Help me out

[FF-Medic]

Ok I am new to the forum and this is my 1st post.

I am 23 y/o and married my wife is 22, we are financially stable and both work. (She runs a cleaning service) and I work as a paramedic and run a small lawn service on the side. I have just finished another yr of school and am really trying to get serious about my investing and can use some help. I am in the process of meeting with some CFP's but my time is limited as I work so much. So a little bit of hx about us, we live in S. Ga in a very rural setting. We recently built a home and got a good deal and did some of the work ourselves to save on cost, house was built on family land. My parents did not teach me much about savings but thankfully I have always had an interest in it!!! (I bought my first truck when I was 15 and started the lawn biz)I make about $50k at my primary job and my wife about 20k, I also make 2-4k in lawn biz and 10-20k at my PT EMS jobs. My main goal is to pay the mortgage down and am making 3 payments a month on $155k mortgage @ 5.5%, we are both volunteer Firefighters and therefore are contributing to a pension that will be pain in full in 20 yrs and can be drawn at age 55, our projected drawing from this right now would be $918/month pp.I have a Co. retirement from my primary that is disbersed at age 55 as well. We also have a mutual fund that is payroll deducted and tax deferred. We have a 3month EF and I have more cash on hand that I would like to invest and would like some help in how to invest.

Now I am wondering what ya'll think about the payroll deduction fund how much should I be sending that way?

My goal is to semi retire at age 45 and when I say that I mean working only my primary job to probably age 55 which would be working 24/48. The deal is my wife and I love to travel and do so about 5-7k per yr now and that would jump to 10k+ at age 45.

Thanks for any advice and I apologize for the length.

[wincrasher]

Investing, like everything else in life is about risk management.

Whatever you invest in, I'd suggest you concentrate on being diversified. Don't go chasing what is "hot" right now in the current market. There are lots of ETF's and mutual funds to research.

You still can take advantage of deferred tax and after tax investments. You still are within limits to do a Roth IRA. You could also to a SEP-IRA on your "self-employed" income.

You said your house is built on "family" land. Do you have title to the land under your house?
If you have a large inheritance, or land, coming to you after your parents or inlaws pass, have they done any estate planning? You don't want to have to sell off family land to pay taxes that could be avoided in the first place.

Good luck!

[EEinNJ]

You seem like a real go-getter and are being sensible about money at a young age. Certainly, put as much as you can COMFORTABLY afford into tax-deferred investments. Since you are young, time is on your side and you don't have to play catch-up.

Some things to think about:
1. You and your wife may want to have kids. Kids are expensive- and neither of you may want to or be able to work as much once you have them.
2. I commend you for being firefighters. That can be a dangerous job, though. You should have disability insurance. Something like a back injury could really mess up your plans.
3. 45 is really young to retire, especially if you're used to working a lot. Also, unless you set up a special distribution schedule, you won't be able to get at your retirement money until you're at least 59 1/2. The trend is, by the time you get to that age, the limit may well be 65!
45 is a great age to be financially secure enough that you can work less, but do something enjoyable.
4. Don't scrimp on living now so you can enjoy money later. As Warren Buffett said, that's like saving up sex for your old age.

[Joan.of.the.Arch]

I want to emphasize, too, that you probably have greater need for disability insurance than does the average worker. I have a friend who is an EMT and he sees a lot of people leaving the work due to just being physically worn out by the age you say you would like to retire. Lifting heavy people is the big deal. So many back injuries and wear and tear on joints and ligaments. My friends says every few years he notices it seems like people are getting heavier. That is partly his own aging, but partly the fact that people are getting heavier, so career ending injuries are increasingly possible. (Use all your safety and assistive equipment--don't try to be macho or loathe the inconvenience of using it.) Probably your job offers some disability coverage, but you should review it carefully to see if it is adequate. You can buy insurance independently.

[jIM_Ohio]

By best friend is a firefighter. You will never be paid appropriately for the work you do... and he also has some skills from being a firefighter which give him very unique opportunities to make money.

I will address 3 issues-
1) what you are doing now
2) what you might want to also do
3) some opportunities to consider

First, it appears you are spending less than you earn. This is the #1 criteria for success. I suggest saving 20% of gross, for you this about 18k per year. Considering this is also from 3-4 income sources you have some added risks and reduced risks at the same time (more on this below).

It appears you spend either $880/mo (30 yr fixed) or $1266/mo (15 yr fixed) on the mortgage.

I am going to assume 30 year fixed...
which means if you are sending 3 payments in per month, you are sending in $880 normal and $1760 extra... $1760*12=$21,000/year.

Meaning your extra mortgage payments meet the 20% savings guidelines.
according to some simple math you will have mortgage paid off in 69 months (just less than 6 years). Well done.


