Opinions on current financial options and retirement accounts

[Mouse]

Since i mentioned multiple different topics I wasn’t really sure which section to post this in, so sorry if it belonged somewhere else.

Here is a brief background on where I am at right now and wondering what others would recommend.


I am 26 years old, started my career less than 2 years ago where i make roughly 56k at the moment (bottom step) that has really good overtime opportunities To Where I could potentially double my income if I REALLY put in the hours. (My normal shift is a 12 hour overnight shift so if I work too much overtime it will really cut into my normal life, running errands, getting things done. But I try to work at least an extra 8 or so hours a week of overtime sometimes more. Goal at the moment is to make an extra 20-30k a year.

anyways. I currently have 3 retirement accounts set up.

- A 414H pre tax( state pension) that takes about 20% off the top of my bi weekly paycheck.

-A 457B deferred comp. that currently only takes about $100 a paycheck. this account is fairly new so I only have $400.

-I also have a Roth IRA that I personally fund and choose investments. (At this time I don’t fully max it out but I try to get as close as I can). I opened this account a few years ago before I started my career


Along with all that, I try to put about 20% of what’s left into my savings account/ EF.

My question is, is it worth it to keep all 3 accounts or should I get rid of the 457B and focus on my Roth And open a taxable brokerage account. I know I will take years but my goal is to get financial freedom to where I can get passive Income form stocks/ dividends that supplement my career income before i hit that ROTH Ira retirement age. As of right now I have dividends in my ROTH that are on reinvestment status and I do play around a little bit with investing as well while I’m still learning within the Roth.


Also, I am currently in the process of attempting to purchase my first house (cheap fixer upper) and renting out a few rooms to friends to also help with mortgage. I am saving money for that as well and I do have money in mutual funds put aside that can help

With a decent down payment along with savings without breaking into my EF. ( grew up learning trades so I have knowledge or connections in almost all fields involved in real estate building / updating)


So my question is, do you think it is beneficial now to open up a taxable account to where I won’t get penalized for receiving dividend checks when they are high enough to consider an extra income other than having to pay taxes. I feel if I start that now it will start the growing process sooner than later . Obviously if i do this I will start being more serious on maxing out my Roth First.

[Mouse]

Also, I am not married at the moment and I do not have any children.

[Jluke]

A lot going on here. I’ll give it a shot.

For retirement, if the 457B is similar to a 401k, one school of thought is:

1. contribute up to the match, if any in the 457B.
2. max Roth IRA
3. Contribute more to 457B
4. Contribute to taxable
5. Pay debt (didn’t see any listed).


you may be eligible for the savers credit if you contribute enough to retirement. Look into that if it is still exists.

I am all for a balanced approach at your age so do a little of everything IF that is what you want. Eventually you’ll figure things out for yourself.

Your second post to thread about marriage/kids. Is that something you will want in the future? That can turn all of your plans upside down.

[Mouse]

Thank you for the Input, I guess it can’t hurt to keep all the accounts. I just was worried putting too much into retirement might have a negative outcome before retirement.. I’ll look
into savers credit. I have never heard of that before.

And I eventually would like to get married and have children. It’s just not a top priority for me jusy yet..

and the only debt I have at the moment is a car payment where I owe about $7,000. I pay a little more than the minimum each month.

[scfr]

Good job getting yourself off to such a solid start at an early age.
I love your idea of renting out rooms in your first house to friends to help pay your mortgage.
While you're learning about the investing (not only the types of investments and mechanics of investing, but also your personal investing style) within the Roth and 457B, you could focus on paying down the car debt with any "extra" money. By the time the car is paid off, you'll probably have a better idea of where you want to invest your money. Also, once the car debt is paid off, you may want to start saving for your next car so that you can purchase with cash when the time comes.

[LivingAlmostLarge]

Agreed with jluke. How much house are you buying and will you need cash for repairs?

[Mouse]

My initial plan was to look into multi families. But everything is pricey in this area. So if I can’t find one within my budget I’ll consider a single family as a first investment and rent out some rooms.. and I like that idea too, continue putting away money even after the car is paid off for the future car. I’m going to try to finish paying it off within a year.


