401k question with pole!

[kalrith]

Do the 6% for sure. You won't miss the money as much as you think since you'll get a tax break on it. Also, how old are you? My wife and I are 26 and 27, respectively, and the money we put in now will make a much bigger difference in our retirement than if we started when we're 35, for example. We've both been putting in 10% (5% matched at 100% by employers) for the past two years. Money's really, really tight for us right now, but we're not changing our contributions as long as we can pay our bills.

 

[SearchMaster]

I am a huge 401K proponent, but pay your debt first. Your two CC's are fairly small balances, you should be able to knock those off very quickly. The loan will obviously take longer but once you get the other two paid, it will seem much more manageable. I like the Dave Ramsay plan of paying your lowest balances first and paying the minimum on the rest.

I also like your idea of working part-time. If you pour every one of those dollars into your debt, I can't imagine it would take more than a few months to pay them off. 6 months of pain would translate to much more financial freedom, where you can up your 401K and not feel pinched at all.

Good luck!

 

[Yossarian]

Keep in mind that the 401k contributions are pre-tax, so in addition to the company match you also gain by having a lower taxable income.

 

[Rage187]

yes, take the free money. Now is the best time to put extra money in your 401k because it will go further with stock prices down so much.

 

[acheron]

Originally posted by: IHateMyJob2004
Another 401K thread where the OP doesn't say WHERE THEY WORK.

I'm assuming it is 100% match on company stock only. And if so, what company you work for is of importance. Anyone who gave responses already without knowing this is a fool.

Why would you assume that? I've never seen a company that only matches on stock, and I've worked for both private and public companies. Maybe it's common and I've just happened to avoid it, but that seems like a terrible idea for the employees.

 

[mb]

What is this I hear about Obama and the Democrats wanting to take your 401k and put it into social security? I'm guessing/hoping it's just a rumor because I can't find any solid information about it online. Anyone know?

 

[crystal]

Originally posted by: rasczak

Originally posted by: crystal
That 6% you put in give you a return of 100% on the spot. vs high teen% on your debt. I said, increase in the 401K and look at some way to cut cost & pay off that dept. $400 per month for 2 people are plenty - I am sure you can go lower than that, no more going out until those debts are pay off. And what are you waiting for, cut/drop cell & internet to the basic.
How is your time? With the holiday coming up, you &/or wife can get a part-time job and pay off that dept in no time.

I have two little ones. As far as time is concerned I have some on the weekends (friday included) so i may try to go back into the restaurant industry to help pay this down.

Didn't know you have 2 little ones... But try to get a part-time job, it should help.

 

[HardcoreRobot]

Originally posted by: acheron

Originally posted by: IHateMyJob2004
Another 401K thread where the OP doesn't say WHERE THEY WORK.

I'm assuming it is 100% match on company stock only. And if so, what company you work for is of importance. Anyone who gave responses already without knowing this is a fool.

Why would you assume that? I've never seen a company that only matches on stock, and I've worked for both private and public companies. Maybe it's common and I've just happened to avoid it, but that seems like a terrible idea for the employees.

my previous company defaulted the match into the stock, but i was free to reallocate. i thought they made that mandatory after the Enron f up?

 

[thegimp03]

Normally I would say to increase your contributions to get the full Company match. In this case and current state of the economy, however, less debt is better. I would try to split the difference. Increase your contributions from 1% to to maybe 3-4% while paying your debt off at the same time. Right now is a great time to be putting some money into the stock market because stock prices are down so I would definitely bump up my contributions but not so much that it inhibits my ability to pay off debt.

 

[kranky]

Originally posted by: acheron

Originally posted by: IHateMyJob2004
Another 401K thread where the OP doesn't say WHERE THEY WORK.

I'm assuming it is 100% match on company stock only. And if so, what company you work for is of importance. Anyone who gave responses already without knowing this is a fool.

