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Posted: 1/4/2006 11:17:40 AM EDT
[Last Edit: 1/5/2006 7:41:15 AM EDT by Greywolf2112]
I am starting to get worried about my financial situation, and the future. I'd really like to get some advice from you guys as to what to do.

Current situation:

Combined income wife and me - $92,000 My career is secure, hers is up in the air. It is possible that our income could take a hit down to about $75,000 a year for the foreseeable future. I am currently on her insurance, but if she loses her job we may have to buy it privately.

No kids, not having any.

We own one house outright in TN, but are going to be selling it this year.

Mortgage on our house in FL, just started, 30 year, at 5.5% for $109,000 and an interest only for $20,000 at 6.5% (we will pay this one off in full once the house in TN sells).

2 years left on a 0% interest car loan on wife's car. No loan on mine, though with 225k on it, it is due for replacement soon.

All our credit cards/minor loans/appliances/furniture is on 0%, and we never end up paying interest on these things. Current outlay for these is about $1000 a month to pay off.

$15,000 loan from parents to help with FL house, and I pay it back $1000 a month, but will pay in full when TN house sells.

Currently the wife puts 5% pre-tax into 401k, which is matched dollar for dollar. I don't get 401k at my job, but wife and I put $8000 a year ($666 a month - scary!) into Roth IRAs.

We have in retirement savings right now about $68,000, and she has $4500 in stocks from an old company that we have just let sit and gain. It is totally liquid.

After we sell our house and pay the interest-only second mortgage and the parents back, we'll have about $40,000 in cash. My savings account right now is earning 4%


Seeing as how I am maxed out on my IRAs, the wife is maxed on her 401k with regards to what is matched, I am trying to figure out what to do.

You see, we have no kids, so don't have to worry about college funds. We live pretty cheap (though we do spend a bit more than most people on food, booze, and toys). Don't drive expensive cars and keep them for the LONG haul. Most of our major home repairs are done, and don't know if we want to do much in renovations right now. I guess I am worried about the future - home insurance and taxes, auto insurance, utilities, food, gas, etc. We want to be able to retire by age 65 and still have a nice life. I'm worried that with only $60,000 in retirement savings right now, and both us being 39 years old, that we are behind the curve.

Most of our infvestments last year made around 6%-10% return.

Any advice would be greatly appreciated. I figure that once our obligations are paid off and all things we have on credit are paid, we'll have about $1000 a month to play with. I wonder if I should invest in individual stocks? I do NOT want to buy real estate and be a landlord - no way.


Link Posted: 1/4/2006 4:32:19 PM EDT
bump for night crew
Link Posted: 1/4/2006 8:07:36 PM EDT
I'm not a FA, but some remarks:
1) 4% on savings? Where!? That seems high for bank / FDIC insured savings.
2) 6-10% on your investments -- not bad
3) 100% 401(k) match = great if you're vested. You put in a dollar and they add a dollar? That means you have 2 dollars at end of year. That's like a 100% gain in the first year. Keep doing that. Do more if you can, unless they limit you to shady investments, like her employer (google Enron).

Suggestions:
a) if your wife gets sacked, Do Not Cash Out the 401(k)! You can do a rollover IRA. Any broker or financial planner will be glad to help.
b) paid-off house is great, but you do seem a little light on other savings / investments for your age, especially since what you're doing sounds good.
c) while landlording can be lucrative, you are clearly uncomfortable with it. Do not let someone bully / shame you into something your uncomfortable with.
d) I worry about the 4500 in "old company" stock. Sometimes by ignoring an investment, you become quite wealthy. Sometimes it goes away. It might be fine, but it might be in trouble.
e) a real financial planner will give you advice about what to do with your $. But they gotta make a living, too. "Fee only" planners charge you a fee. "Fee based" charge perhaps a smaller fee but might get some commissions. Other planners get commissions. The commissions for commission-based guys are often funded by "expenses" in mutual funds or "mortality and expense" in annuities. Who's best? They all have convincing arguments why the others are crooks. I'm confident that a competent, honest one from any category will be better than an incompetent one from any other. Sorry. Just keep in mind that your guy should be able to make a living. Will a fee-based guy's fee be excessive for the money you have? Will a commission guy be tempted to either churn you (have you do lots of trades with a commissioned on each one) or else just ignore you because you're a small fish? Lots to worry about.
f) You could consider going on your own and pick your own funds / stocks / etc. Risky, but your 6-10% doesn't sound too bad, though.
Link Posted: 1/4/2006 8:35:42 PM EDT
What are your ages?
Link Posted: 1/4/2006 8:38:39 PM EDT
[Last Edit: 1/4/2006 8:41:07 PM EDT by wildearp]
All our credit cards/minor loans/appliances/furniture is on 0%, and we never end up paying interest on these things. Current outlay for these is about $1000 a month to pay off.