And the house isn’t confirmed yet.. I have an agent trying to plan a meeting. However, the house is a 3 bed 1 bath, approx 2k Sq ft with a good sized unfinished basement (maybe for smal apartment or at least another room with bathroom .. house does need some updating so I will need money for repairs. Current asking is about 50k less than what I personally qualify for which is good. However, I feel they are still asking more than the house is worth so it would need some negotiating. I am interested in this property because it’s a decent/ cheaper price around this area. And with some updating it has potential for a nice turn around when I decide to sell. A multi family I could hold onto would be ideal for first house

[james.hendrickson]

Mouse - actually, getting a single family house as a first start isn't a bad idea. That will allow you to pilot your business model without the complexity of dealing with more units. Its gonna take some time to get to know the market, get your bank accounts set up, learn how much cash to hold back, develop resources for screening tenants, etc. Starting small will let you build up a knowledge base that you can scale up once you have your single family residence nailed down.

[snafu]

I'm so impressed with your desire to lay the foundation for your financial well being at your age. Good on you! If you are reviewing various investment streams, I suggest adding ETFs [Exchange Traded Funds] which is between Mutual Funds and choosing specific stocks, keeping in your preferred business but modifying the risk. If you choose Dividend Stock, verify the DRIP access.

Another voice supporting your plan to buy SFH and rent rooms to friends. You lose a small amount of privacy but can make a huge difference in paying down a mortgage in the early years when such a high percentage of the sum paid goes to interest, taxes and insurance. . Choose good tenants and it can be fun. It's Important to verify rules/requirements for basement development, often called MIL suite which likely have special requirements like fire escape windows.

[Mouse]

Thank you everyone for the response, late delay on my part..my 9 year old computer finally gave out on me and I find it harder to navigate forums on my phone but I’m getting the hang of it.

I am still house hunting however, I am not desperate at the moment and I’ve noticed I’ve spent more time researching investment opportunities within the stock market that will develop another form of income before I accept a mortgage payment. ( just in case I don’t find a roommate right away )
I have been listening to a lot of YouTube videos, audio books, podcasts of investing , real estate, stocks..(I do this while I’m driving around at work instead of listening to the radio)

[Thrif-t]

I'm just going to comment on the 457B account.

My DH has one and works for a county government. Those are good accounts to have, I'd keep it if yours works the same. He can take out $$ at any time for any reason; earnings too penalty free, no age requirements, just have to pay the taxes because it goes in tax deferred. Not that we ever would, it's strictly earmarked for retirement, but I like that we have a big stash if we had some catastrophic emergency. At some point if I can find the time, I need to figure out if we can start taking money out and converting into a Roth, we can I just need to do the math for our tax circumstances.

Another good thing, if you want to retire early before you can collect your social security or a pension, this account could be used to hold you over until either one of those income streams start. I'd start learning about your plan and see if it has the same rules.

[scfr]

Thank you for the update.
It's great to hear that you are taking advantage of your driving time to expand your knowledge!
"The Next Millionaire Next Door" (an update to the classic The Millionaire Next Door) was recently released, so the author Dr. Sarah Fallaw has been making the rounds on the podcasts. You may enjoy listening to one of her interviews.
Are you getting the audiobooks from the library?

[TinaNamdev]

I also have a Roth IRA that I personally fund and choose investments.

[bjl584]

Mouse - actually, getting a single family house as a first start isn't a bad idea. That will allow you to pilot your business model without the complexity of dealing with more units. Its gonna take some time to get to know the market, get your bank accounts set up, learn how much cash to hold back, develop resources for screening tenants, etc. Starting small will let you build up a knowledge base that you can scale up once you have your single family residence nailed down.

To add to this, get to know someone locally who is already investing in real estate. Pick their brain for info and contacts such as lawyers, contractors, etc. Assuming this is really something you want to pursue of course. I would caution against renting to friends however.

[Mouse]

thats a good point, I’ll try and do more research and see what each of my account FULLY offers and benefits and what not.. I initially opened them based solely off the advice of others who have been around a longer and have already benefitted form it or who regret not opening one. (The 457b)

Thank you for the update.
It's great to hear that you are taking advantage of your driving time to expand your knowledge!
"The Next Millionaire Next Door" (an update to the classic The Millionaire Next Door) was recently released, so the author Dr. Sarah Fallaw has been making the rounds on the podcasts. You may enjoy listening to one of her interviews.
Are you getting the audiobooks from the library?

I did not know the “next” millionaire next door came out! Thank you I’ll have to look into picking that up. And usually I’ve just been buying the audio book CDs online or finding a free version online(unsure if it’s the WHOLE version or not through).

The library didn’t even cross my mind *facepalm*. My apartment is walking distance from our local library. I’ll have to check it out later today.