I just want to put more money away...

**kork13** · 01-08-2011, 09:34 PM

Welcome!
Easy answer first: Yes--stay the course with your 401k. If you have additional cash you want to save for retirement (beyond the 6%), I would first recommend a Roth IRA up to the max, and only then increasing your 401k contributions.

Next: Forget everything about 401k loans! They're terrible, because you're paying a pre-tax debt with post-tax dollars! Basically, when you withdraw that money down the road, you will pay taxes on that money a SECOND TIME! Pay off your current 401k loan, and never ever again even think about them as a possibility. Terrible idea... [/soapbox]

If you want to decrease your expenses, your first target should be eating out, clothing (most people have totally sufficient wardrobes, but simply buy new clothes to have what's "in style"), and whatever else is contained within that "Miscellaneous spending"--do you know what those "misc" things are and how much you spend on them? If not, it might be eye-opening to see where your money slips away drop by drop.

Also, you talk about money "left over"... What is that extra cash used for? Savings? I don't see 'Savings' delineated anywhere in your post. I suspect that you may be looking at savings a little backwards. I'd recommend deciding on a set amount each paycheck that goes to savings (start with, say, 5%-10% of your income), and set it up as an automatic deduction from your paycheck. Then, live off of what's left. If you save upfront, you don't need to worry so much about "what's left" as long as you stay within what you can afford to spend.

As for your adviser friend, be wary. Not to impugn on his integrity or your friendship, but many financial advisers anymore have become roughly equivalent to investment salesmen, frequently peddling high-fee products that don't truly meet a person's needs/goals. So while he may have some sound advice, be careful of any particular stocks, funds, or other investments he may recommend to you.

With that disclaimer in place, he has a point. It doesn't take alot of money to invest outside of retirement accounts--many mutual fund companies (Vanguard, Charles Schwab, T. Rowe Price, Fidelity, and others) have low minimum initial investment amounts, or waive those minimums if you sign up for automatic investments of just $50/mo or more. Plus, having non-retirement investments can often be a smart move, because it creates another means for you to save/invest without the restrictions/penalties involved with retirement accounts. It's simple to start, and a good place to at least dip your toes in would be (for example) with a basic S&P 500 index fund while you educate yourself on what else is out there.

**skydivingchic** · 01-08-2011, 09:36 PM

Well the first problem I see is your rent. For your highest months ($2300), that is 33% of your take home pay, which is the above the general recommendation of less than 30%. For your average and lower months it is well above the recommendations. It will be difficult at best to get any savings traction as long as you are spending that much of your income on housing. Can you get a roommate or move to a cheaper place? You are also spending a lot on eating out each month - over 10% of your take home pay.

I would not lower your 401k contributions - in fact you need to up them. You should be saving 15%+ of your money toward retirement (not counting anything your employer may contribute). And retirement contributions should be for retirement ONLY (i.e. no more 401k loans). The general recommendation for retirement contributions is to contribute to your employer's plan up to the company match (6% in your case), then to a Roth IRA until it is maxxed, then back to the employer's plan if you still have funds.

If one of your goals is to purchase a house you need to sit down and put together a budget that reflects that priority. Are you actually able to save the $230/month extra or is it disappearing? How long have you been using Mint? Do you have a good understanding of where your money goes? That is the first step. Then you'll need to figure out where you can cut in order to free up money for saving. From what you've posted so far I think rent and discretionary spending are two areas you should be scrutinizing.

There really aren't any great secrets to saving more money. It's as simple as spending less than you earn. It's not always easy or fun, but it is worth it in the end.

**jpg7n16** · 01-08-2011, 11:20 PM

Originally posted by wrk4lvg View Post

Hey guys, new member. I've been spending the better part of the past year trying to get my finances in order, but still have a way to go.

What I'm ultimately trying to do is figure out how to save more money. I've been with my current employer for just over 3 years and they match your 401(k) contribution 100% up to 6%. So, thankfully I've been putting in 6% since day one. I thought about going up to 7% just as an easy way to stuff more away, but there is no match past 6, so didn't think that was my BEST option. But maybe you'll tell me otherwise.

