cancel
Showing results for 
Search instead for 
Did you mean: 

Advice on short/mid/long-term goals

Member

Advice on short/mid/long-term goals

I'm looking for some advice on how to approach a few goals. The short-term goal I'm currently working towards is saving $80k by May 2020. I'm 8mo out of bk7 and looking to buy a house w/ 20% down at that time, with at least $20k left over. I currently have $13k out of $80k saved, and have developed a budget where I'm putting $4k/mo into my NFCU savings acct. Also, I'll receive 2 bonuses of ~$3k each and 2 tax returns of $8-10k each by May 2020. So by this time its possible we'll manage to save 100k or more. Is there a better place to park this money for the time being? I just opened my first ever CD at NFCU to get used to "investing" and the idea of not having immediate access to cash.

 

Mid-term goal is after we acquire this home, pay it off in 5-7 years, and to also have a net worth of $1M by age 45 (13 years from now). 

 

My longterm goal is to retire comfortably (having at least $2-6M from all sources) by about age 60 or so. However, I cut 401k contributions down to 1% in the meantime (company matches dollar for dollar up to 6%) to acheive the short term goal. This amounts to $10k/yr, not counting any potential gains  or compounding interest. I'm thinking now that may be a mistake, thoughts?

 

The only debt I have, that I pay for anyways, is a $3k student loan that i want to keep reporting to rebuild credit history. I have 3 CC all with $0 balance. Salary on the conservative side is 150k, up to 180-200k. My risk tolerance is basically ZERO at this moment, I've never been much of a gambler lol

 

Am I approaching this correctly? Do these goals seem realistic based on the numbers given? Any advice is welcomed

 

 

Message 1 of 11
10 REPLIES
Valued Contributor

Re: Advice on short/mid/long-term goals

Welcome JTC! I'm sure other members here with more experience will have more sound advice than I can give. I think it is better for you to get that info from someone who has been through it all, rather than me give you my opinion, when I am pretty much in the same spot you are in age range, but less $$$ lol.

What I will say is I like how you have your plan all mapped out and detailed. You put a lot of thought into this, and are already doing well with your plans as well as your credit. Keep doing what you are doing. As time passes and life happens you may have to make an adjustment here and there, but I think you are off to an excellent start and have a strong base to work off of!
                                 

Total Credit: $218,900Credit Utilization: 1%AAoA: 5 years, 5 monthsInstallments: Car Lease, Marcus LoanNegatives: 0


                                                                                              
                      DSC-27.1K | NFC-25K | ALI-25k | WAL-10k | BoA-22k | BB-12k | NFL-15k | LOW-35k | AMX-19.3k | CHA-10k | PF-8.8k | C-DC-9.7k
Message 2 of 11
Member

Re: Advice on short/mid/long-term goals

Thanks Ron I really appreciate that! The income part changed significantly after the discharge. It really is like a 2nd chance to do things right. I’m trying to handle my finances correctly this time around and live inside my budget.

Prior to bk, I lived so far above my means it was ridiculous. I used credit cards as an extension of my income, rather than a tool. I burned all the big national banks, especially Penfed, to the point of feeling guilty. Of course it wasn’t my intent to run up the cards and file bk, but still it was heinously irresponsible.

One thing I’ve learned through research is it doesn’t take a 6 figure income to retire a millionaire, rather living within a reasonable budget is the key factor. I know that sounds elementary but it works Smiley Happy
Message 3 of 11
Valued Contributor

Re: Advice on short/mid/long-term goals


@JTC-137 wrote:
Thanks Ron I really appreciate that! The income part changed significantly after the discharge. It really is like a 2nd chance to do things right. I’m trying to handle my finances correctly this time around and live inside my budget.

Prior to bk, I lived so far above my means it was ridiculous. I used credit cards as an extension of my income, rather than a tool. I burned all the big national banks, especially Penfed, to the point of feeling guilty. Of course it wasn’t my intent to run up the cards and file bk, but still it was heinously irresponsible.

One thing I’ve learned through research is it doesn’t take a 6 figure income to retire a millionaire, rather living within a reasonable budget is the key factor. I know that sounds elementary but it works Smiley Happy

Very good points and so true!  You are a good example of how you can recover with a good plan and learning from past mistakes.

