RBO answering First Gen American’s questions about #1’s finances post-mortgage

The next near term unmet savings goal seems to be DC1 and Dc2 college fund. More posts on that would be interesting to me as I also have one about the same age. Although I am about a year behind you on payoff, that is my next savings goal.

We decided to up it to $750/mo/kid, basically splitting the difference between what we’d need for a super pricey school and what we were contributing already.  That also means that is eating $500/mo of the not-paying-the-mortgage-savings we were seeing.

I guess you can also ponder some more about when to get that next car

This is a constant pondering thing.  It was in the shop again for a week because it started doing the squealing thing that it had been doing two years ago, and even though it is a cheap fix (tighten things), it takes them forever to figure it out.  Partly because it only squeals when the engine is cold and it’s cold outside.  Only $70 for that + replacing the windshield wipers (because why not), but also there was a week of us having to deal with only having one car (indeed, they didn’t completely fix the squeal because DH had to drive to the city for a meeting and needed me to have the car to do dropoff).  And since they’ve tightened everything the shocks aren’t being as nice and shock absorbent as they usually are which means my ride is more bumpy.  But each time my car needs fixing, we don’t know if it’s going to be the last repair for a while or not.  If it is, then we’re happy, but if the car has to go in again, it’s a pain.  So I don’t know.  We’re still pondering.  Eventually there will be enough excess in savings that we won’t have to rebuild the emergency fund after buying a Prius or something similar.  (We’re not there yet.)  The other car seems fine for now, and the insurance company of the at-fault driver took care of our costs and our insurance company’s costs.

Do general posts on spending budgets (not the day to day expenses, But those emergency ones). I remember feeling a little overwhelmed when my TV, washer and water heater broke within months of each other, until I realized they were all old and due to be replaced… A lot does get fixed when you have a big emergency fund. You don’t really need to keep such close track of everything.

Yeah, we just have a big emergency fund that could cover a washer and water heater and heck, even a new roof (though maybe not solar panels to go on said roof, which we might do after getting a new roof).  We have two water heaters and I guess they’ll be due to be replaced in a few years– can’t remember if we got the 15 year or the 20 year kind.  (And actually, a few months after we moved into this house, shortly after we finally purchased a washer and dryer, the water heaters needed to be replaced, and our dishwasher broke and we ran through a series of broken microwaves… fortunately we’d had paychecks for a few months at that point.  But it did put off our ability to buy furniture.)

Maybe some posts on where you’d move in retirement. I guess if you earn a lot but don’t have a lot of house, a no state income tax place may be a good place to live. I think I generally prefer paying state income tax as there are limits to what low income folks are required to pay. Paying crazy property taxes with a fixed income in retirement is no fun.

We hope to maximize friends and fun things to do in retirement, so we’ll probably be moving to a high tax state!  Most people will retire in place or move closer to family.  But it is a good idea for some folks to think through the tax and cost of living implications of different geographical areas once they’re no longer tied to a job.

Link love and not doing great at the February challenge

I definitely have not been writing for an hour every morning at 8am.  See, what happened was I had a whole plan all ready … and then I got a major grant*, but they need changes made before they can lock in the money and I really want to get the money locked in ASAP.

Saturday and Sunday I wrote for an hour each sort of in the morning, mostly grant stuff.  Monday I did half an hour.  Tuesday I did half an hour.  Wednesday I did nothing.  Thursday I did an hour.  Friday I did half an hour.  Mostly I did not write first thing in the morning because I was too busy scrambling to get ready for whatever 9:30am appointment I had that day.  I had a lot of meetings (except on Thursday where I only had one!).  Tomorrow I guess I will aim to get that referee report done that I’d planned on doing last weekend.  I still have to read the article and I’m not going to read it tonight.  Maybe Sunday I can try to figure out some actual article writing.

This is the first February challenge I’ve not been keeping up with come heck or high water.  I’m a bit disappointed in myself on that front, but also I’ve been working 10-12 hour days on weekdays (7-5 or 7-7 depending on if I have to pick up a child) and several hours each day on weekends just to keep up with everything, so I’m cutting myself some slack on that front.  Still, my end on the grant thing should be done as of today so I need to get back on track with my original plans.  Wish me luck on that.  (Also, I’ve been keeping my inboxes below 320 messages, but only by deleting around 40/day.  It’s going to be a busy weekend.)

