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Roth IRA's have a shitload of ancillary benefits to them that make them an easy default choice. Probably the most important, in my mind, is that you can freely withdraw the principle whenever you want for whatever reason without penalty. It's like some kind of magical savings account that can only hold $5500/yr but generates three times the yield! edit: a caveat I forgot to mention is that the money has to sit inside your account for 5 "taxation" years before it can be freely withdrawn without penalty. This is a large consideration, but thankfully it's the only consideration (for Roth IRAs). double edit: distributions on the earnings are penalty-free after you turn 59 1/2 or a bunch of other one-off rules that should be explained by an authority who knows more about this crap than I do. Five Years old + 59 1/2 = tax and penalty free moneys. Other distribution methods exist with more complication. DNK fucked around with this message at 15:56 on Aug 19, 2014 |
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Aug 19, 2014 15:18
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Nail Rat posted:It always is, since it's coming from the employer and not you(so there's no opportunity for you to have already been taxed on it). Allowing a roth match would be nightmare at tax time for everyone. I specifically asked my HR department about this, and they said (after THEY researched it) that the matching funds will go into Roth 401k if my contributions are to Roth 401k. They could have been lying/misinformed, but I'd like to provide an alternative response. (I am not currently receiving matched funds due to lack of seniority at the company, so I cannot empirically determine validity.)
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Aug 20, 2014 18:12
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Cool. Now I can get all smarty-pants on them. Since you seem up to 401k code: are there different annual 401k contribution rules regarding Roth vs Normal? Do Roth 401k contributions affect Roth IRA contributions?
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Aug 20, 2014 18:26
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Unless you're making more money than you know what to do with: no. I dunno how much money I'd have to make before I started thinking about doing something other than putting excess into tax-efficient passive investment funds. Even if you're doing "only" 80% of your max returns with self-research, it'll still probably net more than using a personal financial advisor. Your financial goals are (most likely) straightforward right now: 1) Match employer 401k 2) Evaluate real-life upcoming expenses: set up a budget and determine what you have left at the end of the month. Use YNAB, Mint, or another program to ensure you aren't glossing over important things like Car Insurance or what you're REALLY spending on food. 3) Distribute that "what's left" into general ideas: Saving for a down-payment? Making money with your money? Shopping spree? At 50k/yr and 110k debt, you're probably not left with much left over unless you're an extreme thrift, paying next to nothing in rent, and/or have an amazing loan program. If you want to make long-term money you have to think about interest rates on your loans vs (potential, risky) gains in investment vehicles. Once you nail all that down, you shouldn't need much advising; what do you do with an extra ~$200 to ~$900 per month? Save, invest, or spend. Bank, Roth/Loans, or Amazon? e: 110k at the standard 6.8% is $623 in interest per month(!!!). If you aren't on a loan assistance program you need to investigate that first and foremost. That elephant in the room is monstrous. Minimums on that loan are probably in the $1000/mo range which will be roughly 40% of your paycheck. You need to do way better than the minimums (or bank on your future success; get them raises) to have a shot at escaping that debt. DNK fucked around with this message at 17:15 on Sep 5, 2014 |
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Sep 5, 2014 17:04
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Drythe posted:edit: I forgot to look at my updated amount, I actually have 74k in student loans. Not much better, but less. I know that those numbers can turn into a BZZZZZZZZZZZZZZ fuzz-noise since "they're so big who needs to think about that?", but I urge you to reconsider your statement of "not that much better". The number you first quoted, 110k, was 150% of your actual amount. $46,000 is an enormous amount. In terms of money that is generating (negative) interest, it's a MONUMENTALLY HUGE AMOUNT!!!!. $46,000 of additional debt is, like, years of your life.
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Sep 5, 2014 20:26
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Naw, but I can imagine my feeling about finances being easily transferable. Also I edited out some of the, uh, preachy parts because I thought it was rude  you quoted me too early. aside from me being bad at simple addition and tacking on 10k to the number.
DNK fucked around with this message at 20:35 on Sep 5, 2014 |
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Sep 5, 2014 20:29
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Counterpoint: there are tax benefits to paying a mortgage that can severely reduce the sticker APR of a home mortgage loan. I'm all for actually owning the things you use, though, and you're maxing the standard investments. I'd put more towards the mortgage.
