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June 04, 2013


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You are in really good shape and your strategy/lifestyle is very interesting. I really can't comment on the growth potential or profitability in expanding your farm business and assets, but you seem to be in a good position to make it a success.

Regarding your liquid investments, I would suggest 2 things:
If you are a fan of Vanguard and relatively inexperienced, try following the Boggleheads forum - link below. In the "Help with personal investments" chat room they very often answer questions where people ask for review of their investments and advice - see how it works and you could do the same, you'll get better and more detailed advice than we could give you here without specifics.

If you want to try your hand at something more adventurous why not set aside $10-20K and just play with it (individual stocks, P2P, whatever you are interested in). You can afford the risk on that small a base and it will allow you to experiment more. We've personally done something like this within one of our IRAs to avoid the tax on selling stocks.

We have a mix of Roth and traditional, I frankly don't worry too much about the exact balance as long as you have a mix. I wouldn't take the tax hit of conversion unless you have a very strong reason

I am curious about 2 aspects of expenses
- why do you spend so much on gas, esp with your wife not working currently - is that a very long commute, or farm business related?
- why is the pets expense so high, when living on a farm? (I've lived on a farm as a kid and the many cats and dogs around cost us almost nothing)

Best of luck, you are doing terrific for your age!

You are doing really good. Congratulation!
I think keeping a balance of traditional and Roth is the way to go. You are at around 50/50 right now and you should continue that to give you more tax options down the road.

Do you have bonds in your asset allocation? If you're nervous about the stock market, bonds will help stabilize your portfolio.

The farm is interesting. I would like to hear more about it. Does it take up a lot of your time? It sounds like a lot of work to me.

You're doing very well.

You had 3 questions.

I'd stick to the traditional 401k for now.
I wouldn't convert to a Roth IRA at this point.
I think a 529 savings is fine.

You're in a mid-high bracket now and no reason to pay taxes today. You may plan to switch to part time in the future and that should drop your income and bracket so you could pay taxes then instead. Yu're also on a path for early retirement eventually if you choose. Thats why I'd stick to traditional 401k and not do Roth at this point.

Wow, you're doing really well. I'm a similar age and I'm not doing bad, but you're doing much, much better.

Not much to add, but I noticed you're may be getting ripped off on your car insurance. You probably haven't shopped around in some time. Every little bit helps.

To second Paul's comment regarding car insurance, I recently dropped comprehensive coverage as my car is now 7 years old and only has a few good years left. My insurance bill was reduced by more than half.

I just wrote you a pretty long and detailed response-- but unfornunately--- it seems to have failed to post. I do not have time to rewrite it for you so-- here is the jist.

Allocation is key. Set your allocation up based on your risk tolerance. Watch out for fees (Vanguard funds and ETF's are great for low fees). Time horizon is crucial as well. You are young and have time on your side--- use that advantage!

Otherwise, the 401k vs roth delemma is an unknown. What will your tax bracket be in the future? What will tax rates be like in the future? who knows..... All you can do is make a reasonable assumption and go with it.

Save for college any way you can. 529's can be good. Same rules apply. Watch out for fees. Careful with your allocation.

Good luck.

@ Ivy
I browsed Bogleheads a couple of years back, but I will start reading it on a regular basis.

In regard to the high gas expense - I have an 88 mile roundtrip commute and we include annual state registration fees, annual inspection fees, and regular maintenance (fluid changes, filter changes, etc.).

In regard to the higher than expected pet expense - we have two older dogs that are on some medications to help with hip/back problems for one and a skin allergy issue for the other. One was a stray that wondered up years ago and the other my wife has had since a puppy. Both are very good with our daughter. Honestly, we're just trying to make them comfortable as their years left with us dwindle down.

@ Retire by 40
Bond allocation is about 5% in the Vanguard Total Bond Index fund.

The farm/ranch time consumption is seasonal (vaccinate cattle herd twice a year (early Spring, early Fall), calving season in Spring, gardening in Spring, cut and bale hay in Summer, etc.), but we use this as family time. My in-laws and brother's family help us out.

@ Paul and Jonathan
We have liability coverage on the Civic (work car) and full coverage on the truck and SUV, but I'm going research our options.

@ jim and jnew
Thanks for the input.

I appreciate the feedback.

I had posted earlier but it doesn't show up. So will write again. I too find investing a little too daunting and time consuming not to mention feeling of being clueless most of the time. I have decided to move my funds to They offer complete personal finance consulting for a nominal fee with no other charges like commissions for portfolio adjustment. I liked their pitch so far and would try them out. I also have wife's IRA with Vangaurd in total stock admiral and am happy with it so far. Will see how PC works out and then decide whether to go with them entirely. Once the funds accumulate it makes you nervous with each up and down. Having PC to manage hopefully will smooth out the downward drift that I find to happen in the market.

@ jim, jnew

401k or trad IRA vs Roth IRA is a moot argument.

CT is married and thus his salary under joint filing qualifies him for Roth IRA without the need for performing the "backdoor" Roth conversion. As he is maxed out on the 401K, the Roth gives him additional opportunity to entend his tax shelters. $17.5K + 5.5K(x2)= $28.5K per year.

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