Debt Dumpers - 2014

[gracie1]

Paid off one credit card this month (it was a small one- only $500) and paid half of another $500 one. will have the other half paid off by the end of the month and I am hopeful to have two more paid off next month. I start paying my student loans next month so I am a bit nervous about how that will all work out but I think I have it planned out.

Congrats!! This is awesome

 

[gracie1]

I've really enjoyed this current thread and the 2013 thread. I don't post much on this but read it daily. I posted sometime last year we were debt free except the mortgages (military moves have left us landlords by default two times, so yes, that's a plural)

My question to the crowd is would you put more towards the emergency fund or do both the emergency fund and ROTH IRA when looking at your budget? TIA! I'm not going to spend additional on the mortgages at this point.

I guess it depends how much you actually have in the emergency fund. You can always start the Roth Ira and continue to contribute to both (if your comfortable with your actual emergency fund). This way their both building up. I have to get working on getting a Roth Ira set up as well. That is on my to do list this month! Even though it will be a very small amount as I still want to keep building my emergency fund - I figure when tax refunds come in I could put most of it in the Roth Ira.

 

[Eureka]

I've put Disney World first for the past couple of years, time to change it up

This is what we want to do too. The kids have been to Disney three times in the past five years. Time to try somewhere else. DH and I love Paris, went there 14 yrs ago, we had just found out I was pregnant with DS13. Can't wait to go back someday. The kids want to go to Canada so we are thinking of that, we love Montreal and Quebec City but none of us has gone to Toronto before, so maybe we'll go there sometime. No big trip this year though, as we did Disney and Universal in August and next summer we are going to the beach and to visit family. I love to plan vacations!

 

[SpaceGirl]

Joining!
My goals for 2014:
Have the last cc paid off (in April)
Get the emergency fund up to $15,000 (by August)

Then I plan on adding a bit extra to each mortgage payment and start saving for DS's college. DS is 11. Any advice on how to save for college? TIA!

My first question is do you have a retirement account and have you been funding your account so that it will meet your retirement needs? If not this is the most important thing you can do for you and your child. Your child can get scholarships, grants and student loans. There are no loans scholarships, grants or student loans to help with retirement.

If you are well on your way to retirement and have the funds to assist your son I think I would open a 529 savings plan. There's no income limit on who can make use of 529's for college. Interest on invested money is tax deferred, and withdrawals used to pay for college costs are tax-free.

 

[Deffenm]

Great job everyone. I can't wait to post that we have an emergency fund and have paid off a debt.

 

[SpaceGirl]

I've really enjoyed this current thread and the 2013 thread. I don't post much on this but read it daily. I posted sometime last year we were debt free except the mortgages (military moves have left us landlords by default two times, so yes, that's a plural)

My question to the crowd is would you put more towards the emergency fund or do both the emergency fund and ROTH IRA when looking at your budget? TIA! I'm not going to spend additional on the mortgages at this point.

GJL

First I would like to Thank You and your family for serving, being in the military means many sacrifices.

With a simple answer BOTH an emergency fund is absolutely necessary if you are carrying two mortgages and the Roth IRA is something you need and deserve for when you retire.

Not sure where your properties are located but in my area the housing market has really picked up. This may be a good time to try and get rid of the houses you were forced to leave, unless you want them for Income Property which would be a great retirement bonus, especially with them being located in a military area.

Beckie

 

[gracie1]

So this may be a dumb question - but instead of getting an Ira, can't you just keep building up your savings? I have a 401k at work, and probably make $1 per year in interest. I do not do the stock trading - I like everything fixed. So is there a reason it's still better to invest in the Ira or keep a separate retirement savings account??

 

[SpaceGirl]

So this may be a dumb question - but instead of getting an Ira, can't you just keep building up your savings? I have a 401k at work, and probably make $1 per year in interest. I do not do the stock trading - I like everything fixed. So is there a reason it's still better to invest in the Ira or keep a separate retirement savings account??

Gracie

There are so many options and variations with employee 401k's your question is hard to answer. (But it's not DUMB)
Does your company match your contributions?
Do you contribute the max they match?
How much longer are you planning to work?

