Budget Critique

[KevinC]

Hello,
I am new to the forum and wanted to post about my finances that I share with my soon to be wife and see what thoughts you had regarding our situation. I appreciate any thoughts you may have.

We are 29 and gross 38k and 37k a year
We pay our CC off in full monthly
Both cars are paid for
Paying 3x minimum payment on our student loans which will be paid off in Dec 2012
My company does not offer a 401k but we contribute to my fiances which includes a company match as well as a PRA

Account Balances
Checking Account: $5,000
Savings: $9,000
EF: $10,000
401k: $18,000
PRA: $6,000

Breakdown of Gross Pay: ($6300)
Taxes: 19%
Housing: 14% (Rent/Electric/Water)
Insurance: 5% (Renters/Life/Auto/Medical/Dental/Vision)
Student Loans: 10% (Only owe $180 per month but pay $600)
Credit Cards: 26% (Always paid in full. Includes food/gas/phones/internet/gym/other. Slightly inflated as we are paying for our wedding in September)
Savings: 11% (Keeping our EF at 10k so this % goes solely to our savings account)
Retirement: 15% (This does not include the company 401k match (4%) nor does it include the company contribution to her PRA. 15% constitutes 28% pre tax contribution and 5% roth)

Future Outlook:
Not planning on having children until age 32 or 33
Looking to purchase a home around same time
Once SL's are paid we plan on using that $600 per month to max out her 401k contribution limit (45%) and saving the remainder towards
My job has tremendous upside as I am working for a young company which could result in good wage increases and I have stock which could result in 6 to 7 figure payday if company is sold at expected projection within 10 years.

What do you think of our situation? If more information is needed I would be happy to provide. Thanks for reading!

[kork13]

Welcome! I don't see any major problems, really. Do you have any particular concerns?

The one thing that seems odd is your retirement savings (given your age & income). Did you only recently start your retirement savings? You should consider opening Roth IRA's for each of you. You can contribute a total of $10k/year, and it'll grow tax free into retirement. Doing so will boost your retirement assets significantly. Once your SL's are paid off, I agree rolling some of that money into the 401k is a great idea.

Some might call your EF lacking (standard rule of thumb is 6 months' expenses, so about $20k for you), but you still have extra cash available in your checking and savings, so no concern IMO.

Otherwise, you're saving well, almost totally out of debt, and expenses are well under control.

What is your plan for saving to buy a house? You're giving yourself about 4 years to save for it, and you'll want at least 20% of the purchase price available for the downpayment. I'm totally guessing here, but you'll probably need to save nearly $800/mo to make that happen.

[kv968]

Welcome Kevin. It looks as if you've got things pretty well under control.

I just want to touch on the future 401k contributions. Instead of adding that extra money you'll be saving when the SL's are paid off to it I'd suggest, as Kork has, that you take a look at opening a Roth for you and your wife.

Also, what is a "PRA"? A Roth? A pension? An annuity? Sorry, I don't recognize that acronym.

You may also want to put some of that money towards the house downpayment so you'll have at least 20% down when you're ready to buy. Right now, if the 11% you're currently saving is going towards that, in 3 years you'll have $25k (and that's using the 11% off of your gross). Would that be enough for the downpayment? I would think you'd need probably need more.

You also mentioned stock in your employer. Are you buying those shares or are they part of a compensation package? Because if you're buying them, no matter how good the "projections" look, you don't want to "put all your eggs in one basket".

And just one other thing, since you're putting 26% of your bills on a CC (paying it off in full which is great), do you have a rewards card? If not, I'd get one. Nothing like making a little extra money for basically doing nothing

[LivingAlmostLarge]

I would definitely find out if having kids will be easy. Don't wait until you want them try a bit early. It's surprising how many people take longer than they thought.

[vitalogist]

If I am reading your post correctly, you are debt free except your student loans. Is that correct?
How much do you owe on your student loans?

If that is not correct, how much other debt do you have?

considering how many people have been listing down their debts here and in other fora, only having student loans to worry about can be considered a blessing nowadays. that is if that loans isn't ridiculously high.