Nope. Keep at 6% until rest of finances are in better shape (no debt, other goals in place)

Here's my #s.

32 y/o, single, no kids
Take home pay after taxes, ins. my 6% contribution, and one 401(k) loan $1200 bal. - $2100/mo +/- $200

Fixed spending:
Rent/utilities - $770/mo
Cell phone - $55/mo
Insurance (rent/car) - $70/mo
Gas - $150/mo

Variable spending:
Eating out - $210/mo
Groceries - $140/mo
Visa - $225 bal
Dept. Store - $45 bal

Then there is misc spending (school books, clothes, coffee (make at home), travel.

Statements like this usually read like this to me:

"Umm those are all the expenses I can think of at first, but I don't really track all my spending, so the rest is just miscellaneous spending. It changes every month. I know it's going somewhere... but I don't know where exactly."

I'd recommend a good budgeting program (I use You Need a Budget) and start seeing where EVERY dollar goes. You say you use Mint, do you plan for future expenses? I'd group coffee with groceries.

What I mean is, you know that you'll need clothes eventually. So do you budget aside say... $30/month for clothing? Even if you didn't buy any clothes that month? And you're going to have to pay for books next semester too right? How much will they be then? You can budget a monthly amount into an envelope or something to prepare for that expense. (YNAB let's me keep a running total for expenses like that; I don't know if Mint does or not)

Since your income is 2100 +/- 200, that leaves $235-635 unaccounted for. That's like 12-28% of your income.

According to Mint my left over is $230/mo, which to me, is pathetic to say the least.

No it's not. That's at least 10% of your income leftover. That's not pathetic at all.

When you consider that you've got $225 and $45 also going to debt elimination, you've got a good chunk of your income left over. (a little over 20%)

I think you'd need to start looking into ways to move up in your company. What would you need to learn to be able to double your income? -you're around $30-35k now, and there are many jobs in the US that pay $60+k. Are there any at your company? What would you have to change to be able to do those jobs? What skills would you have to develop? What classes would you have to take? What would it take?

My Dept. Store card will be paid off in 2 weeks. My Visa will be paid off in February.

Congrats! You'd be surprised how much money you'll have left over once the debt is gone. It's pretty great

I was hoping to be home buying ready by the Q1 of next year. My debt-to-income % should be between 1-3%. Quite honestly, I don't see me being able to come up with 20% down unless it came out of my 401(k) and I don't see that being the wise decision in this economy. Sure, I would pay myself back at 4% inst, but I'm not sure that still makes it a wise choice. Beyond that, my fico scores will be in nice shape.

Then I don't see you being ready to buy a home.

Do you have a 3-6 month EF in place? (you're single, no kids, so likely only need 3 months)

I have a co-worker who is always talking stocks to me (He's a cert. financial adviser), but simply put, he has more cash to invest and thus makes more money on that investing.

Advisors who place too much emphasis on single stocks to their clients are a red flag to me. It's always the next hottest thing, causing you to buy and sell, and generating more and more comissions.

People who want to invest in single company stocks need to have a very good knowledge of the company and the industry. You are buying ownership of companies. And if it's really that good of a company, why trade in and out? (Unless you want to be a daytrader, which is extremely risky and a whole skillset of its own)

Bottom line, do I just keep going with my 401(k) and just keep tweaking it x2 year to make sure I'm getting optimum returns. (up 19.4% last year) or is there something else I can do? (Aside from making more money from a salary standpoint)

Appreciate you guys looking over this long thread and taking the time to reply with advise, if possible, in advance.

Studies have shown that re-allocating 1 time each year works just as well as several times per year.

Just keep pluggin away, doing the best you can with what you've got.