                                 

Total Credit: $218,900Credit Utilization: 1%AAoA: 5 years, 5 monthsInstallments: Car Lease, Marcus LoanNegatives: 0


                                                                                              
                      DSC-27.1K | NFC-25K | ALI-25k | WAL-10k | BoA-22k | BB-12k | NFL-15k | LOW-35k | AMX-19.3k | CHA-10k | PF-8.8k | C-DC-9.7k
Message 4 of 11
Frequent Contributor

Re: Advice on short/mid/long-term goals

You’re leaving a lot of money on the table if you’re not getting that entire 6% 401K match from your company.  I suggest you figure out a way to up your 401k contribution to get the full matching benefit and still save $4,000/month or close to it.  Upping the 401k would cost roughly $1000/month out of an ~$8000 to 10,000/month take-home.  

 

As for where to park park your down payment fund, recent volatility should scare you from the stock market.  Since your timeframe is short (2 years), just find a savings account with the best interest rate. 

 

BTW, your financial goals are commendable, but I hope you have a realistic path laid out to achieve your mid and long-term goals.  Wanting to have $1M net worth and a paid-off mortgage in 13 years isn’t exactly a plan.  (You might want to talk to a financial planner.)  And I hope you’ve calculated that you can afford the house (i.e. your current rent is similar to your future mortgage), you’ve tacked on the price of maintenance and repairs and new expenses associated with buying and having a house. 

 

In any case, good luck. You’re way ahead of the curve.

Message 5 of 11
Frequent Contributor

Re: Advice on short/mid/long-term goals

The above advice is great, I only want to add a few points

Have you considered your credit score in the home purchase. Put a small balance below 8% on one of those cards, leave the others to report 0%.

With a high enough credit score, you don’t have to put down 20%. There are also programs that allow no down payment.

As per the savings and stock market vol. I am personally waiting on certain stocks I like to drop low enough for me to get in on them. However, if your unfamiliar with the market (rocky atm), stay away from it

You seem to have a good idea of where you want to be, just research each goal as deeply as you can until you know all your options with that particular goal

Best of luck!
FICOs: EQ - 714 / TU - 721 / EX - 717
Garden: 11/1/18 / 19%
Profile: Aaoa - 4.6y / Aooa - 13y / Aoya - 1m
Wallet:
"An investment in knowledge pays the best interest." - BF
Message 6 of 11
Member

Re: Advice on short/mid/long-term goals

That is sound advice thank you

I reviewed my 401k year to date statement recently and cringed at what the balance could’ve been.

I’m not well versed at all on the stock market but i have seen this week has been a bit rough. I like the idea of just leaving the short term funds in a safe savings account.

As for the midterm goal of 1M net worth, that calculation includes the future value of the home in addition to cash savings: assumes value of paid off house increases from 300k to 400-450k in 10yrs (booming TX market...for now), and 4K/mo savings x 10yrs (480k + interest earnings).

I’ll examine ways to start the 401k back up AND save at the current rate. We’ve trimmed a lot and my wife bless her heart has been super supportive of this plan. With 3 kids and another on the way it’ll be tight for sure lol. Our current rent is over $2k per month which is comparable to a $280k mortgage including insurance and property taxes. We’re trying not to finance over $240k to stay on track with the budget, which is why we’re trying to put 20% down.

As for long term...I’m not sure how that one will shake out. The general idea is contribute to 401k and IRA plans. I got the name of my grandparent’s financial advisor. Probably will try to set up a meeting to set real numbers on the long term plan.

I sincerely appreciate yall critiquing my plan and offering up ideas!
Message 7 of 11
Community Leader
Super Contributor

Re: Advice on short/mid/long-term goals

Great idea about resuming your 401k contributions up to a level where you get all matching money.  This is a really good choice.  To not do that is like seeing a $100 bill lying in the snow and not picking it up -- it's free money!

 

You may find that there is no way to accomplish all of the following:

        (a) Put away the same amount into your mortgage savings account as you did before

        (b) Raise your contribution to your 401k

        (c) Maintain enough play money for your family so that you can still be happy

 

If so, my personal recommendation is to let (a) go.  Reduce the amount you are putting away.  You will still have plenty for the down payment.  You might need to go with a small amount of PMI in that case, but that's so not a big deal.

