This week’s Ask Hubby question:
I would love some advice on what to do with a new income that my husband and I will be receiving beginning this fall. Both my husband and I are in our mid 30s and we have two grade school age children. We have a paid for house, two paid for vehicles (one very reliable, the other is probably good for 3-5 more years), $84,000 between us in our retirement accounts, $6,800 in the kids 529, $15,000 in savings, and $3,500 debit on a home equity line of credit (we would pay it off, but there’s a fee for paying it off before three years). We currently make $55,000 before taxes. Our new job (evenings & weekends for him, daytime hours for me) will pay between $35K-$45K depending on the final agreements. We really don’t need the money for any set purpose for at least two years, and even after that, it’s just a wish to be able to send our oldest to private school, which is $5,500/year presently, but I’m sure it will be more at that time. Since our kids are still young, we have no real ideas about their college ambitions. I do know that I have no desire to give either of them a free ride, but I don’t want them to be saddled with a huge amount of debt either. I’m happy that we will have this “problem”, but I really want to be responsible with the extra money. Any suggestions you have would be appreciated. Also, we have no idea how to invest any money that isn’t in a retirement account or 529, so if that is a suggestion, please keep in mind that we need as much detail as possible!
Thanks,
A Faithful Reader
Hubby’s response:
Congratulations on your and your husband getting a second income. It sounds like you are in good financial shape for the present. You have a ways to go on funding your retirement accounts, however; so I would try to focus there. I don’t have sufficient details on how the second income is set up to get very specific. What you need to do is figure out how you can get as much of that income into retirement accounts. I think a Roth Solo 401k (solo and self-employed are synonymous) would be ideal, if your circumstances would allow. You could each contribute up to $17,000 after-tax, and have the funds grow tax free until retirement.
In terms of what to invest in, you want your investments grow in a manner that protects you from inflation and a weaker U.S. dollar. So, in addition to equity (stock market) exposure, allocate some of your investments into commodities (precious metals and agriculture) and real estate for the former, and international stocks for the latter. Like maybe 10% each. Low expense ratio ETFs or mutual funds from big companies like Fidelity , Vanguard and Oppenheimer, should be fine.
Investing and saving is like a marathon—just head off in the right direction and keep a good pace, and you should be fine. Good luck.
Disclaimer: This information is not to be considered legal or financial advice. It is for discussion purposes only.
And there you have it folks, this week’s installment of Ask Hubby.
A few things:
1) The disclaimer. Gotta have it because he isn’t an attorney or your financial adviser and he isn’t dispensing legal or financial advice, just giving his opinion.
2) Hubby is willing to give his opinions and answers on a wide variety of subjects listed here. That post also explains his background.
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