Time to change my saving strategy up, any advice?

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Topic Author
malibuboats91
Posts: 164
Joined: Tue Jul 08, 2014 5:50 pm

Time to change my saving strategy up, any advice?

Post by malibuboats91 »

Hi all, I'm looking over my finances and am trying to figure out if I should make any changes. I was planning to buy a house this year but with the housing market as crazy as it is, it looks like it's going to be a few years before I make the plunge. Outside of that just try to save as much as possible. Currently am deferring 5% of my salary to the 401K and get 6% profit sharing, then put $500/mo into my Roth and $500/mo into my brokerage. I was working towards getting to $100k in cash, which I have achieved, but now don't know what I should change up since I've had this same setup going since I graduated from college 5 years ago. Any advice on what I should change? Thanks! :beer

Age: 29
Salary: $68K + $5k bonus
Checking: $12k
Savings: $89k - Ally Bank
Brokerage: $3.5k - VTSAX
Roth IRA: $46k - Vanguard Target Retire 2055
Roth 401k: $50k - Aggressive Portfolio Option**
GE Stock - $700 😑
HSA: $4,800
Debt: $0

**Agressive Portfolio Option
DFA US Large Cap Value I - 7.9%
Schwab S&P 500 Index - 32.87%
DFA US Targeted Value I - 7.99%
Vanguard Small Cap Growth Index Admiral - 5.09%
DFA International Value I - 11.01%
Vanguard International Growth Adm - 11.17%
DFA International Small Cap Value I - 4.94%
DFA Global Real Estate Securities Port - 9.98%
DFA Emerging Markets Core Equity I - 9.05%
Last edited by malibuboats91 on Fri May 28, 2021 8:45 pm, edited 1 time in total.
Monsterflockster
Posts: 980
Joined: Wed Nov 20, 2019 11:03 pm

Re: Time to change my saving strategy up, any advice?

Post by Monsterflockster »

malibuboats91 wrote: Fri May 28, 2021 7:02 pm Hi all, I'm looking over my finances and am trying to figure out if I should make any changes. I was planning to buy a house this year but with the housing market as crazy as it is, it looks like it's going to be a few years before I make the plunge. Outside of that just try to save as much as possible. Currently am deferring 5% of my salary to the 401K and get 6% profit sharing, then put $500/mo into my Roth and $500/mo into my brokerage. I was working towards getting to $100k in cash, which I have achieved, but now don't know what I should change up since I've had this same setup going since I graduated from college 5 years ago. Any advice on what I should change? Thanks! :beer

Age: 29
Salary: $68K + $5k bonus
Checking: $12k
Savings: $89k - Ally Bank
Brokerage: $3.5k - VTSAX
Roth IRA: $46k - Vanguard Target Retire 2055
401k: $50k - Aggressive Portfolio Option**
GE Stock - $700 😑
HSA: $4,800
Debt: $0

**Agressive Portfolio Option
DFA US Large Cap Value I - 7.9%
Schwab S&P 500 Index - 32.87%
DFA US Targeted Value I - 7.99%
Vanguard Small Cap Growth Index Admiral - 5.09%
DFA International Value I - 11.01%
Vanguard International Growth Adm - 11.17%
DFA International Small Cap Value I - 4.94%
DFA Global Real Estate Securities Port - 9.98%
DFA Emerging Markets Core Equity I - 9.05%
Who knows what the housing market will be like in a few years. If we waited we would’ve been priced out.

That said you have saved all that PLUS have 100k cash at 29 and making 70k-ish a year. That’s awesome man!
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retired@50
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Re: Time to change my saving strategy up, any advice?

Post by retired@50 »

malibuboats91 wrote: Fri May 28, 2021 7:02 pm ...
Currently am deferring 5% of my salary to the 401K and get 6% profit sharing, then put $500/mo into my Roth and $500/mo into my brokerage.
...
It seems like saving in your taxable brokerage account wouldn't yet be a concern.

Have you seen the wiki page on prioritizing investments?
Here's a link: https://www.bogleheads.org/wiki/Priorit ... nvestments

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Topic Author
malibuboats91
Posts: 164
Joined: Tue Jul 08, 2014 5:50 pm

Re: Time to change my saving strategy up, any advice?

Post by malibuboats91 »

retired@50 wrote: Fri May 28, 2021 7:11 pm
malibuboats91 wrote: Fri May 28, 2021 7:02 pm ...
Currently am deferring 5% of my salary to the 401K and get 6% profit sharing, then put $500/mo into my Roth and $500/mo into my brokerage.
...
It seems like saving in your taxable brokerage account wouldn't yet be a concern.

Have you seen the wiki page on prioritizing investments?
Here's a link: https://www.bogleheads.org/wiki/Priorit ... nvestments

Regards,
I figured this would be an unpopular move, but I like having the cash at my fingertips.
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retired@50
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Re: Time to change my saving strategy up, any advice?

Post by retired@50 »

malibuboats91 wrote: Fri May 28, 2021 7:20 pm
retired@50 wrote: Fri May 28, 2021 7:11 pm
malibuboats91 wrote: Fri May 28, 2021 7:02 pm ...
Currently am deferring 5% of my salary to the 401K and get 6% profit sharing, then put $500/mo into my Roth and $500/mo into my brokerage.
...
It seems like saving in your taxable brokerage account wouldn't yet be a concern.

Have you seen the wiki page on prioritizing investments?
Here's a link: https://www.bogleheads.org/wiki/Priorit ... nvestments

Regards,
I figured this would be an unpopular move, but I like having the cash at my fingertips.
Perhaps I misunderstood. I was under the impression you were giving up on the house down payment for now, and were going to prioritize retirement savings. If you're still in the "saving for a house" frame of mind, then by all means continue to add to your $89,000 at Ally. However, if having over a years' pay available for a down payment isn't enough to buy a house, you might be looking to houses that are out of your price range. The general house price guideline is 3X income, so in your case, that means around $210,000.

