OUR SAVINGS & INVESTMENTS… WHAT A CROCK OF S%^T!?!

I will get right to it – let’s figure out how we ‘ought’ to save/invest based on the current maximum amounts we are allowed to put into our retirement accounts; college savings (if any) for our unborn children; come to think of it, we might as well throw child care in there, along with an emergency/slush fund; you get the picture…

And let’s assume that ‘mama didn’t raise no fool’ so both husband and wife are in their mid 30s, and each earn over 100k – with a household gross income of 250k – and for argument’s sake, let’s do without the taxable withholdings.

On the one hand – pat your self on the back! woah! way to go! an individual wage earner earning at least 100k represents only 5% of the US population re the distribution of income. You baller you! or is it balla’? (keep patting yourself).

On the other hand, let’s put this income to work and see how it translates for maximum savings/investments.

(1) Retirement Accounts (401k, 403b, 457, etc.) $17,500 per person (not including the $5,500 catch up when you are 50 and older);

(2) IRA/ROTH IRA $5,500 per person – and though I included ROTH, guess what? the $250k household income “phases you out!” In other words, you and your spouse earn ‘too much’ (according to the IRS) to contribute to a ROTH, but hey, lets go ahead with that good old Traditional IRA;

(3) CHILD CARE Normally, I would suggest Annuities after being able to maximize your 401k and IRAs, but let’s instead consider some non-retirement goals like the annual amount of child-care in the US. After all,  ‘mommy’ and ‘daddy’ are both working. Let’s call it $18,700.00 per child;  (feel free to have more than one child, I double dog dare you!)

(4) College Savings – after a quick analysis on savingforcollege.com, it’ll cost $7,000.00 annually per child beginning at age 1. but hey! you’re in luck, you only have to do that for the next seventeen (17) years… oh wait, were you planning on having more than one?!?!?;

(5) Emergency/Slush Fund – let’s not forget about those unforeseen expenses! Gawd forbid you drive that Bimmer – and a nail in your tire will cost $2000! no? for all you German Car Enthusiasts, when was the last time you had to replace just one tire… at $500 each? Well, rule of thumb according to College for Financial Planning – you ought to have 3-6 months worth of expenses in cash. So let’s go with 6 months, it’s a Hockey Season (btw GO RANGERS! <—I had to, I’m from NY!) Hmmm, well – I’d say 6k net ought to adequately keeps the lights running, so $36,000.00 in a money market ought to be enough. Best part is, this is a one time deal – until an emergency happens… when was that last earthquake?

So where are we now? Let’s add everything:

(1) Retirement (for both husband and wife): $35,000.00,

(2) IRA (for both husband and wife): $11,000.00,

(3) Avg cost of Child Care (per child) $18,700.00,

(4) College Savings (for 2 kids <— hey! just keeping it real!) $14,000.00,

(5) Emergency/Slush Fund $36,000.00

CURRENT ANNUAL TOTAL: $114,700.00

Well in our current example, our household income is $250k – so that leaves us with 54% of our disposable income, or $135k. Oh wait? What’s that you say? did you want to remodel your kitchen with graphite? a curved 70” TV? did your car break down? Gee whiz I really saw us having three kids!- Can we still take that Euro-Vacation? but what about student loans! what about credit card debt?!?!? uh, did we even account for taxes? holy crap wait a minute! what if we don’t earn $250k?!?!?!! What a crock of S%^T!!!

Are you still patting yourself on the back?

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One thought on “OUR SAVINGS & INVESTMENTS… WHAT A CROCK OF S%^T!?!

  1. Wow Don! Congrats on the blog. .. great way to get us all thinking about our current and future financial situations. You really know how some of us are thinking financially!

    Personally, I am in need of much improvement in the savings department. I live for the moment and save little for the future. And whatever I do save ends up being my “buffer money” whenever those unexpected expenses and unnecessary splurges may cause my monthly income to be less than the expenses of that month.

    Franz and I ultimately would love to live off one income and use the other for savings… uh, not happening yet! Franz is an awesome saver, but I am just the opposite. I have a lot of past expenses (student loans and credit card debt) to work off before we can live off one income. And I enjoy the spur of the moment spa treatments and eating out/ordering take out too much. Plus now we have been blessed with two children and I’ve been paying for child care, mommy n’ me classes, play ground admissions, Disneyland annual passes. .. hmmm, I know for sure I can cut down some of those things. ..

    I know it’s definitely possible to reach our financial goals. It will take a lot of work reviewing and cutting down our unnecessary expenses. I have been living in the present too much and now I am ready to also live for the future. In doing so, I believe I will actually enjoy living in the present even more…

    So far I have started by no longer accumulating credit card debt. Franz has helped with some previous debt and I’m working off the rest of it. I’m hoping to be credit card debt free by the end of next year if not sooner.

    So much more to work on, slowly but surely. I am so grateful to have two wonderful careers, and I want to maximize my money making opportunities while also being there for my family and friends, and also myself. .. not sure yet how I can balance everything. But with God’s help and the support of my family, I am getting to where I want to be one day at a time…

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