Author Topic: Help out a Newbie?  (Read 11352 times)

ichangedmyname

  • Bristles
  • ***
  • Posts: 420
    • Luxe Frugality
Help out a Newbie?
« on: September 22, 2013, 11:34:33 AM »
***I migrated to the US in 2011 so I am not well versed with a lot of these financial terms. Health insurance had to be explained to me 3 times as well as social security and 401k. I have learned a few things reading the blog though. /disclaimer***

I earn 12/hr + commission full time. Live close to work. (Need to learn to ride a bike, goal for next Spring). I don't have debts, rent is fairly cheap, trying to get rid of our T-mobile postpaid account and going with prepaid. I have started to put away 60% of my pay in a savings account.

I am contributing 4.5% to my 401k and my employee is matching that in full. Right now my 401k is invested in the Vanguard target 2045. I have no idea if it's good or bad. Is there something else better or please suggest some reading materials that will help me make that decision. Thank you!

Also my savings account has $5900 right now and earning a measly .01% I have applied for an Ally savings account to at least earn .84% but they have rejected my application probably 3 times. I tried again the other night and got the response that they will be reviewing it. Any other suggestions on a good savings account with better interest?

Also we are planning to retire abroad where we can live comfortably on $1200/month, yes that place exists. Based on the 4% withdrawal rate I would need $360k to make that possible. Suggestions on how to do that within the next 12 years?

Thanks so much!

Abe

  • Handlebar Stache
  • *****
  • Posts: 1264
Re: Help out a Newbie?
« Reply #1 on: September 22, 2013, 11:55:17 AM »
Great job with your savings rate! That is the most important part of getting to your retirement date. With fairly conservative investments, if you keep that up until retirement, you'll be able to retire at your goal time.

How much are your monthly expenses? Once you've saved enough to cover some period of time you are comfortable with in case of job loss, then start putting more into the 401k. If your federal income tax is low right now, ask if they have a Roth 401k option. That way you will not pay taxes on investment returns, and there's no penalty for withdrawing what you contributed (there is a penalty for withdrawing returns) before age 59 1/2. A regular 401k decreases your taxes now, but you will pay taxes on contributions and returns when withdrawing. If you withdraw early, you will also pay a 10% penalty.

The Vanguard target date funds are decent for investors not comfortable in managing their own asset allocation (how your money is spread out into different investment types like stocks, bonds, real estate, gold, etc).  As time progresses and the target date approaches, they will automatically shift investment allocation away from stocks to reduce risk of a large loss in value. In your case, you may need funding for a long retirement, so will need to stay at least partially invested in stocks to have returns keep up with your annual expenses. It may be worth for you to learn about investment (search for that on the forum, there are a lot of references listed already) and manage the asset allocation yourself to stay on track. I would stick with Vanguard funds as they have a lower annual fee than other companies' funds.

Overall, the last two paragraphs are details, the main thing to focus on are your savings rate, which is excellent, and avoiding high-risk investments.

ichangedmyname

  • Bristles
  • ***
  • Posts: 420
    • Luxe Frugality
Re: Help out a Newbie?
« Reply #2 on: September 22, 2013, 12:12:41 PM »
I started out putting in like $50 per paycheck into my savings but then I had so much extra money and I thought hmmm how about $500/mo? then like 3 months ago I started $1000/mo. When I read MMM's early retirement chart, I decided to try the 60% and I did that this last pay check. I'm kinda happy with how my savings account looks.

My monthly expense is probably $700- $900, bills, groceries, rent, utilities. And it's anti-mustachian but I am sending money to my parents each month $180.

Just read about VFINX and thinking of investing $3k of my savings into that. But I'm gonna read more about it. Off to the investing forum. :)

Stache In Training

  • Stubble
  • **
  • Posts: 224
Re: Help out a Newbie?
« Reply #3 on: September 22, 2013, 08:28:07 PM »
I like the target date retirement funds, because it gets you in bonds and stocks, and does the asset allocation for you.  The fees are very good.  So for typical retirement, unless you learn something more that you really want to invest in, I'd stick with that. 

