movingforward
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Post by movingforward on Jul 3, 2014 12:48:37 GMT -5
My number is $5M to maintain the same lifestyle. Knowing us (my wife and I) we will want our kids to start enjoying their inheritance before we are dead if we can afford it: -> help with college -> help with buying first house -> help with 529 -> pay for vacations/meals if they tag along etc. I do wish our kids will appreciate all we will do for them (sacrifices and all) and not turn out little spoil brats! I'm curious about your number. I know you save for retirement, but you guys enjoy a pretty high end lifestyle and live in a HCOL. You also have the SL to pay off. And I don't get the idea your DW will ever make a ton of money - maybe 75K/yr? And your career tops at maybe 125K? So how do you plan to save 5M as W2 earners when you enjoy such an expensive lifestyle AND you want to give your kids so much (I assume you won't be frugal with them as children since you plan to be so generous with them as adults). Are you going to inherit money? Saving 5M is such a hard thing to do, so I'm curious. Feel free to ignore my prying. I was kind of wondering this too... 5M is a lot. They are young so they have a lot of time for their money to grow but the only people I know who are retiring with that kind of money are making 250K - 300K in MCOL - LCOL areas. Also, if DW decides she wants to take a few years off after having kids things could definitely get side tracked.
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gooddecisions
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Post by gooddecisions on Jul 3, 2014 12:58:38 GMT -5
My number is $5M to maintain the same lifestyle. Knowing us (my wife and I) we will want our kids to start enjoying their inheritance before we are dead if we can afford it: -> help with college -> help with buying first house -> help with 529 -> pay for vacations/meals if they tag along etc. I do wish our kids will appreciate all we will do for them (sacrifices and all) and not turn out little spoil brats! I'm curious about your number. I know you save for retirement, but you guys enjoy a pretty high end lifestyle and live in a HCOL. You also have the SL to pay off. And I don't get the idea your DW will ever make a ton of money - maybe 75K/yr? And your career tops at maybe 125K? So how do you plan to save 5M as W2 earners when you enjoy such an expensive lifestyle AND you want to give your kids so much (I assume you won't be frugal with them as children since you plan to be so generous with them as adults). Are you going to inherit money? Saving 5M is such a hard thing to do, so I'm curious. Feel free to ignore my prying. 11% returns of course.
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midjd
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Post by midjd on Jul 3, 2014 13:03:26 GMT -5
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phil5185
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Post by phil5185 on Jul 3, 2014 13:32:32 GMT -5
Two scenarios for you - (both are 11%/yr) 1. Invest $20,300/yr from age 29 to age 60. =$5M @ age 60 2. Invest $12,400/yr at age 29 and add 5%/yr to your investment each yr (you'll be adding $56k in Year60) also = $5M @ age 60.
If you are a 'glass is half empty' person and you get only 8%/yr you will have $2.7M at 60 and $5M won't happen until age 67. But so far, in the 150 year history of this great country, there has never been a 30-yr block that did that badly.
More importantly, it is mathematical certainty that you won't have $5M if you DON'T invest the $20.3k/yr (or its equivalent).
As for the list of things for the kids - we did those except for the 529, if you are paying for their college, who is the 529 for?
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Deleted
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Post by Deleted on Jul 3, 2014 13:42:33 GMT -5
Our number has always been 3.5M. I came up with that while I was taking a personal finance class. Took the amount I think we will need in retirement in todays $$$, converted that to future $$$, and then figured out the 3% draw to get that amount. It is not perfect, but it gave us a goal to work toward. We have 21 more years and are on course to easilly reach it. We hope.
