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need a pat on the head or a newspaper on the nose

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  • need a pat on the head or a newspaper on the nose

    So I'm a noob when it comes to financial literacy, but learning, thanks to WCI and POF and others for all the great info.  In reading all these posts and threads I feel like we're waaaaaay behind.  I know that instead of comparing our situation to those of you who made early and solid financial decisions that we should be striving to learn from your journeys, but it's concerning to see our numbers and then hear about those of you on track to retire early in your mid to late 40's.

    single income family,  PCP ~ 250k yearly compensation

    401k in 2045 target account with 10k from previous employer

    401k in   2045 target account with  190k

    457b in  2045 target account with  38k

    Roth IRA   on way to vanguard - 12k

    spousal Roth IRA with vanguard - 5.5k in VTSMX

    state 529 plans for 3 kids about 3.5k each

    HSA with $2k invested

    170k house mortgage left , vehicles paid for, no credit card debt, about 170k in debt to family for med school  (no interest rate but hangs heavy on the head Catholic guilt style)

    getting out of grips of mistakes with NWM, cancelled whole life eating $4k loss last year, recently changing accounts to have more direct control with no loads or sales charges on funds

    once accounts are settled, will be shooting to have portfolio of

    30% US

    25% international

    20% REIT

    25 % bond

    we are not big spenders, have a budget, take 1 vacation a year to visit family.

    I'd like to open a taxable account with vanguard, and boost a little more to the 529 plans per year, since we're maxing HSA, backdoor roth and spousal roth, and 401 k/457b

    Having someone say "you're doing ok" would be a huge confidence booster.  but pointing out  what we're doing wrong is also welcome. thanks in advance


  • #2
    How old are you, wife, and the kids? Unless I missed it you left out that key piece of info. If you're 35 you're doing great... 55 not so much.


    • #3

      Maybe a bit much REIT, but meh, it's fine. Keep doing what you're doing and pay your family back.


      • #4
        I am also relatively new here, but thought I'd throw my 2 cents in. This is how I've seen it done, and most likely what needs to continue for you (and me for that matter haha).


        1. Max out the tax-deferred accounts: So 18k/yr in 401k, 18k in 457b, and HSA (which I think is $6,750/yr)

        2. Max out both Backdoor Roths: 11K total

        3. Add to 529: Most people put the max amount that they would get a tax break (10K in my state).


        Do you have any Matching by your employer, cause that would add to the savings and mean that technically you might need less to put into a taxable account to get to your 20% retirement savings?

        Without matching that puts you at $53,750 yearly into retirement accounts. That puts you at a little over 10% of your income. For retirement we should probably be putting at least 20% in. So yes, the next step would be to start putting money into a taxable account, possibly about $25,000/yr (which would give you that extra 10% of savings).


        Good job getting out of that whole life policy, sorry they got you in the first place.


        Asset allocation looks ok. How old are you? If you are fairly early in your career, you could consider backing down on the Bonds just a tad bit. Also, the REIT looks a little high in my estimation. I've seen that closer to the 10% mark.


        Hope this helps.


        • #5
          Also, did you actually mean 190K in that 401K, or 19K? 190K seems off compared to the other accounts.


          • #6

            Without matching that puts you at $53,750 yearly into retirement accounts. That puts you at a little over 10% of your income. For retirement we should probably be putting at least 20% in. So yes, the next step would be to start putting money into a taxable account, possibly about $25,000/yr (which would give you that extra 10% of savings).
            Click to expand...

            I don't math so good. If you are stashing $53,750 that is 21.50% of your income. That is plenty. If you fill up your 529s up to the tax break amount, I wouldn't necessarily worry about the taxable account, unless you really want to save more. I think you are doing fine and on the right path. Saving 20% of income will get you to where you want to go, and you are putting the money in all the right places.


            • #7
              You are doing fine and making good, solid moves. If it were me, I would move 10% from REITs into US Small value.

