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I would lean towards putting that to the car loan. You'll give up your chance to make a 2009 Roth contribution, but you've already got the 401k (with employer matching?), and 7.85% is getting on up there. You contribute to a Roth IRA with after-tax dollars, meaning you pay taxes on that money along with the rest of your salary - put the other way around, you don't get to deduct the IRA contribution from your taxable income when you file. But then you pay no taxes on the withdrawals (if you follow the rules). An IRA is completely separate from your employer/paycheck and you can start one on your own with any bank that offers them. Vanguard is nice. While you're thinking about it, do some research on the funds in your 401k if you haven't yet - retirement thread is a good place to start.
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Jan 21, 2010 04:25
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moana posted:Sounds just about right to me. The savings or MM account would hold your 3-12 month expenses, although right now it's not a huge deal to just have it all in your checking account since interest rates are so low. It depends - for me the extra interest I get from the online savings account is equal to half a year's worth of cell phone bills. But this distribution to checking/money market/online savings is exactly how I set things up too.
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Jan 21, 2010 06:34
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HSBC. They were on top for a while back in the 5% days. Now they're not on top, but it's still pretty reasonable, or enough so to keep me from looking around. They do take a day or two longer than everyone else to transfer money, from what I hear.
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Jan 21, 2010 06:47
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Hmm, I'm inclined to suggest that you wait until you have a job and then decide. You'll miss your chance to make a 2009 contribution to an IRA, assuming you had earned income in 2009. However, you'll still be able to contribute for 2010, and you can make a much better prediction of your finances once you're hired. An IRA should probably be your next step, either way. It can contain stocks and bonds, there's no conflict there. Just don't put in the money you want to use for snorkeling in the Bahamas.
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Jan 22, 2010 02:18
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The only thing I'd add to that is that 80% stocks/20% bonds or Target Retirement isn't really compatible with the idea of taking it out again if you need it, unless it is really a dire emergency type of situation. I did just make my own 2009 IRA contribution into a money market in case I need to get it in the next 6 months, though. :)
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Jan 22, 2010 04:50
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Well, my bank (USAA) reimburses any and all ATM fees up to $15 per month, if you need a gold standard to shoot for.
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Jan 22, 2010 19:04
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I'm suspicious of all of that stuff - rewards checking with 5% interest sounds great until you realize you have to have direct deposit plus 10 debit transactions plus 3 bill pays per month, making your life complicated and your credit card rewards program useless, etc. So I feel like there might be a catch here too. I prefer USAA to gimmicks
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Jan 23, 2010 05:51
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Vestral posted:I have $2k cash in a savings account for dire emergencies, and $10k in what I'm now thinking of as an emergency account What? You are still ahead of the game then. Assuming this isn't in the stock market or a retirement account, feel free to use it to pay off your cards in one fell swoop. Then take the $400/mo you were putting towards the cards and put it in the savings account instead - set that up as an automatic transfer so you don't have to remember to do it. You can eliminate your debt and improve your savings habits by tomorrow. There's just no reason not to do this. But be very careful never to carry a balance on the cards again or you'll be back in a year with a zaurg thread. Only use them for gas, or freeze them in ice if you have to. Keep a $200-500 minimum in your checking account so you won't run out of money and "need" the card. It looks like a lot of the CC debt is due to irregular expenses like moving, right? Plan to use savings for that instead, next time, and be more careful how much you spend. If things get more serious with your boyfriend you two will need to get on the same page about this kind of stuff.
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Jan 27, 2010 18:30
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In defiance of the common wisdom, I just closed my first credit card at the ripe age of 12 years because I developed a grudge against the company and I got a better card somewhere else. But I did wait until after I got the mortgage...
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Jan 28, 2010 05:28
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Two scenarios: Cash out the 401k, have $2500ish after taxes and penalties. CC debt is reduced to $2100, paid off in a year at $200/mo assuming 20% interest. Put the $200/mo into a retirement account for 18 months after that. Keep the 401k, credit card debt is $4600 and takes 2.5 years to pay off at $200/mo. Now what happens after 2.5 years are up. In the first case, you have 18 mo * $200 = $3700 in some retirement account. In the second case, you have $3600 in the 401k. That's assuming 5% return in both cases. So it's more or less a wash? Did I miss something? Anyway, if my assumptions are reasonable, I'd probably suggest keeping the 401k just to enforce a little discipline. :)
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Feb 3, 2010 05:08
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DenialTwist posted:Thanks, the main reason I was looking at cashing out the 401k to payoff my debt is so I could begin to accumulate some cash savings as I currently have none and would like to pay cash for my next big purchase (a car; mine is 10). So at 22, would starting all over again be a terrible thing with the 401k; my plan is tentatively-1. Start hacking away at debt as fast as possible 2. When the debt goes down to one card (about 2k) cash out the 401k to pay it off and start sticking that 200 a month into cash savings so I can pay cash for a new car when I need one. Just be clear with yourself about what you're doing, and don't let the CC debt confuse the issue. After a few years, you're down a 401k, up a car, so that's the trade - you cashed in your retirement savings to pay for your car. Starting from zero with a 401k at 24-25 isn't terrible, no - but dipping into your retirement accounts is gonna cost you a lot over time if you make it a habit. That $3200 in the 401k could be worth upwards of $40k when you retire if you keep it in there.
