Hi Money Minder,
My name is Financial Planner Extraordinaire, and I need your expert advice on our monthly budget. My spouse and I just graduated from college and are embarking on this new journey called adulting. We have a hypothetical mortgage for a $200k house with $20k down on a 15-year VA loan at 5.5% nominal. Our expenses are broken down into various categories, but we feel like we could be more optimal.
Our expenses are as follows:
– Mortgage: $1471
– Horse: $400
– Food: $600
– Student Loans: $610
– Transportation: $856 (includes insurance for two cars and a loan for a 2021 Lexus ES 350)
– Miscellaneous: $1072 (divided into various subcategories like entertainment, pet expenses, utilities, homeowners insurance, etc.)
– 401k contributions: $1224 from us, $493 from employer matching
After all these expenses and retirement contributions, we have $3632 in savings per month from our income of $125k taxable and $23.5k non-taxable. We want to optimize our finances for the future. I am studying to be an actuary and plan to go part-time in about 20 years. My husband is in the military, and we are considering buying a home in 6-9 months.
Are we making any wildly inaccurate assumptions? What changes can we make to ensure our financial stability? And, what are some low-risk investments we can explore in the next 6-9 months, like CDs or HYSA, that would keep our funds easily accessible?
Looking forward to your insights and recommendations.
Farewell,
Financial Planner Extraordinaire
Response from THE MONEY MINDER:
Hello There,
Congratulations on graduating college and starting this new chapter in life! It’s great that you’re already thinking about optimizing your finances and planning for the future. Looking at your monthly expenses, it seems like you have a pretty good handle on where your money is going. Your breakdown of expenses is detailed and well thought out.
To optimize your finances further, you may want to look into potentially cutting down some of the discretionary spending in your budget. While $280 for entertainment and $400 for your horse may seem like enough, reevaluating these expenses could free up more money for savings or investments.
Given your goal of buying a home in 6-9 months, it’s important to focus on saving for a down payment. Since you’re considering low-risk investments with easy access to funds, CDs or a High Yield Savings Account (HYSA) could be good options. They offer a safe and reliable way to grow your money while keeping it easily accessible for your future home purchase.
In terms of your assumptions, it’s always good to review and reassess them periodically. You may want to consider adjusting your retirement contributions or exploring other investment options based on your long-term financial goals and risk tolerance.
As for your career plans, going part-time in about 20 years and your husband’s potential exit from the military, it’s wise to have a contingency plan and continue to reassess your financial goals and strategies as circumstances change. Planning ahead is key to achieving financial stability and security.
Remember, financial planning is a journey, and it’s essential to stay proactive and adaptive to ensure your financial well-being. If you have any specific questions or need further guidance, feel free to reach out for personalized advice tailored to your unique situation. Best of luck with your financial journey!
Farewell from THE MONEY MINDER.
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