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February 05, 2013

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Sounds like you're on the right track. I appreciate your planning. I do the same thing.

My only suggestion would be to make your retirement plans as though there was no social security or pension. I don't have much confidence that either of these will be around in their current form 30 years later when you and I retire. Since you know that your pension is underfunded, that's all the more reason assume it won't be there.

I didn't know that school nurses still existed. I thought they were victims of budget cuts decades ago.

How much are health insurance premiums for a family of 6 or 8?

Do you receive any health care benefits from your work?

I am Canadian so health care is free and my employer pays 50% of dental, drugs, vision and we get money in a flex account for whatever else we think falls in the health care range (massage, braces, counselling).

Police forces here provide generous benefits and you will have a lot of dental visits in your future. What if everyone needs braces?

"I know this sounds very planned out, but I realize a million things can happen between now and then and we’ll have to be flexible."

:) I am only a few years older than you, but I had to laugh at this sentiment - because yes, it DOES sound very planned out! It's good to plan... but don't plan too much, otherwise when (not if) something goes astray, you could feel like you don't know what to do because it isn't according to plan.

I'd say that you might want to consider (this is just risk planning here) the fact that your wife could be at higher risk for cancer based on the fact that both her parents died young from it. That might dictate a different health plan for your family - or a good amount of life insurance. There's also the plan for so many kids... what if you find out you can only have 2 for whatever reason? Will your house be too big? Or how would you cope with a situation like if you got hurt on the job? Or you have to move to be closer to a family member in need or to be closer to better health care or schooling options? You're 24 - don't assume life today is guaranteed to be the same tomorrow.

Not trying to throw bad situations at you, but any of these and more can and do happen. So maybe planning for when you want to take xyz retirement isn't so necessary at this age, if you're making sure that your investments are diversified (and at our age, not overly conservative), and you're saving as much as you can and being smart about keeping spending down where it's important.

Keep up the great work - it sounds like you've put a lot of thought into your financials so far.

No need to rush now, but why not save up for your children's college education? Looking at your situation, it seems you're living WELL below your means, your home should be paid off very quickly (and will likely appreciate in value, at least in the long term), and thanks to you setting money aside for retirement on top of your pension/Social Security, you're in excellent retirement shape.....seems like there's more than enough wiggle room to save for your kids' college education (even if it's in taxable accounts that you can use for retirement OR college).

And keep in mind, a college education is EXTREMELY important. Look at the unemployment rates of college grads vs. non-college grads. Sure, many people succeed without college, and you don't need to go to an expensive private university....but generally, a college education is a great way to ensure/minimize the risk of long-term unemployment.

Re: losing weight to improve your insurance rating - I know that, at least at Northwestern Mutual, you need to have kept that weight off for a certain period of time (I think six months) in order for them to take it into consideration.

Great job on your finances! Most people 10 years older than you are not in as good a position.

A couple of notes:

1. Good job on planning to get rid of your gas-guzzler. $6K/yearly is outrageous especially considering you probably don't live in a gas-expensive state like CA. (I live in CA, have 2 cars, and last year spent around $2400 in gas and probably put on 18K collectively)

2. Your family makes a lot of money now. I'd up your tithing. $1-2K and making $115K looks a tad stingy. You can add it on your taxes also.

3. I'd start up a 529. I doubt that colleges don't factor in things like retirement accounts but I could be wrong. Plus, why not take advantage of the compounding interest?

4. Police officers in my area have very tough jobs and many work a lot of nights and crazy hours. Is your job like this? I might re-think having 6 children unless your wife has an extraordinary amount of energy.

@Chadnudj

http://www.usatoday.com/story/news/nation/2013/01/27/study-nearly-half-are-overqualified-for-jobs/1868817/

I do not agree with the statement that a college education is EXTREMELY important. I made two long posts on the previous profile for CA about exactly this topic so I wont rehash them here but the article above shows how there are 41 million people with degrees and only 28 million jobs that require any kind of degree at all.

