long term planning help

[njcarita]

we'll want some ideas what to do next---

husband and I are both 44
3 kids 14,11,8

we are debt free except for home.
Have about 9 months worth of income in a 401k( extreme emergency fund--- has not been touched in 13 years)

I have a good working budget--- in which I plan to start saving this month
350/month for emergency savings
150/month for vacation.


my husband is self employed contractor( income fluctuates--- some months he's out of work or very slow) and I will start working extremely part time( 5-10 hours per weeK) in sept.( but I will be making between 35-50 per hour)--- so I really want to think what i want to do with this money I'll be making
so what first???

car fund for us and son who will be driving in 4 years???( we have 3 cars 2002 minivan, 2001 ford explorer and a 2000 work truck for hubbys business)----

send xtra to mortgage---

start saving to help kids defray college costs???

what do I do first?? simultaneously

 

[TifffanyD]

Only 9 months worth of living expenses in your 401k?? I would say you need to plump that up most of all. Or do you have some other retirement account? Also, build a real emergency fund, not one you would get penalized for taking from

 

[DawnM]

First thought. I am about the same age as you are (43).....

Retirement: What do you have for retirement? Retirement before cars and college according to Dave Ramsey.

Also, you need a working emergency fund of a min. of 6 months, we are trying to get to 12 months, before sinking funds for cars or college.

Emergency Fund: Is $350 enough? Could you put more into your emergency fund (not 401K, one that you can access if needed?) I don't know what 6 months' worth of living expenses are for you, but it would take us almost 3 years to get to that amount by contributing only $350.

College: For US personally......we have decided to cash flow college for the boys by me going back to work when the oldest gets to that age and by encouraging them to live at home and attend the local 4 year school. Right now that is $5,000 for tuition per year, less than most private kindergardens! We can float that without too much trouble and could probably include an inexpensive car for transportation. If they choose a more expensive college we will have to think about what our contribution will be.

Cars: We also have 3 cars and the newest one is a 2004. Even our 1996 car runs well though and we see no need to get rid of it if it is running well. DH is also able to fix most car issues and that is a blessing for us.

 

[Cheshire Figment]

Both of you should have retirement funds and put in the maximum allowable each year under the tax code. At some point you will want to retire and need money to live then.

Second is setting up an emergency fund that is not in a retirement account; this is something that will cover six months to a year of normal expenses if there is no income.

Third is college fund; again look into your states prepaid tuition plan or a 529 plan (these are different).

Car maintenance/replacement fund

and vacation.

 

[wdwfan16]

As the PPs said, retirement savings is where it all should go.

 

[njcarita]

let me see if I can answer some of the questions??

yes I'm planning to save more than 350/month toward emergency-- that is what I have planned coming out of my husbands income---
I am planning to save all the money I am making-- which should be at a minimum of approx 800/month ( could be double that depending on hours)--
really can't squeeze anymore out of husbands income every penny is accounted for---

or budget is pretty bear minimum-- no cell phones(just prepaid phones for emergency), no magazines, rarely go out to eat etc etc etc--

what is our main budget buster is our Health insurance ( we pay over 700/month-- plus about 250/month out of pockets etc)


as to the kids college-- they already know that they will be communting and working to help pay( I worked my way thru college while I lived home)-- and grandpa and grandma have set up college funds for them too.

 

[KristinU]

Another vote for retirement savings. I know you said you're debt-free except the house and have a good working budget, but you may want to check out Dave Ramsey's book "Total Money Makeover" to help you prioritize.

Most people think of Dave as just being the "get out of debt" guy...but IMHO he has a good solid common-sense plan for the order of financial priorities.

As someone who has had in-laws ask for financial help several times, I whole-heartedly agree with the philosophy of retirement before college savings. It is NOT a blessing to have to have a conversation over the dinner table about sending $$$ to keep their electricity on or make medical payments, especially when you know that proper investing and planning would have put them in a very comfortable spot in retirement. And I'm sure asking for help from children didn't feel great either...and something they probably never dreamed they'd have to do.

Anyway, that's my .02

 

[a1tinkfans]

A retirement account is where I would put the money. A 401K will not cover that for you with the amount you mentioned.

As far as college expenses go, I say worry about being prepared for you and hubby and then worry about college $$$. The medical insurance is a hit but being self employed has many advantages (I am also self employed) as you know so I'd say, good for you with no debt and sock that $$ away, cost of living will not go down and you'll need it for later on..........Meanwhile, STAY healthy

 

[njcarita]

can anyone direct me to a good website-- to figure out what I need to be saving for retirement???

 

[KristinU]

You can google "retirment calculator" and kind of shop around the resulting links to find one that you like using. A couple that are good to play with are the CNN and MSN ones...not terribly robust, but a nice "quick and dirty" analysis. http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner.jsp
http://moneycentral.msn.com/retire/planner.aspx

 

[PinkRhombus]

That 401K is NOT supposed to be considered as your 3-6 month's worth of expenses emergency fund. That is retirement. Don't tap into it for a loan. If you have to cash it out, you are going to get hit HARD with taxes and penalties. So start setting up another savings account/mutual fund for that. You said you're going to be putting everything you make into savings, so just go with that.

 

[Kickapoo Joie Juice]

You may want to reconsider your health insurance, there are some policies out there now that give you 6 office visits per year, per family, regardless of whether it's a specialist or a gp, then you pay out of pocket until the individual 5k or family 10k insurance deductible is met. You get $15 rx's.

On ehealthinsurance.com that policy (by aetna) is running about 350/month for a family of 4 in my zip code. I know that policies can vary according to zip, but it might be worth a try to look into an insurance policy with higher deductibles if you're relatively healthy.

You might want to look into a Roth IRA. Also, Utah has one of the better 529 plans-you don't have to live there to participate.

 

[crisi]

There are a lot of variables.

You can make $35-$50 an hour part time - how easy is it for you to get more hours when your husband's income fluctuates? If you can walk into $50 an hour for as many hours as you can take (a casual nurse can in a lot of areas), then its less important that you have a lot in an emergency account. Your kids are old enough that you probably don't have huge childcare expenses if you increase your hours. But I would make priority one getting an emergency account outside of your 401k.

Our emergency account and our savings account for cars, vacations, etc. is all one account (actually, its several spread over investment accounts, savings accounts, ESPPs, etc). The deal is that I won't spend it down to less than six months of living expenses. And I juggle many things in my head....I need a new car in the next year or two, that will spend that down so we can't take a big vacation this winter.

For us, the kid's college savings are seperate in 529s, but we didn't even start those until we had the mortgage paid off and a year worth of income in savings. I figure that if push comes to shove, we will be young enough (barely) to take out a mortgage on the house when the kids go to school. And the money I would be paying into my mortgage is going into their college funds now.

And the mortage and college funds are a lower priority than maximizing our 401k contributions. But we are at the point where if we stopped putting money into a 401k, we'd still have enough to live on when we retire - because we've both been maxing them for a long time. We still put money in and max them out - it would be nice to be able to retire well.

 

[Tink-n-MrIncredible]

David Bach's book Smart couples finish rich, gives some good insite on these issues. I think he also list some resources you can look up on the internet (calculators). Check it out from your local library.