Why would you assume that? I've never seen a company that only matches on stock, and I've worked for both private and public companies. Maybe it's common and I've just happened to avoid it, but that seems like a terrible idea for the employees.

I think "100% match on company stock only" means that the matching money is given in company stock. That's not terribly unusual.

 

[racolvin]

401k savings is great, but the debt burden is hell, especially in a young family. For what it's worth, here's my suggestion:

1) Up your 401k contribution to 3% - at least get some of that free money.
2) Pay CASH for everything from now on - no credit cards or charge accounts for a while
3) Focus all your efforts on paying off the Dell balance first - pay the minimums on the others
4) As soon as your Dell balance is paid off, focus all your repayment efforts on the Visa balance, continuing with the minimums on the others.
5) When your Dell and Visa balances are gone, what remains is that bank balance. Look at what amount of money you have available to pay off and see how long it would take to pay off the bank balance. If that amount of time is greater than 6 months, then take that debt repayment amount and put 50% of that toward the bank balance and 50% into a savings account. You NEED to have an emergency fund being built. If its less than 6 months, pay off the bank balance ASAP
6) Once the bank balance is paid off, up your 401k to 6% to get the full free money benefit
7) Continue paying into the Emergency Fund until you've saved at least 3, preferably 6 months worth of living expenses.
8) Once you've built your Emergency Fund, max out your 401k as much as possible. By the time you reach this point chronologically, you might have gotten a raise or something - send that straight to the 401k. Keep doing this over time until you reach your maximum 401k contribution amount per year (currently $15.5k if you're under 50)

You've already mentioned cutting back on things and as another poster mentioned, feel free to get rid of your landline UNLESS it is somehow connected to your internet service, like DSL. In many cases you get a discount for having the landline+DSL service rather than DSL service alone. Definitely cut your internet down to the lowest cost plan but don't cut it off completely.

Without getting into alot more of your financial situation there's no way to build a specific plan for you I'm afraid. In the current economy and for the next 18 months it certainly seems more prudent to me to be rid of the debt sooner rather than later. Free money for retirement is awesome but putting food on the table matters more right now.

 

[Rage187]

Originally posted by: mb
What is this I hear about Obama and the Democrats wanting to take your 401k and put it into social security? I'm guessing/hoping it's just a rumor because I can't find any solid information about it online. Anyone know?

a stupid rumor. He couldn't legally do that and the fallout for even mentioning something like that would have wrecked his chances.

 

[mb]

Originally posted by: Rage187

Originally posted by: mb
What is this I hear about Obama and the Democrats wanting to take your 401k and put it into social security? I'm guessing/hoping it's just a rumor because I can't find any solid information about it online. Anyone know?

a stupid rumor. He couldn't legally do that and the fallout for even mentioning something like that would have wrecked his chances.

That's what I figured. It seems way too out there for even the most liberal person to think it would be a good idea.

 

[Vette73]

Originally posted by: rasczak

Originally posted by: Marlin1975
So how much CC debt do you have?
Can you cut back on some stuff to pay if off faster?
Can you get a new credit card, since you said your credit rating has gone up, and move all your dent to 1 low intrest rate card?


But you really need to cut back on anything and everything. You have cable? cut it. You eat out? don;t, take your lunch to work and cook basic meals. and so forth.

So how much CC debt do you have?
$4200 loan from bank 14.25%
$500 Visa 18.99%
$450 Dell 23.99%

Can you cut back on some stuff to pay if off faster?
I've already cutback on our cellphones and may drop 2 tiers on my internet connection plus drop our landline to the most basic. This would save approximately $100 a month. I've also asked my wife to call her cards to negotiate on getting the interest rate down on her card as well. Plus we don't eat out too much anymore. We've cut our monthly budget for food from $600 to $400 which i think Is feasible without starving us.

Can you get a new credit card, since you said your credit rating has gone up, and move all your dent to 1 low intrest rate card? Unfortunately, no i cannot. my credit score is in the tank at the moment, hence why I have been trying so hard to payoff these cards and build up my credit.

