Review of my financial situation

[xclonexclonex]

Hello all,

Would it be possible for the knowledgeable members here to review my financial situation? I am going to post my bank balance etc., and if you guys could tell me if I am doing well or not, and the things I need to do to get better, I would be very grateful.

Kindly let me know if this would be OK.

Thanks!

[Petunia 100]

Of course it is OK, that is what this forum is for.

You will have to be the judge of whether or not the feedback you receive is sound.

[xclonexclonex]

Thank you very much for your reply.

Personal details:
Age: 30
Married - Wife not working (She is from Norway, and does not have a work visa)

Income: Net $3779/month

Assets
Online savings account - $71,579
Regular savings - $1200
Checking - $3032
401(k) - $4064

Now the online account is an account from which no money will ever come out unless is an absolute catastrophe.

Now, here is my question. If I continue to live within my means, and saved a healthy portion of my income, do I need to worry about investments etc.?

I understand that it is possible to multiply money relatively easily with investments, but I am not very good with that sort of stuff, and I would just much rather save and live well within my means. Is that a bad strategy?

Also, how am I doing so far? What can I do to improve?

Thanks for your help!

[cardtrick]

Thank you very much for your reply.

Personal details:
Age: 30
Married - Wife not working (She is from Norway, and does not have a work visa)

Income: Net $3779/month

Assets
Online savings account - $71,579
Regular savings - $1200
Checking - $3032
401(k) - $4064

Now the online account is an account from which no money will ever come out unless is an absolute catastrophe.

Now, here is my question. If I continue to live within my means, and saved a healthy portion of my income, do I need to worry about investments etc.?

I understand that it is possible to multiply money relatively easily with investments, but I am not very good with that sort of stuff, and I would just much rather save and live well within my means. Is that a bad strategy?

Also, how am I doing so far? What can I do to improve?

Thanks for your help!

You're doing OK, IMO. You have about 1X your income saved up which is pretty good for your age. What are your expenses like?

You should invest that money instead of letting it sit in a savings account that isn't even keeping up with inflation. The best advice I can give you is to learn about investing. There is a ton of good information about there. And your fear probably stems from you not knowing much about investing. Investing in index funds is a pretty easy thing to do. Yes, there will be fluctuations but in the long run, you will be OK. Putting $71000 in a savings account is not such a good idea. If you want to be conservative, you can keep about 12 months of expenses in savings, but anything above that and you're not letting your money work for you.

And your 401k is a great tool to invest for retirement and so is a Roth IRA which it looks like you qualify for.

[humandraydel]

Did you save the $71k yourself? If so, you are doing well in terms of savings rate but I agree with others - you should invest some of it, even if it's a very conservative allocation like 40% stocks & 60% bonds.

[kork13]

I agree with the others -- You should be investing some of your cash toward retirement, whether in your 401k or in Roth IRAs (for both you & your wife). With some basic education on investing, you can easily get started into at least a few decent index mutual funds, and do much better for yourself. Right now, you're losing money to inflation every day. In order to preserve the value of your cash savings, you need to invest some of your money in assets that will outpace inflation. However, maintaining enough cash savings to keep you comfortable & safe is also important, so maintain as much cash as you feel you need to hold on to, in order to protect you from "an absolute catastrophe".

On a totally separate note... Are you an American citizen? If so, your wife does not need a work visa in order to get a job here in the US. There is some paperwork to go through for her to file for citizenship through you, but marrying a US citizen will grant a foreign national status as a US citizen and eligibility for all related benefits (to include working without need for a visa).

[MonkeyMama]

Another point of view: It is totally fine to save and never invest. You have to save a lot more and work harder at it, but not everyone is cut out for investing. It is certainly doable. What percentage of your income are you saving for the long run? (Yeah, most average people have to invest to succeed financially, but I know plenty of non-average millionaires who never put a penny in the stock market. Of course they were super savers).

I would consider opening up ROTH IRAs and moving your online savings account over to ROTHs. You can leave it in cash for now - you can always invest it later if you change your mind. The reason would be for the tax shelter. This may only make sense if you plan to stay in the States.

[bjl584]

Are you continuing to save in the online savings account? Does that money serve a purpose such as a house down payment, etc.? If not, then you should consider taking at least a portion of it and investing it somewhere to get it working for you.

Overall though, you are doing fairly well so far.

[JoeP]

Do you have any debt, such as student loans, car payments, credit cards, mortgage, etc? If so, please post the amounts and interest rates.

For investing, we found that having a financial planner really helps eliminate a lot of the risk that goes along with not being intimately familiar with the financial markets. But if you are hesitant about the expense or risk, then it is probably best for you to keep your money in savings. As others suggested, though, you really should look into a 401k and Roth IRA to get some tax advantages and having something lined up for retirement.

[xclonexclonex]

Thank you everyone, for the replies. Much appreciated. Let me tackle all the questions I've been asked.

Did you save the $71k yourself?

Yes, I saved it all myself. I did that by living below my means - not sacrificing on needs, but eliminating wants.

On a totally separate note... Are you an American citizen?

No, I am not an American citizen. I am an Indian citizen. I am currently on a work visa, and my wife is here on a dependent visa, which is why she cannot work. That is fine though, we live in a small town, and she enjoys all the free time

What percentage of your income are you saving for the long run?

This may only make sense if you plan to stay in the States.

I don't have a % amount. I allocate money for all the expenses (rent, food, utilities etc.), and I transfer all the rest to the savings account.

Here is another thing that really confuses me. I want to live in the United States long term. My wife however, wants to go back to Norway at some point. I don't know when that's going to happen - she is not sure about it either. So I am in a limbo here. I am unable to make long term plans because of this. This is something we need to figure out, because we are losing money the longer we don't decide.

