Hey Money Minder!
I need some advice on where to stash my cash now that I’m covered for a few months post-divorce. I’m no high roller, just your average joe. Here’s the lowdown:
I’m 46, recently divorced, pulling in $116,000 a year (after all the deductions for alimony and child support). My take-home pay is around $2970 bi-weekly. Plus, I get about $200-$300 extra each month from mileage checks.
I live in an affordable area, own my home with a 4% fixed interest rate, and owe $64,000 on the mortgage. My monthly expenses for housing, utilities, and whatnot are around $1200. No more car payments – that’s all squared away. Car insurance costs me $500 a year (thanks to my stellar driving record). Oh, and my commute is a breezy 8 miles.
I’m putting 3% into my current employer’s retirement plan (they match!). I also have $100,000 in retirement from past jobs and $20,000 in a 529 for my kiddo. I chuck $150 a month into the 529.
I’ve got $26,000 in a high-yield savings account, dumping in $1200-$1500 monthly. Also, I’m dabbling in ETFs and crypto, investing about $200-$300 a month.
Whatever’s left in my checking account by payday goes straight into the savings account. Should I funnel more funds into the 529, ramp up my retirement savings, consolidate my retirement accounts, or try something new? Maybe beef up my current retirement contributions beyond the 3% match?
I’ve got a comfy emergency fund stashed away, but wondering if I should be putting my extra cash to work in a different way. Any fresh ideas on how to maximize my money?
Thanks in advance!
Financially Inquisitive Frank
Response from THE MONEY MINDER:
Hello There,
First and foremost, I want to commend you on your diligence in managing your finances post-divorce. It’s clear that you have a solid foundation with emergency savings, a manageable mortgage, and no outstanding debts. Given your situation, the next steps can greatly impact your financial future.
Considering your current contributions, it might be beneficial to increase your retirement savings beyond the 3% matching your employer provides. Since you have multiple retirement accounts, consolidating them into one can simplify management and potentially offer better growth opportunities. Additionally, allocating more funds towards your child’s 529 plan shows foresight for their education expenses.
While maintaining a healthy emergency fund is crucial, it’s also prudent to explore investment options that offer higher potential returns. With your risk tolerance in mind, you could consider diversifying your investments further to optimize growth. Review your ETF and stock holdings regularly to ensure they align with your financial goals.
Lastly, the approach of saving any surplus funds into your high-yield savings account is sound for short-term needs. However, for long-term wealth accumulation, exploring avenues like increasing retirement contributions, optimizing investment portfolios, or exploring additional investment opportunities could enhance your financial outlook.
Remember, financial fitness is a journey, and making informed decisions today can pave the way for a secure tomorrow. If you have any specific questions or need further guidance on your financial path, don’t hesitate to seek advice from a financial advisor to tailor strategies that best suit your goals.
Best regards,
THE MONEY MINDER