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Deleted
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Post by Deleted on Jul 3, 2014 13:45:17 GMT -5
My number is $5M to maintain the same lifestyle. Knowing us (my wife and I) we will want our kids to start enjoying their inheritance before we are dead if we can afford it: -> help with college -> help with buying first house -> help with 529 -> pay for vacations/meals if they tag along etc. I do wish our kids will appreciate all we will do for them (sacrifices and all) and not turn out little spoil brats! I'm curious about your number. I know you save for retirement, but you guys enjoy a pretty high end lifestyle and live in a HCOL. You also have the SL to pay off. And I don't get the idea your DW will ever make a ton of money - maybe 75K/yr? And your career tops at maybe 125K? So how do you plan to save 5M as W2 earners when you enjoy such an expensive lifestyle AND you want to give your kids so much (I assume you won't be frugal with them as children since you plan to be so generous with them as adults). Are you going to inherit money? Saving 5M is such a hard thing to do, so I'm curious. Feel free to ignore my prying. We currently make about 120k combined... Save 25% We are both 29 and let's say we have nothing saved (not the case) And let's say we save for 35 years 25% of 120,000 At 6 % it is $3,582,724 At 8% it is $5,787,378 At 11% it is $ 12,517,977 And that is not getting another penny in raise and I would hope my career doesn't top off at 125k because I have bigger ambitions than being a store manager for the next 35 years. Just because I want to "help" my child out doesn't mean I am going to spend a ton of money. What is your idea of generous? Also YM thinks we have a high end lifestyle but it is pretty average for the area we live in.
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Deleted
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Post by Deleted on Jul 3, 2014 13:50:47 GMT -5
As for the list of things for the kids - we did those except for the 529, if you are paying for their college, who is the 529 for? Grand kids if we have any. - while we both still have student loans we got help from our parents. I stayed home for free and paid no bills. - between both parents we got at least 20k towards the purchase of our first home. It was not expected nor asked but surely appreciated. We were both raised to pay it forward, we may not pay for college in full but we will help, we may not give them 100% of the down payment but a token will do. But because I said it everyone thinks it is top line of everything, buying BMW's and such. Far from it...
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Formerly SK
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Post by Formerly SK on Jul 3, 2014 14:00:01 GMT -5
I'm curious about your number. I know you save for retirement, but you guys enjoy a pretty high end lifestyle and live in a HCOL. You also have the SL to pay off. And I don't get the idea your DW will ever make a ton of money - maybe 75K/yr? And your career tops at maybe 125K? So how do you plan to save 5M as W2 earners when you enjoy such an expensive lifestyle AND you want to give your kids so much (I assume you won't be frugal with them as children since you plan to be so generous with them as adults). Are you going to inherit money? Saving 5M is such a hard thing to do, so I'm curious. Feel free to ignore my prying. We currently make about 120k combined... Save 25% We are both 29 and let's say we have nothing saved (not the case) And let's say we save for 35 years 25% of 120,000 At 6 % it is $3,582,724 At 8% it is $5,787,378 At 11% it is $ 12,517,977 And that is not getting another penny in raise and I would hope my career doesn't top off at 125k because I have bigger ambitions than being a store manager for the next 35 years. Just because I want to "help" my child out doesn't mean I am going to spend a ton of money. What is your idea of generous? Also YM thinks we have a high end lifestyle but it is pretty average for the area we live in. Well, we make almost as much as you, don't save 25%, and can't afford pretty much anything that you say you guys do. Our most expensive car ever was 15K. Our house is filled with cheap CL furniture. We don't spend thousands on landscaping, or electronics, or vacations. We eat out about 1x/mo. I know we have two kids, but I honestly can't believe our kids are the reason we can't afford your spending (or maybe they are ). One difference is DH and I have basically had no family financial help after age 18 (other than a paid for dinner now and again) and I can see how your MIL providing free daycare (and all the financial gifts) is sort of a pre-death inheritance to give you guys a leg up. Honestly the contrast between our numbers just confuse me.
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movingforward
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Post by movingforward on Jul 3, 2014 14:07:26 GMT -5
As for the list of things for the kids - we did those except for the 529, if you are paying for their college, who is the 529 for? Grand kids if we have any. - while we both still have student loans we got help from our parents. I stayed home for free and paid no bills. - between both parents we got at least 20k towards the purchase of our first home. It was not expected nor asked but surely appreciated. We were both raised to pay it forward, we may not pay for college in full but we will help, we may not give them 100% of the down payment but a token will do. But because I said it everyone thinks it is top line of everything, buying BMW's and such. Far from it... Personally I think paying for your child's college (if you are able without hurting your own retirement) is one of the most important gifts you can give your kid. My parents helped quite a bit with my undergrad. Grad school was on my own but my job ended up paying 60% of it and I was able to cash flow the rest. Giving your kid the gift of graduating without a mountain of SL debt is a wonderful thing IMO. This means you may have to sacrifice buying them things while they are growing up in order to do it but it is worth it. I will never forget my freshmen year in high school there was a school trip to NYC over spring break. I REALLY wanted to go. The cost was close to 2K (can't remember exactly). My parents talked it over and then I was told that the money really needed to go toward my college. They explained how there is only so much money and a person can't do everything, etc. It really was a valuable lesson and I am forever grateful that they put my education first.
