Do you have a Financial Advisor?

[Bootsie]

5 hours ago, 2squared said:

I determined basic financial plans for us to follow early in our marriage. Once those plans were established, I spent minimal time managing our finances because everything is on auto pilot. 

My first priority is retirement. We contribute at least 15% of our combined income into a 401k, and we invest in the appropriate target retirement fund. At our income level and tax rate, Roth IRA’s are not an optimal choice, but we did invest in Roth’s when our income tax liability was $0, because then it did make sense. When I complete our taxes, I can see where we compare to standard benchmarks like x savings by y years old. Once set, retirement funding is on autopilot  

I determined how many years I wanted to take to pay off our mortgage when we bought our house, I set up the automatic payment, and I haven’t thought about it since. 

I determined how much we need to pay for the kids’ college, and I set that amount to automatically transfer to a money market account at Vanguard. As long as the kids’ college expenses are in line with my initial estimates, I don’t need to review further. 

I determined how much cash I want on hand for an emergency fund. Since my other goals are on autopilot, when we have more than the target emergency fund, we know we can splurge. I have an investment account for excess funds, and I channel money there when our bank account gets too big. I draw it down when we splurge on wants - kid vehicles, vacations, remodeling, etc. 

Our wealth building and goals are are on autopilot and we have a healthy income, so we are at the stage where we are OK spending. 

 I am curious as to why you place college funds in a money market account.  I don't know the age of your kids--so maybe they are close to college age.  But, if they are younger, have you done this even though money market accounts have been yielding close to 0 in recent years?

 

[2squared]

8 hours ago, Bootsie said:

 I am curious as to why you place college funds in a money market account.  I don't know the age of your kids--so maybe they are close to college age.  But, if they are younger, have you done this even though money market accounts have been yielding close to 0 in recent years?

 

My 5 kids are 10yo-19yo, so we are too close to college to risk the ups and downs of the market. Our plan is to pay for one year of college in cash every year, which means we are mostly cash flowing, so the money market account is generally a flow through at this point.

it’s kinda hard to explain without pictures. We will end up paying for 11 years of college over 9 years, assuming 4 college years/kid. Grandparents will pay for 5 years, and dh’s GI bill will pay for 4 years.  

We do have some smaller amounts in 529s which are invested in age based funds, and Grandparents have five years of college invested. If cash flowing goes well with the older kids, the 529 funds will be moved to the younger kids, and we will use that growth to slow our savings rate. Grandparents may be funding more as well, so we are really have more of a cash based plan. 

We started saving when oldest was a high school sophomore or Junior, so investment growth has not been part of our plan. Increasing salaries to cash flow has been the plan. 

We are through year 1 of 20, and the plan is working. 

[Bootsie]

2 minutes ago, 2squared said:

My 5 kids are 10yo-19yo, so we are too close to college to risk the ups and downs of the market. Our plan is to pay for one year of college in cash every year, which means we are mostly cash flowing, so the money market account is generally a flow through at this point.

it’s kinda hard to explain without pictures. We will end up paying for 11 years of college over 9 years, assuming 4 college years/kid. Grandparents will pay for 5 years, and dh’s GI bill will pay for 4 years.  

We do have some smaller amounts in 529s which are invested in age based funds, and Grandparents have five years of college invested. If cash flowing goes well with the older kids, the 529 funds will be moved to the younger kids, and we will use that growth to slow our savings rate. Grandparents may be funding more as well, so we are really have more of a cash based plan. 

We started saving when oldest was a high school sophomore or Junior, so investment growth has not been part of our plan. Increasing salaries to cash flow has been the plan. 

We are through year 1 of 20, and the plan is working. 

Thanks for the description.  I was picturing more of a longer-term college savings plan (that would have been earning next to nothing)  

[Frances]

15 hours ago, 2squared said:

I determined basic financial plans for us to follow early in our marriage. Once those plans were established, I spent minimal time managing our finances because everything is on auto pilot. 

