Cash poor, investment rich.

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by therinlahhan

First off, I use the term “investment rich” as a relative term. I know most people here have a lot more than I do in investments but relative to my “cash,” it’s significantly more. But that’s good.

I know this concept is obvious to most here but I just wanted to lay some words out for my own benefit. It’s taboo to talk about savings, investments with pretty much anyone but your spouse these days so this forum is an anonymous and non-judgmental place to talk about it and it’s nice to have that outlet.

I’ve made some changes to my assets and allocations and this is where I’m currently sitting, at age 30. I’m now sitting at about $17,000 in cash/savings and $280,000 in investment funds between my IRA, taxable account and 401k. The rest of my networth is in real estate equity (primary house, which I have a little over $200k equity in).

The interesting thing about this is that while we now have “a lot” of money stashed away, we’re relatively cash-poor. By forcing yourself to live this way it’s really easy to keep your unnecessary impulse buys and expensive habits down. I have a lot of expensive interests — cars, watches, vacations. But with only $17k stashed in savings — most of which is set aside for medical deductibles and related expenses in case we get pregnant soon — I’m not necessarily in a position to go buy a new car, a new Rolex, or take an extra $10,000 vacation.

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My goal is $1 million in investments by age 40. I don’t know how possible that’s going to be, but even if I miss the mark a little bit and end up at $700,000 or so I’m going to be pretty happy with myself. Goal is retirement by age 55. No later than that. FIRE number is anywhere between $2 million and $2.5 million — depending on market stability, inflation, expenses (how many kids we have), etc. at that point.

The good news? I’m in a good position and I make a lot of money for my LCOL area (about $75k/year), and my wife has a decent job ($50-55k) in a very consistent and reliable line of work (healthcare industry). She will have her student loans paid off this month, getting her to a net positive net worth.

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The bad news? My wife has almost no investments (about $4,000 in an IRA) because she just graduated 3 years ago. She will be signing up for her newest job’s 401k next month. But she will be able to dedicate the $1,000/month she was putting toward her student loans into investments, with my help on allocations.

The good and bad news? We’re planning to have a kid soon, which is great. But is a huge financial burden. But I know we can make it work.

Anyway that’s all. Sorry that this wasn’t a helpful post for the rest of you guys. Just wanted to get some things off my chest, I guess.

EDIT For those saying I’m not cash poor, you’re absolutely right. I realize that we have a lot more in cash than your average American family and we are lucky. My intent with this post was to remind everyone of the fact that when you force yourself to invest more than you leave for other expenses, it’s easier to lead a more frugal lifestyle and save money.

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