 

The advice to keep your mortgage money in a high interest savings is good, but it is important that you learn why it is good.  It's not because you got a show of hands from some strangers on the internet.  It's because of two deep conceptual ideas that lie at the heart of investing: risk and return.  You acknowledge that you are new to the idea of investing.  Because of this I strongly encourage you to ground yourself in a safe and sound introduction to the fundamentals of that field.  A great very short book (free on the internet) for that is IF YOU CAN by William Bernstein.  It's targeted for beginners in their 20s and 30s.

        

After you get more familiar with the big ideas of investing, I think you will likely rethink your plan to place most of the annual money you have available for investing toward paying off your mortgage loan.  You will be losing a huge power of that money to compound over many decades and instead will be funneling it toward paying off a low-interest loan which was also giving you a tax break.  My feeling is that (after you buy the house) you should max out every available dime you are legally permitted to place each year into your 401k and IRA.  As of 2019 that is 25k.  If you have additional money left over, paying down the loan is a decent choice.

 

As far as financial advisors go, they can be valuable.  Watch carefully, however, how they propose you pay them for their services.  A common approach is for them to take charge a percentage of your assets.  That will be very costly over time.  As you read more about the basics of investing you will see a recurring theme of keeping expenses low.  That refers not to household expenses but the fees that people charge you (fund managers, financial advisors, etc.) to manage your money. 

Message 8 of 11
Valued Contributor

Re: Advice on short/mid/long-term goals


@JTC-137 wrote:

I'm looking for some advice on how to approach a few goals. The short-term goal I'm currently working towards is saving $80k by May 2020. I'm 8mo out of bk7 and looking to buy a house w/ 20% down at that time, with at least $20k left over. I currently have $13k out of $80k saved, and have developed a budget where I'm putting $4k/mo into my NFCU savings acct. Also, I'll receive 2 bonuses of ~$3k each and 2 tax returns of $8-10k each by May 2020. So by this time its possible we'll manage to save 100k or more. Is there a better place to park this money for the time being? I just opened my first ever CD at NFCU to get used to "investing" and the idea of not having immediate access to cash.

 

Mid-term goal is after we acquire this home, pay it off in 5-7 years, and to also have a net worth of $1M by age 45 (13 years from now). 

 

My longterm goal is to retire comfortably (having at least $2-6M from all sources) by about age 60 or so. However, I cut 401k contributions down to 1% in the meantime (company matches dollar for dollar up to 6%) to acheive the short term goal. This amounts to $10k/yr, not counting any potential gains  or compounding interest. I'm thinking now that may be a mistake, thoughts?

 

The only debt I have, that I pay for anyways, is a $3k student loan that i want to keep reporting to rebuild credit history. I have 3 CC all with $0 balance. Salary on the conservative side is 150k, up to 180-200k. My risk tolerance is basically ZERO at this moment, I've never been much of a gambler lol

 

Am I approaching this correctly? Do these goals seem realistic based on the numbers given? Any advice is welcomed

 

 


Being 32 with a risk tolerance of zero is going to be a major problem for your goals. Money you need short-term (down payment) should be kept conservative in savings, but your retirement accounts need to be set free. You're not going to make your long-term goals off of conservative investments. And, as others have said, shore up the 401k situation to get at least your employer match.

 

You shouldn't have much difficulty meeting your goals if you stay disciplined. I think your target goal is a bit on the low side, but that's for you to figure out. I'm in the same ballpark for salary (more on the $200k side), live in a major city with a high CoL, and still have no problem putting aside $4-5k/month for retirement accounts/savings, with my wife contributing more on top of that. Saving $80k in 18 months is achievable, but you can't slow down or stop once you hit your mark in 2020. Shift that money back to retirement savings and don't let up.

Message 9 of 11
Member

Re: Advice on short/mid/long-term goals

The advice and opinions thus far have been so invaluable that I'm going to bookmark this page. I went online and elected to increase 401k contributions to meet the company match. After reading these replies and thinking about it/running the numbers, it really was foolish to drop the contribution to below company match Smiley Frustrated It's apparently a blended fund investment, classified as "aggressive growth", so I left it alone for the time being.

 

I'll also try to jump into "If You Can" over this rainy weekend. I appreciate the other outlooks provided in regard to the short term savings approach. Picking up extra OT when its available (and it often is) can help accomplish a, b, and c; I've been hyper-focused on that 4k/mo benchmark, maybe too focused and lost sight of the bigger picture. Also requested appointments with 2 financial advisors so we'll see what comes of it.

 

Thanks again!

Message 10 of 11