Coup: Finally timed the market right and bought last two homes low, and have refinanced several times since then to lower rates and shorter terms. This will allow us to pay off final mortgage in a few years. Always disliked debt so never used home equity line of credit and ended up being paid $1500 to close it! Paid off all student loans early and always pay credit cards in full every month. All our income therefore can be used for current expenses and investments rather than interest payments.


Biggest mistake: Bought a condo at the peak of the market. Ended up doing a short sale, taking a hit to our credit, and having to pay back the bank for some of the shortfall for years. Will never EVER buy a condo again. They are harder to sell than single family homes, subject to HOA fee increases, and if there is a lawsuit due to construction defects, can prevent you from selling when you need to. Better to rent until you can afford a house that you can live in for years.

biggest mistake: buying a condo (that we loved, in a neighborhood we were devastated to leave when we had to move to DC for work) in 2007, instead of paying off more of our law school loans with the downpayment money

biggest coup: making sure that when we bought that condo, we were way below what we could actually "afford," which has enabled us to hang onto it and rent it for high enough to cover our costs, instead having to sell it at a big loss.

Our coup- paid off about $80k in consumer/student loan debt in a little over 2 years by saving aggressively (but not totally giving up fun stuff). DH came into our marriage with about $40k in credit card debt, we bought a $22k car and financed it interest-free, but paid it off in 6 months, and then my dad lent me money to go to grad school. We were able to do this b/c we both had decent incomes (under $100k at the time though), rented a small condo in Ballston for 4 years and the landlord only raised the rent one time, and had no kids.

Anonymous wrote:

For person with $410k in TSP and $300k in IRA - depends on your annual expenses, and other income will you receive. I guess that you will receive a pension benefit from the feds (approx 1 percent of your avg high-3 salaries), plus social security at some time (rule of thumb is to delay taking SS until age 70 if you are in good health). I agree with the 4 percent withdrawal rule of thumb - can you live of that plus your pension and SS?

Me above -- yes I will get a pension from the govt of my high 3, approx $50K/yr, plus SS (not sure what that would be but maybe $25K/yr). DH has pension as well ($30K/yr). We have no debt except mortgage. I do plan on working after 56, just not at my current grinding soul-sucking middle management job from hell... I do not plan on touching my TSP until well into my 60s and maybe 70s.

Now what's your prognosis?

Honestly, people have given you some helpful advice but you need to look at your expected expenses and expected income. There are plenty of websites that will help you do that, but no one here can do it for you because you need to estimate your expenses as well as income. I suppose if you tell me your expected annual expenses, and your expected pension and social security income, and when you plan to stop contributing to TSP and when you plan to start drawing in TSP, and what type of return you expect from TSP (or at least how conservative you are with your TSP and with your projections) then I could give you a guess, but otherwise it's not very fruitful to just ask people "is this enough?"

Anonymous wrote:Don't sell your starter home if it can be rented out.

Would have loved to do this but needed to use equity for trade-up home.

For person with $410k in TSP and $300k in IRA - depends on your annual expenses, and other income will you receive. I guess that you will receive a pension benefit from the feds (approx 1 percent of your avg high-3 salaries), plus social security at some time (rule of thumb is to delay taking SS until age 70 if you are in good health). I agree with the 4 percent withdrawal rule of thumb - can you live of that plus your pension and SS?

Me above -- yes I will get a pension from the govt of my high 3, approx $50K/yr, plus SS (not sure what that would be but maybe $25K/yr). DH has pension as well ($30K/yr). We have no debt except mortgage. I do plan on working after 56, just not at my current grinding soul-sucking middle management job from hell... I do not plan on touching my TSP until well into my 60s and maybe 70s.

Now what's your prognosis?

Don't sell your starter home if it can be rented out.

Max 401k (or TSP) contributions are $17,000 a year, or $22,500 a year if you are age 50+

Max IRA limits (there are income limits as well) $5000/year, or $6000 if age 50+

Max 529 limits (without tax consequences) are $13,000/year, but one can add $65,000 to an account so long as no additional contributions are made for the following 5 years.