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Feb 3, 2010 18:30
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Eggplant Wizard posted:I'm doing fine Seems like you're on top of things, but here are my random opinions: 1. When I was making that salary, I was putting at least $50 per month into a Roth IRA. You are up $17k compared to me when I was in your position, so get to work on that. :) 2. I like credit unions and in fact I just closed my last account at a non-member-owned bank a few weeks ago. Find one that is a member of NCUA and has products you want - online access, credit card rewards, whatever. Credit scores are a magic mystery that people worry about too much, but common wisdom suggests you should keep your oldest card open until the new ones are established. The bank account shouldn't make a difference. I don't use smartypig because the deposit and withdrawal conditions are too weird and onerous to be worth it for me. ING et al. are probably the best options for liquid cash. 3. American Funds... I hear those are good but have a high front end load? Go read a couple of the books recommended in the retirement thread if you're at all curious. Reasonable asset allocation is probably not beyond you, and only you know your own best interest.
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Feb 3, 2010 18:50
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Eggplant Wizard posted:I don't know what a high front end load is You should be taking advantage of tax-sheltered retirement accounts like the Roth IRA, and then 401k/403b once you start some sort of regular employment. It might be reasonable to move up to $10k into a Roth IRA right now - $5k is the annual limit as long as you made that much income, and you can still contribute for 2009. Dunno what you mean by responsible citizen investing, but here is some reading on the "socially responsible" mutual funds: http://forums.somethingawful.com/showthread.php?threadid=3248015 Front-end load is an upfront fee that you pay to invest in some funds, and few funds perform well enough over time to justify charging it. Maybe you'll find out that American is an exception. That account could be anything from money market to high risk stocks. You should find out the allocation (and therefore the risk/reward profile). If you're going to leave those decisions in someone else's hands going forward, at least make sure you trust them to look after your interests over their own - I think that is a rare feature in a fund company.
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Feb 4, 2010 19:49
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My mother made the account for me when I was a kid. It seems to be doing all right and I never hear from them except at tax time. I guess I'd prefer to be doing responsible citizen investing with my money if possible, but that has to wait till I have a little more to throw around.
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Money market funds suck lately. The online savings accounts (ING, HSBC, etc) are 1.2%-1.5% right now, which is probably the best you can get and keep it liquid.
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Feb 6, 2010 22:11
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Yah, don't pay 9% on a car loan in hopes it will "raise your credit".
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Feb 26, 2010 22:59
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Yeah, the PenFed card is pretty good. You're pretty lucky not to be on the loan treadmill; consider staying off it by buying a cheaper jeep.
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Mar 1, 2010 20:10
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I'd say you should focus on not doubling those balances before July. Are there any balance transfers that don't cost 3% or so these days? If not, it's probably not worth it.
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Mar 2, 2010 19:58
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I doubt it. But you'll have to do the math, accounting for the balance transfer fee and the amount of time it's going to take you to pay it off. Play with the calculator "Is a lower rate worth the annual fee?" on this site: http://www.fool.com/calcs/calculators.htm By my calculations, assuming a 3% transfer fee and paying $100/mo, the 4% card saves you all of $45 over the 18 months it takes to pay it off. PS: you should pay it off faster than that.
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Mar 5, 2010 19:21
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There's a student loan thread: http://forums.somethingawful.com/showthread.php?threadid=2250971 If your friend wants comments on his financial situation generally, we'd need more info: income, savings, investments, etc. If he is also saying things like "I want to start investing in a home" he probably hasn't thought too carefully about the finances yet.
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Mar 11, 2010 16:26
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Complete nonsense. Pay it off completely once a month, and enjoy getting a great credit rating and never paying interest.
