This is a mixed post of a Case Study, but also to share my Badassity!
First things first. Thank you. With my very first post, and several face punches (
http://forum.mrmoneymustache.com/ask-a-mustachian/windfall-case-study-too-much-cash-for-a-newbie/) I am happy to announce that I have spent the last few months changing my life situation.
1. Changed jobs. My previous job was unstable and paid $22/hr and my new job is very stable and pays $31/hr plus overtime
2. Created a budget.
3. Created financial goals. First goal is to pay off $16k in credit card debt at around 13% interest. Second goal is to start saving for early retirement.
My new job offers a 401K which I am vesting in from day 1. They match 100% for a 3% contribution and 50% for the next 2% contribution. Additionally, they also contribute 4% into a fund by themselves regardless if I ever contribute a cent. They also offer an HSA and other benefits like short-term disability, life insurance, and more for emergencies. I would like to start investing in the 401K immediately and would like to ask your opinions on which fund to choose.
I have 90k in cash in a saving account and with that I plan to pay off the $16k debt first, then contribute 50% of my monthly salary to the 401k (using the cash for monthly expenses $3500), then open a Roth IRA for me and one for my wife and contribute the max of $11k.
The Fidelity advisors at the job suggested using the BlackRock LifePath Index 2040 Fund L and that is what I chose. However, I have attached a snapshot of some other offerings with low expense ratios (Vanguard). I have also included a snapshot of the LifePath 2040 allocations.
Should I stay put with the LifePath 2040 (I am 40 years old)? Or should I change?
And, if I keep the LifePath 2040, any suggestions about what to invest in with the Roth IRA?
My financial goal is to not increase my lifestyle with this raise, but instead to catch up on retirement savings of which I currently have $0.
Thank you!