It's a psychological play more so than a practical one. So is the order of the debt snowball (smallest to largest). His theory is accomplishing the goals (which are easier towards the beginning) will motivate you to keep going.
Any Dave Ramsey fans in here or financial gurus? Need advice..
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It's a psychological play more so than a practical one. So is the order of the debt snowball (smallest to largest). His theory is accomplishing the goals (which are easier towards the beginning) will motivate you to keep going.
Re-read the steps. The steps are outlaid for someone starting from nothing in savings and a lot of debt. You basically wrote down Step 3.
Interesting flow chart. I question whether or not it's advisable to NOT put money in your 401K above the match percentage in preference of an interest earning HSA, though, especially if the HSA is use-it-or-lose it style. I also think maxing contributions in everything is ludicrous. I make 6-figures and if I maxed contributions to all my accounts, I'd be living in a 1-bedroom apartment, driving a rusted out 1985 Honda Civic. My opinion is the preferable approach is to start early with a reasonable amount, make it automatic so you never see it, and let compound interest do its thing.
Beyond that, I generally agree with what it outlines.
What are your retirement financial goals? As you reach that point, how much per month would you want to do the things you need and the things you want. How many years? What to do wuth money you leave behind?
I started out years ago thinking 6k a month would suffice. Nothing feels better than exceeding your goals. When I started out, 6K sounded like big money. If you have an advisor have them calculate or anticipate future cost of living and a spending power of your projected savings in a monthly payment graph.
I started out years ago thinking 6k a month would suffice. Nothing feels better than exceeding your goals. When I started out, 6K sounded like big money. If you have an advisor have them calculate or anticipate future cost of living and a spending power of your projected savings in a monthly payment graph.
1st of all, congratulations on being proactive and involved with your investing and thinking about your future.
My first recommendation would be to buy 'The only investment guide you will ever need', by Andrew Tobias.
It was written in 1978, and has been updated many times. It's an easy read, but he answers a lot of the questions about investment vehicles that you will start to become aware of as you learn about investing. This book would compliment your education with Dave Ramsey very well.
-Learn the difference between 'no load' and 'load' mutual funds. Always, always, always ask how much this investment is going to cost me. Nothing is for free, but paying .025 is much better than pay 5.0 per dollar invested.
-There are retirement options similar to a 401k for people whose company doesn't offer a retirement plan.
-Make an appointment with a Fidelity office. It's free, they offer many different choices for investing.
It would be a great way to get your feet wet and have a plan presentation.
As Warren Buffett once said, 'never invest in a business you don't understand', the same is true with investing.
Only invest after you understand how the investment works.
Best of luck. You're in a great position, not many people can say the same.
My first recommendation would be to buy 'The only investment guide you will ever need', by Andrew Tobias.
It was written in 1978, and has been updated many times. It's an easy read, but he answers a lot of the questions about investment vehicles that you will start to become aware of as you learn about investing. This book would compliment your education with Dave Ramsey very well.
-Learn the difference between 'no load' and 'load' mutual funds. Always, always, always ask how much this investment is going to cost me. Nothing is for free, but paying .025 is much better than pay 5.0 per dollar invested.
-There are retirement options similar to a 401k for people whose company doesn't offer a retirement plan.
-Make an appointment with a Fidelity office. It's free, they offer many different choices for investing.
It would be a great way to get your feet wet and have a plan presentation.
As Warren Buffett once said, 'never invest in a business you don't understand', the same is true with investing.
Only invest after you understand how the investment works.
Best of luck. You're in a great position, not many people can say the same.
How old are you? Just curious cause I had no clue about retirement when I first started to contribute to my 401k around the age of 22. I just put in enough to get 100% of the company match and said **** it. Over the years Ive increased my contribution and started a roth IRA (outside of my employers retirement plan). Roth IRAs are post tax dollars, so you can withdraw out of the account at retirement without paying taxes on the money. Also, you can withdraw your contributions from the account without penalty, if you need the money before retirement.
You should definitely try to take more of an active role in your retirement so you dont have to pinch pennies when you're retired.
Thanks Mojo. Just realized that.
My personal accounting thoughts/way we live:
My personal accounting thoughts/way we live:
- 3-6 months of savings
- Anything over 4% interest, you need to get down asap.
- Anything below can hold tight as you pay on it.
- Get your retirement match on at your work.
- Student loans aren't the devil so long as they aren't massive and aren't high interest.
- Car payment is fine if it's justifiable. Meaning it doesn't nose dive in value/you get a good deal/rate is good/you keep it after the loan is done.
