Need some direction

[dparz30]

Hello,

I just graduated college, and I am living on my own for the first time. I am making $57,000 salary. I made a budget and figured out that I will be making about $14,000 per year over my essentials (food, apartment, cable, clothes, etc). This is a rough number, and would probably be a plus/minus of 4000. I also have about $12,000 saved up and in my bank account.

I have about $28,000 in school loans at 6.8% in interest. I can't start my 401k for one year (company policy). I do not have any car payments or credit card debt.

So my question is, what do I do with my money? I will need a new car within the next two years, the one I have is old. So should I put some money aside for that now? Should I put some of the $12,000 in a CD, money market, or IRA? Should I try to wipe out my loans as soon as possible? Should I do a combination of all three for my first year? Right now my checking is at 0.5% interest.

This is all very new to me so I need some direction. If you need more info in order to help me out please let me know.

Thank you.

[maat55]

I personally, would take 7k out of savings and pay it towards the SL. Of the 1166 you have extra each month, I would put 400 towards a car fund, 200 towards a Roth IRA and the rest I would add towards the SL.

After SL is gone, I would fully fund Roth, beef up your EF, then establish an housing down payment fund.

[dparz30]

How should I incorporate my 401k into that plan after a year? Other than the $400 saved each month for a car, should I save any other amount of the monthly income, or allocate all of the unused portion into the student loan? Is it okay to rest upon $5000 in my bank account over the next few years, or should I beef it up to say 15k before I aggressively attack the loan? Once I can enroll into the 401k, how should I allocate my money. Should I continue to add the same to the Roth and pull the additional income from what is allocated to my loans? Since I have federal loans I won't have interest on them until November or so, so I do have some time to save up a little.

Thanks

[maat55]

How should I incorporate my 401k into that plan after a year? Other than the $400 saved each month for a car, should I save any other amount of the monthly income, or allocate all of the unused portion into the student loan? Is it okay to rest upon $5000 in my bank account over the next few years, or should I beef it up to say 15k before I aggressively attack the loan? Once I can enroll into the 401k, how should I allocate my money. Should I continue to add the same to the Roth and pull the additional income from what is allocated to my loans? Since I have federal loans I won't have interest on them until November or so, so I do have some time to save up a little.

Thanks

Once you quailfy for matching funds, you should start doing so, only to the match. I would use 3 or 4 funds. An international fund, growth fund, mid-cap and small-cap.

You have to decide how stable your job is as to whether to carry more EF in the shorterm. 5k should be sufficient if you are aggressively paying down debt.

Your SL interest is high enough I would concentrate on knocking it out over a fully funded EF and Roth.

There are different mentalities on how to manage your personal finance's,finding what motivates you the most to prosper is the idea.

I adhere largely to Dave Ramsey's step by step method over working on multiple issues at once. My advice is based on this philosophy:

Small EF
Payoff debt
Build 3 to 6 month EF
invest

I like matching 401k's during this process. Paying off debt smallest to largest or highest interest rate to lowest is optional. I prefer paying cash for everything that does not go up in value.

[jIM_Ohio]

Hello,

I just graduated college, and I am living on my own for the first time. I am making $57,000 salary. I made a budget and figured out that I will be making about $14,000 per year over my essentials (food, apartment, cable, clothes, etc). This is a rough number, and would probably be a plus/minus of 4000. I also have about $12,000 saved up and in my bank account.

I have about $28,000 in school loans at 6.8% in interest. I can't start my 401k for one year (company policy). I do not have any car payments or credit card debt.

So my question is, what do I do with my money? I will need a new car within the next two years, the one I have is old. So should I put some money aside for that now? Should I put some of the $12,000 in a CD, money market, or IRA? Should I try to wipe out my loans as soon as possible? Should I do a combination of all three for my first year? Right now my checking is at 0.5% interest.

This is all very new to me so I need some direction. If you need more info in order to help me out please let me know.

Thank you.

I would save 20% of gross (off the top- pay yourself first)
I will also outline this regardless of specifics above (12k savings; your savings rate above is much higher than 20%)

This means save .2*57k=$11,400

Of that $11,400, put 15% of gross ($8550) to retirement plans. Put 5k of this into a Roth and $3550 of this into a normal brokerage account. Once the 401k kicks in, run the numbers such that you put 5k into a Roth and at least $3550 into 401k (because this is pre-tax, its possible the $3550 is higher if you save more than 15%). I can detail this in another post if you want more info.

