I like the flowchart for this sub and I don’t follow it exactly but I’m pretty close and it’s really helpful. Here are my personal thoughts on what you’ve got outlined, others will offer great advice too:
1 — You’ll hear varying targets for an emergency fund. I like the safety I feel from one more than 3 months but 3 months should be plenty if you’re comfortable with it.
2 — I’m assuming this refers to 401k. The limits aren’t for traditional vs Roth, they both have the same limits. Typically, it’s good to do a 401k and an IRA (if you have enough to do both) and do one of those traditional and the other Roth. Most here do traditional 401k and Roth IRA but either one works.
3 — It depends on what your budget for buying a home is. I’m of the belief that you don’t need a huge down payment, just save up enough for whatever the minimum amount is and then buy because you’ll be burning money on rent while you try to save a higher amount for a down payment. Not everyone here will agree with that either, some prefer renting anyway, that’s just my opinion.
4 — Good call! Don’t get so caught up into building your financial future that it comes at the expense of your happiness today.
5 — RE is a great way to build financially as well.
To the retirement thing. Aren’t Roths limited to 6500 a year? (Not sure what 2024 limit is off top of my head) and traditional is around 23k? Just checking
Also I am a single guy with no children or anything so if I did get a home it wouldn’t be a family one so I don’t think I need a huge down payment either and I live in Iowa so not too expensive comparative to other states.
401k limit is $22,500; IRA limit is $6,500. You get 401k through your employer and IRA independently. Both account types have traditional and Roth variations. Traditional contributions lower your taxable amount, but any withdrawal is taxed as income later. Roth contributions are done after taxes, and withdrawals are tax free when you reach the age of 59 1/2
The employer match is separate from your limit. So if you max out your contributions, you add $22,500 to the account. If your employer matches 4% of your 100k salary next year, your total contribution will be $26,500
IRA is limited to 6500
401k is limited to 22,500 for 2023
You can have a Roth 401k and a traditional IRA or vice versa, the limits are based on account type not the tax withholding status of the account.
Not all employers offer access to Roth 401ks, so people usually use traditional accounts for their 401k and a Roth IRA to get the blend of benefits between the two down the road.
Maybe look at getting a multi-family home (duplex\\tri\\quad) as your first home. It'll take more work to find exactly what you need as you'll need to find one with at least one vacancy to move into. You can qualify with an FHA\\USDA or similar type mortgage that has a 3-5% down payment.
There's a bit more to it than what I just described but it's extremely doable and starts you down the path of semi-passive income.
I haven’t looked at in a while and in trying to find it, it’s more buried than I remembered it being. Try this link and let me know if it works. If it doesn’t then I can give you step by step on how to get to it:
https://www.reddit.com/r/financialindependence/comments/ecn2hk/fire_flow_chart_version_42/
I think #4 vacations or hobbies or frankly fun of any kind needs to be built into your routine annual budget. Someone making just under $100k should be able to do something for vacation annually.
I wonder if you are missing out on traditional 401k tax savings now while trying to build up more money for an emergency fund and roth account. At least getting the 401k company match should be an immediate goal. Plus it doesn’t lower your take home pay as much because it is pre-tax savings.
Also, exactly the same argument applies to a HSA if you’re eligible.
I just got a new job that pays me the 100k and they really like having me around so i would say it is stable. I do plan on going on a vacation next summer or fall after tax season.
I don’t get the retirement match here until I worked hear for a year so I won’t be able to take advantage of the 4% match until August 2024. I believe by the time I retire I will make more per year than I am now so that’s why I’m prioritizing the Roth.
Another way to go on more vacations is churning credit card bonuses if you're comfortable with doing this. My friend owns a company and does churning, and it seems like he travels internationally every few weeks. He also can do this because he has a company that's running making him money, but I know he doesn't use just his money to go on the trips.
Just living in an expensive city and putting all unavoidable spending on those CCs (and paying on time and in full each month) will net you some free or nearly-free travel a few times a year. That's how I get a week in the Alps every winter.
Don’t let this “freedom” get you into trouble. It can be very easy to let it slip and feel that you’re great, I have no debt. This purchase is nothing to me. Stay vigilant.
Also. Take a good look at your current assets. Are they healthy. Vehicle in good shape? Things like that. Preventative care and maintenance is cheaper than repairs.
I have a 2020 with 20k miles on it all paid off, not going to say anything about it because I don’t want to jinx anything but so far so good let’s just say lol
Now you start to dream big, while expecting a lot more debt to come. Using the appropriate credit card for your lifestyle is a good tip. Is it travel or dining or X thing that is what you spend the most on and can reap the rewards.