As for investing your other savings, the 500 index (vfinx) or the total stock market index is probably the best starting point.  Yes check out the investor alley forum section, as there's tons of info and advice there.  However you can't go wrong with VFINX.

And yes, as already suggested, keep up that savings rate, and you'll be golden!

Stache In Training

  • Stubble
  • **
  • Posts: 224
Re: Help out a Newbie?
« Reply #4 on: September 22, 2013, 11:56:00 PM »
Oh, and for savings account, (Not sure why you're being denied from Ally.  Did they give a reason?), but Capital One 360 is what I use.  It gets .75%.  So not quite where Ally is, but still much better than the .01% you're getting.  Here's my refer a friend link: https://r.capitalone360.com/fvMaBF6sbX.  If you use that, you'll get $20 and I'll get $20.  However, don't feel that I'm pushing you towards my link, at all.  If you find the MMM link on the blog, I think you'll be able to get more than 20.  So I'd go that route, if I were you.

Hope you'll be able to get a better savings account soon!

ichangedmyname

  • Bristles
  • ***
  • Posts: 420
    • Luxe Frugality
Re: Help out a Newbie?
« Reply #5 on: September 23, 2013, 03:28:43 PM »
Thanks for that link! I will sign up for that.

I think part of the reason is my SSN isn't old enough and I have filed for taxes the first time this year. But most of it is the fact that my mother-in-law and I have the same name and address. When I applied for my T-Mobile phone, they asked me questions like "What street did you live in in 1975 a. blah blah...." I was like I wasn't born yet. So that definitely adds to the confusion. I have no idea how to fix that. Just keep "existing" I guess.

Abe

  • Handlebar Stache
  • *****
  • Posts: 1264
Re: Help out a Newbie?
« Reply #6 on: September 25, 2013, 08:01:51 PM »
You may not have enough credit history. I had to start using credit cards to have a history to get a mortgage. You'd think not needing credit cards would be a sign you can manage your money well.  Another thing I found is that once you have a large savings account with another bank, they will quickly change their minds about denying you. Now banks are sending me offers for savings accounts all the time to the point I called each one and asked them to stop.


ichangedmyname

  • Bristles
  • ***
  • Posts: 420
    • Luxe Frugality
Re: Help out a Newbie?
« Reply #7 on: September 25, 2013, 10:25:23 PM »
I agree about the credit history and I didn't wanna get a credit card EVER. But I signed up for one and got approved with a $300 spending limit LOL I'll get it in the mail. I'll use it for gas and pay it off diligently. Hopefully I will "graduate" to a cooler one with cash backs.

Stache In Training, I tried to apply and I have to call them tomorrow to verify my identity.

Another Reader

  • Walrus Stache
  • *******
  • Posts: 5012
Re: Help out a Newbie?
« Reply #8 on: September 26, 2013, 07:25:05 AM »
It's your lack of credit history and confusion with your mother that's causing the problem.  Most banks do a soft pull on your credit report before they will open an account for you. 

Depending on where you live, you may have better luck with a local credit union that has a rewards checking plan.  Check depositaccounts.com under high yield reward checking accounts to see if there is one near you.  In the Bay Area, I use Provident CU.  They offer 1.76 percent on balances up to $25k, as long as you have one automatic transfer or direct deposit and 10 debit card transactions every month.

The credit history with that $300 card will help, but it will take a while before the history accumulates.  Both Sallie Mae bank and GE Capital bank offer slightly better yields than Ally, but you will have the same problem trying to open an account on-line.  Try calling and explaining your situation instead of opening the account on-line.

TrulyStashin

  • Handlebar Stache
  • *****
  • Posts: 1030
  • Location: Mid-Sized Southern City
Re: Help out a Newbie?
« Reply #9 on: September 26, 2013, 07:39:46 AM »
The advice you've been given here is good and I have nothing to add on that score.  But I wanted to write and say WELCOME to the United States!  I hope you build a happy life here.

