TBH Personal Finance Thread

[fulmer34]

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[txisboi23]

Just what i needed to read through and remind myself.

[Throwin Darts]

Bumping this to the top. If you're getting a tax refund this time of year its a good time to look at saving and contributing towards retirement. Throw that refund into your IRA and you'll be glad you did.

Updates for 2019 - you can contribute $19,000 to your 401k, $25,000 if you're over 50. Annual contributions to an IRA are now $6,000 and this increases to $7,000 if you're over 50.

[Atfulldraw]

Bumping this to the top. If you're getting a tax refund this time of year its a good time to look at saving and contributing towards retirement. Throw that refund into your IRA and you'll be glad you did.

Updates for 2019 - you can contribute $19,000 to your 401k, $25,000 if you're over 50. Annual contributions to an IRA are now $6,000 and this increases to $7,000 if you're over 50.

Roth

[tigerscowboy]

Best thread ever!

Maxed 401k contributions and debt is now just a 7 year mortgage at 3.4%

Refund and any extras this year are going into son's joint secret account with us that he won't receive until after schooling/training and 1st year steady employment anniversary.

BTW....

I've been completely broke twice. First was continued after finishing school and the 9 months following employment.

2nd was after a divorce 13 years later. She maxed out 3 cards in my name without my knowledge (which I found out when preparing for divorce which I handled and represented myself). In the split, I absorbed all of the debts against the assets. No savings remaining outside of my retirement plans (she had none). I hoped to barely (sometimes couldn't) pay the water and electric. Beans, rice, noodles, venison, leftovers and 10 months later to eliminate the debt and saved my house. A house that was only furnished with one bed, one chair, one tv. Nothing else.

*This is what worked for me: Didn't make payments on the debts every month. Mailed payments every weekend (even if it was just $15) and kept track in written folders. Goals were set and dwelled on every day. Started with the smallest and got the snowball rolling down the hill.

[MLank]

Best thread ever!

Maxed 401k contributions and debt is now just a 7 year mortgage at 3.4%

Refund and any extras this year are going into son's joint secret account with us that he won't receive until after schooling/training and 1st year steady employment anniversary.

That will be a nice chunk of change for him. Good on you. How old is he?

[tigerscowboy]

That will be a nice chunk of change for him. Good on you. How old is he?

Thanks. His Mom and I have his school/training funds covered.

He's 8 yrs. Hope we can give it to him within 15-16 years (before I'm really old).

[brokeno]

Better start saving instead of buying those high dollar trucks

[NaClH2O_therapy]

Too much month, at the end of the money

[NaClH2O_therapy]

Subscribed

[ctom87]

ThrowinDarts... I have always wondered how steps 3 and 4 are possible to those that aren't in a percentile higher than my own.

Sending screen shot of my deductions where you will see health, vision, dental, HSA, taxes, car insurance, car payment and a few other deductions. What is left is still a nice chunk of change, however, we still haven't got to the mortgage, utilities, doctor visits, groceries, etc. And we don't even have a kid yet, so there is no 529 contribution or increased Healthcare costs.

I am contributing 14.5% with a 5.5% match. This ends up being just under $13,000, $9,300 of which is mine. I don't see how I could possibly nearly double what I am putting back and put back another $6,000 into a Roth IRA and still do anything. Thoughts?

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[thegrouse]

I can only speak for my situation but it involves getting a handle on your spending. Of course there is a base amount needed to live but that is where lifestyle comes into play. Your situation may not allow for a maximum contribution at this moment but any raise you get can be added. I started years ago and set my lifestyle around that amount. Every raise I have got I have invested. I have a spreadsheet for my spending and I know when I spend too much. If you do not have a budget to really know where you money is going it really helps.

[AndrewIBEW]

Thanks guys, great thread. And just in time for my new job and a shutdown with lots of OT.

[glen]

I split every raise I get with my retirement account. Wish I would have started earlier. When I had kids I put $15k into an account for school. By the time my oldest was out of HS it is enough to lessen burden of school. I buy used cars, live on cash, and have enough in current house to sell and build next house cash with some left in the tank. It’s is really simple-
I have always went in to work when available for overtime. Never turn it down unless I have family event planned. Don’t blow it when I get it

[Throwin Darts]

ThrowinDarts... I have always wondered how steps 3 and 4 are possible to those that aren't in a percentile higher than my own.

Sending screen shot of my deductions where you will see health, vision, dental, HSA, taxes, car insurance, car payment and a few other deductions. What is left is still a nice chunk of change, however, we still haven't got to the mortgage, utilities, doctor visits, groceries, etc. And we don't even have a kid yet, so there is no 529 contribution or increased Healthcare costs.

I am contributing 14.5% with a 5.5% match. This ends up being just under $13,000, $9,300 of which is mine. I don't see how I could possibly nearly double what I am putting back and put back another $6,000 into a Roth IRA and still do anything. Thoughts?

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Step 2 would be contributing to the 401k up to the employer match.
Step 3 would be contributing to the Roth IRA up to the IRA annual limit
Step 4 would be maxing out the 401k to the IRS limit

If I'm reading your post correctly you are contributing 14.5% to your Roth 401k and are making no contributions to a Roth IRA. Is that correct?

Since your employer provides a 5.5% match in your 401k then I'd consider limiting my 401k contributions to 5.5%. This would complete step 2.

Then I'd open a Roth IRA and set up automatic contributions that would max out your contributions to the account which need to be $6,000 for 2019. This would complete step 3.

The next step, 4, would be to max out your 401k up to the IRS limit. To achieve this I'd go into my 401k and have it automatically increase my contribution percentage each year. This will take some time but you'll eventually complete step 4 by doing this.

By diverting funds from your 401k to a Roth IRA you'll most likely have better investment options at a lower cost which should increase your returns over the long run. You would also have more flexibility due to a Roth IRA not having required minimum distributions like a 401k.

One other thing to consider is that it is a good idea to be diversified not only in your investments but also the tax treatment of your investments. If you go the route described above and contribute to a Roth IRA then I'd consider making future contributions to the 401k on a pretax basis and not on a Roth 401k contribution (after tax) basis. Doing so would give you some pretax investments (401K) and some post tax investments (Roth IRA) and it would give you flexibility depending on the tax climate at retirement. It would also help you achieve Step 4 faster. Just a thought.