"Learn to work harder on yourself than you do on your job. If you work hard on your job you can make a living; if you work hard on yourself you can make a fortune!" -Jim Rohn

Always glad to help

**wrk4lvg** · 01-09-2011, 05:32 AM

Originally posted by kork13 View Post

Welcome!
Easy answer first: Yes--stay the course with your 401k. If you have additional cash you want to save for retirement (beyond the 6%), I would first recommend a Roth IRA up to the max, and only then increasing your 401k contributions.

Next: Forget everything about 401k loans! They're terrible, because you're paying a pre-tax debt with post-tax dollars! Basically, when you withdraw that money down the road, you will pay taxes on that money a SECOND TIME! Pay off your current 401k loan, and never ever again even think about them as a possibility. Terrible idea... [/soapbox]

If you want to decrease your expenses, your first target should be eating out, clothing (most people have totally sufficient wardrobes, but simply buy new clothes to have what's "in style"), and whatever else is contained within that "Miscellaneous spending"--do you know what those "misc" things are and how much you spend on them? If not, it might be eye-opening to see where your money slips away drop by drop.

Also, you talk about money "left over"... What is that extra cash used for? Savings? I don't see 'Savings' delineated anywhere in your post. I suspect that you may be looking at savings a little backwards. I'd recommend deciding on a set amount each paycheck that goes to savings (start with, say, 5%-10% of your income), and set it up as an automatic deduction from your paycheck. Then, live off of what's left. If you save upfront, you don't need to worry so much about "what's left" as long as you stay within what you can afford to spend.

As for your adviser friend, be wary. Not to impugn on his integrity or your friendship, but many financial advisers anymore have become roughly equivalent to investment salesmen, frequently peddling high-fee products that don't truly meet a person's needs/goals. So while he may have some sound advice, be careful of any particular stocks, funds, or other investments he may recommend to you.

With that disclaimer in place, he has a point. It doesn't take alot of money to invest outside of retirement accounts--many mutual fund companies (Vanguard, Charles Schwab, T. Rowe Price, Fidelity, and others) have low minimum initial investment amounts, or waive those minimums if you sign up for automatic investments of just $50/mo or more. Plus, having non-retirement investments can often be a smart move, because it creates another means for you to save/invest without the restrictions/penalties involved with retirement accounts. It's simple to start, and a good place to at least dip your toes in would be (for example) with a basic S&P 500 index fund while you educate yourself on what else is out there.

Yes, I have definitely learned a lesson with the 401(k)loan and mostly why I've been trying to drive down my debt and actually have money IN my savings account. Thank you very much for your post and I will look into that basic S&P 500 index fund after I'm all paid up.

**wrk4lvg** · 01-09-2011, 05:48 AM

Originally posted by skydivingchic View Post

Well the first problem I see is your rent. For your highest months ($2300), that is 33% of your take home pay, which is the above the general recommendation of less than 30%. For your average and lower months it is well above the recommendations. It will be difficult at best to get any savings traction as long as you are spending that much of your income on housing. Can you get a roommate or move to a cheaper place? You are also spending a lot on eating out each month - over 10% of your take home pay.

I would not lower your 401k contributions - in fact you need to up them. You should be saving 15%+ of your money toward retirement (not counting anything your employer may contribute). And retirement contributions should be for retirement ONLY (i.e. no more 401k loans). The general recommendation for retirement contributions is to contribute to your employer's plan up to the company match (6% in your case), then to a Roth IRA until it is maxxed, then back to the employer's plan if you still have funds.

If one of your goals is to purchase a house you need to sit down and put together a budget that reflects that priority. Are you actually able to save the $230/month extra or is it disappearing? How long have you been using Mint? Do you have a good understanding of where your money goes? That is the first step. Then you'll need to figure out where you can cut in order to free up money for saving. From what you've posted so far I think rent and discretionary spending are two areas you should be scrutinizing.

There really aren't any great secrets to saving more money. It's as simple as spending less than you earn. It's not always easy or fun, but it is worth it in the end.

I had replied to each one of your questions and then the site gave me an encoding error after I hit preview and all was lost.

