Financially Wise
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Anonymous
+4 I am 29 and already regretting not saving a higher percentage of my salary in my early 20s because it will make such a tremendous difference because of compound interest. At an absolute minimum save 5% of your salary for retirement (at least enough to get your entire employer match), but 10% would be better and 15% would be excellent. If I were you, I would start with a Roth 401(k) or Roth IRA at your income because you'll pay low taxes now while you're in a low tax bracket and have tax-free money in retirement. If you can only start out saving 5% of your salary right now, commit to increasing your retirement savings by 1-2 percentage points every time you get a raise. Saving for retirement in your 20s is CRITICAL! You have to save so much more, even when you're in your 30s and 40s, to catch up if you don't get a good start in your 20s. If you have a matching option at work, open up a 401(k) there and contribute whatever percentage you need to get the match. (This will probably be a traditional 401k which is taxfree now, but you pay taxes in retirement. I don't think you can get an employer match on a Roth.) Then, contribute any additional money you can to a Roth 401(k) or IRA to capitalize on your low tax bracket now. Then, I would pay off more than the minimum on your student loans. Even if you can only round up to the next $100, do it. If you can do more, great. Keep your $20K emergency savings intact. That's a great nest egg for being right out of school. If it were me, I would probably invest $10K and keep the other $10K easy accessible in savings or money market account. Add to this savings if you can, but you may not be able to do much right now and that's OK. Savings account interest rates are low so it's better for you to save for retirement and pay down debt (higher interest rate) first. Live with roommates for as long as you can to save money. Learn to cook. Drink at home. Always bring your lunch. Do your legwork and find free events to have fun and invite friends, so that you don't feel like you're missing out. NEVER carry a balance on a credit card... those interest rates are crazy. The more you get accustomed to a certain lifestyle (cable, buying clothes, eating out, etc.) the harder it will be to live without later. Good for you for figuring it out early! |
Anonymous
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I am not a believer in throwing everything you have at student loan debt. Also, contrary to the PP's advice, it does not make sense to pay off all debt before you start saving for retirement. If you lose your job, you can't eat your paid-off loans and they aren't going to keep a roof over your head. Also, student loans are easily deferred or put in forbearance in a financial crunch. Finally, because of compound interest, your retirement savings in your twenties when you are still juggling debt will go much further than equivalent savings later in life when you've paid off the student loans and the mortgage. In contrast, your payments on fixed rate student loans will feel smaller over time based on inflation.
I would suggest keeping your current savings as an emergency fund in the high interest savings account. After that, if your company has a 401(k), figure out a way to contribute at least as much as you need to contribute to max out the company match or contribution. Contribute the maximum if you can possibly afford to do so. These are pretax dollars so you will feel less squeezed by every dollar you put in a 401(K) than you will feel by putting the same after-tax dollar toward your loans. If you are not eligible for a 401(K), open a Roth IRA and contribute a fixed amount each month via electronic transfer. It will be tough, but see if you can make the maximum contribution by year's end. Roth contributions might be tax deductible at your income level--check that out to be sure, though. After you've maxed out your Roth for the year, if you get a bonus or birthday money or start accumulating chunks of extra cash in your main operating account, put it toward your loans. Be sure to pay off any variable rate private student loans before you start paying extra toward the federal loans. |
Anonymous
| No money managers and no mutual funds. Also no gold or silver. Do it all youself. Be a capitalist. No one cares about you keeping and expanding your wealth more than you do. Buy dividend paying stocks and reinvest the dividends. By the time you're 30 you'll have enough money to make some speculative purchases which include more risk and potentially greater gain. But, for today google Dividend Achievers or Dividend Champions. Choose 15 or 20 companies. Invest your money equally and have your brokerage firm automatically reinvest your quarterly dividends. They will provide this service free of charge. Good luck and happy investing. It's fun, interesting and lucrative. |
Anonymous
| Contribute to a Roth IRA! Put in the maximum yearly amount. Vanguard is a good discount brokerage, and they have target date funds. |