Some fantastic info flowing in these responses, thank you so much for the thought and effort that has gone into them.
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Originally Posted by jIM_Ohio
EF=emergency fund. Keep 6 months expenses in the EF. So monthly expenses of 4k means 24k should be kept in cash. Look for CDs (certificate of deposits). You can open one 6 month CD of 4k now, and next month open a second 6 month 4k CD and after 6 months you will have 6 CDs, each 6 months in duration. This is a CD ladder. CDs **usually** pay better interest than savings accounts. USUALLY.
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Ok, in regards to order of importance and available cash, using this figure, I would start down this road of responsible money management with $56k in hand.
Quote:
Originally Posted by jIM_Ohio
If you gross 120k and have 48k of expenses, does this mean you can invest up to 40-80k per year? How long did it take to accumulate the 80k savings you have now?
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No, I do not feel comfortable saying that I would be able to maintain a $40k to $80k investment pace for any particular length of time. I have teenage daughters.
It took me about 4 years to accumulate the $80k, and it has been at $80K for a year now.
I need to clarify things a bit.
The $4k/mo. nut, is bare minimum. There is at least another $1500-$2000 in discretionary spending on toys and fun, and general "care free" Americanism.
If I stopped buying car parts, and crashing my race car, and we went in to buckle down mode, we could hold fast @ $4K/mo. and live well.
Quote:
Originally Posted by jIM_Ohio
I would take the following steps immediately:
1) pay down all the car debt with a portion of the 80k. 21k pays off the loans, locking in an 6% return on the money.
2) open the CD ladder as described above with 24k of the 80k
3) purchase a basic investment with a small portion of the remaining 55k. Think 10k and leave the remaining in savings for another 6-12 months.
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Ok, some basic math which I am just ok at, looks like this to me:
$80k - $24k (6 month float) = $56k
$56k - $21k (car debt) = $35k
$35k - 24k (cd ladder) = $11k
$11k - $10k (basic investment (roth?)) = $1k < DisneySteve brings up a good question with the type of investment (taxable or no?) I have no clue here.
None the less, that is something solid to look at, and I do like the tip about taking the questionnaire at each of the 3 sites.
Thank you for the generous reply, thank you.
Quote:
Originally Posted by disneysteve
I was wondering the same thing. Why is it that at 48 with a 120K income, you only have 80K saved? I'm 46 with a similar income and have five times that much saved plus another 175K or so in home equity. I'm wondering if your estimate of 4K in monthly expenses is really accurate. Might you actually be spending more than that?
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I appreciate that Steve, so please do not take this the wrong way.
My post count, and the caveat I placed in the op, I had hoped would be sufficient to ward off any pee pee measuring contests, or statements which would normally cause me to fold up my kit and head yonder.
It is hard enough to show up and lay it out here like this, even with the (perceived) anonymity of these forums.
Basically I thought I was bulletproof when I was younger, I never finished high school, I have zero college and my parents divorced when I was 2. I never received the guidance when I was younger that I so desperately seek now.
Alas, I am a high school drop out, who has somehow managed to learn how to make over 100K/year, with no formal training or the basic skill set necessary to make that money work for him or his family.
Plus, I did not start growing up until I was about 40..... I'm "that" guy.
Anyway, congrats on all of your accumulated wealth, thank you for the advice, and if my retort seems a bit emotional.. Please forgive me.
P.S. I would have about $60k more than that in cash right now if I had not gone out of pocket for some MAJOR home improvement projects.
My rationale there was the economy sucks, labor was dirt cheap, and materials were at prices not seen in years.
I thought "strike while the iron is hot" and I had the cash, so we added 2 bedrooms.
One more thing I forgot to add to the equation.
I work from July to May every season. We have a "hiatus" in my world that is the better part of 3 months.
Every year for the past 10 years, I have been unemployed for those 3 months during hiatus.
My hourly rate increases 3%/year and that's it, I am capped out.
So, we have to save $12k minimum to cover those 3 months (unemployment covers my mortgage and one car payment) and we usually time it out perfectly so that we do not have to dip in to the regular savings fund each year.
So, as you can see, I am in a really weird position, somehow I need a plan that will account for that.
I am sorry for not throwing that out there earlier, I am overwhelmed.