College makes huge sense for many people but we are past saturation point and so we actually have too many people getting degrees right now based on the numbers from the study in the article I listed here. It is not enough to simply get a degree. Millions of people getting degrees right now are literally wasting their time and money doing so.

It is also bad analysis to use group statistics such as comparing unemployment for college grads versus non-grads like those two groups are monolithic. The 13 million more people who have degrees than there are jobs tat require one are not being helped by their degree. Those statistics are not any comfort to them. Just because Doctors can get employed at 99.8% rate doesn't help the liberal arts majors who can't find work in their field at rates easily into the double digits.

The same can be said for salaries. Tell the retail sales clerks with a college degree about average salaries for college degrees and see how much better that makes them feel when they are getting paid no better than the high school drop out working next to them. The article above points out that 25% of retail sales clerks have a college degree.

For the record I have never put a single dime into a 529 college fund nor do I ever intend to. I am not saying its a bad choice to do so, I just don't like how it hamstrings my money and I currently prefer to have other options for that money. I suspect the odds are pretty high that my kids will go to college but I am not certain of it. I consider it at least a viable option that there may be better choices than college for my kids when the time comes.

As noted above, this sounds fine but I am a little concerned at how "planned out" it all sounds.

You are very young and looking many decades ahead, and there are a lot of surprises probably out there for you and your wife, and it is highly unlikely that everything will go as you have planned. So, I think you should also be sure to consider alternative scenarios, contingency plans, etc, at this point.

things i think you should consider: I agree with the other posters about your pension possibly disappearing. some cities have gone bankrupt already to avoid paying pensions of public employees and I think that is likely to increase in the years ahead. if your pension does not disappear entirely, it is very unlikely in my opinion that you will be able to draw your pension before 65 years old. So I do not think you should plan on retiring early. your wifes job also is likely to disappear so you consider what you should do in case that happens. I suggest she should keep up her accredidation, consider getting a nursing PhD, so her job prospects will stay bright even in the future job market. I also think you should consider preparing yourself for a management type business job for when you want to leave the police force when you are older. Work on getting an mba on the internet for example, and try to get more supervisory experience in your current job to build that side of your job history.

Overall, I think you should not assume that things will stay the same as they are now over the next 30-40 years. I think you should make sure you and your wife and family have multiple options open to you "just in case". making sure to keep building your skills for potential employment in different areas if you need it would be a truly smart move.

@RH,

Two pieces of advice.

Why wait for the inheritance to get the HEL. Get it now, pay off what you can and then pay the remaining balance off when you get the inheritance (PenFed could pull that at any time. I track the PenFed HEL and HELOC prices and the 60 month has been that price since last May but who knows when they may change it). Based on how much extra you are putting into the mortgage this should be very do-able. Why not start saving the $50 on interest right away?

Second, don't buy any life insurance until you are at least planning to have your first kid if not pregnant with them. You have no reason to have life insurance right now. You do not have a big mortgage that needs to be paid if you die, you do not have any other obligations and you have a high net worth for your age. Life insurance now is simply insuring against an event for which there are no real financial problems. Once you have children that changes but until then life insurance is not needed.

If you plan to actually have 6 kids, once you get started you are going to need a ton of life insurance. So I would advise none now and get ready to purchase well over a $million worth of it if you have 6 kids. Don't forget long term disability insurance. This is actually more likely than death. Hopefully your employer offers this or an option to buy into it. If they do you should definitely be doing this. If not you should go get it yourself and this should not wait until you have kids.

The fact that your wife is only 24 and has already lost both parents from cancer would make me very leery of having six children, apart from the fact that, as an environmentalist I am against overpopulation for a variety of reasons. These days two children should be enough for anyone, especially with the way college tuition is increasing.

I am not sure why you feel the need at this age to buy an Umbrella policy. Isn't Auto, Homeowners, Term Life, and Disability insurance sufficient?