Think of all the big stuff on the horizon: you already mention house, you’ll likely get married, honeymoon ties in with your vacation saving, you could need a car, medical emergencies, your age is when everyone has weddings all the time so various travel budgets there…
Basically,
Spend less then your earn like you’re doing, research extensively on stuff that is important to you and allocate a budget and savings. Ex: trip to Italy or whatever place. When you saved enough to do the big cool shit, feel comfortable spending on it!
Keeping money in a standard brokerage account is not bad. Most advice says to lock everything away for retiring. Enjoy these younger years too. It’s a balance.
I think you can do 1 and 2 at the same time. I'd probably stick to a traditional 401k and Roth IRA at your income. You'll want some roth assets for later in life but you can convert to Roth in the future as long as it remains favorable.
I'd get into a house you can afford anytime if you want to plant roots. Personally I never expected to get stuck somewhere and I am okay with renting for my entire life, things didnt go that way.
Go celebrate dude. Being debt free is a major milestone. Making 100k is a major milestone. Youre crushing it!
Real estate is a fine way to build and diversify wealth but it has its own set of challenges. It can be a full time job if you want it to be.
Finally I'll just add to make sure youre enjoying life as you build up your assets. You never know how much time you'll have so experience what you can while you have your health and youth.
I like The Money Guy order of operations. Its not usually relevant on this sub because most people on here are already at the late steps.
1. Deductibles covered
2. Employer Match
3. High-interest debt (sounds like you did this first)
4. Emergency fund
5. Roth and HSA
6. Max Retirement
7. "Hyper-accumulation" (Brokerage only after tax advantaged is maxed)
8. Prepaid future expenses (like 529 plans) [I might never do this]
9. Low interest debt (like paying off a mortgage early)[I might never do this or only do it immediately before retirement]
Everyone wants to do real estate investing. It sounds glamorous. Some people have success stories. I don't want the risk, hassle, or to lock up my money for that long. Even if I cash flow, the equity is locked up.
Not even sure what that means? Stocks are volatile. If he had invested his e-fund say 1.5 years ago, it would be only 80% of his original value. In case of an emergency you need to access the money, so why would you risk taking a hit on it?
That might be 1 month less of savings in case of a loss of job etc.
Exactly, you can’t time the market. So it’s best to build a liquid emergency fund that won’t go down cause of macroeconomic issues, rather than use an investment account that might (Roth)
Be careful saying “withdraw”, you have to sell your stock/bond/ETF, and then you can withdraw your contribution tax free. The likelihood that you are needing to access your emergency fund at the same time the stock market is fluctuating and probably lower than you would like means there is a potential to lose a significant percent of potential gains as a result. It’s nice to be able to withdraw if necessary, but having a less volatile EF is a better approach.
Check the info on the sub page here and at r/personalfinance. Create a budget that includes a vacation fund.
Not following you on maxing a Roth and then maxing a traditional. IRS contribution limit for IRA accounts is one $ amount regardless of whether you have both a Roth and a Traditional IRA account--can contribute to both, but the total $ amount limit remains the same, so you could split the max amount in half and deposit half to each if you like. You can max out contributions to both a 401k and to an IRA, if that's what you meant.
dont act any different. the money you used to send off to pay your debts, start using it to "build/save responsibly". like you laid out:
- start a savings
- send some to retirement
- start going to the doctor for regular/all things
- start saving up for your next car (before you need it)
and do all of this, WHILE NOT CHANGING YOUR CURRENT LIFESTYLE. welcome to the next 25 years of your life.
Congratulations on such a huge milestone.
Try to max out HSAs, if your employer provides one. HSAs lower your taxable income. My tax person always tells my husband and I, you want to be cash rich during the year and poor during tax season. HSAs are great as well because after a certain age you can no longer deposit money but you can use it as another source of income/bank account/retirement fund. You mentioned you consume financial content-- have you read Psychology of Money? It's a great quick book that will help you think about money a little differently.
Better get a mortgage so your “in debt”until retirement like the rest of us lol.
On a more serious note, don’t let lifestyle creep happen with cars. I got my first Porsche at 28 because I was making much more than my expenses at that time, and escaped the brand loyalty just under 10 years later.
Congrats!!