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Mar 25, 2010 02:00
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illamint posted:OK, so, I did happen upon a new card with a $4,000 credit line at 0% for 7 months on purchases and balance transfers (with the perfunctory 3% BT fee). My total balances are about $3,200 now; should I transfer them all to the new card? Would it matter if my utilization of one card is about 75% but across all three cards is about 33%? It stands to save me about $150 over the course of that 7 months if I pay it all off. I mean, it seems logical to do it, but is there any reason I'm missing not to? Are you sure you calculated that right? I make it more like $50 saved after accounting for the transfer fees. Not that that's a bad thing, but the other side of the coin is whatever that 0% card is going to turn into after 7 months.
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Mar 25, 2010 21:07
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illamint posted:I've got about $1700 now on an 18.24% card, so that'd be 1700(1+.1824)^(7/12) at 7 months for about $172, right? Then 1500(1+.0824)^(7/12) for the other card for about $242 interest over 7 months versus $96 for the balance transfer. The new card's only 14% after 7 months anyways, so that's better than my Chase card anyways. You assumed you weren't paying down the principal... I usually use some online calculator for this, but if you want to do it the hard way just calculate the interest for each month, accounting for the previous month's payment. But if the new card doesn't turn evil after 7 months there really isn't any reason not to go for it. Verism - unless you have cancer, quit smoking up until you pay off your debt. Or weed comes out of the "Personal" category, but don't raise the amount.
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Mar 26, 2010 02:37
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Well drat, you were lucky to get out of that with skull and dog intact, and only $5k poorer. Good job having the cash handy. The truck loan is really putting a damper on your savings, but it doesn't have to last for a long time. If you pay $1400 towards it each month, it'll be gone in less than a year. You can probably manage that if you put yourself on a cash budget so you don't overspend on food and beer. Once it's paid off, you'll have $1400 free each month to allocate to the AES loan, IRA, your next truck, house savings, single malt, etc. Similar logic applies to smaller numbers like $1000 if $1400 is inconceivable right now.
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Mar 30, 2010 19:04
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It really doesn't matter when you pay during the month. The bank is likely to credit your payments once a month no matter when you send them, anyway. Make sure the extra is being correcly applied to the principal (instead of taken as pre-payment of the next month). Regarding what to do once the truck is paid off - it's a balancing act between short and long term goals. First, max out a Roth IRA ($416/mo) - then you'll be getting ~15% of your salary into retirement savings, which is pretty good. With the remaining $1000\mo, you'll have to decide loans vs. savings vs whatever. I would personally pay off at least the AES 4.9% loan before adding a mortgage to the mix. The Nelnet loans at 1.5% are hardly worth hurrying to pay off right now, but what will happen to the rate later? You don't want to suddenly have some 7% loans hanging over you when you've just gotten a mortgage. I think you can make these plans without thinking about the RSU money. When you get that, just put it towards loans or house savings in the same proportion you already decided on for your monthly paycheck. Save out a few bucks to blow on fun poo poo, too.
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Mar 31, 2010 00:52
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I'm a little lost there - I thought the extra truck money was coming out of the $1195 also.
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Mar 31, 2010 01:59
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Gotcha. Do you have enough cash to handle the next $5000 dog incident? :)
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Mar 31, 2010 02:10
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The online savings accounts are returning about the same as 6-month CDs right now, making that the better option probably.
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Apr 3, 2010 15:43
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mike fictitious posted:Split up the remaining settlement into chunks and invest in several mutual funds. For example: 25% into Conservative, 50% into Moderate, 25% into Aggressive. This isn't such a useful way to conceptualize a portfolio, but you'll figure that out with a little more reading. Overall your plan sounds great, $10k to IRAs, $10k to 401k, $10k to emergency/ready cash. However, with the rest my thought would be to pay down the mortgage rather than putting it in taxable mutual funds. What is the rate on your mortgage, and what's the LTV right now?
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Apr 7, 2010 00:47
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mike fictitious posted:The truth is that I actually hate the mortgage bank (original loan got sold), and want to move it USAA rather than deal with them any more than I have to. USAA sold my mortgage on to US Bank pretty much immediately - same might happen to you. There were a couple of trivial miscommunications about the insurance, but it's really been fine so far. The US Bank mortgage web site gives you all info in copious detail. At 97% LTV I would definitely feel good about putting $10k in there. It'll get you out of PMI that much sooner. Actually Lenk's suggestion sounds really good too - just be sure to keep enough cash.
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Apr 7, 2010 02:21
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Oh man, that looks pretty good. USAA says they will still provide service to help with my mortgage questions, but sometimes that just means forwarding me to the right US Bank phone number. On the other hand, the low fee, low bullshit mortgage purchase was pretty nice.