              Two pieces of advice:

              1. Concern yourself with your own journey, not what other people are doing.

              2. For goodness sake, take more vacation!


              • #8
                Muaddib, I read that twice and, while I now know your religious affiliation, I couldn't find ages or goals. Sounds like you're doing decently if you're early GenX/Y but not if you're a boomer or want to retire in 10 years. Stats and goals, please! Glad you're dumping the TDF's but don't double back with 25% bonds.   
                Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


                • #9
                  Ok you are going to be fine.  Try not to be intimidated by the big numbers you read here.  Those who have a lot of investments have been doing this a long time and the power of compounding helps you amass a nice nest egg.  Based on your target date funds I am guessing you in your 30s.  The most critical thing is just to decide to pay attention and start your financial education.  I agree with the other posters that you should keep your reit allocation at 10%.  I know you feel guilty about the 170k but does your family really expect it back?  I would start expense tracking with mint.  You have a good start to your savings and it is great that you have no cc or vehicle debt.  Your mortgage is not even big. Some stuff in life is fine to delegate but no one will ever care about your own money as much as you do.


                  • #10
                    35 years old, 5 years out of training,  3 kids under 7


                    the 190k is the main 401k we've had for the past 5 years with employer match


                    thanks for the responses!


                    • #11
                      Realize those willing to share their numbers in a public forum or heaven forbid start a blog are certainly top quartile, probably top 10%, and maybe top 1% among high income professionals. Most of us are the richest docs in our partnership or group, but for every one of us, there are a dozen whose situation is far closer to yours.

                      So while you may feel "way behind" hanging out here, it's likely that you're above average just because you're here.

                      I don't know how old you are, but you already have a positive net worth and apparently, pretty good habits, so it should climb pretty rapidly. There's lots of smart people in this forum who have negative net worths. You're ahead of all of them!
                      Helping those who wear the white coat get a fair shake on Wall Street since 2011


                      • #12
                        Proposed solutions to Catholic guilt:

                        1) Cut that family debt off ASAP.  Have you been paying on that?  What is the family's expectation here?  Did they really describe it as a loan?  Do they remind you about it or what?  IMO you should do everything you can to write that off for good.  Either pay them more aggressively or ask them what they would take right now (some discount) to wipe this slate clean, and then get it in writing and make the payment.  I could even see myself going so far as to refinance my house to pay them off just so I could not worry about that or have to hear about it.  I'd say if you weren't making payments and it was just kinda out there you could just try to tell yourself that you don't need to pay it back, but as a fellow Catholic I know that trick would never work with my psyche.

                        I had two situations like this, albeit smaller dollar amounts, right around the time I got married.  First, my wife was still driving a hand-me-down family car, and her mother started saying we owed her for X, Y, Z related to the car.  A few weeks later I bought her a car and the family hand-me-down was parked back in their driveway.  Second, I had a small loan from my dad that I was paying him back on.  After making a few payments, he tells me don't worry about it, I'll let you know when to pay me back.  Fast forward several months and he gives me a bill for all the interest I owe him.  Next day I wrote him a check for the whole balance in full discharge of the debt.

                        In summary, dear Lawd I don't want any family member ever saying I owe them any money for anything.  Makes me ill just thinking about it.

                        And then, generally:

                        2) Convert to cafeteria Catholicism.   

                        3) Follow a more narrow, literal interpretation of those 10 commandments.  Get rid of all that uncertainty as to what really is a sin.   :lol:


                        • #13

                          At 35 you are doing well and keep up the good work! I totally respect Craigy's view above on the debt, however, is the debt owed to some sweet parents or some kind generous aunts or uncles? If the relatives are not in a big hurry to get the money back, then I wouldn't be quite so aggressive in paying it back. You'll have to be the judge of that because every family situation is different. My husband and I tell all of our nieces and nephews to squeeze every penny they can get out of our siblings and milk them for all they're worth and sponge as much as possible.


                          • #14
                            I was still in fellowship at 35, and had a couple more large mistakes to make. I think you're doing great and are on your way to becoming one of those annoying FI/RE types.


                            • #15
                              Pat on the head! You're doing just fine. Keep putting away 20% every year. Time to FI just depends on your yearly spending. Some people here make crazy bank and thus have huge stashes of cash. You (and I) aren't going to need that much because our normal lifestyle does not cost as much to maintain (at least I hope you aren't spending as much as a neurosurgeon). I love reading other people's stories though because it motivates me to meet the goals I set for myself, rather than making me feel sad that I don't make as much or I haven't done as well in comparison or whatever.