Am i in a good financial situation?

Question

i am married, i make 45k a year my wife 25k a year live in the dallas area and both of us are 30.
house loan 160k worth 180k payment with taxes 1420month
car loan 11k just bought it payment 269 per month
Our other car we own/no payment worth 7k
have 11k in a retirement account
and 16k in reserve savings.
we dont spend much but all of our family and friends have lot and lots of stuff. are we in a good position.

Answer 1

Wow you are in really good position here, your net worth
assets $225k - 171debts your net worth is 54k that is a good. Another thing i applaud you is NO credit cards. some of those Friends and family that have lots of stuff may NOT have the net worth you do and be in debt to there eyeballs.

Answer 2

Definitely...you are probably within the top 25% far as money management, about half of America has bad credit and less than 5% have a significant amount of savings IE over $10000.

The only thing I things I think may be able to be improved is
1) The 1420 per month on the house...my household income is not too far off yours and I'm in a condo in a prestigious area for 500 per month/mortgage+maintenance fees...may be a bit smaller but still is quite good
2) far as the car loan it isn't too bad a payment but, given your financial position, I would simply buy cars in cash in the future and/or pay down the principal with an extra payment gradually unless you are heavily into mutual funds (in which case leasing makes some sense if the investment rate/gain exceeds the interest rate of the lease)

3) Two huge tricks, if you're as frugally inclined as I am, are
A) use public transport 70% of the time even when you own a car...gas+maintenance+depreciation-by-mileage savings is significant. For example I strategically bought my condo along a major bus-line I can take straight to work.

B) Only run A/C or heat in 1-2 rooms at once (IE leave only heat or a/c on in the bedrooms at night and buy individual units for each room). This will often cut your electricity bill in less than half...mine's only $25/month with this setup (for a 900sq./ft. complex) and only $32-ish during the summer.

Answer 3

Your not in a horrible position but I would continue to save and save. 11 K for your retirement isn't that great at 30. Although a lot of 30 year olds haven't even thought about retirement yet lol. Car loan seems reasonable. It seems nowadays a family who makes $70 K a year goes out and buys a $50 K car. It's good to see you spent much less. Dallas is a booming area, so your homes value will continue to rise. I believe Dallas real estate has even been rising the last year, which is pretty impressive all things considered. I would try to set a goal to save $10 K this year for your retirement just to get a little jump start into your savings. I'm sure you know about compounding interest but obviously the more you put in at a younger age the better. All in all it sounds like you're doing a hell of a lot better than most other 30 year olds. Good Luck to you.

Answer 4

You're doing well. You can probably do better. You knew this, but simply wanted it validated.

First, get a realistic budget. You and the wife can work on this over the Holidays. It's not intended to be stressful, but an eye opener. Take a look at 2007 as a basis for the numbers. Build a budget with some wiggle here and there. Put in expenses for nights out and gifts and vacations. Plan ahead. Work your plan.

Be sure to 1)save 2) have a goal to have 7-10K in a saving account in 2008 3) pay off the car loan 4) eliminate any other debts 5) max out 401K's 6) look at paying off the house by 2015

All of this is do-able with a plan. Don't worry about your friends and acquaintances who have "stuff". It's just sticks and stones and crap. If you build yourself some wealth, you can live comfortably for most of your life. Make your money work as hard as you.

Dave Ramsey advocates most of this, and I agree with most of it. You're obviously bright and educated couple, so leverage this to your advantage.

Answer 5

You are doing well. Your income is well above average and you are managing your money well. My only suggestion is to accelerate the car payments by bringing down your savings somewhat. That will save you interest which is not tax deductible. Contribute the maximum amount allowed by law to the 401K. You still have 25-30 years of work ahead of you to build up a good retirement fund.

It is easy to look around and find that people of your age seem to be doing much better than you. They have fancy furniture, newer cars, take long vacations, eat out often, etc. Some of them may be earning more, some of them may have inherited money. But most of them are simply living beyond their means and piling up debts. Don't fall into that trap. Stay in control of your money instead of having your money control your life. Having a lot of stuff while you worry how you will pay the next mortgage payment does not provide a happy life.

Answer 6

It sounds like you are doing very good. I agree with alot of the other postings most 30 year olds aren't even thinking about retirement funds. I would suggest maybe checking out a book by Dave Ramsey called "The total money makeover" and it will help you stay focused. Maybe set your goal for this coming year to save alittle more then you did last year and each year raise the goal alittle bit. Happy holidays and you are doing great.

Answer 7

Doesn't sound like you are in a bad position, but $1420 sounds like an awful lot for the amount of your mortgage. My mother's mortgage is $1235 and her loan amount was about $180 k. You might want to see about getting that refinanced to get a lower interest rate if you have good credit. That would help you out a little bit.

Answer 8

It sounds good but instead of paying the bank for the car loan, consider paying off the loan and paying yourself instead.
Of course it will depend upon the rate you are paying for the loan and the rate of interest you are earning on your savings. If you can, pay $50 a month additional on your mortgage towards principal.

Answer 9

i am really pleased you and your wife are doing very well and the best of luck to you both
but there are allot of people that go on here that are not so well off and as far as they are concerned you are just rubbing there noise in sore wounds as not every one are as lucky as you and your wife but at this time of year with it being christmas some people cant aford much for there children do you see what i mean
but all the very best to you and your wife
and a very merry christmas to you all and have a good new year

Answer 10

Try not to compare "stuff" with your friends and family.

I would be willing to be that many of them have so much "stuff" that the are in debt to their eyeballs. Remember their motto: "It's not how much money you have, it's how much money everyone thinks you have".

You didn't say where the $16k in savings is invested but, at your ages, most of it should probably be in stocks.