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    #46
    Originally posted by Gailete View Post
    As long as you only take out the money you put in, not the interest/dividends in the account, you do not need to pay it back. That is with a Roth IRA. A Roth 401K I believe is through your work and if you took money out then you most likely have to pay that back. I never had a reason to study up on them as they were never offered at my job.

    If you look at your Roth IRA as strictly a retirement account, like I do, then you might not want to think about touching it. However, If you look at it as a saving account where the interest is your retirement money and the other can be used if needed or as part of a saving up for something special such as college or a down payment, you don't have to pay it back. It gives you a back door so to speak that most retirement funds don't give you.
    Makes complete sense! Thank you for this breakdown.

    Comment


      #47
      Originally posted by TrueMaroonGrind View Post
      I have a 401k(pre-tax contributions) through work and a Roth IRA(post-tax contributions) on my own. I have always been told to have both a pre and post tax plan, because you never know if taxes are going to skyrocket or freefall. A pre-tax plan gives you an advantage because it lets you accumulate gains on income that would otherwise be taxed and if tax percentages in the future are small you will make out like a bandit. Taxes could also be super high in the future and destroy your pre-tax plan. You are correct Roth IRAs or post-tax plans don't get taxed when you withdraw money. This effectively protects you from future gigantic tax increases. They also don't let you accumulate years of gains on money that you would otherwise give to the government.

      It is all about protecting yourself and making the most of your hard earned money. I advocate having both, but not everybody does.

      Interesting. Iíll definitely take that into consideration upon opening an IRA. Thank you for your feedback!

      Comment


        #48
        I hope you stick around and keep us posted on the student loan pay-down so that we can cheer you on!

        Comment


          #49
          Follow Dave Ramsey. You are a perfect person for Dave Ramsey!

          He has a book - The Total Money Makeover. Get it and read it. It will change your life. I'm 52 and wish I had had the opportunity to read it when I was 25 and newly married.

          He has seven baby steps.

          1. Save $1,000 emergency fund. Only having $1000 in an emergency fund makes you desperate to pay off your debt! It isn't forever and if you lose your job, you can stop the extra debt payments and use that extra money to live on.
          2. Pay off all non-mortgage debt in order from smallest to largest. You are going to pay them off all so fast that interest rates don't matter (in my opinion). You have eleven loans. You will pay the minimums on all of them and then put all the extra on the smallest loan. Then the next month, you pay all the minimums and all the extra on the next smallest, etc. You will pay off the first five loans in five months. In the next five months after that, you will pay off the next two loans. All the while, the rest of the loans are getting smaller because you are still paying the minimums on them. Wouldn't it be great to only have four loans left by the end of the year? (Okay, I'll get off my soapbox). The two 6.8% loans will be paid off in the first few months.
          3. Save a fully funded emergency fund - Dave says 3-6 months. I really think eight months.
          4. Invest 15% of your household income into retirement. You might want to consider stopping retirement for the next year. You will get your loans paid off even faster.
          5. Start saving for kids' college/home down payment.
          6. Pay off home early
          7. Give generously and build wealth.

          You should listen to some of his podcasts. He is so inspiring. I don't agree with 100% of what he says but these baby steps really work.

          Good luck!

          Comment


            #50
            Pay Down Loans

            As with other posters, my only recommendation is to keep your finances separate and pay off you loans as soon possible!

            I've been there and I'm doing the whole "we are one but not married thing," and I can tell you, it doesn't work.

            Comment


              #51
              OP, I've noticed that no one here has commented on the fact that you're setting aside 10% of your income for retirement and not recommended that you increase it.

              Personally, I think the advice to pay off a few of those higher interest student loans right away before you build up more savings is a smart idea. Or worst case, if you're super uncomfortable with having that little in savings, split it for a month or 2 just to get a tad more savings buffer, then pay off the higher interest loans, then continue to do both in some ratio that is comfortable to you. I personally don't think that you really seem to need to hit $10k before you pay off the loans as that seems like a bit of an arbitrary number.

              What I do think, is that after you've paid down/off some of those loans and then built up your savings to cover at least 4 months or so of expenses, that it would be worth increasing your retirement savings to something more than 10%. 15% is often the "ideal" and the sooner you can increase your contribution the longer it will have to compound and pay off.

              If it were me, I'd pay the high interest student loans. Then Sock away a few more months of expenses, up the retirement savings a few %, and then use the remainder to pay off the student loans faster. Once they're paid off, or at least down to the point where only the lowest interest rate ones are left, then I'd be working on building up more cash on hand.

              Comment


                #52
                Originally posted by scfr View Post
                I hope you stick around and keep us posted on the student loan pay-down so that we can cheer you on!
                I sure will! Thank you!

                Comment


                  #53
                  Originally posted by scfr View Post
                  I hope you stick around and keep us posted on the student loan pay-down so that we can cheer you on!
                  Originally posted by sblatner View Post
                  Follow Dave Ramsey. You are a perfect person for Dave Ramsey!

