How many months of liquid savings do you have per your living expenses? 
Do you budget a percentage of your salary or a fixed number into savings?
Do you count retirement in that number?

How do you do your savings?

We've got several years worth of living expenses in a few different savings accounts, one being an investment account that we can easily pull from at any time. We put back a certain amount each month just into savings, not necessarily a percentage. Retirement is not counted in that. We are both putting into 401k's and IRA's. I'm maxing out my company match (50% of up to 6%, so 9% total) on my 401k and I believe we are maxing out IRA contributions, as well as HSA contributions. My wife works in public education and I believe she has to put in 10-12% of her income, but she doesn't pay into SSI.

We don’t save a predetermined amount, we just live pretty frugally. Max our our 401k’s. Invest in our companies’ discounted stock programs. We built a good sized savings account that we keep in investments through our financial advisor. That said, we have 2 kids in daycare ($2,200 a month) which is more than our mortgage, so our savings have significantly slowed. 

Just started a new 401k with new job that's maxed. Previous one was rolled into an IRA and it's booming. 

Savings is just ok, I don't have a set schedule for adding to it and I want to change that eventually.

I'm currently in psycho debt payment mode. I'm making great strides, but my sanity is suffering.

6-8 months of expenses saved. probably double that amount in investment accounts (this is my pay off the house fund) should they be needed. Max IRA and 401k contributions (company match on the 401k). try to set back 5-12% per month on top of those things but that is mainly fund vacations, christmas, emergency needs, etc. Anything left from that amount at the end of the year goes into the investment accounts normally, with us working to finish the basement, we didn't have any money to go into that this year.

posted by Automatik

I'm currently in psycho debt payment mode.

That's actually a really smart thing to do, right now.  We are overdue for a recession/bear market, and even in this mature market you're unlikely to get as good of a return as you are probably getting paying off expensive debt.

It's long overdue. 

Started using YNAB about 6 months ago. It's an amazing tool and has helped a ton, but you have to be REALLY proactive with it. It making me crazy with money/cash flow monitoring to a level I've never been before.

So my wife maxes out her 401k. I moved to a public ed job so I rolled my 401k into an IRA where my previous 401k was rolled into. We max that IRA.  Now 10% of my salary goes into my retirement and the college puts in 14% for 24% combo. We have one savings account that in a MM fund that is for 6 months of living expenses and we also put 20% of our income into another savings MM fund. My question is would the 20% we put into that second MM fund be better served somewhere else?

posted by kizer permanente

My question is would the 20% we put into that second MM fund be better served somewhere else?

It's hard to recommend any investments, right now.  Probably why paying down debt is a good idea.

Normally, in this market environment, I'd be saying to plow into fixed income investments.  But you'd be chasing risk above 3% yield.  Short-term and Intermediate-term duration debt should do well in a bear market, especially after they cut rates back down to zero.  Certainly better than buying equities that will donk-off 30%+ in the next year or two.

Anyway, money market accounts usually offer about the worst returns you can find.  6 months of savings isn't that good any more - I'd recommend more like 12 months.  But it doesn't have to sit in cash.  At least put it in a short-term CD that gets you a little bit better rate.  Sure, there's a penalty if you cash out early but only part of the interest (which might make it yield less than a money market, but that's only if you really need to cash out). 

You might do better still, and more liquid, in a low cost bond fund.  Vanguard has a short-term treasury ETF that returned 3.5% last year (keep in mind that's after two(?) rate cuts).  It averaged about 1.5% over the last 3-5 years.  Vanguard also has a short-term Corp. Bond ETF that did 7.0% last year and has averaged about 3.0% over the last 3-5 years.

Top CD and money market rates right now are @ 2% right now.  Keeping money in a bank only makes sense if you're getting some sort of packaged discount, like waived trading fees or lower mortgage rates.

posted by iclfan2

We don’t save a predetermined amount, we just live pretty frugally. Max our our 401k’s. Invest in our companies’ discounted stock programs. We built a good sized savings account that we keep in investments through our financial advisor. That said, we have 2 kids in daycare ($2,200 a month) which is more than our mortgage, so our savings have significantly slowed. 

Is that like $275 a week per kid? Whoa

posted by gut

It's hard to recommend any investments, right now.  Probably why paying down debt is a good idea.

Normally, in this market environment, I'd be saying to plow into fixed income investments.  But you'd be chasing risk above 3% yield.  Short-term and Intermediate-term duration debt should do well in a bear market, especially after they cut rates back down to zero.  Certainly better than buying equities that will donk-off 30%+ in the next year or two.

Anyway, money market accounts usually offer about the worst returns you can find.  6 months of savings isn't that good any more - I'd recommend more like 12 months.  But it doesn't have to sit in cash.  At least put it in a short-term CD that gets you a little bit better rate.  Sure, there's a penalty if you cash out early but only part of the interest (which might make it yield less than a money market, but that's only if you really need to cash out). 

You might do better still, and more liquid, in a low cost bond fund.  Vanguard has a short-term treasury ETF that returned 3.5% last year (keep in mind that's after two(?) rate cuts).  It averaged about 1.5% over the last 3-5 years.  Vanguard also has a short-term Corp. Bond ETF that did 7.0% last year and has averaged about 3.0% over the last 3-5 years.

