- Close on our new house – Pay all final costs and furnishings with cash
- Max out Roth IRA x 2 for myself and wife – $13,000
- Max 401k – $22,500
- 529 Plan – Contribute $10,000
- Taxable Account – $60,000 in contributions
- Buy Rental Home– Single Family Home
- Make Minimum Student Loan Payments – 4 years left @ 1.1% fixed
2023 will be one of major transition for my family and I. We are moving to a new state, starting new jobs, building a new home and have a new baby. I’m excited and anxious for the future. I wonder what I will look back on in this post in one, five and ten years from now.
Goal 1: Close on our new house – Pay all final costs and furnishings with cash
We are expecting to close on our new home in the early spring and we cannot wait. We made a lot of sacrifices to get here (and had a lot of blessings at the same time). We built a custom home which given the current supply/demand issues, inflation, etc has been challenging. We have built up a nice cash buffer and will utilize this to pay all the final costs above the construction loan and also will need to furnish the house as we nearly sold everything we own and driving down with just a small uhaul trailer. I expect to have enough cash on hand that this should be doable.
Goal 2: Max out Roth IRAs for myself and wife – $13,000
We plan to do this in early January, both will be backdoor Roth IRAs given our income level.
Goal 3: Max out 401k – $22,500
My new job doesn’t allow 401k contributions until one year of employment which is unfortunate but I do have a second 1099 job that I anticipate will have a fair amount of work over the next year. I’m in the process of opening a solo 401k to contribute through my 1099. I plan to max at least $22,500 and may contribute more depending on how much I work.
Goal 4: 529 Plan – $10,000
My wife and I welcomed our first child earlier this year. I already have about $3,000 in a 529 but I’m planning to get more aggressive with it now.
Goal 5: Taxable Account- $60,000
Achieving this goal will be the big unknown for us this year. I anticipate a lot of expenses and spending especially early in the year given we need to close and furnish a new house. I also anticipate my income will be lower this year than previous given new job, new child etc. I think setting a goal of $5,000/month is reasonable at this time although anticipate I’ll be behind the ball early in the year but hope to get there by then end of the year.
Goal 6: Buy Rental Home
I’d like to dip my toes in the rental market. I’ve been reading a lot about the tax benefits for high income professionals and it is actually kind of nuts some of this stuff is legal. IE: I’ve been reading about real estate professional status, cost segregation and bonus depreciation that can create massive tax benefits. For now, I envision picking up a small single family rental home and put it on Airbnb. The real estate market is now turning so hopefully can find a good deal in 2023 and hope I don’t catch a falling knife!
Goal 7: Make Minimum Student Loan Payments
I currently have $198k in student loans left (from a peak of $281k since graduating in 2020).
I refinanced to a five-year loan term @ 1.1% last year. I wish I could sell this loan rate to someone else!!! I have four years left, essentially I will have to pay $50k a year for four years and they are gone. I don’t anticipate paying any of this down faster a minute sooner than I have too (at least not this year). My current payments are $4257/month which totals: $51,084/year
Minimum cost to achieve these goals listed above: $156,584. I anticipate an income between $400-500k next year depending on how much I work and if my wife goes back to work after maternity leave. Time will tell but I am excited for the future!
Thanks for reading. Until next time.
-AMJ, MD