Opinions on pensions for retirement

[jIM_Ohio]

The 401K is only matched for teachers who are uncertified because they don't qualify for the teacher's pension. I chose to have $50 per month directly deducted into the 401K-- half roth, half traditional. I also chose the conservative investing route. I'm just wondering if I should be worrying about being more agressive. Here are some numbers:

My salary: 56K per year
Hubby (new salary): 46K per year

We have about 86K in debt. 6K cc's/personal loans, 11,500 car loan, the rest are student loans (some fed, some private)

On the conservative end of things, we'll have about $1000 above what we usually spend (and that includes minimum payments on debt AND $200 monthly to savings) to spend on hammering debt or putting some into savings/retirement.

Everything's in more detail on my blog.

Thanks, y'all are pretty awesome.

This is good info, still somewhat disorganized. Listing payments and interest rates (and payoff dates) would get you more specific advice.

If you are sending $200 to savings but still carrying the debt, I would rethink this. $2400 sinks the cc debt in 3 years alone. If I re-read that post correctly, this means you have $1200 to send to debt or invest or add to savings. $1200 sinks cc edbt in 5 months. Done deal, make that happen. I would then add $200/month to savings, invest around $500/month to $1000/month depending on the interest rates of the other debt.

Having car debt and student loan debt is not bad.

What are the terms of the student loans? What are terms of car loans. If rates are above 6%, I would send an extra $200/month or so to the debt while also investing. If above 8%, I would not invest more than $200 month while continuing to attack the debt.

If you have a Roth 401k available and can put in more than 5k per year, you have a HUGE savings advantage over many of us- I do not have a Roth 401k available to me, yearly contribution limit is $15,500.

[Joan.of.the.Arch]

Be careful if you are being offered annuities in a retirement plan. This is very common in 403-b's for teachers. Google whatever companies may be offering any annuities. Google the name of the annuity. There are some awful things said about annuities that get offered to teachers specifically.

Here is an article that's almost three years old now, but gives a sample of some of the problems.

Costly Lesson - Forbes.com

I'd liked to mention, too, that you probably do need a retirement plan beyond just your pension, even if your pension is impeccably secure. The biggest reason I can see for that is that your pension probably will not include health benefits, but only the option to continue buying the same insurance as the working teachers. But you will probably have to pay 100% of the costs.

Don't forget to find out whether you live in a state whose teachers cannot collect Social Security even if they qualify for it based on non-teaching earnings.

[disneysteve]

I chose to have $50 per month directly deducted into the 401K-- half roth, half traditional.

You can't have a Roth/Traditional within a 401(k)

I'm assuming she means a Roth 401k and a traditional 401k.

[disneysteve]

Target:

1. c/c's first
2. student loan second (longest term)
3. auto loan last

This might be right, but I've listened to Suze Orman enough to hear her rant against private student loans numerous times. I'm not that familiar with them, but apparently they can be pretty bad to have. So I'd want to know more about the specifics of each debt - interest rate and terms - before totally agreeing with the order you suggest, Scanner. Since the CC debt is minimal (less than 6K out of 86K), those private student loans might need to be higher on the list.

[aevans1206]

My plan stands but I think there is some confusion here. You can't have a Roth/Traditional within a 401(k)

Our network went with Oppenheimer, which was offering the new roth 401K and a traditional 401K. You could opt to split, which I did.

[aevans1206]

Thanks for all of the discussion and advice, all. I really appreciate it. Here's a link to my blog which details interest rates and balances of various crappy debt.

So I went to the library today...: Aevans1206's Personal Finance Blog

I know it's a lot of money to hammer at the debt if I just go full on paying off the debt. It just makes me worry that' I'm neglecting other areas too. Sigh. There's always teaching summer school to help pound away that debt. Oh the horror!

[disneysteve]

I would pay off:

Orchard Bank2 of $585 just to get it out of the way and shorten the list.

Then, attack HFC. That 30% rate is insane. If I understood you correctly, you have an extra $1,000/month to apply to debt, so in 3 months, that debt would be gone. I suppose given that short timetable, I'd pay off HFC firsts and then the little Orchard Bank2. Either way, they'd both be gone in 4 months.

Then the Prosper loan at 19%. That will take another 2 months.

So in just 6 months your list will have 3 fewer items and $5,129.84 less debt.

After that, focus on the smaller of the two ACS loans at 15%. I focus on the smaller amount so that you can then snowball your payments when that one is gone.

[aida2003]

Just my 2 cents.

Are those debts all yours alone or combined (with your DH)?

I may sound harsh, but with your both combined income and not investing ($50/mo. is nothing, IMO) it sounds that you can snowball those debts very easily within a year or two unless you have small children and/or live in a very expensive area where your current bills are very high. It's all about choices in life .

DS gave you very good pointers.

[aevans1206]

I do have both a small child and live in an expensive area. I think I will do summer school this year and throw that money at this debt crap. It really takes me being very strong in conviction, though, for any movement to really happen here. We have plenty, I just want it paid NOW! I'd work 24 hours a day if it would help me get there faster (well, maybe I'm exaggerating a little). I've got the $1500 stimulus check to look forward to helping as well as my yearly bonus which will come in June ($1500-$2000). And summer school could possibly yield $6000 depending upon where I choose to teach it. I'll work on my resume tomorrow and will call the office of specialized services to get that ball rolling. Sigh. And I so looked forward to a summer off. Maybe my mom will be willing to watch little man tate and I can save on childcare too!

I admire all of you and look up to you. You're my current idols!