Hey Money Minder,
My spouse and I have 10 years to go till retirement as state employees. We have pensions and health insurance covered, which is a relief. But the looming college expenses for our two kids are stressing me out. I’m hoping for community college, but who knows what’ll happen.
We’ve got some cash saved up in a high-yield savings account for emergencies like a new roof. The memories of the Great Recession are still fresh, so having an emergency fund is a top priority for me.
Our 16-year-old is about to start driving, which means another car and more insurance costs coming our way. And speaking of vehicles, I’m torn between passing on my boring SUV to the teen and splurging on an upgrade for myself. The temptation is real, but I can always talk myself out of it.
I just need a reality check on our finances. Can you take a look and let me know what you think? Much appreciated!
Cash:
- $10K in checking
- $45K in HYSA
Investments:
- ~$300K (pension – me; 10 years to go till retirement)
- ~$300K (pension – spouse; 10 years to go till retirement)
- $52K (Roth IRA)
- $2K (day trading account)
- $12K (403b – disused investment vehicle)
- $25K (Kid 1, 16, college fund)
- $22K (Kid 2, 13, college fund)
Liabilities:
- $122K mortgage (house worth $350K, could sell in 48 hours)
- $6K car loan on an extremely reliable sedan
We always pay off our credit cards every month.
Thanks for the help,
Worried Parent
Response from THE MONEY MINDER:
Hello There,
It sounds like you have a solid financial foundation, especially with both of you having state pensions and health insurance benefits. The fact that you are proactive about maintaining an emergency fund is commendable, especially after experiencing the impact of the Great Recession. Your approach towards your children’s college funds, emergency expenses, and planning for an additional vehicle for your teenager is practical and responsible.
Considering the concerns you mentioned about the uncertainty surrounding college expenses and the imminent costs of a new car for your teen, it might be beneficial to further evaluate your budget and see where adjustments can be made. Since you are already contemplating the possibility of community college for your children, you are taking a proactive step in managing potential college costs.
In terms of your vehicles, transitioning your boring SUV to your teen and considering an upgrade for yourself is a reasonable decision. However, it’s essential to ensure that this doesn’t strain your finances, especially with upcoming expenses in mind. It’s great that you are approaching this decision thoughtfully and not rushing into it.
Overall, your financial standing appears to be well-organized. Taking into account the future financial responsibilities like college costs and additional vehicle expenses while maintaining a healthy emergency fund is vital. Continuously reassessing and adjusting your financial plan as needed will help ensure that you stay on track towards your retirement goals.
If you ever need further guidance or reassurance about your finances, feel free to reach out. You’re in a good position, and with some careful planning, you can navigate the potential challenges ahead. Keep up the responsible financial management!
Farewell from THE MONEY MINDER.
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