Quote:
Originally Posted by ftblstr2319
Thank you everybody for the great advice! I really had no idea where to start putting my money. This is definately a swift kick in the ass to get me into gear.
As for the house, i MAY be lucky enough to be splitting the down payment with the g/f (but who knows) ...Damn women... want rings, weddings, kids..they try to make it tough on me. So I will probably keep a little of my monthly's for a just in case fund 
I've never heard of a deductible ira. I am definitely going to be looking up the benefits of that over a ROTH.
My understanding of a deductible is that, I will get the 25% back on tax returns, but won't I still have to pay that out when I "retire" in taxes again?
My HSA deductible is 1100 for the year. Then they cover 100% of all medical bills after that is paid.
As for the High Yield Checking accounts, I've seen Countryside at 3.6% and Wamu 3.3% . Do you guys have any recommendations on accounts? I've read a few bad things about Countrywide.
The IRA. This is the tough one. I know of Vanguard, Ing Direct, and T-Rowe price...are any of these good starters for an IRA??
Again thank you all mucho mucho |
40k per year as a single man puts you square in middle of 25% tax bracket- assuming your deductions do not reduce your taxable income down to $32550. $32550 is highest income taxed at 15% for single people.
So 5k into a deductable IRA (a deductable IRA is a traditional IRA which qualifies for a deduction). Make sure you qualify for the deduction.
On a gross pay of 40k, your tax liability will be $2665
With a deductable IRA, the 5k is removed from income before taxes, so taxes on 35k would be $1415. Almost cuts your tax liability in half.
Yes you would have to pay taxes on withdraws later.
My logic is this- you earn in the 25% tax bracket now. 75% of the country files taxes in the 15% tax bracket (max income of $32550 single or $65100 married). You are in the top 25% of wage earners. Take any tax break you can find now.
When you marry (if you marry?) the 40k you make will only be in 15% tax bracket, at that time use a Roth IRA (because 15% is cheap taxes to pay). In addition you could convert the deductable IRA to a Roth and pay 15% at time of conversion. In general, pay taxes when taxes for you are lowest. 25% is NOT a low tax rate. 15% is. That simple conversion saves you 10%- and I know few places where you can get a 10% return like that.