To try and sum it all up: I have a roommate and $770 is a 50/50 split. We live in a relatively expensive location due to the close proximity to school and work. I was living further away in Nashville, but the gas was costing more, thus making it even more costly from a total monthly expense. My car is paid for, but only gets 16-17mpg.

I've been using Mint for 11 months and have been turning the budgets down a month at a time. I will be really focusing on driving down "misc" expenses even more.

Thank you again for your time and advise.

**wrk4lvg** · 01-09-2011, 06:25 AM

Originally posted by jpg7n16 View Post

Nope. Keep at 6% until rest of finances are in better shape (no debt, other goals in place)

Will do.

Statements like this usually read like this to me:

"Umm those are all the expenses I can think of at first, but I don't really track all my spending, so the rest is just miscellaneous spending. It changes every month. I know it's going somewhere... but I don't know where exactly."

Trust me, I know where every single penny goes. My issue being not doing a better job focusing on putting those extra pennies go to the best place. I log into Mint every single day as well as my bank accounts daily to make sure all spending is accounted for (and of course making sure fraudulent charges are not present) But my goal back in September has to been to get this spending under control. I have to a very large degree, but I know there is a lot of room for improvement. I needed a push and you guys have contributed to that push.

I'd recommend a good budgeting program (I use You Need a Budget) and start seeing where EVERY dollar goes. You say you use Mint, do you plan for future expenses? I'd group coffee with groceries.

My grocery budget has come down from $300+/mo (my total monthly food bill for many years was over $600/mo) to where it is now as well as my eating out budget. I've been on a diet for a year now and the downward trend in my budget has resulted in a loss of 30lbs (205-175) as well as lower monthly food bill. However, I believe it can be a bit lower.

Let me expand on this "Coffee" expenditure. I used to drink coffee OUT everyday. Not at Starbucks, but D&D and local gas stations. So I've picked up a single serve coffee machine thinking it would save me every bit of 50% back in September. It hasn't, until recently. Now I'm looking at around 35-50 cents per cup made in house vs $1.35+ I was paying outside.

What I mean is, you know that you'll need clothes eventually. So do you budget aside say... $30/month for clothing? Even if you didn't buy any clothes that month? And you're going to have to pay for books next semester too right? How much will they be then? You can budget a monthly amount into an envelope or something to prepare for that expense. (YNAB let's me keep a running total for expenses like that; I don't know if Mint does or not)

Clothing Budget is set exactly at $50/mo and coffee at $30/mo. Both have not had any entries for about 3 months (maybe a little more, I'd have to check) until yesterday. Bought two pairs of pants and sweater for $45.55. As for school books, I have just started back last semester. So last semesters book set me back $185. Work gives us 8k/yr tax free (minus any fees (lab, etc)) up front as well as books (after successful completion of the course). I had intended to just take the monies refunded to me for books and use it to pay for the next semesters, but it's about a 2 month process. So I had to come out of pocket up front on this semester. However, the money to come WILL BE set aside for summer session.

As for Mint running total expenses; it sounds like YANB and mint may do the same thing. I will check out YANB here in a moment.

Since your income is 2100 +/- 200, that leaves $235-635 unaccounted for. That's like 12-28% of your income.

I've signed up for OT the last couple of weeks as well as applied for p/t work in hopes to bring in extra income to stuff away.

No it's not. That's at least 10% of your income leftover. That's not pathetic at all.

When you consider that you've got $225 and $45 also going to debt elimination, you've got a good chunk of your income left over. (a little over 20%)

Putting it like that makes me a feel a bit better, but I'm not doing myself any favors if I'm not actually "saving" it. Check.

I think you'd need to start looking into ways to move up in your company. What would you need to learn to be able to double your income? -you're around $30-35k now, and there are many jobs in the US that pay $60+k. Are there any at your company? What would you have to change to be able to do those jobs? What skills would you have to develop? What classes would you have to take? What would it take?

I have been with the company just over 3 years and have received two promotions and just interviewed for a 3rd. Albeit, the 3rd will not come with an increase in pay as it will be a "Developmental role", it will better position me to be promoted to a position that will. As for courses, I'm taking under grad courses in Info-Systems Technology. I'm in the cellular industry.

