How am I doing financially?

**LittleMissSplendid** · 01-03-2015, 10:51 PM

While both your salary and retirement investments look good it would help to know if you have any debt.... credit cards, student loans, etc. Also do you have a mortgage or plan to buy soon? Is the 76k in cash your emergency fund?

**indianguy80** · 01-04-2015, 08:50 AM

I do not have any debt (paid off student loans, no CC debt and no car loans). I rent ($1100 + approx. $400 tv/internet/phone/electricity) and would like to buy a house in like 4+ years only. Right now I have a very travelling job. 76K is emergency fund plus a bit extra due to my job situation.

-Krishna.

**autoxer** · 01-04-2015, 09:13 AM

I think you are doing quite well. You have 7 times your annual expenses saved up and no debt. Are you targeting an early retirement? Do you plan to raise children?

**LittleMissSplendid** · 01-04-2015, 09:14 AM

Higher than average income, no debt, solid retirement savings, and a high emergency fund all put you in a very good position in case life throws you a wrench. It also seems like you can comfortably start saving for a down payment on a house without affecting your savings. I'm sure other posters will chime in with suggestions on how to make your money grow more or other future planning matters you may want to consider.

**rennigade** · 01-04-2015, 10:41 AM

Whats the point of life insurance? Do you have a wife/kids? If not..life insurance is kind of a waste.

**indianguy80** · 01-04-2015, 10:53 AM

To answer some of your questions: I have a wife (home-maker), but no children. We are hoping to have children soon.

Early retirement.. Not really put a thought on it. I would like to retire comfortably like around 65 or so.

For investments, I have them in index funds.

-Krishna.

**Eagle** · 01-05-2015, 06:33 AM

Originally posted by rennigade View Post

Whats the point of life insurance? Do you have a wife/kids? If not..life insurance is kind of a waste.

Term life insurance is relatively cheap. Probably $5-15 a month for $100,000 or more. The last thing a loved one needs to do is be worrying about money if Krishna were to pass away.

**FoolFromAZ** · 01-09-2015, 10:43 AM

You are doing great man. How did you save that much in 5 yrs. I pretty much make same money as you. but I have not saved that much in 5 yrs.

Roth 401k? you could contribute more than 5.5k ? invested a lot in stocks and they all went up?

If you dont mind, please write more details on your monthly expense and life style. that might help me and others over here to follow.

**jIM_Ohio** · 01-09-2015, 11:11 AM

Originally posted by rennigade View Post

Whats the point of life insurance? Do you have a wife/kids? If not..life insurance is kind of a waste.

He is married, wife needs the life insurance on him for certain

**jIM_Ohio** · 01-09-2015, 11:19 AM

My response is to approach your problem from 3 directions. Each will put a certain spin on the same situation.

1 is balance sheet. This is a list of assets and liabilities. You listed assets in your posts and in another post you suggested you have no debt. The result of a balance sheet is a net worth.

The good thing about net worth is it a decent indicator of success (if you meet a high net worth individual, that generally sticks out).

2) is cash flow- this is a list of expenses and income. You listed expenses, you listed income, I would focus more on this. I would make sure you saved 30% of gross pay every month. 20% to retirement and long term savings, divided to 401k, Roth account and taxable account. 10% to mid term savings which helps improve balance sheet (for example a mortgage).

3) Is investment optimization and the change of both cash flow and net worth. As #1 and #2 evolve, realize they work together, but measure very different things.

For example, a person which owns rental property likely has a high income (rentals generate income) but the change to net worth year over year is little unless they invest some of the money.

A person which invests money might lose what they invest, so the balance sheet does not look good even though cash flow looks great.

A person might do #1 and #2 really well, but picking Bernie Madoff vs learning to do it themselves will each see different answers (#3 is the result of# 1 and #2 each being successful).

You want all 3 of these to measure success, but realize how you measure a successful balance sheet, how you measure cash flow, and how you know if your net worth and investments are growing are all very different ways of thinking.

**indianguy80** · 01-09-2015, 12:23 PM

Originally posted by FoolFromAZ View Post

You are doing great man. How did you save that much in 5 yrs. I pretty much make same money as you. but I have not saved that much in 5 yrs.

Roth 401k? you could contribute more than 5.5k ? invested a lot in stocks and they all went up?

If you dont mind, please write more details on your monthly expense and life style. that might help me and others over here to follow.

Hi FromAZ,
Roth 401(k) you could contribute up to 17.5K. (I think you are thinking of Roth IRA with the 5.5K limit.) I have invested them in stock-mutual funds.

Monthly expense:
Fixed (rent, utilities, tv, cable): ~1500
Variable (groceries, entertainment, eat-out, vacation savings, etc etc): ~1000 (sort of varies from month to month +/- 200)
Charity (including religious ones): 1250
Roth 401(k): ~1600
Other investing: ~1400

-Krishna.

**indianguy80** · 01-09-2015, 12:25 PM

Originally posted by jIM_Ohio View Post

My response is to approach your problem from 3 directions. Each will put a certain spin on the same situation.

1 is balance sheet. This is a list of assets and liabilities. You listed assets in your posts and in another post you suggested you have no debt. The result of a balance sheet is a net worth.

The good thing about net worth is it a decent indicator of success (if you meet a high net worth individual, that generally sticks out).

2) is cash flow- this is a list of expenses and income. You listed expenses, you listed income, I would focus more on this. I would make sure you saved 30% of gross pay every month. 20% to retirement and long term savings, divided to 401k, Roth account and taxable account. 10% to mid term savings which helps improve balance sheet (for example a mortgage).

3) Is investment optimization and the change of both cash flow and net worth. As #1 and #2 evolve, realize they work together, but measure very different things.

For example, a person which owns rental property likely has a high income (rentals generate income) but the change to net worth year over year is little unless they invest some of the money.

A person which invests money might lose what they invest, so the balance sheet does not look good even though cash flow looks great.

A person might do #1 and #2 really well, but picking Bernie Madoff vs learning to do it themselves will each see different answers (#3 is the result of# 1 and #2 each being successful).

You want all 3 of these to measure success, but realize how you measure a successful balance sheet, how you measure cash flow, and how you know if your net worth and investments are growing are all very different ways of thinking.

Wow, you're really an expert at this. So, how am I doing comparatively? I am not heading toward a cliff am I?

-Krishna.

**indianguy80** · 01-13-2015, 09:22 PM

One question: I currently keep my liquid on the bank. Is there a better place to park that?
Another one: What is a good mix to invest my extra money and 401(k).

Please advice. I will really value it!

-Krishna.

**jIM_Ohio** · 01-14-2015, 06:48 AM

Originally posted by indianguy80 View Post

Wow, you're really an expert at this. So, how am I doing comparatively? I am not heading toward a cliff am I?

-Krishna.

List your goals

List your net worth
List your cash flow
List how both have changed over the years

That process is repeatable and generates success for you.

Measuring yourself vs other people will generally lead to frustration and depression

How am I doing financially?