Doing well, but feeling directionless

**kork13** · 12-09-2021, 11:37 AM

I LOVE YOUR QUESTION! It's so good to see people who are succeeding, and want to succeed with intentionality. Building your financial goals for both the near & long term is extremely important, so I'm really happy that you're pursuing it.

First thought: Don't doubt yourself. It sounds like you're just not inspired with anything, and that's really what you're looking for. Understand that you don't necessarily NEED to actively pursue financial goals. You're still saving for retirement, paying off your mortgage, building up other cash/investments, and so on. Sure, those things are basically on auto-pilot, but don't discount the work that you're doing to support those goals. Your finances are in a good place, so maybe you want to redirect your efforts toward another segment of your life. I've heard & really appreciate this collection of whole-person goals that you can set for yourself:
(1) Spiritual/Religious
(2) Family/Relationships
(3) Career/Professional
(4) Financial
(5) Social/Friendships
(6) Physical/Health/Fitness
(7) Intellectual/Academic
Try to set goals for yourselves in ALL of those categories. You'll find that during the course of the year(s), you'll devote varying amounts of attention to each one, and that's totally fine. If your financial goals are on autopilot, you can set those on the back-burner while you spend more time focusing on your fitness goals & intellectual development (for example). Also remember that goals should be SMART -- specific, measurable, attainable, relevant, and time-based. Spend some time thinking through all of that, build some plans for how you can achieve them, and I expect that you may find some of the inspiration & direction that you're seeking.

But going back to specifically financial goals:
- As I mentioned above, just keep doing what you're doing with retirement, mortgage payoff (how fast do you want to pay that off?), and so on.
- Set goalposts for your LONG term goals, like retirement. "By X date, I want to have Y saved." You can do that 1, 3, 5, 10, 20 years out for yourself, and give you some more tangible goals that you can more readily conceptualize & really feel that you're making progress.
- You'll get a variety of opinions on 529s here -- some folks love 'em, others hate 'em... I'm in the middle. They're useful & decently flexible, because you can use them for grade school, college, trade schools, or even advanced degrees later on...plus you can withdraw (penalty free) the equivalent amount of any scholarships. But especially in your position with a high income, be careful not to over-fund them -- so contribute to them with an eye at what they will grow into. I personally prefer to split the money for our kids' education between a 529 and a UTMA. The UTMA is more flexible, basically a standard taxable investment account owned by the child with no strings attached.
- Building up money to invest in SOMETHING is a great next step. In the meantime, start educating yourself on whatever you guys want to do with it. If that's real estate, start learning about how to get into it. If you want to start (or invest in) a business, you can study how to go about that. Maybe there's a hobby that you'd like to turn into a side hustle.
- Once you determine what you do want to do, set your target, and invest toward it in a standard taxable investment account. On the RE example -- Do you want just one rental property, or multiple? A SFH or multi-plex? What price point are you looking at, and how do you want to fund it (mortgage or debt-free)? The more specific your target can be, the more it'll help drive your results.

**LivingAlmostLarge** · 12-09-2021, 01:23 PM

Decide about college. Because you don't have to save the entire amount but it's hard to save only brokerage accounts and then a whopping college bill comes due and you want to pay but don't want touch money you didn't earmark. Perhaps the answer is you don't. I don't know what the answer is. I split my college savings into Coverdell ESA and brokerage for kids specifically not in our names because I wanted to know what I was working with. But I want to pay for college and more.

The answer might be to open brokerage accounts for the kids in their names so if they go to college that's what it's for. Or if not then they do have what you meant to give them. I feel like if you don't have a specified account for them it's easy to not want to give something you might really want to do.

**Jluke** · 12-09-2021, 03:49 PM

I’d open a brokerage account and start buying VTI or VTSAX (total us stocks. First is etf. 2nd is the mutual fund. So if you prefer etf or mutual fund just pick that one.)

rental property. Can be lots of work and headaches.

have you thought about a vacation home?

unless you left it out you are light on non-retirement funds. Sorry. Thus the brokerage account recommendation.

**Scallywag** · 12-11-2021, 01:47 AM

Originally posted by phantom View Post

I've been away from the forum for a few years, but I'm back because I'm feeling a little directionless. My husband and I have seen our salaries creep up over the past few years, and mine just made a major jump thanks to the rise of remote job options in tech in my low cost of living area. We're currently making a combined $300k/year and I'm starting to feel like we have more money than we know what to do with.

We are 39 and 43 years old and have kids who are 3 and 6. We put an awesome patio on our house over the summer and that was the last of our big short term goals. We recently increased our mortgage payments specifically to get the mortgage paid off in 6 months, right before I hit 40. We have no other debt and no big purchases on the horizon. We are maxing out our retirement accounts.