I, like you, aggressively paid off my mortgage. Having no mortgage (and thus a relatively low cost of true 'necessities' in my life) helped me feel much more comfortable with investing aggressively and watching the markets ups and downs.

I agree with Apex that disability is extremely important for you and your line of work. I would assume your employee takes care of that, but make sure its enough and if you have the options through them to get more its probably a great deal.

I disagree with Apex re: life insurance. Get a 30 year term while you're still young and healthy (though you're absolutely right re: losing weight, it'll make a big difference). You should see how much my offered rate rose after the first minor blood test black mark. I think someone who is considering 6 kids already knows they need life insurance and probably soon.

I think your doing real good. Saving for retirement at your age is your best move. You'll be way ahead of the game with such an early start.

You do have a lot of plans. Nothing wrong with that, so long as you stay flexible and be prepared to let the plan change when needed. You should play the "what if" game sometimes. As in ...What if you or your wife dies young or becomes disabled? What if your unable to concieve children? What if one of your children needs special care? Whatif ??? whatever. I'm not saying you have to expect bad things to happen. But with such a long time ahead for you there are sure to be wrenches thrown in your plans fronm time to time. Just saying.

@Apex

I'm wondering if you could expand on your analysis of why you chose not to use 529s for your children? I understand the penalties if they choose to not go to college, but if the likelihood is very high (say 80%), why not at least drop in a portion, like $10-20K per child that would be enough to cover costs at a very inexpensive college.

Coming from a large family, I'm not as shocked as many on here at the desire to have 6 kids, but I did want to point out that in 5 years, your wife and you will be 30, and having 6 kids after 30 is biologically a challenge for many (in fact, having 1 can be a challenge for some!). For myself, my kids come first (before paying my mortgage off, you do have to be able to take care of them, but that's just part of them coming *first*), and with the financial shape you're in (hint: better than mine, and mine's not too too bad!), there's no need (financially) to wait that long IMHO!! Of course, there may be other factors at play here :)

I agree with r-meister 100% about the challenges of having children beyond age 30. Listen, you can either have kids and put off (age 47) retirement OR you can retire early with NO children. You can't have both because, reason with me here, how will you manage to keep expenses low enough with 6 kids to achieve this feat? Think about it in real terms, your first child may enter college when you retire as you say, but look at the expenses incurred with the other 3-5 finishing middle and high school?

I'd say start a family now and live life to the fullest. You will regain your balance in life by having children. What I mean in that is I fear you are living an unbalanced life. Look, some people are either stuck in the past, some live only for today, and yet others sacrifice and pine about the future. I'm afraid you suffer from the latter; sacrificing today for a life in the future. Is it worth it? What if your brain becomes so wired that when the time finally arrives you will no longer know how to live in the present?

So I say go and start a family. This is a gift that you need, for yourself and your wife!

I think you're doing great.

I just want to warn you not to count too heavily on the pension, and ideally don't count on it at all (hard to do, I know). I work in the public sector in the SF Bay Area, and we had our pay cut across the board by 10% of compensation (the pay cut amounted to about 12.5%) about 1.5 years ago (including police officers...who were basically sacred cows up to that point. Some of them were shocked when they found out they weren't untouchable). They are also working on rolling back pension benefits, which is being decided in the courts...but even if they never roll back your pension, pay cuts or a lack of pay raises can definitely eat into the value of your pension benefit. I would definitely expect some kind of pension cut to happen, either direct or indirect.

I have to say I thought Luis's post was very apt. When I was your age I was a little obsessed about planning for the future, too. Now, I just think there are too many wildcards, especially with the big picture view of our economy not being very good (government debt, etc.). I also agree that most people who retire in their late 40s or early 50s seem to not have kids. So retiring at 47 with 6 kids is not realistic...and as others have said, it's almost impossible to have 6 kids if you don't start until age 29.

As for this idea that you shouldn't have more than two...I think that's BS...As long as you can support them, I'm good with it...And there's no personal agenda on my end. I don't have any and don't want any...but I don't think everyone has to be like me.

