Author Topic: Where to stash my 'Stash?  (Read 1272 times)

tomsonaut

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Where to stash my 'Stash?
« on: October 19, 2017, 04:58:25 PM »
Hey all! Relatively new to the MMM blog and brand-spanking new to the forum in search of some sound financial advice. A quick about me: I just finished graduate school in May with a whopping $110k in student loan debt at 5.3-5.6% and live in the really, really fraking expensive (but otherwise quite lovely) city of Boulder, CO, just down the road from the MMM himself. The upside: I have an awesome job as an engineer with one of the University's research labs (sko Buffs!) that affords me a nice work/life balance while still raking in some pretty serious piles of dough. I share a two bedroom apartment with my girlfriend and one of our friends within walking distance from work that keeps my monthly bills very low (~$800/mo for rent, utilities, etc.) for the area and get a 10% match on 5% contributions to a 401a with the university. I also contribute an additional 15% (combined) before tax to the great 457 and 403b plans that are offered. After taxes and other deductions for vision insurance (blind as a bat and getting blinder every day) and HSA contributions, I shovel roughly $1950 at my student loan payments for a pay-off date in ~5 years. On top of this, I contribute $500 after tax to a Wealthfront personal investment account which I'm nominally using as a house down-payment fund even though I'm almost certainly better off renting given the state of the local real estate market. I don't really keep track of the rest of my spending after that, because while I'm sure there's room for greater efficiency, I like to leave a little room for life (I know, that's some wussypants shit right there).

My question to you financial whiz kids out there is this: am I really making the best use of that $500 after tax? Should I be squirreling it away before tax instead, working on hitting the maximum contributions of my 457 and/or 403b? Or should I be putting it in an IRA? Roth or Traditional? Or, should I be dumping that on to the garbage fire that is my student loans for an even earlier payoff date? I drive a 1996 Toyota Corolla paid in full (current mileage is well under 5k a year, but I am guilty of the occasional car-clown habit), don't have any other long-term debt, and I keep my reward credit cards paid off in full.

cantgrowone

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Re: Where to stash my 'Stash?
« Reply #1 on: October 20, 2017, 02:56:07 PM »
Hi. Your first paragraph is a bit to take in. First, max out all pre-tax accounts. Then max out post retirement accounts.

What's the interest rate on the student loan? If it's low enough then you could pay the monthly payment and invest the rest into a brokerage account.

Beach_Stache

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Re: Where to stash my 'Stash?
« Reply #2 on: October 21, 2017, 05:04:02 AM »
Sounds like you are doing a really good job saving!  I know there is an "investment order" article out there that most people seem to follow, and I do for the most part as well.  The student loan interest seems a bit high, but I graduated like 15 years ago when rates were much lower.  Can you get those loans consolidated within the same contract, or roll them over and consolidate to a new one?  At $110k on the loans, that is a lot of money to be paying 5.5% or so, so I would try to get those down.

I also didn't hear you say anything about your emergency savings, do you have enough in a savings account to deal with car repairs, losing a job, etc.? 

If you are renting at $800/month in a HCOL area and you are happy (and your girlfriend and roommate) are happy with that situation then I would do that as long as you can, as you'll save a ton of money there, and you also won't have to worry about other costs like the AC going out, repairs, etc. 

Great job getting to work on that debt and savings so fast!

AccidentalMiser

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koshtra

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Re: Where to stash my 'Stash?
« Reply #4 on: October 21, 2017, 05:39:11 PM »
Yeah, I'd dump it on the garbage fire. Paying off that debt is equivalent to locking in a 5%+ guaranteed return. And with luck we'll get our next recession well underway just as you're clearing it up, and stock prices will be attractive again. (I don't believe in trying to time the market, but I have to admit that right now I feel kind of "meh" about buying stocks.)