So on that note, if I were to invest in the stock market or a retirement account here, and move to Norway, how would I ever get that money back...?

Are you continuing to save in the online savings account? Does that money serve a purpose such as a house down payment, etc.?

The only goal that money is going to serve is bail us out in time of desperate need. I am not sure I ever want to own a home, even though it makes a lot of sense to do so. I fear the commitment, and the responsibility. I might get over that if we decide to live in these United States.

Do you have any debt, such as student loans, car payments, credit cards, mortgage, etc? If so, please post the amounts and interest rates.

Here is my debt situation:

Amazon $100.00
NewEgg $500.00
Commerce Bank $550.00
Discover $395.00
Total $1,545.00

I am not paying interest on any of those loans. They are all in the 0% APR period, and I will pay them off before they start accruing interest.

I do not have any other loans.

Here is how my spending looks:

Required Expenditure
Category Value
Rent $650.00
Cell phone $70.00
Insurance $450.00
Utilities $150.00
Internet $60.00
Medical $100.00*
Fuel $100.00
Car Repair $100.00*
Groceries $200.00
Total $1,880.00

Other Expenditure
Category Value
Eat Out $100.00*
Purchases $100.00*
Phone Card $10.00
Travel $100.00*
Cinema $30.00*
Game Purchases $30.00*
Misc Expenses $100.00
Total $470.00

Grand Total $2,350.00

* These are projected expenses. There are some months when the expenses are 0 for these categories.

So that means that the amount of money I transfer to the savings account is greater. I almost always stay under the grans total amount. The only exception was when I purchased my car.

I have more questions about investment which I will ask in a separate thread.

I understand the majority of members think that investment is a smart idea, and I am going to educate myself on that subject.

[bjl584]

I'd clear the debts. The amount that you are earning in interest in your account by waiting until the 0% APR ends is minimal. Pay them off and be done with it.

What is the $450 charge for insurance? What type of insurance? Is the $450 per month?

[xclonexclonex]

I'd clear the debts. The amount that you are earning in interest in your account by waiting until the 0% APR ends is minimal. Pay them off and be done with it.

What is the $450 charge for insurance? What type of insurance? Is the $450 per month?

Ok, sounds good. I will pay off the debt.

The insurance amount is a total of medical, dental and auto insurance. We do not have home insurance at the moment, but we contemplating it.

[BMEPhDinCO]

It looks like you are doing really well... a few suggestions:

1. Get rental insurance (it's home, but for when you don't own your home) - it will pay off if you ever need it, and add a rider for computers..

2. Consider savings buckets - ie, in some online account or an excel sheet, divide your savings into categories:

12 month EF - $28,000 (rounding $200 down)
Vacation/Travel - $5,000 (especially if y'all want to visit home countries again soon)
Car - $5,000 (this is for your next car, maintenance, repairs, fees, etc)
Electronics - $1,000 (so you don't ring up loans at NewEgg)
Medical - $1,000 (or whatever yours and your wife's deductibles are)

I would probably also add a Gift category, a Moving category, and maybe an "Opportunity Fund" one (ie, for great deals so you can take advantage) - these are optional, let's give them $1,000 each to start.

This means your $71k is now down to $28k - take this, go to Vanguard, talk to someone there, and invest it in mutual funds.

While you don't HAVE to invest, you can make a lot more doing so (power of compound interest) and if you do it conservatively, you should be ok (*note, not if the US defaults, then we are all screwed, wait until November 10th or after to do this last move). If you don't want to invest in the stock market, invest in bonds, CDs, or something other than just an account - find ones with the higher rates. You can get all this out if you move, a specific retirement account may be more difficult.

Then when you get those monthly amounts you are saving for the categories above, if you don't spend it all, put it into that special account.

This is my two cents, take it or leave it, but either way, you are doing good so far!

[xclonexclonex]

This is my two cents, take it or leave it, but either way, you are doing good so far!

Thank you very much for your suggestions. I really appreciate it. I will get a home insurance. I'll give a call to GEICO and see what they can offer me.

Reading all the posts here, I feel I did not do a good job researching investments. I am beginning to grasp the concept of putting my money to work. As of now, its really not doing a whole lot for me. I am getting 0.80% percent return, but even if I were to invest conservatively, it seems like I could earn more than that.

So that is something I should look more into, and figure out what is right for me.

The breakdown of funds makes a lot of sense. Right now, I have a pile just sitting there, not doing a whole lot. I will try to find a way to put it to work.

If any of you could recommend a good research starting point of a complete noob, I would be grateful.

Thanks!

[cardtrick]

Thank you everyone, for the replies. Much appreciated. Let me tackle all the questions I've been asked.




No, I am not an American citizen. I am an Indian citizen. I am currently on a work visa, and my wife is here on a dependent visa, which is why she cannot work. That is fine though, we live in a small town, and she enjoys all the free time

I'm also on a work visa. The gf however is a US citizen, and hence we don't have that issue. Besides, we're not married. As tempting as it is to just get married so I don't have to deal with all the ridiculous paperwork to get my permanent residence through employment, I just don't feel like I'm at that stage in my life yet. We've been in a relationship for almost 6 years now!

I've been filling out green card paperwork pretty much every week since January and they haven't filed ANYTHING with the government yet. They're still getting everything in order. The process to get permanent residence through employment is truly crazy! But if I were to get married, I could get my GC within 6 months! So tempting.

Your wife does have the option of finding an employer who will sponsor her work visa. It's not just about the money. Achieving career goals is very fulfilling. My mom still regrets giving up her career when she got married.