Overall Financial Strategy

[geauxfish24]

Hello,

First time poster here....just looking for some general advice from this board about my financial situation and what I can be doing to improve on it. General info is below:

Wife and I are in mid 30's...combined gross income of $130k/year

Owe approx $285k on our home....valued at approx $375k ($1835/month payment). 3.75% interest rate

Owe $13k on a vehicle ($250/month payment) 4.7% interest rate

$0 credit card debt (paid off in full monthly)

I have $75k in 401k through employer...currently contributing 10% with 4% employer match

Wife has state pension that she is contributing approx $600/month too. Will be fully vested in 6 years.

I have $21k in a Roth, wife has $5k in a roth

We have an 8 month old child and have $10k in 529 for him-gifted to us

We have $75k in a savings account not doing anything currently.


As I stated earlier, just looking for any ideas, tips, etc on how we can improve upon our current situation. Thanks in advance!

[riverwed070707]

What are your goals financially and for the future? How many years til retirement? No debt besides the mortgage I assume?

[bjl584]

Without knowing anything else, it looks like you two are doing just fine.
One thing that stands out is why carry a $13K car loan when you have $75K in the bank not doing anything?

[disneysteve]

Welcome.

How much are your monthly expenses?

What % of income is your wife contributing to her pension?

Are you contributing to the 529?

Ideally, you want to get retirement savings up to 15% of income.

I agree with knocking out that car loan. Paying 4.7% interest while you have 75K sitting at 2 or 2.25% doesn't make much sense.

[geauxfish24]

I figured the car loan/savings would come up. We potentially have an opportunity to participate in a commercial real estate investment in the near future. If that does come to fruition, I am wanting to use approx $40k for that which would leave $35k in an emergency fund. Hence, that is why the car loan is in play.

The wife is either at 8% or 10% to the pension, can't remember for sure.

We aren't contributing to the 529 yet, just got the account setup last month. This is one of the things I know we need to start doing.

We try to save an average of $1500-$2000/month after bills are paid, etc. Some months it's lower and some are higher but we are usually in that ballpark.

[disneysteve]

I figured the car loan/savings would come up. We potentially have an opportunity to participate in a commercial real estate investment in the near future. If that does come to fruition, I am wanting to use approx $40k for that which would leave $35k in an emergency fund. Hence, that is why the car loan is in play.

That makes sense if a chunk of that money is earmarked for something specific.

The wife is either at 8% or 10% to the pension, can't remember for sure.

So you're each putting about 10% in. Not ideal but certainly not a bad start for a young couple. Aim to bump that up by at least 1%/year. A good time to increase contributions is any time you get a raise.

We aren't contributing to the 529 yet, just got the account setup last month. This is one of the things I know we need to start doing.

We try to save an average of $1500-$2000/month after bills are paid, etc. Some months it's lower and some are higher but we are usually in that ballpark.

Is that in addition to the retirement money? If so, that's great as that's another 14% or so of income. If that's accurate, I'd suggest bumping up the retirement funding and start an automatic investment into the 529. You have the benefit of time with an infant so even a small amount like $50/month on top of the 10K would get you about 45K at age 18; $100/month would be 63K (I used a 6% return).

[Jluke]

Just a reminder.

401k max is 19,000 per person
Roth IRA max is 6,000 per person

you can’t really borrow money for retirement but you can borrow for college.

if you are going to do a 529 go small ($50/month).

Beef up retirement savings now.