And now for some links!  We tried a little harder for some cheerful non-political ones this week.  It’s a little hard since I’m only reading two twitter feeds and am avoiding the news and #2 keeps sending me horrible articles(!) (technically, well-written articles about horrible things because you know, the US).

Go San Francisco! (part VIII is especially great) (SF is where the appeals court for the 9th circuit is) “Minutes after the ruling was released, President Trump denounced it from his Twitter feed. “See you in court,” he tweeted, in all caps.” (but then he didn’t)

This is one of those horrible articles #2 has been sending.

Zombie apocalypse (#1 notes that there are some pretty strong assumptions in that article)

Fascism

Trump and birth control

I’m not sure I agree with this, but it is food for thought.  I definitely think it’s important to make Neo-Nazis ridiculous again and to not give them a platform.  At the same time, we’ve learned recently that we need to take racist threatening buffoons seriously.

twitter

This is cool

I need a shirt that says “dismal scientist”.  Choose science!  Yay scientists!

#2 is going to the Scientist march in DC!  I’m going to a local one.

let America vote

Where are they going?

Look what is happening in Texas.  In Texas!  Look what is happening in Utah.  In Utah!

If you’re a Democrat in a red state and you’ve spent the last month calling your Senator about [insert evil corrupt cabinet pick here]… definitely read this link.

Also, fight people who tell you activism isn’t worth it.  My colleague who I yelled at for telling me my calls didn’t matter came to my office this week to tell me that maybe they did since the state legislature had tabled one of their awful alt-right bills– after public outcry, they’re not even going to vote on it.

In case you need to measure text readability because your IRB says you have to

persistence postcards

What happened after Huckabee said something homophobic.

general strike feb 17th (I’m not sure how I feel about these since in the US only the privileged can participate, but maybe that’s ok?)

ACLU fundraising frenzy

Does this actually work?

I wore my beta hat today

Happy second blogoversary, Crazy Grad ma!

Four easy and romantic meals to impress your valentine

Love is Love

a podcast so boring it’s meant to help you fall asleep

should parents pay for childrens’ college?

This makes my day better

girlfriend got him a cat  trying to do paperwork

A rich source

tiny hats on cats

three

Note on the videos– this first one here for me is like taking Valium.  Does anybody else get that sense of zen?  DH doesn’t– he feels super trippy, but not like he’s successfully meditated.  I feel like it takes over the part of my brain that’s constantly worrying about the state of the world.

*(yay)

Ask the Grumpies: Do I need to see a financial planner about a 300K inheritance?

A asks:

Tl;dr: Would a windfall that doubled your (age appropriate but not amazing) savings overnight change your savings/investment strategy?

My dad died recently; my mom died a while ago. They were both relatively young and had saved extensively. The bulk of his assets, around 300k, are in various types of IRAs and we plan to roll them over as inherited IRAs and opt for option to take the required minimum distribution over my life expectancy, with the understanding that we can draw down more if we wish.  These assets are currently split nearly evenly between various stocks and bond funds. Additional property based assets also exist but the valuation is less clear – this will likely come to us as cash but at a much later date.

Having been saving appropriately ourselves for retirement, my spouse and I, at 40, have around $350k in various index funds through TIAA CREF and Vanguard – we have in the past several years fully funded our Roths, made our maximum contributions to our own IRAs, and done some “catch up” saving to offset the time my spouse spent in grad school/not working to his full potential.  We have planned/budgeted to continue to do so for the foreseeable future. We also had planned to pay off our house over the next 2-4 years in lieu of investing in bonds.  Our allocations are nearly all in small set of mid-large cap domestic and international index funds.

My question is, given this windfall, which nearly doubles our total savings, should we simply allocate the new funds into our existing allocation? Should we reconsider our savings rate into IRAs? Should we change our financial goals ~ 1) pay off house 2) save for retirement 3) save for other things (kids’ college/travel/etc).  We both like our careers but we also view savings as a means of having choices – to quit a job, to take a leave of absence, or to stay in a job we love that isn’t paying what it should.

We are getting some pressure (from family/from our tax attorney) to find a financial advisor and engage in more expensive actively managed investing.  We aren’t sure about this – should we engage someone for short term advice and pay for it? Should we keep doing what we are doing, which is reading up and figuring it out ourselves? Neither of us works in this area…

Thoughts and advice?

