What’s your next move.

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Personal finance, well really life in general, is often about the next move. You go from elementary, to middle, to high school, and then to college. You finish college and get a job, only to find yourself looking for a new job after a couple of years.

My entire personal finance journey has always been about the next move.

First it was getting a job so I could earn money.

Then I used my new income to start paying down $28,000 in student loan debt.

Once my debt was paid off, I focused on saving for a down payment so we could buy a house. When we reached $100,000 in our savings account, we bought a house.

This year, Girl Ninja and I have turned our focus to contributing more significantly to our taxable investment account, in addition to maxing out my 401k ($18,000) and Roth IRA ($5,500).

Even though we are in the wealth building phase (heavily investing as opposed to paying down debt or saving for a house) of our personal finance journey, I still don’t really feel like I know what our next move is.

Am I investing simply for the sake of investing? 

Shouldn’t I have a plan, stated goal, or purpose for this wealth I’m trying to create? I need a next move if I want to stay focused.

I need something to look forward to.

But what? Here are a few of the things that sound appealing, but I’m not quite sure are for me…

Early retirement.

We could build up our retirement and taxable accounts to such a great number (probably around $1.5 million) so I can retire a decade before I’m supposed to. That’s cool and all. But I honestly don’t think I would quit my job even if I was financially able to. The pay is too good. The work life balance is second to none. And I legitimately enjoy my job. It’s weird, I know.

Buy an investment property

I quite enjoy the the idea of putting down $70,000 or so down on a $350,000 house, renting it out for $2,000/month, and letting someone else pay off my mortgage for me, not to mention watch my asset appreciate over the years.

That said, I also quite enjoy not having to be a landlord, property manager, or maintenance man. Nor do I necessarily want to tie up even more money in another illiquid asset.

Save for our next home

Girl Ninja and I bought a cute/modest 1930’s craftsman in the greater Seattle area. We spent $350,000 for our house, even though we were approved to spend nearly $600,000 by our lender. We’ve been in our house for just shy of two years and we love our community more and more every day. That said, we also realize that 10 years from now, when multiple children are in the picture, we might want a house that meets different needs.

If we are going to upgrade in house five or ten years from now, we could start saving today to make the more expensive house less of a financial burden.

?????????????

No. Seriously. What else could be my next move? I honestly can’t think of another “next move”.

This is where you might be able to help me by sharing what YOUR NEXT MOVE is.

– Are you working towards paying down debt?

– Or are you saving to start your own business?

– Have you drank the early retirement kool-aid and you’re saving 50%+ or your pay? 

Maybe one of your “next moves” will inspire me and become my next move!

34 thoughts on “What’s your next move.

  1. Hey there ninja –

    I was in the same position as you several years ago, and decided to purchase a couple of investment properties to help diversify my portfolio. Ultimately, my ideal goal is to have 5 investment properties within the next 10 years, and attempting to have them all paid off by the time I retire.

    Since I’m in a somewhat similar position (not having the desire to retire early… or ever, probably), I have focused first on maxing out my TSP, fully funding a Roth IRA for my wife, and depositing around $100 a month in a savings account for each of my children. (I don’t have or desire to have 529s set up for them… what if they don’t want to go to college??)

    Since I don’t plan on moving anywhere within the next 5 years (when I plan on promoting, I’ll most likely have to move to another city/state, I have decided to snowball some of my debt. This will ensure that we’ll be completely debt free (minus the mortgages on my current home and rental properties). The interest and balances are low on our vehicles, so this shouldn’t be a problem. This 5 year plan gives us time to not only let our home and rental properties increase in value, but helps to ensure that the next home we buy will be enough for a growing family and in an area that we want to be in. As I’m sure you understand, being debt free increases leverage when looking to buy a new home.

    Once we move in about 5 years, my focus is to heavily invest in real estate assets accumulating the desires 5, and snowballing and reinvesting the payments to pay them completely off. I have a lot of interest in dividend investing, and it’s something I believe we’ll get into eventually, but my love for real estate outweighs my desire to own dividend producing assets. Everybody throughout the PF blogosphere has their own cup of tea, I guess mine is real estate.

    So for you? I’d say invest in real estate. Interest rates are still low (and will be for sometime), and making wise investments will (hopefully) pay off big time by the time you’re retired. If you have any questions, shoot me an e-mail!

  2. Disclaimer – I’m a Veteran and didn’t have to worry about down payments for any of the properties I own. That being said, saving up for an eventual down payment would obviously be a smart move.

  3. My next move is paying off this house, then considering whether I want to keep it as an investment property and move on to another one.