If you want to prioritize retirement savings, then adding more of your pay to the 401k is probably a better move. By investing in your taxable account before putting the maximum in the retirement account you're creating unnecessary "tax-drag" that will persist.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Topic Author
malibuboats91
Posts: 164
Joined: Tue Jul 08, 2014 5:50 pm

Re: Time to change my saving strategy up, any advice?

Post by malibuboats91 »

retired@50 wrote: Fri May 28, 2021 7:29 pm
malibuboats91 wrote: Fri May 28, 2021 7:20 pm
retired@50 wrote: Fri May 28, 2021 7:11 pm
malibuboats91 wrote: Fri May 28, 2021 7:02 pm ...
Currently am deferring 5% of my salary to the 401K and get 6% profit sharing, then put $500/mo into my Roth and $500/mo into my brokerage.
...
It seems like saving in your taxable brokerage account wouldn't yet be a concern.

Have you seen the wiki page on prioritizing investments?
Here's a link: https://www.bogleheads.org/wiki/Priorit ... nvestments

Regards,
I figured this would be an unpopular move, but I like having the cash at my fingertips.
Perhaps I misunderstood. I was under the impression you were giving up on the house down payment for now, and were going to prioritize retirement savings. If you're still in the "saving for a house" frame of mind, then by all means continue to add to your $89,000 at Ally. However, if having over a years' pay available for a down payment isn't enough to buy a house, you might be looking to houses that are out of your price range. The general house price guideline is 3X income, so in your case, that means around $210,000.

If you want to prioritize retirement savings, then adding more of your pay to the 401k is probably a better move. By investing in your taxable account before putting the maximum in the retirement account you're creating unnecessary "tax-drag" that will persist.

Regards,
House prices in the city I live in are $300k+ and currently selling for $50-100k over asking. That’s why I’m changing priorities back to saving for retirement.

I’m a CPA/tax manager so I know all about the tax implications. I honestly just don’t want to cash tied up when I’m already ahead of most people my age. That’s why I started contributing to the brokerage.
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retired@50
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Re: Time to change my saving strategy up, any advice?

Post by retired@50 »

malibuboats91 wrote: Fri May 28, 2021 7:36 pm
retired@50 wrote: Fri May 28, 2021 7:29 pm
malibuboats91 wrote: Fri May 28, 2021 7:20 pm
retired@50 wrote: Fri May 28, 2021 7:11 pm
malibuboats91 wrote: Fri May 28, 2021 7:02 pm ...
Currently am deferring 5% of my salary to the 401K and get 6% profit sharing, then put $500/mo into my Roth and $500/mo into my brokerage.
...
It seems like saving in your taxable brokerage account wouldn't yet be a concern.

Have you seen the wiki page on prioritizing investments?
Here's a link: https://www.bogleheads.org/wiki/Priorit ... nvestments

Regards,
I figured this would be an unpopular move, but I like having the cash at my fingertips.
Perhaps I misunderstood. I was under the impression you were giving up on the house down payment for now, and were going to prioritize retirement savings. If you're still in the "saving for a house" frame of mind, then by all means continue to add to your $89,000 at Ally. However, if having over a years' pay available for a down payment isn't enough to buy a house, you might be looking to houses that are out of your price range. The general house price guideline is 3X income, so in your case, that means around $210,000.

If you want to prioritize retirement savings, then adding more of your pay to the 401k is probably a better move. By investing in your taxable account before putting the maximum in the retirement account you're creating unnecessary "tax-drag" that will persist.

Regards,
House prices in the city I live in are $300k+ and currently selling for $50-100k over asking. That’s why I’m changing priorities back to saving for retirement.
That's a good move, because at those prices you'd need to double your income to be able to afford one. Getting yourself into the uncomfortable position of spending too much on a house should be avoided. If you spend too much you'll be "living for the house" and won't have a spare dime to do anything other than make mortgage payments and pay property taxes and homeowner's insurance.

All of which takes me back to my earlier comments. Start putting more in your 401k and stop piling up savings in your taxable account.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
mortfree
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Re: Time to change my saving strategy up, any advice?

Post by mortfree »

I would increase 401k to 15%. At least.

You could simplify your aggressive portfolio to just Schwab 500
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anonsdca
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Re: Time to change my saving strategy up, any advice?

Post by anonsdca »

Sounds like you had a mission to save for a house and did a great job stashing cash. Well done. I am 57 and close to retiring so our situations are very much different. That said,

You dont mention your expenses but they are likely low considering how much you are saving. I would figure out what you feel comfortable with as an emergency fund (6 months expenses or whatever), I would use the Ally account for that and throw the $100K in the market and invest it.

It is a hard world out there for any return on cash, so if the home dream is dead, put that money to work for you. You can always liquidate it later if the home dream resurfaces.
anonsdca
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Re: Time to change my saving strategy up, any advice?

Post by anonsdca »

Sounds like you had a mission to save for a house and did a great job stashing cash. Well done. I am 57 and close to retiring so our situations are very much different. That said,

You dont mention your expenses but they are likely low considering how much you are saving. I would figure out what you feel comfortable with as an emergency fund (6 months expenses or whatever), I would use the Ally account for that and throw the $100K in the market and invest it.

It is a hard world out there for any return on cash, so if the home dream is dead, put that money to work for you. You can always liquidate it later if the home dream resurfaces.
KlangFool
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Re: Time to change my saving strategy up, any advice?

Post by KlangFool »

malibuboats91 wrote: Fri May 28, 2021 7:36 pm
I honestly just don’t want to cash tied up when I’m already ahead of most people my age. That’s why I started contributing to the brokerage.
malibuboats91,

You can withdraw your Roth IRA contribution at any time without tax and/or penalty. So, why do you choose to pay a lot more taxes by not maxing up your 401K?