1. Echo the above comments on not counting on the pension, just view it as "icing on the cake", the way FMF views Social (In)Security. Even if you live in a fiscally responsible state, the general public is too resentful of these benefits from a rapidly bygone era.
2. Aim for 3-4 kids and call it a day..you will be more than busy enough. I feel bad for our society that good (at least financially responsible)people no longer want to reproduce, but "it is what it is."
3. Lastly, while I abhor most "specialty insurances" (as the old saw goes, 'you wouldn't buy life insurance just for weekend days'), your wife may consider while healthy an AFLAC like "cancer policy" or some other special cancer insurance, especially to cover the medicine costs than can easily be $20k a month. Just an idea..that I am sure many others may disagree with..
Don't lose the forest for the trees though- you are in great shape and doing wonderfully!

@Noah,

I would be happy to.

1. Uncertainty. As I discussed above, the fact that this money is allocated for one very specific purpose that is not certain to happen with penalties for using it for anything else. I also find the value of college to be getting less and less all the time with the exception of very specific degrees. That is to say that 40 years ago I think any degree was a benefit. Today I think only some are. I believe a good number of them are not worth the paper they are printed on. Many more are worth something but not nearly as much as the promoters are all making them out to be. And then there is a class of degrees that are worth a ton if you are able to perform well enough to get a good job with that degree. And then if you have 20,30,40K sitting in a 529 what are you going to do with it? Well go to college of course. But wait a minute, is that the right choice? Well its nearly free, I mean, there sits the money. We saved for this. College has to be the right choice. I think it can circumvent the critical thinking about price and value the same way HMO health insurance does for medical care. If it feels nearly free, critical thinking about value goes right out the window. Of course it's not free, but the fact that money was pre-allocated kind of makes it feel like its already spent for that.

2. Minimal tax benefits. I believe the benefits of the 529 are overblown. 401k is better because the majority of taxes are federal and 529's are not deductible for federal income taxes. Some states offer state tax deductions but mine doesn't even do that (MN). So all you get is tax free growth and the last decade there hasn't been much of that and there isn't even much time left for growth now for my kids.

3. Extra expenses and limited investment choices. I can't say for sure about this one because I have not explored it in the least because I have no interest in using one but I have heard that the fees can be somewhat higher than you might like and the investment choices often are more limited. Perhaps that just requires more diligence on the users part to find a better plan. Which brings me to the next reason.

4. Simplicity. Given the minimal benefits I see I don't really care to have more plans that I have to deal with understanding and setting up and then figuring out what paperwork I need to file to get the money out of the plan at the right time to use for the right reasons. In addition this is dedicated money with a shorter withdrawal period. That means you have to do quicker risk re-balancing in these accounts. If you follow the same time frame of advice you get for retirement you would need to be moving to very conservative and safe investments about 5 years before entering college to protect from a large loss of principle. I prefer to do that kind of risk management over my entire portfolio but in this case you would need to do it in the microcosm of the 529 because that is where the money is all going to be drawn from in a few short years when you get to that stage. The savings here are not going to be life changing. I prefer to avoid complexity unless it comes with large benefits. I don't believe 529's do.

5. Versatility. I have enough money tied up in tax deferred retirement plans the way it is. I want access to a decent amount of my money. I do not want to put all my spare money into various dedicated vehicles that tie all the money up. As someone who invests in real estate I need a lot of cash. My real estate is my education plan and my expectation is that I will be money ahead by using that money on real estate rather than putting it in a 529.

That sums up the big reasons I avoid 529s. I want to be careful to state that I don't think 529s are dumb or that people who use them are dumb. There are clearly benefits to them. They can save you money and for many people they are probably a good option. On the whole the drawbacks and extra hassle just makes the benefits not worth it to ME PERSONALLY.

@Apex

Thank you for taking the time to outline that for me. I skimmed it and will digest it later. It's a good time for me to re-evaluate my current 529 plan choice.

