28 year old new homeowner seeking feedback on planned adjustments to investment strategy
My financial situation and mindset have both changed a lot since I was able to become a homeowner at 27 last year in what felt like a minor miracle due to the context. (Feel free to skip ahead for my current financial situation and planned adjustments).
My partner and I had been living in an income-restricted rental studio apartment in a VHCOL city and working at large corporate non profits. Our rent was $1,650/mo and I was making $51k/yr gross and my partner was making $26k/yr gross. There were a lot of issues with the apartment, and living there was making us miserable, so I was looking for a way out when I discovered the opportunity to purchase a one bedroom condo through partnership with a local affordable housing non profit. The only requirements were income in the appropriate range (which mine was, and my partner’s finances were not included in the calculations since we are not married, and their name is not on the mortgage) and $5k for the down payment (which I had, but paying it consumed nearly all of my cash savings at the time).
Nearly a year later, I am now making $56k/yr gross and my partner is making $33k/yr gross. Our monthly housing costs have decreased to a $1,343 mortgage + $204 mandatory HOA fees. It is a small building with no shared amenities, so HOA fees are primarily a means to replace our roof in 24 years and prepare for any unexpected maintenance. The building was constructed last year and has had no issues so far. Property taxes and insurance premiums combined are currently paid through the mortgage at a total of about $2,250/yr. It’s still unfathomable to me that someday (when the mortgage is paid off) property taxes, insurance premiums, and HOA fees will comprise the entirety of our housing costs! We feel very lucky to have so much stability now, in this highly desirable city with an insane rental market.
Since we moved, I have been saving and investing a lot more than I was able to before, and simultaneously enjoying life a lot more, within the following budget parameters:
$1,547/mo housing (my partner contributes $580 a month towards this, so I only pay $967)
$450/mo food
$160/mo medical expenses (health insurance premiums, copays, prescriptions)
$80/mo utilities (power, water, wifi)
$40/mo transportation (no car, just a transit pass and the occasional ride share)
So my total essential expenses are around $1,700/mo ($20.4k/yr)
Over the past six months, my non essential spending has been around $400/mo ($4.8k/yr)
The current state of my savings are as follows:
$7.5k emergency fund in a HYSA, which I am planning to grow to at least $10k by next year via my automatic $100 biweekly contributions
$30k in an employer sponsored 401k, to which I am currently contributing 10% of my pre tax income. (Technically it’s a 401a since my employer is a non profit, but I haven’t seen any information indicating there’s any meaningful difference between a 401a and a 401k. Please correct me if I am missing anything there.) There is an employer match of 35% of the first 6% of my pay that I contribute. There is an additional discretionary annual employer contribution of 4% of my pay. This will increase to 6% after I reach a service milestone in 2028, assuming I choose to stay with this employer. I have specialized knowledge in an essential role, so I have good job security.
I have no student loans or credit card debt. My only debt is the 30 year conventional mortgage with an interest rate of 4.5% and about $212k principal remaining on the initial $215k loan.
I was following along with the flowchart from the beginner's section of the sidebar, and I see that it recommends contributing the amount needed to get the full employer match, but nothing above that amount, so I am planning to reduce my 401c contribution back down to 6% and open a Roth IRA to invest the difference, up to the maximum, which looks to be $7,500 this year.
I am assuming that keeping my “extra” money invested this way will be more fruitful down the line compared to the amount I could save on total interest paid by making early mortgage payments now, despite my tiny initial down payment. Is there anything else that I should be doing to set myself up for a successful early retirement? Thank you for all of the guidance and motivation this subreddit has already provided!