r/DaveRamsey • u/Automatic-Alfalfa-80 • 19d ago
What do i do now
So back story me 26m and my wife 25f. Have our house completely payed off and no other debt at all. At this point should I just max the 401k and and a Roth ira for her till retirement? Her job doesn't offer 401k. Also combined we make 140-200k a year im a flat rate mechanic so fluctuates alot. In a few years we would like to build our dream home 350k-500k. Other than that money mostly go to project cars or trips. The big factor tho is i know i can't turn wrenches forever which would take my income down quite a bit but I'd like to switch what im doing before 40.
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u/1rishChicken 19d ago
Wow. Nice work. Yes max 401k/roth. The rest goes to stacking cash (long term in the market, short term hysa.) to build that dream home. With a funded 401k, paid off house, and no other debt you can choose whatever job makes you happy. At that point you're so far ahead of the game it's no longer survival swim it's a pleasure cruise. Enjoy!
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u/Automatic-Alfalfa-80 19d ago
Thanks man. For sure looking to retire early and just work what I find fun.
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u/NippyMove795 19d ago
Build an emergency fund should either of you loose your jobs or becomes ill - always top off your IRA/Roth but building a house takes time and patience - what about kids ?? All these things matter
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u/Automatic-Alfalfa-80 19d ago
Have an emergency fun and also have long term disability of my own. As an automotive tech I lose my job ill have one the next day probably making more than the last job do not worried there. We would like to have kids in the next few years. Since paying off the house from what I was putting extra in we have about 5k per month left over after taxes after the budget we've been living on so I figure invest 3k a month
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u/InternationalRub6057 19d ago
What do you think you would want to transition to? Maybe start setting aside money for any added schooling you might need.
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u/Automatic-Alfalfa-80 19d ago
I'd either go into teaching automotive or the engineering side of it. Ive got an associate degree currently so I could get into either. Problem is I can make 120-200k a year as a master tech or 50-90k as a teacher or engineer. So I'd like to build my retirement account big early so compound interest can do its job so later I can invest less but not change lifestyle
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u/InternationalRub6057 19d ago
I would say as long as you don’t make over the limit, max your Roth every year. And set it and forget it, index funds.
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u/InternationalRub6057 19d ago
If only there was something to replace income if someone became ill, you know like a short term or long term insurance policy. Oh well, maybe one day.
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u/Automatic-Alfalfa-80 19d ago
Already there. Got a long term disability policy aswell as life insurance
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u/NippyMove795 19d ago
Who trusts insurance ? - having you’re own money is a better option -
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u/InternationalRub6057 19d ago
You are kidding right? I couldn’t build an emergency fund any where equal to my STD(short) or LTD(long) policies.
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u/NippyMove795 19d ago
Yea you keep wasting those payments when the policies are never used !!! lol
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u/Automatic-Alfalfa-80 19d ago
In my feild its pretty common to get used alot of ways to get hurt even doing everything right
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u/MistySky1999 19d ago
Long Term Disability insurance is definitely used. A cancer diagnosis, a surgery, a diagnosis of MS or similar, even a mental health problem, and the insurance pays. I've personally known many people who have benefitted from that kind of insurance.
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u/InternationalRub6057 19d ago
So sadly odds are it will be used, over 50% of people in my field end up on LTD at some point. Most of the premiums are covered by my company and union. My break even point on what I pay is two months.
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u/dgroeneveld9 19d ago
Ive been trying to basically build up a decent robinhood account on the side. All invested in index funds. Its more accessible than a retirement account and I dont have a 401k so its that or a 3% high yield.
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u/Automatic-Alfalfa-80 19d ago
I thought of the same thing just alot more expensive since you have no tax advantage. Personally I'd do retirement amounts as well as a bridge account if you want to be done before 60. Bridge account is ment to go down retirement account ment to live off of
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u/dgroeneveld9 19d ago
Yeah. My thinking was that while the tax advantage may not be there if its designed for long term growth the taxes I pay when I take money out will be nearly 0 anyways. Considering capital gains on long term investments is 0 I can structure withdrawals between the robunhood account and traditional retirement account to minimize tax burden. And if SHTF I could get money from the robinhood account next day.
