Suggestions needed for improved "savings"

[MakeMe$$$$]

Hello Folks!

Pulled the plug last November 30th. Previously sold the house, bought a nice motorhome and now traveling around the US. I'm CSRS but didn't put a lot into TSP as I should have. My wife is retired from the State of IL. Currently our combined pensions produce enough cash flow to support our life style and additional saving goals. I'm currently at about $36K in TSP and plan to just let it ride for now.

What I am looking for are places to invest/save money for other purposes. I don't mind some reasonable risk and want something that is relatively self maintained without lots of my intervention. Currently we have 3 share draft accounts making virtually nothing:

1. $20K in a future medical fund. This is to cover unexpected expenses. As an example, since we travel to a lot of places we are sometimes in need to pay the medical fees and then get reimbursed. What complicates this is that my wife's State of IL health and dental insurance plans delay payment/reimbursement by 9 months. (It is an IL thing. LOL) It hasn't happened yet but we may need to pay a significant amount awaiting reimbursement. As we use it, we replace funds after reimbursement. We don't plan on adding funds to this account except to replace anything used to cover delayed payments by the insurance.

2. $5K in a maintenance fund. This is a fund that we don't want to use except in case of extraordinary need. We are adding $200 a month to it until it reaches $10K.

3. $10K in an account that we add $1K a month for future use. This is our fund to assist in purchasing a home at some time in the future.

#1 & #2 would need reasonably easy access to draw from and then replace/add funds. #3 is a long term plan expected to have monthly deposits for up to 6 years from now.

OK FOLKS... suggestions?

[skiehawk11]

MakeMe$$$$ congrats on the retirement!

A few questions:

1. Why does your wife have IL medical and dental and you have Federal medical and dental insurance? Would it be more beneficial to go onto one of the national federal plans to do away with the delayed payments as well as ease of access to medical help while travelling?

2. So your maintenance fund is your emergency fund? Sounds like a solid plan adding to 10k (I'd add more if finances permit). What investment vehicle is your money in?

3. What is your time horizon to purchasing a home? Have you decided what state and price range?

[Aitrus]

Congrats on quitting the Rat Race!

I've got a few ideas, but some of them involve some work on your part. You could think of them as a retirement hobby if you'd like, and something you can make money with on the side as well.

For long-term money that you don't really expect to need to use until later, you can shop around for banks / credit unions that have good CD return rates. Since you're driving all over, just dropping by the local banks as you move around to see what the rates are shouldn't be too difficult. A good return will be a little less than the G fund, and if something bad happens you can usually cash out the CD early with a 0% return.

Some banks have special "starter" accounts that earn a pretty good return as long as the account balance is really low. There's a credit union close to where I live that lets teachers and other school workers have a special savings account, and I'm sure there's others out there as well. This special account returns 5% annually as long as there is less than $500 on the account, but at $501 and higher it drops to the normal rate. Find 10 banks that do something like this, and you've got a total of $5,000 in a savings accounts earning 5%. My wife is a teacher, and the account lets each teacher, and each child of that teacher, have an account. We keep about $470 in each account and pull out the earnings every year so the account doesn't go over the limit for the 5% return. It's not much, but it's a good way to teach our kids about being smart with money. On a large scale, it would bring a fair amount of money with zero risk (except for inflation risk).

Purchasing rental properties with management to take care of it for you will bring in some passive cash. This takes some research, however, and might take more work than you'd like, or more starter cash than you've got. Start a business and save on the taxes by making all properties a business asset of MakeMe$$$$ Inc, a private business that owns rental properties. If you can spot good deals, you can purchase homes, duplexes, townhouses and multiplexes that are undervalued and rent them out, or sell them for their actual value. You can always offer less than asking price, especially if paying cash. Somebody selling a house for $150,000 might just be willing to sell for $120,000 if you can write a check for that much and hand it over. People like cash, moreso if the house has been on the market for a while and they're desperate to get out of it.

Tax liens have a pretty good return and are almost risk-free, but take some work and a little time on your part to learn how the process works. The risk is if the property value drops to 0 for some reason (house fire, flooding, etc), but some basic insurance can take care of this. The returns are pretty good, as much as 20% in some counties. The lowest I've seen is 8% for sewage taxes in one county near me. The work involves researching the property before you bid on the lien to make sure it's worthwile - no use paying $5,000 and getting 15% interest if the property is worth only $2,000. On the rare occasion that the person isn't able to pay within the time period, then the property is yours free and clear, but then you have to go through the legalities of forclosing on them (which can be hard if it's somebody's grandma).

