Need to know what I'm missing

[Mixelflick]

I am 36, make $80,000/yr and am sole breadwinner. New baby boy, only child and married. Here's the current plan/state of affairs:

1.) $20,500 in HSBC (lost my job fund - About 7mo. of expenses)
2.) $3,600 in Series I bonds sitting around the house for rainy day
3.) $700 in regular savings (appliance/car breakdown fund)

4.) Mutual funds - Contributing $300/month
5.) 529 - Just started contributing $500/mo.
6.) Roth - Just opened and funding at $333.33/mo.

7.) 401(k) - $125,000. Currently maxing it out at $15,000/yr.
8.) Only debt is $66,000 mortgage

I plan to take tax refund/any bonus $ and fully fund the 529 for the yr.. That way I can pump that $500/mo into my mutual funds and anything left over goes to HSBC savings. I am most concerned about job loss. Not because I'm on shaky ground but because you never know.

Question: What am I missing? Am I oversaving in any one area to the detriment of the other? I'm focusing on building up the mutual funds as I think that's where I need the most help.

Comments?

[sweeps]

Looks really good. You mention that you just opened your Roth -- did you contribute the max for 2005? You can make 2005's contributions until April 17th of this year.

I applaud your aggressive saving towards the 529, but I personally think it may be a little too aggressive. I would shift $100 to the mutual fund bucket, making it $400 a piece.

Do you have life insurance? Disability insurance?

[Mixelflick]

Thank you for your advice.

Yeah. I have 5X salary I think on the life + some Accidental Death. I bought 70% income replacement for Disability at work. I get the STD for free.

Reason I am funding my 529 so aggressively is, well, that's what the calculators said to do! I can see your point though. Better to max out the Roth first?

I don't know. I just worry that in the event of job loss I'll have to stop contributing to his 529 and that would kill me. I'd sleep much better knowing it's paid up and all I had to do was keep the lights on.

[Mixelflick]

Sorry... I haven't funded the Roth yet. Just started this month.

[sweeps]

I'm very for funding your child's 529 as soon as possible. However, here's my reasoning for backing off a bit. First, even though it is very unlikely, there is a possibility that Congress will allow the tax-free treatment of 529's to expire in 2010. You'd really kick yourself if that happened. Second, you can always get loans for your child's education. You can't get a loan for your retirement. 18 years from now, if your retirement fund is overfunded, and your 529 is underfunded, you can always use your Roth to help pay for the education. Worst case, low-interest student loans. Third, there is always the possibility that your child will not need all the money the calculators say he will. He may choose not go to college, or he may get scholarships, or there are other possibilities as well. The 529 fund limits your options in this respect. Just my 2 cents.

[Mixelflick]

I hear you. Good advice.

Thanks!

[Snoopy2645]

Wow you look like you are doing great for being 36

[sweeps]

No problem. Thought of one more thing.... As a compromise on the 529, you can reduce your regular contributions a little bit, and whenever cash gifts come in for your child (birth, baptism/christening/bris, birthday, holidays, etc.), deposit them directly in the 529. Family members and friends seem to be more willing to give cash if they know the money is going to your child's college fund.

Side note: I totally agree with Snoopy, you're doing fantastic. Keep up the good work, but don't overstress. Enjoy the time with your family and set aside a little money for fun and entertainment.

[Mixelflick]

Thanks everyone.

I actually just woke up to this financial reality. Didn't know I had been doing a lot of things right just instinctually I guess. I've always hated debt.

And the best thing I ever did: Filled out a 401(k) enrollment form at 23. At least I can say I never left any "free money" on the table.

[gakline]

I think you can make Roth IRA contributions for your spouse (i believe the full $4000). Something to check into.

[Ima saver]

Mikel, I agree with sweeps. Every thing I have read says pay more attention to your retirement funds (mutual funds) than to a 529. You can get loans for college but not for your retirement!

[Ima saver]

Make sure your mutual funds are no load also.