Sophia’s main concerns, in her words:
Hi there! My husband and I are 27 and we make good money, but we’re unsure what goal to focus on next. We want to save for financial independence, buy a house at some point, give more to charity, and maybe splurge on a nice trip or two. We also want to start a family in the next few years, so there will be additional costs and college to save for. I’m having a hard time getting excited about any one specific goal, but I don’t want to waste our good fortune.
My husband makes $95,000 year, with a possible $15,000 bonus. I make $48,000 a year. We just moved cites and got ourselves a $60,000 pay raise in the last year, so our net worth has increased a lot recently.
Our current assets are:
$16,000 in cash
$22,000 401k (small portion in Roth, most after tax)
$3,500 Simple IRA
$33,700 Roth IRAs
Car worth $16,000 with a $13,800 loan at 1.9%
We currently each save 12% of our income into our employer retirement plans. He has a 401k with a $5,000 per year match. I have a Simple IRA with a 3% match. We currently live off about $80,000 of our income (which seems so high!) and save the rest. I keep a detailed budget so I know where it all goes.The extra money has been going into our emergency fund. I was thinking $20,000 as an emergency fund so we’re close to our goal.
We’re not sure what goal to focus on first. We’re getting tired of our apartment and it tends to be cheaper to buy rather than rent in our city. But there could be possible job changes in our future so I’m on the fence about buying a home. If we upgrade to renting a 2-bedroom house with a yard, it will cost us about $400 more a month and we’d have to buy a second car.
We also want to be financially independent at a reasonable age so it’s easier to do cool stuff with our work and our life. We’ve considered taking some bigger trips, but we already spend a lot of money. I’m thinking we can maybe cut our food bill and save that for a trip. We also have considered upping our charitable contributions.
So that’s the details. Where should we put our extra money? Spend more? Save more? Give more? All of the above?”
Has anything changed in your financial life since your application?: My husband is going for an informal interview for a possible internal transfer from Houston to the NYC office next week.
He’ll be back right before our scheduled call. It’s no sure thing, but it adds to my hunch that we won’t be in these exact jobs in this exact city long term.
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Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.