Finance ..what to do?

**riverwed070707** · 01-17-2012, 09:36 AM

How old are you? What percentage of your income are you currently contributing to retirement? If it were me personally? I would probably not pay off the car in one lump sum but I would accelerate my payments. Maybe throw an extra $100/mo at the car payment to pay it off quickly. Keep 6-12 months liquid and invest the rest.

Your retirement is small, so first thing I'd do is put $5k in a Roth IRA. You can still contribute for 2011, so do that now and then budget in the $416/mo for 2012 as part of your monthly "bills". It's not a bill but you want to account for it.

$90k is a lot of cash. I'd be apprehensive about diving in too quickly -- either meet with a couple fincial advisors and see what they recommend or start small with a couple mutual funds and grow your portfolio as you feel more confident.

**bjl584** · 01-17-2012, 09:47 AM

From the info you gave, your monthly expenses are $1550 a month. I will round up to $2000. So, if an EF should represent 6 months worth of expenses, that would be $12,000 in your case. So, that's $83,000 above your fully funded EF.

What are your plans going forward? Do you want to buy a house? You will need some of that money for a downpayment if so.

One thing that I would do is pay off the car. 2.9% isn't a lot of interest, but your 95k is probably earning alot less than that. Be done with it and improve your cash flow. Then, drive the car till it dies.

You probably should start to invest some of that money into something that will generate a better return for you. Stocks, mutual funds, etc.

**Billseeker** · 01-17-2012, 09:51 AM

28 yrs old. I was in the military (Marines), served and got out with no savings but debt (young and stupid crap). Been working for 3 yrs now. Company has no matching 401K so I didn't put much into retirement and focus instead of reducing my debt. I am paying and extra $200/mo on my car loan to pay it off quickly. I can max out my ROTH IRA for 2011 and 2012 now.
I'm totally noob into investing and don't want to dive in into high risk investing.With this much cash, I just don't know what to do ( I guess I need to talk to a financial advisor)

**disneysteve** · 01-17-2012, 09:57 AM

Originally posted by Billseeker View Post

Rent = $1200 mo.
Phone, Cable, Car Insurance = $350 mo.

Originally posted by bjl584 View Post

From the info you gave, your monthly expenses are $1550 a month.

I wouldn't assume that at all. OP listed just a few items. That is hardly a comprehensive list. What about food, gas, health care, dining out, entertainment, clothing, travel, auto repair, subscriptions/memberships, etc?

**bjl584** · 01-17-2012, 10:02 AM

Originally posted by disneysteve View Post

I wouldn't assume that at all. OP listed just a few items. That is hardly a comprehensive list. What about food, gas, health care, dining out, entertainment, clothing, travel, auto repair, subscriptions/memberships, etc?

I know. But it's all that I had to work with.

**disneysteve** · 01-17-2012, 10:12 AM

Originally posted by Billseeker View Post

I'm totally noob into investing and don't want to dive in into high risk investing.With this much cash, I just don't know what to do ( I guess I need to talk to a financial advisor)

I see no need for an advisor and I have yet to hear of one who gives worthwhile advice.

Certainly no need to dive into high-risk investing.

Tell us your goals and timelines for those goals and we can help guide you to appropriate investments that are not overly aggressive, have reasonable expenses and will put you on the path to reaching your goals.

**MonkeyMama** · 01-17-2012, 10:22 AM

Housing is insane expensive in the Bay Area. I would save the cash towards a down payment on a home. That is probably the best use of that money, if you are intent on buying a home in the near future.

Of course, since interest on cash right now is so abysmal, I'd personally just pay off the car, and focus on cash down payment for a home. Investing is generally for the more long term.

Also, should really start funding 401k. I am assuming for every $1000 you put in, you will save $300-$400 in taxes, from the info given. So, keep that in mind when figuring how much to save. ROTH is fine (I prefer IRAs over 401k since have full control over them), but that is not enough savings for retirement in the long run. I'd also start saving substantially in my 401k (the money that was going to car payments, debt payments, etc.).