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Oct 6, 2014 22:55
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I'd keep your emergency fund. It's not worth toeing the line and dipping into even worse debt (credit cards, etc) if something unexpected happens. There's pretty marginal savings from paying it all off now vs paying it all off in five months if/when you are on much more solid footing. All that being said, feel free to put some additional money towards your car loan -- but don't run yourself dry. The buffer you have is a wonderful thing.
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Nov 7, 2014 21:53
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jarjarbinksfan621 posted:Way too many words to say, "Spend less money, and make more money." Is that how you get out of debt, really? I read a whole lot about challenging assumptions and breaking out of an entitled mindset that you seemed to have missed. The point of the article was mostly that you get into debt by allowing comfort/convienance that you cannot afford, and getting out of debt involves shedding a lot of that. It's very much a moralistic argument on top of being  spend lesse: veer right, way right. Now cut Medica--move into an apartment.  I'm a pretty big leftist, but I still like the message. e2: vvvvv mlyp, etc vvvvv DNK fucked around with this message at 01:01 on Nov 12, 2014 |
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Nov 12, 2014 00:38
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fuzzy_logic posted:I'm looking to move my savings from a big national bank to a smaller credit union... Why? That's the most important thing. Regardless, it's nice having some token money in large banks because of their ATM footprint. ATMs charge two fees: money out and transaction fees. Most smaller banks do not charge for money out of your accounts from other institutions, but they still allow that institution to charge you for the transaction. Some unions reimburse that expense. Otherwise, it doesn't matter where your money is. ACH transfers usually take less than 3 days and -- with some credit -- liquidity is a non-issue. After that point, it's comparing interest rates and/or financial products.
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Nov 19, 2014 15:54
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What Nocheez said. The difference between being "pushed into a higher tax bracket" and staying in a current bracket is probably 10% or less. Even if you were sitting at the very top of your bracket -- for 15%: exactly $36,900 in 2014 which, by the way, would pay $5081.25 in federal -- and had to take enough extra income (say, $80k) to be pushed up TWO income brackets (for a top-end of 28% --13% more --) your effective taxes for that year would be on the total amount of $116,900 and come out to $25,907. Now, 25907/116900 = 22%. This person would be paying only 7% more than the 15% they're normally* paying despite landing in a bracket which is 13% higher! (*  don't ruin the magic by explaining that their original taxation was at 13.8% also due to progressive income tax brackets)The gist of it is that it's free money and that their overall tax burden isn't increasing due to "tax brackets" but rather it's because they're getting tons more effective income. I'm pretty sure there's not much you can do about an inherited traditional IRA being forceably disbursed, but the good news is that it's free money, yeah?
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Dec 12, 2014 19:58
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Otoh, you can always contribute to your Roth IRA and then withdraw the principle for your home purchase without much headache. Of course, you're gambling on whether the money will be there when you need it, but if you're wanting to simultaneously accrue tax-advantaged earnings while keeping some access to funds, there you go. If you have your eyes on a specific property and are bidding on it, you shouldn't be doing this, but if you're biding your time and are thinking of home ownership with a "when im ready"-mindset then I think Roth IRA as-savings is a decent option.
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Dec 13, 2014 00:47
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Why not just go with Ally or Citi's 0.9% - 1.0% interest savings accounts? You might be losing a tenth of a percent, but you'll have far easier ACH access and dependable customer service.
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Dec 13, 2014 21:26
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Utilization is only important at the moment of the credit check. You can run at 80% utilization for 20 years (don't miss payments!) and pay off your cards to 0% a week before your credit check and nothing bad will happen. During credit checks, you want to be below 30%, and I think some agencies want you below 20%. tl;dr pay off your credit cards in full every month and don't worry about it
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Feb 7, 2015 03:18
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What you're talking about is called "utilization": how much of your available credit (across ALL credit accounts) you're using. It's measured in a percentage. For example: $2000 credit debt with $10000 total available = 20% utilization. Utilization had a large impact on your score, but it is not permanent. You could have 90% utilization the month before a credit pull but pay off all of the debt the week before and you'd look a-ok to creditors. How fast you pay off your card is meaningless to creditors. It is only meaningful to you: paying off slower means you pay more in the long run.
