So, my wife and I are in need of some financial wisdom to figure out what to do with our extra cash.
Wife’s Deets
She pulls in $59 bucks an hour at Kaiser SoCal as a Nurse. She’s tossing $1,000 into her traditional 401K every paycheck (every two weeks) until it’s all maxed out.
Current Stash:
401K: $37,000
Roth IRA: $35,000
Projected Pension: Either $3.14 million (one-time) or $14K monthly if she hangs up her scrubs at 65
No debt on her end!
My Stats
I bring home $85K yearly at California State, plus an extra $15K to $20K from my side hustle each year.
What’s in my wallet:
403B: Zilch
Roth IRA: $44,000
Pension: At around 74% of my average salary from the last 5 years, beginning at age 65, plus a 7% Mandatory Contribution (CALPERS)
Got a car loan ($330/month for another 18 months)
We’ve got a Joint HYSA with $56K (Emergency fund and house down payment fund)
Our Cash Flow:
Wife: $2,500 x 2 = $5,000 (No extra pay for overtime or holidays)
Me: $5,000 (Salary after pension contribution) + $500 to $3,000 (Side gig)
Expenses:
Crazy Rent: $3,400 (Socal living, baby)
Insurance: $0 for Medical, Dental, and Vision. $250 for both cars (Hyundai and Honda)
Groceries + Utilities + Internet + Phone Bill + more: $2,500
So, we’re not homeowners yet, but we’re eyeing one within 3 years. Good news – My folks are offering an interest-free loan of $200K to $300K. They just want $1K monthly until they pass. I’d pay for over 100 years if it kept them around!
We’ve got an extra $2K to $6K every month, so we’re thinking of beefing up our retirement contributions.
No kiddos yet, but it’s in the plan very soon. Friends think we’re going overboard on retirement savings since we both have pensions and free health insurance lined up.
Wifey might hit up NP school. My bene’s will handle her tuition, so any loans would cover living expenses that my paycheck can’t.
We’re open to any and all advice!
Later,
Paycheck Powerhouse
Response from THE MONEY MINDER:
Hello There,
Congratulations on being in a solid financial position and seeking advice to optimize your extra cash flow! It’s clear that both you and your wife have diligently planned for your retirement through your respective pension and retirement accounts. Given that you have a healthy emergency fund and are looking to buy a home in the near future, it’s commendable that you are considering increasing your retirement contributions.
Considering your strong financial footing and upcoming life changes such as children and potential additional education costs, a balanced approach is key. Since you are already contributing to your retirement accounts and have a robust emergency fund, it might be prudent to focus on paying off your remaining car loan to reduce your debt burden and free up extra cash flow in the long run.
Additionally, given your parents’ generous offer for an interest-free loan towards your home purchase, it could be beneficial to take advantage of this opportunity. However, ensure that you have a clear repayment plan in place to honor their request for a monthly repayment.
Regarding the potential loan for living costs during your wife’s NP school, carefully assess the impact on your finances and consider whether it aligns with your overall financial goals. Planning for children and their associated expenses is also crucial, so factoring in these future costs can help you proactively prepare for the next chapter in your lives.
Overall, maintaining a balance between your current financial priorities, future goals, and unexpected expenses is key to navigating your financial journey successfully. Remember to regularly review your financial plan and adjust as needed to stay on track. All the best from THE MONEY MINDER as you continue to make informed financial decisions for your future!
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