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February 12, 2014

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Wow, I'm so impressed that you have tithes/charitable giving 1500 per month, that's so generous of you. Just like you I'm not really a techie person, latest mobiles are not important to me as long as I have a cellphone to use for communications.

Thanks for sharing SP, looks like you've got great control of your finances.

One question though, how is it that you don't "income out" of IRA contributions? Do your 401k/charities/interest bring your MAGI down that far? or are your IRA contributions not tax deductible?

@Flyer M - Our IRA contributions are not tax-deductible. We do a 'backdoor Roths' every year.

You are doing alright for yourself, really. I'd say if your goal is to retire early then you could divert all of your $1355 savings and $917 IRA into your mortgage and taxable investment accounts for early retirement spending. If you just keep your 401K matching you'll have more than enough come full retirement age with pension and social security to boot. So then now your trajectory of early retirement is actualized a lot sooner. Play with it and see what the effects are for you personally. Then, time the payoff of your mortgage with your newly calculated retirement age.

I'd forget toying with rentals in your particulary case since you are financially free from needing the boost and then avoid the headaches that they will cause you.

@Luis - The savings will be reduced in another two years or so once we have enough set aside for replacing both vehicles in the future. Why would you suggest paying off the mortgage even earlier? The interest rate is low (3.25%) so we're likely to get a better rate of return by investing. We definitely plan to increase the amount going to taxable investing over time as our income increases and we reduce savings.

My thought for the rentals was another stream of income that would lower the amount of nest egg needed to retire, particularly since I'm not that confident in the pensions and SS. A lot could happen to either between now and retirement age.

You and your husband need to figure out what your goal is for your nest egg. Then I would suggest that you go to a compound interest calculator website and play around with it using a "safe" number of CAGR as your Interest rate to see how much additional $/month it will take to get to that goal, based on a 15-17 year time to retirement. Then you and your husband get to decide what areas to cut in your budget or increase your income. I know it sounds like I am oversimplifying it but in reality it is this simple. We can all make suggestions and you guys might like them or not so it doens't matter. What matters is what you guys are willing to give up to accomplish this goal. Give up some lifestyle or some time (to increase income).

Ex. Recently my wife and I cut out cable TV, we got a ROKU 3 with Netflix ($8/month), we still have internet. This alone saved us $100/month.

6 Sigma would tell me to look for the quick win, low hanging fruit.

@ SP To clarify your question about mortgage payoff....only payoff earlier if you see the opportunity to retire earlier than 55. Reducing expenses in retirement helps you live off of less reducing the risk of draining your investment income. Then, you could potentially withdraw 4% safely and only touch principal thereby protecting your nest egg. Remember also that you do not want to be less in stocks and more in muni bonds while in retirement. Having all this should be more comforting especially since you do not want to have to depend on pensions and social security.

correcton* you want to be less in stocks...

You are in great shape. I have never regretted paying off my mortgage. Sure, you might be able to make more than 3.25%, but it is never guaranteed. You never now when things can change and it is good to have no debt, including no mortgage debt.

Was a great read. Thanks for sharing.

I am confused. If you are paying it off like a 15 year, why not refi into the 15 year and lower your interest rate?

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