Financial Picture

[snafu]

I've a different perspective. I suggest you review your Risk Tolerance by filling out one of the on-line questionnaires like those offered on Vanguard's site. As others have stated, it's in your interest to reduce your taxable income by maxing out your & DW's retirement plans. It may require you to pay for items DW's income currently covers but possibly you can balance that with tax avoidance.

Would you consider reading one of the more popular books on investing like The Automatic Millionaire? It's likely available electronically at your library. We have no idea what's held in your & DW's retirement plans, i't value increase 12/31/2013 - 12/31/2014 and whether it lines up well with your Risk Tolerance. If your income is stable, I don't see the point in maintaining $ 60K in cash. You are obviously a good money manager and carry low interest, modest debt. What in your experience would require such a large sum of cash in a compressed time frame? Would 3-6 months of cash for basic expenses allow you to feel totally secure?

I don't think I'd jump in with both feet, but wish you'd work out a plan of investments that meshes with your existing holdings and Risk Tolerance, either Mutual Funds or Exchange Traded Funds that included Index and Foreign Holdings based on percentages that felt comfortable. I suggest you examine Dollar Cost Average [DCA] [it's automatic] to even out costs with a low fee, no cost provider like Vanguard or Discount Brokerage for ETFs. Fact is those holdings can be reverted to cash in two business days. Yes the market goes up and down but even in the worst of it 2008 - 2010, we who stayed with our long term plan, come out of it up around 35%. Those who bailed at the worst - bought high...sold low, made themselves a huge financial mess.

just my .02 cents

[JoeP]

So I have 20k to put to use. I'd like my money to work for me and would consider thinking in 4 blocks of 5k to allocate as needed (invest, improve, debt reduce, other??).

I don't like loans, so I'd pay off these loans today.
Car Loan: $463/month ($19k balance at 1.9% with 4 years remaining)
HVAC: $150/month ($8k balance at 0% with 4.5 years remaining

That would free up $613 a month. I know you said you are not concerned about cash flow, but there is value in not being on the hook to pay for something you don't yet own every month. The car and air unit will be yours 100%, and you can put $400/mo into a separate physical bank account for your next car (preferably used and that you can pay for with cash).

Wouldn't it be great to never need another loan?

[autoxer]

I don't like loans, so I'd pay off these loans today.
Car Loan: $463/month ($19k balance at 1.9% with 4 years remaining)
HVAC: $150/month ($8k balance at 0% with 4.5 years remaining

That would free up $613 a month. I know you said you are not concerned about cash flow, but there is value in not being on the hook to pay for something you don't yet own every month. The car and air unit will be yours 100%, and you can put $400/mo into a separate physical bank account for your next car (preferably used and that you can pay for with cash).

Wouldn't it be great to never need another loan?

Jluke already has enough cash to buy the next car. He doesn't need to free up cash flow, there is already a surplus. He already has a healthy aversion to debt, and there isn't much to gain by attacking the 0% and 1.9% rate debts. If any debt should be attacked it would be the mortgage, but even that rate is so low, that a balanced equity portfolio could produce more than the interest costs.

I agree with snafu, Jluke needs an investment plan so that his assets work harder for him.

[MonkeyMama]

I wouldn't put a penny in taxable investments until the ROTHs were maxed out. ROTHs have significant tax advantages but are also easier to tap if need be. I think you understand that with the college savings strategy (we do the same), but then I don't understand why so much in cash and taxable savings if ROTHs are not maxed out. You've lost some tax shelter there (over the years) but can correct that going forward.

[Jluke]

Thanks for the continued feedback!

Quick Update:
I increased my 401k contribution from 11% to 15%; still not maxed but taking incremental steps.
Roth increased to $450/month; will do a lump sum at some point to reach max for 2015

401K is Fidelity.
Personal Investments are done in Sharebuilder.

Taxable (AAPL, GOOG, GOOGL, IBM, EPD*, IYE, IYK, SIRI, SPY) *probably selling this year even if at loss - complicated tax (k-1)

Roth (AAPL, BRK.B, CAT, F, UNH, VTI, VYM, VWINX, XOM); started investing in July 2014; prior was just CDs at my Credit Union. Monthly investments in either AAPL, UNH, or BRK.B.

Hope this info is helpful for more great advice!

[Jluke]

Mortgage: July payment made plus 5K additional; new balance $68,260. 7 years and $7140 interest to go IF no extra payments made

Roth: $1300 contribution in June. $2700 to go at $450/month Jul-Dec to reach $5500

Cash Balance: 74k so 10-14k left to use to my advantage.

