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12/15/2008 6:41:57 PM

Quote :

"you are an idiot investing 20% in 401k. At most you should do up to the company match."

and if your company is matching 20%, let me know who i need to send my resume to.

12/15/2008 6:48:53 PM

Quote :

"Currently I put 5% (bumping to 6% in march) with a 3.5% company match (4% company in march). 1.5% in a separate Roth IRA Saving 22% in Money Market Acct.. Once I build up $5000 as emergency fund . I will begin creating CD's and fueling my discretionary investment account (when market turns around). I plan to pay the min on my 4.6% consolidated student loan. "

Once you get to $5000 cash in your emergency fund, start maxing that Roth IRA before you do anything else.

12/15/2008 6:54:02 PM

Damn, I really wish I knew about all this investment stuff about 8 years ago. I would be in such a better place right now

12/15/2008 6:56:43 PM

Is your job 40 hrs? Get a 2nd job until you're promoted. You'll have less personal time, but at $35k you can't afford much anyway.

12/15/2008 7:00:00 PM

Or get a better job. 35k seems really low


Work smarter, not harder

[Edited on December 15, 2008 at 7:30 PM. Reason : .]

12/15/2008 7:30:07 PM

what is the max for a Roth IRA??

12/15/2008 7:42:46 PM

i think its $5000 for this year. hurry, you've got two weeks!

12/15/2008 7:45:32 PM

that sounds about average for first job out of college, especially with most degrees which are no longer really worth much other than to say you have a bachelor's.

I think I made $38k my first year out of college, and did fine. It isn't much money if you've been out of school 5 years or so, but it's not bad for just starting out.

***just recognize that (A) you can't do and buy all the things that people with greater income can (sounds completely obvious, but I'm amazed at how many people this fact is totally lost upon, and (B) you really can't afford to do and buy all the things that the vast majority of people with the same income do, because the majority of people live above their means, and are useless as a gauge of what you should be doing.


and yes, max for a Roth (for us) is $5000/year. Works out to $412/month if you do it that way, I believe.

[Edited on December 15, 2008 at 7:47 PM. Reason : asdfasd]

12/15/2008 7:45:45 PM

Quote :

"i think its $5000 for this year. hurry, you've got two weeks!"

you can contribute to the previous year's Roth IRA until Tax Day of the next year.
So you have until mid-April to contribute up to the 2008 limit. So, if your bonus, for example, isn't paid out until January, or you get your tax refund in February, you can contribute towards your 2008 limit.

12/15/2008 8:09:48 PM

$35k/year will give ~$2,100 a month after taxes and depending on benefits taken out

personally, I would pay off my loan while I'm living at home and start some savings. Then when I got bumped up a pay grade or two, I'd start thinking about houses and cars.

12/15/2008 8:15:37 PM

Quote :

"$35k/year will give ~$2,100 a month after taxes and depending on benefits taken out"

Uh, 35K a year will net you about 800 bucks per biweekly paycheck.

12/15/2008 8:29:17 PM

In NC, a single person making 35k a year will take home about 2gs a month.

[Edited on December 15, 2008 at 8:55 PM. Reason : .]

12/15/2008 8:50:51 PM

isn't there a website where you can calculate your take-home paycheck given your yearly salary plus the state you live in?

12/15/2008 8:58:29 PM

http://www.paycheckcity.com/netpaycalc/netpaycalculator.asp

12/15/2008 8:59:52 PM

Quote :

"you are an idiot investing 20% in 401k. At most you should do up to the company match. If you still feel the need to save for retirement put it in a Roth IRA. Currently I put 5% (bumping to 6% in march) with a 3.5% company match (4% company in march). 1.5% in a separate Roth IRA Saving 22% in Money Market Acct.. Once I build up $5000 as emergency fund . I will begin creating CD's and fueling my discretionary investment account (when market turns around). I plan to pay the min on my 4.6% consolidated student loan. Buying a house is pretty low on my priority list...."