Congrats! You'd be surprised how much money you'll have left over once the debt is gone. It's pretty great

I'm very excited about getting to $0.00/mo going out to debt (except rent)

Then I don't see you being ready to buy a home.

You're right. I do have VA benefits available to me as well as THDA (FHA program here in TN), but you are probably still right beyond that.

Do you have a 3-6 month EF in place? (you're single, no kids, so likely only need 3 months)

D.R. may not be happy with my EF,or lack thereof, but I have $3200 set in savings.

Advisors who place too much emphasis on single stocks to their clients are a red flag to me. It's always the next hottest thing, causing you to buy and sell, and generating more and more comissions.

People who want to invest in single company stocks need to have a very good knowledge of the company and the industry. You are buying ownership of companies. And if it's really that good of a company, why trade in and out? (Unless you want to be a daytrader, which is extremely risky and a whole skillset of its own)

He's not pushy, but does get excited about telling me about xyz and that I should get in on some of the ventures he's taken, but never has pushed me to do anything. He did look over my 401(k) and got that mess taken care of, but that was 2-3 years ago. I was up 12% 2 years ago and 19% last year. So that credit certainly goes to him.

Studies have shown that re-allocating 1 time each year works just as well as several times per year.

Just keep pluggin away, doing the best you can with what you've got.

I did it one time last year. One time the year before that. It's my understanding I need to get out of my US Small Cap in the next month or two. Will need to do some more reading on that.

"Learn to work harder on yourself than you do on your job. If you work hard on your job you can make a living; if you work hard on yourself you can make a fortune!" -Jim Rohn

Great quote

Always glad to help

Thank you very much!

(Man am I glad I learned from above and "Copied" this entire post. Went to preview it again and got that same encoding error. Does this site not like firefox?)

**humandraydel** · 01-09-2011, 07:07 AM

Originally posted by kork13 View Post

Next: Forget everything about 401k loans! They're terrible, because you're paying a pre-tax debt with post-tax dollars! Basically, when you withdraw that money down the road, you will pay taxes on that money a SECOND TIME! Pay off your current 401k loan, and never ever again even think about them as a possibility. Terrible idea... [/soapbox]

I agree, 401k loans are not a great idea. However, what you have posted is simply not true, though a lot of people seem to think it is. The reason is because the loan you take out was NEVER taxed. It wasn't taxed when you put the money IN the 401k, and it isn't taxed with you take it out (loan).

In other words, assume you take $7500 (pre-tax) out of your 401k and spend it. When you pay the $7500 back, it is with post-tax dollars so you have to earn $10,000 to pay it back. If you were to instead wait and save the money ($7500) with post-tax dollars, you would have to earn $10,000 in order to have $7500. Both scenarios result in the EXACT same amount of tax paid ($2500).

The problem with 401k loans is that you have to sell the investments and buy them back later. This can work either for or against you. If you took a 401k loan in 2008 (before the crash), it would actually work in your favor.

**wrk4lvg** · 01-09-2011, 07:22 AM

I agree, 401k loans are not a great idea. However, what you have posted is simply not true, though a lot of people seem to think it is. The reason is because the loan you take out was NEVER taxed. It wasn't taxed when you put the money IN the 401k, and it isn't taxed with you take it out (loan).

In other words, assume you take $7500 (pre-tax) out of your 401k and spend it. When you pay the $7500 back, it is with post-tax dollars so you have to earn $10,000 to pay it back. If you were to instead wait and save the money ($7500) with post-tax dollars, you would have to earn $10,000 in order to have $7500. Both scenarios result in the EXACT same amount of tax paid ($2500).

This was my understanding, but I could be wrong.

The problem with 401k loans is that you have to sell the investments and buy them back later. This can work either for or against you. If you took a 401k loan in 2008 (before the crash), it would actually work in your favor.