Just a few ideas, but it's something to get the juices flowing.

[MakeMe$$$$]

MakeMe$$$$ congrats on the retirement!

A few questions:

1. Why does your wife have IL medical and dental and you have Federal medical and dental insurance? Would it be more beneficial to go onto one of the national federal plans to do away with the delayed payments as well as ease of access to medical help while travelling?

2. So your maintenance fund is your emergency fund? Sounds like a solid plan adding to 10k (I'd add more if finances permit). What investment vehicle is your money in?

3. What is your time horizon to purchasing a home? Have you decided what state and price range?

All of the "funds" are in my credit union's share savings earning...NOTHING WORTH SQUAT.

Regarding the medical insurance. We have double covered each other for years and over the time it has been very cost effective. I use the GEHA low family option since what they don't pay, her insurance covers. As an example, 2 years ago I had weight loss surgery and it cost us $0 because of the double coverage. I had knee surgery in TX last winter and again $0. As I reach medicare age then I will be dropped off of her insurance and then when she reaches medicare she gets dropped off of mine. We've done the math over the last several years and with all the co-pays we have saved money doing the double coverage with me on a low option. BTW...if recent IL supreme court rulings trickle into the process, Sandee's insurance will be free for her in the future. (Again, and IL thing. LOL)

The maintenance fund is for high/expensive repairs outside of our normal budget. Currently and for the next 2.5 years I am covered by a service contract that should control high costs repairs. In fact, I paid $6K for 4 years of coverage and they have paid out over $7500 in repair coverage. Our 43' motor home is more complex than you can imagine. If I blow a turbo that will cost $3-4K. A blown engine can cost over $30K. We are planning for this fund to be used for unusual expenses and not just for normal maintenance that we currently have covered with our cash flow. I would also look at adding about $150 a month ($350 total) to also cover new tires and batteries that could be due for replacement in the next 5 years.

Our housing goal is to be on the road for at least 5 years. We have done significant upgrades to the coach including residential refrigerator, new satellite/entertainment systems and the coach is currently in the shop having a new floor installed. It is a keeper! Part of our goal with all this traveling is to scope out where we will settle in. Our current thoughts are in the Austin, TX area or south of that. We winter in McAllen, TX. This spring we will scope out Tucson - Phoenix areas as we head out for a west coast trip next year. The need to build up more housing reserve is because our MH is coming up on 10 years old. At that point it hits a second round of depreciation due to age and higher difficulty of getting financing. While we expect a value of around $40K 5 years from now, we are not putting that into our exit strategy. It could be that we trade it in for a smaller MH for occasional traveling based out of our new home. In a perfect world we stay healthy, keep traveling until we drive the coach to a retirement home and hand them the keys. LOL Of course, if we get through that 5 years with the emergency fund intact and $20K in the medical fund, we have that much more available.

The long term savings investment could be a more strictly managed program with more stringent withdrawal requirements. It would only be used in DIRE need until we move towards a fixed home. The emergency maintenance and medical funds need a bit more flexibility but shouldn't see activity like a checking account. We have sufficient reserve cash assets that allow us to push our cash flow envelope and perhaps cover unusual exposes without drawing on these funds.

Because of our defined benefits packages we feel we are still open to moderate risk. We certainly can't do too much more poorly with these savings than we are doing now.

[crondanet5]

Roll your TSP into a brokerage rollover investment account now. Then Private Message me and I'll tell you what to invest it in for growth. The key is making this account really grow before you must make withdrawals starting at age 70 and a half AND continue to grow the account in a tax deferred program after age 70 and a half so you (sob) have to increase the amount of those withdrawals every year thereafter to meet minimum withdrawal requirements. The problem you face is how to protect your investment from a loss while you are out admiring the Speed Limit signs and learning which local realtor is miserably maintaining that stretch of highway. How much longer are you planning on doing this trail ride before you have unlimited access to an investing computer without signal loss? The longer you drive the less days you have to double that $36,000.