We are 5% match going to 6% I believe. Ignoring everything else besides the 401k and Roth IRA options because I am not interested in getting involved much past that, do you think I am better off putting the 5 or 6% in for the company match and then just putting the appropriate percentage of money into my IRA to max out the $5000?? I know some about the Roth IRAs, but what makes it so much better than investing in the 401k?

12/15/2008 9:44:53 PM

The 401(k) is pre-tax money, and you will be taxed when you withdraw it.
The Roth IRAs are post-tax money, but you don't have to pay any capital gains or income taxes on it when you withdraw.

You can run the number multiple ways, but over the long term, assuming you're relatively young and the market will continue to grow agressively over the next 30-40 years, you should be better off, tax-wise, with more money in the Roths

12/15/2008 9:59:15 PM

pay off the loan, definitely. you're not gonna want to be in debt when this economy gets a lot worse than it already is.

12/15/2008 10:08:11 PM

ah ok. yea I knew about the differences between them I just wasn't 100% sure what the dollar difference was in the long run. i guess its something to consider starting next year

12/15/2008 10:12:16 PM

DENIED!!

12/15/2008 10:22:31 PM

Quote :

"Crede All American 5456 Posts user info edit post Quote : "yea but if you are renting a small place for like $700 that could be a mortgage payment on a small condo, too. so wouldn't it be better to put the money towards something that builds equity than like go rent some place while you pay it off?? or just stay at home. but i mean renting just seems dumb, too IF you could purchase a place with a similar mort. payment." ding ding ding"

Except that when renting, after that $700 a little bit more for utilities you are done. When owning, you have a lot of other costs (as someone mentioned) and also have to pay for maintenance and pay to fix things that break. Thats hard to do on top of a $700 mortgate (which isn't much) if you haven't yet built up your savings. I think you need to build yourself a 3 month savings buffer before you consider purchasing anything or even aggressively paying off the debt.

12/15/2008 10:29:00 PM

Quote :

"You arent thinking it through and its far from ding ding ding. You need to have some savings before you even consider buying a home. RsXtypeS posted some added expenses that homeownership brings and he didnt even mention if something breaks in the house. It can get expensive VERY quickly. Homeownership should NOT be for people with no savings and a ton of debt. Stop looking at homes as investments, this is what many people who are now bankrupt did. You can buy a home when its right for you. If you are stressed over a 10k debt how will you feel if you buy a home and it loses its value and/or you have to put in a new air conditioner.. etc? Listen to some of the older guys on here on this one."

thanks i bought a condo and i have student loans and not a lot of savings and i'm fine. why? because i did it with what i could afford. and took into account home ownership dues. my furniture isn't that nice, but most people that have lived in an apartment before have some furniture. i'm just using my college furniture right now. homeowner's insurance is an expense, but it isn't horribly expensive. i am using my student loans for the mortgage payment and the rest of it is in an account earning interest (little, but some). my condo has already appreciated ~10,000 since i purchased it last year. i mean you can think about a lot of these expenses and plan for them AND when you purchase a place, when you take into account location, condition of the home, etc etc you can make a wise decision and invest reasonably.

i am not going to be bankrupt because i picked a place i could afford. and when i sell, i will have made a little money to put back toward paying my loans off.

i know it is a different situation, but when you have debt you can still plan for a home purchase if you plan wisely. yes, you need to take the added expenses into account. my HO dues are not that much a month and includes outside maintenance, trash, water, security gate, cleaning in the halls, parking, etc. HO dues (especially in condos complexes are BIG catches, definitely something to look into)

yes i agree a savings is needed (for the fixes and HO dues and utilities) but i don't think the OP mentioned about savings. i think purchasing a home with 10K of loans if you have savings and plan well isn't as horrible as some people make it out to be. obviously planning has to occur.

oh but buying a car and then selling it to buy a house (like the OP) is not a very good plan. cars depreciate FAST. i mean as soon as you drive them off the lot. and if you are making a car payment...that is bad debt.