    I have current debts of a car and a mortage. both will be paid off in 10 years or less and barring accidents both will be good for many years after that *grin*.

    • Same boat for me, we are maxing out retirement and paying down house and car fast. I think our plan (if we stay put) is to keep an eye out for a property in a different part of town that we would like to move to one day, buy it and rent it out, then eventually fix it up how we like while renting out or selling out current house.

  4. I had a similar feeling for a while, but I finally came up with my next move (not quite ready to declare it publicly though) and I just finished saving up enough cash for it. My next financial move is paying off my mortgage (in the next 2.5 years) and then having enough for a 4% SWR at then-current expenses by my 30th birthday. I think I’ll hit all of those, but then I honestly don’t know what I’ll do after that. Quit my job? Find another career path? I’m reasonably certain I don’t want kids, though sometimes I wonder if I might change my mind in my mid-to-late-thirties. Somewhere in there, I assume I’ll get married, but I’m not really concerned about paying for that. I’d love to find the time and money to keep traveling. My boyfriend and I went on a month-long trip earlier this year, which was amazing! I’d love to do that every few years. I don’t see us moving in the next 3-5 years, so I don’t want to save for a bigger place at this point and honestly, my plan is to use a HELOC on my current place for my portion of the down payment on a new place anyway.

  5. My five year plan consists of the following:

    1. Pay off / Stabilize Credit Card Debt. I normally put everything on my rewards card and pay it in full each month, but have just been hit with some hefty medical expenses that included out of state travel for the family several times. This has put a hurting on the Credit Card and I have raided the emergency savings to help but now am starting to fall behind.

    2. Recover emergency savings. I prefer 3-6 months income in a money market account or in a CD ladder consisting of 12 12-month CD’s. This will end up being a reduced priority goal once something is reestablished, probably after 5-10k dropping to 3 and then after 20k dropping to 4.

    3. Pay off wife’s student loans (~$20k)

    4. Down payment on new house (~$100k)

    5. Max out Roth IRA contributions and 401(k) contributions

    Those are my goals, in order. They involve several minor goals, like eat out less, adjust budget, etc. It helps and hurts that we recently relocated (8 months ago) halfway across the country and away form friends and family for my work. I am now earning what my wife and I earned combined and in a lower cost of living area.

    The downside is we own property where we used to live that was underwater and the banks wouldn’t work with us to do a short sale so it sat unused for 7 months as we tried to rent it out. It is now rented and we use a management company to act as landlord (1 month rent as finders fee plus 10% of rent each month as management fee, we have to approve all major purchases and decisions, but don’t have to deal with the day to day headaches of being a landlord). This should help achieve goal 1 very quickly.

    Another plus / negative is my wife has returned to work. This means more income, but also daycare expenses for our 2 year old. The daycare expenses were going to occur anyway as my wife needed some time alone and we were looking into part-time daycare as a solution.

    Those are my goals and some reasons I believe the list is achievable in 5-10 years. Five years for aggressive savings, ten for not so aggressive savings. The rental income will factor in heavily in the time frame. We are effectively paying three mortgages (mortgage on rental property, daycare expense, and rent) and the rental property will reduce one and a half of them if it remains rented.

  6. I enjoy your blog because we seem to roughly be at the same juncture in our lives for several years now. I’m toying w a similar question. But I have one for you- where is the money for the next move coming from? The 401k isn’t until retirement sp are you planning to pull Roth contributions and any taxable investment money? Right now we are debt free (minus mortgage on modest home) newlyweds near maxing out retirement accounts. We have started saving cash monthly until we figure out what to do with it.

    Here are some other options for you to consider: Besides pay cash for a car when one inevitably clunks out, we may buy a second home and rent out our first, or pay down a chunk of our current mortgage and become renters to a bigger home for a bigger family. That renting would be just for a few years till kids are gone, then we could move back to small home that is nearly paid off.

  7. Our next move is to pay off our car loan and start saving for our next car purchase. Also maxing out the IRA. Would like the option for my husband to retire early or maybe start his own business. But maxing out 401k and both IRAs would be about 50% of our income, and we’d have to drastically change our lifestyle to afford that. Would like to at least start an IRA for myself after we’re easily maxing out my husband’s. After that, work on paying off the mortgage.

  8. I am now 66 1/2 and retired; thus many of the goals for younger people are now behind me. I have no debt except a small principle remaining on my mortgage. I no longer work, so I cannot contribute to retirement accounts. Emergency savings are moot, since I can always withdraw from my Vanguard IRA and have the money in my checking account within two business days.