Adventine

  • Handlebar Stache
  • *****
  • Posts: 1256
  • Age: 30
  • Location: Manila, Philippines
Re: Help out a Newbie?
« Reply #10 on: September 26, 2013, 08:58:17 AM »
Hi hotforbacon! Sounds like you're doing pretty well already. Just one thing that concerns me and that I'm sure you're aware about already. Have you thought about making investments (financial instruments, real estate, etc) in the country where you will retire?

ichangedmyname

  • Bristles
  • ***
  • Posts: 420
    • Luxe Frugality
Re: Help out a Newbie?
« Reply #11 on: September 26, 2013, 09:26:23 AM »
Another Reader I just got a call from Ally to fax over driver's license and SSN card. :) So hopefully that turns out well. I will look into local credit unions too. Thanks!

Truly Stashin thanks for the welcome.

Adventine hello! Maybe in the future I'm thinking of buying property there and renting it out but I'm still learning a lot of things right now.

unpolloloco

  • Stubble
  • **
  • Posts: 185
Re: Help out a Newbie?
« Reply #12 on: September 26, 2013, 10:14:59 AM »
***I migrated to the US in 2011 so I am not well versed with a lot of these financial terms. Health insurance had to be explained to me 3 times as well as social security and 401k. I have learned a few things reading the blog though. /disclaimer***

I earn 12/hr + commission full time. Live close to work. (Need to learn to ride a bike, goal for next Spring). I don't have debts, rent is fairly cheap, trying to get rid of our T-mobile postpaid account and going with prepaid. I have started to put away 60% of my pay in a savings account.

I am contributing 4.5% to my 401k and my employee is matching that in full. Right now my 401k is invested in the Vanguard target 2045. I have no idea if it's good or bad. Is there something else better or please suggest some reading materials that will help me make that decision. Thank you!

Also my savings account has $5900 right now and earning a measly .01% I have applied for an Ally savings account to at least earn .84% but they have rejected my application probably 3 times. I tried again the other night and got the response that they will be reviewing it. Any other suggestions on a good savings account with better interest?

Also we are planning to retire abroad where we can live comfortably on $1200/month, yes that place exists. Based on the 4% withdrawal rate I would need $360k to make that possible. Suggestions on how to do that within the next 12 years?

Thanks so much!

To hit that goal, you'll need to save about $20k/year every year (inflation-adjusted to 2013 dollars) until retirement (based on a 7% annual real return - which means you'll have to be investing that money).  You might be able to do this by contributing the max to your 401k every year (with the employer match, it should get close to 20k) if you can. If you can't, you'll need to figure out a way to make more money or reduce expenses.

ichangedmyname

  • Bristles
  • ***
  • Posts: 420
    • Luxe Frugality
Re: Help out a Newbie?
« Reply #13 on: September 27, 2013, 09:28:28 PM »
I'm going to track my expenses next month so see just how much I spend extra. Because my rent is only $300, utilities and bills $100 and we spend a bit on food. Have to get rid of postpaid phone and go with prepaid but that comes with an ETF of $150 upfront. I wanna get my ducks in a row so I can start the new year with a much more solid plan.

And thinking of increasing my savings to 70%. I have a question though. Should that percentage include 401k contribution?


Abe

  • Handlebar Stache
  • *****
  • Posts: 1264
Re: Help out a Newbie?
« Reply #14 on: September 28, 2013, 04:38:34 PM »
I'd include your 401k contribution in that percentage. If your expenses stay the same in retirement, you will be fine with that high a savings rate. Just keep in mind that traditional 401k money cannot be accessed until you are 59 1/2 without a 10% penalty, so plan to have enough money in regular accounts to tide you over until then. The math works out to invest in tax-sheltered retirement accounts, but consider your willingness to have limited access to that money for a few decades.

ichangedmyname

  • Bristles
  • ***
  • Posts: 420
    • Luxe Frugality
Re: Help out a Newbie?
« Reply #15 on: September 30, 2013, 09:35:07 AM »
Thanks Abe. My savings have been after tax, health insurance, life insurance and 401k contribution taken out.

Finally got my T-Mobile postpaid account turned into prepaid. My husband and I were paying almost $100/mo and we were still under contract until August 2014. I bought a prepaid sim at Walmart for $32 with tax (supposed to be 39.98 + tax) and it was refilled with $30 for the monthly plan (100 minutes, unlimited text and 5gb data). Then crossed the street to T-Mobile and swapped out the nano sim for a regular sim. Then called prepaid customer care to port over my postpaid number.