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midjd
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Post by midjd on Jul 3, 2014 14:15:57 GMT -5
We currently make about 120k combined... Save 25% We are both 29 and let's say we have nothing saved (not the case) And let's say we save for 35 years 25% of 120,000 At 6 % it is $3,582,724 At 8% it is $5,787,378 At 11% it is $ 12,517,977 And that is not getting another penny in raise and I would hope my career doesn't top off at 125k because I have bigger ambitions than being a store manager for the next 35 years. Just because I want to "help" my child out doesn't mean I am going to spend a ton of money. What is your idea of generous? Also YM thinks we have a high end lifestyle but it is pretty average for the area we live in. Well, we make almost as much as you, don't save 25%, and can't afford pretty much anything that you say you guys do. Our most expensive car ever was 15K. Our house is filled with cheap CL furniture. We don't spend thousands on landscaping, or electronics, or vacations. We eat out about 1x/mo. I know we have two kids, but I honestly can't believe our kids are the reason we can't afford your spending (or maybe they are ). One difference is DH and I have basically had no family financial help after age 18 (other than a paid for dinner now and again) and I can see how your MIL providing free daycare (and all the financial gifts) is sort of a pre-death inheritance to give you guys a leg up. Honestly the contrast between our numbers just confuse me. I agree. We make a little less than that, save about $30K/year, and are living paycheck-to-paycheck otherwise. The only difference is our daycare bill, but that + our mortgage is still less than Cawaiu's mortgage... Although I do remember him saying his wife doesn't pay FICA, which could make a big difference. But I'm guessing there's a lot of family support, too. An extra $5K here and there can really add up.
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Gardening Grandma
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Post by Gardening Grandma on Jul 3, 2014 15:08:51 GMT -5
We currently make about 120k combined... Save 25% Does that 25% include employer matching?
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Deleted
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Post by Deleted on Jul 3, 2014 15:13:54 GMT -5
We currently make about 120k combined... Save 25% Does that 25% include employer matching? No
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Deleted
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Post by Deleted on Jul 3, 2014 15:23:00 GMT -5
The 120 is fairly recent though, right?
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Deleted
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Post by Deleted on Jul 3, 2014 15:25:04 GMT -5
Honestly the contrast between our numbers just confuse me. Don't let it confuse you... Just don't think about it
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midjd
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Post by midjd on Jul 3, 2014 15:31:37 GMT -5
Well if you have some budget-stretching secret the rest of us are missing out on, we want to know!
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Gardening Grandma
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Post by Gardening Grandma on Jul 3, 2014 15:40:55 GMT -5
Does that 25% include employer matching? No 25% of your gross or net? (Either way that % is commendable) Just curious. I never managed to save 25% of my income, but it was one income to support 3 people.
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Deleted
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Post by Deleted on Jul 3, 2014 15:44:29 GMT -5
Your mortgage includes taxes and insurance right?
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lazysundays
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Post by lazysundays on Jul 3, 2014 15:46:59 GMT -5
Cawiau- time for you to post your budget. The natives are getting curious.
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Deleted
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Post by Deleted on Jul 3, 2014 16:10:41 GMT -5
Your mortgage includes taxes and insurance right? yes, they went FHA I believe, so nowhere near 20% down
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Deleted
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Post by Deleted on Jul 3, 2014 16:20:59 GMT -5
I just meant, when we had a mortgage, I paid my taxes and insurance on my own, it Wasnt included in my monthly amount...
How do they figure taxes on new construction there? I wonder.
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Deleted
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Post by Deleted on Jul 3, 2014 16:26:05 GMT -5
I just meant, when we had a mortgage, I paid my taxes and insurance on my own, it Wasnt included in my monthly amount... How do they figure taxes on new construction there? I wonder. if you don't put down 20% they escrow. the taxes are probably based on the purchase price. I bought new construction and there wasn't any problem figuring out the taxes.
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Deleted
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Post by Deleted on Jul 3, 2014 16:31:57 GMT -5
I guess I just worry he's overlooking something. I didn't put down 20 and they didn't escrow. That was a while ago...
