Pru 401(K) just started showing up in paycheck?

[Browndriver5]

Kind of extreme, but generally good advice

He is extreme for sure but I find a really easy way to save money is to either not have a debit card or if you have a debit card always round up in your check book when you make a purchase and round down the nearest dollar when you get paid. It sounds weird but at the end of each month take that extra money and put it into savings, after all according to your check book you never had the money anyway.

 

[Grell]

Start a Roth as soon as possible

 

[Browndriver5]

A few pointers to our younger readers:

-- 401K defer taxes, thus a driver will realize tax savings. For example, a driver in IL would realize 30% savings on his contributions last year; when he retires in FL, he will only pay 10-15% of it toward taxes. Most part-timers will already be in the 10-15% bracket, therefore most will not realize any tax savings from their deferrals.

-- 401K aren't free; they contain maintenance, management, brokerage & other transactional fees that aren't always transparent. These fees grow as your account swells. For a driver with a balance of nearly $1M, how much are these fees? Higher than his annual gross pay. These fees are why financial advisors/investment firms push so hard for you to contribute to a 401K.

-- Yes, you should be saving for retirement. But life gets in the way. Interest rates will never be this low again, so saving for a down payment on a new home will likely be a much stronger investment. And then life gets in the way.... college debt, braces for the kids, etc. Paying high interest loans is arguably a smarter idea than contributing to a 401K.

-- Be weary of stated returns. My mutual fund has done very well over the past 7 years (20% return). My GF's dad had his pension paid in a lump sum then rolled the $ into an aggressive 401K ... he lost most of it (2007-2009) and even with strong returns will never catch up to his principal. It just varies based upon the specific situation you're in. And many people are bracing for a market correction...

Buying a house isn't always a good investment

 

[UpstateNYUPSer(Ret)]

Just read everything Dave Ramsey. If you want to be set up he is a very wise man

My only disagreement with Dave and his advice is the religious overtone; other than that, he is spot on with his advice, which is basically common sense.

 

[UpstateNYUPSer(Ret)]

Buying a house isn't always a good investment

Perhaps but it still much better than paying your landlord's mortgage.

 

[Browndriver5]

Perhaps but it still much better than paying your landlord's mortgage.

Its a very fine line. It all depends on your options

 

[Browndriver5]

My only disagreement with Dave and his advice is the religious overtone; other than that, he is spot on with his advice, which is basically common sense.[/QUOTE

Id say the hardest thing for me is to have a monthly balance on everything. Its tough, especially from a grocery buying stand point

 

[UpstateNYUPSer(Ret)]

Its a very fine line. It all depends on your options

For me it was a no brainer. Write the interest and property taxes off of my taxes each year.

 

[oldngray]

Long term buying a house is better but there are exceptions such as it is better to rent if you will only be living there for a couple of years.

 

[UpstateNYUPSer(Ret)]

Long term buying a house is better but there are exceptions such as it is better to rent if you will only be living there for a couple of years.

General rule of thumb is less than 5 years.

 

[Browndriver5]

For me it was a no brainer. Write the interest and property taxes off of my taxes each year.

How long is your home loan for?

 

[UpstateNYUPSer(Ret)]

How long is your home loan for?

It was for 30 years but I refinanced to a 15 year fixed at 4.5%. I am also on an accelerated payment program which will have the loan paid off 6 years ahead of time. I am a vet so all of my home loans have been VA loans, which are much more affordable than conventional mortgages.

 

[Browndriver5]

For me I rent with a friend at work. I pay 500$ all in (utilities included) . So Instead of me buying a house with an 835$ mortgage for something in todays market or even 7 years from now may not go up in value I'm losing money in my eyes. I can invest that extra 335$ a month into retirement until I save enough to buy a quality house.

 

[Browndriver5]

Although I am still losing money spending 500$ a month and not gaining anything in return, I could be in the same situation except with a house with more maintenance etc..

 

[UpstateNYUPSer(Ret)]

When you buy a house you should plan on spending an additional 10-15% of your house payment per month on maintenance.

 

[Brownslave688]

Although I am still losing money spending 500$ a month and not gaining anything in return, I could be in the same situation except with a house with more maintenance etc..

Yep. When I sell my house I lived in for 6 years I might make 10k. I essentially spent 70k to make 10k. Could of just rented and saved that money too.


My best friend can not grasp this concept at all that I probably could of saved more just renting.

 

[Babagounj]

When you buy a house you should plan on spending an additional 10-15% of your house payment per month on maintenance.

A condo with a small monthly condo fee is another option .

 

[Brownslave688]

It was for 30 years but I refinanced to a 15 year fixed at 4.5%. I am also on an accelerated payment program which will have the loan paid off 6 years ahead of time. I am a vet so all of my home loans have been VA loans, which are much more affordable than conventional mortgages.

When my parents bought their house in the early 80's they got a VA loan. 13%. Said it was way better than others were getting. I'm like that's just nuts.

 

[Babagounj]

Yep. When I sell my house I lived in for 6 years I might make 10k. I essentially spent 70k to make 10k. Could of just rented and saved that money too.


My best friend can not grasp this concept at all that I probably could of saved more just renting.

If you make a profit on the home sale , watch out for more taxes .

 

[Browndriver5]

A few pointers to our younger readers:

-- 401K defer taxes, thus a driver will realize tax savings. For example, a driver in IL would realize 30% savings on his contributions last year; when he retires in FL, he will only pay 10-15% of it toward taxes. Most part-timers will already be in the 10-15% bracket, therefore most will not realize any tax savings from their deferrals.

-- 401K aren't free; they contain maintenance, management, brokerage & other transactional fees that aren't always transparent. These fees grow as your account swells. For a driver with a balance of nearly $1M, how much are these fees? Higher than his annual gross pay. These fees are why financial advisors/investment firms push so hard for you to contribute to a 401K.

-- Yes, you should be saving for retirement. But life gets in the way. Interest rates will never be this low again, so saving for a down payment on a new home will likely be a much stronger investment. And then life gets in the way.... college debt, braces for the kids, etc. Paying high interest loans is arguably a smarter idea than contributing to a 401K.

-- Be weary of stated returns. My mutual fund has done very well over the past 7 years (20% return). My GF's dad had his pension paid in a lump sum then rolled the $ into an aggressive 401K ... he lost most of it (2007-2009) and even with strong returns will never catch up to his principal. It just varies based upon the specific situation you're in. And many people are bracing for a market correction...

Also paying on any kind of loan is never really a good idea. You can never beat the bank at their own game. The key is to live debt free and have a yearly salary stashed away with your retirement building.