So sorry to hear about your loss.

This is a tough one.  If it were me, 300k isn’t so much that it seems like it needs special financial planning above and beyond what you are already doing.  On the other hand this whole inherited IRA thing could be tricky and have tax consequences that I don’t understand but you sound like you’ve looked into them.

When #2’s husband got a large lump sum from stock options he just added more to the investments he already had using the same strategy as before (also some of that went towards a wedding and moving expenses– they still can’t afford a house where they live).

If it were me I would do 1. Retirement 2. House 3. Other.  You also want as much of that as possible put into vehicles that you can hide from colleges (like retirement and your house) because 300k in cash means you pay 100% tuition etc. while 650k in retirement doesn’t, depending on your income.  So if making those moves is complicated or you don’t know how colleges are going to treat different assets, it might be worth it to talk to a professional.  But that seems more in the realm of your tax person than a financial planner.

Active investing is almost never a good thing and I can’t see 300k being so big that you need it.  It’s not like you’re trying to dodge an inheritance tax at age 40 with less than 700k plus a home.  It’s not a big enough portfolio to really benefit from munis.  So I’m not really sure what active management would add.

On the other hand, when my father dies, my mom already has a firm (apparently a branch of Charles Schwab does this) picked out to forensically untangle all of his investments.  Simplifying them in a way that doesn’t create massive taxes will be the next step.  That’s not active management but it will take a professional in the short term.

So I guess a fee only financial planner might be worth it if this is beyond your tax person’s abilities, but not one who is going to encourage active management.  Instead someone who will help your figure out how to get the right asset mix (which you probably already know), how to avoid excess taxes, and how to maximize financial aid.  So like one or two meetings rather than them taking over your portfolio.

Grumpy Nation, what would you do in A’s situation?

Activism: Should you go broad or deep?

A lot of the taking care of yourself while fighting for America recommendations out there say to go deep on one or two issues.  Not because the other issues aren’t important, they are.  But because you’ll get burned out if you try to focus on too much stuff.  Better to pick an issue, join a specific-interest group, and do things for that issue.

We at grumpy rumblings have been recommending a different approach.  We’ve been telling people that if you have 15 min a week, to sign up for one of the weekly mailing lists going around (see our activism tab) and just do what it says on that list for that week (if you agree with the items, etc.)  We argue that doing this is a way to compartmentalize all the craziness and use your limited time and attention to make your voice heard.  Someone else has done all the research, made decisions about what to focus on most immediately, and needs you to provide the power of your voice and beliefs.  If you’ve got more time, you can subscribe to more lists or follow one of the twitter accounts that provides daily actions.

We don’t think that going deep is wrong either.  We think both are needed.  We need the people willing to go to meetings and do the initial research.  We need people willing to aggregate across those different groups and figure out what is most timely.  We need people to do the finger work to make calls across a wide variety of issues.  And we need those people to not burn out.

So do whichever works best for you and whichever fits with your life and personality best.

I can’t focus on just one issue– there are too many.  But I also get overwhelmed just looking at CNN.  So… I’m letting @Wandsci, @ActionsUSA, and others do that reading and aggregating and figuring out who to call for me.  And then I mostly do what I’m told.  (I’ve also been doing weekly proofreading for one of the groups in my state and I’ve been keeping and adding to a list of progressive groups in our county which I then give to groups so they can connect with each other, and I’ve been helping people figure how to do the activism they want to do.  So I guess you could say I’ve been going deep on networking.  Even though I’m a total introvert.).

DH is currently drilling down on a project to protect immigrants because that’s what the local democratic party has decided to focus on and DH was willing to figure out who to talk to to get the the information they need to set up their own program in conjunction with an immigrant group.  He’s also making weekly phone calls.

So no, I don’t think you have to go deep to avoid burnout unless that’s what you want to do.  You probably can’t dive deep into every issue, but you can dive deep into one or two, or you can be an intermittent voice for a broad array of issues.  Not burning out is important, but you don’t have to focus on only one thing to avoid it, you just can’t focus on everything.

How do you avoid burnout?  Do you prefer broad or deep (or a little of both)?  Do you think one is inherently better than the other, or does it depend on the person?

