Am I maximizing my current situation?

[docstudent]

Here’s a quick recap: started new job in June of ‘23, with
a base salary of $172,400, and I had to relocate to a new area.

Take Home: $8060 ( after contributing $2000 to 403b- two insex funds 60%, 40% split).
Rental income: $2300

Monthly income: $10360

Mortgage: $1482, HOA: 390
Balance: $157,000, Estimated Value: $435,000
Rent payment: 1370 (all-inclusive)
Car: $499, $13104 (remaining balance)
Car insurance: $1156 every six months
Groceries: $240 a month
Gas: 260
Eating out and entertainment: $600
Gym: $9, Netflix $9.

Savings #1: $51, 236 (5% interest)
#2: $24, 300 (6% interest)/ (cap of $2000 per month)
403b’s #1: $115,000, #2: $21,000, #3: $20,000, #4: $4156.

STRS: $175,000, Supplemental account: $72,000
Tentative retirement numbers: $6500 to $7000 (as salary increases the numbers will rise. Next year’s base salary is projected to be $180, 500.
Aim is to retire in 2030- (53), but open to 203- (55).
Stock Market: $36,000

Roth IRA: $5829 ( max out in Dec)
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Credit card debt: $0

General plan is to max out IRA yearly and put $3600 per month the into the savings account that generates 5% interest. With that said, is that the smartest usage of the $3600?

Loan on car is 2.4%, is it a great need to pay off by June?

[riverwed070707]

Can you clarify what's happening with your living situation? I think I understand you are a renter in your primary residence and you rent out a house that has a mortgage on it with approx $430 net income assuming no maintenance or vacancy. Is that accurate? What's your long term plan for the house? Are you just renting it currently due to your relocation or are you intending to keep it as a long term investment? If the latter, it would be wise to keep your rental expenses separate from your personal so you can set aside money for maintenance and ensure you're maximizing your deductions.

I don't have time to math it out right now and you didn't really specify what you're contributing to each of your savings buckets, but how does your needs/wants/savings pan out in terms of percent of your overall income? Normal retirement timeline strives to save 20%; if you're planning for an early retirement you should be saving 50+% across all savings buckets. The other calculation you'll want to look at is your fire number (FireCalc is a good one) - how many years can you get by in retirement with your projected spending and investment returns. At a quick glance it looks like you should have something like $5,500 left over per month to save but its unclear where that is going.

My only other comment on spend is that your car insurance cost is WILD. I pay $800/year. When was the last time you shopped around?

[docstudent]

Yes, I net about $430 from my rental and my tenant signed a 12-month lease. I aim to put $3600 in the account that is paying 5% interest each month. The other savings account is through the credit union and I transfer 2G per month between two accounts to get the 6% AYP. I do not contribute any new money to this account. I simply allow the 24G to recycle and it resets every September.

I shopped around and it was higher with other companies, but I will look again and see if I can find some cost cutting.

[Jluke]

For the stock market: 36000

is that a taxable investing account?

have you considered taking a portion of the 3600 and investing in a total US fund? Just be sure to choose a fund you do not already own in other retirement accounts so you can tax loss harvest if necessary

[disneysteve]

My only other comment on spend is that your car insurance cost is WILD. I pay $800/year.

This comment comes up from time to time. Auto insurance costs vary TREMENDOUSLY based on location. When we moved from PA to NJ, our insurance premium dropped 50% even though we moved just 15 miles. Still, we now pay $2,400/yr for the 3 of us. And of course, your cost is based on your age, your driving record, your coverage limits, and what it is you are insuring.

[docstudent]

I own the condo and I have no plans to sell it. I will continue to rent in the LCOLA and return to my primary residence around the time that I retire. I will increase the rent to $2500 and that will add another plus $200 a month.

[disneysteve]

put $3600 per month the into the savings account that generates 5% interest. With that said, is that the smartest usage of the $3600?

What is that savings account for? Is that your emergency fund? If so, 6 months or so of expenses is fine. Beyond that, I'm not sure I'd keep adding to it. Keep in mind that the 5% rate is temporary and variable. As rates stabilize and start to fall probably next year, that rate will come down. The stock market is booming but it's still always a good time to invest for the future.

[docstudent]

I am maxing my 403b contribution of 23G a year, and IRA. At the moment, I’m just adding money into savings, but I could invest the $3600 monthly in the market. My two biggest holdings, Microsoft and Apple have generated 30% returns for me. I’m using Robinhood to get the 5% rate and I do not think it’s going down anytime soon. They offer 3% on all IRA contributions as well and I will quickly add on 7G for the ‘24 cycle.

[andy-stockfit]

Assuming that your savings account is your emergency savings, I'd stop contributing there at some point. As mentioned, the 5% APY is a good rate and nearly risk-free, but it might be temporary.

Investing more in the stock market for the long term (preferably in a tax-advantaged account) is something to consider. This can generate more than your 5% APY, but that of course, is never guaranteed. The longer your money can stay invested (without trading too much, if possible), the better.

[bjl584]

Without time to digest what I'm looking at too deeply, the thing that jumps out to me is that you should consider paying off your car today.

[disneysteve]

Without time to digest what I'm looking at too deeply, the thing that jumps out to me is that you should consider paying off your car today.

Good point. What’s the rate on the car loan?

[Jluke]

Good point. What’s the rate on the car loan?

It’s 2.4%

from another thread Update on Job

[disneysteve]

It’s 2.4%

from another thread Update on Job

At that rate, I'd keep it for the duration.

[kork13]

My biggest question is regarding payoff dates. When do you expect to have your mortgage paid off, and when do you expect the car to be paid off? Do you intend on keeping that car for a number of years after you've got it paid off?

Given the low rate relative to what your savings account is earning, it doesn't hurt anything to keep the car loan for a while, at least as long as your savings account is earning more (after taxes) than the loan is costing you with interest.

Realistically, as long as both of those debts are paid off by the time you want to retire at 53, it looks like you'll be setup for retirement no problem. Your STRS pension will easily cover your expenses.

Only caveat --- Is the STRS pension COL adjusted? Or does that amount stay the same & it devalues to inflation over time? That would be the only concern, if it doesn't get COLA. Your retirement accounts are *okay*, but not really in a strong position either. So if your pension is not COLA'd, you need to funnel alot more money into your retirement accounts (or other investments) before you leave your job, to ensure that they'll produce enough income for you to offset the pension's losses to inflation.

[docstudent]

Yes, STRS is COL adjusted. If I opt to stay at my current job, the base salary will jump to the low 190’s by 2025. With that said, it will increase my retirement earning by $300 to $500 per month. The next six months, I will put in the market and the other staff I will put money side to pay down my mortgage. Since I am single, I am always thinking about having more than the standard emergency account.