They are tax-advantaged accounts. They are not "retirement" accounts. You could get the money out tax-free and penalty-free before 59 1/2 years old.

Check out the the following URL.

https://www.madfientist.com/how-to-acce ... nds-early/

In summary, max up your Trad 401K and your Roth IRA. Save yourself a lot of taxes.

KlangFool
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lazynovice
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Re: Time to change my saving strategy up, any advice?

Post by lazynovice »

What’s up with the GE stock? Is that something your grandfather gave you that you are emotionally attached to? :)

I’m bummed you are giving up the house dream for years but if you have made your decision, you have too much cash. I’d max the Roth each year for sure. Does your 401(k) have a Roth option?
Topic Author
malibuboats91
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Joined: Tue Jul 08, 2014 5:50 pm

Re: Time to change my saving strategy up, any advice?

Post by malibuboats91 »

lazynovice wrote: Fri May 28, 2021 8:37 pm What’s up with the GE stock? Is that something your grandfather gave you that you are emotionally attached to? :)

I’m bummed you are giving up the house dream for years but if you have made your decision, you have too much cash. I’d max the Roth each year for sure. Does your 401(k) have a Roth option?
I don’t really know my timeline on buying a house. I was ok with paying 4-5x my income on a house and paying 20% down but with the housing market as it is I simply cannot afford one. Given this, am I best pushing my cash, net of emergency fund, into the market? I was going to wait for it to drop again before putting it in.

I’ve had the GE stock for a few years. Thought it was a good buy but am down quite a bit on it.

My 401k is a Roth.
Last edited by malibuboats91 on Fri May 28, 2021 8:54 pm, edited 1 time in total.
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retired@50
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Re: Time to change my saving strategy up, any advice?

Post by retired@50 »

malibuboats91 wrote: Fri May 28, 2021 8:46 pm I’ve had the GE stock for a few years. Thought it was a good buy but am down quite a bit on it.
Sell it, harvest the loss, and move on. Individual stocks aren't the way to go.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
KlangFool
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Re: Time to change my saving strategy up, any advice?

Post by KlangFool »

malibuboats91 wrote: Fri May 28, 2021 8:46 pm
My 401k is a Roth.
malibuboats91,

How does that make any sense? It should be Trad 401K.

KlangFool
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Topic Author
malibuboats91
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Re: Time to change my saving strategy up, any advice?

Post by malibuboats91 »

KlangFool wrote: Fri May 28, 2021 8:59 pm
malibuboats91 wrote: Fri May 28, 2021 8:46 pm
My 401k is a Roth.
malibuboats91,

How does that make any sense?

KlangFool
I have a traditional and Roth 401k option. Roth is post tax dollars. I feel like this is how most 401ks are....I used to audit them for a living.
KlangFool
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Re: Time to change my saving strategy up, any advice?

Post by KlangFool »

malibuboats91 wrote: Fri May 28, 2021 9:00 pm
KlangFool wrote: Fri May 28, 2021 8:59 pm
malibuboats91 wrote: Fri May 28, 2021 8:46 pm
My 401k is a Roth.
malibuboats91,

How does that make any sense?

KlangFool
You have a traditional and Roth 401k option. Roth is post tax dollars.
And, how does it makes any sense to pay 20+% taxes and do an after-tax contribution to Roth 401K? Trad 401K is the right answer.

KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
lazynovice
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Re: Time to change my saving strategy up, any advice?

Post by lazynovice »

KlangFool wrote: Fri May 28, 2021 9:02 pm
malibuboats91 wrote: Fri May 28, 2021 9:00 pm
KlangFool wrote: Fri May 28, 2021 8:59 pm
malibuboats91 wrote: Fri May 28, 2021 8:46 pm
My 401k is a Roth.
malibuboats91,

How does that make any sense?

KlangFool
You have a traditional and Roth 401k option. Roth is post tax dollars.
And, how does it makes any sense to pay 20+% taxes and do an after-tax contribution to Roth 401K? Trad 401K is the right answer.

KlangFool
He’s in the 22% tax bracket. Roth is just fine for now.
KlangFool
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Re: Time to change my saving strategy up, any advice?

Post by KlangFool »

lazynovice wrote: Fri May 28, 2021 9:11 pm
KlangFool wrote: Fri May 28, 2021 9:02 pm
malibuboats91 wrote: Fri May 28, 2021 9:00 pm
KlangFool wrote: Fri May 28, 2021 8:59 pm
malibuboats91 wrote: Fri May 28, 2021 8:46 pm
My 401k is a Roth.
malibuboats91,

How does that make any sense?

KlangFool
You have a traditional and Roth 401k option. Roth is post tax dollars.
And, how does it makes any sense to pay 20+% taxes and do an after-tax contribution to Roth 401K? Trad 401K is the right answer.

KlangFool
He’s in the 22% tax bracket. Roth is just fine for now.
lazynovice,

So, paying 22% is better than 0%?

KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
lazynovice
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Re: Time to change my saving strategy up, any advice?

Post by lazynovice »

malibuboats91 wrote: Fri May 28, 2021 8:46 pm
lazynovice wrote: Fri May 28, 2021 8:37 pm What’s up with the GE stock? Is that something your grandfather gave you that you are emotionally attached to? :)

I’m bummed you are giving up the house dream for years but if you have made your decision, you have too much cash. I’d max the Roth each year for sure. Does your 401(k) have a Roth option?
I don’t really know my timeline on buying a house. I was ok with paying 4-5x my income on a house and paying 20% down but with the housing market as it is I simply cannot afford one. Given this, am I best pushing my cash, net of emergency fund, into the market? I was going to wait for it to drop again before putting it in.

I’ve had the GE stock for a few years. Thought it was a good buy but am down quite a bit on it.