Well i would pay off the Dell and Visa first. Then after those 2 are gone then do the full 6% on your 401k. And yea cut back on the internet and anything else. The landline should go unless you really need it for business?

 

[kranky]

If your credit card balances are more than 10% of your credit limit, you'll be helping your credit score improve sooner by paying off those debts.

 

[DaveSimmons]

Originally posted by: Marlin1975

Originally posted by: rasczak
So how much CC debt do you have?
$4200 loan from bank 14.25%
$500 Visa 18.99%
$450 Dell 23.99%

Well i would pay off the Dell and Visa first. Then after those 2 are gone then do the full 6% on your 401k. And yea cut back on the internet and anything else. The landline should go unless you really need it for business?

From what you've said you should be able to pay off both the Dell and Visa debt in ~4 months if you're frugal this xmas (spending ~$300 total, losing one month of paying down).

That's the time to go up to at least 3% and preferably to 6%. You'll have 2 less payments to make, and the good feeling from only having one loan left.

At that point you should also set up a savings account some place like INGDirect, and have (say) $25 a month taken out of your checking account automatically. Never go look at the balance, just let it grow untouched.

 

[JS80]

Screw your debt, that's 100% guaranteed return. Do 6%.

 

[FlashG]

Originally posted by: mb

Originally posted by: Rage187

Originally posted by: mb
What is this I hear about Obama and the Democrats wanting to take your 401k and put it into social security? I'm guessing/hoping it's just a rumor because I can't find any solid information about it online. Anyone know?

a stupid rumor. He couldn't legally do that and the fallout for even mentioning something like that would have wrecked his chances.

That's what I figured. It seems way too out there for even the most liberal person to think it would be a good idea.

O RLY?
Text
Text
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I don't know about the politics of these people but it looks like someones thinking about it.

 

[mb]

Originally posted by: FlashG

Originally posted by: mb

Originally posted by: Rage187

Originally posted by: mb
What is this I hear about Obama and the Democrats wanting to take your 401k and put it into social security? I'm guessing/hoping it's just a rumor because I can't find any solid information about it online. Anyone know?

a stupid rumor. He couldn't legally do that and the fallout for even mentioning something like that would have wrecked his chances.

That's what I figured. It seems way too out there for even the most liberal person to think it would be a good idea.

O RLY?
Text
Text
Text
I don't know about the politics of these people but it looks like someones thinking about it.

I've had a little more time to do some research on the topic. Turns out it was an idea proposed by Teresa Ghilarducci, some economics professor.

In her House committee testimony, she proposed a plan in which workers would get a $600 tax refund but must set aside 5 percent of their pay into a retirement account managed by the Social Security Administration. The money would be invested in government bonds to earn at least 3 percent interest.

Crazy woman should be fired. How could anyone in her position be so naive?

 

[FlashG]

Originally posted by: mb

Originally posted by: FlashG

Originally posted by: mb

Originally posted by: Rage187

Originally posted by: mb
What is this I hear about Obama and the Democrats wanting to take your 401k and put it into social security? I'm guessing/hoping it's just a rumor because I can't find any solid information about it online. Anyone know?

a stupid rumor. He couldn't legally do that and the fallout for even mentioning something like that would have wrecked his chances.

That's what I figured. It seems way too out there for even the most liberal person to think it would be a good idea.

O RLY?
Text
Text
Text
I don't know about the politics of these people but it looks like someones thinking about it.

I've had a little more time to do some research on the topic. Turns out it was an idea proposed by Teresa Ghilarducci, some economics professor.

In her House committee testimony, she proposed a plan in which workers would get a $600 tax refund but must set aside 5 percent of their pay into a retirement account managed by the Social Security Administration. The money would be invested in government bonds to earn at least 3 percent interest.