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Mar 29, 2015 23:31
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That being said, spreading your contributions out to ~1450/mo isn't significantly different than just doing one bolus injection of 17.5k. Like, in the best year of the stock market ever it would be ~$1800 difference, but when you're looking at total retirement balances of 1M+... not a huge difference. The stock market has bad years, too. You can front-load/micromanage your 401k for slightly better return, but it's not critical, and if you miss out on matching funds it is immediately Not Worth It. Don't worry about it unless you want to worry about it. DNK fucked around with this message at 14:28 on Apr 2, 2015 |
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Apr 2, 2015 14:26
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From every conversation I've ever had with military members (family, friends, and friends of friends) 10 years is a ridiculous amount of time to be in the military. Now, I'm not saying you can't do it, but if I were you, I'd hedge: what if I don't stick around for 10 years? That being said, paying minimums and saving the rest isn't a bad plan. The outlook for that is you pay slightly more in interest.
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May 26, 2015 18:16
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A savings account with $5000 in it is roughly comparable to a credit card with a $5000 limit. If you can manage the one, you can manage the other. Probably.
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May 30, 2015 00:34
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me posted:So I started working my first ("real") job. Financially I think things are going well, even though my pay is low. You're pretty much me down to the '03 cav.
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Jun 10, 2015 14:44
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There is a 53k limit for both employer and employee contributions to a 401k. There is a 18k limit for employee contributions.
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Jun 10, 2015 22:27
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If you're confused about your credit / credit score run a credit report (one of them) here: https://www.annualcreditreport.com/ Secondly, your situation seems like a precursor to horrible credit card debt. It reads like a reddit post except it's missing that "oh yeah and I have $2500 in CC debt" at the end. Make a budget first. Stick to it for two months. Figure out what your monthly net income is (positive or negative...) and then consider whether you can make purchases on credit and pay them back. The hint here is that if your monthly net income is negative then your credit card debt WILL NOT magically disappear. Finally, it seems like you have an income problem but it also seems like you're a student. I strongly suggest not taking out a credit card and using all the money angst you may have to push yourself towards job searching / self-improvement planning*. *if you identify that you need a loan to buy some interviewing clothes or other leverage necessary to gain further income, go for it! But don't open a CC so that you can float along a little more comfortably...
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Jun 30, 2015 13:30
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Yes, go index investing. Do not be a stock picker with general funds. There is very little tax impact (unsure about international aspect of it) with total stock market indexes. They are 100% stock indexes, though, and are prone to volatility. If you want to use the money in the next five years, keep it in a bank account. If your window is greater than five years, investments are acceptable.
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Aug 31, 2015 22:28
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Entirely dependent on the terms of the purchase. Are you buying them at a discount? Is there a "lower price of either ____ or ____" clause? Is it in lieu of a paycheck? Because if you're just buying stocks on their going spot rate it's an awful deal; don't do it.
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Sep 2, 2015 14:39
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Counterpoint: it's trivial to use a single, easy rewards card for 2% back on everything. That's $200 for every $10000 you spend AND it builds your credit score (so you can get better rates on things like auto/housing loans).
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Sep 27, 2015 21:18
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waloo posted:What's a 2% card on everything? I feel like I have missed that one somehow. Citi Doublecash (MasterCard)
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Sep 28, 2015 02:01
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Did you put a signature on a piece of paper around these arrangements? If so, you're playing with fire, and you can totally get burned. Whether you'll actually get burned is dependent on how forgiving the parking spot place is. They can file collections in small-claims court. This is a normal operation for pretty much any subscription/lease-based, petty-cash business. I'd advise eating the loss and learning the lesson: always read cancellation terms when subscribing/leasing anything.
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Sep 30, 2015 23:26
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Where does the other 310k go? How long has this person worked at the org? How were their revenues last year (is he performing)? Does the money that isn't taken as salary get sent to the right places (a charitable dollar can be used efficiently... or not)? I'm a proponent of market-rate salaries for non-profits (competent management is rare; pay them what they're worth), so this isn't extremely alarming just going off of income. That being said, due diligence on who you're giving money to is awesome, and if the organization is a front for his pan-handling that's not cool.
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Oct 12, 2015 22:15
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Yeah you'll "pay" $3500 for $5000 worth of day care. It's without-a-doubt worth it.
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Dec 17, 2015 23:37
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It's amusing to think of a director of the board appointed by Vanguard. That's some really vaguely dystopian poo poo: the blind god of investors appoints leadership to a company. Like this currently happens with private equity companies who do board takeovers but at least there's some... agency there.
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Feb 4, 2016 19:22
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Seconding doublecash. Accepted everywhere, 2% on everything, and no fees.
