UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev Thread | Next Thread
Author: DeltaOne81 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75598  
Subject: Is this a sin, or being practical? Date: 2/28/2014 4:27 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I've always been a big saver. Even as a kid. I just like having things squirreled away just in case and I definitely don't want to work until I can't stand. Straight out of college I started funding my 401K and a Roth IRA, and not too long after working, I started maxing out my 401K. I'm 32 now, so I've probably been maxing it out for 6 or 7 years.

But life changes. I moved to the NY metro area 5 years ago where expenses are high (and took a slight paycut in doing so). I bought a house 2.5 years ago in NJ with my $12K in property taxes for 1/3 of an acre (*after* I got it knocked down on appeal, heh). And now, I have a kid on the way and am finding out the cost of child care around here... lets just say many colleges are less.

I'm faced with the internal crisis of actually considering scaling back on retirement savings. My wife and I make a good living, and it feels like it should be enough, but everything costs so much. Nevermind saving for college, and all the 5-digit periodic home owner expenses (new roof, new porch, repaving the driveway, etc). I do some things around the house, but I'm not about to start cutting walls open.

I'm looking at cutting back on some expenses - like I don't think we'll be doing much expensive traveling for a while, and we could stand to eat out less, and bring lunches to work - but there's not much I can do about mortgage, taxes, forthcoming child care, etc.

Retirement calculators tell me I have a good chance of being able to retire at 55 with meaningful income even under less than ideal market conditions. Scaling back contributions don't seem to hurt those projections. So I guess it's good that it feels wrong to me to consider cutting back on savings, as opposed to so many Americans who feel wrong saving at all. But it still does.

It is wrong to think about cutting back for other life priorities? Am I sinning against Fool-kind? Or is that just the way life goes?
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: inparadise Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 74332 of 75598
Subject: Re: Is this a sin, or being practical? Date: 2/28/2014 4:58 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
It is wrong to think about cutting back for other life priorities? Am I sinning against Fool-kind? Or is that just the way life goes?

Ya gotta do what ya gotta do. Just don't lose sight of that saving mode, and start thinking that optional expenses are must haves. Lego parties in your rec room are just as good as renting out a hall and hiring entertainment. Teach a kid to play with a box, and you will have an independent kid. Now you have to focus not only on retirement savings, but college.

Focus as much as you can on savings mode without hurting your family. Don't keep up with the Jones'. Bank those raises and bonuses and be satisfied with what you have. Can't tell you how often I've answered one of the kids' questions like "Why don't we drive a fancy car?" with because keeping our expenses low means Dad has a better chance of living to an earlier retirement.

It's actually been kinda fun to teach the kids about value purchases. Christmas gift this year was $200 that they had to spend with me. Part of the point was time together, but also to encourage them to search out the best value for their money so that they could max out their purchases. I was happy to take as much time as they wanted to shop. Youngest just finished spending his this week. I finally see the light at the end of the financial tunnel for him!

IP

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: zol Three stars, 500 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 74333 of 75598
Subject: Re: Is this a sin, or being practical? Date: 2/28/2014 5:19 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
It is wrong to think about cutting back for other life priorities? Am I sinning against Fool-kind? Or is that just the way life goes?

Don't concern yourself with sinning against Fool-kind. Your priorities do not need to be approved by anyone here except your wife.

Having said that, we have also struggled with balancing currents needs AND wants vs future. We don't know how long we will live. Also, kids are little and living with us for a "short" amount of time. So, what to do? Focus on the things you can control:
- Contribute to the 401k to get the most out of it (do you get a match?)
- As you are doing, examine expenses and see where you can cut. Continue saving for home owner expenses.
- Child care is expensive but not forever. What will you do after you no longer need to pay for child care?
- Take advantage of opportunities to save like using a Dependent Care account (save on taxes) for childcare expenses now and for camps later, check if 529 accounts are deductible, etc.
- Consider moving to a less expensive place/state if it makes sense for your family
- Think and plan for college now. If you have a high income your kids may not qualify for assistance. How will the kids cover college expenses in 18 years? Would you still be on track to retire at 55 if you cover college? Would you consider retiring later?

