ZT: Help me get Rich! Forget about helping those getting out of debt

http://www.fatwallet.com/t/52/798215/


Date Posted: Jan/05/2008 10:31 AM
Rating: +38

Here's a rundown:

Me - SAHM - 33
DH - 33
3 kids - 4 and under


Household Income 82,000 gross
Mortgage - 250k balance (~450k house)- 30 year fixed 5.25% - $1500 monthly
Property Taxes/home insurance - $650/month
Car Loan - 9k - 630/month (will retire loan 4/09 - it's 3.9%, so we opted to keep money in HYSA while making payments)
No other debt
Shouldn't have to purchase another car until 2014 or beyond. Love Hondas!

Annual Savings:
401k - 5% of salary (maxing out company match)
Roth - $6000/year - that's $3000 each

Assets:
44k in non-tax sheltered stocks
67k in 401k - diversified funds that we reallocate annually
70k (total for both) in ROTH IRA (mutual funds)
13k in 403B (Fidelity funds)
25k cash emergency fund (typically used to make major home repairs, then gets replenished - HYSA)

We actually have a negative federal tax liability thanks to a lot of mortgage interest and 3 kids. Taxable income? $25k in 2006. (Though with a promotion it will be more this year)

My money management is entirely self-taught, though my dad did help me develop good habits, as he had me open an IRA at 18 years old. We live pretty frugally. Our last vacation got us twins, so we're afraid to travel again. We don't eat out often, only 1x/month. So I'm not really looking for ways to cut spending, so much as to maximize savings.

Since I became a SAHM, we have managed to increase our retirement savings from 10% to 13% of gross income, dedicating a good portion of DHs raises to retirement savings. In April 2007, I stopped paying extra on mortgage, and instead put that money to my Roth contributions.

DH will start his MBA in April. Due to company reimbursement and schedule of classes, we will not have to pay anything until mid 2009, when the car loan is done. Cost of grad school = $450/month, less than car payment.


My plans:
1) I plan to sell/repurchase some stock in 2008-2010, in order to take advantage of 0% capital gains tax for those in 15% tax bracket or less. Some of our stock was gifted to us in the 1970s as minors. I'd love to reset the cost basis.
2) I plan to treat the MBA like a loan payment - paying $450/month into a conservatively invested 529 account, DH as beneficiary, once the car is paid off. The 529 will help me take advantage of state tax breaks on the contribution and offers tax free growth (IL-Bright Start). I'm aware the growth will be minimal, as we'll be using the money more or less immediately. Any remaining monies in 529 will be reassigned to kids.


Questions:
1) I'm considering selling some stock to maximize our Roth contribution for 2007-2008. Does it seem wise to not have taxable accounts, and instead try to tax shelter more?
2) What else can/should I be doing? We're going by the theory that it's best to pay for our retirement, as our kids would rather pay for their own school than for our retirement. As money becomes available, we're maxing out retirement, then it'll go to kids savings. However, the kids will get a big jump start someday. $25k for each kid, from DH's elderly great-aunt, upon her passing. She's 90.
3) Any better ways to fund the MBA? I've looked into student loans, but it seems that interest accrues while in school, unless it's a Stafford loan.

Now, including a pic, so you'll all play nicely ...