My wife and I are wondering how to begin growing our wealth. I am 34 and make $96,000, she is 33 and makes $45,000. We have a 1.5 year old at home and plans for another in the near future. I have around $37,000 in student loans left and we just opened a 30-year mortgage a year ago. We have $15,000 in a traditional savings account, I have a pension through public education, and she has a 401(k) with around $20,000 in it from an old job and another one with a few thousand in it she opened a year ago. She also has a Roth IRA a family member opened for her recently with $5,000. To muddy the waters, I will be searching for a new job next year which will mean a move with all the trappings (new mortgage, etc.), that will put me somewhere around $130,000. She is planning to stay home with the kids for a few years or work part time, if possible.
Our total take home/spending difference averages around $1,000 each month that we can save, invest or put toward debt. The student loan has a 5.625% interest rate but is suspended right now because of the CARES Act. The payment is $242 a month. Our mortgage balance is $192,000 and that monthly payment is $1,427 but we pay a little extra each month. We’d love to refinance but the closing costs aren’t worth it since we are likely selling it next spring or summer. We got a good deal in a seller’s market in our Nebraska town and did some minor upgrades to the house. I realize after two years of interest, initial closing costs, maintenance, etc. we will still probably be losing money on this house, but I’m optimistic we will walk away with at least $20,000 cash when the sale is complete.
My biggest concern is purchasing another house next summer and how to balance that with paying off this student loan and starting to save for retirement. Should we just sit tight and squirrel money away for a down payment rather than trying to invest in the current uncertain market? I’m nervous to tie a lot of it into retirement accounts that I can’t touch, as well, even though I’m tempted to open a Roth IRA for myself and fully fund it for 2019 given the extended tax deadline this year. Doing that right now would leave us less than $10,000 in liquid cash.
First, a congratulations is in order — you’ve got money in the bank, you’re paying extra toward your mortgage, you’ve got some retirement savings already stashed away as well as a pension and you’re focusing on your finances. That’s all great stuff.
There are a lot of moving parts to this question but you’re certainly not alone — many people in their 20s, 30s and beyond worry about how to save for retirement while they’re juggling so many other present-day financial responsibilities, such as…