My 401k is a Roth.
Yes, you should put it in at your AA. And you could choose for the fixed income to be a CD if you don’t want to do bonds.

I looked back at your earlier threads and I still think you are underpaid at 73k as a tax manager. What are you doing to increase your income? Accountants coming out of school are making what you are making. Can you apply at a larger firm?
Topic Author
malibuboats91
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Re: Time to change my saving strategy up, any advice?

Post by malibuboats91 »

lazynovice wrote: Fri May 28, 2021 9:15 pm
malibuboats91 wrote: Fri May 28, 2021 8:46 pm
lazynovice wrote: Fri May 28, 2021 8:37 pm What’s up with the GE stock? Is that something your grandfather gave you that you are emotionally attached to? :)

I’m bummed you are giving up the house dream for years but if you have made your decision, you have too much cash. I’d max the Roth each year for sure. Does your 401(k) have a Roth option?
I don’t really know my timeline on buying a house. I was ok with paying 4-5x my income on a house and paying 20% down but with the housing market as it is I simply cannot afford one. Given this, am I best pushing my cash, net of emergency fund, into the market? I was going to wait for it to drop again before putting it in.

I’ve had the GE stock for a few years. Thought it was a good buy but am down quite a bit on it.

My 401k is a Roth.
Yes, you should put it in at your AA. And you could choose for the fixed income to be a CD if you don’t want to do bonds.

I looked back at your earlier threads and I still think you are underpaid at 73k as a tax manager. What are you doing to increase your income? Accountants coming out of school are making what you are making. Can you apply at a larger firm?
So just park the down payment money in my ally? I think that’s what AA means ha.

Lol yes I’m still at the same firm. Expect a 6-10% raise this year, but still feel very underpaid. I could go to either a smaller or larger firm and likely get up to $85-90k base. My rationale for staying at my current firm is because I’m comfortable, I have a high likelihood of making partner (they make $300-500k on avg) and I have a lot of flexibility. The low base pay does kind of kill me inside though.

One thing I didn’t talk about in my other thread is outside of my base pay I get $2,500 towards a country club membership, $480 for my cell phone and 6% profit sharing vs 3% at most other places. Still pretty lost on what I should do.
lazynovice
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Re: Time to change my saving strategy up, any advice?

Post by lazynovice »

KlangFool wrote: Fri May 28, 2021 9:15 pm
lazynovice wrote: Fri May 28, 2021 9:11 pm
KlangFool wrote: Fri May 28, 2021 9:02 pm
malibuboats91 wrote: Fri May 28, 2021 9:00 pm
KlangFool wrote: Fri May 28, 2021 8:59 pm

malibuboats91,

How does that make any sense?

KlangFool
You have a traditional and Roth 401k option. Roth is post tax dollars.
And, how does it makes any sense to pay 20+% taxes and do an after-tax contribution to Roth 401K? Trad 401K is the right answer.

KlangFool
He’s in the 22% tax bracket. Roth is just fine for now.
lazynovice,

So, paying 22% is better than 0%?

KlangFool
Yes, unless he expects to be in a lower tax bracket at retirement. He can make his own assumption since he is a CPA and understands taxes but SS plus RMDs could put him in a higher bracket than that assuming tax rates don’t increase. N lower earning years, Roth makes plenty of sense.
lazynovice
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Re: Time to change my saving strategy up, any advice?

Post by lazynovice »

malibuboats91 wrote: Fri May 28, 2021 9:22 pm
lazynovice wrote: Fri May 28, 2021 9:15 pm
malibuboats91 wrote: Fri May 28, 2021 8:46 pm
lazynovice wrote: Fri May 28, 2021 8:37 pm What’s up with the GE stock? Is that something your grandfather gave you that you are emotionally attached to? :)

I’m bummed you are giving up the house dream for years but if you have made your decision, you have too much cash. I’d max the Roth each year for sure. Does your 401(k) have a Roth option?
I don’t really know my timeline on buying a house. I was ok with paying 4-5x my income on a house and paying 20% down but with the housing market as it is I simply cannot afford one. Given this, am I best pushing my cash, net of emergency fund, into the market? I was going to wait for it to drop again before putting it in.

I’ve had the GE stock for a few years. Thought it was a good buy but am down quite a bit on it.

My 401k is a Roth.
Yes, you should put it in at your AA. And you could choose for the fixed income to be a CD if you don’t want to do bonds.

I looked back at your earlier threads and I still think you are underpaid at 73k as a tax manager. What are you doing to increase your income? Accountants coming out of school are making what you are making. Can you apply at a larger firm?
So just park the down payment money in my ally? I think that’s what AA means ha.

Lol yes I’m still at the same firm. Expect a 6-10% raise this year, but still feel very underpaid. I could go to either a smaller or larger firm and likely get up to $85-90k base. My rationale for staying at my current firm is because I’m comfortable, I have a high likelihood of making partner (they make $300-500k on avg) and I have a lot of flexibility. The low base pay does kind of kill me inside though.

One thing I didn’t talk about in my other thread is outside of my base pay I get $2,500 towards a country club membership, $480 for my cell phone and 6% profit sharing vs 3% at most other places. Still pretty lost on what I should do.
AA is asset allocation- so 90/10 80/20, etc. See the wiki.

Given all your extra comp, make sure I am right on the 22% bracket because if you are higher, Roth 401(k) starts to make less sense. I know that you know that but just sayin...

If the raise does not come through, you need to question the reality that those partners will make you partner. Work/life balance is worth something and sounds like you are making a conscious decision. But you are definitely making less than your peers at other firms. You may be working less though.
Topic Author
malibuboats91
Posts: 164
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Re: Time to change my saving strategy up, any advice?

