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You definately are. Especially if you take into consideration that, I think the number is 2%, of your money withheld in a 401k, will not effect your takehome pay at all since you are paying tax on less money.Mellanby_equals_grit wrote:I'm contemplating opening my first 401k.. Since my job offers contribution-matching I feel like I'm missing out on free moniez.
I'll run you down the Dave Ramsey baby steps first.deadphish wrote:So over the last year or so the wife and I have managed to stash away 10 grand. Pretty impressive considering she is a public school teacher and I am a musician. We are homeowners (about 1 year into our mortgage) already and have 2 kids under 3 yrs old. Some other points:
-I'm not really interested in designated "college funds" as they seem to lock you in to a long term investment with penalties for early withdrawal.
-Basically I am looking for a way to get some short term gains to try and catch up a little to families that might have started building wealth earlier in life. We're both 35.
-The wife already has about 60 grand put aside for retirement through her school retirement program (auto from paychecks).
-CD's seem a little too safe and not very high rates. As do US Bonds and the like.
-We'll be meeting with a financial adviser soon from are Credit Union anyway, but I know there are knowledgeable peeps here that might have some decent advice.
TIA
pokersource.com?the knob wrote:I'll run you down the Dave Ramsey baby steps first.deadphish wrote:So over the last year or so the wife and I have managed to stash away 10 grand. Pretty impressive considering she is a public school teacher and I am a musician. We are homeowners (about 1 year into our mortgage) already and have 2 kids under 3 yrs old. Some other points:
-I'm not really interested in designated "college funds" as they seem to lock you in to a long term investment with penalties for early withdrawal.
-Basically I am looking for a way to get some short term gains to try and catch up a little to families that might have started building wealth earlier in life. We're both 35.
-The wife already has about 60 grand put aside for retirement through her school retirement program (auto from paychecks).
-CD's seem a little too safe and not very high rates. As do US Bonds and the like.
-We'll be meeting with a financial adviser soon from are Credit Union anyway, but I know there are knowledgeable peeps here that might have some decent advice.
TIA
Got an emergency fund of $1K in the bank? If not, setting that up is pretty easy.
Debt-free other than your mortgage? If not, consider paying that off with the cash, then moving on to the steps below.
After that, Dave recommends three to six months of expenses in a fund somewhere that you can acccess. Depending on how stable both of your jobs are, can go for the low or high end of that range.
Next step is to put 15% of your annual income into retirement. If you are up to this step and have money left, dump it into a Roth. I think the limit is $6K per spouse this year, you may be able to fund last year's IRA up until April 15th, but I'm not sure I'm remembering that correctly. Don't buy individual stocks, buy funds with at least a ten-year track record of good returns. I'm getting ready to do some re-allocation as I pulled a good chunk out of my 401k into a standard IRA when my company was bought and now look like a sheer genius leaving that in a money market fund during 2008.
After that comes funding the kids' education. You've got a lot of time to build that up and ride the market's ups and downs. Look into Missouri's MO$T program, there are various funds that you can allocate in that (blanking on who runs it now). That's assuming you are a Missouri resident, which gives you a break on state taxes. Dave likes the educational IRA (Coverdells I think), but seems to be OK with 529s like MO$T as well.
Final step is to aggressively pay off the house. Take a look at your current mortgage rates and see what you can get, maybe from the credit union that you are talking to. I'm getting to refi for the last time in my life hopefully (going from 6.125% to around 4.5ish%). I'll also be shooting for a ten-year note to roughly keep my current payoff horizon (get it paid before the first kid hits college). If you have a 30-year loan, look at doing a 15 or 20-year and save a buttload on interest.
Play poker, win stuff like it says.stinkdified wrote:pokersource.com?
goon attack wrote:I forgot the tenure issue. Once you're tenured, you're gold!
That kind of job security must be nice...real nice.
go change your diaper and leave me alonePhilo wrote:goon attack wrote:I forgot the tenure issue. Once you're tenured, you're gold!
That kind of job security must be nice...real nice.
thought you were a teacher?