Of course, this assumes you want to retire and buy a house. Don't have a whole lot of info to go on - depends on what your overall goals are.

**97guns** · 01-17-2012, 04:21 PM

if it were my finances i would let the car loan ride at 3%, i would be looking to get that 100K to make money for me and i would look at real estate. my brother is looking to add another property heres the numbers

single family home for $95K

put down 20K

mortgage of less than $400/month

prop tax $100/month

insurance $30/month

rent for $950-$1000/mo.

works out to a positive cashflow of $420/mo.

look good? but here is the kicker - in 4 years he will have gotten his entire 20K investment returned to him and everything from then out is pure gravy do that a few more times and you have a self made retirement plan.

**KTP** · 01-18-2012, 02:05 AM

Originally posted by 97guns View Post

if it were my finances i would let the car loan ride at 3%, i would be looking to get that 100K to make money for me and i would look at real estate. my brother is looking to add another property heres the numbers

single family home for $95K

put down 20K

mortgage of less than $400/month

prop tax $100/month

insurance $30/month

rent for $950-$1000/mo.

works out to a positive cashflow of $420/mo.

look good? but here is the kicker - in 4 years he will have gotten his entire 20K investment returned to him and everything from then out is pure gravy do that a few more times and you have a self made retirement plan.

I thought about doing this myself (have about 280K in cash right now)but what happens when your tenant doesn't pay for several months, the pipe to the washing machine breaks and causes 5K of water damage and the roof starts leaking and needs replacement? If I could be convinced it would still be well worth the risk I might be interested in 4 or 5 properties...

I think I would come out better though just buying a REIT.

**97guns** · 01-18-2012, 07:10 AM

ive had my properties for 2+ years now and had to look for a tenant 1 time, all the other tenants are originals. all my properties were built post 2002 so roofing and all other components are in good shape. i have had to replace 2 stoves and put in 2 laminate floors in this time but the fact is i wrote everything off, you get no tax shelter with a reit.

im not saying its right for everyone just that its right for me. bottom line is you NEED to make that 100K make money for you.

**Billseeker** · 01-18-2012, 12:31 PM

Thanks for the input.

I was originally thinking about using the money for house down payment but the home prices in the bay area is still high that it will eat it up almost all of my cash.
So this is what my plan is:

Pay off the car loan @ 26K 4.9% (originally mentioned 2.9% but it was a typo

) this will give an instant 4.9% return/savings and peace of mind

with the car paid off, I have no other bills except rent, insurance, phone..the usual stuff but no CC or car loan.

Put 15K in EF
Max out my 2011 and 2012 ROTH IRA = 10K
Future goals is to save around 150K for a house down payment.

THIS IS WHEN I NEED SOME HELP...I have 44K left to invest and I'm planning on putting it in high yield savings or CD??? or other investment which I don't really know

with descent risk and return. I can save an additional 2K/mo.since I don't have a car loan or CC bills

**97guns** · 01-18-2012, 01:18 PM

i live in the bay area, south bay. i agree, the numbers in the bay area do not work to well. my rentals are all in los banos 3/4 of my tenants commute to the bay for work and have solid jobs.

**disneysteve** · 01-18-2012, 01:57 PM

Originally posted by Billseeker View Post

Future goals is to save around 150K for a house down payment.

I have 44K left to invest and I'm planning on putting it in high yield savings or CD???

What is the timeline for saving for the house? If it is in the 3-5 year range, the savings or CD are probably best. If more than 5 years, there are some other things that may be worth considering.

**Billseeker** · 01-18-2012, 02:27 PM

Originally posted by disneysteve View Post

What is the timeline for saving for the house? If it is in the 3-5 year range, the savings or CD are probably best. If more than 5 years, there are some other things that may be worth considering.

Yup, 3-5 yrs is the plan. So if I save 2K a month, I should achieve that goal in <5yrs plus I have an additional 100K of cash from stock options in 2 yrs. if I meet some objectives

Finance ..what to do?