#350: Ask Paula: How A lot Ought to We Spend on a Marriage ceremony?

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Photo of Paula Pant with chairs behind herNameless and her husband have set themselves on the trail of saving for retirement. However an previous mistake haunts them: a monetary planner satisfied them to purchase a mixture of entire and time period life insurance coverage, which prices them $700 monthly. Do they want entire life insurance coverage, and the place else can they save their cash?

Mike has $60,000 in money incomes one p.c curiosity. He has plans to purchase a house and get married in three to 5 years. The place else can he put his money to earn a bit extra? Is the inventory market too dangerous for such a short while horizon?

Nameless and her future husband are questioning: what’s a sensible quantity to spend on a marriage?

My pal and former monetary planner Joe Saul-Sehy joins me to reply these questions on right this moment’s episode. Take pleasure in!

Do you have got a query on enterprise, cash, trade-offs, monetary independence methods, journey, or investing? Go away it right here and we’ll reply them in a future episode.

Nameless asks (at 4:28 minutes): I’m within the early phases of wedding ceremony planning and the toughest half has been making a finances. We’re paying for the marriage ourselves and don’t need a courthouse wedding ceremony or to elope.

We’re each in our early thirties. I make $85,000 yearly with an anticipated bonus of $20,000, have $5,000 in money financial savings, $65,000 in retirement accounts and contribute roughly 20% of my earnings to those accounts yearly. My annual bills are about $45,000.

My fiancé makes $83,000 yearly, has $45,000 in retirement accounts and about $15,000 in financial savings. His annual bills are about $50,000.

Neither of us have important money owed aside from our home and repay bank card balances in full each month. We owe $220,000 on our home, at an rate of interest 3.75% and have $110,000 in fairness. Neither of us need to retire tremendous early; we’re focusing on our mid to late forties.

What do you assume can be a sensible and accountable finances for our wedding ceremony?

Mike asks (at 22:46 minutes): I’m in search of recommendation on the place to place cash for brief to medium time period financial savings targets – a 3-5 yr time span.

Somewhat about me: I’m 36, single, haven’t any debt, reside in a big midwestern metropolis, and I make about $70,000 per yr. I’ve about $75,000 in a 403b account. I lately opened a Roth IRA and am making month-to-month contributions.  I contribute about 9% of my earnings to my 403b, I get a ten% employer match and contribute 2% to my Roth IRA.

I’ve additionally amassed about $60,000 in a excessive yield financial savings account, the place I earn about 1% curiosity. I’ve come to the conclusion that having this a lot cash in a financial savings account isn’t splendid. A few of this cash might be diverted to my Roth IRA and I’ve opened a brokerage account with Constancy to presumably make investments a number of the cash in inventory index funds. I’m attempting to determine what to do with the remainder of it.

There’s an excellent likelihood I’ll be shopping for my first residence within the subsequent 3-5 years and marriage can also be within the playing cards.

My impression is that inventory index funds could also be too dangerous for that brief time horizon. I really like the thought of a CD however the returns are low. I’m gravitating in the direction of the thought of placing an excellent portion of that into bond index funds – I’m in search of one thing low danger however will beat my financial savings account returns. Any ideas on bond index funds or some other place to stash your money for brief to medium time period targets?

Nameless asks (at 40:56 minutes): My husband and I are 32 years previous. Proper now, we have now 10 months of emergency financial savings. We contribute $12,000 a yr to our brokerage. We each max out our Roth IRA’s at $12,000 per yr, mixed. We contribute 3% to our 401k’s or 403b’s.

My husband’s firm matches 3% and my employer contributes 5%, no matter how a lot I put in.

We’re additionally saving $24,000 a yr in the direction of our subsequent funding, which may be one other rental residence or beginning a enterprise. I even have about $40,000 in an previous 403b. We’ve got two mortgages, with one being a rental residence, and we have now a automobile mortgage at simply 1.9%. We’ve got no different debt. My questions are:

  1. Ought to we be contributing extra to our employer 401k’s? They aren’t Roth accounts and have restricted funding choices – I’ve the funds in an aggressive goal date fund. I’ve thought of an HSA or contributing extra to our brokerage account. Are there advantages for one possibility vs. one other?
  2. Two years in the past, when our little one was born, I panicked as a result of we didn’t have IRA’s and neither of us had been getting retirement plans with our employers. With the assistance of a monetary planner, we opened IRA’s and bought entire and time period life insurance coverage. We’re spending $700 a month on entire and time period insurance coverage, as suggested by our monetary planner.

We really feel this may be a mistake – I’ve learn that constructing generational wealth is constructed by way of investments and that time period life insurance coverage needs to be sufficient. Ought to we put this cash into our brokerage, begin an HSA, or a 529? Ought to we have now entire life in any respect?

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