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January 28, 2013


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Seems like you are in great shape for starting out. A few suggestions:

Lots of people, particularly those with a product to sell, will be happy to tell you how to invest your money. So take all their advice with that in mind. Here, you can weigh any advice provided below for what you paid for it :-).

There are a lot of possible goals listed, and not a lot of definitive direction, which can be expected at this stage in life, so it's hard to give any concrete advice. I'd be a bit leary of jumping into investing for now, particularly with the need to save for a possible $20K outlay for travel over the next year or two. For now, I would recommend just banking a good chunk of that while you learn about investing and personal finance. Many local colleges have adult community classes that can get you familiar with the variety of investments and usually are on Saturday or evenings once a week for a couple of weeks. Otherwise there are blogs and books you can read and review if you haven't already. Give yourself a year to settle, you've just gotten married, new job, etc. before you start putting money into investments.

To answer your questions:

Yes, you should be able to do more than just survive with kids and another car. It's all in how you manage things.

With respect to the wife I find it increadably annoying that she isn't "inclined" to work. My wife stayed at home with the kids, and I have no problem with that because that is a lot of real work. But she worked a job up until we had the first child and she's been working at least part time once they started in high school and could take reasonable care of themselves. Your a partnership. You both need to pull your respective weight and contribute IMHO but you have to also consider your personal and cultural situation and what you both feel pulling your weight means.

Regardless of the job situation, the money can become a real problem unless you are both on board and working towards the same goals. If she's always feeling like she's got to "beg" more money out of you and you're always feeling like she's "throwing it away" on unnecessary things, you'll both be angry at the other. This is where frank discussions of goals, expectations, budgets, etc. needs to happen. Remember, you can usually afford to have anything you want, you just can't have everything you want. Right now she's seeing thousands of dollars laying around being useless, why not have fun with it? There's plenty more where that came from, right? She isn't likely thinking, or wanting to think long term. So you guys need to talk about it and what that extra money really means to each of you and what you expect. You must get aligned with the same goals, with some room for a few individual goals, or you will always be arguing about the money. At a minimum you need to agree on what are your spending limits. There are resources that can help here, a variety of books for couples. A spending plan can help, but only if you both really agree to it. That may mean you have to lighten up some even while she tightens down. Finally, as an engineer we tend to think we have "solved" a problem once a plan is in place. Life isn't that easy, you will need to readjust, sometimes majorly, so just keep that in mind.

If I were in your shoes given today's situation I'd look to put about 15% (excluding any employer matching) of my pretax income towards retirement, however you do that (e.g. 401K, Roth, IRA). I'd go ahead and pick a target date fund until I was more comfortable looking at other options. You've got a lot of other things on the table to be saving for and that percent should get you on the right path for now and it appears you can easily afford it.

With respect to the travel costs, do it if it makes both of you happy and you plan for it while meeting other financial goals. Find reasonable ways of getting the cost down, but enjoy your time away. The only risk is if you don't or can't plan for it and suddenly there is an expectation of multiple travel many times a year. Again, it's down to reasonable expectations. When I was first married with in-laws out of state there was an expectation we would travel every time there was a family event, to include holidays. We had to nix that one early on, especially once we had kids. You may have to do the same.

Wish I could help with the other issues but I've no real experience moving out of country or not having done taxes for past years. I'm sure others can offer better advice in those areas.

Best of luck.

SM, I have a very similar background to you. I also got an MS+PhD and wasn't out working at a real job until I was 30. I am married and my husband and I don't have any kids yet. What jumped out at me is that your wife doesn't feel like working and yet wants to spend more money. She should at the minimum be working part time if she wants some luxury items outside of necessary everyday spending.

You are doing well, but you need to start saving aggressively for retirement and take advantage of all the retirement vehicles available to you and your wife. Since I also didn't start making a real salary until I'm 30, I am now maxing out my 401-k and also a ROTH IRA. I am saving 40% of my income and also paying down my mortgage very aggressively. It definitely helps to have a spouse who earns an income stream.

I also have parents who expect support from me to the tune of $10k a year. It is a strain, but in my culture it is expected for children to support their parents. I expect it is the same for you. Don't worry about it, but you need to have a budget in place to account for it.

Now is the time to beef up your emergency fund. I strongly believe 12 months of savings in an online savings account is the way to feel financially secure. Try to increase your 401-k and Roth contributions, and start saving for a house downpayment. Once you start a family you will not want to rent forever.

As for your taxes, you have three years to amend your taxes, which you should look into if you feel you are due refunds for 2010-2012. Look into the 1040X.

You need to start understanding what investing means. I used to think it was picking hot stocks, now I have most of my funds in low cost ETFs. Read up on as many personal finance books as you can find in your library. After a while they'll all start sounding the same and you know you've learned what you needed.