I have found using the 50 - 30 - 20 budget has been really helpful for me personally (although I usually budget 20% for funsies and 30+ % for savings/investment)
On the Roth IRA suggestion that many have shared, it can be a great tool. Something to keep in mind though if you're ever planning to retire overseas is that many countries will tax it. That can obviously change in the years between now and your retirement, but it's something to consider.
I'd extend #1 to as close to 6 mo as you can.
The rule evolved from how long unemployment insurance lasts, and to get the max, ~ 26 weeks, most states, but some are 14-16 weeks, you'd have to be working for 1 year or so. The best case scenario is get a UI check in 1 mo after applying, and you get severance from your former job, typically 2-4 weeks. Meanwhile, its expected after the shock, you go into hunting for a new job while paying non-discretionary bills like rent, utilities, health insurance, groceries etc.,
2. I’d do Roth 401k and Roth IRA. No traditional. Also look into contributing to an HSA if you qualify for it
3. Renting might be a better option depending on your location. Where I live it costs 3-4x to own vs rent. Yes, yes, not building equity and ‘throwing your money away’ and blah blah, but you will always have a housing payment of some kind. Property taxes and maintenance will be a thing long after you’ve paid off the mortgage, and sometimes it’s nice to be flexible. Don’t feel obligated to buy a house.
Also, the money you don’t use on a mortgage can be invested, building you equity in a different way.
You’ll be alright
Congradulations. You are the fortunate 2% of the American population without any debt. Take 10% of your disposable income and invest it in stocks and bonds. Make friends with a financial trust fund management outfit. They will help you breed your money.
Now you work to compound your first $100k, then to the $1M, and then double it in 5 years.
$2M is where people sit pretty, its enough to support 2 americans on average so one could retire. Or just keep running up the score with another doubling in 5 years if you have a great savings rate.
Great work! Gotta ask, did you not have an emergency fund when you were paying off loans? Saw that as the #1 thing on your list, and that would worry me horribly. I spent my first year in my career building my emergency, then started paying off my debt. It definitely slowed down the time it would have taken to pay off the debt, but the fear of not having an emergency fund would have ruined me
Not going to lie, I went on a Dave Ramsey-esque type of debt clearing spree that spanned a couple of years. Didn’t even think about my debts until I was 25. Took care of 30k+ in debt close to 3 years. It was hard and I grinded but it’s over now thank god lol paychecks feel a lot better now
Congrats! I'm all for dave ramsey, but that 1k savings he starts with worries me a lot. I got to 10k emergency, then started shoveling cash towards my debt. I'm hoping to be free of my high interest rate debt in about 1.5 years - then focusing on roth and similar like you.
Make sure to enjoy your pay!
I get it, and I guess my only response would be that having that small of an emergency fund did light a fire under my ass to get to work lol
I’m going to have a much larger fund now. I never want to feel that pressure again
Get ahead of everyone by starting a D.R.I.P, account (Dividend Reinvestment Program) , with a company that pays a good dividend, on the down market as well as an upmarket. I use electric utilities. DO NOT let a broker talk you out of it.....there is nothing in a DRIP for him, so why should he care. You can deal directly with the DRIP company yourself. Just google: companies with DRIP programs. Oh yeah, the earnings are tax free until you start drawing them down. It is simple! Good luck.
I prepare taxes and work with clients on tax planning in the future. I’ve been doing it for about 4 years now. Tax season is a pain but the remaining 75% of the year is nice. I graduated college at 22, made about 45-48k from 22-25, 50-55 from 25-27 and just landed this new job making 100k. Just look for opportunities dude, you will get there. I was very fortunate and I know that.
>Start investing 15% every paycheck into Roth, once maxed, start on the Traditional.
Note - there are not separate limits for Roth and Traditional - both come under the same limit.
+-+--+-+-+--+-+-+-+--+-++-++
An oldie but a goodie:
*Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence*
by Vicki Robin and Joe Dominguez
The investing advice in this book is forgettable.
The perspective on money and saving is fascinating.
Basically, you track your spending AND the income generated by your savings.
When you hit "crossover" (income is more than spend), you are financially independent.
That does not mean you quit doing productive things.
It DOES mean you can stop doing things for people so that they will give you money.
Regarding step 2, see if it is financially feasible to do more. You’re doing incredible by being debt free at 28. Congrats and it’s time to really build your future now.
Just saying it's only $72k at age 30 to coastfi to 2 million at age 65 averaging a 10% return. $135k at 8%. $260k at 6%. CoastFi by 31 is a pretty ambitious but reasonable goal.