Top CD and money market rates right now are @ 2% right now.  Keeping money in a bank only makes sense if you're getting some sort of packaged discount, like waived trading fees or lower mortgage rates.

Only real debt is the mortgage @ 2.75%. I don't know how much sense it makes to be in a rush to pay that down right now? My wife has a car loan but its 0%. That's it for debt. 

posted by Ironman92

Is that like $275 a week per kid? Whoa

Yea, expensive af in this city. Gonna be like getting a giant raise when they go to public school. But that’s 4+ years away. And of course the cutoff is August 30th to start school, and my 4 month old was born in the middle of September!

posted by iclfan2

Yea, expensive af in this city. Gonna be like getting a giant raise when they go to public school. But that’s 4+ years away. And of course the cutoff is August 30th to start school, and my 4 month old was born in the middle of September!

I remember those days. We had 2 in daycare. We send to private school now and its still worlds cheaper lol

posted by kizer permanente

Only real debt is the mortgage @ 2.75%. I don't know how much sense it makes to be in a rush to pay that down right now? My wife has a car loan but its 0%. That's it for debt. 

Dang that’s a nice rate. I don’t think debt is a bad thing (if it’s controlled). I also make more in the market then my debt %, so I have no reason to pay off my debt quicker. Ally also has normal savings accounts that make 1.6%, which isn’t terrible for not being in the market. I keep too much cash on hand instead of putting it into our invested funds, but I’m a little too risk averse. 

posted by kizer permanente

Only real debt is the mortgage @ 2.75%. I don't know how much sense it makes to be in a rush to pay that down right now? My wife has a car loan but its 0%. That's it for debt. 

I'd take about all the debt I could get at <3% because I'd expect to get a better return in the markets.  But I wouldn't be doing that now.

Obviously no point in paying down debt that cheap because it's not easy and costs money to take cash back out of your house, outside of doing a Refi on your ARM.

Your house would, hopefully, appreciate an average of 2-3% per year....so why would anyone ever pay off their mortgage?  Outside of the 20% equity you have to contribute, at mortgage rates of 3% you're housing cost is effectively free (aside from real estate taxes).  That assumes a person is financially responsible.

The only caveat would be if you wanted to lock-in a bit higher rate on a 30-yr fixed.  But I don't see rates going appreciably higher for a long time, at least a decade.  So 5-yr ARMs give you a chance to take equity back out, while offering some peace of mind.  I'd actually do an interest only, except the rate is a little higher which, combined with higher equity requirements, totally wipes out the return advantages.  That's unless you can get a favorable deal, but again that requires more cost via higher trading fees in that bank's brokerage account, or large savings accounts yielding practically 0% interest.

Anyway, as far as debt I think my current tolerance after-tax is somewhere between 4-5% where I'd consider paying it off.  I just paid cash for a new car 6 months ago because, at 4.9% APR, I'd have to do at least 6% in the markets to break even.  During or just after a recession where you can expect a healthy market recovery for at least a few years, then that math changes.  Right now, the decision to take that financing and put the cash into the market could turn out to be a VERY EXPENSIVE loan!

A mortgage at 3% is less than 2% after-tax.  That's a no-brainer to keep rolling over.  You can beat that rate with pretty conservative investments.

posted by Automatik

It's long overdue. 

Started using YNAB about 6 months ago. It's an amazing tool and has helped a ton, but you have to be REALLY proactive with it. It making me crazy with money/cash flow monitoring to a level I've never been before.

We've been using YNAB for over a year now and it has helped us immensely.

posted by gut

Anyway, as far as debt I think my current tolerance after-tax is somewhere between 4-5% where I'd consider paying it off.  I just paid cash for a new car 6 months ago because, at 4.9% APR, I'd have to do at least 6% in the markets to break even.  During or just after a recession where you can expect a healthy market recovery for at least a few years, then that math changes.  Right now, the decision to take that financing and put the cash into the market could turn out to be a VERY EXPENSIVE loan!

A mortgage at 3% is less than 2% after-tax.  That's a no-brainer to keep rolling over.  You can beat that rate with pretty conservative investments.

Lol I wish I knew as much as you about finance. God damn. 

Wife and I have maxed the Roth IRA ($5,000 for a few years and $6,000 last 2 years) each. But just hit the income limit and can’t contribute anymore. That’s about to change again for 2020 though, as she just quit her job to stay at home with the kid and work part time. We each contribute to company 401k, but that’s pretty minimal in comparison to the Roth

We have investments with 3 different firms, plus a 4th for the Roth retirement. I’d say enough for like a decade of living, but obviously if we had to dip in the returns grow smaller and smaller and a market recession would effect that. 

Also have 3 different college funds set up for our first born, that, if needed, can dip into. But that is definitely not the goal lol. At 8 months old, without us contributing any more, he should have around $160,000. Lucky little fuck. I just paid off my loans 2 months ago at 34 lol. We are hoping to have enough for him and the next to get 3 years each paid for. The estimated cost for college is projected to be astronomical in 20 years. 

Zero.  

Blew it all on betting on Clemson to win the title game.

My full and part time jobs match my 401k so I do those.  I get two raises a year so each raise I get I convert half of that into more in the 401.

Had to dip into the funds in 2018 when I moved and my sure thing job took nearly 6months to become reality.  Having that time off was pretty nice but got stressful.  Man, teachers getting Time off each summer must be awesome