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12/13/2006 3:10:15 PM

On 401k paralysis:
Put 100% into a target-date retirement fund until you figure out your allocation strategy.

On 3- or 6-month emergency funds:
Why you might need 6-months' worth of funds - (1) You're in a highly paid field - such that, if your industry collapsed you might not find another job with the same level of compensation for a long time. There are lots of jobs that pay 40K. There are only so many that pay 100K. Even fewer that pay 200K (2) You have a spouse and/or children, so yours is not the only voice that counts in financial matters and life decisions. (3) You own a home. What if you move, then end up struggling to sell the old house? It could sit on the market for 6 months or a year before it sells. You may not be able to get renters if you don't know exactly when the house might sell. 2 mortgages or a mortgage + a rent is not fun.

I try to keep 3-months' worth now in the emergency fund and to plow the remaining $ into tax-advantaged retirement & education accounts. When I have more (any) commitments, then I will push it up to a 6-month stash.

12/13/2006 9:42:22 PM

That's the problem with our society. You have some guy making 100K a year that is laid off and then refuses to work for a penny less b/c he believes he is worth 100K. Meanwhile his family is eventually forced to live in poverty as a result.

12/13/2006 9:45:31 PM

actually he's forced to live off 70K/yr for the next 6 months

Quote :

"You have a spouse and/or children, so yours is not the only voice that counts in financial matters and life decisions. "

That doesnt really apply here. The fund is based on your "living expenses" so whether you are single or have 19 kids that should already be accounted for. And actually, the more kids you have the more variable costs you have and you could probably cut that spending back in an emergency (piano lessons, vacations, nice dinners, etc) so that is an argument against 6 month savings rather than for it.


Im still in the corner that says if you need money then sell some stuff from your portfolio. Hell, sell some losers. That will help your cash flow even more in a pinch since you can deduct the losses from your income for that year.

12/13/2006 9:54:43 PM

^^How long do you hold out before you settle for "anything"?

Besides, the government pays unemployment, but not for underemployment...so he's better off taking 2/3 of his previous salary in unemployment, than he is to take a job paying 1/2.

(Although I could argue that being unemployed really eats at your soul and becomes a self-fulfilling prophecy that's progressively harder to overcome.)

^Yes it does.

Let's say you and she both work. She's got an incredible promotional opportunity if she will move to another city. You have to account for: her increase in pay or opportunity, against your chances of finding a job in the market, the hassle of selling your old house & buying a new one, etc. It's much harder to optimize the equation when you triple the number of variables. and throw in emotions too

[Edited on December 13, 2006 at 9:57 PM. Reason : *]

12/13/2006 9:55:04 PM

I know a tec writer that has held out for 2 years. That's too long. I agree with rally. I'll have 3 months saved up and I'll sell off some non retirement assets after that.

Unemployment pay may be great but a large gap in your resume is not.

How long I waited would also depend on the economy. For my area it is much better now than it was several years ago. If I called up all my contacts and didn't have any good leads in a month I'd probably start looking for shit jobs just to keep me from eating at my principle.

[Edited on December 13, 2006 at 10:00 PM. Reason : ]

12/13/2006 9:58:34 PM

What is the maximum unemployment benefit in NC on a per weekly basis, before taxes?

12/14/2006 7:03:02 AM

if you get fired and then enroll in grad school, are you still eligible for unemployment benefits?

12/14/2006 8:27:18 AM

I doubt it.

To actually receive benefits, you must certify to your eligibility every one or two weeks (this varies by state). Generally, the certification includes your affirming that you are "able and available for work", the amount of any part-time earnings you may have had and whether you are "actively seeking work"

12/14/2006 8:50:44 AM

^^

WEEKLY BENEFIT AMOUNT (2004-05)
Minimum $15.00
Maximum $442.00 (Revised Annually the first week of August)
WEEKLY BENEFIT AMOUNT FORMULA: Divide the sum of the wages earned during the
highest quarter of the base period by 26, rounded down to the next lower whole dollar. The result
cannot exceed the maximum weekly benefit amount allowed by law. If the amount is less than fifteen
dollars ($15.00), the individual is not eligible for benefits.

12/14/2006 8:55:20 AM

do you get taxed on that amount as income?

12/14/2006 11:25:07 AM

I think so.

12/14/2006 11:30:00 AM

You owe tax on it. I *think* that you can have them withhold taxes from the amount that you're eligible for, but I am not 100% sure.

12/14/2006 11:41:21 AM

i really dont think the max is $442

theres some way around that i believe

12/14/2006 1:45:16 PM

i was going to just meet the company match , 8%

am i retarded.

12/14/2006 2:37:19 PM

Does your company give a 1-1 match? 8% is a good start, but don't be one of those people that refuses to put in any amount to their 401K that exceeds the company match.

12/14/2006 2:52:34 PM

^David, you might want to point out that after the match you should heavily consider a Roth.

12/14/2006 3:01:56 PM

Then there is the point also that 8% of quinn's salary may infact be a pretty nice little chunk.

i mean, say he's putting in 8% of 70k, with a matching 8% of that also, 11.2k/yr in a 401k alone as your only investment isnt exactly something to scoff at.

i wouldnt call that "retarded," but maybe not optimal.

(of course with a full 1-1 8% match, putting $333/mo into a roth wont be a problem either)

12/14/2006 3:30:24 PM

Quote :

"David, you might want to point out that after the match you should heavily consider a Roth."

Yeah, I thought that had been mentioned above, but guess it was on a previous page. An investment in your 401K above the company match should almost always be preceeded by maxin out a roth ira.

12/14/2006 3:33:59 PM

I've seen Roth mentioned on a few pages, and just wanted to throw in something and see if I could get some info

I just graduated in May, and have been on the company's 401k plan for about 4 months now. My company matches up to 9% (about 0.72 per $1). After that, i've been sticking any type of savings in a money market account. Instead of putting in there, should I also be putting it in a Roth as well? I feel like I need to have some type of savings, and to have an actual savings account is a waste of time.

12/14/2006 4:47:15 PM

Go with the Roth.
You can pull out the principal in the Roth anytime penalty and tax free. Thus, you can use it as a place to store some emergency cash, although it won't grow at all.

So if you put in $4K this year and max it out, you can take out up to $4K without penalty or tax if you need it.

12/14/2006 4:50:40 PM

Agreed

12/14/2006 4:53:15 PM

Is a money market even worth it?

12/14/2006 4:53:34 PM

I would say so, easy access, guaranteed to not lose any principle, you can store more than 4K in it

12/14/2006 4:55:20 PM

^^^^^it is not a waste to have a savings account...in fact it is a good idea, IMO. a high yield savings account that is. as has been said earlier, you should have atleast 3 months in savings.

as for info on a Roth...its a retirement account that you put post-tax dollars into and it grows tax free. you can google or wikipedia for further information, but thats the short of it.

[Edited on December 14, 2006 at 4:56 PM. Reason : ^]

12/14/2006 4:56:13 PM