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Last month, Leana blogged about her family’s early retirement goals and how they plan to get there. I find it fascinating to read personal finance stories, and I used to be an avid personal finance reader. Her post inspired me got me thinking about my own plans, which admittedly aren’t as solidified by the numbers but are nonetheless on our minds.
Managing Multiple Financial Goals
Over the course of my adult life, I’ve had a difficult time finding balance in my finances. When I was single in my 20s, I spent too much/saved too little. After having kids and quitting my corporate job, I pinched pennies too much to try to pay off our mortgage faster. We had no money allocated to “fun” stuff.
My husband and I are trying to save for retirement and college while simultaneously trying to enjoy travel and other non-essential fun stuff without feeling deprived. It’s a tricky balance, for sure.
Retirement saving has actually been the easiest bucket for us. My husband and I have both been good about contributing to our company 401k plans over the years. We scaled back on our contributions while we were paying for my husband’s grad school degree, but we put them right back up afterwards.
I haven’t had a corporate 401k to contribute to for the past 12 years. But, we’ve recently doubled down on my husband’s contributions and made sure he is contributing at or close to the maximum dollar amount allowed by the IRS each year ($19,500 in 2020). Pouring that much into retirement does mean we have to cut back on other stuff, like new cars and a bigger house.
My husband and I are both in our late 40s. While he loves his current job, he doesn’t want to do it until he’s 65. Yet, he doesn’t want to completely retire in his 50s. He sees himself semi-retiring in his late 50s and taking a different role, like a part-time professor at a nearby college.
So, we need to start saving in some non-401k funds so that we have access to some savings we may need before we can withdraw from 401ks penalty-free at age 59 1/2. We need to look into shifting to a Roth 401k, Roth IRA and/or another investment fund.
Paying for college is a controversial topic. Even the experts disagree on this.
My husband and I both graduated college debt-free thanks to the help of scholarships and our parents. Both of us got to have the experience of living on campus and making life-long friends. We are so grateful for this, and we have come to realize how lucky we were to start our first jobs without any debt.
Both of us feel strongly about providing the same opportunity for our three kids. However, due to the disproportionate rise in college costs over the last few decades, our contributions will have limitations.
We plan to pay for four years tuition plus room and board at a state university (or the same price at a private university with scholarships). Thankfully, tuition at state universities in Texas is somewhat “reasonable” compared to other parts of the country.
We’re looking at $20-$25k per year, or around $100k total per kid. This doesn’t include books and extra spending money, which our kids will cover themselves. However, many of these universities also give merit scholarships for high grades and test scores. So, we are hoping the total is really closer to $75k-$80k.
Our plan to pay for this is two-fold: 529 savings and cash flow.
Each of our kids has a 529 plan. We’ve socked away gifts from grandparents and made contributions over the years. When my kids were younger, I did a variety of freelance jobs (mystery shopping, freelance writing) and stuck all of that “extra” income into these 529 plans. My oldest has around $50k in his 529 account, and he has 2 more years until college.
To supplement with cash flow, we are on track to get our house paid off in the next 2-3 years. Once we pay off our mortgage, that will free up $12k per year that we can use to cash flow college expenses.
It sounds like I want to have my cake and eat it too, right? Save for retirement and college, AND travel? Well, thank goodness for miles and points.
Next summer, my family plans to travel to Europe. After getting sign-up bonuses on United cards, a Chase business card and Alaska Airlines cards, we should be able to get almost-free flights to Europe. Sure, traveling in Europe will still cost us money. But saving on flights is huge!
Having a child in high school has forced us to slow down our travel due to school commitments. So we won’t be jetting off somewhere every month. But, we still plan to travel as a family of five 2-3 times per year.
My husband and I also have our own travel plans for when our kids are grown and flown (9 more years until our youngest goes off to college). Remember how a few summers ago I spent almost a month in Florida with my kids? We’d like to do something similar with just the two of us.
We plan to “live” somewhere for a month, where we can both work remotely. Try out different beach locations, rent a condo or house, maybe bring our dogs with us. Since we won’t be confined by a school calendar, we can get some deals to go during the off-season.
You Can’t Take It With You, and There Are No Guarantees
While I’m not advocating for reckless spending in the present, I want to make sure that I don’t end up being too much of a “saver.” It’s been ingrained in my head since birth. My parents saved up money and experiences for later in life that they never got a chance to enjoy due to poor health. If there is a destination we really want to visit, I will find a way to get there sooner rather than later.
Have we found the right balance between travel, college savings and retirement? I hope so. I’m sure our plan has holes in it and it’s not perfect. But, at least we have a plan.
Do you find it hard to juggle and balance your finances with multiple goals? What has worked for you?
Nancy lives near Dallas, Texas, with her husband and three kids. Her favorite vacations include the beach, cruising and everything Disney.