Good luck and you need to talk to your wife about working because at some point you will resent her free time and leisure while you work all the time.

Your salary is pretty good and your family should be able to live a comfortable lifestyle. Do you have to pay for the parents to visit? 10k is a lot of money to spend per year on a visit. Maybe just pay for the flight tickets and let them pay for sight seeing. Sight seeing isn't the same as providing support, right?
You are not portraying your wife in a very good light here. What's her contribution? It sounds like she just wants to hang out at home/mall and spend money. Does she have any goals?

"My wife is not inclined to work and would prefer being a home maker."
"I am beginning to spend wisely... However, my wife is on the other end of the spectrum and thinks I am too stingy..."

Wow, just wow. Does she at least cook all three meals for you everyday, do the dishes, wash your clothes, vacuum, shovel snow, make your bed, take your clothes to the dry cleaner, iron your shirts, clean the entire house (especially the bathroom), and plan to raise children someday? If not, she'd better stop spending your money and start contributing. You are not her sugar-daddy. You're both in this together. Being lazy is one thing, but to call her husband stingy for not letting her spend his money wastefully? Wow. I would seriously seek counseling.

SM, you're doing well. You have a high income,, you don't spend much and you save a lot.

Do you really only spend $150 a month on groceries for 2 people? That seems very low. If so, then good job there.

You said you're now contributing 30% to your 401k which is a very good savings rate. I'd say that 15% is a nice target and your'e double that so you're doing great there.

You might want to have a consultation with a CPA about the taxes. I believe you can amend the previous years with a 1040X to make corrections and claim those tax credits/deductions and get extra money back. Worth talking to a tax expert to handle it right I'd think. You've got 2-3 years to do an amended return. I'd also talk to the CPA about what might happen to your retirement accounts if/when you move outside the USA.

You asked about using an HSA for investing. You can use HSA money to invest in mutual funds. What you have for options depends on your HSA account. Your health insurance will have a deductible and a maximum out of pocket annual cost. I'd keep an amount of cash equal to at least the max out of pocket cost to cover health expenses. Then you can invest money above that if you prefer. If you save health receipts and keep the money in the HSA then that just helps the money grow tax deferred. Its not a huge benefit in the end over simply using HSA tax free money to pay your doctor bills.

I would have to concur with everyone's comment above about your wife not working. I totally understand if you have children, but what is she currently doing while you are working 8-9 hours today, hopefully you come home to a clean house, all chores around the house done, and a nice dinner, if not I know I would be extremely upset. You need to suggest that she find work.

I disagree a bit with the others finding an issue with your wife being a home maker. Kids, or no kids, if that really works for both of you (you can afford it, it doesn't bother you psychologically), the go for it. My husband is a stay at home dad now, but even before we had kids he had to stop working because of visa issues. As the sole earner for most of our married life I have to say I think I have the better deal. Having a partner at home gives you enormous flexibility for any domestic tasks, vacations, whatever not. And now with kids is even better. As I earn enough for our needs we don't have financial hardship, so it's all positive, and I feel I have also the benefit of "escaping" into my work whenever needed. I hope you face a similar situation with your wife - although the using of the expression "inclined to work" for your new wife makes me wonder if that indeed bothers you.

This said, I think you do need to plan and budget as a family and get on the same page what and how much to spend. If your wife values certain things that for you are unnecessary, let's her trade off other things, or may be set aside a discretionary budget for her. We haven't had to do it since we are both savers, my husband even more than me, but he does have one particular expensive hobby and I've never begrudged him spending in that area.

For the $10K in travel/visits, why don't you set aside an account and try to put there $800-900 monthly, that way you'll feel safer that you have enough (and if you don't, you can certainly skip a year, we are in the same boat and the first time we skipped a year the parents really minded, but they got used to it)

Pre-Script: If you graduated a PhD program with very little or no debt CONGRATULATIONS.

I think for somebody who travels as much as you an airline miles award credit card it the way to go. I have the Continental/United card from Chase which does a fairly standard $1/mile accrual but it keeps miles from ever expiring. Thus you can accrue enough points to but one of those tickets for you or others every few years. Although I understand where you are coming from on a family perspective, $10k/year on travel is a lot of money for your budget.

Given you and your wife's differing views on frugality consider setting up and agreeing on a budget together then adhering to it. You can then both be happy about the price of an item if it is within budget, even if it is luxurious.

Consider encouraging your wife to start offering daycare. This ties in well with her desire to be a homemaker and will bring in some extra cash to pay for the travel.

"As a student from 2004 – 2011, I didn’t heed to some specifics when I was filing for my taxes." I wouldnt worry here...did you make enough money (say...$50k+) to have enough taxes to be worth putting deductions against? Did your expenses amount to be greater than the standard deduction?

