How are we doing?

[jpg7n16]

I could put it into CD's, hwoever the interest rate isnt worth locking that money up for an extra .3 percent

So for me security is reason enough for me to leave it alone.

My goal was to lock up the extra cash when CD rates rise, and when inflation is rising so that i could lock in long term with a much higher rate.

I totally agree. But I was thinking something more along the lines of one of these (or split between the mid and short):

Short term bond funds 5 star and long management tenure: (look closer at the longer managed ones)

http://screen.yahoo.com/a?cc=CS&nm=&proy=&mgrt=10%2F&rtmin=5&rtmax=&retrmin=&retrmax=&risrmin=&risrmax=&trytd=&troy=&trty=&trfy=&mii=&mfl=&er=&namin=&namax=&tomin=&tomax=&mmcmin=&mmcmax=&vw=1&db=funds

Mid term bond funds 5 star and long management tenure:

http://screen.yahoo.com/a?cc=CI&nm=&proy=&mgrt=10%2F&rtmin=5&rtmax=&retrmin=&retrmax=&risrmin=&risrmax=&trytd=&troy=&trty=&trfy=&mii=&mfl=&er=&namin=&namax=&tomin=&tomax=&mmcmin=&mmcmax=&vw=1&db=funds

The short term funds are relatively price stable, and are yielding about 2%. The mid term are slightly more risk, but most are yielding around 5%.

And if inflation is a large concern for you, have you considered I-bonds? Individual - I Savings Bonds

I know your goal is to feel secure. So would you still feel secure if you had $12,000 in cash and $37,000 in one (or two or three) of those investments?

I forgot to mention, I also contribute $200 a month to mutal funds (income fund), although that fund is down considerably right now, it has average 9 percent since inception (1982)

All good businesses buy low and sell high

Next years goals look something like this:

Max out IRA
Pay down considerable balance on car
Try to maintain 17% contribution to TSP even when wife quits her job

Not sure where I should go from there.

well we're here to help you reach your goals. To many of us, being debt free is an important goal, so that'll show up a lot in our advice.

Sometimes it's a necessity in order to win financially. But for you, a 3.5% loan is probably a lower priority.

But we don't have to live with your choices, you do.


Your goals look good to me. If you accomplish them, you'll be doing very well.

[Bcp1984]

Sorry for the frustration in the above post.

I guess the question should have been how am I doing and what should i be doing from this point forward.

I understand that I have an amont most would consider more than nessecary in an emrgency fund. I could put it into CD's, hwoever the interest rate isnt worth locking that money up for an extra .3 percent(I get .70 in my high yield savings right now). It also is at an amount that i am comfortable leaving it at, and I dont worry about money at night. So for me security is reason enough for me to leave it alone.

My goal was to lock up the extra cash when CD rates rise, and when inflation is rising so that i could lock in long term with a much higher rate.

I forgot to mention, I also contribute $200 a month to mutal funds (income fund), although that fund is down considerably right now, it has average 9 percent since inception (1982)

Next years goals look something like this:

Max out IRA
Pay down considerable balance on car
Try to maintain 17% contribution to TSP even when wife quits her job

Not sure where I should go from there. I think I have all the pieces in place, but I will have to buckle down a little harder next year when i am deployed.

Brandon

[jpg7n16]

I realize that. Just not going to this year. How this turn into a how are we doing thread into this is what you SHOULD be doing?

By the way, my career in the Air Force is finance, so i know most of this stuff as I am an accounting major.

How else would you know how you're doing, if you don't evaluate what you are doing compared to what you should be doing?

I think they're two parts of the same question.

Now if you just wanted to hear someone say, "good job!" then you're doing fine. You've got a ton of cash built up (too much in fact).

You're doing pretty good on finance, but some of the personal finance stuff wasn't taught in accounting (I was a finance major - working in accounting )

For instance, keeping 2 years of cash in an Emergency fund is an error of subjecting yourself to too much inflation risk. It tested that on my CFP exam.

The max you really ever need in cash is 6 months - now if you wanted to switch from cash to other better yielding investments, that'd be no problem. If you really feel you need a 2 year buffer, only 6 months should be in cash. Find a good mid term bond fund, or some other appropriate investment for the remaining 18 months. But not stocks unless you have at least 5 years to let it grow.

But I think you're overprotecting a bit - and your goal is to pay off the car anyways. You could reach your goal, and not be in a terrible position. You'd still be doing better than most people your age.

[littleroc02us]

We save on average around a $1000.00 per month, in addition to 17 percent of my base pay to TSP. Trips are not a nessecity, but being stationed in Germany is part of the luxury. It cost me 60-70percent less to visit a country than it would when I am in the states, so to me this is not a money waster, we enjoy traveling and sightseeing. (last time we went to Paris it cost us 600 dollars for three nights and all mueseums paid for which some people almost spend in eating out in a month alone).

We have zero credit card debt.

We intend on putting approz 75K down on a 110-130K home, which would eave me to carry a mortgage of about 30-50K, and 10-15kin savings when we get back to the states.

I am going to max the IRA;s out next year, something we just didnt do this year and should have.

Our ultimate goal? Own our home (paid for within the next ten years), cars paid for and driven for the next 6-8 years leaving no payments whatsoever while still contributing as much as possible to TSP. I will also recieve my military pension in 12 years if I stay in.

We rarely shop for things we don't need as there are not as many "stores" as there are in the states. We rarely eat out, so not much wasted money there.

So again, what's wrong with paying off the car and having no debt? You still have 25k in EF.