I read Apex's comments in the other post and I agree with him that 529s aren't always the best college saving option. A few years ago, I set up Roth IRA's for my kids, who are employees of my business. When college's calculate financial aid, 529s are weighed heavily, while retirement assets are considered sacred. As long as the rules don't change, and there's no guarantee of that, I'd recommend understanding how college's calculate earnings, investments, etc when determining aid packages and then decide what's the best college saving vehicle for your situation.

If America was full of couples like you, there would be no need for blogs like this! :)

My advice:

1. Relax! You're way ahead of the game.

2. Give more money.

3. Term life and disability insurance.

4. Take your wife on a nice vacation.

5. No need to put off kids unless there are other things you didn't mention.

Congrats on your success. I'm guessing you are a Boglehead?

@Oliver...you are so right...If most folks were only HALF as good as RH, our economy would be in MUCH better shape. I also suspect they would be much less tolerant of the government running up huge debts as well.

@indio

Chances are unless you are making less than $50-60K/year, your children are not likely to receive any financial aid. I knew several teachers in high school who made too much money for their kids to get financial aid. These were public school teachers. I don't think I stand a chance at qualifying. If anything, the only option is saving now or pressuring my children to do well so that scholarships are available. Since my children are/will be 50% Mexican, I might stand a chance :)

The other option is that my wife ultimately wants to go back to school. If all 3 (assuming we add 2 more) children decide to not go to college (highly unlikely), we'll use the money so that she can go back to school and get her degree.

You are doing great. Don't worry that things seem planned. You can never plan enough. Most people your age don't have a plan.

I agree with previous advice given about getting teh Penfed HEL now. No need to wait when you are so far ahead of the game on paying down your mortgage.

Next, even though you might not get the preferred rate, start getting some term life now. You never know what is going to happen. Secondly, you can just ladder in policies over time and the overall average price will still be great. At your age, the rates are extremely low.

Just two comments: Overtime should be greatly limited. You got married so you can spend time with your wife, so spend time with your wife! Wife and kids appreciate more than a token appearance of the husband/father, so if overtime is not needed for the necessities of life, do without it and be happier/healthier. I speak from experience; overtime is greatly overrated.
Also, happiness comes from giving more--not keeping it all for yourself. Tithe more or give more to help others or whatever. Contributions will help you on taxes and help you and your family to be kind and joyful.

RH,

You are doing amazingly well for your age- the thing that stood out for me:

>Sometimes I feel like all I do is plan for the future and don’t enjoy the present.

Make a spending plan. Just like you set aside a certain % for savings, set aside a certain % for spending and spend it guilt free.

If money accumulates in the spending account still use it for spending- vacations, eating out or purchases. This way you plan some balance into your life.

-Rick Francis

RH


RH here,


First I wanted to say thank you to everyone for your comments! I like to talk about financial stuff with my friends but most aren't very interested and there's not many that I would take financial advice from:)


OK, here we go.


@My Financial Independence Journey


I agree about not planning to much on my pension and SS. My thinking is that even if I only get half of the planned pension, I should be alright. If the pension doesn't come through at all, I can keep working. Our current expenses (not including savings, taxes, or the mortgage) is right around $35,000. That will go up with children but I don't think quite as dramatically as some people think. We won't have childcare or private school expenses. The main categories that go up should be food and utilities. Anyways, lets conservatively say that the pension pays out $25,000 per year. If I meet my savings goals, we should have about $1M in today's dollars in retirement accounts. A 3% withdrawal rate would give me another $30,000 a year from those accounts. If I don't hit those savings goals, I will obviously keep on working.


@Jane Savers @The Money Puzzle


This year at my job, premiums for a family with a low deductible health plan are $204/month or $2448 per year. If you choose a plan with a high deductible, the premiums are $58/month or $696/year.


I do receive health benefits from work. My wife and I are on my plan and in 2012 for a high deductible plan we paid $810 in premiums and my company paid $11,000 in premiums.


Funny you should mention dental visits in the future as my wife and I are going today for the first time in a few years.


