My take home pay essentially covers my living expenses, but I am only contributing enough to my 401(k) to get the match from my employer and I am not contributing to a 529 plan for my son. In otherwords, I can pay my mortgage, credit card bills, taxes and everything else from my pay check, but I am not saving anything.
In terms of long term planning, I currently have enough invested, along with my current 401(k) contributions, to cover my retirement and my son's education. I also have a 6+ month emergency fund. I am not worried about living pay check to pay check in this way.
My question is should I draw down from my investments, or maybe more accurately from the returns on my investments, so I can take advantage of the tax savings by maxing out my 401k and make 529 contributions? Would there be big advantages to moving some of the investments into a rental property that would generate monthly income (this is more hassle then I would like)
The idea would be to sell some of my long term capital gains investments every month, or couple of months, to pay my monthly expenses. I would then offset the lost investment value by increased payroll deductions for the 401k and 529 plan.