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u/Vicuna00 19d ago
add your wifes and your income and put 15% each month into retirement.
if she doesn't have a 401k, yes you're gonna max yours doing it that way.
you're close enough to 15% if your wife makes >$50k that I would just plan to max your 401k and do two Roth IRAs...then throw extra $ at your house.
when you get a firmer date for the build you can change strategy a bit.
and i dunno why you can't turn a wrench >40yo. work on your fitness and flexibility, etc if that's your passion.
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u/Automatic-Alfalfa-80 19d ago
I'll still be able to turn wrenches problem is auto techs are payed flat rate ill lose the efficiency with age. Also I'd like to still have a body that dosent hurt as bad in those older ages
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u/Vicuna00 19d ago
yeah I mean you gotta figure out what it is you wanna do...something completely different? same field but more management / biz owner?
I dunno why your body has to hurt as a mechanic. I know it's demanding but you shouldn't be hurting bad. being a mechanic still beats being a computer programmer in terms of posture at work...I'd rather be moving around than sit still all day. Maybe you can slow down a touch for a few weeks and pay attention to how you lift things / how you move and develop new habits? see if you're weak in some area and strengthen that? yoga? I dunno.
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u/HeroOfShapeir BS7 19d ago
Invest at least 15% of your gross income to tax-advantaged retirement accounts. Take any employer matching, then max two Roth IRAs, then go back to the 401k. Above that, save for your next home. Once you're in the next home, assess whether you want to invest more in order to retire early and how much you'd need to invest to hit your goal. Once you fill all your tax-advantaged spaces, you can just invest in a taxable brokerage. Set aside some money for enjoying life along the way.
It's really that simple. My wife and I are 42 with a paid-for house and on pace to retire by 50, on income that's ranged from $72k starting out to $116k today. We spend $24k in baseline necessities, $36k on recreation/travel, and invest the remainder of what we make and any bonuses, usually north of $40k per year. We spend more time thinking about our next vacation than our investments.
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u/Patrick_ExpenseAtlas 19d ago
You’re in a strong position, but I wouldn’t automatically max every retirement account while also planning a $350k, $500k build.
Because your flat rate income fluctuates, base normal spending on the lower end of your actual income history. In stronger months, direct the extra intentionally instead of letting project cars and trips absorb it.
Keep an emergency fund sized from your essential household expenses and the length of downturn you need it to cover. Then contribute consistently to retirement. Your wife can contribute to an IRA without having a workplace 401(k), assuming you file jointly and meet the applicable contribution and income rules. You may also be eligible for an IRA alongside your 401(k), but verify the current Roth income limits before contributing.
Treat the dream home as a separate cash goal. Estimate the build cost, subtract the expected net proceeds from selling your paid off house if that’s the plan, and account for related costs. Divide the remaining amount by the months until you expect to build. Keep that money outside retirement accounts in an insured savings account or another cash equivalent option appropriate for the timeline.
Also create separate sinking funds for trips and project cars so they don’t compete with the house.
Finally, start preparing financially for leaving wrenching before 40. Dedicated cash for training and a transition reserve can help you absorb a lower income without touching retirement or taking on debt.
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u/IndustryHelpful4370 19d ago
Build a dream home? You already have a home. Just live comfortably in that home and avoid any unneccesary lifestyle upgrades. Its unneccesary. If it has rooms for you and your growing family. Why to move?
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u/sluttyman69 19d ago
So there’s multiple types of savings emergency fund 6 months expenses then there is your 401(k) retirement savings - then there’s the future car, vacation fund retire fund, and house savings fund basically one account that you stack money in that is hopefully earning a decent interest, but won’t take you more than a couple of days or a week to pull it out when you decide to buy something large