    The goals therefore now are to manage my time and money within retirement. I will postpone taking social security until age 70 when my benefits will be significantly higher and SS can meet most of my expenses; in this way, I will be withdrawing all expenses from my tax-deferred IRA for about the next 3 years and ultimately paying less tax on SS since it will eventually constitute most of my income.

    As for time, I have plenty to keep me busy. After 35 years of working, I am happy to have all my time to myself. I can travel, read, write, cook, see films, and go to museums, plays, and concerts with no constraints on my time. Of course one of the main things is not to go overboard and withdraw too much from my IRA all at once just because I feel like taking a trip to China or the south of France. I don’t know how long I’ll be around, but even if it’s 20 years I think I should be OK.

    • Hi Larry, I was just curious – how much did you have to save in your younger days to have the savings/retirement you are enjoying now? Did you live frugally or did you just make a lot of money? Thanks!

      • Hi, Diana. There is no one-size-fits-all answer to the question of how much to save for retirement. I did not in fact ever make a lot of money, and in some ways I think I spent more than I should have and saved less. But relatively speaking, I was pretty frugal, and in most years I put away about 10% of my gross into a 401(k), supplemented by an employer match. Since the rebound in 2009 I was also aided by a strong stock market, and I put all my retirement savings into a well-diversified set of index funds with low expense ratios.

        Even professional opinions differ greatly as to how much you need to have saved to retire – with some saying you need 20% of your gross saved (not counting social security) and others that you can do fine having saved as little as $200,000. Both of these are in my opinion extreme. I decided to retire when I had saved 8 times my latest gross, and when I count the fact that close to 20% of that gross was going for 401(k) contributions and FICA, I could say I had really saved about 9.5% my gross. That, along with my social security estimate, led me to think I could retire about a year ago and be OK so long as I wasn’t extravagant.

        • “with some saying you need 20% of your gross saved”

          I phrased that incorrectly. Instead of 20%, it should be 20 times your gross.

    • That is awesome Larry! Nice to hear that you are doing well in retirement 🙂 Not too sure if I can be as successful…

  9. My next moves? In order:

    1. Save up enough for a down payment.
    2. Rebuild/build an emergency fund (right now the down payment fund IS the emergency fund).
    3. Max out my 401k.
    4. Max out my wife’s 401k.
    5. A combo goal — save for vacations, kid’s 529, and taxable investments.
    6. Pay off student loan debt.

    Now, are these necessarily the most efficient choices? No. But they’re personal to my wife and I, and work for us, and they’re flexible if our priorities shift (i.e. we’re in decent shape in retirement savings, so we can delay maxing them out if we decide the vacation fund or paying down student loan debt is a bigger priority).

    As for you, Ninja, I’d seriously consider 529 plans (imagine how easier/better your life might have been WITHOUT having quite so much student loan debt, plus there’s state income tax savings there for your/your wife), creating a “splurge” investment account (basically an account that can grow for some awesome splurge, like an around the world trip or taking a 3 month sabbatical one summer), or even a charitable investment fund (where your dividends can be contributions to favorite charitable causes, making you both a philanthropist and someone who is saving money on their taxes).

  10. We’re going to try to move to a cheaper rental this summer so we can start saving more. All our CC debt will be paid off in March, so we can really ramp up saving for a down payment and getting a better emergency fund. Then after saving for a few years and my DH is done with school, we’re hoping to relocate to a less expensive state where we can afford a modest house and live a bit simpler. Hopefully, I won’t have to return to work full time. I’d like some chickens and grow some of my own food. I’d love to get into investing outside of our 401k but it scares me and I have no idea. We’re in our 30’s and we’ve been living in catch up mode for a long time. Praying we finally escape that and move into the next phase.

  11. Luckily my kids’ grandparents have taken care of their college funding. We have no debt other than a modest mortgage and currently max out hubby’s 401k and IRA. We could max mine out too, and that’s a possibility, but what I really want now is to save for experiences. We’re in a different phase, our kids are 14 and 9 so they’re able to travel without too much fuss. We want to see as much of the world with them as we can. I know it’s not an investment per se, but I think investing in experiences is as important as investing to grow your net worth.

  12. Our next move from investing is to be able to give 25% of our gross income to charity and family. Currently, we are at 10%. We think it will take about 5 more years to get there.

  13. Currently, my #1 goal is to pay off the remainder of my $27k of debt. Current plan has that sorted in 2 years, but I’ve been paying more than the plan each month, so I’m ahead of schedule.

    #2 – Once #1 = $0, re-route portion of those monthly payments to max out TSP each year.

    #3 – Save up 3-6mo Emergency Fund (concurrently with goals #1 & #2, but significantly less per month until #1 = $0).