This has been my case, plus it's being paid back at 4% interest to myself. Now, I'm sure that the $2500 I took out could have netted me an ever greater return at the end of last year, I am comforted by the fact that I still came out ahead. It wasn't a loan that was used to buy something. Ironically, it was a loan used to pay the IRS....

Either way, I have 0 intention on doing it again BECAUSE I saw how well I had been performing. I just hope the intention is reality in the long run.

**wrk4lvg** · 01-09-2011, 08:19 AM

Originally posted by jpg7n16 View Post

I'd recommend a good budgeting program (I use You Need a Budget) and start seeing where EVERY dollar goes. You say you use Mint, do you plan for future expenses? I'd group coffee with groceries.

Well, downloaded it. Set up allllll of my accounts. Downloaded allllll of my files and then uploaded them.

Was going through and approving transaction when the program froze. I had to shut the program down through my pc's task manager.

Fired the program back up and everything was gone. It was as if I had just installed the program.

I'm starting to see a pattern here. Encoding error on this site, having to start over on YNAB.

From the looks of it, Mint accomplishes the same thing and uses direct connect. My only problem is that it does not support direct connect for my Visa and my credit union. Never checked to see if Mint allows for upload of file. Need to check that out.

**jpg7n16** · 01-09-2011, 02:20 PM

Well having read your other posts, I wouldn't bother purchasing YNAB if Mint lets you do the same things.

I would also take $1200 of your savings, and pay off the 401k loan. By the end of this month, all your debts will be gone, and you'll be free to start building the EF. Plus it'd leave you with about $2000 - which is a little over 1 months expenses for an EF. But mainly just that the debt would be gone for good. That'd feel like a clean start at building your wealth.

And your budget picture would look more like this:

Income- 2100

Fixed Expenses
Rent/Utilities- 770
Cell phone- 55
Insurance- 70
Gas- 150

Variable Expenses
Eating out- 210 (I think this may be a little high)
Groceries- 140
Clothing- 50
Coffee- 30
Textbook expense (projected)- 30

Leftover- 595

And from that leftover amount you can figure out expected expenses for say car repairs, household items, toiletries, entertainment, travel, giving, etc.

I'm not sure what exactly your travel expenses are, but if you were going to take say a $600 vactaion in 6 months to visit your family, you should start off budgeting $100/month today. And when your company refunds you for the textbooks, just add that amount to your income for that month.

And when you truly have a legit leftover number, that should all be added to savings to get you up to a 3 month EF. Once you're there, you get to decide between a) saving up 20% for downpayment, or b) increasing 401k, or c) some combo of those two.

I think you get the idea.

**disneysteve** · 01-09-2011, 02:38 PM

Originally posted by wrk4lvg View Post

Take home pay - $2100/mo +/- $200

You've gotten some great advice so far. I wanted to jump in and comment on this. If your monthly pay varies, be sure to budget based on the lowest number, not on the highest. If you budget on $2,100 or more and you only bring home $1,900, you've got a problem. If, however, you budget based on $1,900 and bring home $2,300, you're in great shape. Live as far below your means as reasonably possible. Planning everything based on a $1,900 income will go a long way toward accomplishing that.

I'd also agree that $350/month for one person for food is way too much. Plenty of people here will tell you that they feed their family of 3 for that much. I'd look to get that down to $200 or less. That would help a lot.

Rent is a big problem, too, but that is a bit harder to fix.

**wrk4lvg** · 01-09-2011, 02:44 PM

Originally posted by jpg7n16 View Post

Well having read your other posts, I wouldn't bother purchasing YNAB if Mint lets you do the same things.

I would also take $1200 of your savings, and pay off the 401k loan. By the end of this month, all your debts will be gone, and you'll be free to start building the EF. Plus it'd leave you with about $2000 - which is a little over 1 months expenses for an EF. But mainly just that the debt would be gone for good. That'd feel like a clean start at building your wealth.