[tqf258]

This post makes me think about my own situation. My wife and I are both 37. I have ~$75K cash saved up.
I currently seem to be hoarding cash as well.

I have a mortgage on my home of 99K at 3.25% pay 1300/Month 85 more payments. Total interest left to pay if it goes the whole time is 12K.

I have a mortgage on a rental of 20k at 3.75% pay 400/Month 57 more payments. Total interest left to pay if it goes the whole time is 2k.

I have a truck loan of 20k at 1.99% pay 525/Month 44 more payments. Total interest left to pay if it goes the whole time is 800.

The rest of my monthly expenses total ~3k.

Wifes 401k ~$90k
My 401K ~$200K
Cash ~75K

We have one child 16 and currently have a 529 with ~$4500 in it. Adding $50 per month.
We both have term life policies mine for 1M and wife for 500k

We collect $650/Month on rental.
Wife clears $1400/Month (Salary of 30k/year) after 15% into 401k. Her company matches almost 10%
I clear $6000/Month (Salary of 100k/year) after maxing out 401K. My company matches 4%

I currently also have a partnership that I make ~8K per month before tax.
This is the money that I am hoarding, it may go away soon or it may continue....Not sure.

I had thought about paying off rental. And possibly truck. But I am now considering holding on to the cash and paying of my mortgage first. Then rolling the payment over to the rental and then to the truck.

Just looking for thoughts on what to do with the cash and if my retirement accounts are up to speed.

[Jluke]

This post makes me think about my own situation. My wife and I are both 37. I have ~$75K cash saved up.
I currently seem to be hoarding cash as well.

I have a mortgage on my home of 99K at 3.25% pay 1300/Month 85 more payments. Total interest left to pay if it goes the whole time is 12K.

I have a mortgage on a rental of 20k at 3.75% pay 400/Month 57 more payments. Total interest left to pay if it goes the whole time is 2k.

I have a truck loan of 20k at 1.99% pay 525/Month 44 more payments. Total interest left to pay if it goes the whole time is 800.

The rest of my monthly expenses total ~3k.

Wifes 401k ~$90k
My 401K ~$200K
Cash ~75K

We have one child 16 and currently have a 529 with ~$4500 in it. Adding $50 per month.
We both have term life policies mine for 1M and wife for 500k

We collect $650/Month on rental.
Wife clears $1400/Month (Salary of 30k/year) after 15% into 401k. Her company matches almost 10%
I clear $6000/Month (Salary of 100k/year) after maxing out 401K. My company matches 4%

I currently also have a partnership that I make ~8K per month before tax.
This is the money that I am hoarding, it may go away soon or it may continue....Not sure.

I had thought about paying off rental. And possibly truck. But I am now considering holding on to the cash and paying of my mortgage first. Then rolling the payment over to the rental and then to the truck.

Just looking for thoughts on what to do with the cash and if my retirement accounts are up to speed.

Yep, that sounds awfully familiar!

Open a Roth IRA for both you and your wife, and max it out for this year - $5500 per person. That should solve your cash "problem" (disclaimer - unless you do not qualify based on AGI)

Consider adding more to the 529; I am using a Roth instead of the 529 - as you might have read.

I opted to put 5k on the mortgage recently b/c I am weary of the stock market right now and I've contributed a lot in the last year to the market (30k). And I am planning on staying in this house for a while yet so that money move made sense to me.

I would focus on your personal mortgage, not the rental - not as much interest saved - and it appears the rental pays for itself and then some.

Keep me updated - nice to see what others do and how it impacts them financially and psychologically too. After dropping the 5k on the mortgage I am anxious yet again to pay it down some more.

[Goldy]

This post makes me think about my own situation. My wife and I are both 37. I have ~$75K cash saved up.
I currently seem to be hoarding cash as well.

I have a mortgage on my home of 99K at 3.25% pay 1300/Month 85 more payments. Total interest left to pay if it goes the whole time is 12K.

I have a mortgage on a rental of 20k at 3.75% pay 400/Month 57 more payments. Total interest left to pay if it goes the whole time is 2k.

I have a truck loan of 20k at 1.99% pay 525/Month 44 more payments. Total interest left to pay if it goes the whole time is 800.

The rest of my monthly expenses total ~3k.

Wifes 401k ~$90k
My 401K ~$200K
Cash ~75K

We have one child 16 and currently have a 529 with ~$4500 in it. Adding $50 per month.
We both have term life policies mine for 1M and wife for 500k

We collect $650/Month on rental.
Wife clears $1400/Month (Salary of 30k/year) after 15% into 401k. Her company matches almost 10%
I clear $6000/Month (Salary of 100k/year) after maxing out 401K. My company matches 4%

I currently also have a partnership that I make ~8K per month before tax.
This is the money that I am hoarding, it may go away soon or it may continue....Not sure.

