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ermak · 10-31-2007, 08:25 PM

35 year old couple, 2 children. Earn almost 100K after taxes.<br />Approx. 100K Home Equity, Owe 225K Mortgage Balance.< 1K credit card debt, paid off every month. Both cars paid off. No student loan or any other debt. Emergency Fund: 26K. Diversified Retirement Assets (90% stocks): 75K (401K, 403B, ROTH, & Trad. IRA Total). 529 College Plan: 18K.<br />Wife has company pension, but still contributes 20% of salary<br />I contribute 10% to 401K and 4K to ROTH. We both have Term Life Insurance policies.<br />

sox · 10-31-2007, 08:25 PM

You're way ahead of the average, of course, because your finances are headed in the positive direction. The average person is in debt. No debt other than your mortgage is perfect. You're socking away 15% or so of your income -- great.

I see nothing to quibble about here. You don't say how old your kids are, but if you're planning to put them through college, you should plan on working that long. After that, it's just a question of whether or not you *want* to work -- my guess is that you'll be financially set.

Here's an easy rule of thumb to track your progress -- I call it the FTI (for "Forget This Index" -- when it reaches 1000, you can walk into your manager's office and say "Forget This!"):

Age * Net Worth / Yearly Expenses

Age is your average age
Net Worth includes everything, including home equity and pension balances
Yearly Expenses doesn't include payroll taxes or investments

You're at 35 * 219k / 55k or so -- I'm guessing on your expenses, based on your description. That's already at 139, which is great for age 35. It'll continue to go up as you age and as your portfolio grows faster than inflation.

When your expenses drop (kids finish college), you might be all set! Pay off the home to lower expenses further, cut your income down as well, remove your itemized deductions and take advantage of the standard deduction, pay next to nothing in taxes, and enjoy the rest of your lives!

Good luck,

Doug

gooner · 10-31-2007, 08:25 PM

Looks excellent. If I could I'd up the 10% to the 401K. Pls dont make the mistake we made in moving some money to our kids accounts (UGMA) when they were young to take advantage of their lower tax rate. The money becomes theirs with no strings attached ... The 529 direction you've gone is so much better - we belatedly went with a prepaid plain where you buy future credits at today's prices.

The only other thing we have is disability insurance with a 6 month wait period to lower the premium (ie., only for real emergencies).

10-31-2007, 08:25 PM	#1 (permalink)
ermak Greenhorn Join Date: Jul 2006 Posts: 20 Rep Power: 3	Are we doing well financially? How do we compare? 35 year old couple, 2 children. Earn almost 100K after taxes.<br />Approx. 100K Home Equity, Owe 225K Mortgage Balance.< 1K credit card debt, paid off every month. Both cars paid off. No student loan or any other debt. Emergency Fund: 26K. Diversified Retirement Assets (90% stocks): 75K (401K, 403B, ROTH, & Trad. IRA Total). 529 College Plan: 18K.<br />Wife has company pension, but still contributes 20% of salary<br />I contribute 10% to 401K and 4K to ROTH. We both have Term Life Insurance policies.<br />

10-31-2007, 08:25 PM	#2 (permalink)
sox Piggy Bank Join Date: Jul 2006 Posts: 59 Rep Power: 3	Are we doing well financially? How do we compare? You're way ahead of the average, of course, because your finances are headed in the positive direction. The average person is in debt. No debt other than your mortgage is perfect. You're socking away 15% or so of your income -- great. I see nothing to quibble about here. You don't say how old your kids are, but if you're planning to put them through college, you should plan on working that long. After that, it's just a question of whether or not you want to work -- my guess is that you'll be financially set. Here's an easy rule of thumb to track your progress -- I call it the FTI (for "Forget This Index" -- when it reaches 1000, you can walk into your manager's office and say "Forget This!"): Age * Net Worth / Yearly Expenses Age is your average age Net Worth includes everything, including home equity and pension balances Yearly Expenses doesn't include payroll taxes or investments You're at 35 * 219k / 55k or so -- I'm guessing on your expenses, based on your description. That's already at 139, which is great for age 35. It'll continue to go up as you age and as your portfolio grows faster than inflation. When your expenses drop (kids finish college), you might be all set! Pay off the home to lower expenses further, cut your income down as well, remove your itemized deductions and take advantage of the standard deduction, pay next to nothing in taxes, and enjoy the rest of your lives! Good luck, Doug

10-31-2007, 08:25 PM	#3 (permalink)
gooner Piggy Bank Join Date: Jul 2006 Posts: 75 Rep Power: 3	Are we doing well financially? How do we compare? Looks excellent. If I could I'd up the 10% to the 401K. Pls dont make the mistake we made in moving some money to our kids accounts (UGMA) when they were young to take advantage of their lower tax rate. The money becomes theirs with no strings attached ... The 529 direction you've gone is so much better - we belatedly went with a prepaid plain where you buy future credits at today's prices. The only other thing we have is disability insurance with a 6 month wait period to lower the premium (ie., only for real emergencies).

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