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newly debt free and need advice

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  • newly debt free and need advice

    After struggling all through my 20s and early 30s, I am finally debt free and able to save. It feels awesome, but I'm a bit overwhelmed.

    I have $1,000 in a savings account that I plan on making monthly contributions of $100 to. I also contribute 6% (my company's match) to my 401K.

    My questions are: 1) once I hit $2K in my savings, should I transfer it to a Roth IRA? 2) should I also invest in a low-cost index fund, buying shares on a regular basis?

    By way of background, I'm 34 and make $50K per year. Any advice would be much appreciated.

    Thanks

  • #2
    You need to build your emergency fund to 3 to 6 months expenses. Then, you could open a Roth account with T.Rowe Price to invest monthly with a minimum of 50 dollars per account.

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    • #3
      Thanks for the reply. Guess I'll keep my head down and keep adding to the savings until the emergency fund amount is reached.

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      • #4
        I agree with maat55. First build the EF while continuing to get the full company match on the 401k. Once the EF is funded, opening the Roth is a good idea. Also, though, you need to be saving some money outside of retirement accounts for other needs like car/home repairs, next car purchase, vacations, etc. You don't want to lock up everything in retirement accounts.
        Steve

        * Despite the high cost of living, it remains very popular.
        * Why should I pay for my daughter's education when she already knows everything?
        * There are no shortcuts to anywhere worth going.

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        • #5
          Well, it looks like that you are on the right track. Your choice of investments are actually rather good, and I would definitely encourage you to pursue the index funds.

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          • #6
            Originally posted by knockknoc View Post
            After struggling all through my 20s and early 30s, I am finally debt free and able to save. It feels awesome, but I'm a bit overwhelmed.

            I have $1,000 in a savings account that I plan on making monthly contributions of $100 to. I also contribute 6% (my company's match) to my 401K.

            My questions are: 1) once I hit $2K in my savings, should I transfer it to a Roth IRA? 2) should I also invest in a low-cost index fund, buying shares on a regular basis?

            By way of background, I'm 34 and make $50K per year. Any advice would be much appreciated.

            Thanks
            I think opening a Roth account would be a good idea. Since it is the simplest and most effective way of having a sheltered account, you can be assure that you can save a higher amount of money in the future

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