My husband is interested in owning a rental property, and I'm not opposed. So, I guess that's probably our next savings goal. But, that's more his dream than mine.

We'd like to help our kids get off to a good start after they finish high school, but I have mixed feelings on paying for college. I believe college is generally overpriced and getting more so every year. That makes me reluctant to stash money into 529s. I've been throwing in small amounts since my kids were born, saying we'd wait till the mortgage was gone to really figure out what we wanted to do. But, I can't keep saying that for long.

My husband and I wouldn't mind having the option to retire early. But, we don't have specific age targets in mind.

Here's what we have at the moment:
40k cash
23k in 529 plans
491k husband's retirement
387k my retirement

This is roughly where money is going on a monthly basis beyond bills and such:
4.4k to retirement accounts
2.8k to cash savings
3.5k to mortgage

I'd like help figuring out how to set some goals and where to save before my husband starts buying $1k+ bottles of whiskey. Any thoughts?

Wow, with that kind of income, you can reach almost any financial goal you set your mind to, especially once your mortgage is gone! I would suggest boosting your cash accounts to build up not just "savings" but also a war chest of short to go shopping on if there is a stock market correction or an excellent property becomes available for cheap for any reason.

I agree with you about college but since your children are so young, I'd stash a small portion of each paycheck in their 529s especially if turns out that they are able to go to an Ivy but do not get full scholarships (happens sometimes based on parents' asset levels). If they end up not needing the money, you can always roll it over to another family member or pay taxes on it and use it as a gift for their weddings / down payments etc.

But well done! Out of curiosity (and because my kid is at the age where she needs to start thinking of a college major seriously), what do you do in tech? Were you previously in tech? Could you share how you managed to get a remote opportunity that helps you make a good salary while enjoying an LCOL?

Thanks so much for any feedback you can share!

**disneysteve** · 12-11-2021, 01:22 PM

Originally posted by phantom View Post

I believe college is generally overpriced and getting more so every year. That makes me reluctant to stash money into 529s.

Whether it's overpriced and whether the kids are going to do it anyway are two very different issues. Choosing not to prepare for it because it's expensive isn't going to benefit anybody. Do you get a state tax deduction for 529 contributions? If so, it's probably worth doing for that reason alone. And of course there is the tax free growth and treatment of that money when used for qualified expenses.

If you don't get a deduction, you may choose to set up your own earmarked college fund elsewhere, use it if you need it for that purpose, or be easily able to repurpose those funds if you don't.

I'd like help figuring out how to set some goals and where to save before my husband starts buying $1k+ bottles of whiskey. Any thoughts?

I'd like to know what your husband will be buying and when I can come over to help him with those bottles. Wouldn't want him to have to drink alone.

Seriously, it's hard for me or anyone else to set goals for you as we don't know what your hopes and dreams are. That said, you mentioned early retirement. ER is certainly a major goal for many of us, or more accurately, financial independence (FI) so that work becomes optional after that point. I would suggest you start playing with the numbers and the calculators like firecalc to see what that would look like for you.

You're saving well over 40% of your income, which is fantastic. That's almost exactly the same as what my wife and I have been doing the past few years. We're now both 57 and have hit the FI point. I'm still working but just dropped to part time 2 weeks ago. Had we been able to save at that rate at your ages, FI would have come way earlier. It doesn't mean either or both of you have to retire but it would give you tremendous flexibility to pick and choose how and where and when you want to work. Even though I just went part time, I'm already contemplating dropping further to per diem and just taking shifts when and where I want to.

**phantom** · 12-11-2021, 07:38 PM

Thanks to everyone for all the comments so far. I'm working on responding one at a time.

Originally posted by kork13 View Post

I LOVE YOUR QUESTION! It's so good to see people who are succeeding, and want to succeed with intentionality. Building your financial goals for both the near & long term is extremely important, so I'm really happy that you're pursuing it.

First thought: Don't doubt yourself. It sounds like you're just not inspired with anything, and that's really what you're looking for. Understand that you don't necessarily NEED to actively pursue financial goals. You're still saving for retirement, paying off your mortgage, building up other cash/investments, and so on. Sure, those things are basically on auto-pilot, but don't discount the work that you're doing to support those goals. Your finances are in a good place, so maybe you want to redirect your efforts toward another segment of your life. I've heard & really appreciate this collection of whole-person goals that you can set for yourself:

Thanks for the praise, advice, and encouragement! I think the reminder that it's good to focus on other goals is useful. I have been mostly focused on career and family over the past couple of years while my kids were babies and while I was trying to do new things at work. Now that the kids are taking care of themselves more and now that I have a job I am enjoying, I'm realizing that finances have been on auto-pilot for awhile. I've long been naturally frugal, and I set up some good habits and automation in the past, so it's been mostly fine. But, I do think the plan is due for a refresh.