12/15/2008 10:48:51 PM

Quote :

"pay off the loan, definitely"

until u get laid off and realize that money would have been better allocated in your savings account until you find another job.

yes paying off the loan is better than buying a big screen TV, fancy vacations, or $100 nights at the bar. If though you can be saving or investing a significant amount of this money instead; with the low interest rates and long repayment period u are better off holding onto your money.

12/16/2008 12:10:39 AM

Quote :

"Trying to put furniture in a new house is an expensive process."

hahahahahaha

Craigslist furniture > trying to bring some tail back to your moms house.

12/16/2008 12:15:48 AM

I always make my financial decisions based off of what will get me laid.

Tampon > your logic.

12/16/2008 1:04:15 AM

Save your money for a year. Or two. You can save a LOT toward a down payment.

The real estate market isn't even close to bottoming out yet. Next winter will be much better than this one for buyers. I'm waiting another year or TWO before buying property. Sucks for people who bought shitty property, and even for normal homeowners, but it's a great time for 1st time buyers in the next 2-3 years.

Everyone is right about your student loans. Carry them for the full term of the loan if you can allocate the money toward saving for a house.

12/16/2008 1:22:59 AM

What do you consider a nice car? I bought a 2006 Grand-Am for $8,500 with under 30,000 miles on it over the summer. Wait to buy your dream car until you at least double your yearly income.

12/16/2008 1:34:26 AM

there are a lot of people that will never double their yearly income

12/16/2008 1:36:25 AM

^True, but I am sure there are plenty of jobs out there in the world that can earn someone around 60k.

12/16/2008 1:40:47 AM

I had no degree and a CCNA and I was making nearly 70K (granted this was with weekend pay I volunteered for).

[Edited on December 16, 2008 at 1:52 AM. Reason : .]

12/16/2008 1:52:03 AM

stay at home, put a thousand bucks away in the bank for your emergency fund, then pay off the student loan, then either save up enough money to put down 5% on a small starter home, or rent a cheap apartment and save money for your down payment. you shouldn't be spending more than 1/3 of your pretax income on rent/mortgage payments. and don't waste your money on the car, pay cash and get a cheap reliable car that will get your where you need to go, something like a civic/accord.

[/dave ramsey]

[Edited on December 16, 2008 at 1:56 AM. Reason : /]

12/16/2008 1:53:44 AM

dave ramsey is a toolbag if you're smart with your money. he's better than the dumbassery most people engage in, though.

and $1000 for an emergency fund is a joke. I would say $5k at an absolute minimum.

12/16/2008 5:40:46 AM

I agree with prep-e/

If you do get laid off and still have you loans you will continue to get the bill.. Build up an emergency fund and then pay off your loans.

12/16/2008 9:25:31 AM

I hate those losers that call into Dave Ramsey. Lowest common denominator I tell ya. You shouldn't need someone to teach you common sense. That show is just painful to watch for the rest of us.

[Edited on December 16, 2008 at 11:24 AM. Reason : s]

12/16/2008 11:21:00 AM

Quote :

"put a thousand bucks away in the bank for your emergency fund,"

$1000 for an emergency fund lol

what a joke; maybe $5000

Quote :

"dave ramsey is a toolbag if you're smart with your money"

I have read his most recent book. His advice his practical for your average simple american who has no clue about how to manage
their finances. For those with half a brain his advice is stupid. Debt is a tool if you can use it right.

Quote :

"don't waste your money on the car, pay cash and get a cheap reliable "

spoken like a true tool

12/16/2008 11:57:21 AM

BMWs and Porsches are incredibly reliable. Hell, they're as reliable as a wood burning stove.

12/16/2008 12:06:01 PM

there is nothing wrong with buying a nice car out of school as long as it reasonable fits in your budget. The way I saw it is i'm single, with a good job, and young. Besides you only live once so I got a 2 year old A4. Before the purchase I made sure that even with my car payment i still had money going to savings, retirement, with soem left over for day to day expenses.


