Emergency Funds Case Study
Emergency Fund Ratio
For households with dual-earners, like yours, we normally recommend you hold in cash or cash equivalents 3-6 months of fixed expenses. These fixed expenses are what would be left if you both lost your job. Certain expenses like: income taxes and contributions to retirement plans would not be included when calculating the size of your emergency fund. You currently hold 15x your expenses in cash and cash equivalents. Since both of you work, in addition to earning strip mall income, there isn’t as much of a need for a funded emergency fund in your case.
Housing ratio
Payments to service mortgage payments and other fixed expenses related to maintain your home, like property taxes and homeowner’s insurance, should amount to more than 28% of your gross income. …show more content…
Your investment assets currently represent around 73% of your total net worth. This is a positive financial health signal and we recommend that you continue holding a high ratio of investment assets.
Tax Ratio
Given your income level a common benchmark of at most 30% does not represent an overly stressful tax burden. Your current income tax is about 25% of your gross income goes toward paying taxes. This means your income taxes might not be a concern for financial stress.
Cash Flow Recommendations - Pre-Retirement Goals
Pre-retirement goals are goals that you will achieve within the next 4 years or before your retirement age in 2021. These goals listed below include: buying a Houston condo, selling your current home, supporting Jennifer in her divorce and buying a vacation home in Vail, Colorado. We will give you our recommendations for each goal.
Sell your current home
For repairing your current home we suggest that you pay the cost of $40,000 from both of your checking accounts or saving accounts.
The schedule below summarizes the
For households with dual-earners, like yours, we normally recommend you hold in cash or cash equivalents 3-6 months of fixed expenses. These fixed expenses are what would be left if you both lost your job. Certain expenses like: income taxes and contributions to retirement plans would not be included when calculating the size of your emergency fund. You currently hold 15x your expenses in cash and cash equivalents. Since both of you work, in addition to earning strip mall income, there isn’t as much of a need for a funded emergency fund in your case.
Housing ratio
Payments to service mortgage payments and other fixed expenses related to maintain your home, like property taxes and homeowner’s insurance, should amount to more than 28% of your gross income. …show more content…
Your investment assets currently represent around 73% of your total net worth. This is a positive financial health signal and we recommend that you continue holding a high ratio of investment assets.
Tax Ratio
Given your income level a common benchmark of at most 30% does not represent an overly stressful tax burden. Your current income tax is about 25% of your gross income goes toward paying taxes. This means your income taxes might not be a concern for financial stress.
Cash Flow Recommendations - Pre-Retirement Goals
Pre-retirement goals are goals that you will achieve within the next 4 years or before your retirement age in 2021. These goals listed below include: buying a Houston condo, selling your current home, supporting Jennifer in her divorce and buying a vacation home in Vail, Colorado. We will give you our recommendations for each goal.
Sell your current home
For repairing your current home we suggest that you pay the cost of $40,000 from both of your checking accounts or saving accounts.
The schedule below summarizes the