    #4 – Go back to school.

  14. Ninja,

    What do you think about classic cars?

    I just bought a 1968 Porsche 912 with some of my accumulated savings. I figured that since they’re skyrocketing in value, I better get one now before I am priced out of the market. I decreased my 401k contribution, so I can replenish my “emergency fund”. It should only take me about 1-1.5 years to replenish it- after that, I’ll bump up my 401k.

    I have no doubt that the car will increase in value by at least 8% per year, so I view it as a portfolio diversification. If I ever need the money, or get tired of it, I can just sell it.

    Jake

  15. The game plan is continue what we’ve done over the last year or so which is:
    1) Max out retirement accounts (hubby’s 401k and backdoor his/her roth IRA)
    2) 529s and some taxable investments
    3) mortgage reduction

    It will take at least 3-5 years to clear the mortgage debt so I really don’t have to ponder other options for awhile.

  16. My next move is to pay off the mortgage on our house in the next 5-7 years.

    After this the next move is officially make the break from the corporate world and enter the world of full-time lifestyle entrepreneurship.

    The wife and I want to spend 3 months a year living and working from another country and another 1-3 months by the water her in SoCal.

    There are a lot of “next moves” that we find ourselves working on simultaneously. Trying to enjoy the journey as much as the destination of the NEXT…

    Cheers!

  17. While I am still working on paying off debt, I am always thinking a few steps ahead. I also enjoy my career and don’t see myself wanting to take early retirement, at leapt not to the extreme. Once my debt is gone and I’m on track to maxing out my RRSP and TFSA I plan on saving for three or four months of travel every other year.

  18. We just had our first kid, so our next move is try to keep up on sleep!

    We are actually looking at getting aggressive with the mortgage as we are already investing 22% of our income pre-tax and saving about 55% of our post tax income. Much like GYFG, as soon as that mortgage is paid off – I can rage quit my corporate cubicle gig.

  19. From what you’ve written in the past, I’m surprised giving your money away wasn’t on the list. You seem to get so much joy and meaning out of your work with your youth group. What kind of change could you make with your set of skills and additional money?

  20. We’re in the same boat. Our only debt is our mortgage and we’re contributing plenty to retirement. I think our next goal is to save up for our forever house. We like this house but it won’t be big enough when we have baby #2 and we’re not in a great school district. We’ve got a couple years to save up.

    • Hey Brianne. We are in a similar situation. Will you keep your first home or sell it? Will a 30 year term restart? I am wondering how to navigate this “starter home” situation with the best financial result.

      We considered renting out our first and renting a bigger one till kids are gone. Use the saved up cash to pay down first mortgage instead of having a new mortgage on a big house. Less retirement worry.

  21. What a great problem to have, right?

    Our goals:
    1. Pay off student loans
    2. Build up a larger emergency fund
    3. Save cash for inevitable replacement car (used, of course!)
    4. Max out retirement
    5. Invest/save for kid’s college / downpayment for a house / travel fund

    Hopefully some of these things can happen at the same time?

  22. We are considering our next move right now which I believe will involve more real estate. We currently have 12 years remaining on mortgage #1 and 7 years remaining on vacation property in AZ (but fully rented to cover all costs).

    Looking to leverage some of the worth of mortgage #1 for a downpayment on house #3 and rent it out to cover the mortgage.

    Just not sure if this is what we want to do as that would bump our current mortgage up by 30-40k. with interest rates low it seems like the time to do it. Short term pain for long term gain? If any of ninjas readers have input, I’m game 🙂

  23. My next move?

    Pay down debt — only 8 months to go! And then —

    1. Save up 10k emergency fund
    2. Save up money to take a year off work and TRAVEL! Until the money is gone.

  24. Funny you bring this up. Much like most of the commenters, I am also unsure of our next move. Sure, we have goals and plans, but right now I feel like there are so many variables to really nail in the next step.

    We just moved and converted our first house into a rental. We also had baby #2. Kicking around the idea of another rental property, investing more toward a future home, or aggressively paying off an equity loan on house 1 to purchase house 2 and keep liquid.

    I dont feel stressed or worried, because I am comfortable with these options and happy to have them.

  25. You could save to start a scholarship fund for your Young Life group. $333 a month would be enough to fund 1 4-year, $1000 per year scholarship per year. Given that your first year you’d likely only start with 1 scholarship, you could even ease into it, costing $83 the first year, $166 in year 2, $250 in year 3, and $333 in year 4. This would take your journey from personal finance to personal and philanthropic finance. I guess the question being, without any defined goals, at what point do you open up your financial goals to be beyond your own family?

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