2) I would focus on the following:
a) get 6 months expenses in a cash account (calculate budget month over month, multiply by 6, put this in cash savings). If you are out of work, this money can be tapped while you wait for disability and similar to kick in.
As you get older, you may want the 6 months cash to expand to 24 months cash- decide that based on what you know. Because you have more than one income source, you may need more cash, or less cash... if you need to replace all sources of income, you need more... disability insurance may only cover one of the jobs, not all 3. Think about that and what it would do to finances, then hedge the risk (more disability insurance, more cash or something else to hedge).
b) come up with a retirement investment plan. Right now this is a pension and a mutual fund. That is not a plan, that is a mouse running a wheel in a cage... it is a good workout, but you might not get anywhere interesting and could possibly make you run in circles.

a retirement plan would be this
1) define your risks (occupational, health, life)
2) come up with an asset allocation which deals with those risks
3) choose mutual funds to fit the allocation

You have done 3 without addressing #1 and #2. If you know your risks, as those risks change, you can change the allocation to meet those risks.

An allocation is usually defined as % stocks and % bonds. Like 80-20 or 40-60.
Part of your risk profile in #1 needs to deal with the hazards of your job, becoming disabled for short amounts of time (like breaking a limb or dealing with a similar type of injury).

If I were advising you, I would suggest the following...

Keep paying down the house. Owning it free and clear appears to be important to you. If its not that important, then I change this advice from point 1...

Take extra monies you invest and focus on the 6 months cash and building up a moderate investment portfolio (probably 40-60 allocation or more conservative depending on risk tolerance). Then once house is paid off, your risks change considerably.

Take the 17k you are paying extra on the house (each year), and increase the risk profile of investments a little (like 60-40 or 80-20). The original 6 months cash and 40-60 conservative allocation are still there, just take risks with new money- the 17k you have freed up from a paid off mortgage. With the $880 original mortgage payment, put this back into budget for spending, house improvements or other wants.

For retirement, you then have:
a) a pension
b) paid off house
c) 17k invested over about a 15 year period in equities and growth investments
d) a decent cash base and conservative investment structure behind the growth investments





3) You have a unique background and skill sets which some employers need. My friend has a safety business which does CPR training, other safety training, and also "pre-fire inspections". He does the fire inspections for the township we live in... companies also hire him to help prepare them for fire inspections (like new businesses and new construction and anyone which has had violations in the past). Just avoid any conflicts of interest (he does not do the safety business in the township we live in). This might be more profitable than the lawn business.

[FF-Medic]

Lots of great info here and I appreciate it. I will try to answer every question and statment made (sorry if I miss some)

WC: yes I have the title to the land that my house is on.
I will get an inheritance but I would not consider it large, although speaking to the parents about estate planning is a good idea.

EE: yes we do plan on having children and our plans is 5-6 yrs which according to our payoff plan for the mortgage we will be debt free.

We do have some disability ins for the FD and I some at at EMS but the fact I'm not real sure what I have is an indicator that I need to research and make sure it's adequate.

My payroll deduct mutual fund can be distributed at any age when you retire, my Co. retirement is dispersed at 55, But as I said in OP I say semo retire loosely, I plan on working my regular job which is 24 hrs on 48 off and this would be the only job I would work so this would seem retired. ( I am also considering going back to school to become a PA but that is real undecided)

We do not scrimp now we just budget wisely, we take 3-4 trips/yr and have many hobbies.

JOA: again thanks for the reminder about disability ins.

Jim: you are correct on the mortgage.

We have 9mos EF in a high yeild checking account. (was 3.25% just this week dropped to 2.50%

Help me with defining risk, I consider my risk level to be high and this is why. I have the pension locked in for age 55. The Co. retirement at 55. and I have the payroll deduct which I will refer to as Gebcorp from here on. that is a retirement date fund of 2030 which is at my age 45 semi retire plan, which I would doubt I would have to draw from even at that time.

Your plan is exactly what I have in mind, paying the house off and then really hitting the savings with the extra after that.

And yes there are a lot of good opportunities for the job set and I have considered others, I really enjoy the lawn biz and it also pays for the equip that I need to manage my own property.

So here is another question I have $500 in treasury bonds that I bought when I was 13 that have matured and I have always wanted to dabble in the stock market on my own I was considering getting that $500 and getting an account at sogotrade and buy a little bit as a way to learn more and maybe earn some over time, is this a bad idea or the fact that the amount is so low make it acceptable? I have a fair amount of time to research during the downtime between calls and I like to be doing something so I was thinking maybe this would fit the bill....Give me your takes on it and I really appreciate all the help.