                  He has a book - The Total Money Makeover. Get it and read it. It will change your life. I'm 52 and wish I had had the opportunity to read it when I was 25 and newly married.

                  He has seven baby steps.

                  1. Save $1,000 emergency fund. Only having $1000 in an emergency fund makes you desperate to pay off your debt! It isn't forever and if you lose your job, you can stop the extra debt payments and use that extra money to live on.
                  2. Pay off all non-mortgage debt in order from smallest to largest. You are going to pay them off all so fast that interest rates don't matter (in my opinion). You have eleven loans. You will pay the minimums on all of them and then put all the extra on the smallest loan. Then the next month, you pay all the minimums and all the extra on the next smallest, etc. You will pay off the first five loans in five months. In the next five months after that, you will pay off the next two loans. All the while, the rest of the loans are getting smaller because you are still paying the minimums on them. Wouldn't it be great to only have four loans left by the end of the year? (Okay, I'll get off my soapbox). The two 6.8% loans will be paid off in the first few months.
                  3. Save a fully funded emergency fund - Dave says 3-6 months. I really think eight months.
                  4. Invest 15% of your household income into retirement. You might want to consider stopping retirement for the next year. You will get your loans paid off even faster.
                  5. Start saving for kids' college/home down payment.
                  6. Pay off home early
                  7. Give generously and build wealth.

                  You should listen to some of his podcasts. He is so inspiring. I don't agree with 100% of what he says but these baby steps really work.

                  Good luck!
                  Iíve heard great things about that program. I have a friend whoís currently enrolled. Although when I spoke to her, she was building 6 months worth of income before tackling her debt. Iíll defintely look into purchasing his book. Thank you so much for your feedback!

                  Comment


                    #54
                    Originally posted by breathemusic View Post
                    OP, I've noticed that no one here has commented on the fact that you're setting aside 10% of your income for retirement and not recommended that you increase it.

                    Personally, I think the advice to pay off a few of those higher interest student loans right away before you build up more savings is a smart idea. Or worst case, if you're super uncomfortable with having that little in savings, split it for a month or 2 just to get a tad more savings buffer, then pay off the higher interest loans, then continue to do both in some ratio that is comfortable to you. I personally don't think that you really seem to need to hit $10k before you pay off the loans as that seems like a bit of an arbitrary number.

                    What I do think, is that after you've paid down/off some of those loans and then built up your savings to cover at least 4 months or so of expenses, that it would be worth increasing your retirement savings to something more than 10%. 15% is often the "ideal" and the sooner you can increase your contribution the longer it will have to compound and pay off.

                    If it were me, I'd pay the high interest student loans. Then Sock away a few more months of expenses, up the retirement savings a few %, and then use the remainder to pay off the student loans faster. Once they're paid off, or at least down to the point where only the lowest interest rate ones are left, then I'd be working on building up more cash on hand.
                    Hi
                    I get a 5% match through my employer so Iím still able to get that 15%. Iíll be sure to increase my portion significantly after Iíve finished paying everything off.
                    I chose 10K because this is about four months of income for me. Iím uncomfortable with only having a $1,000 cushion for such an extended period of time;however, I donít mind having this for just a few months until I can get the high interest loans out of the way. Thank you for your feedback! Iíll definitely utilize your input regarding those high interest loans and bumping up my 401K contribution.

                    Comment


                      #55
                      Back in the day when I worked for a living, I put 10% of my income into savings, I tithed 10% (gave to charity/church), if I had a retirement account at work, I would contribute to it if possible, but not out of the 10%. At one point I was actually living on less that 50% of my paycheck and had oodles of money going into a retirement account, savings bonds being purchased via my paycheck, etc. I had plenty of money - then.

                      Anyhow my whole work history I stuck with 10% saving and 10% tithing. I was doing this when I got my first job out of college at around $2/hour working at Arby's. I was completely supporting myself on part time work initially and then quickly became full time there. It doesn't seem like much money I was earning or that I could have been saving, but almost a year later when a potential job came up in another state, I had enough in savings to buy a plane ticket to fly out for an interview. Didn't get that one, but did get one from a guy out there that had heard about me. So I moved and was making $5K/year at my new job. I was able to save up enough for wedding expenses, minus the dress that was borrowed from a cousin. I was still saving that way when I had to quit working. It just became a matter of habit. When I went to nursing school, I ended up with a small loan from the school itself, that partly because of rounding up when paying a long term bills like that and then adding in extra I was able to pay it off ahead of time.

