I feel like an Egyptian...

[jsm]

...because I have pyramiding debt!

Recently, though, my ship came in and I am now in a position to start saving money and paying down about $30,000 in revolving debt and installment loans (at an average rate of about 9%). My savings account is almost empty and I am looking for advice on how to best resolve my financial dilemma.

After a couple of "getting going" months, I will have positive net income with the option to invest in a retirement account. The account provides a match on the first few percent of the amount invested, but I want to keep this money out so I can have a better standard of living at a younger age. I can also put the extra money toward debt and pay it off quicker, but then it will take longer to save enough for a 6-month emergency fund.

What would you do? Time is short, and keeping the money I'd otherwise put in the retirement fund for myself seems attractive only because I'd be able to do more "stuff." Also, should I try to pay down the debt as fast as possible at the expense of taking longer to establish an emergency fund?
Thanks for your help!

[CoolHandLuke]

That's tough, I feel for you. Dave's rule of thumb is to establish an emergency fund first and foremost, however I believe your very near the "emergency" threshold, if your at a point where you are going to incur almost $300.00 intrest/month I would pay that debt down ( smallest amounts first) really concentrate on one debt at a time smallest to largest, don't worry about what debt has what intrest rate right now, elimination is elimination! Good luck, best wishes.

[Kircheis]

Can you post what your monthly income is compared to your monthly expenses? In fact, do you have list of your monthly expenses? Also, how much is your company matching for your retirement (up to what percentage of your salary)? Is it a 100% match?

[kv968]

...because I have pyramiding debt!

Recently, though, my ship came in and I am now in a position to start saving money and paying down about $30,000 in revolving debt and installment loans (at an average rate of about 9%). My savings account is almost empty and I am looking for advice on how to best resolve my financial dilemma.

After a couple of "getting going" months, I will have positive net income with the option to invest in a retirement account. The account provides a match on the first few percent of the amount invested, but I want to keep this money out so I can have a better standard of living at a younger age. I can also put the extra money toward debt and pay it off quicker, but then it will take longer to save enough for a 6-month emergency fund.

What would you do? Time is short, and keeping the money I'd otherwise put in the retirement fund for myself seems attractive only because I'd be able to do more "stuff." Also, should I try to pay down the debt as fast as possible at the expense of taking longer to establish an emergency fund?
Thanks for your help!

It's hard to give decent advice without the numbers (i.e. income, bill breakdown, age, matching percentage, savings (if any), etc...) so if you could provide some of those you'll get a much more detailed answer.

My "off-the-cuff" answer would be to put the "extra" income into the retirement fund up to the max the company matches. But again, that could depend on the other numbers.

My other "off-the-cuff" answer that stands no matter what the other numbers say is unfortunately keeping the money for yourself so you can do more "stuff" is kinda off the table at this point. I know "time is short" but it seems like you might have done enough "stuff" already and now it's time to pay off some of that before you do more.

[bjl584]

...because I have pyramiding debt!

Recently, though, my ship came in and I am now in a position to start saving money and paying down about $30,000 in revolving debt and installment loans (at an average rate of about 9%). My savings account is almost empty and I am looking for advice on how to best resolve my financial dilemma.

After a couple of "getting going" months, I will have positive net income with the option to invest in a retirement account. The account provides a match on the first few percent of the amount invested, but I want to keep this money out so I can have a better standard of living at a younger age. I can also put the extra money toward debt and pay it off quicker, but then it will take longer to save enough for a 6-month emergency fund.

What would you do? Time is short, and keeping the money I'd otherwise put in the retirement fund for myself seems attractive only because I'd be able to do more "stuff." Also, should I try to pay down the debt as fast as possible at the expense of taking longer to establish an emergency fund?
Thanks for your help!

I too would like to see some numbers. But, without knowing anything else I would contribute to the retirement account up to the match. You can not get much better of a return than a free company match.

[jsm]

Edited; see below.

[jsm]

Please see the attached text file for the numbers. Thanks for your help.

[jpg7n16]

After a couple of "getting going" months, I will have positive net income with the option to invest in a retirement account. The account provides a match on the first few percent of the amount invested, but I want to keep this money out so I can have a better standard of living at a younger age. I can also put the extra money toward debt and pay it off quicker, but then it will take longer to save enough for a 6-month emergency fund.

Unless you know of another way to double your money instantly guaranteed, you are foolish to pass up on the employer match option.

Part of my job as a financial advisor is to get people to listen to their future selves. What do you think you would say in life if you get to age 65, hoping to retire, and find that your money will only last maybe 8-10 years?

Serious questions:
-What do you plan on doing for income when you retire?
-Don't you think after 30+ years of work, you'll want to take a break?

The idea that by saving for retirement, your life will suck today is a warped sense of reality. You can have both a great life now and later with a little planning.


Pretty good article to get you thinking about why you should start early:
Joy of saving early and often | Bankrate.com

What would you do? Time is short, and keeping the money I'd otherwise put in the retirement fund for myself seems attractive only because I'd be able to do more "stuff." Also, should I try to pay down the debt as fast as possible at the expense of taking longer to establish an emergency fund?
Thanks for your help!

I would do the following in order:
-Take any free money I can (employer match, no more, no less)
-Pay off any debts 8%+ starting with the highest debt
-Build up to 3 months EF
-Up retirement savings to 10-15%
-Pay off other debts
-*possible step* Build up to 6 months EF
-Up retirement savings to 15-20%