My first priority is retirement. We contribute at least 15% of our combined income into a 401k, and we invest in the appropriate target retirement fund. At our income level and tax rate, Roth IRA’s are not an optimal choice, but we did invest in Roth’s when our income tax liability was $0, because then it did make sense. When I complete our taxes, I can see where we compare to standard benchmarks like x savings by y years old. Once set, retirement funding is on autopilot  

I determined how many years I wanted to take to pay off our mortgage when we bought our house, I set up the automatic payment, and I haven’t thought about it since. 

I determined how much we need to pay for the kids’ college, and I set that amount to automatically transfer to a money market account at Vanguard. As long as the kids’ college expenses are in line with my initial estimates, I don’t need to review further. 

I determined how much cash I want on hand for an emergency fund. Since my other goals are on autopilot, when we have more than the target emergency fund, we know we can splurge. I have an investment account for excess funds, and I channel money there when our bank account gets too big. I draw it down when we splurge on wants - kid vehicles, vacations, remodeling, etc. 

Our wealth building and goals are are on autopilot and we have a healthy income, so we are at the stage where we are OK spending. 

We sound very similar. If you don’t mind answering, I’m curious what kind of investment fund you use for excess funds? We definitely have more than our target emergency fund amount right now and I need to do something with it.

[2squared]

4 hours ago, Frances said:

We sound very similar. If you don’t mind answering, I’m curious what kind of investment fund you use for excess funds? We definitely have more than our target emergency fund amount right now and I need to do something with it.

If we weren’t in spending mode, I would be using excess funds to increase retirement, pay down debt, and/or save for large future purchases. Depending on time frame, cash holdings would go in low interest safe spots like boring savings and Vanguard money market accounts to meet those goals. If our spending goals were longer term, I would use a retirement target fund at Vanguard (in a non retirement account). I love the ease of target funds  

We’ve always had shorter term financial savings goals until this stage in our life, so most of our excess went into low interest safe spots to meet those needs. We spent 20+ years building higher income careers and a solid financial portfolio, so I am very much enjoying spending our excess now.

 

[Frances]

9 minutes ago, 2squared said:

If we weren’t in spending mode, I would be using excess funds to increase retirement, pay down debt, and/or save for large future purchases. Depending on time frame, cash holdings would go in low interest safe spots like boring savings and Vanguard money market accounts to meet those goals. If our spending goals were longer term, I would use a retirement target fund at Vanguard (in a non retirement account). I love the ease of target funds  

We’ve always had shorter term financial savings goals until this stage in our life, so most of our excess went into low interest safe spots to meet those needs. We spent 20+ years building higher income careers and a solid financial portfolio, so I am very much enjoying spending our excess now.

 

Wow, we are in such similar positions it is eerie. We’ve definitely used savings and money market accounts before for emergency funds and short term savings goals, but the current combination of the excess $ amount and very low interest rates is making it harder to stomach. I’m still getting comfortable with spending significantly more, even though we have it. My husband has no issues at all. We did buy a much needed new couch today. 😜

[Miss Tick]

5 hours ago, Frances said:

We sound very similar. If you don’t mind answering, I’m curious what kind of investment fund you use for excess funds? We definitely have more than our target emergency fund amount right now and I need to do something with it.

We have found Fidelity Zero or Vanguard Index funds are a good place for that kind of "exess" funds situation.

[Ottakee]

5 hours ago, Frances said:

We sound very similar. If you don’t mind answering, I’m curious what kind of investment fund you use for excess funds? We definitely have more than our target emergency fund amount right now and I need to do something with it.

I use a vanguard Moderate Growth fund.   Depending on your risk tolerance they have 60/40 stock bond ones or more conservative ones.  I have my future car fund in one.

Best to hold these type funds for over a year for capital gains.

My credit union is paying 3% interest in their MAX checking up to $15,000 so you might want to see if you can find something near you like that as well.