Dental plans in the US usually aren't that great. I use one at my work b/c they pay %80 of the premiums. If all of my children needed braces, I will pull the money from my Health Savings Account. I currently have about $11,000 in there and should add another $15,000 in the next 3 years.


@ Kay


I like going through the "what if" situations and honestly there are a few things that could happen that would be difficult to recover from. One of the biggest concerns that you pointed out is if my wife or I become disabled. I have disability insurance through my pension. If I become disabled, they will pay me %50 of my final average salary (about $30,000) for the rest of my life. It only stops if I could come back to work. That's a lot stricter than a lot of disability polices b/c as a police officer I only need to get a bum leg or something like that and I would be unfit for duty. My wife on the other hand doesn't have disability insurance. If she becomes a SAHM she won't be able to qualify for it.

@Chadnudj


I agree that saving for college is very important. I'm only saying that I can save for college in my retirement plans. I will be able to withdraw from the 457b when I leave my current employment and can withdraw my contributions to the Roth IRA's at anytime. Maxing both of those out will be $28,500 every year. If my wife becomes a stay at home mom, our gross income will be $75,000 at the most. That would mean I am saving 38% in retirement accounts, not including the pension. If I put money in a 529, I would have to put less in retirement accounts. I would rather put my money in retirement accounts.


My wife and I currently are thinking that paying for 1/2 of college sounds fair. We might pay for more if we do well before then, or pay less if we truly can't afford it.


@Noah


Giving away 2% does look stingy. We should give more. I started writing why we give what we do, but it was really just a lame excuse.


Retirement accounts aren't taken into account for the FASFA, but the college you apply to might. As noted above, I would take advantage of the compounded interest in my retirement accounts. Plus 529's are counted as parental assets on the FASFA.


My job is actually very low stress but I do work a lot of hours(32 hours of overtime this week). I really can't see us having over 4 children.


@ Mc


I agree about being flexible in the future. Lately I've been thinking about different jobs I might like after leaving law enforcement. I thought about teaching and several other things. I do want to be financially independent at that point so if I am working, it's because I want to. If I'm not FI, I will find something to do. I really looked into being a financial advisor (CFP)but have been turned off by the fact that most of the jobs starting out are just sales of high cost products that really help the company and not the client.


@Apex


Regarding the HEL, we've changed our mind about the mortgage payoff plan. We decided that if we really bust it, we can probably pay it off by the end of the year. It's now at $48,000 and we haven't gotten the $20,000 inheritance yet. I calculated that switching to PenFed would save us $206 and I didn't think it was worth the hassle.


With the life insurance, while we are planning on waiting a few years to have kids, we might change that at any time. I would personally feel better if we had it in place.


I have a decent long term disability plan through my work but my wife doesn't have it. Question: If she gets private LTD based on her current job, will the plan allow her to stay on if she becomes a SAHM?


@Chadnudj


I agree that saving for college is very important. I'm only saying that I can save for college in my retirement plans. I will be able to withdraw from the 457b when I leave my current employment and can withdraw my contributions to the Roth IRA's at anytime. Maxing both of those out will be $28,500 every year. If my wife becomes a stay at home mom, our gross income will be $75,000 at the most. That would mean I am saving 38% in retirement accounts, not including the pension. If I put money in a 529, I would have to put less in retirement accounts. I would rather put my money in retirement accounts.


My wife and I currently are thinking that paying for 1/2 of college sounds fair. We might pay for more if we do well before then, or pay less if we truly can't afford it.


@Noah


Giving away 2% does look stingy. We should give more. I started writing why we give what we do, but it was really just a lame excuse.


Retirement accounts aren't taken into account for the FASFA, but the college you apply to might. As noted above, I would take advantage of the compounded interest in my retirement accounts. Plus 529's are counted as parental assets on the FASFA.


My job is actually very low stress but I do work a lot of hours(32 hours of overtime this week). I really can't see us having over 4 children.