For person with $410k in TSP and $300k in IRA - depends on your annual expenses, and other income will you receive. I guess that you will receive a pension benefit from the feds (approx 1 percent of your avg high-3 salaries), plus social security at some time (rule of thumb is to delay taking SS until age 70 if you are in good health). I agree with the 4 percent withdrawal rule of thumb - can you live of that plus your pension and SS?

Anonymous wrote:Re: 401k, etc., I have $410K in my gov't TSP and DH has $300k in his IRA.

DH is retired and I have ~ 6 years until first opportunity to retire at 56. Does this seem like a lot or a little to you? Currently putting max into TSP.

Very little.

Anonymous wrote:Yes, something is awry. $300 per week per child, multiply that by 10 weeks of summer, and multiply that by 2 kids.
My oldest needs braces and will have to do without

a helpful reply would require knowing the full picture: salary, number of household members, housing cost, expenses, etc etc

you might need some planning help quite beyond the capabilities of an anonymous forum.

something like this might be helpful

http://www.financialplanningdays.org/Content/CitySelectStep2.aspx?City=Metro%20Washington&rt=Applicant

Yes, something is awry. $300 per week per child, multiply that by 10 weeks of summer, and multiply that by 2 kids.
My oldest needs braces and will have to do without

Anonymous wrote:all those things are easy when you are earning a good salary. I is not that simple when you are just getting by on your salary.
I would love to live below my means, but every summer I have to rely on credit card debt to pay for summer camp

If you're using credit cards to pay for a kid's summer camp there is something awry, but we'd need more info to weigh in (if you're so seeking.)

all those things are easy when you are earning a good salary. I is not that simple when you are just getting by on your salary.
I would love to live below my means, but every summer I have to rely on credit card debt to pay for summer camp

This is a terrific thread, and I'll be printing it out to show my kids--thanks to the OP. I'm in the investment business and see many successes and failures. Here are a few lessons I've learned:

1. Can't agree more with those who have lived below their means. One never knows what's ahead so build in your own margin of safety. Let the surprises be good ones.

2. Over insure. Pooled risk is a bargain and protects against outlier events. I just saw a tragedy mentioned on another thread and wondered if the OP had long term disability insurance.

3. Understand where you've been lucky or smart. I've seen many with success in one field think that can translate to another--with poor outcomes.

4. Read Howard Marks' "the most important thing..." probably the best investment book for novices I've ever read (and I've read most of them...)

There's more but I don't want to be preachy and I'll assess reader interest. regarding investment advice, I'd ignore all of what's written here as it's all based on each writer's sampling of one. Investing well is really hard and takes time, effort, and good judgment. I no longer know who to refer to--I used to have some good brokers/advisors on my short list but the business has changed so much over the past decade and the good ones have elevated to million+ minimums and brokers just want to gather assets, charge stupidly high fees, and gather more assets.

A decent option is to work with a good no-load family like vanguard or t rowe, find 2 or 3 actively managed funds that meet your own sensibilities (this is vital) and commit to them for the long term. I'm also a fan of the Longleaf funds. This is not a recommendation, only saying one could do (and most do) much worse.

Decide to be a capitalist. Be prudent which means do not waste money. Buy reliable cars and drive them as long as possible without making car payments. Drive them into the ground. Carry no credit card debt. Open a brokerage account. Buy dividend yielding stocks and ETFs. Reinvest your dividends into the same companies or other dividend yielding stocks. Diversify your portfolio. Use common sense. Know that you are a smart person. Buy stocks in companies that sell products that you like, respect, and anticipate will be around for a long, long time. Don't chase companies like Apple. It is a great company and it maybe around for a long time, but the public is fickle. Technology can change rapidly and Apple is only as good as it's next product cycle.

Don't even try to be a day trader unless you are very smart and very courageous, because you are not trading against people, you are trading against computers that have no emotions and more money than you can imagine. The computers can buy and sell millions of shares per day often times profiting only fractions of a penny per share on their trades. Most people cannot day trade and beat the programed trading of investment firms and hedge funds

However, in the long run over time the true value of stocks are revealed and the small investor/capitalist can become wealthy. The key to acquiring wealth is to get started now by reducing spending, opening your first brokerage account, buying dividend yielding stocks, reinvesting dividends, accumulating a steady stream of income and eventually using some of that income stream to invest in some more speculative companies.

You need knowledge, balance, and a little bit of courage.