[USER]

I am recently divorced and just finished paying off my ex spouse for equity on our house and I am looking for any advice moving forward.

I am a 27 year old male, currently making 125k salary, bonus varies but 19k this year and 17k last year.

I am somewhat low on cash after splitting things and my main priority right now is building back emergency savings.

Account breakdown as follows:
Checking and Savings – $17k
Roth IRA – $55k
Traditional IRA – $54k (old 401k that was rolled over to Traditional IRA.

401k – $48k
HSA – $30k
Individual Brokerage – $18k
House – Appraised for $360k last month
Remaining Mortgage -$280k
No other debts

I contribute 11% of my paycheck to 401k, company matches 6%
I max out HSA every year
Plan to max Roth IRA every year, didn’t last year due to divorce stuff.

Almost all my investments are just in FXAIX or similar. A few growth funds here and there.

An average month spend is around $5,000. That includes all bills and spending money. I bring home around $6,700 a month after taxes insurance and everything.

I get my bonus this month, so that will replenish my savings to where I am comfortable.

What recommendations do you have for my remaining cash after my other contributions above.

I’d like to retire by 50, so just want to maximize my potential gains.

[Ashley]

Other debt? I only ask because $5k spend a month feels high for one person.

Not extravagant, but potential for some cuts…

[Tony]

You have a pretty common financial setup, so just keep following the FOO and you’ll be fine in that regard. I’d be more interested in how you’re spending 5k/mo, especially if you have no debt.

As a SINK myself my expenses are about half that. I’d take a fine-tooth comb to your expenses to see where you can trim some fat.

It may involve downsizing your house or car, renegotiating your insurance/raising deductibles, meal prepping more, or canceling seldom-used subscriptions, etc.

As they often say on the podcast, it’s ‘an aggregation of marginal gains’, and it would be a win if you could get your spending down to 4k or less.

Getting ahead is equal parts saving and lifestyle management as it is investing.

[Wallace]

Is Roth an option on 401K? At your age I would maximize Roth contributions. You’re doing great man.

Divorce can be devastating emotionally and financially.

[Adam]

You’re getting a lot of comments about your spending, but I just wanted to say that you’re doing extremely well. You are FAR ahead of where most 27 year olds are and even more so compared to someone who recently got divorced.

You’re well on your way to retiring early if you can maintain that lifestyle and savings rate.

Even with adding in some costs for increased health insurance if you retire early, you’re on track for mid 40s if you truly do save almost $3,000 a month into retirement (401k, HSA, Roth) and another $1,500 a month into your brokerage if that is all used for long term investing.

I’d try to quickly bump up your emergency fund up to 6 months of living expense and then max out your 401(k) to take full advantage of tax-advantaged accounts, but don’t overlook the brokerage which is your early retirement account of choice.

Just try not to let lifestyle creep happen and blow past that current budget.

[Jamie]

Follow that graphic, but definitely work on your budget. That is a large monthly spend given your housing costs and having no kids.

I have similar necessity expenses but my total monthly spend is about 3500.

Food, miscellaneous (not sure how this is different than fun), fun, and gifts can be cut down.

[Kim]

You alone as a single are spending $5k?? How much of that is personal use?

[Karen]

Once you have your cash savings where you are comfortable, and you’ve maxed your roth etc, total market index and chill is my vote.

Seems like you are more then well setup to reach your goals.

[Author]

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