We will gladly pay the early termination fee and be billed until the end of our billing cycle because in the long run we're still winning. So happy that this has been done. Not a lot of effort just some researching.

I faxed Ally Bank my state ID and SSN card to prove identity but the ID was too dark so I re-faxed. Waiting on that.

Is it weird that I am so excited about this? LOL

ichangedmyname

  • Bristles
  • ***
  • Posts: 420
    • Luxe Frugality
Re: Help out a Newbie?
« Reply #16 on: October 14, 2013, 03:09:07 PM »
Just did a little math and my annual take home pay will be a little over $29000, excluding 401k contribution. This isn't much compared to what some people earn but I really have low costs that I think I can put away 75% of my take home pay starting January next year.

I just wonder how much of my savings should go to my savings account and how much to investments. Is there a magic number or an article that can help me come up with figures? Thanks.

ikea4532

  • 5 O'Clock Shadow
  • *
  • Posts: 11
Re: Help out a Newbie?
« Reply #17 on: October 16, 2013, 11:15:32 AM »
+1 for the bacon love!
And I am a newbie too, but you are saving at a exponentially higher percentage than I, congrats on coming to America, and have fun!

dorkus619

  • Stubble
  • **
  • Posts: 162
  • Location: MD
    • SimplyBex
Re: Help out a Newbie?
« Reply #18 on: October 16, 2013, 01:40:18 PM »
Hey hotforbacon! I'm pretty new too, but I figured I would pitch in a couple of my 2 cents.

I would say that you should invest most of your savings and keep some of it "Liquid" - easily accessible like a savings account (Highest interest as possible of course!) Deciding how much to keep liquid is up to you - what you want your emergency fund to be in case you need cash right away. The rest is going to do much better if it's invested and earning a MUCH higher percentage.

When you research different funds, like vanguard funds, you can see their performance over the past Year To Date, 1yr, 5 yr, 10 yr, etc. Lots of times these average 7-12% over the long run. Much better than savings!

*The Catch* - The tax-advantaged retirement accounts: 401k, 403b, IRA, Roth IRA, etc have stipulations. Because they want you to hold out until you're "retirement age" of 591/2 or so. So read up on all the diff types of accounts. You may want to keep some money in a taxable investment account so that you can take out your money when you want without penalty (unless the market is low when you need the cash)


Also for determining your savings rate, someone posted this equation which I use. It seems right, but there were some debates on another thread about how to determine. Simplified, it's everything you save/put towards your net worth divided by the money you make.

Pre-Tax contribution + Principal paid + Other savings
---------------------------------------------------------------------
       Take home pay + Pre-Tax contribution


Some people argue that in the pre-tax contribution you should include your employer's contribution too, some disagree. I think it should be included at the top but not bottom because you couldn't get that match in cash just because.

Also I'm not sure I agree with including principal payments towards reducing debt. I mean I'm contributing to a piece of shit house I bought (I was young and naiive, the house is in the ghetto, and it was just before the market crashed). So I almost feel like I'm really throwing that money away, that my house isn't really an "investment" or positive towards my net worth....as of right now I'm about $60k underwater on the damn thing!

ichangedmyname

  • Bristles
  • ***
  • Posts: 420
    • Luxe Frugality
Re: Help out a Newbie?
« Reply #19 on: October 19, 2013, 11:02:53 PM »
Hello! Thanks for reading my thread and sharing your thoughts :D

As of today I got $5500 in my Ally savings earning .84% interest. I'll be earning .13 a day in interest. I'm transferring $1k more into it on Monday. My chase account has 1400 in it, that's my liquid cash. My 401k is currently at $1144 and I have about $1100 in cash.