Post by malibuboats91 »

lazynovice wrote: Fri May 28, 2021 9:27 pm
malibuboats91 wrote: Fri May 28, 2021 9:22 pm
lazynovice wrote: Fri May 28, 2021 9:15 pm
malibuboats91 wrote: Fri May 28, 2021 8:46 pm
lazynovice wrote: Fri May 28, 2021 8:37 pm What’s up with the GE stock? Is that something your grandfather gave you that you are emotionally attached to? :)

I’m bummed you are giving up the house dream for years but if you have made your decision, you have too much cash. I’d max the Roth each year for sure. Does your 401(k) have a Roth option?
I don’t really know my timeline on buying a house. I was ok with paying 4-5x my income on a house and paying 20% down but with the housing market as it is I simply cannot afford one. Given this, am I best pushing my cash, net of emergency fund, into the market? I was going to wait for it to drop again before putting it in.

I’ve had the GE stock for a few years. Thought it was a good buy but am down quite a bit on it.

My 401k is a Roth.
Yes, you should put it in at your AA. And you could choose for the fixed income to be a CD if you don’t want to do bonds.

I looked back at your earlier threads and I still think you are underpaid at 73k as a tax manager. What are you doing to increase your income? Accountants coming out of school are making what you are making. Can you apply at a larger firm?
So just park the down payment money in my ally? I think that’s what AA means ha.

Lol yes I’m still at the same firm. Expect a 6-10% raise this year, but still feel very underpaid. I could go to either a smaller or larger firm and likely get up to $85-90k base. My rationale for staying at my current firm is because I’m comfortable, I have a high likelihood of making partner (they make $300-500k on avg) and I have a lot of flexibility. The low base pay does kind of kill me inside though.

One thing I didn’t talk about in my other thread is outside of my base pay I get $2,500 towards a country club membership, $480 for my cell phone and 6% profit sharing vs 3% at most other places. Still pretty lost on what I should do.
AA is asset allocation- so 90/10 80/20, etc. See the wiki.

Given all your extra comp, make sure I am right on the 22% bracket because if you are higher, Roth 401(k) starts to make less sense. I know that you know that but just sayin...

If the raise does not come through, you need to question the reality that those partners will make you partner. Work/life balance is worth something and sounds like you are making a conscious decision. But you are definitely making less than your peers at other firms. You may be working less though.
Ahh gotcha. Yeah I agree. I was thinking about putting $50-60k of it into my brokerage. I was trying to time...I know against what everyone says I should do.

I’m in the 22% bracket yet.

Yeah I agree. I feel like mentally I need a fresh start at a new firm or company, but my firm always sucks me into staying. They have a very rigid pay scale so even though I’m a top rated employee who made manager before all my peers I started with, I still make the same despite senior vs manager title. Assuming you read my thread on feeling burnt out...I think the pay piece is the largest component of that because I know even if I continue crushing it I’ll still feel like it wasn’t worth it. On June 1st I’ll be fully vested in my profit sharing so after that point the world is my oyster.
invest4
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Re: Time to change my saving strategy up, any advice?

Post by invest4 »

* Agree with your decision not to pursue real-estate right now. However, you may reconsider what you are willing to spend relative to income when you are ready (3x is often cited...vs 4-5x for example).

* Simplify your portfolio (too many funds imho...are you really getting any extra "juice" out of it vs something simpler?)

* Jettison the GE stock (also part of simplification)

* Max out retirement savings and HSA first...brokerage / taxable is dead last in my view.

* Do further research on Roth vs Traditional and decide accordingly

You are doing well...best wishes.
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malibuboats91
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Re: Time to change my saving strategy up, any advice?

Post by malibuboats91 »

If I want to start pushing the Ally $$ into the market, given the current market conditions and potential recession, should I push say $1k/mo into my brokerage to dollar cost average? I don’t know the time horizon on me buying a house. In my current city it’ll be 2-4 years unless the market drops.
lazynovice
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Re: Time to change my saving strategy up, any advice?

Post by lazynovice »

malibuboats91 wrote: Sat May 29, 2021 10:34 am If I want to start pushing the Ally $$ into the market, given the current market conditions and potential recession, should I push say $1k/mo into my brokerage to dollar cost average? I don’t know the time horizon on me buying a house. In my current city it’ll be 2-4 years unless the market drops.
How much are you moving in? The whole 89k? That’s 89 months! If you don’t want to lump sum it, then get it in over less than a year. If you can’t move it faster than that, you shouldn’t invest as aggressively as you are.
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malibuboats91
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Re: Time to change my saving strategy up, any advice?

Post by malibuboats91 »

lazynovice wrote: Sat May 29, 2021 11:29 am
malibuboats91 wrote: Sat May 29, 2021 10:34 am If I want to start pushing the Ally $$ into the market, given the current market conditions and potential recession, should I push say $1k/mo into my brokerage to dollar cost average? I don’t know the time horizon on me buying a house. In my current city it’ll be 2-4 years unless the market drops.
How much are you moving in? The whole 89k? That’s 89 months! If you don’t want to lump sum it, then get it in over less than a year. If you can’t move it faster than that, you shouldn’t invest as aggressively as you are.
Haha very true. I just transferred $20k to VTSAX as a start.
junior
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Re: Time to change my saving strategy up, any advice?

Post by junior »

malibuboats91 wrote: Sat May 29, 2021 10:34 am If I want to start pushing the Ally $$ into the market, given the current market conditions and potential recession, should I push say $1k/mo into my brokerage to dollar cost average? I don’t know the time horizon on me buying a house. In my current city it’ll be 2-4 years unless the market drops.
If you take a look at https://www.portfoliovisualizer.com/ you can back test portfolios and run different scenarios showing historically how long a portfolio was underwater at some point in history.

I ran this recently for one of my portfolios and the worst case scenario that wasn't the 2007 crash was about 4 years from a stock drawdown to recovery. The worst drawdown to recovery was five years 6 months.

