Quote:
Originally Posted by jIM_Ohio
my first impression was the tax return is too high (that is close to $200 per month). Second reaction was to pay down the debt with an extra $50 per month. makes sense I would do this without consideration for the 401k. Because if you own a home, you'll need to do this again (mortgage interest deduction will increase tax return). My EF is ion CDs. I have one CD maturing each month, then it rolls over to a 90 day CD. I have 3 CDs set up. Interest rate/return is not my objective here. Keeping money illiquid (so my wife cannot spend it easily) and liquid (so if an emergency happens, we can get to money within 10 days). The bank we use is open 7 days per week and located at all grocery stores... so we can get access to money by showing up to bank. If you have 6 months in EF, consider 3 months in 90 day CDs, then put rest in I-bonds, money markets or something similar. I would rethink this. Maybe open a balanced fund or bond fund with a portion of EF (the extra 3 months), then when student loans are paid off, add the $650/month to this investment. Use this savings for the house. Maybe consider a 401k loan for a portion of down payment. I would NOT withdraw retirement funds for a house purchase. I might borrow, depending on real estate market and housing costs. For a Roth the rule is 5 years. I think you should consider other options before removing money from a Roth.
I think you need to continue asking questions. I also think you will learn most the last sentence will change once you learn more. If you are getting a $2200 tax refund, you are suggesting the US government can borrow money from you for free. Last I checked, I can make my money work for me better in 11 months at $175/month than a one time payment of $2200 would help me. Saving for a home can be tough. My advice is get a house as quickly as reasonable (are you living in the city you want to live?). Once you get the housing payment into the budget, more of your money will be working for you. Consider a small condo or small house for starters, making sure it is not a fixer upper.
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jIM Ohio, thanks for your input.
Re: the debt...the min is 600/m for 30 years. I think it's best to pay just that bc I don't think I can put a significant dent in it before then. Interest rate is less than 5%. I'm stuck with it and have to live with it.
Re: EF and CD's...so in your case, you chose to put into a CD provided by a local bank despite other options which might provide a higher rate. I think that was my concern also, I would feel more comfortable if there is local branch.
Re: RothIRA...I am thinking I might hold off or if I open one contribute only a small amount. I want to start building on savings for short term use (<5years) for possibility if I need new car and/or down for home.