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Apr 20, 2016 02:12
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Open a Chase Slate card and do a balance transfer. It has a 0% introductory rate -- pay the minimums and then tackle it at the end of your debt reduction. Depending on how much credit you qualify this can significantly help. $1000/mo is pretty heavy debt paydown by itself. If you can do nothing but pay $1000/mo then you're already in great shape. ~14 months to gain ~$12000 net worth is fantastic. Consolidation loans would make a lot more sense if you didn't have the ability to quickly (under 2 years) pay off the debt. Since your payments are strong, you'll be carving into the principle deeply. I'm not a loan consolidation expert, but the administrative qualification process and overhead (flat fees?) will likely result in marginal if any savings compared to just blasting the loan with cash.
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Apr 28, 2016 15:06
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Agree with posters above: don't worry about paying more than you need to for those loans if you have any financial risk in your life that would be mitigated by having a bigger savings account. That being said, one way to think about those kinds of low-interest loans is cash-flow: if you paid off one or both, your monthly obligations decrease and so your net positive cash-flow increases. This allows you more flexibility to use your money how you want to.
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May 20, 2016 16:37
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KYOON GRIFFEY JR posted:how do you do this, am i just retarded? What I did (to separate EFund from Short-term cash savings) is literally set up a new savings account. Then I named them different things. It's like five button clicks. You get a bunch of paperwork because you're setting up an actual new account (rather than a virtual partition), but that makes way more sense from an accounting perspective -- how would you handle withdrawals from a partitioned account without complicated rules? DNK fucked around with this message at 15:23 on May 24, 2016 |
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May 24, 2016 15:19
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Build up a months expenses in your checking account and keep that amount ("float" it) in your checking account. Dump the rest in your savings account until you have two months expenses in there. So 3 months total. Once you've done that -- if you can do that -- consider opening an IRA. e: a months expenses with paid for everything might be like $200. That's fine. You may need to save up to open an IRA -- you usually need at least $1000. DNK fucked around with this message at 04:09 on May 26, 2016 |
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May 26, 2016 04:06
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The general savings account withdrawl limit is 6 per month. Note that the amount is not limited. As long as you have a checking account that you're feeding (or use it to pay on one or two CCs per month which handle the transaction volume) it's generally pretty hard to hit that cap.
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Jun 15, 2016 01:29
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Yeah, you're fine. A good practice would be to instead pay your CC out of checking and transfer your money from savings to checking. The point of doing that is to have all outflows come from checking. Savings would only go internal <--> internal. This makes it REALLY hard to hit the transaction cap and insulates your large cash stockpile from fraud.
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Jun 15, 2016 04:27
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$23k of savings in a single year is super duper good, and that's not counting anything else you did. By the way, maxing your ROTH IRA and 401k is about $23k.
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Aug 5, 2016 17:19
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The most straightforward advice that you should heed is to pay off that 8.5% debt before investing in anything. Debt is something like a negative investment with a guaranteed cost. Paying it off is an investment with guaranteed returns. The stock market had returned an average of ~7% annually across the past thirty years. Your debt is sitting at 8.5%. There is no better investment in your future than paying off that debt. Your midrange interest (3-7%) stuff has a bit more complicated calculus going into it, but the general feeling is that this is also worth getting rid of before considering investing. Low interest (less than 3%) are generally worth paying minimums on due to greater returns elsewhere. Mortgages and Student Loan paid interest can be deducted from your taxable income which slightly complicated the above picture, but the general advice still applies.
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Aug 5, 2016 19:17
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In addition, Roth IRAs have special privileges not afforded to Traditional IRAs that make them very attractive. The most notable, in my opinion, is the fact that you can withdraw the principle at any time without penalty. This significantly reduces the risk of stashing money away for 20 years -- if you absolutely do need it, you can take what you deposited back. Shifty Pony posted:Quick question: Put it on autopay and forget about it. Do not pay more than minimums. Use your pile of cash to do more fruitful things, like a 2% CD if you're ultra risk-averse. I'm not an oracle, but it's extremely likely that the stock market will have increased by at least 1.8% in a year and a half. Expecting a diversified investment portfolio to underperform 1.8% over a 1.5 year time frame is, historically, quite unlikely. DNK fucked around with this message at 17:39 on Aug 10, 2016 |
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Aug 10, 2016 16:04
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Star War Sex Parrot posted:Where are these at? Best I see right now are 2% and maybe a 2.05%. Numbers out of my rear end. Edited the section. My point was that there are essentially riskless investments that will outperform paying off a 1.8% loan, and there are risky assets that are very likely to outperform 1.8% over a 1.5 year time frame.
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Aug 10, 2016 17:38
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