[Edited on December 16, 2008 at 12:19 PM. Reason : l]

12/16/2008 12:18:12 PM

yes, but if you lost your job you could lose your car hur. You dont anticipate risk in your life. Using debt as a "tool" is inviting risk into your life.

You certainly have a right to live your life like you wish HUR, but dont call people a tool for being responsible and living within or even below thier means. Im saving up now to pay cash for a newer car. Yes a lease payment is LESS, but if something happens to my income I still own my car and dont have a montly commitment to stress over.

12/16/2008 12:32:31 PM

^ Truth.

I got a nice car when I got my first well paid job. My payments were around 500 a month and I could easily afford it. Now that Im back in school Im kicking myself for not purchasing something more practical.

12/16/2008 12:47:45 PM

Quote :

"You certainly have a right to live your life like you wish HUR, but dont call people a tool for being responsible and living within or even below thier means. Im saving up now to pay cash for a newer car. Yes a lease payment is LESS, but if something happens to my income I still own my car and dont have a montly commitment to stress over."

Wow, HUR is talking specifically to folks like you. Sure, there is something satisfying about having things paid off, but let's look at this from the other angle.

I'll assume you are sinking 10k into a car that you'll pay for cash. Once you pay that 10k, it's gone, you can think of it as equity in something that is now depreciating heavily. What if instead you got a loan on that car at 3% for 100% financing. You could turn right around and get a CD at 5% for the life of that loan and you'd be making 2% on the money you would have sunk into your car.

12/16/2008 12:55:10 PM

I suppose he is talking to people like me.. .people who dont require instant gratification and try to live within thier means. I dont want to "rent" my lifestyle where I own nothing but can afford to make the monthly payments on everything.

Again Nattr, reread my post. You are not accounting for risk. A car will lose value. In your situation if I drive off the lot with a 100% financed loan, which is such a stupid thing to do, and wreck it on the drive home.. im upside down. Yes, im aware I can BUY insurance for this but that is more money. Why pay 15 dollars for something that only costs 10? Esp when you have the 10? Your scenerio makes perfect sense on paper, but life doesnt work like that. Too many people will see the extra money and piss it away. Now call me a liar when we have a negative savings rate in the US. People are living beyond thier means and borrowing to maintain a lifestyle they think they deserve, not one they can afford. So i would encourage the original poster to not go down this path.

12/16/2008 1:14:07 PM

Quote :

"spoken like a true tool"

can you explain your response to him further please? I really don't understand. What makes someone a tool for not wanting to throw tons of money down the drain for a car when they can get something reliable and safe for a lot less???

I'm going to assume your biggest gripe was with them spending cash to get something now as opposed to trying to invest and beat their financed interest rate. and if so, I don't think that makes someone a tool either.

[Edited on December 16, 2008 at 1:21 PM. Reason : ]

12/16/2008 1:20:04 PM

Dear lord you're clueless.

Quote :

"people who dont require instant gratification and try to live within thier means. I dont want to "rent" my lifestyle where I own nothing but can afford to make the monthly payments on everything."

I'm not suggesting that at all. If you have 10k (or 20 or 30, however much you are going to spend) to go into a stealership and plop down on a new ride are you telling me that you wouldn't rather earn 2-1000 per year on the money you have AND get to purchase the car you want? You're honestly telling me that you'd rather leave money on the table?

Quote :

"You are not accounting for risk. A car will lose value. In your situation if I drive off the lot with a 100% financed loan, which is such a stupid thing to do, and wreck it on the drive home.. im upside down."

How is that any different than the 10k you are already light in your bank account? You still have to pay the money to repair the car whether you own it outright or whether you are making payments.