@ Mc


I agree about being flexible in the future. Lately I've been thinking about different jobs I might like after leaving law enforcement. I thought about teaching and several other things. I do want to be financially independent at that point so if I am working, it's because I want to. If I'm not FI, I will find something to do. I really looked into being a financial advisor (CFP)but have been turned off by the fact that most of the jobs starting out are just sales of high cost products that really help the company and not the client.


@Apex


Regarding the HEL, we've changed our mind about the mortgage payoff plan. We decided that if we really bust it, we can probably pay it off by the end of the year. It's now at $48,000 and we haven't gotten the $20,000 inheritance yet. I calculated that switching to PenFed would save us $206 and I didn't think it was worth the hassle.


With the life insurance, while we are planning on waiting a few years to have kids, we might change that at any time. I would personally feel better if we had it in place.


I have a decent long term disability plan through my work but my wife doesn't have it. Question: If she gets private LTD based on her current job, will the plan allow her to stay on if she becomes a SAHM?


Your home is not an asset. It doesn't put money in your pocket every month.

At this moment in history, fixed rate 30 year mortgages are being offered below the rate of inflation. That is incredible. In fact, a 30 year fixed rate mortgage is an asset.

So, refinance your 15 year mortgage to 30 years. Take the money from the inheritance to make a downpayment on an investment property - with another 30 year fixed rate mortgage.

And, take the equity out of your existing home for the downpayment on a third rental house -- with 30 years fixed.

Your wife can easily manage the properties as a stay at mom.

Instead of paying down your mortgage, invest that cash into college funds for your kids. You will need to.

I understand the mental attitude of wanting to be debt-free and paying off the mortgage. But there is a difference between good debt - like a fixed rate mortgage that a tenant pays off for you -- and bad debt.

Take advantage of these 30 year fixed rate mortgages. As someone who has lived through years of 12% interest rates --- the current mortgage environment is a once in a lifetime opportunity to accumulate assets in the form of rental properties.

Sounds like you're doing great.

I have only two points -- first, I agree with the strategy to concentrate on retirement funding and not get too concerned with college savings. Community College is very affordable and not everyone goes to college or needs to go.

Second, I fully endorse the plan to have alot of kids. Have as many as you want and don't wait to start. My folks sacrificed plenty to have ten kids. Over the last 15 years of my father's life, he gradually lost his eyesight and needed to give up driving. If they'd had only one child, this....and many other things.... would have been a huge burden. Instead, I have 9 siblings with whom I could share this responsibility and it was a joy. Watever material goods or experiences were missing from my childhood are more than made up for by having all those brothers and sisters. So, we didn't have cable tv or lavish vacations and they never bought me a pony or paid for college or a wedding. But among my siblings are a nurse, hairdresser, chef and plumber (among other things). Having these people in my life was the greatest financial blessing my parents ever bestowed on themselves and on me.

I love your plan! I plan everything to death too, but I have no problem changing courses so it's more of a psychological thing for me to have some kind of plan to fall back on in the absence of another issue to deal with. A lot will change for you over the next decade, but I say

1 - Max out retirement accounts and do so for as long as you can. If you do it even for a few years now and then have to take a break you will still be way ahead of the game.

2 - Don't count on overtime or your wife's job as both rely on government budgets which can change dramatically. For this reason and to optimize flexibility I'd wait till I had $50K in savings before rushing to pay off a 3.5% mortgage with interest you can deduct.

3 - It unnerves me a bit to see how your wife has thrown 100% of her large inheritance into your joint community property. You are very young yet and this may sound crazy now but if you ever divorce for any reason she is the one who is going to lose out big time for having done that, assuming you don't have a prenup. You seem to be the one taking the reigns with the planning, and so she may feel left out or like she doesn't have any control even if she doesn't know it or show it yet. I would at least talk to her gently about the coming $20K and give her the option of setting it aside for safety in an account in just her name. Even if it's just for a few years or even if she declines it will mean a lot to her I'm sure. There is always emotion attached to inheritances and do remember that is her money - not yours.

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