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This is the twenty-fourth day in our 31-Day Money Challenge. Over 31 days we’ll publish 31 podcasts, each designed to help you move closer to financial freedom. Yesterday I interviewed Brandon Turner about real estate investing. Today I’m going to cover a number of reader comments and questions, and give you a simple tool to help you determine whether you are on track to retire.

Sponsors: The 31-Day Money Podcast is sponsored by Betterment and Personal CapitalBetterment and Personal Capital are two tools I use to make investing easier, less expensive, and more effective.

Topics Covered

  • A simple way to determine if you are on track to retire.
  • How much you need saved to replace 80% of your pre-retirement income.
  • How to determine how much you should have saved throughout your career.
  • What percentage of your income should you save, at a minimum, to be on track to retire.
  • Why having no debt is an important retirement planning move.
  • Why retiring early is a terrible goal.

News Items

  • Vince Young files for chapter 11 bankruptcy
  • U.S. Stocks take a drubbing on concern about corporate earnings. Dow slides 175 points. Nasdaq loses 0.6%–We discuss this headline from CNN and what to make of a 1% drop in the markets.


Your Money Ratios: 8 Simple Tools for Financial Security at Every Stage of Life by Charles Farrell

Capital to Income Ratio

  • 25 – 0.1%
  • 30 – 0.6%
  • 35 – 1.4%
  • 40 – 2.4%
  • 45 – 3.7%
  • 50 – 5.2%
  • 55 – 7.1%
  • 60 – 9.4%
  • 65 – 12.0%

Savings Ratio

  • 1. 25-40: 12%
  • 2. 45-65: 15%

Debt Ratio: No more than 2x mortgage to income ratio

Listener Questions & Comments

In this podcast I respond to several listener questions and comments:

Kenneth: I discuss Kenneth’s decision to invest his non-401k assets with Betterment.

Mark: “I’m 23 years old and just recently graduated college. I’ve been working going on 6 months. I have 4500 saved up since I graduated. The only debt that I have is the 25000 dollar school loan. My question is, do I need to concentrate on making extra payments on the school loan or should I start putting money up for a down payment on a house. Thanks for any advice you give. Huge fan of the podcast.”

Steven: “If you read this on your podcast, please do not read my last name. Thanks for your podcast. I’ve listened to all of them and they are very informative. I am in the military and my retirement pay will cover all my expenses with a little left over. Even though all my living expenses will be covered with my pension, every year I max out my ROTH IRA (through Fidelity) ($5500) and my non-matched ROTH TSP ($17,500). Toward the end of this year, I will open a regular taxable account with Fidelity (or maybe Vanguard) and will contribute (~$2000) per month. I am planning on only buying stock mutual funds (the Mr. Money Moustache approach). Do you know of any good reason why I should buy anything else (i.e. diversify)? If I keep up the current savings rate, I will make more (figuring a 4% withdrawal rate) in retirement than I do working. I would appreciate your thoughts.”

Brian: “I’m really enjoying listening to all your podcasts, just finished DR 028: How and Why to keep investing costs low…
Keep up the great work!

My overall ER: .13%

Here is my Asset Allocation:

34%-Vanguard Total Stock Market Admiral (Taxable)
15%-Vanguard Small-Cap Admiral (Taxable)
18%-Vanguard FTSE All-World xUS Large-Cap (Taxable)
08%-Vanguard FTSE All-World xUS Small-Cap (Taxable)
05%-Vanguard REIT Admiral & ETF (Roth/HSA)

10%-Vanguard Inter-Term Tax Exempt Muni (Taxable)
05%-Vanguard Total Bond Market (Roth)

David: “I recently stumbled upon your blog and have enjoyed the content as well as the podcasts. In particular, I appreciate your gracious demeanor which indicates wisdom beyond financial matters. Thanks for putting your work “out there” for the benefit of others.

I wanted to see if you could provide me with some advice. My wife and I currently have surplus income over expenses of $2,400 / mo. We’re about 4-5 months away from paying off our mortgage (which is actually in the form of a HE LOC). We have no other debt. Because of our growing family (5 children vs. 3br / 1.5ba house) we anticipate buying a larger house in the next 3-5 years. We would like to buy it with cash. Are there any investment vehicles you could recommend for generating a return on our “house savings” as they accumulate?

I do have a Discover Bank high interest savings account that I could put the funds into, but I’d like to generate better returns than 0.85%. In all honesty, I was kicking around the idea of putting the savings into Vanguard’s S&P 500 Index Fund. However, because of the relatively short duration, would it be unwise too take on the risk of principal loss for a better return?”

FYI: Here are a list of the top paying online savings accounts.

Joe: “Hi Rob- for asset allocation purposes, I’m looking to re-balance and add more bond funds. I’m sure others are in the same boat after the stock market run-up. However, I am concerned about the impact of rising interest rates on bonds in the future. Is it better to sit on the sidelines for now or take the plunge with a total bond fund or stick to short-term, or corporate or inflation protection bond funds in this environment? Also, how about international bonds?”

Day 25: A look at a sophisticated asset allocation tool

Author Bio

Total Articles: 1120
Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Article comments

1 comment
Md. Taslimuzzaman Fakir says:

Hi Rob. I’m at Day 24 in your 31 day money challenge podcast. Thank you, thank you, thank you! I’ve been looking for a comprehensive guide to how i can achieve the goal.