I agree with focusing on retirement, but don't freak out about it. I didn't have a "real job" until I was 30, and I didn't max my retirement until 35, but at $17k a year, plus employer match, plus $5k in Roths each if you're eligible, plus (hopefully) growth on investment, you can catch up. You just have to get buckle down and do it.
Another thing that no one seems to have mentioned so far is that as a single-income high-earner household, I would want one hell of an emergency fund in case your husband lost his job and had trouble finding a new one. They say to keep in mind that it might take 1 month of unemployment for every $10k you make in salary, which means someone making $200k should be prepared to take up to two years to find a new job. Hopefully not, but just in case. It doesn't sound like you guys have a lot of savings, and with no Roth IRAs which you can also call on penalty-free (although hopefully you'll never have to), I would want at least 6 months of expenses to call on just in case.
I'm sure others will have more advice about how you can save for retirement given that you're not eligible for plans through an employer, I'm not sure how that works.
Given that you have student loans and so I'm guessing a degree, do you have plans for full-time employment when the kid(s) are in school? That might offset some of the increased housing or private school costs.
And I can tell you haven't been on MM before, because you took out a cash advance on your credit card to pay for renovations!
When I first joined MM I was all set to buy a house, and it was really deflating when the ladies on here told me that I wasn't in good shape to do so. Now I look back and realize what a bullet I dodged, not buying before I was financially ready. The truth might be a bit of a hard pill to swallow at first, but it's good for you in the long run!
Hm, I tried to respond to you but I'm not seeing it. Oh well. And yes, kinds stupid about the cash advance thing but it was a really low rate (one of those check they send you) and we paid if off pretty quickly.
I do have a liberal arts degree, but I haven't worked in several years and when I did, it was in sales and sometimes administration. Not like I can just go get a job as a nurse or something.
I'm not really sure what to do. Thanks for all your advice! I really like this board and I'm so glad I found it!
OK, breathe, it's ok. Lots of people get later starts in retirement savings. Your income now is quite high, so you have the means to get caught up, although you probably should be saving more than 17K/year in 401k accounts. I would probably advise talking to a financial advisor - others will have to help you in terms of finding a good one (since I'm not American), but you want someone who can help you determine what a good level of savings is at this point to get caught up. You might be able to find someone through your bank, or ask friends for recommendations.
Maybe we can't actually afford more house. It kills me that I'd lose 6% to realtor fees. I've often wondered if I'd be better off just staying here and shelling out for private school, as much as it kills me. I mean, here I am with student loans myself paying for my kids to go to school. Annoying!
Anyway, I'll try to get started ASAP. I have no idea on how to find a financial advisor. It sounds expensive.
What is this e-trade thing you guys were talking about on the other thread? Maybe I could do that instead for some savings?
You might be able to pay to send your kids to public schools in a preferred district. Around here tuition for public elementary is dirt cheap.
Check further on the 401k. Some 401k plans allow contribution more than the federal limit then let you rollover to a RothIRA at the end of the year. Mine does offer it.
With not much saved in retirement, if I were in your shoes, I would shoot for saving at least 20% of gross. The more, the better though.
Regarding upgrading in house, try not to end up with a jumbo loan to get a competitive rate. The great rates you see out there only applies to conforming loans (less than the jumbo loan amount) according to one of the loan officers I checked out. Not sure what the limit is in your area. We are at a LCOL area with a $417k limit.
Wow, 20% of gross? He made $30k gross last month, so I should have put back like $6k just into savings? Although, now that I think about it, that is what I'm doing, just splitting it between debt and savings instead of all retirement savings.
You are making my head spin with the "rollover in the roth" and all this. I need to get an advisor. I'm just afraid they are going to yell at me for my foolishness!
I just want to say that I completely get the freaking out. You're in a much better financial situation than we are, but I posted our budget last week and all but had a breakdown at the responses I got. It was really scary and overwhelming, but there's a TON of good advice to be had from this group, so stick around and just keep going through the responses until it makes sense. It might be a bit of work to research the stuff you'll need to do but I've found this forum to be a great help so far!
I'm LOVING this board. So glad I found it. A friend of mine mentioned she came in here a long time ago so I just poked around the nest on a whim and boom, here you guys are. So cool.
I hope your budget woes are getting back on track! I think I'll stick around here so I'll wait for your updates
Post by barefootcontessa on May 12, 2012 19:15:04 GMT -5
A good first step is to track your spending and then set a budget. You can save more than you think when you put your mind to it. You might be able to pick up some side work to generate a little more income as well.
