Retirement / Savings / Carloan

[scfr]

[QUOTE=myrdale;n699685
Not going for the 4 wheel drive will knock a nice chunk off. It is more a want than a need.

[/QUOTE]

This was going to be my suggestion. A $5K lower price almost funds the IRA for a year. Why pay $5K for something you'll use an average of maybe 1.5 times a year? If you own the truck for, let's say, 15 years, you'll "need" it 22.5 times, which means you'll be paying at least $222 for each use!! And that doesn't include the extra you will pay to insure it and get lower gas mileage (I'm assuming). Plus interest if you finance. Holy cow! Why not just rent those 1 or 2 times a year, or swap favors with a buddy, or something like that?

And if you save on insurance and get better gas mileage and pay less interest - voila - $$ for the IRA in future years.

I have no problem with buying a new vehicle. (We have 2 cars right now, both Toyotas, both purchased new, one we've had for 20 years and one for 9) Sometimes it makes sense. But if part of your justification is that you're "in it for the long haul" then prove it, starting with the vehicle you own now. Keep driving the truck you have since it's "running like new." Keep it for a couple more years, keep saving, keep putting money in to the IRA, wait awhile longer to buy the truck.

On a separate note, since you know you'll be needing a new roof and A/C unit soon, why not consider that money already spent? In other words, $28K - $12K for expected major expenses = $16K in "available savings." That seems on the low side for an EF, not to mention buying a new truck.

You mention having a paid-off house. Did you used to have a mortgage payment? If so, where is the money that used to go to the mortgage going? Could those funds go towards the new truck fund?

[myrdale]

Well for better or worse I just maxed out the IRA for 2018.

"Why aren't you funding your IRA on an ongoing basis during the year?...." - Disneysteve

I am not arguing that I shouldn't, I just have not. While I'd like to think I am above average in respect to finance, I am probably closer to average than not.

"Monthly contributions of $500 will max out the Roth" - Jluke

Indeed, and it would hurt alot less than 15 minutes ago doing it all at once. I use the word hurt in the same way I would about a vaccine, it's still good for you.

"It won't be in your hands anymore to tempt you to spend it on something else like a 32k truck" -Disneysteve

I would not say having the money has been tempting me to buy the truck. I have had my eye on it for several years. It's just the last I I had gotten close I realized the house needed siding more than I needed the truck.

"Did you used to have a mortgage payment? If so, where is the monty that used to go to the mortgage going" - scfr

Yes. To the bank account, living expenses, siding a year and a half ago $17k, $5.5k early this year for last years IRA.

"How are you calculating this?" - msomnipotent

I used 12% and 30 years with $20 contribution annually for the first example, and a one time contribution of $5500 and 12%. You can argue that's too high of a rate but it was seat of the pants numbers into an online calculator on my phone. I may have screwed the maths up there. I'd have to check it again.

"if part of your justification is that you're in it for the long haul, then prove it, starting with the vehicle you own now"

279,000 miles and 17 years. A quick google search shows the average length of ownership of a new vehicle to be 6.5 years right now, 2 years longer than it was in 2006. I am nearly x3 the current average at the moment. Yes I'd love if the truck last another 10 years, but part of the crux is getting some value out of the resale of the truck before it is only of scrap value. Whether or not it is $2k resale to add to the $32k new truck or a $25k used truck, it's still more than $0 in say another 10 years if the engine were to fail.

[disneysteve]

Well for better or worse I just maxed out the IRA for 2018..

That's great. And in 2 weeks you can start funding it for 2019. Send in a monthly contribution or, even better, set up an automatic transfer to the account if you can and just forget about it.

[disneysteve]

Something else I was going to mention, since rules of thumb have come up, is that one of them is to put at least 15% of your gross income into retirement savings. You've got 7% going to the 401k and $5,500 going to the Roth. If you make 75K, that means you're contributing 14.3% so you're just about there. If you can, up the 401k to 8% for 2019. That's only $62.50/month pre-tax so only about $45-50/month less in your take home. You likely won't even notice it. You'll thank yourself later.

[myrdale]

The automatic transfer is one I have thought about in passing, but I haven't started to look to see what is involved. For purposes of my post I was a little sloppy and rounded down. Its actually 7.5% I have been putting in. I have considered bumping that up to 10%, as you said it would be less than noticeable.