I can say from experience that plans will change. What you may not consider feasible now may be feasible down the road.

- zol

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 74334 of 75598
Subject: Re: Is this a sin, or being practical? Date: 2/28/2014 5:31 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
It is wrong to think about cutting back for other life priorities? Am I sinning against Fool-kind? Or is that just the way life goes? <./i>

Your priorities are yours, no one else's. That said, it is a good time to sit down with your wife and review your financial priorities and goals.


Print the post Back To Top
Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 74335 of 75598
Subject: Re: Is this a sin, or being practical? Date: 2/28/2014 5:31 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
DeltaOne81: "I've always been a big saver. Even as a kid. I just like having things squirreled away just in case and I definitely don't want to work until I can't stand. Straight out of college I started funding my 401K and a Roth IRA, and not too long after working, I started maxing out my 401K. I'm 32 now, so I've probably been maxing it out for 6 or 7 years.

But life changes. I moved to the NY metro area 5 years ago where expenses are high (and took a slight paycut in doing so). I bought a house 2.5 years ago in NJ with my $12K in property taxes for 1/3 of an acre (*after* I got it knocked down on appeal, heh). And now, I have a kid on the way and am finding out the cost of child care around here... lets just say many colleges are less.

I'm faced with the internal crisis of actually considering scaling back on retirement savings. My wife and I make a good living, and it feels like it should be enough, but everything costs so much. Nevermind saving for college, and all the 5-digit periodic home owner expenses (new roof, new porch, repaving the driveway, etc). I do some things around the house, but I'm not about to start cutting walls open.

I'm looking at cutting back on some expenses - like I don't think we'll be doing much expensive traveling for a while, and we could stand to eat out less, and bring lunches to work - but there's not much I can do about mortgage, taxes, forthcoming child care, etc.

Retirement calculators tell me I have a good chance of being able to retire at 55 with meaningful income even under less than ideal market conditions. Scaling back contributions don't seem to hurt those projections. So I guess it's good that it feels wrong to me to consider cutting back on savings, as opposed to so many Americans who feel wrong saving at all. But it still does.

It is wrong to think about cutting back for other life priorities? Am I sinning against Fool-kind? Or is that just the way life goes?

I am not your priest, and this is just another Fool's opinion, but I think not.

Life happens.

You have a huge headstart.

Maximum 401-k contributions for the last 6 years would total almot 100k, plus earnings. Maximum IRA contributions for the last 6 years would total 30k, plus earnings.

You also note that you were contributing before you maxxed out. I would SWAG that you have 200k+ in your accounts. At 8% CAGR that would grow to 800k by the Time AARP reaches out to you. Plus another 5 years to 55, it should be 1M+.

And your post is unclear whether your DW has been doing the same.

In addition, you are still planning on contributing and your expenses feel more like noral change in family status expenses rather than huge extravagances. As long as you do get caught up in "Keeping up with Jones" in North Jersey and NYC, you should probably be fine.

One would also hope that you woudl seem some progress on the income side that might let you add back some the decreases, plus when you hit 50, the "catch-up" contributions are currently allowed under federal law.

Saving a lot in the first few yeasrs out of school while young and single is a huge advantage. All that early money has been workin for you, and will continue to work for you. I am sure that you are smart enough to contribute at least as much to the 401-k as is necessary to grab any company match ("free money"), plus likely more given yoru first paragraph.

Past of life is "living" now and as long as ome is thoughtful and prudent, rearranginig saving and spending for awhile is not necessarily disastrous.

Just my $0.02.

Regards, JAFO


Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: ckollmann One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 74341 of 75598
Subject: Re: Is this a sin, or being practical? Date: 3/1/2014 8:14 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
It is wrong to think about cutting back for other life priorities? Am I sinning against Fool-kind? Or is that just the way life goes?

I empathize with you, as I've asked myself the same questions as we evolved from renting in the student ghetto to buying a condo to having a kid to now buying a house for way more than I ever thought I would with a new second kid. It's a lot of changes, and I still freak out sometimes that the daycare bill alone is more than I lived on as a grad student!

