term life insurance policy and umbrella.  Need more life?  I have done estate planning.  I'm married, wife is an ED NP, working part time.  We have one son, and a 2nd due this month!  I haven't started 529s.

    What should my priority be?  My thoughts are student loans first and then investments.  Before finding this site, I was told to pay minimum amounts on my loans since I'd likely make more than the interest rates in investments, so that had been the plan, but currently with the market, overall, I'm not beating 4.5%.  Should I get out of the sep-IRA to do back door roths? I do have a financial advisor.  My taxable investments are all in individual stocks.  I know most would say go to ETFs I think.
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