Regarding your non-retirement are on the right track. Buying ETFs/some mutual funds (watch the expense ratios!) can be a great way to invest, particularly with Dollar Cost Averaging (buying $x/month). If you are doing this type of investing be sure to find funds with no commissions, trade fees or front end loads. You can find a lot of options through Vanguard, E-trade, etc.

Regarding long term planning and moving abroad (these are educated guesses and you need to do your own research):
-I'd stay away from buying a house
-I'd stay away from starting a tax protected college savings account (ie 529 plan)
-I'd just slightly reduce my 401k contribution in favor of just investing on your own. Early withdrawals are penalized 10% plus your current tax bracket...however, if you are working outside the US long-term ("Foreign Income Tax Credit" I think its called) you dont have to pay taxes on the first $80k or so. So if your foreign income was $40k then you could withdraw another $40k and only pay the 10% penalty. Alternately you could leave the money in the US until retirement age and skip the penalty, although you would probably have to pay normal income taxes on the distribution. That's all pretty technical, so check with your tax adviser.

Many many thanks all of you for your comments! They were very helpful.

From the comments received overall, I gather that my wife should contribute more that she is now and appreciate some frugality. I agree with that. As Ivy pointed out, it is mainly the visa issue with my wife. However, I did ask her if she prefers to work even if there were no visa issues, to which she responded that she might not like to work. Her reasons:
• New to the states. Not sure if her grades and credentials as a grad in her country are worth it here as she says she's an average student.
• Typical challenges for any newbie such as culture shock, don't know how to drive a car, communicate with others etc.
• Homesickness – one thing that I did expect with her, but never imagined the need would be so strong. In other words, spending time on phone/online with her family on a daily basis. And she can’t do this if she works.

The way I see it, these are not issues at all and it is a matter of time (I hope) that my wife pursue this path. However, she comes from an affluent family and a lot of pampering. Doesn’t like a 9 to 5 job. This makes it difficult for me to explain in a very polite way that I can’t provide all the things that her daddy can. On a lighter note, I didn’t see this side of her when I said ‘I do’. I do encourage her to at least “save” if not “earn” if she can by couponing, for example. I know many women enjoy this activity. But not my wife and this is where my being “stingy” comes up. I also encourage her to volunteer so she could build a network. This requires me driving her around and it might not always prove flexible with my schedule.

Adult community classes over weekends are a very good suggestion. I will try to find that out in addition to reading blogs on investments as suggested. You are spot on about my wife on managing finance. Executing a plan in professional life is different than in personal life. This is something that I need to work on. Right now I am contributing 12% in 401k. I could bump that up to 15-17%. Thanks for the suggestions.

Saving 40% is a good goal that I could consider. And as pointed out, I need support from my wife to make this happen.

It might sound that I might be mean towards my wife but I hope I am not. She was brought up as a pampered kid. I know the hardships that any grad student faces and knows the value of money. I want her to appreciate this effort someday. I would like to think that I am resilient and tolerant so far. But no guarantee in the future.

Ha ha!! when I feel that I am frustrated this is exactly what I think in my mind. She does cook though, but that’s about it. I am giving her enough freedom but I get annoyed if that freedom is misused.

Thanks for the tip on HSA.

I encourage her to define what her goals are and what would she like to do. And I make an analogy with answering job interview questions. I hope she realizes that could do more in real-world if she complains about household chores.

Yes, visa doesn’t allow her to work right now. Even if she likes to work in the future, right now my wife demands flexibility and most of the jobs don’t provide that. I at least want her to save if not earn. I would be happy. But she doesn’t like the concept of saving a dollar with a coupon and a planned shopping and thinks that is “cheap”. Well, it indeed is. What is strange is it somehow hurts her pride or something and completely ignores the big picture.

The problem is we are giving in to the desires of our body. If we want a double decker burger, we go out of our way just to satisfy this craving. If we want to eat chocolates, we eat. We are seeing more and more fast-food chains and lesser gyms and fitness clubs. A few people takes care of their body and maintain a healthy lifestyle these days.

@Alexey: An "emergency fund" is a 100% liquid account (or could be cash if you wanted) that you use in case of a budgetary emergency. For example, you have a tight budget with no money in savings except for the emergency account and your only means of transportation breaks down and requires repair. Assuming you NEED your car/bicycle/whatever (no viable alternatives) that would be an emergency and you would use the money in that account. The idea is to avoid going into/deeper into debt when "life" happens.

@SM/Original Poster: Consider marital counseling, particularly with someone who understands your culture(s). You and your wife are clearly not working as a team. It is clear you feel you are doing this alone and she is providing challenges instead of support.

