Author Topic: Very new, but intrigued by MMM! What to do?  (Read 3200 times)

martinc

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Very new, but intrigued by MMM! What to do?
« on: June 15, 2013, 12:37:53 PM »
Hello! I'm going to be quick! I'm a SAHM to 3. My husband is employed out of the home. Makes close to $60k with employer who matches retirement up to 6%. He is currently putting in 3%.
We have 2 high-interest/fairly low balance credit cards, low-interest car loan with balance of about $11k, student loans with balance of $25k, then mortgage (which we just refinanced and will be saving $280/month).
My question is....should dh be putting in full 6% to retirement to benefit with matching or should we back down or stay at 3% to pay off debts quickly? Thanks for helping! Looking forward to growing a 'stache!

Zaga

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Re: Very new, but intrigued by MMM! What to do?
« Reply #1 on: June 15, 2013, 12:41:23 PM »
If you can do it without endangering your ability to pay your bills, then put in the 6% for the full match while you are paying down your high interest debts.  After that, investing more vs. putting more towards retirement is debated a lot, and can be a personal choice.

Dee18

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Re: Very new, but intrigued by MMM! What to do?
« Reply #2 on: June 15, 2013, 01:08:21 PM »
Yes! You are passing up free money.

davisgang90

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Re: Very new, but intrigued by MMM! What to do?
« Reply #3 on: June 16, 2013, 06:28:22 AM »
If the interest rates on the credit cards are above 2-3% I'd pay them off and then look to max out 401k.  What are the rates on the student loans?  If they aren't low, might want to kill them too.

nktokyo

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Re: Very new, but intrigued by MMM! What to do?
« Reply #4 on: June 16, 2013, 06:44:52 AM »
What others said. Increase your match to 6% then put all money into debt until it's gone. Highest interest first.

Then look at how you spend money now. Here's something to get your juices flowing http://www.mrmoneymustache.com/2012/10/08/how-to-go-from-middle-class-to-kickass/

mpbaker22

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Re: Very new, but intrigued by MMM! What to do?
« Reply #5 on: June 16, 2013, 07:02:26 AM »
If the interest rates on the credit cards are above 2-3% I'd pay them off and then look to max out 401k.  What are the rates on the student loans?  If they aren't low, might want to kill them too.

A company match is a 100% rate of return.  Paying off a credit card is 20%.  The company match is usually a better deal.

Mr Mark

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Re: Very new, but intrigued by MMM! What to do?
« Reply #6 on: June 16, 2013, 09:06:23 AM »
If the interest rates on the credit cards are above 2-3% I'd pay them off and then look to max out 401k.  What are the rates on the student loans?  If they aren't low, might want to kill them too.

A company match is a 100% rate of return.  Paying off a credit card is 20%.  The company match is usually a better deal.

Only over 1 year. Pretax, compounding, that credit card gets bad.

But I agree, get the match. Free money. However, if you have debt above 4% you're effectively borrowing money for everything you are currently spending. Everything. I'm sure some part of my portfolio yield is being paid by you!

So you gotta get that debt monkey off your back, and focus on reducing spending, increasing income, and building net worth, so other people pay you.

arebelspy

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Re: Very new, but intrigued by MMM! What to do?
« Reply #7 on: June 16, 2013, 09:27:23 AM »
Step 1: Contribute to the 401k to the least amount you can in order to get the full match (in this case, 6%).
Step 2: Pay off any debt over 4% interest rate.
Step 3: Max a Roth ($5500)
Step 4: Up contributions to max the 401k (whatever percent so you hit the $17,500 maximum).

Lots of options after those 4 steps are done, but start with 1 and 2.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
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Rebecca Stapler

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Re: Very new, but intrigued by MMM! What to do?
« Reply #8 on: June 17, 2013, 08:00:07 PM »
What others said. Increase your match to 6% then put all money into debt until it's gone. Highest interest first.

Then look at how you spend money now. Here's something to get your juices flowing http://www.mrmoneymustache.com/2012/10/08/how-to-go-from-middle-class-to-kickass/

Ditto. Being able to put 6% into the 401k and pay down your debts is probably going to require cutting some expenses. But it's worth it. You don't want to leave that employer match on the table.