So I’ve read the Personal Finance Flowchart and here’s where I stand currently:

[captainfaris]

Age: 42
Retirement Target: 2040
Salary:
3/2023 to 12/2023 = ~ $120,000 gross
2024 = $161,160 gross

Living Expenses:
$1500/month total IF that

Debt:
Student Loans = ~$108,000 total
Anticipated Payment = ~ $1,000/month

Upcoming Major Expenses:
Surgeries not covered by insurance = ~ $20,000 (tax deductible, though, bc they are medically necessary; I will itemize this year)

Assets:
Cash on Hand = $1,500
Checking = $1,000
Savings = $20,000 (for surgeries w/in 3 months)
Marcus HYSA = $5,000

Current Retirement Savings = $0

2023 401(k):
Contributions = $1320 bi-weekly for the remainder of the year (Total = $22,440)
Allocations =
[70%] - iShares S&P 500 Index (BSPAX)
[15%] - MFS International Growth Fund Class A (MGRAX)
[15%] - BlackRock High Yield Bond Inv A (BHYAX)

Other Pre-Tax Savings Elections
HSA = $3850

Really just looking for everyone’s advice/opinions on my financial situation… specifically the 401(k) contributions & allocations as well as my total financial/investment plan to:
* keep $1500 cash in home safe
* keep $3000 in checking
* save & keep $50,000 for future home down payment in Marcus HYSA
* open Roth IRA and contribute $6,500
* invest $5,000 in after tax dollars that I’m prepared to risk in a Vanguard brokerage account just to play/roll the dice & which, specifically, would you suggest?

 

[ghost_passerby]

@captainfaris You’re waaaay behind on retirement. Unless you’re planning to work until you drop, after 3-6 mos of emergency savings, all else should be prioritized in tax advantaged retirement accounts- 401k, IRA and HSA. Once you’ve maxed out your annuals on those, you can open a taxable brokerage but even then, you’re not really in a position to be gambling

 

[captainfaris]

@ghost_passerby They’re all maxed out. Aside from the Roth which I may or may not have to do a backdoor conversion but also for which I’ll be able to fund it in full ($6500) this Friday.

Also, when I say I’m frugal, I mean I’m very, very very cheap and monthly living expenses = $1500 MAX.

 

[npd]

@captainfaris Where's the money if you're so frugal? You make so much more than you spend but you don't seem to have anything to show for it.

 

[captainfaris]

@npd I started the job 1 month ago.

 

[robrog8999]

@captainfaris What were you doing the past 20 years?

 

[rychartist]

@robrog8999 how does the answer to this question help him?

 

[robrog8999]

@rychartist This is a financial planning sub. The past is extremely important to planning for the future. In this case, I'd wonder what habits/situations caused someone to land at 42 with $0 retirement savings that could circle back and blow plans up again and need to be considered.

 

[rychartist]

@robrog8999 I guess, but nobody's going to air their dirty laundry on the internet of all places, just to appease what appears to be a very judgy question. They may, however, think thoughtfully about your question, and do what they can to avoid making the same mistake(s) again. Which may have been the whole point of your question to begin with. We might never know

 

[davew0958]

@npd Post history shows they just started the job.

 

[secundus]

@captainfaris After reading thru some of your post history:

1) Your Student loans are if I remember 6.7%. If interest is not accruing, okay leave it. But once it starts up again I’d consider paying those down/off in lieu of holding any bonds whatsoever. Good guaranteed tax free rate of return paying down/off that debt.

2) May eventually want to get a place of your own but your rent is cheap. An American Primary Residence is one of the most favorable investments you can make and you’ll need somewhere to live in retirement. Leveraged on fixed rate 30 year mortgage is preferred. I’d get roommates to lower your cost less than $600/ month if possible. If math doesn’t make sense may make sense to maintain renting with risk of rent increasing in future.

3) You live well beneath your means. That will need to be maintained until you retire. Maintain minimalism. You should have 3x your income when you are 40. Due to not having that, you need to spend remaining years catching up prior to retirement.

4) If you want to check bank account sign up bonuses and credit card sign up bonuses. Churning group at Reddit has info. Can typically get a few $k each year you can plow into savings or taxable brokerage account.

Honest, I’m nervous for you. I’m 35 and feel like I am behind. I got $170k in my 401k and another $200k in equity in a house and no debt other than a 3% mortgage.

This is manageable with minimalism and plowing money into reasonable investments

 

[captainfaris]

@secundus Thank you for your thoughtful input and advice. Please don’t worry for me, though. I’m not alone in the world and my husband owns his own business that does quite well. I just got a new job is all.

 

[davew0958]

@captainfaris

$5,000 in after tax dollars that I’m prepared to risk in a Vanguard brokerage account just to play/roll the dice & which, specifically, would you suggest?

I would suggest you are woefully behind on funding your retirement and do not have the money to "play" with. Your best bet is to invest this smartly.

 

[captainfaris]

@davew0958 I think what’s potentially being overlooked here is my salary vs living expenses. My TOTAL monthly living expenses are $1500 MAX. $600 of that is my rent, which is paid 6 months in advance right now. So for the next 6 months they’ll only be $900 out of pocket. I work fully remote from home, so no gas expenses, my SUV is paid off and in perfectly good condition, so now car payment… I literally live on less than $18,000 per year. My salary is $160,000 per year.

 

[davew0958]

@captainfaris Which is all great, but you're talking about future money. Money that you could potentially earn is important, but you haven't earned it yet. The road to financial security is littered with the bodies of people who were banking (pun intended) on future earnings. Right now, I'm seeing a negative 85k net worth.

 

[captainfaris]

@davew0958 Of course that’s right now. That’s why I’m asking for advice on my plans for the future. In the grand scheme of things, $5,000 is not going to break me, but if I can buy $5,000 of either equities with a higher risk/return ratio OR during a potential mark dip, why not?

 

[davew0958]

@captainfaris Yes, you're asking for advice and you're ignoring the advice you're getting.

 

[captainfaris]

@davew0958 I’m not ignoring the advice. I’m questioning one piece of the advice I’m being given. I’m literally doing everything else people are suggesting.

 

[davew0958]

@captainfaris I'm very nicely trying to explain to you that even though you have great income potential, your financial situation is not good. You've only had this job for a month, so you're first on the chopping block. You could get injured or sick.

You're personally in awe of your new income so you're expecting us to be in awe of your new income, and that's just not how this works. There are people your age making considerably less than you who are a million dollars ahead of you. There are people who are 10 years younger than you who are a million dollars ahead of you. I'm not saying compare yourself to others, but you need to wake up to your situation and stop counting on money you don't have yet. You asked for advice. The advice is that you are not in a position to play with your money.

 

[captainfaris]

@davew0958 I’m not expecting anyone to be in awe of anything. Lol. Nor did I at any point suggest my financial situation is good. I literally came here for advice and constructive criticism regarding my plan for THE FUTURE. If I was confident in it, why would I even bother asking? You seem very hung up over a potential $5,000 investment. And I don’t know why, but your projecting because you’re not describing anything I wrote, but instead what you read.