Hello all, My wife and I have been married for over a year now and are looking to start a family (I am 29). I would like to hear from you all who have families and successful careers on smart ways to invest/save money etc during the early stages of family-life preparing to have a child and potentially more kids down the line. I currently have 43K in student loans (wife has $0) and with my new job I am looking to pay them off as quickly as possible (hoping within the next 1.5 years) to free up space in our budget. I don't have money in a roth and have the basic 401k plan through my employer but would like to start contributing money towards a roth after the student loans. We own a house and that doesn't break the bank for either of us however we are thinking of potentially selling because of the current market and buying another that cost more. We do not live a crazy expensive lifestyle and do not live in an expensive state (shoutout DE). Any and all advise is welcome and thank you! TC: 130K #personalfinance #investments #familylife #savingmoney #studentloans
You've already got a house, so that's good. If you are going to move, do it ASAP--moving when you've got a baby, and then having to baby proof a new house is a nightmare. If you're thinking about changing jobs, do that soon as well; starting a new job with a baby is another nightmare, and take paternity leave into consideration.
Also, start looking for daycares as soon as you have a due date. Many places have long wait lists.
Noted thanks. Any financial advise?!
Have you checked if you qualify for Biden's student loan forgiveness program?
I have private student loans through Sofi so I don't think Biden's potential plan would cover them.
We are expecting later this year. I would look into how to utilize an FSA and also a dependent care fsa if you are going the daycare/nanny route assuming you aren’t on an HSA plan. My employer has an option in October to make or add an fsa which is just in time to cover the hospital costs of birth with pre-tax money. Wish I would have done an fsa this year to help cover some of the appointment costs.
Congrats on expecting! Any other financial advise other than the FSA while your preparing your family?
I re-read your original post. We had a house that was fine for us, well within the budget and we sold it. Paid off all debt which for us was 2 cars and a boat. Now all we have is the new mortgage to worry about and our month to month expenses. It’s not really financial advice but we have really enjoyed having no debt going into having a child. It’s pretty freeing so if you are already thinking about selling, hopefully you have enough equity to pay off your existing debt including student loans. Also don’t under estimate the costs of child care 😭😭 it’s much more expensive then people realize.
Just my 2 cents: What you really want to optimize for is financial independence, not “net worth.” Let’s suppose you’ll need $15k/month of income to support the family. So the question becomes how can you build up an investment portfolio that generates $15/month of predictable consistent income. The problem with things like holding equities in a 401k is that they are speculative investments and not designed to generate predictable income. You could have $2M in a 401k portfolio if stocks but if it’s not generating $15k/month of cold hard cash you don’t really have freedom. In order to make $15k/month you’ll need $3.6M invested in a portfolio of assets that generate 5% post tax cash flow. So the questions you’ll need to think about are 1) what’s the most effective way to get that $3.6M ASAP 2) what kind of assets can you buy that will produce a predictable 5% post-tax cash on cash return
Thanks. Any advice on what investment opportunities I should look to invest in now or after I paid off my student loans?
If you’re getting employer matching the 401k isn’t a bad idea but if your goal is income I would look at dividend paying stocks, rental properties and AirBnb vacation properties. Examples of dividend paying stocks: Pfizer, Coca Cola, at&t. You can also look at covered call stocks like Qyld which pay around 10% cashflow. Buying a good Airbnb vacation property investment will probably generate between 10 and 20% cashflow and you’re also getting the equity appreciation with debt pay off. Bottom line here is you need INCOME to live, not net worth. If you happen to get super rich you will have access to even better income producing funds like private equity and hedge funds which typically pay between 10 and 20% annual cashflow. Hopefully that’s a good starting point! *disclaimer* I am not a financial advisor
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I did not follow the "sell because of the current market ans buying a more expensive". What does that mean? Since house prices are really high its a good time to buy?
good point dndjfjhedi. I meant sell the house because we can get more than usual right now and us paying a little more isn't a big deal for our situation.