| Young family man needs advice |
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lost_punk
New Member
Cash: $ 0.65
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Joined: 27 Oct 2011
Location: Sheboygan falls, WI
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| Young family man needs advice |
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Greetings everyone. this is my first post here YAY for me. any way. i'm a 29yo male with a wife and 4 kids. my oldest kid is 7 so they are all young. My wife is working part time and going to school. I have a good job with very little risk of layoff. My company has a 401k with employer match 6 cents on the dollar up to 6%. They also drop in 250$ per quarter. I contribute about 6-10 percent depending on the month. If i know we have something coming up i'll lower it a little. I have a mortgage and a car payment. I do not really have any extra cash at the moment but once my wife finishes college and gets a real job we will have some extra cash.
My question is for me to retire in 40ish years what planning should i be doing? Should i look into putting less into the 401k and more into a IRA? should i worry about paying off the mortgage and cars and then put more into my 401k. while i am concerned about retirement i don't want to put every extra penny i have into my retirement accounts. I still want to have hobbies and be able to take trips and generally enjoy life. just don't want to be 65 going oh crap i have no money. any tips, suggestions?
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Thu Oct 27, 2011 9:12 pm |
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coaster
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Do you have an emergency fund? You should have at least six months' worth of living expenses readily available in easily liquidated assets of either non-fluctuating market value, or else very minimal fluctuations that you're comfortable with having to take a small loss if you need the money while it's down.
Other than that, I think you're doing fine and I don't have any problems with wanting to spend a little on enjoying your life. As far as knowing whether you'll have enough to retire on, you keep doing as you're doing and I'm pretty sure you'll be just fine, but to get some hard numbers there are retirement calculators on almost every major investment company websites.
~Tim~
Eye Candy : Why Whimsy
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Fri Oct 28, 2011 6:21 am |
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littleroc02us
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Start using some projection Retirement calculators that will help you determine how much you will need to save each month to allow yourself the type of income you will need in retirement.
Try this website:
http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner.jsp
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Fri Oct 28, 2011 5:03 pm |
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oldguy
Senior Member
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Location: arizona
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quote:
Should i look into putting less into the 401k and more into a IRA? should i worry about paying off the mortgage and cars and then put more into my 401k. while i am concerned about retirement i don't want to put every extra penny i have into my retirement accounts. I still want to have hobbies and be able to take trips and generally enjoy life.
You can have money now and have money later, it is not the either/or choice that many seem to think. The key is selecting a suitable risk level. Eg, say that your family saves $5000/yr 30 yrs, and enjoys spending the rest. If you choose a near-zero return (savings account) you will have $150,000, ie not much retirement in 2041. That same $5000/yr at 11%/yr is $1,100,000, a much better outcome.
It isn't too important which tax status you select - a 401k, a Roth, or a taxable personal account - the key is to grow the accounts at 11%/yr. But obviously you should accept all of the free 'match' - and your wife's match if she gets one.
Discipline - DW & you should make a Plan. Say that you agree on $5000/yr, or $10,000/yr - do that w/o fail every year - no cheating to pay off a car, buy a couch, pay for a kid's college - it has to be the priority. But, safe with the knowledge that you are on track to have X million in 30 yrs, your family can enjoy spending every other dime that you earn - that eliminates most family money fights (a big cause of divorce). We've been married for 42 yrs, 
Definitely avoid prepaying mortgaes and car loans - retain the use of inexpensive capital and out it to work for you.
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I contribute about 6-10 percent depending on the month. If i know we have something coming up i'll lower it a little.
Backwards thinking. Always make the contribution first, and then live on the remainder. People who pay all of the bills first and then save what is left at the end of the month - never have anything left. It's a poor mindset to slip into - it leads to years (a lifetime?) of paycheck to paycheck living.
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Sun Oct 30, 2011 7:01 pm |
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lost_punk
New Member
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Location: Sheboygan falls, WI
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quote:
Originally posted by oldguy
Definitely avoid prepaying mortgaes and car loans - retain the use of inexpensive capital and out it to work for you.
