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07-06-2017 01:00 PM
To extend on tacpoly's comments, I would also urge you to plan out your endgame goals in retirement before rolling everything over to a Roth. Roths are often talked up as a whiz-bang-awesome way to go because you withdraw tax-free, and while that sounds really appealing, it doesn't always make the most sense.
It's not a simple black-and-white question to answer, but the easiest way to start thinking about it is to understand if you plan on having more income withdrawn in retirement than you currently make or less. The goal is to pay taxes on the lesser of two incomes - either now or later. If you think you'll take home less in retirement, think twice about rolling it all over to Roth (and more importantly, contributing to a Roth 401k when you can take the tax shelter on your higher income today). If you think you'll take home more in retirement than you make now, then roll away and start maxing out that Roth 401k ASAP.
Ah, I didn't think of it that way - thanks for pointing this out! I was focused on trying not to pay taxes on withdrawals since I thought those taxes would be more than the taxes I'm paying now. Income wise, I am definitely making less now than I will (hopefully) make in later years I'm also spending less, as most of my expenses are just taking care of myself. In later years and into retirement I may have family, property, medical, travel, etc. that would increase my expenses and likely require more income withdrawn from accounts. I will start on the Roth 401k asap!
07-06-2017 04:44 PM
Generally, if a person is young (twenties) I advise contributing to a Roth IRA and Roth 401K. Do not take money out and allow it to grow grow grow until retirement. Then you'll be taking maximum advantage of totally tax-free growth.
Around late 30s to 40's, a person is usually entering peak earning levels, I would switch to a regular 401K to take advantage of the immediate tax break.
This is very general and YMMV, of course.
Applies to me, thanks! I do hope I don't have to take money out but grad school is expensive But I will do my best to put everything into the Roths and keep them there! I never thought about switching to regular accounts at peak earning levels - great idea, I will remember it for the future.
07-09-2017 03:05 PM
Awesome thread! Very creative all around. Love to read & see where I fall into the grand scheme of these types of things.
Happy to say I am somehow on the Merry-Go-Round stage!
As far as savings go...
- I have 1 savings account with roughly 6-7 months worth of emergency fund in it. Each paycheck I put a portion of it away into the savings account ($2100 total for the year). Usually put in half of my tax return as well.
- I have a Roth 401K that I started when I got my first well paying job. This currently has right around the same amount as my savings account does. I put in 6% of each paycheck, and my employer matches $.25 per dollar on the first 6%.
- I have another account where I've saved away $500 or so from "round-ups" on my spending.
I have been considered starting a Roth IRA as well, but haven't just yet.
Overall goal is to be completely debt free within the next 2.5 years, and if all goes as planned at the start of next year (Jan 2018) I may finally have some networth for the first time ever.
07-11-2017 01:14 PM
Some more bills trimmed, a $225 checking account bonus came through, $250 of this week's paycheck, and I've managed to sock $1400 away in the last few weeks
07-11-2017 01:23 PM
Just opened a Vanguard brokerage account today. My plan is to divert my emergency fund here once I accummulate 6 months worth of expenses. My goal is to have this achieved by the end of the year. So for now, I'm transferring a small amount over to the new Vanguard account monthly in preparation for the large amount I plan to deposit at the end of the year. I'm very excited!
Nothing else new on the regular savings front - it's automated twice a month to my savings account. I also have some misc funds going to my other investment account as well.
I need to find a part time job for extra money. I'm fortunate to have an above average salary but I have too much free time after work! I could be making money!!
07-11-2017 04:22 PM
Hmm...I guess you could say I'm on the swingset; I have more than $50 in the account, but not quite enough to be playing on the slide (maybe in 2 - 3 months). I fairly recently increased my contributions to my 401k, my secondary retirement account, my savings account, and my savings bond account (a savings bond is automatically generated when the account reaches $25). All contributions are automatically withdrawn from my paycheck; that way, I don't miss it.
Before I started the job that I have now, I didn't think I'd ever have any savings or anything for when/if I retired; mainly because I never stayed at one job long enough to save anything; due to the fact (at the time) that I was a caregiver for my husband at the time (who has since passed away). Before I moved to Florida, I was out of work for about two years, and when I got this job, I waited for about a year to start my 401k account with my employer. I felt so good knowing that I'll be saving for my retirement, because I knew no one else would be taking care of me. Fast forward to 2014....that's when I first got medical coverage (got a life insurance policy a couple of years before) , and signed up for long term disability; I know it was a big risk not having it, but I had a lot of things that had to be done.
In November 2015, my fiance's father passed away; we went back to our home state (Michigan) to attend the funeral. Shortly after returning home, I began having health issues. Three trips to the emergency room in less than month (I had a boatload of issues); after the second trip to the emergency room, my doctor scheduled me for surgery a few weeks later. About a week or so after he scheduled the surgery, I made my third trip to the emergency room. My surgery was scheduled for 01/27/16; my doctor had to meet with a medical board to allow him to perform the surgery the next day, or keep me in the hospital until my original surgery date (I have no idea why they don't perform that kind of surgery on a weekend). To make a long story short, if I didn't have medical insurance, I would have been on the hook for a medical bill for nearly $300,000!
After that experience, I was even more determined to have an emergency savings account; the chance of me having to experience that medical issue again is almost non-existent...but that doesn't mean that I couldn't have a different medical issue that could possibly be even more costly.
Sorry that I kind of got off-topic...
07-11-2017 05:25 PM
Currently at Swingset: Added $34 into my USAA Savings last week (after switching from Chase) then $1000 more on Monday. I have direct deposit going into my USAA Savings every check (twice a month). I will be having $45k available in August that will be used to pay off CC debt. The rest will go to USAA Savings. My goal is to reach $5k by December 2017 then $15k-$20k by December 2018. I will be opening a college account for my 8 year old in August 2017 stating with $700 with Discovery. I’m currently paying about $1,400 in CCs per month, but now that most of them will be paid off next month, that $1,400 will be going into:
I continue to day trade and been successful at gaining between $15-$20/day averaging $200-$250 per month. I then get that and goes into USAA Savings as wel.
07-14-2017 07:50 AM
Finally - one month of living expenses has been saved!! Only five more to go!!
After doing some back of a napkin calculations, I've decided that it would be in my best interest to 1) increase the amount of what I consider "living expenses" and 2) save 6 months of expenses versus 3 months. Reasons: 1) I want to include in my living expenses amount, enough money to accommodate the things I enjoy - dinners out and travel to my home state. 2). I want to be able to look for another job without a lot of pressure - 3 months is plenty of time but 6 months will allow me to make sure it's the right fit. Or even to take a lower paying job that will be less stressful. Or to move back to my home state! Options, I want options!
Hope everyone has a great weekend!
07-14-2017 09:22 AM
So I got my bonus check and I'll use it to pay off some bad stuff open a PenFed secured card and still have enough left over to pay bills and put a weeks expenses into savings. So all in all a decent week I believe. I'll get to where I need to be by December at the latest. More bad stuff I pay off that is more that I don't have to worry about honestly and the savings can then snowball.
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