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5/7/2010 2:36:50 AM

so I've gotten married since I originally posted in this thread. I was at 20% 401k with 5% 1:1 company match. I've actually backed that down to 15% on my end. We bought a house and put 10% down and am trying to build our big savings fund back up a little bit, while at the same time I bumped my student loan monthly payments from $400 to $1000. The minimum is $200 so I'm really trying to expedite paying them off (hoping to have them totally gone within the year). Since that loan is around 5% and there is nothing that is a guaranteed 5% gain out there now I figure that it is probably as good a time as any to back off the savings and rid myself of the student loan so the only "debt" we have is our mortgage. Hopefully that is a good decision on my part.

My wife has had a contract job for 3 months now. Same company I work for but since she is contract, she gets no 401k match. So far we haven't had her contribute anything to a 401k here. The plan is to max out a Roth IRA for her this year while I contribute my 15% to my 401k. We are also contributing 20% gross each month to our money market "savings" where we are rebuilding some of what we spent toward our house down payment.

My goal is to finish paying off my student loans within a year and at that point move back to 20% into my 401k and start maxing out a Roth IRA for each of us. If she can get a direct-hire job with a 401k match, then we'll have her contribute just enough to get the match.

I find the tough part is finding out at what point you are putting too much money into retirement and not enough into more medium-term investments. For example with my goal by next year: is it really a good investment for us next year to max out 2 Roth IRAs, and both be contributing to a 401k (me 20% her ~5%)? Or should we just be maxing one Roth with the two 401ks and then be putting the money that could be going into a roth into a money market that isn't tied to retirement? Those are the kind of questions that I am not good at making a decision on.

[Edited on May 7, 2010 at 9:04 AM. Reason : ]

5/7/2010 8:56:23 AM

Thanks, Omar.

I've got $2,000 that I want to put towards retirement right now. I was thinking of starting a Roth IRA with SECU. They have a 2.5% interest rate which is pretty good. Should I go ahead and start the IRA and maybe max my contribution by the end of the year or go with something else?

5/7/2010 9:20:31 AM

Honestly (this is just my opinion of course and I am no expert), I think a Roth IRA for someone our age is a waste to put with someone like SECU. I thought about the same thing and got some advice and did some research and I am either going to go with scottrade, vanguard, or etrade for our Roth IRA I think.

For someone our ages (in their 20s), your retirement account can afford to be/needs to be as aggressive as possible right now. 2.5% for a short term CD or something is great when you can find those at the moment, but 2.5% for a retirement account that you won't be touching for 30+ years doesn't intrigue me to be honest.

I know it is tough to see a day like yesterday in the stock market and realize you are spending the equivalent of 400 dollars a month into maxing out a Roth IRA over a year and see yourself possibly losing money in the short term. But I just think you're giving up the opportunity for a lot of gains over the long term going with a credit union for your Roth.

Anyone else in here feel free to say I'm stupid or correct me if you disagree. Won't hurt my feelings

[Edited on May 7, 2010 at 9:26 AM. Reason : ]

5/7/2010 9:23:45 AM

I cant stand Suze Orman

5/7/2010 9:43:31 AM

Quote :

"Since that loan is around 5% and there is nothing that is a guaranteed 5% gain out there now I figure that it is probably as good a time as any to back off the savings and rid myself of the student loan so the only "debt" we have is our mortgage."

Long term, the stock market will almost always give you a better return than 5%, especially if you are writing the student loan interest off come tax time.

Quote :

"is it really a good investment for us next year to max out 2 Roth IRAs, and both be contributing to a 401k (me 20% her ~5%)? Or should we just be maxing one Roth with the two 401ks and then be putting the money that could be going into a roth into a money market that isn't tied to retirement?"

I'd go with the former. Money market rates are crap right now. There's no real reason to focus on "medium-term investments" unless you are definitely going to need this money several years out. Also, keep in mind, you can take principle out of your roth ira if a big emergency comes along.

You should take the advice you just gave kickstand. Don't be scared to lose money short term. Don't give up long term games for a lower yield return whether it be 2.5% in some crappy bank IRA or 5% on a student loan.

5/7/2010 9:52:23 AM

Quote :

"You should take the advice you just gave kickstand. Don't be scared to lose money short term. Don't give up long term games for a lower yield return whether it be 2.5% in some crappy bank IRA or 5% on a student loan."

haha, self-pwnt . But thanks, that all makes sense. I've just had this feeling of burden and wanting to pay off these student loans ASAP. But that really does make sense. Maybe I can compromise and put $500 a month toward student loans (still 2x the minimum payment) and invest the other $500 (heck $500 a month would be maxing out my Roth IRA in addition to the one we already budgeted for my wife right there).

[Edited on May 7, 2010 at 10:02 AM. Reason : ]

5/7/2010 10:00:25 AM

NCSUWolfy

5/7/2010 10:01:44 AM

What is a good place to start an IRA for my fiance since her company does not have 401k? I do not really understand how they work.

5/7/2010 10:03:55 AM

Roth-type IRA should, for most of us, be the first thing you do. There are fortyeleven different places to do it. Your bank can probably help you out...your insurance agent might be able to help you out (but he might want to put an annuity in the account, which I generally think is a bad idea), or probably the easiest way is to just register an account with Scottrade or E-trade.

and IRA is not an investment in and of itself--it's an account that enjoys special tax structuring where you can put all sorts of investments, in exchange for not being able to use the money until you're at/near retirement age (with a few exceptions). That's not that big of a deal, because you shouldn't be spending that money anyway.

5/7/2010 10:09:08 AM