The guy that recruited DH quit: Musings on stability

If you recall, DH’s company has been having money flow issues and isn’t sure it’s going to last through March.  Employees had to take about a month long 10% paycut in order for them to make payroll at the end of 2016 (they’re back at full pay now).  It’s also highly dependent on government contracting work which could mean lots of money or very little money over the next few years depending on how/if money is allocated to the DoD.  (The DoD does a surprising amount of life-saving research– it isn’t all weapons.)

The guy who recruited DH to the company just quit the company in order to take a job in a more stable company at a lower salary with no benefits (they do reimburse ACA claims and they’re in a state with its own exchange program and individual mandate so Trump won’t make the exchange go away).

He has a SAHM wife and two small children.  He needs the stability more than he needs the larger paycheck.

The company CEO called DH to make sure he wasn’t going to follow suit and also leave.  It would have been a good time to ask for concessions if there wasn’t a worry about the company going under in a couple months.

DH has a wife whose job has high stability and doesn’t really need a paycheck at all (we’d have to cut down on education/retirement saving and some luxuries, but we’d be fine).  That means he can stick with a job that has a high salary and high flexibility but at any point in time could go under in the next three months.  Heck, he could cut down to part-time contract work at any point in time and he would be ok.  I provide that ability.  Our heavy retirement saving these past few years means that we could even cut down retirement savings and we’d be fine.  Being massively risk averse, ironically, means we can take more risks because with my job security and our savings these risks are measured risks.

But most people don’t have that kind of financial independence.  That means that when a company does something like temporarily cut pay by 10% they’re going to lose good people who need that stability.  Breadwinners from single earner families may be less likely to leave a stable job (I assume– I haven’t read research) but when that stability disappears they may be more likely to seek a new position so as to not have to deal with an unemployment spell.  At least, that’s the case with DH’s colleague.

As for what this means for the company– it’s a small operation and his role was important.  They won’t be hiring to replace him any time soon.  But that won’t be important if they go under in March.  So we’ll see what happens.

I’m just glad that we’ll be fine no matter what that is.

What determines when you or (if applicable) your partner changes jobs?  Could you handle a lengthy unemployment spell?

Link Love

Ask the Grumpies: Traveling preferences?

Leah asks:

What are your favorite places to travel? What are your main priorities in places you travel?

I am such a homebody.  But I do love going to Los Angeles, especially the Westwood and Santa Monica areas.  That would probably be my favorite place to visit.  The food is just so amazing even from 4/5 star restaurants and there’s sun and everything is beautiful.  I also like San Diego, San Francisco, and Palo Alto for similar reasons (though the latter two are less beautiful… for one thing they’re paying attention to water restrictions).  Berkeley has great food but I find the downtown area kind of boring.  Cambridge, MA I’m extremely familiar with so I’ve got favorite places whenever I visit there (which I tend to do 2-3x/year).  I’ve got friends I like seeing in DC.  Manhattan has good food.  So does Montreal.  But I don’t go out of my way to go to either of the last three places.  Anytime I’m in Ann Arbor I stop at Zingerman’s.   Can you tell that I do most of my traveling for economics conferences?

I like going new places with my family.  I’ve been to Madrid twice without my family and loved it, but I’d like it more if I could take them with me.  I don’t think Germany would have been as nice without my family and I wouldn’t have gone to Luxemburg without them.  Of course, we mostly just go to the rural Midwest to visit DH’s extended family, so where we go doesn’t really have anything to do with where we prefer to go.  Our time is spent on family rather than on new locations.

My main priorities are:  1.  food (as discussed above) and 2.  transportation.  I prefer places that are walkable and have great public transit so I don’t have to drive around in an unfamiliar city.  (Though I have driven so much in LA that it’s pretty familiar at this point, still, who wants to drive in LA?  That’s probably why I prefer Westwood and Santa Monica– walkable and the Big Blue Bus.)  Mainly though I just need to make sure my kindle is loaded up with novels and I’ve packed a pair of pajama bottoms in case my bedroom is too cold and under blanketed.

#2 says:  I don’t want to travel now that I live in Paradise.  I live somewhere great and coach-class air travel has only gotten worse over time.  When I have to travel, I hope there are friends on the other end.

#1 says:  Awww.