Nobody knows what is going to happen but I'd be tempted to put most of your money in and accept if there's a crash you either need to accept that you will lose money or wait 1 to 5 years for stocks to go back up. Or do a smaller down payment. I don't see the point of dollar cost averaging.
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ruralavalon
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Re: Time to change my saving strategy up, any advice?

Post by ruralavalon »

It's great to see that you are debt free, and making contributions to both your employer's 401k plan and a Roth IRA at Vanguard.

malibuboats91 wrote: Fri May 28, 2021 7:02 pm Hi all, I'm looking over my finances and am trying to figure out if I should make any changes. I was planning to buy a house this year but with the housing market as crazy as it is, it looks like it's going to be a few years before I make the plunge. Outside of that just try to save as much as possible. Currently am deferring 5% of my salary to the 401K and get 6% profit sharing, then put $500/mo into my Roth and $500/mo into my brokerage. I was working towards getting to $100k in cash, which I have achieved, but now don't know what I should change up since I've had this same setup going since I graduated from college 5 years ago. Any advice on what I should change? Thanks! :beer

Age: 29
Salary: $68K + $5k bonus
Checking: $12k
Savings: $89k - Ally Bank
Brokerage: $3.5k - VTSAX
Roth IRA: $46k - Vanguard Target Retire 2055
Roth 401k: $50k - Aggressive Portfolio Option**
GE Stock - $700 😑
HSA: $4,800
Debt: $0

**Agressive Portfolio Option
DFA US Large Cap Value I - 7.9%
Schwab S&P 500 Index - 32.87%
DFA US Targeted Value I - 7.99%
Vanguard Small Cap Growth Index Admiral - 5.09%
DFA International Value I - 11.01%
Vanguard International Growth Adm - 11.17%
DFA International Small Cap Value I - 4.94%
DFA Global Real Estate Securities Port - 9.98%
DFA Emerging Markets Core Equity I - 9.05%
What expense ratio do you pay for the "Aggressive Portfolio Option"?

What is your tax bracket, both federal and state?

I suggest increasing contributions to your 401k account. You are contributing $3.4k annually. I suggest stopping contributions to your taxable brokerage account ($6k annually) and contributing that to your 401k. The maximum annual employee contribution to a 401k is $19.5k.

Unless you will be eligible for both a significant pension and Social Security benefits you should probably be making traditional contributions to your 401k account.

For some of your cash savings you could consider switching to some I savings bonds. There is an annual purchase limit of $10k per person. "The composite rate for I bonds issued from May 2021 through October 2021 is 3.54 percent. This rate applies for the first six months you own the bond", link.
Last edited by ruralavalon on Fri Jun 04, 2021 9:47 am, edited 2 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
as9
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Re: Time to change my saving strategy up, any advice?

Post by as9 »

A firm paying below market but contributing $2500 to a country club membership seems very odd.
Topic Author
malibuboats91
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Re: Time to change my saving strategy up, any advice?

Post by malibuboats91 »

as9 wrote: Fri Jun 04, 2021 9:44 am A firm paying below market but contributing $2500 to a country club membership seems very odd.
It’s a manager benefit because the role switches to largely sales focused.
rockstar
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Re: Time to change my saving strategy up, any advice?

Post by rockstar »

malibuboats91 wrote: Fri May 28, 2021 7:02 pm Checking: $12k
Savings: $89k - Ally Bank
I don't get this at all.

What's your thought process here?
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leeks
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Re: Time to change my saving strategy up, any advice?

Post by leeks »

:moneybag
rockstar wrote: Sat Jun 12, 2021 12:20 am
malibuboats91 wrote: Fri May 28, 2021 7:02 pm Checking: $12k
Savings: $89k - Ally Bank
I don't get this at all.

What's your thought process here?
OP saving for a house downpayment.
rockstar
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Re: Time to change my saving strategy up, any advice?

Post by rockstar »

leeks wrote: Sat Jun 12, 2021 12:40 am :moneybag
rockstar wrote: Sat Jun 12, 2021 12:20 am
malibuboats91 wrote: Fri May 28, 2021 7:02 pm Checking: $12k
Savings: $89k - Ally Bank
I don't get this at all.

What's your thought process here?
OP saving for a house downpayment.
In a savings account that pays 0.5%?

Home prices went up 20% within the last year by me. If they would have put down 5% a year ago, they could have been at 25% equity today. Then, they could have refinanced. If they put 5% down on a $400k home, that's only $20k. Then, add maybe another $6k for closing fees and maybe another $10k for moving. That's a whole lot less than they have in the savings account. How much home are they trying to buy? Are they trying to get a 10 year note?

I get putting the money in something safe right before executing the transaction. I held my down payment in a 3 month t-bill while house hunting with the expectation to buy within that time frame. I didn't want to risk my capital while bidding and looking at homes. But if they're not going to pull the trigger in less than a year, I struggle with using a savings account for the down payment.
GG1273
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Re: Time to change my saving strategy up, any advice?

Post by GG1273 »

To keep it to a short story, one method that a few of us at my job increased our contributions was to increase by 1% per quarter.
Say I was putting in 6% and getting a 6% match
April 1st shows up - my calendar alert will go off, I'd sign on the 401K and increase by 1%. Reset the reminder for Jul 1st.

My salary was just a little bit higher than yours but about the same age - I was maxing out on my own before I really knew it with the match as my bonus for many years.

Best of luck!
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malibuboats91
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Re: Time to change my saving strategy up, any advice?

Post by malibuboats91 »

rockstar wrote: Sat Jun 12, 2021 12:20 am
malibuboats91 wrote: Fri May 28, 2021 7:02 pm Checking: $12k
Savings: $89k - Ally Bank
I don't get this at all.