I would like to spend the cash I have on hand first for rent and bills. I downloaded Personal Capital as per the blog post and I am in love with it. I'm getting obsessed with getting rich! Is that bad? :(

Plans for 2014:
**I would start putting my 2nd month paycheck (the commission) into my Ally savings to take advantage of compounding interest.
***When it gets over 10k I would start a CD ladder. And keep it rolling.
**Still continue to bank the 2nd paycheck of the month until I make enough to start a vanguard account.
**Also look into a ROTH IRA to add to my OLD LADY MONEY.


dorkus619

  • Stubble
  • **
  • Posts: 162
  • Location: MD
    • SimplyBex
Re: Help out a Newbie?
« Reply #20 on: October 22, 2013, 02:49:43 PM »
Cool! Sounds like you have a pretty good idea of what you want to do. I know that my plan has changed multiple times already even though I've only been stashing for a few months. I keep reading (Currently: MMM Blog, Suze Orman - The Money Class, and Jacob Lund Fisker - Early Retirement Extreme) and learning and that affects my plans.

Here's my money situation and plans (as of now)! I'm also currently obsessed! We're in it together haha

Company 401k             $2300 (autopilot 10% pre-tax deduction from pay)
Vanguard Roth IRA       $1200 (just invested, no strategy yet, made $16 capital gains already!)
Barclays .9% Savings   $  500 (Emergency Liquid Savings)
Health Savings Acct      $    ??  (Not much, split in 2 parts: invest acct and liquid acct w/ debit card)


November Plans:
- Focus on building my Emergency Savings (initial goal = 3 months expenses)
- Pay my final Verizon Wireless bill (recently switched to ting!)
- Convince my boyfriend to rollover his old 401k and/or start  stashing again
- Get my boyfriend on Mint and more active in his finances



The good thing about a ROTH IRA is that you can start drawing from it for early retirement (only the $$ you put in though, not gains/interest) So it seems like a good "early retirement account" from what I understand. And 5 years before retirement I can begin moving $ from 401(k) to Roth, after it sits 5 yrs it can be withdrawn without penalty If I'm reading things right.
I'm looking for a final nest egg of about $700k. I hope to get there in 20 yrs or less. I think that will be feasible...It's hard to plan so far out.


Stache In Training

  • Stubble
  • **
  • Posts: 224
Re: Help out a Newbie?
« Reply #21 on: October 22, 2013, 09:27:52 PM »
$.13 a day! That's awesome to know that figure.  That is very helpful to know, and see how it changes as you keep stashing. It's a great mental booster!  Obviously other investing in vanguard will earn more, but that's really nice to see on your emergency/liquid fund.

Think you can post the formula of how you found that out?  I'm sure I could figure it out eventually, but usually I add in unnecessary steps when creating my own formulas, so it's great to get a confirmation that I did it right.

Congrats on setting up such a great plan!  I'd say that the only thing you are missing right now is the investing side.  With the low interest rates, I'd put your investing at vanguard step ahead of your CD step.  I know that the .84% interest you're getting in your savings account is just as good as most CD's you're going to get.  But that's personal choice, if you don't feel comfortable, it'd make sense.

Good Luck!

ichangedmyname

  • Bristles
  • ***
  • Posts: 420
    • Luxe Frugality
Re: Help out a Newbie?
« Reply #22 on: October 23, 2013, 06:56:05 AM »
Thank you!
Stache in training I just found that in my ally account. LOL And apparently it gets added to the account on a monthly basis. I am excited to see it grow.

I was actually thinking about the Vanguard account. I was about to do that before but I read that it's basically "forget about it" money? The reason I wanted the CD ladder going first was I never know when I'd need the money. It's going to be short term like 6 months and a year and keep that rolling.

Once I build enough savings for VFINX I'll start an account, only 3k that will take 2 months of savings. I'm planning to hit 10k by the end of this year if I can keep my Christmas shopping in check. hehe

dorkus619

  • Stubble
  • **
  • Posts: 162
  • Location: MD
    • SimplyBex
Re: Help out a Newbie?
« Reply #23 on: October 23, 2013, 10:39:20 AM »
Congrats on setting up such a great plan!  I'd say that the only thing you are missing right now is the investing side.  With the low interest rates, I'd put your investing at vanguard step ahead of your CD step.  I know that the .84% interest you're getting in your savings account is just as good as most CD's you're going to get.  But that's personal choice, if you don't feel comfortable, it'd make sense.
I concur with the above! When I looked into CDs vs my .9% Barclays savings, it seemed silly to lock up my money in a CD for the same or less return. You Vanguard account could be "forget about it" money OR you could have it in a taxable/investment account. Which I believe you can put in and take out as you please. I wanted my money locked up so I don't steal from myself! But now I'm realizing that I need to focus on building an emergency fund because If I lost my job, I'd be in trouble!

