The balance: saving too little vs saving too much. AND Tesla

[Anonymous]

How do you contribute to a Roth IRA.

Aren't you above the income limits?

I ask this because if there is some way around the income limits I would like to know.

[Anonymous]

Anonymous wrote:How do you contribute to a Roth IRA.

Aren't you above the income limits?

I ask this because if there is some way around the income limits I would like to know.

Based on their total, I strongly suspect they each contribute 18k to a 401 and then each do a 5500 backdoor Roth conversion.

[Anonymous]

Anonymous wrote:My parents saved very little (good income, good life, generous with others but very little left). My in-laws save too much (in the last couple of years, they gave their kids 28K each due to estate planning but argue about taking a few hundred dollars flight because it is too expensive).

I am hoping to strike a balance. Enjoy our life now, save enough to enjoy retirement. My husband is more like his parents (he keeps adding oil to his 10 year old dented Civic, sticking two kids back there despite the two doors model and claims it is fine).

Our finance:
We are both mid thirties
240K HHI
200K equity in our 900K house
80K equity in our 230k condo rental
760K in our 401K/roth IRAs (we contribute 47K to these accounts each year)
20K in 529 for 1 and 3 year old (we contribute 10K to these accounts each year)
100K in saving/bonds/general-investing for Emg/whatever
cars are paid but oldish (10 and 9 year old).

My husband is wonderful and he is not into worldly goods/or cars. But he keep talking about how nice the Tesla "concept" is (he did not say he wants one because "the Civic is good for at least another 2 years!"). He commutes 45 min-1 hr each way. I think he will enjoy the Tesla and financial we can take it (80K!) but close.What say you DCUM, should I talk him into it? or am I veering toward spending too much?

I stopped reading at the bolded. Your ILs have the right idea, and saving like this is the reason they can give away 28k per child. This is what my ILs have done, and what my parents do. Hopefully we will be able to do this for our children.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My parents saved very little (good income, good life, generous with others but very little left). My in-laws save too much (in the last couple of years, they gave their kids 28K each due to estate planning but argue about taking a few hundred dollars flight because it is too expensive).

I am hoping to strike a balance. Enjoy our life now, save enough to enjoy retirement. My husband is more like his parents (he keeps adding oil to his 10 year old dented Civic, sticking two kids back there despite the two doors model and claims it is fine).

Our finance:
We are both mid thirties
240K HHI
200K equity in our 900K house
80K equity in our 230k condo rental
760K in our 401K/roth IRAs (we contribute 47K to these accounts each year)
20K in 529 for 1 and 3 year old (we contribute 10K to these accounts each year)
100K in saving/bonds/general-investing for Emg/whatever
cars are paid but oldish (10 and 9 year old).

My husband is wonderful and he is not into worldly goods/or cars. But he keep talking about how nice the Tesla "concept" is (he did not say he wants one because "the Civic is good for at least another 2 years!"). He commutes 45 min-1 hr each way. I think he will enjoy the Tesla and financial we can take it (80K!) but close.What say you DCUM, should I talk him into it? or am I veering toward spending too much?

I stopped reading at the bolded. Your ILs have the right idea, and saving like this is the reason they can give away 28k per child. This is what my ILs have done, and what my parents do. Hopefully we will be able to do this for our children.

+1

And after having watched my mother linger for years with dementia, needing a host of services, I do not believe it is possible to save too much.

[Anonymous]

Anonymous wrote:OP here. Since many are wondering about our mortgage I will clarify. Our PITI is $4250 with 27 year left. I do not intend to pay the 3.9% loan sooner. My general rule is 1/4 of our income for each of the 4 category: taxes, house, saving and other (food, daycare cost, vacation, etc ..). Our house was brand new so I do not expect any of the big ticket item for at least another 5-7 years. I know most of you like to own your house free and clear but I like leverage. None of this in defense of buying the car by the way.

That is a huge mortgage for your income.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here. Since many are wondering about our mortgage I will clarify. Our PITI is $4250 with 27 year left. I do not intend to pay the 3.9% loan sooner. My general rule is 1/4 of our income for each of the 4 category: taxes, house, saving and other (food, daycare cost, vacation, etc ..). Our house was brand new so I do not expect any of the big ticket item for at least another 5-7 years. I know most of you like to own your house free and clear but I like leverage. None of this in defense of buying the car by the way.

That is a huge mortgage for your income.

Only in bizarro DCUM world. Any affordability calculator (and yes, I mean the affordability calculators, not the maximum loan approval calculators) would say OP can afford at least a $1.2 million home.

[Anonymous]

These people are too harsh on your mortgage. Everyone's priority is different. I splurge on my house too, my mortgage payment is way higher. But like you, we're putting money into 401K, IRAs, 529 consistently. You're doing great. Just don't think about the Tesla yet

[Anonymous]

Anonymous wrote:Rule of thumb - every home repair is $5000! Last summer - repaired flagstone paths - $5000; rebuilt chimney - $5000; replaced roof on our porch - $5000; etc, etc. Your savings can get eaten up very quickly!

Why does DH like the Tesla? If it is for energy efficiency reasons, it is actually not getting the greatest reviews. Hybrids are better for the environment.

Please, I don't think anyone really gets the Tesla for the energy efficiency. It's just a cool car.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Rule of thumb - every home repair is $5000! Last summer - repaired flagstone paths - $5000; rebuilt chimney - $5000; replaced roof on our porch - $5000; etc, etc. Your savings can get eaten up very quickly!

Why does DH like the Tesla? If it is for energy efficiency reasons, it is actually not getting the greatest reviews. Hybrids are better for the environment.

Please, I don't think anyone really gets the Tesla for the energy efficiency. It's just a cool car.

The "hybrids are better for the environment" thing is kind of an overstatement, anyhow. They are better for the environment, at the moment, in about 80% of states for the first 50,000 miles. They're not better in 20% of states, not better in some other states after 50,000 miles, and likely the gap will narrow as the production process improves and the grid changes.

[Anonymous]

Why not the model 3? Starts at 35k.

[Anonymous]

Anonymous wrote:As usual, DCUM folks spend no money. You can afford this car if you want it.

Seriously. You're in great shape financially. Buy it and enjoy it.

[Anonymous]

I say buy a Tesla when you need a car, and not before.

[Anonymous]

Anonymous wrote:Why not the model 3? Starts at 35k.

Presumably because it would take 3 years for OP to obtain one.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why not the model 3? Starts at 35k.

Presumably because it would take 3 years for OP to obtain one.

OP can hold off a few more years. Save some money.

[Anonymous]

Get a Spark-- you get the fun of driving an torque-y EV and it has the lowest total cost to own of any car being sold today. OTOH it's pretty small (but 4 door at least) and only sold to Md residents.