Of the $11,400, put 5% of this into short term savings. This is about $3000 per year. This starts as the emergency fund, and once this hits 3 months expenses, I would do the following:

1) save for next car (be able to keep 3 months expenses after car is paid in cash)
2) pay down student loans

Because you identified a higher savings amount (14,000) than 20% ($11,400) put the other $3000 towards the student loans. If you have many loans, and they are all the SAME interest rate, put the extra money on the either the highest interest loan, or the lowest balance owed loan. (If one rate is higher, pay that off first, if all rates are the same, pay off the loan which can be removed the fastest).

In general loan consolidations will not help your situation, unless is lowers the INTEREST RATE (do not focus on lowering the payment, focus on the rate you are paying only). If current repayment term is 10 years, when you consolidate still plan on a 10 year repayment plan (do not extend term to lower the payment).

Here is the picture I will paint:
1) You already have 3-6 months expenses in the bank (this is 12k). Leave this be.
2) Use the 5% above 15% to long term savings, 5% to short term) to save for the next car. Pay cash for the car, and get one which lasts about 5 years.
3) Once you acquire the car, continue to save for next car... assuming you did well you would have 15k to acquire a car in about 7 years (avoid financing cars).
4) Your retirement savings needs at least 15% of gross at all times. Does not matter if its Roth, 401k or brokerage account. Save 15% and good things will happen in 15-30 years. If you get a house, still 15% to retirement, if you get a raise, still 15% of gross to retirement.
5) My student loans had 10 year repayment terms, and just rounding the payment up to the nearest $100 paid them off 1-3 years early. With $3000 extra per year, more than likely you are student loan free in about 5 years, maybe 7 with 3k extra to them per year.

Keep a mid term focus... in 7 years you have
a) no student loans
b) paid for car
c) about 100k-200k in retirement accounts

You might have money also saved for a house. If the house is important, then lighten the student loan repayment and get the house paid for with a portion of the 3k extra going towards student loans.

[jpg7n16]

I personally, would take 7k out of savings and pay it towards the SL. Of the 1166 you have extra each month, I would put 400 towards a car fund, 200 towards a Roth IRA and the rest I would add towards the SL.

After SL is gone, I would fully fund Roth, beef up your EF, then establish an housing down payment fund.

I do something along these lines, except - depending on how soon you need the new car - I might take 6 or 7k and front load your car savings, instead of paying down the student loans. Obv you want a new car sooner, but how long before you need one? You can get a really good used car for say 8-10k. 400/month would take 20-25 months (around 2 years)

So I would say, 1st determine when you need the new car. "Probably in about 10 months" Okay then 2nd how much are you wanting to spend? "9000" Okay. In the 10 months @ $400/month - you'll save up $4k, so you should front load your car savings with 9000-4000 = 5000.

If you did that, then your transportation needs would be met 1st.

The rest of the extra monthly cash, I'd split in 3rds: 1/3 to rebuild 10k in the EF. 1/3 ROTH IRA. 1/3 Extra on Student Loans.

For your priorities, I view them like so:
1) Meet necessities of life (food, shelter, utilities, necessary clothing, necessary transportation)
2) Take free money (employer match, when 401k becomes available)
3) Eliminate high interest debt (tax adjusted 7% and up)
4) Establish appropriate EF
5) Retirement Savings
6) Eliminate low interest debt (tax adjusted below 7%)
7) Wants of life


Since the SL interest is deductible (whether you itemize or not), and you're in the 25% bracket, then the tax adjusted rate is 6.8%*(1-.25) = 5.1%.

[jIM_Ohio]

For your priorities, I view them like so:
1) Meet necessities of life (food, shelter, utilities, necessary clothing, necessary transportation)
2) Take free money (employer match, when 401k becomes available)
3) Eliminate high interest debt (tax adjusted 7% and up)
4) Establish appropriate EF
5) Retirement Savings
6) Eliminate low interest debt (tax adjusted below 7%)
7) Wants of life

Most of finances is about balancing priorities.

My #1 comment would be that retirement planning is #1a or #2... meaning pay yourself first, at least 20%.

Different people will prioritize different things. If you can do all the things in the list at the same time, they may not all have equal priorities. Decide what is important to you.

If retirement spending is not #1 now, when things get tougher (like marriage, family, kids, inlaws) more than likely retirement saving is what gets cut or removed. Keep the retirement saving as a high priority until you retire- it gets SOME of your savings at all times, and more when you can afford it.

[jpg7n16]

Most of finances is about balancing priorities.

You know... I think that might make an interesting thread: what are your priorities? I'll make that after this post.