Stache In Training

  • Stubble
  • **
  • Posts: 224
Re: Help out a Newbie?
« Reply #24 on: October 23, 2013, 09:56:42 PM »
As Dorkus said, it can be forget about it money. (it pretty much needs to be if you put it in a retirement account.)  However if you put it in a taxable account, then you can always access it, but you'll have to pay taxes on the gains when you sell.  You'll still have to pay taxes on your CD gains (even though they may be at different rates), but look at it this way, you'll only be paying taxes when you make money, so taxes, while you hate them, are a good sign.

Also, you'll be getting dividends which will be taxed lower than your gains.  Obviously you'll want to re-invest them, but if you feel you need access to money, you can just turn the dividends to deposit into your bank account.  That might stem the tide to where you won't need to "withdraw" your funds, and whenever you feel like you don't need that check coming in, just simply set the dividends to re-invest again.

If you never know when you'll need the money, I'd rather have my money in an index fund, as if you feel you need money, it'll only take like a week to get the funds transferred.  As opposed to if you need it from a CD, you'll have to wait until the end of the month, at the EARLIEST, depending on how good of a ladder you set up. 

However with all that being said, if you're able to  consistently save 3k in 2 months, you should be able to put this money away, even in a taxable account, and make it be "forget about it" money... or lets say "forget about it money... that I can access if I ever truly need to."  I hope that all makes sense, I tend to ramble.

As for the daily interest amount, I know they calculate via a daily balance rate.  It's so you can't just transfer 30k to your savings account on the 30th of every month, and then take it back out on the 1st again, after getting lots of interest.  You have to keep your money there for the entire month, to actually get the total interest on every dollar.  I just don't know that formula they use. (Probably something like annual rate divided by 12, then divided by the days of the month, times the balance of the day.)  If you move a big chunk of change from that account, you'll see that number change, and then that will be the number they use for the remaining days, until the balance changes.  I use 360, but they don't list the amount earned that day, just a running total of interest earned... maybe it's time to make a suggestion!  Thanks for letting me know where that came from!

ichangedmyname

  • Bristles
  • ***
  • Posts: 420
    • Luxe Frugality
Re: Help out a Newbie?
« Reply #25 on: October 23, 2013, 10:57:59 PM »
I'm reading about taxable accounts now. I can't seem to grasp it. What is it? Is it like VFINX? I'm so confused! But I'm reading and hopefully boggleheads can educate me.

Stache In Training

  • Stubble
  • **
  • Posts: 224
Re: Help out a Newbie?
« Reply #26 on: October 23, 2013, 11:12:19 PM »
A taxable account can work just like a retirement account.  You can put whatever funds you want in it.  So yes, VFINX can go in it.  However since a retirement account is earmarked for retirement, you can't touch it until retirement age, 59&1/2.  (there are always exceptions to that, but in general, that is the rule.) Also, the growth can grow either tax free or tax-deferred, depending on the type of retirement account.  However, a taxable account doesn't grow tax free or tax deferred.  But that means you can touch it whenever you want.  So in a retirement account, your dividends will usually be re-invested, and you won't pay taxes until later on, if it was a deferred account.  In a taxable account, you'll pay taxes, even if you re-invest, but you could also just have the dividends going into your bank account, as I mentioned earlier. (dividends are taxed at a lower rate than your regular income)  Now on the actual value of the taxable account, you don't pay taxes until you sell, but then you are taxed.  For example, your savings account at your bank is technically a taxable account, it's essentially investing in a very stable investment, the bank. You're taxed on the interest you receive.  A CD would technically be a taxable account.  It's really any account that money can go into, that isn't a retirement account.  We all just call it a taxable account, to make sure people realize you're not talking about a retirement account.