Quote :

"Yes, im aware I can BUY insurance for this but that is more money. Why pay 15 dollars for something that only costs 10? Esp when you have the 10? Your scenerio makes perfect sense on paper, but life doesnt work like that."

Terrible analogy, if we are talking cars and collision, it would be more like, if there is a 10% chance someone will steal your $10, would you pay 25 cents extra to replace the $10 if this happens?

Quote :

"Too many people will see the extra money and piss it away. Now call me a liar when we have a negative savings rate in the US. People are living beyond thier means and borrowing to maintain a lifestyle they think they deserve, not one they can afford. So i would encourage the original poster to not go down this path."

We aren't now talking about the original poster or the rest of America, we are talking about you. If we were talking about the rest of America, they wouldn't have gotten to the point where they could pay cash on a large purchase in the first place.

[Edited on December 16, 2008 at 1:31 PM. Reason : .]

12/16/2008 1:29:40 PM

nattr. you make a good last point.

I would like to pay cash for a 2 yr old model. (since a lot of the depreciation is already happened yet I still get a warranty.) Paying cash gives me a bigger bargaining chip as used car rates tend to be higher than new car rates. My analogy was about the purchase price of a car not about the insurance. But still, you are paying more for the item simply bc you finance it. Also, you have little equity in an item that is losing its value rapidly.

Personally, this is just my plan. I have 6 months emergency fund. I have student loans, 2 mortgages.. and that it. I made great progress on my student loans before I got married and the wife went back to school. I made a deal with myself to not take on anymore debt. So Ill have my second mortgage paid off in another 3 months. Then we will need a newer car. (we have two 10yr old cars with over 155k each) But not having a car payment really allowed me to pay down my student loans while i was renting. When she starts working most of her income will go towards the car fund and student loans. We plan on, by the end of 2009, having a newer car, one mortgage and darn close to finishing off my student loans....oh and hopefully a bun in the oven.

[Edited on December 16, 2008 at 1:54 PM. Reason : .]

12/16/2008 1:53:04 PM

Ok I have a question as well


Pay rent now $650 for a 2 bedroom. I can go next door and possibly buy a condo for the same price nice places but no garages and I need a garage but hate throwing away another year in rent if I can buy for the same price. What should I do?

12/16/2008 2:01:52 PM

a lot of people in this thread should still be living at home with the rents.

12/16/2008 2:10:43 PM

^^

I'm sorry, but TWW can't answer all your questions. This kind of stuff is something you need to sit down and figure out. Go through your pro's and con's keeping in mind what this thread has told you.

12/16/2008 2:53:01 PM

^LOL, sounds like it.


Skank, do you plan on relocating anytime soon? People are having a real hard time selling things now. Do you have anything saved? Remember if you own it, youll have to pay to fix it. Along with all the property taxes.

12/16/2008 2:53:19 PM

Quote :

"Pay rent now $650 for a 2 bedroom. I can go next door and possibly buy a condo for the same price nice places but no garages and I need a garage but hate throwing away another year in rent if I can buy for the same price. What should I do?"

Check the HOA dues before you say it's the same price. Condo/townhome HOA dues are usually $100+ per month and they don't tend to appreciate very well most of the time. Add maintenance and repairs and you might end up losing a lot of money if you can only sell it at a break even price a few years from now.

[Edited on December 16, 2008 at 2:55 PM. Reason : l]

12/16/2008 2:53:54 PM

Use a rent/buy calculator to get an idea of where you stand. This one

http://realestate.yahoo.com/calculators/rent_vs_own.html

is a bit generic but it will at least give you an idea. I picked 650 in rent, 150k purchase price of your home, 10k downpayment, 1500/yr in taxes, 25% marginal tax bracket, 5.5% interest rate, 500 year insurance premium, 200 yr maintenance, 5% before tax return on savings (very generous for this market in the near term), and 1% inflation (again, in the near term we'll be facing deflation, after awhile that might flip to [hyper]inflation).

And renting comes out better.

12/16/2008 3:13:01 PM