My #1 comment would be that retirement planning is #1a or #2... meaning pay yourself first, at least 20%.

Different people will prioritize different things. If you can do all the things in the list at the same time, they may not all have equal priorities. Decide what is important to you.

Yup. I don't think we'll all ever agree on all of them. I think 1 and 2 are pretty straightforward, and then people shuffle around 3-6 based on what is more important to them.

Once the high interest debt is eliminated, it gets $0. And once the EF is funded - it gets $0. So essentially, retirement savings moves up spots to 2nd/3rd on my list.

Your high on the 20% savings regardless, so you'd move it up the list. I'm high on interest rate maximization, so my list shows that.

If retirement spending is not #1 now, when things get tougher (like marriage, family, kids, inlaws) more than likely retirement saving is what gets cut or removed. Keep the retirement saving as a high priority until you retire- it gets SOME of your savings at all times, and more when you can afford it.

That scenario seems like people who make #7 a priority and call it #1. "My kid needs these dance lessons."; "I had to take my inlaws out while they were in town."; "I have to take my wife out to the fanciest restaurant in town twice a month." etc. etc.

It's so easy to get needs and wants confused in the heat of things. Dance lessons shouldn't take priority over your family's future, but sadly many families do just that sort of thing.


To someone like the OP who is trying to decide where his/her money should go, establishing priorities in advance is very important.

[jIM_Ohio]

You know... I think that might make an interesting thread: what are your priorities? I'll make that after this post.


Yup. I don't think we'll all ever agree on all of them. I think 1 and 2 are pretty straightforward, and then people shuffle around 3-6 based on what is more important to them.

Once the high interest debt is eliminated, it gets $0. And once the EF is funded - it gets $0. So essentially, retirement savings moves up spots to 2nd/3rd on my list.

Your high on the 20% savings regardless, so you'd move it up the list. I'm high on interest rate maximization, so my list shows that.

That scenario seems like people who make #7 a priority and call it #1. "My kid needs these dance lessons."; "I had to take my inlaws out while they were in town."; "I have to take my wife out to the fanciest restaurant in town twice a month." etc. etc.

It's so easy to get needs and wants confused in the heat of things. Dance lessons shouldn't take priority over your family's future, but sadly many families do just that sort of thing.


To someone like the OP who is trying to decide where his/her money should go, establishing priorities in advance is very important.

My 20% formula also is worked into debt reduction if the debt is credit cards... for example identify the 20% of gross, then send it all to debt reduction if the debt is really high- a person needs to live on 80% of gross to be truly living below their means IMO.

Paying debt is a form of saving money, its just not long term savings.

So the pay yourself first is step 1... how you pay yourself (debt reduction or investments) is less a factor than the pay yourself percentage (if I save 30% and you save 15%, if if you have an investment which generates 50%+ annual returns, it would take a while for you to accumulate more money than me, and its probable you are taking more risk, or more effort, to do that than I am with a higher savings percentage).

[dparz30]

I came back and got all these great threads. Thanks guys.

I am single, pay only $610 for rent each month, probably around $800 total with cable and electricity. Other than that my main expense is food. I'm a smart and frugal shopper, although I'll occasionally purchase something nice, like I plan on getting a nice cookware set. I only started my job last week, and I haven't moved into my apartment yet (doing that tomorrow), so I don't know exactly how my finances will be until I can see what I spend in July. I could possibly have over $17,000 extra income depending on how I handle my money. I'll also probably get some bonuses throughout the year which will help.

I would agree to start a Roth IRA. I plan on doing that within a month, but I have absolutely no idea as to where I should go, and how it exactly works. I'll probably open with $5000, and max out for the year. (Is that how it works, or can I start with $5000 and add more to it each month within the first year). So some advise on this would be helpful.


The loans are federal student loans, all are at 6.8%. They have that 10 year plan, but I hate paying so much extra in interest. It seems like I am losing money by not paying it off as fast as possible. Would it be wise to say dump $10,000 into it in five months right before interest starts, and then start a plan to pay it off in 3 or 5 years? I'm still not sure on this one.


My car has just under 100,000 miles, but it is known to start having a lot of major mechanical problems at around this mile marker. Once it needs major mechanical work it wouldn't be worth it to put money into it. I was looking into getting a certified preowned vehicle in the 15-20k range, but if I have to get a lesser desirable car for a few years that would be fine too. I'm not going to worry about it until I need one, but would you say $400 per month is a reasonable amount.

