New job and shift in savings

**myrdale** · 08-09-2021, 06:28 AM

You have $400,000 in debt.

Maybe the PSLFP goes through and erases half of that. Good luck.

I think I'd open a Roth IRA.

I think I'd pay the car off this afternoon.

I think I'd start working on the mortgage.

**kork13** · 08-09-2021, 08:55 AM

For retirement funds, I'm one to just walk down the priority list, fill up whatever buckets are available to you, eventually landing at taxable investments.

1) Roth IRA
2) Roth 401k/403b/etc.
3) Traditional IRA
4) Traditional 401k/403b/etc
5) HSA (medical expenses initially, full access w/o restriction at age 65)
6) Home mortgage
7) Taxable investments
In most all of those options, I'd suggest just investing in broad-market index mutual funds just to keep things simple (and those MFs should encapsulate those blue chip stocks and more).

**Jluke** · 08-09-2021, 11:48 AM

How is your money currently invested in both robinhood and your retirement accounts? That is what is your asset allocation of stocks:bonds?

My suggestion is the same as Kork’s. I would (and do) invest taxable in a Total US fund. Look into VTI or VTSAX vs ITOT vs schwab’s version. S&P 500 is another choice as well but you can’t get more diversified than the total us funds.

see bogleheads or white coat investor if you haven’t already.

**docstudent** · 08-09-2021, 03:01 PM

I’m assuming that the PSLFP will go through if I stay employed in public service until 8/2025. I have been following and protocols prescribed by the federal government. If the government dismantles the program, there will be a grandfather clause for all existing participants. I’ve had serval colleagues that completed the process and had their loans waived after year 10. I will start paying an extra $150 on my mortgage and that will shave additional time. My mortgage is fairly affordable in comparison to other parts of LA. My car loan has an extremely low interest and I would not be saving much overall if I paid it off early.

The Robinhood account is 100% invested in stocks and I plan to contribute $3000 until July of 2022 (that’s if I can’t find another alternative to shift my cash). I would simply prefer to contribute to my 403b since it had a 30% return rate last year.

**YULACU** · 08-11-2021, 12:23 PM

Originally posted by myrdale View Post

You have $400,000 in debt.

Maybe the PSLFP goes through and erases half of that. Good luck.

I think I'd open a Roth IRA.

I think I'd pay the car off this afternoon.

I think I'd start working on the mortgage.

PSLF is a good program. I had $125k of student loans forgiven in December 2020. As long as you follow the rules, it works just fine. And, as docstudent mentioned, most experts agree that if Congress axed the program, current participants would still be eligible.

**disneysteve** · 08-11-2021, 01:29 PM

This wasn't your question, but first thing I'd do is roll over the 3 old 403b accounts into a single IRA. That gives you much more control, simpler record keeping, likely lower expenses, and a broader range of investment options.

You didn't list the interest rates on your debts so it's hard to comment on the car or mortgage loans.

Have you considered how much income. you may be forgoing in order to "earn" loan forgiveness? Public sector jobs typically pay far less than comparable private sector jobs. Could you end up better long term by leaving public service and paying the loans yourself? Especially since you want to retire in 9 years, doubling your income (or more) could make a huge difference.

You have 46K in savings. How many months of an EF does that represent? If that covers at least 6 months, then start investing the 3K. A Roth if you qualify. A taxable account if you don't. In either case, choose a broad market MF or ETF from a low cost source like Vanguard or Fidelity.

**docstudent** · 08-11-2021, 06:19 PM

I think it’s the smartest move to remain in the program until the loan is waived. The typical salary in my profession ranges from $112,000 to as high as $158,000. My current salary of $125,000 is very competitive based on my work load. On the other hand, the upper range exceeds $190,000 (but it’s more of playing the political game to get an upper management position). My home loan interest rate is 3.75% and my car loan is at 1.8%.

If I wasn’t in the program, my student loan payment would be close to 2G per month. I will definitely look into transferring my 403b accounts over to another brokerage account. My current emergency represents about 14 months of living expenses. I’m less likely to pay off my car, because of the newness of my job. In this day and age, you can be let go without notice, so I’d rather not unload 25G from my savings. If this year goes well, then I’m feel a little bit more comfortable about paying down other debt.

**scfr** · 08-12-2021, 06:37 AM

I concur with starting with the Roth, if you're eligible, in something like a Total Stock Market fund. At $3K a month, you'll max the Roth in 2 months.

After maxing the Roth, I'd want to know:
What are your target and actual asset allocations?
Do you want to have your mortgage paid off by the time you retire?

**myrdale** · 08-12-2021, 11:58 AM

Originally posted by disneysteve View Post

This wasn't your question, but first thing I'd do is roll over the 3 old 403b accounts into a single IRA. That gives you much more control, simpler record keeping, likely lower expenses, and a broader range of investment options.

I don't have any experience or knowledge about 403b's but I really like this suggestion. There is a significant amount of value in keeping things simple.

**myrdale** · 08-12-2021, 12:01 PM

Originally posted by docstudent View Post

Im less likely to pay off my car, because of the newness of my job. In this day and age, you can be let go without notice, so Id rather not unload 25G from my savings. If this year goes well, then Im feel a little bit more comfortable about paying down other debt.

This is an interesting insight into human behavior, and it's not specific to you.

**docstudent** · 08-12-2021, 03:27 PM

My current job is at-will and this is unlike like my previous employer. I was a tenured employee and the likelihood of losing my job was HIGHLY unlikely. It would take an act of treason to be released from my old position. I think it’s best to hold onto the cash and see how the job plays out in the next three months or so. Thus far, it’s been a smooth transition and I’m expecting to stay for a minimum of three years or so. I should be able to seek 132G next year, but I believe that is the current cap for the position. With solid stuff planning, I will have more than enough to pay off my condo prior to retirement. I’m considering putting the extra funds into blue chip funds per the stock market.

**scfr** · 08-14-2021, 09:14 AM

Can you give us an example of what you consider a blue chip fund?

**docstudent** · 08-14-2021, 10:22 AM

I define blue chips stocks the same as market insiders: long-standing institutions that have weathered many storms and always bounce back over time. In addition, the ability to pay out dividends is another characteristic is blue chip investments. Moreover, I’m I heavy on Microsoft, Apple and all indicators show significant growth in both stocks. But, there is some underline factors that might stifle the growth of Apple. With that said, I’m not considering putting money in stocks that have not stood the rest of time. Though, I’m willing to put small amounts of emerging and promising new stocks. I will not need to access any profits until 2035, so I have time to Eldridge out the highs and lows.

**scfr** · 08-14-2021, 01:52 PM

So it sounds like you're talking about individual blue chip stocks, not a fund.
Stick with your target asset allocation (and if you don't have one, take some time to figure it out).
For the stock portion, stick with a broad based market index. In this day and age, I don't see any reason not to if your goal is to invest in blue chip stocks. Sometimes individual "blue chip" companies implode in dramatic fashion.

New job and shift in savings