Author Topic: Confused on where to start  (Read 2193 times)

show me the money

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Confused on where to start
« on: March 06, 2014, 07:59:58 AM »
Hello all,

 I have been reading MMM since i found his blog last August, and have tried to follow his example. i know i have suffered from some lifestyle inflation over the past few months, but have also made great headway in getting rid of all credit card debt. cards are paid off every month now. 

here is where I am a having trouble, i started a new job making more money last July, and have money left in my old companies 401K, not a lot, but some, i have not yet started the 401K with this company, and am not sure i should, (they offer no match), i was thinking of moving my old 401K into an IRA with vanguard, i also am looking into starting an index fund with them, i have enough saved for to start one now. the only debt my wife and I have is the mortgage about 154k @ 4%, i don't know if i should be paying that down as quickly as possible, we know we don't want to stay in the house, as we no longer care for the area, we bought here because it was cheaper, and that if one of us lost our jobs we could still afford the mortgage.

 my wife's job takes an automatic amount from her check that goes right into her pension, and she has been contributing extra. i believe i make enough now to max my 401K each year, but as i said they dont match. i am not sure which way to go.

i want to get a hold of "Intelligent Asset Allocator" by Bernstein to read through, and i have read some of Jlcollins stock series.

we are both in our early 30's, me closer to mid 30's, and i know we cannot wait any longer, i wish i knew some of these things 10 years ago.

Thanks All

matchewed

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Re: Confused on where to start
« Reply #1 on: March 06, 2014, 08:05:51 AM »
If what you're asking is whether to use your 401k? The answer is generally yes.

If you feel that you can make more in the long run than the interest rate on your mortgage then it is optimal to do minimum payments on the mortgage and keep investing.

As for what to invest in, that's up to you and your risk tolerance. Keep going through jlcollinsnh's site. Once you're done with that implement what seems like a good idea with that advice. Then move on to the complicated stuff all the while saving as much as you can. That last part is the most important, refining and optimizing that can take time while you educate yourself.

soccerluvof4

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Re: Confused on where to start
« Reply #2 on: March 06, 2014, 08:31:59 AM »
^ +1. Here is the link to what he was suggesting

http://jlcollinsnh.com/stock-series/


wtjbatman

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Re: Confused on where to start
« Reply #3 on: March 06, 2014, 09:30:00 AM »
I know you said your 401k doesn't match (mine doesn't match either, they just throw in two bonuses throughout the year), but what are the fund options like? If they aren't good, I wouldn't rollover your old 401k into this one, I would roll it over into an IRA at somewhere like Vanguard, Betterment, Sharebuilder, wherever you are comfortable that offers low-fee investing in index funds. If the fund options are good (index funds), it might be ok to do a rollover. As for the benefits of a 401k, I'll let the above link from madfientist provide a much better argument than I could. Also keep in mind that you could also fund a Traditional IRA which, depending on your income, can also lower your taxable income. Rollovers don't count against the yearly contribution limit, so you could rollover to an IRA while also funding it. Not only that, you can still do 2013 contributions along with 2014, so you could fund it with up to $11,000 (by April 15).

As for your mortgage, you said you owe 154k @ 4%. Normally I would say that investing outweighs that interest rate, and you're better off just making your regular mortgage payment and investing the rest. But then you mention you don't like the area and might want to move soon. So then the question becomes, how much equity do you have in the house? Are you underwater on it? Could you sell it and still have money to pay a chunk on a new house?

show me the money

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Re: Confused on where to start
« Reply #4 on: March 06, 2014, 09:58:51 AM »


As for your mortgage, you said you owe 154k @ 4%. Normally I would say that investing outweighs that interest rate, and you're better off just making your regular mortgage payment and investing the rest. But then you mention you don't like the area and might want to move soon. So then the question becomes, how much equity do you have in the house? Are you underwater on it? Could you sell it and still have money to pay a chunk on a new house?

we just refinanced it last year, i think it appraised for 160k, so not much really. some advice i found interesting was with the higher income i have now, best thing would be to split the extra between saving/investing and the other half as extra towards the house.

we love the west coast, on the east coast now, but just had our first child last year, and not sure we could take him away from all the family here. i have been looking at best places to live/raise family and one of the places that comes up is about a 30 min drive from where we live now, so that might be an option. just have to suck it up while he grows up i guess.