$30K in savings no 401K. Need some opinions

[cologero]

You will have $20k after selling sport car. I'd put $5500 in Roth IRA this year and in January 2017. This will leave you with $9k. I'm weighing paying off the car versus saving it in case you want to buy a house. What's your monthly car payment?

Thanks for the responses everyone. To answer some questions, I've already maxed my Roth for 2016. The sportscar is paid off, but my other vehicle is $240/mo. As far as purchasing a home, I have no exact time line, but at the very earliest, next summer or the following summer in 2018. I'll probably need $10- $20k down to keep myself from being house poor. Here's what I'm thinking.

Option #1: Sell car asap (it's already listed, but prob won't sell until spring though). After it sells, use $5,500 to max Roth IRA for 2017. Use approx $10K to pay off car. Put remaining $4K in savings. By spring hopefully my savings will be at $20-25K.

Option #2: take $5,500 out of my EF in Jan to fund my Roth for 2017. That'll leave $11- $12K in my EF. Then when I sell my car I can pay off my primary vehicle and save the remainder.

On a side note, how have I done the past few years??

[Jluke]

Hello, SA friends! Quick update since it's been a couple years (I'm now 38 yrs old).
- Monthly bills: $1,950 (=50% of take home pay which is now $3,850/mo.). This includes rent/utilities, cell phone, gym membership, cable/internet, insurance, charitable giving, church giving and car payment (owe $11,000 @ 2.5% and it's valued at $25,000).

While I've made progress, I still feel stressed. Am I doing ok? Should I keep on this path? Should I suck it up and give more to my 401K? Should I take another $5,500 out of my savings and put it in my Roth in Jan...or should I keep it at the level it's currently at

Good work.

One rule of thumb on retirement savings is 3 times your salary at age 40.

Looks like you're contributing just over 12k/year to the 401k. Pretty good.

For your 2017 Roth consider using $2500-3000 from savings in January then put the remainder in when the car sells. Less of a hit. This is something you should really try to do every year. Between the Roth and 401k you're close to 18k.

Monthly budget. You have $1900 leftover. Where is that going or did I miss something?

What is the source of your stress- retirement savings?

[cologero]

Monthly budget. You have $1900 leftover. Where is that going or did I miss something?

What is the source of your stress- retirement savings?

About $900- $1,000 goes to gas, groceries, misc. each month. The rest goes to savings account or paying more on bills.

I think the source of my stress comes from not really investing until my mid 30's. According to the savings levels, I probably need to have $240K saved by 40...that's just not gonna happen.

[Jluke]

About $900- $1,000 goes to gas, groceries, misc. each month. The rest goes to savings account or paying more on bills.

I think the source of my stress comes from not really investing until my mid 30's. According to the savings levels, I probably need to have $240K saved by 40...that's just not gonna happen.

Consider presenting your complete budget (line item expenses) so we can see if there are any opportunities to save more; spend less.

Have you looked for a new insurance provider for home and auto?

Church donations: I know this is a sensitive subject but I will ask. Are you doing a certain % of gross or net income?

Tax time: if you get a big refund consider changing your W-4 to single, 1. You will get more cash each paycheck.

Just some examples of info that can be suggested.

[LivingAlmostLarge]

I think you are doing well. The biggest thing is turning it around at any point. Once you finish cleaning up the mess you'll see some big gains from the heavy lifting of having saved all the way through paying off debt.

[cologero]

Consider presenting your complete budget (line item expenses) so we can see if there are any opportunities to save more; spend less.

Have you looked for a new insurance provider for home and auto?

Church donations: I know this is a sensitive subject but I will ask. Are you doing a certain % of gross or net income?

Tax time: if you get a big refund consider changing your W-4 to single, 1. You will get more cash each paycheck.

Just some examples of info that can be suggested.

$900 Rent
$400 Church (10% of net)
$150 Utilities
$100 Cable/Internet
$100 Phone
$45 Gym
$75 Car Insurance (renters insurance is paid for the year- $130)
$240 Car Payment
$300 Groceries
$200 Gas
$300 Personal (dinner, dates, clothing, misc)
$700-$1,000 Savings

I get about $1,500 back from taxes. I'll either put it in savings or in my Roth.

As you can see, I keep my bills pretty lean. Yeah, I could cut out say cable, gym and maybe some personal stuff, but I'm not trying to be miserable while I save either.

[james.hendrickson]

Just based on my quick scan of your personal finance situation - I would look into buying some real estate. Your cash and stock situation looks good, what you seem to be missing is real estate.

Also, are you maxing out your 403b/401k?

Do you have any debts that you could be paying down?

[cologero]

Just based on my quick scan of your personal finance situation - I would look into buying some real estate. Your cash and stock situation looks good, what you seem to be missing is real estate.

Also, are you maxing out your 403b/401k?

Do you have any debts that you could be paying down?