Originally posted by kork13 View Post

Set goalposts for your LONG term goals, like retirement. "By X date, I want to have Y saved." You can do that 1, 3, 5, 10, 20 years out for yourself, and give you some more tangible goals that you can more readily conceptualize & really feel that you're making progress.

I find retirement savings goals challenging because I could see living at a variety of levels of comfort in retirement. But, maybe it would be useful to at least thinking about what different goals would look like and what it would take to hit them.

Originally posted by kork13 View Post

Building up money to invest in SOMETHING is a great next step. In the meantime, start educating yourself on whatever you guys want to do with it. If that's real estate, start learning about how to get into it. If you want to start (or invest in) a business, you can study how to go about that. Maybe there's a hobby that you'd like to turn into a side hustle.

Once you determine what you do want to do, set your target, and invest toward it in a standard taxable investment account. On the RE example -- Do you want just one rental property, or multiple? A SFH or multi-plex? What price point are you looking at, and how do you want to fund it (mortgage or debt-free)? The more specific your target can be, the more it'll help drive your results.

You make some good points here. I've been avoiding really learning about real estate because every time I start it sounds like a lot more effort than I really want in an investment. But, my husband loves Trulia and open houses and sherifs sales. He's been helping friends look for house and talking about flipping houses or becoming a landlord for as long as I've known him. At one point he had a rough plan for buying 1 property at a time till he had 10 of them. But, we ended up setting that plan aside in favor of other financial goals. He's looked at multi-tenant properties and single family homes, and we've talked about financing verses not. It's probably time to get clearer on what a first property purchase might look like and how much we need to save for it. Maybe run some numbers on different scenarios. I just need to find a balance between understanding how things work well enough to make sure we've got a reasonable planning and getting freaked out by the effort and the risk. We could be flexible when the time came, but having an idea of what we were shooting for would probably help a lot.

I love your comment about turning a hobby into a side hustle. My main hobby right now is 3D printing, and I'm imagining trying to convince my husband that I need to "invest" in more printers so I can start selling stuff. While that's probably not something I'd realistically pursue any time soon, it's interesting to think what we could do beyond index funds and besides real estate.

**phantom** · 12-11-2021, 08:05 PM

Thanks to all the quotes of the 529 front!

We live in PA where we do get a state tax deduction for contributions, so there's definitely reason to consider the option.

My big concern about college is that my husband and I both have college degrees, but have worked with a bunch of people who are either self taught or bootcamp graduates who are ever bit as knowledgable and capable as we are. In fact, I would argue that many of the bootcamp grads I've worked with have an educational background that is more relevant than my own. But, our kids are young. Maybe they'll pursue careers that don't need the academic credentials like we did or maybe they'll want to be doctors. Maybe they'll just want us to hand them the keys to an investment property. But, telling them there are options other than college shouldn't mean taking college off the table.

There have been times I've considered that there's a good chance that we'll be able to just cash flow whatever they want to do. But, of course, there's no telling what the future could bring. The job market could shift leaving us out of work or paid much less in 12 years, or we might be ready to throw in the towel by then. It's definitely better to prepare now.

What I'm realizing after listening to all of you is that we should probably figure out a best and worst case scenario for the cost of education after high school and at least get the 529s large enough to handle the best case scenario and maybe a bit past that. Then, we can figure out where we want to put money for a worst case scenario. But, getting a better idea of what that range looks like, even if it is a bit of a wild guess, will probably help.

**MonkeyMama** · 12-12-2021, 07:10 AM

They say to not make any big decisions after windfall, for something like 12 months. This just might be one of those scenarios where you need some time.

In addition to that, we personally don't spend raises/windfalls. The point is to divorce the spending decisions from the income/windfall. I cringe every time someone says but you *should* spend 20% or whatever up front on yourself. Why??? I have to spend money just because I received it? Nope. But I think the point is also missed that the money will still always be there. It's maybe just a natural built in "give it some time and thought" buffer, the way we handle it. Put the money away for now, and it will still be there when you have more clear goals.

You are no doubt in a high tax situation, so take advantage of at least the state 529 deductions. & you will have to weigh that as far as retirement contributions. Might be worth at least doing the max to retirement. & these are kind of minimums for fiscal efficiency, while you run through numbers and make longer term decisions.

Note: We personally did not use 529s or education savings vehicles, but we had no tax motivation to do so ($0 tax situation) and just kept all that money in "taxable" accounts (in addition to not wanting to tie up college money that might not be spent on college). Obviously with your income you will get some tax benefits from a 529 plan, even without the state deduction. Makes it a more complicated decision for you. But the right decision can still be that you don't want to tie up your money in a 529 plan.