[Mr Nice Guy]

I realize that. Just not going to this year. How this turn into a how are we doing thread into this is what you SHOULD be doing?

By the way, my career in the Air Force is finance, so i know most of this stuff as I am an accounting major.

Wow...

[ActYourWage]

How this turn into a how are we doing thread into this is what you SHOULD be doing?

By the way, my career in the Air Force is finance, so i know most of this stuff as I am an accounting major.

Because this is a Saving Advice forum. If we see something that stands out, we are going to give our advice.

[Bcp1984]

"I am going to max the IRA;s out next year, something we just didnt do this year and should have."

You can contribute to this year's (2010) Roth IRAs until April 15, 2011.

I realize that. Just not going to this year. How this turn into a how are we doing thread into this is what you SHOULD be doing?

By the way, my career in the Air Force is finance, so i know most of this stuff as I am an accounting major.

[ActYourWage]

"I am going to max the IRA;s out next year, something we just didnt do this year and should have."

You can contribute to this year's (2010) Roth IRAs until April 15, 2011.

[Bcp1984]

Honestly, I can see why your not making as much traction as you could, your playing with so many ideas. (Trips, cars, house, etc...) How can anyone make great headway with that plan. Here is what I would do.

1. Stop taking trips
2. Pay off the car, that will still leave you with 25k EF. Isn't that enough to last something like 8 months. (When you have to make payments on things that cuts down on your disposable income.)
3. Max out Roth IRA's for retirement.
4. Save for a 20% down on a 15 year mortgage @ no more than 35% of your income.

We save on average around a $1000.00 per month, in addition to 17 percent of my base pay to TSP. Trips are not a nessecity, but being stationed in Germany is part of the luxury. It cost me 60-70percent less to visit a country than it would when I am in the states, so to me this is not a money waster, we enjoy traveling and sightseeing. (last time we went to Paris it cost us 600 dollars for three nights and all mueseums paid for which some people almost spend in eating out in a month alone).

We have zero credit card debt.

We intend on putting approz 75K down on a 110-130K home, which would eave me to carry a mortgage of about 30-50K, and 10-15kin savings when we get back to the states.

I am going to max the IRA;s out next year, something we just didnt do this year and should have.

Our ultimate goal? Own our home (paid for within the next ten years), cars paid for and driven for the next 6-8 years leaving no payments whatsoever while still contributing as much as possible to TSP. I will also recieve my military pension in 12 years if I stay in.

We rarely shop for things we don't need as there are not as many "stores" as there are in the states. We rarely eat out, so not much wasted money there.

[littleroc02us]

Honestly, I can see why your not making as much traction as you could, your playing with so many ideas. (Trips, cars, house, etc...) How can anyone make great headway with that plan. Here is what I would do.

1. Stop taking trips
2. Pay off the car, that will still leave you with 25k EF. Isn't that enough to last something like 8 months. (When you have to make payments on things that cuts down on your disposable income.)
3. Max out Roth IRA's for retirement.
4. Save for a 20% down on a 15 year mortgage @ no more than 35% of your income.

[Bcp1984]

If it's your goal to pay off the car early, and you have enough cash to pay it off today, what is the reasoning for not paying it off today?

Our goeal in paying the car off early does not involve using our emergency fund for this purpose. If something happened today and I was not in the Air Force tomorrow, i would have enough liquid cash to survive for up to two years. That security for my wife is unreplacable.So we pay a little extra months that we are going on trips to other countries.

We went to Sweden, Copenhagen and Italy this year,and paid cash for all trips/exspenses. We will be going to Rome for Valentines day so starting to save for that as well.

Brandon

[Hector]

I see. I am opening retirement account at the age of 31 and living in SF bay area. Seems like I dont need to think towards down payment at least for a couple of years.

[jpg7n16]

Do one get similar benefits(withdrawing for down payment without penalty) by investing in regular IRA as well?

Kind of, but not exactly. Regular IRA's are funded with pre-tax money. So when you withdraw from a regular IRA, since it hasn't been taxed yet, you must pay taxes on it.

The situation KTP was advising is essentially special to Roth IRAs. Since Roths are funded with after-tax money, and we are not taxed twice on the same money - you get to withdraw your contributions tax free. But this applies to the contributions only, not to the earnings. Since earnings haven't yet been taxed, and you likely don't meet the criteria for tax exempt withdrawls (over 59 1/2, disabled, death, etc.)


Why what you say is 'kind of' true: For 1st time homebuyers, you can withdraw for the downpayment without penalty from a regular IRA, but not without tax. (no 10% penalty if for 1st time home purchase)

Fool.com: All About IRAs - For First-Time Home Buyers

[Hector]

Looks great, congrats.

As soon as possible (tommorow?) put $5000 for each of you into a Roth IRA from your savings. Keep doing this at least until you are ready to buy a house, then you can withdraw as much of your contributions as needed for the house downpayment without any penalty. The advantage, aside from the fact that your Roth earnings grow tax free is that if you don't end up needing all of the money, you have locked in some great early contributions that you can never get back if you miss them.

I would suggest investing the Roth IRA in 1 year CDs if you really think you need all the money in a few years for the down payment, otherwise maybe some blue chip stocks or high rated corporate bonds to get 5% to 6% return with small risk.

If we had only had Roths at age 26....imagine the posibilities....

Do one get similar benefits(withdrawing for down payment without penalty) by investing in regular IRA as well?

[jpg7n16]

We plan on paying of the car early as we did with our S40 (2 1/2 years).

If it's your goal to pay off the car early, and you have enough cash to pay it off today, what is the reasoning for not paying it off today?