What's your thought process here?
At this point I think a house is going to be 2-3 years out for me. I’ve had this cash sitting for 5.5 years, and I’m kicking myself for not having it in the market. Despite wanting a house pretty bad, financially it makes sense to keep my apartment because I’m only paying $1,065/mo whereas houses in my area are $300k+ which is out of reach for me. One thing that did change is I got a mid year bump up to $75k base last week and should be getting another 5-10% increase at the end of summer.

Considering all this, you think I should throw it in the market? I pushed $10k in maybe 2 weeks ago. Then instead of doing $500/mo into my Roth I put $3k in as a lump sum to max for 2021.
rockstar
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Re: Time to change my saving strategy up, any advice?

Post by rockstar »

malibuboats91 wrote: Sat Jun 12, 2021 10:24 am
rockstar wrote: Sat Jun 12, 2021 12:20 am
malibuboats91 wrote: Fri May 28, 2021 7:02 pm Checking: $12k
Savings: $89k - Ally Bank
I don't get this at all.

What's your thought process here?
At this point I think a house is going to be 2-3 years out for me. I’ve had this cash sitting for 5.5 years, and I’m kicking myself for not having it in the market. Despite wanting a house pretty bad, financially it makes sense to keep my apartment because I’m only paying $1,065/mo whereas houses in my area are $300k+ which is out of reach for me. One thing that did change is I got a mid year bump up to $75k base last week and should be getting another 5-10% increase at the end of summer.

Considering all this, you think I should throw it in the market? I pushed $10k in maybe 2 weeks ago. Then instead of doing $500/mo into my Roth I put $3k in as a lump sum to max for 2021.
I don't know what you should do. The market could crash right after you put the money back into it. How would you feel if that happened? There are no easy answers. The big problem with real estate is that it's leveraged. And the pricing today almost requires a two income household. Maybe you can find a wife:) Just don't get divorced. Divorces are bad for finances.

I get having money in a safe, liquid instrument for emergencies, so that you don't run up credit cards or sell during a market downturn. You should have more than enough in your savings for an emergency. It's what you want to do with the excess that's challenging. Spend it on a wedding and engagement ring and honeymoon?

Here are the market PEs:

https://www.wsj.com/market-data/stocks/peyields

They're all high. Are we at the peak? I don't have a clue. But they're not cheap. When they're high, the reality is to expect lower returns. But bonds as an alternative suck too.

Bond yields are also ridiculously low:

https://www.bloomberg.com/markets/rates ... t-bonds/us

Right now, I'm just spreading money across three ETFs: VOO, QQQ, and VNQ. I have no clue if this is the right decision.

And today I'm planning to open a Treasury Direct account to transfer some of my emergency fund to I Bonds. I expect to hold them for 18-24 months and then decide what I want to do.

The next decade could end up being a low return one, or it could end up returning zero. That's what I would mentally prepare for when adding money into the market now.
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leeks
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Re: Time to change my saving strategy up, any advice?

Post by leeks »

malibuboats91 wrote: Sat Jun 12, 2021 10:24 am
rockstar wrote: Sat Jun 12, 2021 12:20 am
malibuboats91 wrote: Fri May 28, 2021 7:02 pm Checking: $12k
Savings: $89k - Ally Bank
I don't get this at all.

What's your thought process here?
At this point I think a house is going to be 2-3 years out for me. I’ve had this cash sitting for 5.5 years, and I’m kicking myself for not having it in the market. Despite wanting a house pretty bad, financially it makes sense to keep my apartment because I’m only paying $1,065/mo whereas houses in my area are $300k+ which is out of reach for me. One thing that did change is I got a mid year bump up to $75k base last week and should be getting another 5-10% increase at the end of summer.

Considering all this, you think I should throw it in the market? I pushed $10k in maybe 2 weeks ago. Then instead of doing $500/mo into my Roth I put $3k in as a lump sum to max for 2021.
We have been in the same boat. Over 5 years now "ready" to buy a house but neighborhood prices went up as fast as we could save and cash buyers are dominant, sales prices way over appraisal,.etc. It became less and less buyer friendly due to low supply and the logistics of the transactions, not just outrageously priced. Now we have over $200K still just sitting in cash equivalents missing out on years of market gains. At current prices we really we need $300K cash minimum to buy to be within 30 min commute of my husband's job and have a backyard. And I refuse to raise children without a yard or with longer commute times.

We are temporarily relocating but still feel "ready" to buy if the right deal appears (like friends selling a house) or other factors lead us to pick another city or a job change. So all that money will keep sitting around, and we will keep adding to it even though it is losing real value. Sigh. My husband is firmly opposed to taking any risk with it.

You can't really "know" when you will buy if your neighborhood or criteria are quite specific - the housing market prices/inventory can not be anticipated. And when prices keep going up you have to just keep saving.
mdavis6890
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Re: Time to change my saving strategy up, any advice?

Post by mdavis6890 »

I think you're doing great!

Take the cash you have and buy whatever the cheapest ramshackle in a shady neighborhood you can find is. Something barely habitable where gunshots are at least 1/2 mile away. Something that costs $150k or less. Then upgrade every few years as you continue to save, and pretty soon you'll have the house you want.

This way you're tied into the market and don't feel like prices are going up faster than you can save. Also prevents you from being house-poor.

You're young and flexible, now is the time for such a plan. Later when married with kids it would be much more difficult to do.
lazynovice
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Re: Time to change my saving strategy up, any advice?

Post by lazynovice »

malibuboats91 wrote: Sat Jun 12, 2021 10:24 am
rockstar wrote: Sat Jun 12, 2021 12:20 am
malibuboats91 wrote: Fri May 28, 2021 7:02 pm Checking: $12k
Savings: $89k - Ally Bank
I don't get this at all.

What's your thought process here?
At this point I think a house is going to be 2-3 years out for me. I’ve had this cash sitting for 5.5 years, and I’m kicking myself for not having it in the market. Despite wanting a house pretty bad, financially it makes sense to keep my apartment because I’m only paying $1,065/mo whereas houses in my area are $300k+ which is out of reach for me. One thing that did change is I got a mid year bump up to $75k base last week and should be getting another 5-10% increase at the end of summer.