It was a weird emotional barrier to overcome to not max out the 401k contribution, because I had internalized the message of all the people and media telling everyone to save more. But I looked at my numbers (obsessive record keeping and spreadsheets helped) and realized that not only was I well on track to retire early and also it was more important to me to spend a little more for happiness in our current lives.

Only you can set your priorities, don't worry about what "Fool-kind" says. They can have their own blind spots. I'll never forget asking for advice on prioritizing between low interest debt vs savings and getting lectured about "living above my means" due to having used a 0% loan to buy a couple thousand dollars worth of furniture. Didn't matter that my net worth was increasing monthly by about the total amount of the loan, some people can't see beyond "Debt is bad, mmkay?" Keep your eyes on what is really important.

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: inparadise Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 74342 of 75598
Subject: Re: Is this a sin, or being practical? Date: 3/1/2014 8:46 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Only you can set your priorities,...

And unless you are truly extravagant leading to ruin, only you and yours will reap the consequences of those priorities. To paraphrase, Retirement is a journey, not just a destination. Enjoy your journey.

IP

Print the post Back To Top
Author: DeltaOne81 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 74343 of 75598
Subject: Re: Is this a sin, or being practical? Date: 3/1/2014 10:00 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
And your post is unclear whether your DW has been doing the same.

She hasn't been maxing it out, as her income is lower it'd be a pretty big bite, but she has been contributing since she started working 6.5 years ago and has raised it several times. And she also has fully funded an IRA.


To clarify, I'm not so concerned with what might some others on here, my reference to Fool-kind was more meant to ask if doing this would be Foolish or foolish. Would I get a bunch of responses telling me I should cancel tv, learn to lay my own patio, and start riding a bike to work (20 miles, heh)? Or would I get what I got, which is people generally telling me I'm in good shape and it's okay to modify priorities in life sometimes so long as you don't drop the ball.

I greatly appreciate all your thoughts.

Print the post Back To Top
Author: katiewa Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 74345 of 75598
Subject: Re: Is this a sin, or being practical? Date: 3/1/2014 12:04 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 7
There's been at least one mention of kids not being eligible for financial aid if mom&dad make too much or have too many assets. We started the college odyssey two years ago--not a chance for financial aid according to the FAFSA. And many (most?) of the top-tier schools offer ONLY need-based scholarships. However, it appears that most other schools still offer financial aid packages for good students.

So, as one aspect of your college savings plan, start reading to your kid from Day 1--don't worry about the kiddy books yet--think National Geographic, the newspaper, etc.--whatever you normally read. "It doesn't matter what [you] read, it's the tone you use."

Count. Driving home from somewhere one night, singing wasn't cutting it. Started counting--son calmed right down, listened to the counting the rest of the way home--somewhere in the 600's.

Read Richard Feynman's comments on his father (Pleasure of Finding Things Out, I believe). Not necessarily the specifics, but just the general talking, discussing, explaining in depth of everything.

Assuming normal brain development and function, don't worry about when the kid starts reading (or anything else). People used to ask if our son started reading when he was 3 or 4. No--halfway through 1st grade before he'd read at home. Why read by yourself when you can snuggle up to Mom or Dad and have them read for a couple of hours??

Legos, paper and crayons, boxes, sheets and pillows, magnets, and the like will entertain kids for hours--especially if you are playing with them.

Bake with your kid early-on. Talk about what fractions are, why they work. Read the recipes, the cans, the boxes

Measure things.

Whatever your interests are, figure out ways to involve your kid as early as possible.

A kid who enjoys learning will tend to be successful in school, which means better potential for scholarships.

Kathleen

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: DrTarr Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 74359 of 75598
Subject: Re: Is this a sin, or being practical? Date: 3/1/2014 11:15 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
IP And unless you are truly extravagant leading to ruin

Seems like if you are stiffing your 401(k) for a trip to Colorado to smoke up, that might be foolish... If, you are living within your means and putting money into things that help you long term and pay you back in other ways, we call that life.. And life should be very Foolish...

So you have to work an extra year to make sure you kids have quality daycare... A couple to make sure you can pay those taxes in NJ :(
And - a few more to put them through college.... Seems like really good retirement planning to me..

Family/dT

Who is happy to help take care of his Father financially if needed!

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev Thread | Next Thread
Advertisement