how my doing?

[starry]

Hi, i'm new to this site, and feel really lame spelling out what i have saved etc, especially since it's such a relative thing and such, but figured i'd ask anyway at the risk of being lame

I have never talked to a financial advisor (and i'm really not a finance whiz at all, and don't know alot), so i have no idea how "i'm doing." Let me preface this by saying i feel very fortunate for what i have. I am not kept up at night worrying about finances (at this point), like i was when i was younger. So i am appreciative and thankful for that and all i have.

That said, here is my deal: just turned a "youthful" 43 (i act a fair bit younger i feel, whether that's good or bad i don't know . I'm married, 2 years. We don't have kids, but plan to at some point (my wife is 6/7 years younger than me). If we're fortunate enough, we'd have one or two i suppose.

I have approx $140,000 in my 401K, and approx $45,000 in savings account. Do you think i'm "ok" with things at this point, being what they are? Job seems relatively stable (who knows!)....Should i do something else with that money that's in my savings account?

thanks for any thoughts.

[artwest]

You are doing fine as far as savings.

Do you have any debt?

[starry]

ah! i knew i left something out. essentially no credit card debt. Car is paid off. We have a townhouse - paid 430K for it 2 years ago, and now owe 360K. Mortgage payment has been fine, on time, etc.

My one significant debt remains (sadly, at 43), a student loan. 21K. I just upped my monthly payment, which i should have done so long ago, since i've had the means.

So, that should give you a better idea.

[artwest]

You are doing pretty well.

In my opinion you should take $21,000 out of your savings and pay off the student loan today! Also take out any other money to pay of your other insignificant debts. By the end of the day you should be deb free except for your mortgage and still have some money left in savings.

You should get rid of the credit cards and use debit cards from now on. Use the money that you were using to pay on your student loan and add that to your mortgage payment to get that paid off more quickly.

The first step in being wealthy is to be debt free. It looks like you can be debt free except for your house by the end of the day and probably still have at least 3 months worth of expenses in your EF. Now all you have to do is stay out of debt, get your mortgage paid off and contribute to your 401k. Since you are only 43 you should be in very good shape by age 62.

[starry]

thanks artwest. Good food for thought. I think in the back of my mind i knew i should tackle that student loan outstanding balance. But there is something psychological about have that higher amount in the savings account to look at. Something i just need to get over i think.

[Frugal]

That is a lot of money in savings.

[riverwed070707]

Have you tried using an online retirement calculator to see where you are vs where you need to be for retirement savings? At a glance, what you have doesn't seem bad but I suppose that depends on a lot of things like when you want to retire, what you want to do in retirement, whether you're HCOL or LCOL, etc. From this snapshot, it's pretty hard to tell you whether you're on track or not. What percentage of your income goes to retirement each month?

[StellarSaver]

Starry, what is your total annual income? In order to really know how well you are doing in planning for retirement, this is an important factor. Considering that you have a $360K mortgage, I would expect your income to be somewhere in the $180,000 ball park if you are following the usual "best practices" guidelines. If your income is significantly less than that, I would say you have spent too much on your house, which is probably hobbling your ability to save and invest more money each month.

Also, do you have any other investments outside of your 401(k) or bank savings account?

For what it's worth, my favorite rule of thumb for tracking how well someone is doing is from the book "The Millionaire Next Door". Granted, it's not really intended to tell you if you'll be able to retire comfortably, but it does give a good indication of your wealth accumulation tendencies. The rule is that your net worth should be your age times your total annual salary divided by 10. So in your case, if you make $100,000 annually, your expected net worth would be 43 * $100,000 / 10 = $430,000. If you make $180,000 a year, then your expected net worth would be 43 * $180K / 10 = $774,000. If you are at or above your expected net worth based on this formula, then you are doing well, in my opinion.

[snafu]

Congratulations on keeping free of consumer debt, credit card nightmares and saving a substantial sum. I have a different view of your financial status now and going forward. If interest on your student loan is low, it may be prudent to continue it's payment schedule. Yesterday, the government made it clear that savers will get next to nothing for their prudence. I believe inflation is pushing you backwards. Have you noticed how much more you are paying for gas and groceries for example? $100. bought more last summer than it did summer 2011.

Would you be willing to read about financial planning as suggested by poster Stellar Savings? 'The Millionaire Next Door' is an interesting read as is 'The Wealthy Barber.' Both are available at your library for free and if you don't like to read, perhaps your wife will take on the chore. What does your 401K hold? Does your employer offer any matching funds?

Are you using your income efficiently and effectively? For example,have you examined the amortization table of your particular mortgage? What percentage of your payment reduces principal and what percentage pays interest? Will you be comfortable if the tax deduction for mortgage interest is eliminated?

There are brilliant folks who will make helpful suggestions on your spending. If you are willing to outline your monthly spending they'll comment on more value for $$$.

[bjl584]

Originally Posted by starry

Hi, i'm new to this site, and feel really lame spelling out what i have saved etc, especially since it's such a relative thing and such, but figured i'd ask anyway at the risk of being lame

I have never talked to a financial advisor (and i'm really not a finance whiz at all, and don't know alot), so i have no idea how "i'm doing." Let me preface this by saying i feel very fortunate for what i have. I am not kept up at night worrying about finances (at this point), like i was when i was younger. So i am appreciative and thankful for that and all i have.

That said, here is my deal: just turned a "youthful" 43 (i act a fair bit younger i feel, whether that's good or bad i don't know . I'm married, 2 years. We don't have kids, but plan to at some point (my wife is 6/7 years younger than me). If we're fortunate enough, we'd have one or two i suppose.

I have approx $140,000 in my 401K, and approx $45,000 in savings account. Do you think i'm "ok" with things at this point, being what they are? Job seems relatively stable (who knows!)....Should i do something else with that money that's in my savings account?

thanks for any thoughts.

It's hard to tell how well you are doing based on the information that you gave. What is your income? What is your debt? Does your wife have any savings? When and where do you plan to retire?

You have a total of $185,000. That's a nice nest egg, but if you are earning $200,000 a year, then you aren't doing so well. If you are earning $40,000 a year, then you are doing quite well. It's all relative and based on your circumstances and your lifestyle. Can you provide more info?

[danieldroga]

You have good savings yet you should also consider having investments. Don't be satisfied of what you have now if you know that there are ways to earn more.