Can you give me more information about normal brokerage account, and can you add detail to that paragraph you mentioned.


I got hired as a product development engineer, and there are and will be major projects for the plant for years to come, so I feel confident that my position is secure, and I am confident in my abilities to perform the job. The plant manager is generous with raises from what I hear, so I do believe I'll be better off as the years go by.


I think that is all on my mind for now. I really do appreciate everyone's responses.

[dparz30]

I forgot to mention that my companies 401k plan is one of the worst I've seen. They match the first $1000, and then 10% of the dollar after that. So if I were to put $5000 in, a total of about $6400 is put into the account.

I know I won't be struggling to get by each month. I grew up with parents that were always in debt, so I lived with a concern of not forcing my parents to spend money on me. That is partly why I chose such a hard field; I didn't want to live with the same lifestyle that they gave me while growing up. I don't mean buying lavish things , I mean living comfortably without worrying about money all the time.

[jIM_Ohio]

I came back and got all these great threads. Thanks guys.

I am single, pay only $610 for rent each month, probably around $800 total with cable and electricity. Other than that my main expense is food. I'm a smart and frugal shopper, although I'll occasionally purchase something nice, like I plan on getting a nice cookware set. I only started my job last week, and I haven't moved into my apartment yet (doing that tomorrow), so I don't know exactly how my finances will be until I can see what I spend in July. I could possibly have over $17,000 extra income depending on how I handle my money. I'll also probably get some bonuses throughout the year which will help.

I would agree to start a Roth IRA. I plan on doing that within a month, but I have absolutely no idea as to where I should go, and how it exactly works. I'll probably open with $5000, and max out for the year. (Is that how it works, or can I start with $5000 and add more to it each month within the first year). So some advise on this would be helpful.


The loans are federal student loans, all are at 6.8%. They have that 10 year plan, but I hate paying so much extra in interest. It seems like I am losing money by not paying it off as fast as possible. Would it be wise to say dump $10,000 into it in five months right before interest starts, and then start a plan to pay it off in 3 or 5 years? I'm still not sure on this one.


My car has just under 100,000 miles, but it is known to start having a lot of major mechanical problems at around this mile marker. Once it needs major mechanical work it wouldn't be worth it to put money into it. I was looking into getting a certified preowned vehicle in the 15-20k range, but if I have to get a lesser desirable car for a few years that would be fine too. I'm not going to worry about it until I need one, but would you say $400 per month is a reasonable amount.

Can you give me more information about normal brokerage account, and can you add detail to that paragraph you mentioned.


I got hired as a product development engineer, and there are and will be major projects for the plant for years to come, so I feel confident that my position is secure, and I am confident in my abilities to perform the job. The plant manager is generous with raises from what I hear, so I do believe I'll be better off as the years go by.


I think that is all on my mind for now. I really do appreciate everyone's responses.

I have lots of answers for you, you will like some of them...

I would agree to start a Roth IRA. I plan on doing that within a month, but I have absolutely no idea as to where I should go, and how it exactly works. I'll probably open with $5000, and max out for the year. (Is that how it works, or can I start with $5000 and add more to it each month within the first year). So some advise on this would be helpful.

What I do is send in $500/mo from Jan-October, then in November and December I have $1000 extra to spend or invest in a taxable account.

Others on this board send in all $5000 on Jan 1 to hit the yearly limit. same year (so 2010 contribution is sent in Jan of 2010)

Others on this board wait until Jan of the following year to make contribution. They might need to see if their income qualified them, or they might be self employed and have other tax motives, so in Jan of 2011 they make their 2010 contribution of $5000.

If you do the first item (send in $500/mo), choose a target date fund, and a place like T Rowe Price will have almost no fees. If you use T Rowe Price, wait until Sept to open account, as I believe they assess account fees in August on balances under $5000 (check with them on details).

Fidelity and Vanguard are also good options if you do not want T Rowe Price.

Roth IRA is $5000 max per year until you hit age 50 (then its $6000 because of a $1000 catch up contribution). Check me on the age for the catch up, but you are a long way away from this.

The loans are federal student loans, all are at 6.8%. They have that 10 year plan, but I hate paying so much extra in interest. It seems like I am losing money by not paying it off as fast as possible. Would it be wise to say dump $10,000 into it in five months right before interest starts, and then start a plan to pay it off in 3 or 5 years? I'm still not sure on this one.

The best decisions are not one or the other. Do both (invest and pay off debt) and realize you have some constraints. You have $5000 to put into a Roth, if you skip the $5000 this year, you cannot put in more next year, so the minimum suggestion is $5000 to the Roth.

