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Post by crystal1588 on Feb 23, 2011 14:05:27 GMT -5
So we have a dilemma. I suppose it's a good one to have, but we're still going back and forth with it.
DH and I (24 and 23) make around 90k per year (around 95k with bonuses, but we don't count them since they aren't gtd). This year, we will be putting 15% into 401(k)'s (including employer match). We also plan on saving around 10k into liquid savings.
Our employer (same for both) matches 25% up to the federal max, so we know that it is huge to put as much as possible into our 401's. That said, we are planning on trying for a baby later this year. When he/she is born, I will reduce my hours at work to 3 days/week. We can cover this with generally tightening the purse strings, but we want a fairly large "buffer". We also have about 20k in taxable accounts, but you never know where the market is going to go.
Should we be saving more into liquid savings or are we correct to keep shoveling money into retirement. Right now, our retirement accounts total around 25k.
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Deleted
Joined: May 18, 2024 2:51:14 GMT -5
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Post by Deleted on Feb 23, 2011 14:11:14 GMT -5
It is hard to argue against a 25% match... I would do all that you can to take as much advantage as that as possible.e.
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dancinmama
Senior Associate
LIVIN' THE DREAM!!
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Post by dancinmama on Feb 23, 2011 14:16:20 GMT -5
It is hard to argue against a 25% match... I would do all that you can to take as much advantage as that as possible.e. I totally agree. |
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Peace77
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Post by Peace77 on Feb 23, 2011 14:19:55 GMT -5
How much do you have in liquid savings (emergency fund) now?
Is it at least 6-9 months worth of expenses?
Do you have any debt?
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Post by crystal1588 on Feb 23, 2011 14:26:21 GMT -5
We have about 5k in liquid savings and 20k in taxable accounts, that we would dip into if we had to. We are adding about $800/month into the EF. Our debt is a car loan (12k), which is at 0.9% interest, so we aren't prepaying it at all.
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Deleted
Joined: May 18, 2024 2:51:14 GMT -5
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Post by Deleted on Feb 23, 2011 14:31:39 GMT -5
It is hard to argue against a 25% match... I would do all that you can to take as much advantage as that as possible.e. I totally agree. I third that motion... that is a nice contribution from your company. Best of uck trying for a baby. Besides the car loan, no student loans? How do you intend to take care of your baby the three days you willbe working? Day care costs? |
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Post by crystal1588 on Feb 23, 2011 14:36:28 GMT -5
How do you intend to take care of your baby the three days you willbe working? Day care costs?
My mom will be watching them 1 day/week and daycare costs (our company has an onsite daycare) for the other 2 days are $75/week. We will cashflow them by reducing our savings a bit. We also have a $50/month SL payment (the balance is sitting around 5k (or so, I haven't looked at it in awhile, it's on autopay).
We are overall both very financially careful and also are savers. We want to make sure we have enough liquid when we go through some major changes of adding kids and reducing my work schedule.
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Post by Savoir Faire-Demogague in NJ on Feb 23, 2011 14:41:21 GMT -5
You guys seem to be doing fine for such a young couple. The best decision you guys can make is to put off bringing a child into the world for at least five years. The amount of retirement plan savings you can accumulate while you are so young is a very large factor in the growth potential, plus additions to taxable accounts made in the same period.
Nothing like having a few hundred thousand to fall back in when times are thin.
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The J
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Post by The J on Feb 24, 2011 11:33:23 GMT -5
I would put away as much as you can into retirement right now. Every dollar you don't put into retirement is costing you at least $.50 (the match and what you're paying in taxes). Your savings rate will go down with the baby, at least in part due to the fact that you're going to be reducing your work schedule 40%. You have a pretty good hunk in liquid savings, between the EF and the taxable account.
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Deleted
Joined: May 18, 2024 2:51:14 GMT -5
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Post by Deleted on Feb 24, 2011 11:40:11 GMT -5
Put the max you can in retirement.
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zuzu
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Post by zuzu on Feb 24, 2011 11:47:25 GMT -5
Maybe you should keep saving 15% but start living like you are only working 3 days a week now and save the difference so you can get used to living on less.
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hsclassic
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Post by hsclassic on Feb 24, 2011 12:10:51 GMT -5
I'd take Zuzu's suggestion a little further - absolutely keep the 15% (up it to the max $ contribution amount if you can) - if you pay yourself first, you'll live like you never had it in the first plan. Then live like you are on a single income. While PT is in your plans, you never know what the future may hold, so live now on 1 income (sounds like you might be close to that already) and bank the 2nd income.
If you get "too much" (if that's possible LOL) in your taxable accounts, you can always fund your Roth IRAs which, theoretically, can be an extra EF for a true emergency. Optimally you are already funding your Roth's plus 401k's to the max right now.
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qofcc
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Post by qofcc on Feb 24, 2011 13:34:59 GMT -5
I would increase the retirement savings to the maximum if possible to take advantage of the max instead of adding to the EF, but move the money in the taxable accounts into liquid investments until after the baby is born and you are back to work and your life is settled again. It sounds like you are risk adverse and if the market takes a big dip this year as some are predicting, you can weather a downturn in the retirement accounts, but you don't want your emergency baby money taking a hit.
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