**phantom** · 12-13-2021, 06:47 AM

Originally posted by Scallywag View Post

Out of curiosity (and because my kid is at the age where she needs to start thinking of a college major seriously), what do you do in tech? Were you previously in tech? Could you share how you managed to get a remote opportunity that helps you make a good salary while enjoying an LCOL?

Thanks so much for any feedback you can share!

I am a software engineering manager. I have a degree in computer science and worked for many years as a software engineer in web development and mobile development before developing an interest in leadership and pursuing management roles. The job market for experienced software engineers and engineering leaders alike is crazy hot right now. Remote work has long been a possibility in the field, but the pandemic has pushed engineers to demand it and companies to realize how well it can work. It's gone from a rare thing that people could make work in the right circumstances to something almost anyone can do. As a consequence, job markets are broadening. Companies from HCOL areas are realizing that they can get a slight discount for folks from LCOL areas while still beating their local markets, and some of the companies in LCOL areas are realizing they have to raise salaries to compete. I was working for a local company earlier this year where I handed out raises of 20-60% and got a 50% raise myself, because we ceased to be able to hire at our old rates and wanted to keep the people we had. I have since left for reasons unrelated to money and a very slight raise, and I now work for a Bay Area start up. My new employer pays me less than they would if I lived in a more expensive area, but it works out to be a good deal for both of us.

Unfortunately, it's no secret that software engineers are well paid, and there are lots of people entering the field hoping to cash in. But, most of the demand is for experienced folks, and even when experience just means 2-5 years, getting that early experience can be tough. It was tough when I started, and I think it might be even tougher today. I'd still encourage anyone who thinks they might enjoy it to go for it, because it can be a fun job. We especially need more young women in the field.

Of course, it's also worth pointing out that there are fears that these high salaries won't last for long and that eventually the jobs will all be outsourced to India, Eastern Europe, and South America. To be fair, this has been a concern for awhile, and while jobs do keep going to those places, plenty stay in the US. For now, time zones, language, culture, and legal compliance are big blockers to hiring outside the US. But, as US software engineering salaries rise, even in the LCOL areas, the incentive to find ways to make outsourcing work increases. A former employer of mine opened a "center of excellence" in Bangalore a few years ago, and last month, they closed one of their US offices laying off everyone in it (even though they've all been working from home). Most of the people I knew there already have other jobs because the US job market is still crazy hot. But, I see it as a reminder that this could all end any time.

**Scallywag** · 12-20-2021, 04:56 PM

Originally posted by phantom View Post

I am a software engineering manager. I have a degree in computer science and worked for many years as a software engineer in web development and mobile development before developing an interest in leadership and pursuing management roles. The job market for experienced software engineers and engineering leaders alike is crazy hot right now. Remote work has long been a possibility in the field, but the pandemic has pushed engineers to demand it and companies to realize how well it can work. It's gone from a rare thing that people could make work in the right circumstances to something almost anyone can do. As a consequence, job markets are broadening. Companies from HCOL areas are realizing that they can get a slight discount for folks from LCOL areas while still beating their local markets, and some of the companies in LCOL areas are realizing they have to raise salaries to compete. I was working for a local company earlier this year where I handed out raises of 20-60% and got a 50% raise myself, because we ceased to be able to hire at our old rates and wanted to keep the people we had. I have since left for reasons unrelated to money and a very slight raise, and I now work for a Bay Area start up. My new employer pays me less than they would if I lived in a more expensive area, but it works out to be a good deal for both of us.

Unfortunately, it's no secret that software engineers are well paid, and there are lots of people entering the field hoping to cash in. But, most of the demand is for experienced folks, and even when experience just means 2-5 years, getting that early experience can be tough. It was tough when I started, and I think it might be even tougher today. I'd still encourage anyone who thinks they might enjoy it to go for it, because it can be a fun job. We especially need more young women in the field.

Of course, it's also worth pointing out that there are fears that these high salaries won't last for long and that eventually the jobs will all be outsourced to India, Eastern Europe, and South America. To be fair, this has been a concern for awhile, and while jobs do keep going to those places, plenty stay in the US. For now, time zones, language, culture, and legal compliance are big blockers to hiring outside the US. But, as US software engineering salaries rise, even in the LCOL areas, the incentive to find ways to make outsourcing work increases. A former employer of mine opened a "center of excellence" in Bangalore a few years ago, and last month, they closed one of their US offices laying off everyone in it (even though they've all been working from home). Most of the people I knew there already have other jobs because the US job market is still crazy hot. But, I see it as a reminder that this could all end any time.

Thank you so much for this detailed post!

Yes, the outsourcing is always a concern and the barrier to entry is an excellent point you bring up. My assumption is that if you do not get hired off the campus then it might be harder to get hired at all? How do young / new graduates "break" into the field?

Doing well, but feeling directionless