#RuggeroRespigo on #Reddit #stockmarket Need advice on allocating investments, thinking about taxes and risk, and increasing savings rate Main questions:How should we think about where to allocate my savings? Between paying down the mortgage, contributing more to 401(k), HSA, Roth IRA, emergency fund/liquid, or after-tax savings (stocks)? Specifically, how do I think about risk/return ratio for all these asset types? E.g., paying down mortgage balance faster is a guaranteed 4.5% return, vs contributing to 401(k)/IRA is subject to market fluctuations. Also, what are the tax implications I should be aware of? E.g., if I pay down my mortgage faster, are there tax implications?How do we save more. Were lucky to be relatively high earners, but I feel like were overspending. My main problem is how much we spend on food and dining out. Its not like we live a lavish lifestyle. I bring my lunch to work about 40-50% of the time, and when I dont, my lunch is usually $6-8. We eat dinner at home 70-80% of the time. I need some tips on how to compress the amount of $ we spend on groceries ($600/mo) and dining out ($620/mo) by 50%! The second area where we could probably save a bit is on my car. its a 11-y/o BMW 3-series, and maintenance is expensive. I dont have much luck with buying used cars, so am cautious to trade it in for something else.Heres the very detailed breakdown of our situation: 28 y/o m, married, no kids, own a house. Spouse is 26 y/o, female. Both me and my spouse work full-time. No debt aside from mortgage.Salaries:Mine: $106K base + $0-17K performance bonus + $8K in stock grants. Company has HSA contributions, 401(k) match of 3%, and a stock purchase program that allows me to use up to 10% of my salary to buy shares at 10% discount to market price every quarter (which I usually hold on to). I take advantage of all these benefits.Wife: On an hourly rate, take home pay after taxes is usually around ~$2.8K per month, and roughly $3.5K per month with overtime (~3 months a year)Total monthly disposable income after tax withholdings: ~$7.8K plus $1.3K/mo that go straight towards purchasing my company shares.House info: 30-y fixed mortgage, 4.5% APR, $454K loan balance. Monthly payment of $2.8K, which includes home insurance and taxes of ~$520/mo.Assets: My 401(k): ~$64.5K. I contribute 8% of my salary. Employer matches 3%. I have Vanguard funds and a Pimco fund that im investing in via this 401(k). House: ~$121K in equity (based on purchase price, 20% down and equity contributions made so far) Roth IRA: Just opened one in Vanguard and wired $5.5K into it. After-tax savings: Stocks: $38K (invested in 2 stocks: my company and AAPL, so potentially very volatile) Liquid/emergency fund: $11.5K Wife doesnt have any retirement savings besides whats listed above.Monthly spending: This varies widely, but I am tracking it (using this software: moneymanagerex.org), so here goes:Mortgage: $2.8K Groceries: $600 Dining&drinking out/: $620 Stuff (clothes, home supplies/products): ~$600 Transportation (gas/car insurance/car repairs/public transit/etc): ~$500 (I dont have a car loan, this is mostly insurance ($100/mo), gas ($80-100/mo), and repairs ($2.8K for the year). Gifts: $400 Utilities (gas/electricity/water/internet/cell phone/etc): $370We had a lot of moving-related expenses (buying furniture, putting things into the house, etc) this year, that I am not factoring in, as I dont expect these to be recurring. We also have a budget of ~$6K a year for vacation (2 trips per year, one of them is usually overseas to visit family).I think thats it! Thanks for bearing with me.
Posted on: Wed, 19 Nov 2014 22:33:05 +0000
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