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Deleted
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Post by Deleted on Jul 3, 2014 17:05:03 GMT -5
I just meant, when we had a mortgage, I paid my taxes and insurance on my own, it Wasnt included in my monthly amount... How do they figure taxes on new construction there? I wonder. if you don't put down 20% they escrow. the taxes are probably based on the purchase price. I bought new construction and there wasn't any problem figuring out the taxes. What She said ! They did an estimate based on what similar homes in the neighborhood were paying and went a bit higher. I know next year I will get a refund from escrow account because taxes are still based off the land only (just got my first quarterly tax bill for $320 while I am putting $350/month in escrow). From what I remember: ~$1,540 Principal and Interest ~ $73 insurance escrow for next year ~$102 PMI ~$350 Property taxes escrow Or something similar. Anyway just paid my mortgage and it was $2,061.62
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Plain Old Petunia
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Post by Plain Old Petunia on Jul 3, 2014 17:19:07 GMT -5
I know next year I will get a refund from escrow account because taxes are still based off the land only (just got my first quarterly tax bill for $320 while I am putting $350/month in escrow).
They don't issue supplemental property tax bills in your state? Here's how it works in mine:
Jan 1, all property is assessed
Dec 10 - First installment is due, based on Jan 1's assessment, now nearly 1 year old
Apr 10 - Second installment is due
If a property is sold during the year, it is spring of the second year before the supplemental tax bill is issued. The supplemental bill is retroactive to the date the property changed hands.
Maybe your state doesn't do this kind of thing, I don't know. But I'd make sure before I counted on that refund.
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Deleted
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Post by Deleted on Jul 3, 2014 17:29:35 GMT -5
So, 30k savings, 32.5k housing, 20k taxes, 6k car payment,
im im at what, $2625 a month for the rest?
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Deleted
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Post by Deleted on Jul 3, 2014 17:38:05 GMT -5
I know next year I will get a refund from escrow account because taxes are still based off the land only (just got my first quarterly tax bill for $320 while I am putting $350/month in escrow).
They don't issue supplemental property tax bills in your state? Here's how it works in mine: Jan 1, all property is assessed Dec 10 - First installment is due, based on Jan 1's assessment, now nearly 1 year old Apr 10 - Second installment is due If a property is sold during the year, it is spring of the second year before the supplemental tax bill is issued. The supplemental bill is retroactive to the date the property changed hands. Maybe your state doesn't do this kind of thing, I don't know. But I'd make sure before I counted on that refund. I don't think so... If we get one: great, if we don't : no biggie. It is not like we are counting on the money to make ends meet. But per my lawyer and mortgage broker that have both done new construction closings in the past they both said the same thing: first year you usually get a refund because it is based on the land without the property. By year 2 they get t right and might need to put more in escrow or less. I am saying they might be right since my first quarterly tax bill is less than I am supposed to be putting in escrow every month.
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Deleted
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Post by Deleted on Jul 3, 2014 19:26:05 GMT -5
According to firecalc, there's a 96% chance my 240K will be able to provide me with 25K/year in today's dollars from ages 65 to 100. This is obviously not a great living it up number, but I'm hoping there will be about 10K/year in SS as well. Plus, that assumes I don't save another dime between now and age 65 (20 years). Assuming I don't raid it, I shouldn't starve anyhow.
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DVM gone riding
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Post by DVM gone riding on Jul 3, 2014 22:07:05 GMT -5
MPL--It might not be great but I think 35k with generic gov aid-like food stamps will get you an acceptable quality of life.
I don't know about you but I don't intend to leave my kids oodles. I have every intention of using closer to 5% draw rate.
Phil--is that number 5% more than you put in the year before so year 1 cont=12400 and yr 2=13020? or an increase in the percent of total income?
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Deleted
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Post by Deleted on Jul 3, 2014 22:18:02 GMT -5
MPL--It might not be great but I think 35k with generic gov aid-like food stamps will get you an acceptable quality of life. I don't know about you but I don't intend to leave my kids oodles. I have every intention of using closer to 5% draw rate. Phil--is that number 5% more than you put in the year before so year 1 cont=12400 and yr 2=13020? or an increase in the percent of total income? Food stamps? LOL I make 35K now and am way above the limit for food stamps even with two kids.
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phil5185
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Post by phil5185 on Jul 3, 2014 22:29:40 GMT -5
Yes, that's it.
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