Honestly, if I were in your position, I would stay put in your current house for a while longer and focus on beefing up your retirement and regular savings. Unless the school situation is really untenable. As a SAHM myself, I strongly agree with the PP who said that you need a much heftier e-fund in case your husband loses his job somehow. As a higher income earner, it will likely take him longer than average to find an equivalent job. And, to be honest, it's not like you'll be able to waltz back into the labor force tommorrow with no problems.
Also, are you saving anything for your kids' college education?
Honestly, if I were in your position, I would stay put in your current house for a while longer and focus on beefing up your retirement and regular savings. Unless the school situation is really untenable. As a SAHM myself, I strongly agree with the PP who said that you need a much heftier e-fund in case your husband loses his job somehow. As a higher income earner, it will likely take him longer than average to find an equivalent job. And, to be honest, it's not like you'll be able to waltz back into the labor force tommorrow with no problems.
Also, are you saving anything for your kids' college education?
The local public school is okay for the first few grades, I'v heard. I actually enrolled her in the free preschool. I met the sweet teacher and saw the nice building, so I'm okay if I had to stay here three more years. The problem is 30% of the kids don't speak any english, so while the lower grades are just coloring etc., it gets to be a problem as the kids get older. Also, that's when the problem gets worse because english-only people start moving away or join got private. So in truth, I do have a few years but I can't be at that school forever.
As for their college, I do put back a measly $75/month per kid (they are 1 and 3). I don't really like doing that since I still carry loans for my own education, but it feels wrong to not save anything for them.
Thanks to this thread, we upped his 401k contribution to 10% last night. He's already contributed $5,500 this year and the account has gone up $12k, so I'm a wee concerned it will max out before the year is over. I wonder what happens then? Do they just give the money back to you? I wonder if I can hook it up to an IRA?
Thanks to this thread, we upped his 401k contribution to 10% last night. He's already contributed $5,500 this year and the account has gone up $12k, so I'm a wee concerned it will max out before the year is over. I wonder what happens then? Do they just give the money back to you? I wonder if I can hook it up to an IRA?
Thanks ladies!
The yearly limit only applies to his contributions...you can profit as much as you want, but don't expect a $12k profit every year. :-) But, even with contributions, they will stop his contributions automatically when he reaches the limit. I do 20% because I started it back when my salary was lower, but around November-ish they stop withholding for my 401k because I've maxed out.
Yep, the limit only applies to his contributions. What happens with extra contributions after hitting the limit? It depends on the 401k plan. With H's, they stop the contributions automatically. With mine, it won't and I can rollover the extra contibution to a Roth IRA.
Have you considered sitting down with a fee-based financial advisor? I feel like this could be very beneficial for your family and will help you understand where your money needs to go, what you can afford, etc.
ETA: More specifically, I'm referring to someone who can help you with "life planning" as opposed to someone who deals with your investments. Our advisor takes into account our wants and modifies plans for us based on where we are. It's been very eye-opening and made me feel so much more comfortable in handling our money. His retirement advice alone has been worth what we've paid him.
Have you considered sitting down with a fee-based financial advisor? I feel like this could be very beneficial for your family and will help you understand where your money needs to go, what you can afford, etc.
ETA: More specifically, I'm referring to someone who can help you with "life planning" as opposed to someone who deals with your investments. Our advisor takes into account our wants and modifies plans for us based on where we are. It's been very eye-opening and made me feel so much more comfortable in handling our money. His retirement advice alone has been worth what we've paid him.
Where do you find such a guy? Can you recommend a particular firm? How did you find your guy?
Thanks to this thread, we upped his 401k contribution to 10% last night. He's already contributed $5,500 this year and the account has gone up $12k, so I'm a wee concerned it will max out before the year is over. I wonder what happens then? Do they just give the money back to you? I wonder if I can hook it up to an IRA?
Thanks ladies!
The yearly limit only applies to his contributions...you can profit as much as you want, but don't expect a $12k profit every year. :-) But, even with contributions, they will stop his contributions automatically when he reaches the limit. I do 20% because I started it back when my salary was lower, but around November-ish they stop withholding for my 401k because I've maxed out.
I think what happened is he put in like $5k, his employer matched it and then there was a little growth. Not like it just shot up to 12k, sorry if that wasn't clear!