I had thought about paying off rental. And possibly truck. But I am now considering holding on to the cash and paying of my mortgage first. Then rolling the payment over to the rental and then to the truck.

Just looking for thoughts on what to do with the cash and if my retirement accounts are up to speed.

Do you have any needs for that much cash? Is your kid college bound? I think its a bit too late to hit the 529 hard since they are potentially heading off to school in less than 2 years but my advice might change if you are going to be paying a large tuition bill.

If tuition is not a big deal then I would look at ways to increase my retirement savings a bit. You are pretty close already so nothing major but the common rule is to have 3x income by 40. For you (excluding your partnership) you are looking at about 390k and you have 290k with three years left. Could your wife increase her 401k to hit the max? That would certainly help and would also help to reduce your income so you might be able to contribute to a roth which I always highly recommend.

Otherwise I'd be pretty tempted to take 20k and pay off one of your debts and then snowball that payment to the next one. Pretty good shape all around though, keep it up!

[Jluke]

Mortgage: July payment made plus 5K additional; new balance $68,260. 7 years and $7140 interest to go IF no extra payments made

Roth: $1300 contribution in June. $2700 to go at $450/month Jul-Dec to reach $5500

Cash Balance: 74k so 10-14k left to use to my advantage.

Latest Update on my Financial Picture:
Mortgage: Additional 10k paid towards mortgage in August (so 16k total extra in 2015)
Roth: $1100 remaining to meet the max
401k: still at 15%; feeling the effects of the "lower" paycheck
Vacation at the beach for a few days was a good break and easily affordable.

Cash Savings is now at 65k.
Minus debt, escrow, etc I am at 53k according to Quicken (excluding mortgage)

Home project in the works - add gas fireplace to basement, which I didn't do back in 2012 when finishing the basement.

After this, I need to take a break from major money moves for 2015; even though it is fun and addicting! Thanks to all who helped and contributed ideas.

[Jluke]

2015 Status

• Roth maxed out for 2015
• Last 4 paychecks will have 401k contribution of 20%, but only around 11-12k total for the year.
• Gas fireplace fell through - pushing $10k.
• Purchased hearing aids from Costco - $2600 on AmEx (0% till April 2016)
• Continue to make $300/mo extra mortgage payment. End 2015 w/ balance at 52.1k
• HVAC paid down to 7k; end 2015 w/ balance at $6600.
• Cash balance is around 63k

Early Goals for 2016:

• Max 401k - this will be a huge challenge for me.
• Max Roth
• Reduce debt
• Keep net savings at around 50k

[snafu]

Since May you've made a lot of changes and I hope you're pleased. What investments met your comfort level with risk for ROTH? Hoping DW is aboard and approving of the changes.

I note you've increased your cash savings but am bewildered by your statement about 401K goal for 2016. What choices are on offer? I believe you are allowed to continue to contribute to 2015, 401K until April 2016 should that be beneficial to you.

[Jluke]

Since May you've made a lot of changes and I hope you're pleased. What investments met your comfort level with risk for ROTH? Hoping DW is aboard and approving of the changes.

I note you've increased your cash savings but am bewildered by your statement about 401K goal for 2016. What choices are on offer? I believe you are allowed to continue to contribute to 2015, 401K until April 2016 should that be beneficial to you.

Thanks for the comments.

For Roth: I added to my positions in Apple, VTI, VWINX.

Cash savings have decreased. Most notably due to 15k being put on the mortgage.

Increasing my 401k contribution this past year from 6% to 10% to 15% has affected my monthly budget in a good way, but basically every dollar is now "spent". Hoping this will benefit me come tax time - owing closer to 0 or seeing a small refund.

[Jluke]

xxxxx

[Goldy]

Thanks for the comments.

For Roth: I added to my positions in Apple, VTI, VWINX.

Cash savings have decreased. Most notably due to 15k being put on the mortgage.

Increasing my 401k contribution this past year from 6% to 10% to 15% has affected my monthly budget in a good way, but basically every dollar is now "spent". Hoping this will benefit me come tax time - owing closer to 0 or seeing a small refund.

You are making great progress. I just read through the entire thread and I had forgotten than I had replied to it early on.

Do you still have the car loan? I know earlier you didn't want to pay that off due to you not having cash flow issues but now that you are trying to max the 401k I wonder if it would make paying off the car more appealing. Right now cash flow is stopping you from maxing the 401k. Just something to think about.