The investment options that most 401 plans offer are usually not high risk so by doing a little research you should be able to diversify your money and actually start making a good return on your savings. 401 plans are typically long term investments and yes they will fluctuate but you will receive the best returns in the long run by having a good mixture of mutual funds and guaranteed interest accounts within your 401.

Your 401(k) contribution has no effect on your Roth/Roth IRA contributions. You only need to ensure you meet the eligibility requirements.

It might be worth your time to contact a financial advisor.

You could always "Ask Suze Orman" and maybe on her show.

 

[SpaceGirl]

Great job everyone. I can't wait to post that we have an emergency fund and have paid off a debt.

You will get there...

 

[gjl]

Removed

 

[gracie1]

Gracie

There are so many options and variations with employee 401k's your question is hard to answer. (But it's not DUMB)
Does your company match your contributions?
Do you contribute the max they match?
How much longer are you planning to work?

The investment options that most 401 plans offer are usually not high risk so by doing a little research you should be able to diversify your money and actually start making a good return on your savings. 401 plans are typically long term investments and yes they will fluctuate but you will receive the best returns in the long run by having a good mixture of mutual funds and guaranteed interest accounts within your 401.

Your 401(k) contribution has no effect on your Roth/Roth IRA contributions. You only need to ensure you meet the eligibility requirements.

It might be worth your time to contact a financial advisor.

You could always "Ask Suze Orman" and maybe on her show.

My employer will match us $50 per pay and that's it. I am in a fixed so the amount of interest I get is extremely low, like $1-$2 per year?? My thought process is why can't I just keep putting the money into savings instead of a retirement fund?? Is there something big I am gaining by not?

 

[dtr_angel]

Yesterday I sorted and rolled coins in our coin jar (I think the last time we did that was before our Disney trip over 2 years ago... we don't use cash so we don't have change to put in on a regular basis) $71.50 towards our vacation fund!

I got online to try to find out about getting a FSA debit card. Not able to do it online, so I'm going to call today and find out. That would be AWESOME. If not, I can at least do direct deposit online which would be quicker than waiting on the checks this year.

 

[gracie1]

Yesterday I sorted and rolled coins in our coin jar (I think the last time we did that was before our Disney trip over 2 years ago... we don't use cash so we don't have change to put in on a regular basis) $71.50 towards our vacation fund!

I got online to try to find out about getting a FSA debit card. Not able to do it online, so I'm going to call today and find out. That would be AWESOME. If not, I can at least do direct deposit online which would be quicker than waiting on the checks this year.

That is great! $71.50 I have to wrap my change and see where I am. I did deposit some last year. It's always a surprise!

 

[dayvewc]

My employer will match us $50 per pay and that's it. I am in a fixed so the amount of interest I get is extremely low, like $1-$2 per year?? My thought process is why can't I just keep putting the money into savings instead of a retirement fund?? Is there something big I am gaining by not?

I would look at it like this. If you take the $50 per pay period and put it in savings, then at the end of the year you have saved $1300 (assuming getting paid every 2 weeks). Plus interest at 1%, you'd have about $1430. (Give or take just a little).

If you contribute the same $50 and contribute to the 401k plan, then your employer will match it at $50 giving you a total of $2600 at the end of the year. Plus interest at 1% (which is about what you are indicating) that is $2860 in a year. (Give or take just a little).

So, yes, I would definitely do the contribution as it will (up to the $50 limit) double your savings.

 

[gracie1]

I would look at it like this. If you take the $50 per pay period and put it in savings, then at the end of the year you have saved $1300 (assuming getting paid every 2 weeks). Plus interest at 1%, you'd have about $1430. (Give or take just a little).

If you contribute the same $50 and contribute to the 401k plan, then your employer will match it at $50 giving you a total of $2600 at the end of the year. Plus interest at 1% (which is about what you are indicating) that is $2860 in a year. (Give or take just a little).

So, yes, I would definitely do the contribution as it will (up to the $50 limit) double your savings.

I definitely do the one that is employer contributed. I don't know what interest I get off hand, but I know it's not 1% - I think I only get a couple $'s each year. But I am not stopping this one. I was thinking of opening an additional one. But I really think I will just keep the one that I have and just contribute everything else to my savings account.