Considering all this, you think I should throw it in the market? I pushed $10k in maybe 2 weeks ago. Then instead of doing $500/mo into my Roth I put $3k in as a lump sum to max for 2021.
Congrats on the raise! Will the bonus increase too? You aren’t too far off from 300k being a reasonable price- but if you still feel strongly that a house us 2-3 years away, then stick to your plan to put the money in at an allocation you can live with. You just put the 10k in two weeks ago. Maybe wait two weeks and put 15k in?
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Fortune
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Re: Time to change my saving strategy up, any advice?

Post by Fortune »

[/quote]
In a savings account that pays 0.5%?
I get putting the money in something safe right before executing the transaction. I held my down payment in a 3 month t-bill while house hunting with the expectation to buy within that time frame. I didn't want to risk my capital while bidding and looking at homes. But if they're not going to pull the trigger in less than a year, I struggle with using a savings account for the down payment.
[/quote]

Can you pl clarify on putting money in a 3 month T-Bill. I see 3 Month Treasury Bill Rate is at 0.03% vs high-yield savings account that pays 0.5%. I have some funds in Savings account looking for a higher return. Thanks
Topic Author
malibuboats91
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Re: Time to change my saving strategy up, any advice?

Post by malibuboats91 »

lazynovice wrote: Sun Jun 13, 2021 3:11 pm
malibuboats91 wrote: Sat Jun 12, 2021 10:24 am
rockstar wrote: Sat Jun 12, 2021 12:20 am
malibuboats91 wrote: Fri May 28, 2021 7:02 pm Checking: $12k
Savings: $89k - Ally Bank
I don't get this at all.

What's your thought process here?
At this point I think a house is going to be 2-3 years out for me. I’ve had this cash sitting for 5.5 years, and I’m kicking myself for not having it in the market. Despite wanting a house pretty bad, financially it makes sense to keep my apartment because I’m only paying $1,065/mo whereas houses in my area are $300k+ which is out of reach for me. One thing that did change is I got a mid year bump up to $75k base last week and should be getting another 5-10% increase at the end of summer.

Considering all this, you think I should throw it in the market? I pushed $10k in maybe 2 weeks ago. Then instead of doing $500/mo into my Roth I put $3k in as a lump sum to max for 2021.
Congrats on the raise! Will the bonus increase too? You aren’t too far off from 300k being a reasonable price- but if you still feel strongly that a house us 2-3 years away, then stick to your plan to put the money in at an allocation you can live with. You just put the 10k in two weeks ago. Maybe wait two weeks and put 15k in?
Thanks! This raise was kinda out of the blue as our normal adjustments come later in the year. Sounds like they realize they’re underpaying all of us so they’re bumping us up now then typical performance increases will happen in fall…hopefully another 5-10%. No additional bonuses though.

In your opinion should I stick in the 2-3x my income for a house thought pattern or would 4x be ok?

In the short term I bumped my 401k contributions up to 20% and maxed my Roth IRA. I could probably max my 401k if I wanted to based on my raise. I haven’t bit the bullet yet though
lazynovice
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Re: Time to change my saving strategy up, any advice?

Post by lazynovice »

malibuboats91 wrote: Sun Jun 13, 2021 7:09 pm
lazynovice wrote: Sun Jun 13, 2021 3:11 pm
malibuboats91 wrote: Sat Jun 12, 2021 10:24 am
rockstar wrote: Sat Jun 12, 2021 12:20 am
malibuboats91 wrote: Fri May 28, 2021 7:02 pm Checking: $12k
Savings: $89k - Ally Bank
I don't get this at all.

What's your thought process here?
At this point I think a house is going to be 2-3 years out for me. I’ve had this cash sitting for 5.5 years, and I’m kicking myself for not having it in the market. Despite wanting a house pretty bad, financially it makes sense to keep my apartment because I’m only paying $1,065/mo whereas houses in my area are $300k+ which is out of reach for me. One thing that did change is I got a mid year bump up to $75k base last week and should be getting another 5-10% increase at the end of summer.

Considering all this, you think I should throw it in the market? I pushed $10k in maybe 2 weeks ago. Then instead of doing $500/mo into my Roth I put $3k in as a lump sum to max for 2021.
Congrats on the raise! Will the bonus increase too? You aren’t too far off from 300k being a reasonable price- but if you still feel strongly that a house us 2-3 years away, then stick to your plan to put the money in at an allocation you can live with. You just put the 10k in two weeks ago. Maybe wait two weeks and put 15k in?
Thanks! This raise was kinda out of the blue as our normal adjustments come later in the year. Sounds like they realize they’re underpaying all of us so they’re bumping us up now then typical performance increases will happen in fall…hopefully another 5-10%. No additional bonuses though.

In your opinion should I stick in the 2-3x my income for a house thought pattern or would 4x be ok?

In the short term I bumped my 401k contributions up to 20% and maxed my Roth IRA. I could probably max my 401k if I wanted to based on my raise. I haven’t bit the bullet yet though
There are a lot of mortgage calculators online. I would come up with a budget that allows you to save toward retirement and other goals. You’ll need to budget for HOA, property taxes, insurance, increased utilities. Reserve some cash for a lawn mower, furniture, washer and dryer, refrigerator. You kind of back into a payment you are comfortable with and then a down payment you can handle. Less than 20%, then budget for PMI.

I can’t tell you if you should go higher. I prefer to forecast what my budget would look like and decide. As a single person who works a lot, don’t overlook low maintenance condos and townhomes. And since you are unmarried, don’t worry about buying a forever home or one that you can have a family in. Chances are high your first house will be sold when you get married or shortly before or after you have your first kid.
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