I'll probably put $12- $15K in my 401K next year...so not quite maxing it out. The debt I'll have is my car ($11K) and rental home ($39K)...I don't make anything off of it unfortunately because my mortgage is basically the going rental rate for the area it's in. I tried refinancing it a few years back but got turned down twice because they said I didn't have enough equity in it. Sad because they both were on my credit report for 2 years! Right now I'm at close to breakeven on the home, so maybe a lender will refinance it now. Regardless, it's a cheap home and I won't be able to make much on it. My mortgage is $500 at 8% I think, and make I'll be able to rent it for $600. I'm 1/2 way through my note btw.

On a side note, I don't really know much about real estate.

[LivingAlmostLarge]

You could pay off the cheap house. But if you are looking to get into your own place I'd put it low on the totem pole. I think you are in excellent shape since it seems like you are making good money in a LCOLA. That means the house you want isn't too expensive? Which may make retiring early very feasible.

How much is the house you want? Would it be feasible to get it for $900? or about the rent amount? If so consider focusing on getting into your house sooner rather than later.

[cologero]

You could pay off the cheap house. But if you are looking to get into your own place I'd put it low on the totem pole. I think you are in excellent shape since it seems like you are making good money in a LCOLA. That means the house you want isn't too expensive? Which may make retiring early very feasible.

How much is the house you want? Would it be feasible to get it for $900? or about the rent amount? If so consider focusing on getting into your house sooner rather than later.

I think I'll need $20K as a down-payment on a $150K home to stay under a $1,000 per month mortgage. A $150K home where I live would certainly be nothing fancy though. I would prefer to go up to $200K, but that's just not feasible with my current savings.

I'm considering just staying where I'm at for the time being and saving more, however I'm miserable living in an apartment lol.

So with the track I'm on, do you think I should be able to catch up on my retirement savings and get back on track since I didn't save aggressively enough when I was in my 20's?

[Jluke]

On a side note, I don't really know much about real estate.

I am going to focus on the future home purchase.

I think I'll need $20K as a down-payment on a $150K home to stay under a $1,000 per month mortgage. A $150K home where I live would certainly be nothing fancy though. I would prefer to go up to $200K, but that's just not feasible with my current savings.

A 150k home you should have 30k down payment (20%), plus cash for closing costs. You don't want to pay PMI. a 120k loan, 30-years at 4% is $573 + Property taxes/12 + Insurance/12. per month.. same loan amount for 15 years at 3.375% is $850 + taxes + insurance per month.

A 200k home you should have 40k down payment, plus cash for closing costs. same reason. so there you are looking at a 160k loan.

Have you considered moving to your rental property instead at some point?

As for retirement savings, which seems to be your ultimate concern, you have to balance that with your desire to have a house, etc. your house may or may not be paid off when you are ready to retire. Having to afford the home will put a damper on your ability to save for retirement.

Depending on how things go, you could even say that your rental property is part of your retirement assets as you could eventually sell that or use the rent check as income.

[cologero]

Yes, I completely understand the 20% rule, I just don't know if I'll have $30K...I know I'll probably get some flak here but I'd probably be ok paying PMI until I had enough equity to get rid of it. If my mortgage was under $1K per month, I would have some flexibility to pay more to principal. Any home less than $150K in my area will be more trouble than it'll be worth. I'd rather just stay put in my apt.

As far as my rental goes, it's well over an hour away from me and my job, and quite honestly, I would never live in it due to the neighborhood slowly becoming sketchy.

I guess what I'm really asking is...assume I don't buy a house amytime soon and I don't ever make anything off the rental, how am I looking as it relates to my retirement savings plan?

[Jluke]

I guess what I'm really asking is...assume I don't buy a house amytime soon and I don't ever make anything off the rental, how am I looking as it relates to my retirement savings plan?

stay the course, try to get to 18k per year in your 401k (or as close as possible) and $5500 in the ROTH (each and every year).

here is a retirement calculator that Tomhole shared previously - try it out.

http://www.flexibleretirementplanner.com/wp/

consider posting this on bogleheads too with focus on retirement savings.

[james.hendrickson]

The rationale for having additional investment properties is that by the time you retire, you should have the mortgages on the properties largely paid off, which should allow you to have a healthy retirement income.

[LivingAlmostLarge]

$200k home with only 10% @ 4% = $851/month. 15 year at 4% is $1381/month. with taxes and insurance you are very close to what you paying in rent for the 30 year. The sale of the car and extra might make buying in a year feasible.

You are making $70-80k? It might be time to look into buying a house. I think you have a large enough cash flow cushion that you could buy a house and then pay monthly the excess. I think even $1381 is about 25% of your gross on a 15 year that's not bad.

If you bought a $200k home on a 15 year and continued saving for retirement 15% I think you'd be in excellent shape by 55 to consider early retirement.

Run the numbers off gross and see if the $200k home comes in around 25%. Then run a hypothetical budget for the $200k and 15% retirement and tell us what it your monthly surplus is. It might surprise you.