TL;DR: A retirement account is just a holding tank for funds you can't touch till retirement, and comes with certain tax advantages.  A taxable account is just a holding tank (or any other account) for funds you can touch whenever you want, with very little tax advantages.

ichangedmyname

  • Bristles
  • ***
  • Posts: 420
    • Luxe Frugality
Re: Help out a Newbie?
« Reply #27 on: October 23, 2013, 11:14:53 PM »
So. If I went ahead and got VFINX that would be taxable but I can touch it IF I need it. If I started a ROTH IRA, it's kinda like my 401k and I get penalized for touching it.



Is that right? ***Please read original post, it takes awhile for me to get things... sorry... ***

Stache In Training

  • Stubble
  • **
  • Posts: 224
Re: Help out a Newbie?
« Reply #28 on: October 23, 2013, 11:37:23 PM »
Yep, you got it!

Though one little area to explain.  VFINX is just a certain kind of fund.  It can be in both your roth or 401k (if offered) and a taxable (non-retirement) account.  You probably understand this, but I am saying this, because your wording seemed like you might think if you bought VFINX, that it would automatically be in a taxable account.  It would most likely be like that if you just opened up a brand new account and bought into it.  However, VFINX can belong in any account.  So you'll want to specify whenever buying anything, whether it's belonging in a taxable (non-retirement) or retirement account, such as your roth.

But yes, you can open a vanguard account, and buy VFINX (I'd use their concierge service to make sure everything is being done correctly), make sure not in a retirement account, and then you'll be able to access it whenever you want.  But it'll take a bit longer than a savings account, as I already stated.

All of this is of course just for your investing side of your finances.  Just a reminder, so you're not putting all of your emergency fund into stocks, or whatever fund you choose.

ichangedmyname

  • Bristles
  • ***
  • Posts: 420
    • Luxe Frugality
Re: Help out a Newbie?
« Reply #29 on: October 23, 2013, 11:48:15 PM »
Yes that's exactly what I meant. I have been building up the courage to buy VFINX 3k but I'm holding off until the beginning of next year.

So next year's plan
**do the Vanguard account instead of CD ladder and buy VFINX 3k to start with
***Save up to max ROTH IRA.
****Max out 401k

Depending on how well I do at work each month I could be saving 1200 to 1900 every month. I am not a big fan of the job of OMG I love that I can save that much.

I have to start thinking about ESPP as well. Next enrollment is in December for January next year. We get 15% discount off the lowest price of stock for that quarter but we have to hold it for a year before we can sell. I don't know if that's a good thing.

dorkus619

  • Stubble
  • **
  • Posts: 162
  • Location: MD
    • SimplyBex
Re: Help out a Newbie?
« Reply #30 on: October 24, 2013, 07:06:18 AM »
That sounds like a solid plan! Also congrats on your $10k net worth - I read that on the celebration thread.

I'm still at like -$40k because my house is underwater, but hopefully that will slowly iron itself out over time.

About ESPP: I just saw this thread yesterday and I hadn't really thought about company stock before (too many eggs in one basket?) but that was before I realized that many companies offer discounts! Also my company has high ups and shareholders in best interest and brag about that kinda stuff so it would probably be a good investment (just a little bit, while not subtracting from other savings/investing I do) I think my company pays good dividends. Not sure - need to research! We are having an HR lady here next week to talk about next year's benefits!

ichangedmyname

  • Bristles
  • ***
  • Posts: 420
    • Luxe Frugality
Re: Help out a Newbie?
« Reply #31 on: October 24, 2013, 08:13:11 AM »
Interesting read dorkus619. Thanks!

ichangedmyname

  • Bristles
  • ***
  • Posts: 420
    • Luxe Frugality
Re: Help out a Newbie?
« Reply #32 on: January 02, 2014, 06:51:53 PM »
Started a traditional IRA at Vanguard today :)

My 401k currently has a little over 2k in it. I'm contributing 5% and company match 4.5%. I don't think I should max 401k since my annual earnings is barely 30k but I'll work it out that I can contribute more.

I also have $3k in VTSMX and plan to add to that every month.