And your budget picture would look more like this:

Income- 2100

Fixed Expenses
Rent/Utilities- 770
Cell phone- 55
Insurance- 70
Gas- 150

Variable Expenses
Eating out- 210 (I think this may be a little high)
Groceries- 140
Clothing- 50
Coffee- 30
Textbook expense (projected)- 30

Leftover- 595

And from that leftover amount you can figure out expected expenses for say car repairs, household items, toiletries, entertainment, travel, giving, etc.

I'm not sure what exactly your travel expenses are, but if you were going to take say a $600 vactaion in 6 months to visit your family, you should start off budgeting $100/month today. And when your company refunds you for the textbooks, just add that amount to your income for that month.

And when you truly have a legit leftover number, that should all be added to savings to get you up to a 3 month EF. Once you're there, you get to decide between a) saving up 20% for downpayment, or b) increasing 401k, or c) some combo of those two.

I think you get the idea.

I do have a wedding/cruise I'm going to in May and have already paid $550 worth of payments towards the $894 bill.

My initial plans for paying of the debt was as follows: I get two bonuses over the next two months. One for Approximately 4k after taxes at the end of Feb. Get another for $1350 at the beginning of March. I also get between 1k-1500 back from Taxes (however, I've adjusted my W4 to claim 1 starting this year)so i suspect this won't happen going forward. I was budgeting out of my present take home to pay of the dept. store card and Visa and then take either the 2nd bonus or tax return to pay off the 401k loan. The 1st bonus was going right into my savings taking me to around 7k. None of it going towards the trip in May.

That has been my plan for sometime. Probably not the best approach? But for some reason, psychologically seeing my savings go from 3200 to 2000 is messing me up and knowing me, I would have some sort of issue (I drive an Audi and if you know Audi, you know they are mostly crap and cost a ton if something were to ever go south) and next thing you know I may need that 1200 again to fix the car. Which presently only cost me fuel, insurance and regular maintenance to drive.

I spoke to a financial adviser through Dave Ramsey and he said to actually cut funding to my 401k and put everything towards a 20% DP on a home. However, once he learned that I'm matched 100% up to 6%, he advised to certainly not pass up free money.

So it looks like my option after these 3 debts are gone will be option A.

**jpg7n16** · 01-09-2011, 03:53 PM

Originally posted by wrk4lvg View Post

I do have a wedding/cruise I'm going to in May and have already paid $550 worth of payments towards the $894 bill.

Congrats

That's a great start.

Some things - realistically, we're talking about 1-2 months of interest on your debt. By my calculations, that's in the neighborhood of $10. (6% on 1200, for 1 month = $6) So if you want to wait a month for peace of mind, it's really just not a big deal.

The credit cards, I'd pay off today. If I could go online and submit the payment, I'd do that today. No reason to keep $300 in debt, when I have $3200 in the bank. And if my car broke down, I could just charge back $300 of living expenses due to the repair bill. (which I highly doubt you'd incur)

But again, we're talking like $5 of interest here. Not a big deal. So if I paid you $5 cash, would you pay off your card today? That's pretty much what we're talkin about. If yes, great! You'll save $5. That's a meal

Though I don't understand not paying off the trip with your bonus. You'll have around $7k coming in before middle of March, so why the hesitancy about the last $350 bucks or so?

I guess I just like things to be complete. Pay off the rest of the trip and then everything in the account is your's. No worries about payin for the trip, it's taken care of. No negative feelings about having to write that one last check the month before the trip, just all positive feelings about the trip itself. Maybe that's just me.

And if you're that concerned about your car breaking down, you need to budget $X/month for car repairs. If you think $1200 in repairs before year's end, that's at least $100/month you need to set aside.

**wrk4lvg** · 01-09-2011, 04:22 PM

I completely agree with your logic and reasoning for the clean slate. I'm just a little more cautious is all, I suppose. However, that doesn't mean I won't go with it. I worked 7 hrs of OT last week as well as picked up a Sunday shift that gives me a 35% shift diff. Should all be on next paycheck. It should cover the two CC debts

This will leave me $1200 loan and the rest of my trip. I suppose that can all be taken care of my Feb and as you said, be done with it all.

Actually, that already feels good.

I just want to put more money away...