While 6.8% on the debt is "high", its high relative to a mortgage, but my debt was higher (15 years ago). I had loans with 12% interest rates. 6.8% is not bad. Really. You can probably get a lower rate if you consolidate (just keep the term to 10 year payoff if you do this).

Have you plugged the numbers into a calculator to see if $200/mo pays off in 8 years and $300/mo pays off in 6 years? Run the numbers, don't guess.

My car has just under 100,000 miles, but it is known to start having a lot of major mechanical problems at around this mile marker. Once it needs major mechanical work it wouldn't be worth it to put money into it. I was looking into getting a certified preowned vehicle in the 15-20k range, but if I have to get a lesser desirable car for a few years that would be fine too. I'm not going to worry about it until I need one, but would you say $400 per month is a reasonable amount.

Don't solve problems which don't exist yet. Cars are short term problems and long term liabilities. Here is what I mean...

If you have to pay $1000 to get car fixed, and the fix lasts 6 months, is it better to have $1000 come out of checking account once in 6 months ($170/mo) or have a $400/mo car payment every month for 3-4 years?

Keep the car you have, and if you have a 5000 mile road trip, rent something (it will be cheaper). Focus on keeping costs down until you get on your feet. Set aside money now for that certified pre-owned car so you have 10k or 15k for a used accord or used camry when the time is right. If your car account only has $4000 in it when current car dies, only spend $4000 on its replacement.


The math from above:

$57,000 salary

this math is for a full year (2011)... and taxes filed in 2012... what your 2010 tax return looks like depends a lot on Jan-June when you were not working full time.

$57,000 salary
std deduction (single) $5700
1 exemption (for self) $3650

57000-$5700-$3650=$47,650
$47650 represents a good guess for taxable income

Reference Room

$47650 pays tax in 25% bracket (see link above for table)
the exact math is
$4681.25+[25%*($47650-$34,000)]

Tax bill is $8094.

If you followed all that, adding to my 15%-5% suggestion above:

Pay $8094 in taxes
Send $5000 to Roth IRA
Put $3550 into Brokerage account (choose brokerage at same place you open Roth for simplicity).

the sum total of these numbers ($8094+5000+$3550=$16644) should be constant for this income of 57k gross

once 401k eligible that $3550 is pre tax and numbers above change some
I am going to suggest 8% to 401k as a GUESS... the goal is to run the numbers and keep the $16644 taxes+investments constant once 401k eligible... $3550 (the taxable brokerage contribution) is 6% of gross pay. I am using 8% as a guess to start with.

$57000k gross
8% 401k contribution is $4560
std deduction and exemption do not change ($5700 and $3650)
$57,000-$4560-$5700-$3650=$43090 id taxable income

use same tax table... still in 25% bracket.

$4681.25+[25%*($43,090-$34,000)]=$6954

This tax bill is lower by about $1000 than the one above

The constant sum above ($6954+5000+$4560=$16514) is really close to this ($8094+5000+$3550=$16644).

That is the advantage of investing pre tax (when in taxable account you had only $3550, when pre-tax you "gained" more money ($4560) on balance sheet and less went to government (for now). You will pay taxes on the 401k money later.

[jpg7n16]

I would agree to start a Roth IRA. I plan on doing that within a month, but I have absolutely no idea as to where I should go, and how it exactly works. I'll probably open with $5000, and max out for the year. (Is that how it works, or can I start with $5000 and add more to it each month within the first year). So some advise on this would be helpful.

From the IRS website: Publication 590 (2009), Individual Retirement Arrangements (IRAs)

When Can You Make Contributions?
You can make contributions to a Roth IRA for a year at any time during the year or by the due date of your return for that year (not including extensions).

You can make contributions for 2009 by the due date (not including extensions) for filing your 2009 tax return. This means that most people can make contributions for 2009 by April 15, 2010.

If you open with $5k, then you have used up your $5k for the year 2010. Next year, for 2011, you would have a new 5k, and could do that however - like Jim says above.

The loans are federal student loans, all are at 6.8%. They have that 10 year plan, but I hate paying so much extra in interest. It seems like I am losing money by not paying it off as fast as possible. Would it be wise to say dump $10,000 into it in five months right before interest starts, and then start a plan to pay it off in 3 or 5 years? I'm still not sure on this one.

Well yes - they charge you 6.8% interest, but after tax benefits, it's only 5.1%

So your $28k charges you around $1,904 for the year. When you deduct that on your taxes, you will get an extra $476 back. So net, you will have paid $1,428 on $28k for a tax adjusted rate of 5.1%.