Do it. Do it now. With the economy completely in the crapper, this is actually a good time to buy, and since you won't be touching the money for a long time, it will have plenty of time to grow.Mellanby_equals_grit wrote:I'm contemplating opening my first 401k.. Since my job offers contribution-matching I feel like I'm missing out on free moniez.
Knob,the knob wrote:I'll run you down the Dave Ramsey baby steps first.deadphish wrote:So over the last year or so the wife and I have managed to stash away 10 grand. Pretty impressive considering she is a public school teacher and I am a musician. We are homeowners (about 1 year into our mortgage) already and have 2 kids under 3 yrs old. Some other points:
-I'm not really interested in designated "college funds" as they seem to lock you in to a long term investment with penalties for early withdrawal.
-Basically I am looking for a way to get some short term gains to try and catch up a little to families that might have started building wealth earlier in life. We're both 35.
-The wife already has about 60 grand put aside for retirement through her school retirement program (auto from paychecks).
-CD's seem a little too safe and not very high rates. As do US Bonds and the like.
-We'll be meeting with a financial adviser soon from are Credit Union anyway, but I know there are knowledgeable peeps here that might have some decent advice.
TIA
Got an emergency fund of $1K in the bank? If not, setting that up is pretty easy.
Debt-free other than your mortgage? If not, consider paying that off with the cash, then moving on to the steps below.
After that, Dave recommends three to six months of expenses in a fund somewhere that you can acccess. Depending on how stable both of your jobs are, can go for the low or high end of that range.
Next step is to put 15% of your annual income into retirement. If you are up to this step and have money left, dump it into a Roth. I think the limit is $6K per spouse this year, you may be able to fund last year's IRA up until April 15th, but I'm not sure I'm remembering that correctly. Don't buy individual stocks, buy funds with at least a ten-year track record of good returns. I'm getting ready to do some re-allocation as I pulled a good chunk out of my 401k into a standard IRA when my company was bought and now look like a sheer genius leaving that in a money market fund during 2008.
After that comes funding the kids' education. You've got a lot of time to build that up and ride the market's ups and downs. Look into Missouri's MO$T program, there are various funds that you can allocate in that (blanking on who runs it now). That's assuming you are a Missouri resident, which gives you a break on state taxes. Dave likes the educational IRA (Coverdells I think), but seems to be OK with 529s like MO$T as well.
Final step is to aggressively pay off the house. Take a look at your current mortgage rates and see what you can get, maybe from the credit union that you are talking to. I'm getting to refi for the last time in my life hopefully (going from 6.125% to around 4.5ish%). I'll also be shooting for a ten-year note to roughly keep my current payoff horizon (get it paid before the first kid hits college). If you have a 30-year loan, look at doing a 15 or 20-year and save a buttload on interest.
Are you saying you don't want to go into a plan 529 or don't want to be stuck with a small selection of funds in there? If you're pretty sure your kids will be going to college, I think you are better off investing in a 529 rather than outside of it, since all gains are tax-free as long as they are used for educational expenses. Here's what a link off the state treasurer's site (don't know if you are in MO or elsewhere, but think all states have a 529) says:deadphish wrote: Knob,
Great stuff. That is very informative. All of the things Dave mentions are on my radar. We'll be pretty loose with the 3-6 months expenses savings (great job security), but will certainly have $1000 liquid for emergencies.
I think we will avoid any traditional "college funds" for our 2 kids. I just don't like pigeon holing children into thinking they have to attend college. I'd rather invest this money in other lower-medium risk stuff I can access if they need it when they are 10 or 16 or whenever. Feel free to talk me out of this. It's just my gut reaction to these types of funds.
I want to refi out of our 30yr mortgage ASAP. Especially if rates keep breaking into the 4's. I've done the math many times and it still amazes me the amount of interest you can save with a shorter term. Saving that $50-100k on the mortgage is like a huge gain we could feel years before retirement age. Only prob is we didn't put much down when we bought in 11/07 and, with the economic crisis, are probably a little underwater (maybe even if we're lucky). So I guess we'll just keep making extra payments as often as we can until we are able to do a refi. I wish we could somehow get out of PMI in the meantime.