                      One of the things that when you are finally an adult and working, you need to get into good money habits, not necessarily doing an all or nothing approach, such as spending all spare cash to pay off your school loans or saving it all and just paying the minimum on your loans. Life will always be coming at you for all sorts of areas and to be prepared, you have to be thinking ahead. If I remember correctly, you are making a little over $3K/month. You have $1331 spare a month. I would suggest putting that $331 into savings and then dumping $800 extra onto those loans, that leaves you $200/month as a sort of rainy day fund like when you need a new tire, or a filling in a tooth, sort of thing. Those little things that never get really planned for, but will crop up and it seems to me the less a person is prepared the more they creep up. Maybe because the people that are never prepared talk about it and how broke they are, while those that think about the need for a rainy day fund just pay the bill and then go about their business. Anyhow just an idea. Because of some of the things that I did routinely, I never had to think about whether or not I would put money into savings or not (except for the 4 grueling years with Mr. BigBucks) this was something I did, also with the money I gave to charity. It wasn't something I thought about should I or shouldn't I, I just did. Not saying others have to, just using as an illustration.

                      This is a good time to get yourself into good habits so those things that pop up don't catch you unawares.
                      Gailete
                      http://www.MoonwishesSewingandCrafts.com

                      Comment


                        #56
                        Originally posted by MZKIMJACKSON View Post
                        Iíve heard great things about that program. I have a friend whoís currently enrolled. Although when I spoke to her, she was building 6 months worth of income before tackling her debt. Iíll defintely look into purchasing his book. Thank you so much for your feedback!
                        Psst, get it from the library for free.

                        Comment


                          #57
                          Originally posted by Gailete View Post
                          Back in the day when I worked for a living, I put 10% of my income into savings, I tithed 10% (gave to charity/church), if I had a retirement account at work, I would contribute to it if possible, but not out of the 10%. At one point I was actually living on less that 50% of my paycheck and had oodles of money going into a retirement account, savings bonds being purchased via my paycheck, etc. I had plenty of money - then.

                          Anyhow my whole work history I stuck with 10% saving and 10% tithing. I was doing this when I got my first job out of college at around $2/hour working at Arby's. I was completely supporting myself on part time work initially and then quickly became full time there. It doesn't seem like much money I was earning or that I could have been saving, but almost a year later when a potential job came up in another state, I had enough in savings to buy a plane ticket to fly out for an interview. Didn't get that one, but did get one from a guy out there that had heard about me. So I moved and was making $5K/year at my new job. I was able to save up enough for wedding expenses, minus the dress that was borrowed from a cousin. I was still saving that way when I had to quit working. It just became a matter of habit. When I went to nursing school, I ended up with a small loan from the school itself, that partly because of rounding up when paying a long term bills like that and then adding in extra I was able to pay it off ahead of time.

                          One of the things that when you are finally an adult and working, you need to get into good money habits, not necessarily doing an all or nothing approach, such as spending all spare cash to pay off your school loans or saving it all and just paying the minimum on your loans. Life will always be coming at you for all sorts of areas and to be prepared, you have to be thinking ahead. If I remember correctly, you are making a little over $3K/month. You have $1331 spare a month. I would suggest putting that $331 into savings and then dumping $800 extra onto those loans, that leaves you $200/month as a sort of rainy day fund like when you need a new tire, or a filling in a tooth, sort of thing. Those little things that never get really planned for, but will crop up and it seems to me the less a person is prepared the more they creep up. Maybe because the people that are never prepared talk about it and how broke they are, while those that think about the need for a rainy day fund just pay the bill and then go about their business. Anyhow just an idea. Because of some of the things that I did routinely, I never had to think about whether or not I would put money into savings or not (except for the 4 grueling years with Mr. BigBucks) this was something I did, also with the money I gave to charity. It wasn't something I thought about should I or shouldn't I, I just did. Not saying others have to, just using as an illustration.

                          This is a good time to get yourself into good habits so those things that pop up don't catch you unawares.
                          I just love your input, particularly about getting into the habit of routinely setting aside funds each month. Iím on a bit of a fast track now and have to contribute a lot more than ten percent of my earnings, but I look forward to the day when I can relax and stick with a basic routine. Thank you for your continuous feedback!

                          Comment


                            #58
                            Originally posted by MZKIMJACKSON View Post
                            I just love your input, particularly about getting into the habit of routinely setting aside funds each month. Iím on a bit of a fast track now and have to contribute a lot more than ten percent of my earnings, but I look forward to the day when I can relax and stick with a basic routine. Thank you for your continuous feedback!
                            Thank you

                            To those that think it is so hard to get into routines, when I first got sick almost 16 years ago, on top of everything, my brain went to mush. I found that I had to write Post-it notes to myself, such as take the wash out of the washing machine (started that one after leaving it in the washer for a week). I also had a Post-it note to pay bills and balance checking accounts on Wednesday. I ended up with some strange errors in my check book during that time until I got in the habit of balancing it weekly. But the paying bills on Wednesday has stuck especially since my SS check gets deposited on Wednesday. It was during this time I also had to quit doing the math manually and had to depend on my calculator. Like I said my brain turned to mush. That is much better now, but I have still found that almost everything you do can become a habit. Never remember where you put your purse? Designate a spot and always put it there. Habits can help to get your life under control and you really need them when it comes to money.
                            Gailete
                            http://www.MoonwishesSewingandCrafts.com

                            Comment

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