But really, get yourselves on a BUDGET. If you can get her to agree to an amount for a category (say $100 for kitchen supplies) then she might realize the value of saving or coupon-ing. Suddenly that 20% off coupon for Bed, Bath and Beyond enables getting $120 worth of goods instead of just $100. You MUST get her buy-in for the budget- unless you want to deal with being her daddy and giving her an allow for the rest of her life.

"visa doesn’t allow her to work"

I think that clarifies the situation. She isn't working because she can't legally do so right now. Enough said.

My wife and I emigrated from England in 1956 with $450. We spent 2 years in Canada, then 2 years in Denver, and have been in Silicon Valley ever since, retiring in 1992.

We have fully realized the American Dream. Apart from my wife taking a few years off when our three children were small we worked very hard. I was an aerospace engineer, and after obtaining a credential in Early Childhood Education my wife became a teacher's aide in our local school district. Today we are debt free, have a fabulous home, a condo overlooking the ocean near Santa Cruz, a multi-million dollar investment portfolio, and have vacationed all over the world, including several treks in the Himalayas of Nepal.

Our success is based on several significant factors.
1) We are from identical working class backgrounds, both of our fathers were firemen during WWII.
2) We met when I was 16, married when I was 22, and emigrated shortly thereafter.
3) I completed a 5 year apprenticeship with a famous British aircraft company and received the equivalent of a BS degree in engineering. My wife won a scholarship to a very prestigious private girl's school, graduated and then became a librarian. I later obtained an MS in engineering, paid for by my US employer.
4) Growing up during the severe rationing, bombing, and hardships of WWII made us very frugal with money and we started saving at an early age, and since our total income from our pensions, social security, and income investments has increased fivefold since we retired over 20 years ago, our portfolio is still growing every month, even today.
5)When we arrived in the USA the quota for British immigrants was unlimited (it has since been drastically lowered), so we became citizens at the first opportunity. In fact because my work required a secret clearance I had to sign a declaration of my intent to become a US citizen immediately after being here 5 years.

The first thing that strikes me about your story is that you and your wife came from very different backgrounds and have very different attitudes about work and frugality. Your wife seems to have a bit of a "Princess" attitude, unwilling to work hard, rather than that of an immigrant striving to realize the American Dream. The US economy and debt situation has taken a serious turn for the worse since I retired and I think you have an uphill journey ahead of you. Life doesn't afford anyone the luxury of several bad decisions, especially in your youth, and I think you will have your work cut out for you both to achieve financial success and personal happiness on your journey through life.

If you are considering moving out of the States, I would a) not buy a house or many expensive items (furniture, cars, etc) that will have to be moved and b) reduce the retirement and tax-advantaged (HSA) account savings. Depending on where you go, these may not be as beneficial to you. Invest in a fee based (not commission based) financial planner or CPA where you can talk about the specific countries that you may move to. They will be able to detail what the tax picture is on the retirement accounts.


One issue with your wife IMHO really boils down to expectations. For example, I see too many children of well meaning parents who have provided so much, earned so well, and created such a nice lifestyle, that anything less to the child when they step into the adult world is cheap and beneath them. The child's expectations of what they feel they deserve versus what they have actually earned are skewed. This can lead to going way into debt to try and immediately create a lifestyle that may have taken their parents decades to build up to.

So it seems to me that now you've got a double whammy with your spouse, where she is essentially stuck at home all day with little productive to do, not really comfortable going out and making new connections, and dwelling on and clinging desperately to her family and friends and remembering her "good life". She's wallowing in it, which just magnifies her feelings of homesickness.

I had a friend who married a woman in a similar situation. It didn't end well, not because she was a horrible person, started messing around, or spent all their money (she was actually a very nice, highly educated woman). It ended bad because she would simply not let go of her expectations of living the life she had at home, with hired help cleaning the house, making dinner, and most importantly, where she didn't have to think about money because it was all "taken care of". Everything she did was done with the attitude it was beneath her because he didn't make enough for them. All she could ever do was look back and see what she was missing. She never turned around and looked forward to see where she could go, what she could do. Eventually, when her father passed, she took their son and went back to her country "just for the summer" to help her mother and ended up staying and seeking a divorce.

I don't bring this up to cast gloom and doom, but to point out that you both must really work together to get something for yourselves and both start looking forward. It's easy to glorify your past days, particularly when you're bored and homesick, but your spouse isn't living them now and at some point (and as you said it may take a while) she should move forward. If the kind of lifestyle your wife is wanting isn't happening now, that should light a fire under her to *work with you* rather than solely *rely on you* so you both can achieve it in the future, whatever that entails and you two agree to. A better life worked for will be more of an achievement than a good life given. Again, frank discussion of expectations and wishes and where you both want to be and how you plan on getting there needs to be conducted.

Best of luck.

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