- A person with good finances can also be one that has a fixed mortgage, a car payment, and student loans. The difference is the high interest debt (CC's, ARMs, and others) are more impactful than anything.
Never heard of him...
Keep the Cobra OP.
i'm famous
Why bother with any mutual funds, load or not? They all suck. Index instead. For him I would say put it all in a vanguard lifecycle fund. Set it and forget it
Why fidelity? You want a unconflicted advisor. That means fee based, not one affiliated with a money manager. Honestly I think all of them suck but may be worth it for some.
Any advisor is going to be 'conflicted'. Starting with Fidelity was a suggestion, then shop other advisors and see which one is the best fit.
As they say... 'The more you know'.
I’m 31
31 is nothing, plenty of time left before retirement.
6 months Emergancy fund is fine.
Put your other 6 months of expenses into retirement/investments. Roth IRA, mathching 401k with mutual funds ave 10%+ a year.
Save 15% of salary into investments.
What is your home mortgage? 30 or 15? You want a 15 year loan.
How many cars do you have?
I don’t think you need to sell your car. It’s paid off. You enjoy it. It’s not going down in value.
Put your other 6 months of expenses into retirement/investments. Roth IRA, mathching 401k with mutual funds ave 10%+ a year.
Save 15% of salary into investments.
What is your home mortgage? 30 or 15? You want a 15 year loan.
How many cars do you have?
I don’t think you need to sell your car. It’s paid off. You enjoy it. It’s not going down in value.
If I’m brushed up on my Dave:
1. Cut your emergency fund in half by putting the extra 6mo on your house. Only need 3-6 mo of saved up emergency fund.
2. Break down that $700 and see if you’re eating out too much. Might be able to put another $500-750 a month towards the house if you try a lean boot camp kind of month.
3. Sellin a paid off car is fine but if you think you’ll buy one again in the future you’re in no better place long term. I’d keep it.
4. Technically you would be putting 15% into retirement right now but I’ll get back later into why I’m honestly on the fence about investing in this particular market...
Anyways,
From what I see just trim another couple hundred a week.
I personally was spending about $50-80 a day 3-4 years ago. Lots of frivolous stuff like restaurants and nick nacks. It helped me the most to go “beans and rice” “rice and beans” one cold turkey boot camp month. Didn’t look back since.
I pull in good money, but here’s how my work/general casual shoes look. Please, don’t rush to PayPal me shoe money, I have $180 in my pocket and 6mo of emergency fund. I’m just a cheap ass haha.
People think I’m a bum I guess, no shits given. I put about $40-50k of my actual income into debt repayment, and probably another $100k from the shop back in as well but that’s between me and partners. We want to get out of debt and safe before the next recession or collapse. Scary times are just a year or two away, look how crazy the markets are. Alarm bells everywhere. All it will take is a couple forms to blink and reposition a 5% chunk of assumed securities and the feds 1913-2019 run of fiat crap will officially suffer entropy.
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Maybe so, but anybody who hasn't started seriously saving and investing for retirement at age 31 needs to start NOW, do not pass go, do not wait any longer. NOW. And max it out.
Do you guys that have a Roth IRA do your own investing?
My wife has two employers that match 401, so she puts in almost as much as they’ll match.
I just put a generic 5% into my 401K, but it is unmatched.
I want to up my retirement savings to about 8%, but not sure if I should continue 401K, should split it with a Roth 401K, or Roth IRA.
Suggestions?
(I will have a respectable RR retirement pension and my wife will have an additional half once we are 60. I just turned 34)
My wife has two employers that match 401, so she puts in almost as much as they’ll match.
I just put a generic 5% into my 401K, but it is unmatched.
I want to up my retirement savings to about 8%, but not sure if I should continue 401K, should split it with a Roth 401K, or Roth IRA.
Suggestions?
(I will have a respectable RR retirement pension and my wife will have an additional half once we are 60. I just turned 34)
I've had an Edward Jones financial adviser for a number of years who handles my IRAs, and some savings accounts. We meet quarterly to review my risk tolerance, tweak my investment strategy, based on what's happening in the world. Besides that, I transfer money into my accounts, and she handles everything else. I have zero complaints, and have been getting solid returns every year.
Since your wife has a matching 401k, and you don't, I would start throwing money at an IRA to get the tax benefits on the back end.
Since your wife has a matching 401k, and you don't, I would start throwing money at an IRA to get the tax benefits on the back end.
If I were you I'd open a Roth IRA. Mine is through Vanguard, I choose a target date fund. It has low fees, solid returns and is very easy to navigate.
The reason you should do this and not a Roth 401k is that it is likely some of the same funds but a 401k comes with higher fees.
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