$15,000 loan from parents to help with FL house, and I pay it back $1000 a month, but will pay in full when TN house sells.

I stopped here. Just WOW!!!
Link Posted: 1/5/2006 3:24:51 AM EDT

Originally Posted By RegisteredVoter:
I'm not a FA, but some remarks:
1) 4% on savings? Where!? That seems high for bank / FDIC insured savings.

Emmigrant Bank - 4% on straight savings account - very well-established bank as well.

2) 6-10% on your investments -- not bad
3) 100% 401(k) match = great if you're vested. You put in a dollar and they add a dollar? That means you have 2 dollars at end of year. That's like a 100% gain in the first year. Keep doing that. Do more if you can, unless they limit you to shady investments, like her employer (google Enron).

Suggestions:
a) if your wife gets sacked, Do Not Cash Out the 401(k)! You can do a rollover IRA. Any broker or financial planner will be glad to help.
b) paid-off house is great, but you do seem a little light on other savings / investments for your age, especially since what you're doing sounds good.
c) while landlording can be lucrative, you are clearly uncomfortable with it. Do not let someone bully / shame you into something your uncomfortable with.
d) I worry about the 4500 in "old company" stock. Sometimes by ignoring an investment, you become quite wealthy. Sometimes it goes away. It might be fine, but it might be in trouble.

Actually a great company - her initial investment in the stock was $950 3 years ago before she left that job and she just kept the money there - since then it has gone up up up! This is sort of a "rainy day" fund we aren't touching, so we aren't getting dinged for capital gains.

e) a real financial planner will give you advice about what to do with your $. But they gotta make a living, too. "Fee only" planners charge you a fee. "Fee based" charge perhaps a smaller fee but might get some commissions. Other planners get commissions. The commissions for commission-based guys are often funded by "expenses" in mutual funds or "mortality and expense" in annuities. Who's best? They all have convincing arguments why the others are crooks. I'm confident that a competent, honest one from any category will be better than an incompetent one from any other. Sorry. Just keep in mind that your guy should be able to make a living. Will a fee-based guy's fee be excessive for the money you have? Will a commission guy be tempted to either churn you (have you do lots of trades with a commissioned on each one) or else just ignore you because you're a small fish? Lots to worry about.
f) You could consider going on your own and pick your own funds / stocks / etc. Risky, but your 6-10% doesn't sound too bad, though.



That is one thing I am considering - I get no more tax advantages since I'm maxed on our IRAs till next year (goes up to $4500 per person, I believe). Perhaps using some of the extra we'll have each month to pick some good stocks.
Link Posted: 1/5/2006 3:25:27 AM EDT

Originally Posted By All_Beef_Patty:
What are your ages?



Each of us just turned 39.
Link Posted: 1/5/2006 3:25:58 AM EDT

Originally Posted By wildearp:
All our credit cards/minor loans/appliances/furniture is on 0%, and we never end up paying interest on these things. Current outlay for these is about $1000 a month to pay off.

$15,000 loan from parents to help with FL house, and I pay it back $1000 a month, but will pay in full when TN house sells.

I stopped here. Just WOW!!!



Why "WOW"?
Link Posted: 1/5/2006 4:13:00 AM EDT
Dumbass...


Yuo have to expext "the man" to pay fer yer ass. quit your job, collect unemployment, go on welfare, collect food stamps. Go whine to the local charities and get more. Meanwhile go get a Escalade with spinners and two cell phones. Forget the kids- they can take care of themselves. Whaever you do do not try to better your own situation- its un-American.
Link Posted: 1/5/2006 4:15:34 AM EDT
the best advice i have is for you to send me a check asap. im for address.
Link Posted: 1/5/2006 7:11:53 AM EDT

Originally Posted By Greywolf2112:
Why "WOW"?



Many people find it quite surprising that anyone has a paid-off house. It's quite popular to use second mortages / refinancing to get cash to spend on crap. For many people, their financial problem is "where can I borrow more cash?" Your problem is "What do I do with my cash?"

Also: Don't obsess on avoiding taxes. Yes, you should consider tax implications, but having a big tax bill means you made a lot of money. Sometimes people try to hold an investment for just a couple more months so it qualifies for lower capital gains treatment. Sometimes this works, sometimes the price goes down, erasing (and more) any tax advantage.

If you hear someone complaining about how much they have to pay in capital gains, don't feel sorry for them. They're actually bragging about how much money they made.
Link Posted: 1/5/2006 7:15:50 AM EDT
Tag, I'm interested in getting a financial advisor sometime in the next year or so when I get straightened out.

I'd like to retire at 50 but am not sure how to make that happen Only half kidding BTW.
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