 

[dayvewc]

I definitely do the one that is employer contributed. I don't know what interest I get off hand, but I know it's not 1% - I think I only get a couple $'s each year. But I am not stopping this one. I was thinking of opening an additional one. But I really think I will just keep the one that I have and just contribute everything else to my savings account.

Ahhh, I guess I was misunderstanding the original question. As long as you are getting the maximum employer match, then a savings account is probably a good secondary route.

 

[SpaceGirl]

My employer will match us $50 per pay and that's it. I am in a fixed so the amount of interest I get is extremely low, like $1-$2 per year?? My thought process is why can't I just keep putting the money into savings instead of a retirement fund?? Is there something big I am gaining by not?

I wish I could talk to you I'm still a little confused about the type of 401 you have...Do you put $50.00 in a payday and your company gives you $50.00 a pay period in your account? The fixed is were I'm confused do you mean a fixed interest rate on your money?

The biggest advantage of retirement accounts and IRA's are the tax advantages....they allow you to save the money pre-tax which usually means you are able to save more money while paying less taxes.

When these accounts are invested into say Mutual Funds the earnings are reinvested back into the account giving you compounded interest on your money which in turns gives you a better return on your savings (much more then $1-$2 a year)

The Roth IRA's are different because you pay the taxes before you fund the account, but money from a ROTH can be taken out at any time without any penalties before retirement, the interest or gains from this account would be taxed with penalties if taken out before retirement age.

A savings account is just going to let the bank earn money...while paying people very little interest. Even a CD would earn a little more than a regular savings account. Your bank or credit union should have their rates posted on-line.

If you want to talk just pm me your # and I will call you girlfriend.

Beckie

 

[momof2gr8kids]

So I called today to "cancel" my phone, internet and cable. Was thinking of switching as a competitor has incentives to switch. I mentioned this to them and they said since I was such a great customer they would see what they could do ..... Then they came back with a few added bonuses and offered to drop it from $145/mth to $65 for the next 6 mths. So that's $480 over the 6 mths extra to go towards our savings or debt.

I told them I'd think about it. Maybe they will offer me more!

 

[gracie1]

So I called today to "cancel" my phone, internet and cable. Was thinking of switching as a competitor has incentives to switch. I mentioned this to them and they said since I was such a great customer they would see what they could do ..... Then they came back with a few added bonuses and offered to drop it from $145/mth to $65 for the next 6 mths. So that's $480 over the 6 mths extra to go towards our savings or debt.

I told them I'd think about it. Maybe they will offer me more!

Wow!! That is great!!

 

[gracie1]

I wish I could talk to you I'm still a little confused about the type of 401 you have...Do you put $50.00 in a payday and your company gives you $50.00 a pay period in your account? The fixed is were I'm confused do you mean a fixed interest rate on your money?

The biggest advantage of retirement accounts and IRA's are the tax advantages....they allow you to save the money pre-tax which usually means you are able to save more money while paying less taxes.

When these accounts are invested into say Mutual Funds the earnings are reinvested back into the account giving you compounded interest on your money which in turns gives you a better return on your savings (much more then $1-$2 a year)

The Roth IRA's are different because you pay the taxes before you fund the account, but money from a ROTH can be taken out at any time without any penalties before retirement, the interest or gains from this account would be taxed with penalties if taken out before retirement age.

A savings account is just going to let the bank earn money...while paying people very little interest. Even a CD would earn a little more than a regular savings account. Your bank or credit union should have their rates posted on-line.

If you want to talk just pm me your # and I will call you girlfriend.

Beckie

I guess it is confusing how I put it!! I have a 401k with work - they will match $50 per pay, so I contribute $100 per month and they contribute $100 per month. I do not do the mutual funds (or stock or whatever it is) I just have it sitting in with a fixed rate (almost like a savings account). Then I was debating on whether just using my regular savings account at the bank for retirement or opening a Roth Ira. I haven't looked at the rates. Or maybe I will do some cd's - that is a good idea and they do have some really good intro rates when you open them. I just didn't think that the interest rate on an Ira is much higher than the interest rate on a savings account. I don't do mutual funds though. I know that you can really make some money off of them, but I just feel like it's gambling and I don't like that!! lol