The question you need to ask is, are there other opportunities available that would earn me more than 5.1%? For me, I believe that stocks will earn between 7-11% over the long term. So which would be better, pay down a 5.1% cost or increase a 7-11% income? For me, I choose the latter 1st. (As shown by my priorities above)

Which means if I have an extra $1, I'll choose to invest it before I choose to pay extra on a loan at under 7% (what I think the market will return).

I'm not going to worry about it until I need one, but would you say $400 per month is a reasonable amount.

We might be on different thinking here. We're suggesting $400/month savings towards a car. We are not suggesting a $400/month car payment. Just to be clear.

Can you give me more information about normal brokerage account, and can you add detail to that paragraph you mentioned.

What Jim's pretty much saying is once you've maxed out your tax advantaged retirement accounts (Roth, 401k, etc) your only option is a normal brokerage account (allows stocks, bonds, mutual funds). Those accounts are available anywhere you can buy stocks (E-trade, Fidelity, Vanguard, Charles Schwab, Merryl Lynch, etc etc). I use Fidelity.

You'll notice his advice while you are not 401k elligible is to 1st max out the tax advantaged accounts (5k to the Roth) and then the only other place to put money in mutual funds is in a brokerage account (he suggests 3500ish extra). But once you become 401k elligible, you have another tax advantaged account available. SO you could do up to 5k in the Roth, plus 16,500 to the 401k. Now you don't need a normal brokerage account, unless you want to do over 21,500 for the year.

I forgot to mention that my companies 401k plan is one of the worst I've seen. They match the first $1000, and then 10% of the dollar after that. So if I were to put $5000 in, a total of about $6400 is put into the account.

You may think it's bad somehow, but at least your employer is matching. If there's no limit on the 10%, then every dollar earns you an instant 10% - but the main value in a 401k isn't the match, it's the growth of the stocks. Still, if you maxed out your 401k - 16,500 - you would actually do better than someone with a 3% match. (3% * $57,000 = $1710 ; $1000 + .10($16,500-1000) = $2,550) So maybe it's not as bad as you think...

[jIM_Ohio]

I forgot to mention that my companies 401k plan is one of the worst I've seen. They match the first $1000, and then 10% of the dollar after that. So if I were to put $5000 in, a total of about $6400 is put into the account.

I know I won't be struggling to get by each month. I grew up with parents that were always in debt, so I lived with a concern of not forcing my parents to spend money on me. That is partly why I chose such a hard field; I didn't want to live with the same lifestyle that they gave me while growing up. I don't mean buying lavish things , I mean living comfortably without worrying about money all the time.

LOL you get free money (a match) and complain its bad.

Tell you what, if its so bad, give me 10% of the match, and I will give you a couple free gas fill ups every year

that match is not that bad.
the match is an incentive to use the 401k so the higher paid executives can use it too.


A typical match is 50% of first 6%

so if I make 100k and put in 6% ($6000) my company matches $3000
my wife's is slightly better- she gets 2/3 of first 6%, so she puts in 6% ($6000) and gets $4000 match.

For you, this would be $57,000... 6% is $3420 you get $1000 plus 10% of $2420 which is $242
Put in $3420 and get $1242 is a good match (that is about a 33% match).

What's better is your match is NOT capped. So I put in 6% I get 3%... I put in 11% I still only get 3%.


If you upped match from 6% to 12% your math would be
12% of 57k=$6840
company matches $1000 then adds $584 to that

$1584/$6840 is about 25%

Then up to 18%
$10,260 is contributed by you
employer kicks in $1000+$926=$1926


If you ever contribute max ($16,500) your match would be
$1000+$1550=$2550

you max contribution (with match) would be $19000

my max contribution (50% of first 6% matched) is $16500+3% of contribution... I would need to make 100k to reach same max you have available to you (I don't make 100k YET).



As a young worker, I am sure you look around and wonder if the grass is greener somewhere else. My comment would be play the hand you are dealt (financial and otherwise) and not focus as much on what others have (benefits or material things). Your life is on a different path.

[dparz30]

I am only comparing the plan to others that I have seen from Halliburton, Schlumberger, and Dow. They are much bigger companies in much bigger industries than plastics. I thought a 100% match up to 5 pr 6 percent was normal. My bad on that one.

What is the difference between the three roth ira choices you mentioned. What kind of books or reading material should I look at to learn more about how they work and how investing works in general.

Thanks