Ok now i have to ask why. I've been hearing this for a long time. dont pay off your mortgage early. I have a 114K loan for my mortgage. if i make the monthly payments for the full 30 years i end up paying something like 250K. why should i not pay off my mortgage early and save the 125K that i could put into building an addition on my house because its small. or helping the kids out with college in 12 years. just seems like a huge waste to me.
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Sat Nov 05, 2011 11:42 am |
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oldguy
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Location: arizona
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quote:
Ok now i have to ask why. I've been hearing this for a long time. dont pay off your mortgage early. I have a 114K loan for my mortgage. if i make the monthly payments for the full 30 years i end up paying something like 250K. why should i not pay off my mortgage early and save the 125K
Your goal should be to make money for your family - not to avoid paying interest. Example. If you borrow an extra $50,000 for 30 yrs at 5%, it costs about $97,000. You invest the $50,000 in an 11%/yr index fund and leave it for 30 yrs, it grows to $1,145,000. That is the power of compound interest, it is usually a surprise to people who haven't gone thru the math.
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i could put into building an addition on my house because its small
Usually a bad idea. Avoid changing the foot-print of your house. Most buyers want "as-built" houses, they avoid houses with additions - too many seam leaks due to settling, differences in plumbing, electrical, odd layout, odd traffic flow. So it lowers the resale value of the house. Ie, you may spend $25,000 on an addition and findout that the house is worth less than before. It is better to sell your house and buy a new one that has the correct amount of floorspace.
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Sat Nov 05, 2011 1:01 pm |
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lost_punk
New Member
Cash: $ 0.65
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Joined: 27 Oct 2011
Location: Sheboygan falls, WI
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quote:
Originally posted by oldguy
Usually a bad idea. Avoid changing the foot-print of your house. Most buyers want "as-built" houses, they avoid houses with additions - too many seam leaks due to settling, differences in plumbing, electrical, odd layout, odd traffic flow. So it lowers the resale value of the house. Ie, you may spend $25,000 on an addition and findout that the house is worth less than before. It is better to sell your house and buy a new one that has the correct amount of floorspace.
If you factor in the fact that i'm 28 years old and both myself and my wife intend to die in this house in 50+ years does that change anything? or how about the fact that i have 4 kids and 1 bathroom in a area where the houses are priced way more than they are worth.
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Tue Nov 08, 2011 11:03 pm |
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oldguy
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Cash: $ 309.30
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Location: arizona
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quote:
If you factor in the fact that i'm 28 years old and both myself and my wife intend to die in this house in 50+ years does that change anything? or how about the fact that i have 4 kids and 1 bathroom in a area where the houses are priced way more than they are worth.
No, it doesn't change anything. As far as 'way more than they are worth', they are worth what a willing buyer and a willing seller agree on.
I would want a near-new house that has modern plumbing, new-code electrical service, new heating/AC, new roof, new appliances - a house that will not need upgrades for another 25 or 35 yrs. If you buy an as-built house that needs no modifications, you can get nearly a 100% mortgage for 30 yrs. That means that your monthly loan service will be low. So you will be free to build family with other invstments - 401k, etc.
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Wed Nov 09, 2011 12:56 am |
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POCat55
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There's been a lot of good advice here. Especially to make sure that you make your contributions to retirement a priority and then go from there.
Also, do yourself an enormous favor, make sure that whatever you and your wife decide to put towards your 401k that you are ALWAYS getting the full employer match. That it important no matter what job you are in and what job your wife ends up with. It's free money.
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Tue Dec 06, 2011 4:09 am |
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Ewan Park
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Joined: 25 Dec 2011
Location: uk
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| Re: Young family man needs advice |
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I Really appreciate your position.
Yes I do have some serious suggestions that will give you what you want now and a retirement that you will love.
You do not want or need to be sacrificing everything to fill a retirement fund.
Contact me !
Ewan Park, Specialized Overseas Property Investment Consultant
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Sun Dec 25, 2011 8:10 pm |
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