Crazy woman should be fired. How could anyone in her position be so naive?

I'm meeting with my financial advised next week and this is going to be one of out talking points. I'll report back if anything interesting comes up.

 

[FlashG]

Originally posted by: FlashG

Originally posted by: mb

Originally posted by: FlashG

Originally posted by: mb

Originally posted by: Rage187

Originally posted by: mb
What is this I hear about Obama and the Democrats wanting to take your 401k and put it into social security? I'm guessing/hoping it's just a rumor because I can't find any solid information about it online. Anyone know?

a stupid rumor. He couldn't legally do that and the fallout for even mentioning something like that would have wrecked his chances.

That's what I figured. It seems way too out there for even the most liberal person to think it would be a good idea.

O RLY?
Text
Text
Text
I don't know about the politics of these people but it looks like someones thinking about it.

I've had a little more time to do some research on the topic. Turns out it was an idea proposed by Teresa Ghilarducci, some economics professor.

In her House committee testimony, she proposed a plan in which workers would get a $600 tax refund but must set aside 5 percent of their pay into a retirement account managed by the Social Security Administration. The money would be invested in government bonds to earn at least 3 percent interest.

Crazy woman should be fired. How could anyone in her position be so naive?

I'm meeting with my financial advised next week and this is going to be one of our talking points. I'll report back if anything interesting comes up.

 

[rasczak]

Originally posted by: FlashG

Originally posted by: FlashG

Originally posted by: mb

Originally posted by: FlashG

Originally posted by: mb

Originally posted by: Rage187

Originally posted by: mb
What is this I hear about Obama and the Democrats wanting to take your 401k and put it into social security? I'm guessing/hoping it's just a rumor because I can't find any solid information about it online. Anyone know?

a stupid rumor. He couldn't legally do that and the fallout for even mentioning something like that would have wrecked his chances.

That's what I figured. It seems way too out there for even the most liberal person to think it would be a good idea.

O RLY?
Text
Text
Text
I don't know about the politics of these people but it looks like someones thinking about it.

I've had a little more time to do some research on the topic. Turns out it was an idea proposed by Teresa Ghilarducci, some economics professor.

In her House committee testimony, she proposed a plan in which workers would get a $600 tax refund but must set aside 5 percent of their pay into a retirement account managed by the Social Security Administration. The money would be invested in government bonds to earn at least 3 percent interest.

Crazy woman should be fired. How could anyone in her position be so naive?

I'm meeting with my financial advised next week and this is going to be one of our talking points. I'll report back if anything interesting comes up.

So I was able to cut out $68.00 worth of services every month. Went down 2 tiers on my internet and downgraded our landline to 19.95 each (my wife's notary business needs the line for faxing). So now i have that reallocated to my dell card as well.

 

[kalrith]

Originally posted by: mb

Originally posted by: FlashG

Originally posted by: mb

Originally posted by: Rage187

Originally posted by: mb
What is this I hear about Obama and the Democrats wanting to take your 401k and put it into social security? I'm guessing/hoping it's just a rumor because I can't find any solid information about it online. Anyone know?

a stupid rumor. He couldn't legally do that and the fallout for even mentioning something like that would have wrecked his chances.

That's what I figured. It seems way too out there for even the most liberal person to think it would be a good idea.

O RLY?
Text
Text
Text
I don't know about the politics of these people but it looks like someones thinking about it.

I've had a little more time to do some research on the topic. Turns out it was an idea proposed by Teresa Ghilarducci, some economics professor.

In her House committee testimony, she proposed a plan in which workers would get a $600 tax refund but must set aside 5 percent of their pay into a retirement account managed by the Social Security Administration. The money would be invested in government bonds to earn at least 3 percent interest.

Crazy woman should be fired. How could anyone in her position be so naive?

[sarcasm]Earning 3 percent interest and being managed by the Social Security Administration is exactly what I want my retirement money to be doing![/sarcasm]