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Apr 7, 2010 03:50
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Pre-tax, but then it's more of a maximum really. Shoot for 25%-33% of your gross income. If you can find something cheaper that's reasonable, life will be financially more comfortable.
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Apr 16, 2010 03:37
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First, immediately pay off the credit card balance. Then re-allocate the CC's $200/mo plus a big chunk of the disappearing $900 between car/student loans and a school fund. Possibly you should stop using the card - it doesn't sound like you have great control over your spending. One way to overcome that is to decide to spend say $100 per month on whatever the gently caress you feel like, withdraw it in cash at the beginning of the month, and don't buy anything once it's gone. Budget separately for groceries and gas so you don't starve. You don't need to literally eat ramen, but you do need to quit throwing money around. Also, sell your camera and any other electronic poo poo to help pay for school. You can't do a full time job, an MPH, and serious photography or TV watching all at the same time. What about the car? Depending on what it's worth, you might be able to sell it and buy a cheaper one with no loan. If you can't sell it, look at the interest rate and decide whether to pay it down faster or let it ride. Next time you buy a car, make it one you can afford. I think you can make this work if you bust your rear end. You will still be significantly in debt when you finish the degree, but the debt will slowly be getting smaller the whole time because you'll still be working.
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May 5, 2010 23:40
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Before your job ends, you'll collect $9000 after expenses. Meanwhile you owe $8000 at 13%. Buying a laptop would be dumb.
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May 8, 2010 00:40
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That's $160000 in mostly non-dischargeable debt, and nobody's going to guarantee you a six-figure job when you finish. How much do you love pharmacy? Why are you done with the MPH idea already? You seem kind of all over the place.
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May 23, 2010 18:09
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The interest on those loans is high enough that I think it makes sense to focus on them entirely, with two exceptions: set aside enough cash that you have $15k (car + emergency savings) in September, and be sure to start getting the max match on the 401k when you can. The loans will be paid off in under two years then, right? All thanks to keeping your expenses low and your car expectations reasonable. After that your tax-advantaged investment option is pretty much the 401k - I think your income takes the IRA option off the table. You will have to get clever about handling taxes. Don't ask me how because I don't make that much :)
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May 28, 2010 03:30
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If the minimum payment is the smaller of 4.5% or $10, it would take just over 4 years. Think they're calculating it that way?
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May 31, 2010 01:55
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polyfractal posted:-I'll be making about 2500 a month pre-tax, which comes to about 1900 post-tax. What do people do with the money that is going to eventually go towards taxes? Stash it away each month in a high-interest savings account and don't touch it until April? I'm wary of using that money for anything since it is going to be required later. As a 1099 contractor with no withholding, you have to pay taxes quarterly (more or less) or you pay penalties. Get Form 1040-ES and work through it. quote:-This particular job will be a two year contract. My employer will match 5% of my income for a 401k, meaning 1500 a year. Should I even bother with this 401k since it isn't much and I'll be changing jobs in two years? It feels like throwing it all in a Roth IRA might be a better choice. Free money! Don't throw it away.
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Jun 6, 2010 21:04
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I have hated BoA since they were NationsBank back in the 90s. I use USAA's banking as well as insurance. It is quite good. Usability of the online tools is comparable to my other banks, or better. They refund ATM fees up to $15/mo, so I use whatever ATMs are convenient and never pay for it. They also let you scan checks to deposit them rather than mailing them in. Their rates on basic bank stuff are always reasonable but rarely the absolute best: index funds cost a little more than Vanguard's; CDs return a little less than HSBC's; credit card rewards are a bit less than Pen Fed's. Mortgage rates are competitive and fees low, though. And as you probably know, they will fix most problems in a quick phone call.
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Jun 8, 2010 18:30
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I really think people worry about this too much. Here is an anecdote for you: I recently closed my Citibank credit card, which had a limit of $20k and was my oldest card. As a result, Credit Karma currently grades me "D" ("lovely") on average age of open credit lines and "D" on number of accounts (6 lines of credit is hardly anything, apparently). But my score is still above the threshold for best mortgage rates. To be safe, I did get the mortgage and the new card before I closed the old one. You should do the same, because you'll have a bigger increase in utilization than I did. The USAA cash rewards credit card is pretty good - not the best rewards of anybody, but probably the best combination of service and convenience.
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Jun 9, 2010 16:40
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Well, hello there in a different thread. When I had to do that, I found working through the form 1040-ES by hand to be pretty instructive. It's not super complicated. 15% is probably a slightly conservative guess - I was around 13% with AGI of $45k a few years back.
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Jun 11, 2010 06:37
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