As for the house, don't sweat the mortgage at first. We had a 30-year when we bought our house and refi'd to a 15 after my wife got out of nursing school and our income went up. We put an addition on, had a construction loan, then had to get some weird first/second because Fannie Mae or whomever was going to buy our loan didn't like something about it all being on one mortgage, but were able to keep it a 15. After having that for a couple years, we refi'd to our current loan, which I had the bank do as a 12-year so I can make sure it's paid off before the older boy is ready for college. I think we'll probably have it paid off after about 21 years in the end, what with the different mortgages listed above, although I'm hoping to start banging out some massive payments when my professional student wife gets her masters in a couple years and starts making more than me (and not due to me being laid off like the last time that happened).Owners of MOST accounts are able to make a deduction for contributions of up to $8,000 per year per taxpayer from their Missouri income taxes.
Contributions can grow free from federal and Missouri income tax until withdrawn. When it is time for the beneficiary to go to college, withdrawals used for qualified higher education expenses, including any earnings the investments may have yielded – also will be exempt from federal and Missouri income taxes.
QUESTION: Diana and her husband make $288,000 a year and her husband is a contractor in Afghanistan. They are in a 33% tax bracket. Should they pay off their house with the excess money, or take their accountant’s advice and keep the mortgage to get the tax deduction?
ANSWER: You don’t keep a house to get a tax write-off. You’re paying $7,680 in interest per year, so you have that as a tax deduction. When you have that, it saved you $2,500 in taxes. Your accountant is telling you to send $7,680 to the bank to keep from sending $2,500 to the government. That’s stupid! You can pay the house off, give $7,680 to a charity and keep the tax deduction without the debt.
Well I just opened it up online.. BJC offers up to 1.75% match for a contribution of 4% or more.. Not dollar for dollar but still free moniez.. I didn't really know what percent of it to put in what so just guessed on some things.. I figure I'm 24 and am now saving for retirment I'm ahead of 90% of people my age. I'll get more serious about what exactly to put the investment in later on.kodos wrote:Do it. Do it now. With the economy completely in the crapper, this is actually a good time to buy, and since you won't be touching the money for a long time, it will have plenty of time to grow.Mellanby_equals_grit wrote:I'm contemplating opening my first 401k.. Since my job offers contribution-matching I feel like I'm missing out on free moniez.
Just put in as much as they will match.
I pressed a couple mortgage guys on the phone about this...saying I was more interested in the long term savings than a few G's out of pocket. They always ended up convincing me to just put more into the principal on a monthly basis to save long term. Our loan is FHA and you can do a streamline refi with FHA (no appraisal, minimal paperwork), but the rate is about a point higher than a conventional mortgage. If I see rates in the 4's again I just might bite and do a conventional refi. Dropping from 6.25% to anything in the 4's is hard to pass up.Leedog wrote:Just an off handed thought. Find out what it would take to refi. Maybe you can use part of your 10 grand to buy it down enough. As you said yourself, the money you can save is staggering. Prolly more than you can get investing it. Just a thought. Really haven't thought it through.
Pretty much, the differences between doing it bit by bit, or at the beginning or end of the year are too small to pick about. In my example, above that $250/mo is $3,000/yr. and you would effectively get the same bang for your buck doing it in one lump sum each year. My gut says rates have bottomed... but you never know, although I don't see how they can get too much lower.Leedog wrote:My point on that is if you are gonna do an extra $100 bucks for a year or $1200 in one check is all the same. My house is paid for so I'm not up on the current rates. But if/when you think they have bottomed out, maybe the thing to do is pull the trigger on the lump sum, instead of chipping away and have the best window close while you are waiting around.
Oh yeah, it adds up real quick. Just look at my example on an measly $100,000 mortgage, nothing by today's standards and you can cut nearly $70k in interest just by going from a 30 to a 15 at 6.50% for only an extra $250 a month or $3,000 a year.Leedog wrote:Yeah. My point is do what you gotta do to pull the trigger when you think things are bottomed. If you think they are now, then the lump sum now might be the way to go. Look at an ammoritization (sp?) schedule and see what you are pissing away on interest each month compared to a new 15 year note and you may want to move sooner rather than later instead of chipping away. I'll bet the amount makes you sick.