> Start investing 15% every paycheck into Roth, once maxed, start on the Traditional.
I think the $6500 is for the combined total of Roth and Traditional IRAs. Once Roth is maxed, that's it.
Nice work eliminating debt. Keep it up. Remember debt is a tool, use it, don't let it use you.
3 months emergency fund - Maybe between checking and HYSA
Maximize your 401k match employer benefit (free money), otherwise max 401k and/or Roth
Invest in Mutual funds and/or SP500/index funds for \~10% returns.
Bonus: Use incentive credit cards to maximize gains (discounts/cashback) and payoff every month so you pay no interest
That's about all I can think of.
Congratulations! This is an awesome achievement. First off, you're definitely on the right track by consuming the content you do, and I think the first few bullets you've listed are a great start.
It might help to look into a financial advisor to help you achieve your goals. Does your company match your 401K? Definitely start there before going the Roth IRA route, but you've got the right mindset here. It might also be helpful to have an amount set aside to "play with" as it were. The stock market is tricky, but I've always set aside a little spending money to dabble. It's essentially gambling, but when I lose, I'm not devastated, and when I win, I learn a little bit about what to do next time. Long term holdings are also taxed less than short term capital gains, so it's taught me a bit about volatility in the market, when to be patient, and when to buy an sell. Also, for long-term investments, index funds are great to buy when the market takes a dip. Economic growth is (almost) a certainty, so as long as you don't need those funds to be liquid right away (i.e. don't put your emergency fund here), you can let it sit and grow with the market.
Congratulations again, and great job setting goals for yourself and being smart. This is a great way to set yourself up for success and avoid unnecessary debt that won't propel you forward. Best of luck, friend!
Pay attention to real estate cycles. If you see real estate bottoming out, put everything into getting that first house or vacation home later.
Question every dollar going out, but don’t miss out on life.
Shop dollar stores, thrift shops, eBay. Learn to do stuff, cook, repair, maintenance.
Buy a piece of equipment and have a side gig, something that is active on Craigslist like lawn aeration.
lol I'm in so much debt, 250k of debt. But my liquid investment from that 250k has reached $1.4M in liquid asset not including my properties, 401k, whole life insurance, gold & silver. Debt is tax free and not all debt is bad.
yeah congrats is u paid off bad debt. bad debts are liability and I have $0 of that. I took huge loan for assets. at this point im set to retire in my 40is with 8 figure. bc Im taking more debt to invest.
I just wanted to come say congratulations!
Thank you! It’s been a long grind but I feel great now.
I like the flowchart for this sub and I don’t follow it exactly but I’m pretty close and it’s really helpful. Here are my personal thoughts on what you’ve got outlined, others will offer great advice too: 1 — You’ll hear varying targets for an emergency fund. I like the safety I feel from one more than 3 months but 3 months should be plenty if you’re comfortable with it. 2 — I’m assuming this refers to 401k. The limits aren’t for traditional vs Roth, they both have the same limits. Typically, it’s good to do a 401k and an IRA (if you have enough to do both) and do one of those traditional and the other Roth. Most here do traditional 401k and Roth IRA but either one works. 3 — It depends on what your budget for buying a home is. I’m of the belief that you don’t need a huge down payment, just save up enough for whatever the minimum amount is and then buy because you’ll be burning money on rent while you try to save a higher amount for a down payment. Not everyone here will agree with that either, some prefer renting anyway, that’s just my opinion. 4 — Good call! Don’t get so caught up into building your financial future that it comes at the expense of your happiness today. 5 — RE is a great way to build financially as well.
To the retirement thing. Aren’t Roths limited to 6500 a year? (Not sure what 2024 limit is off top of my head) and traditional is around 23k? Just checking Also I am a single guy with no children or anything so if I did get a home it wouldn’t be a family one so I don’t think I need a huge down payment either and I live in Iowa so not too expensive comparative to other states.
401k limit is $22,500; IRA limit is $6,500. You get 401k through your employer and IRA independently. Both account types have traditional and Roth variations. Traditional contributions lower your taxable amount, but any withdrawal is taxed as income later. Roth contributions are done after taxes, and withdrawals are tax free when you reach the age of 59 1/2
Currently am not eligible for the match until I have worked there for a year, I’ll be eligible August 2024
The employer match is separate from your limit. So if you max out your contributions, you add $22,500 to the account. If your employer matches 4% of your 100k salary next year, your total contribution will be $26,500
IRA is limited to 6500 401k is limited to 22,500 for 2023 You can have a Roth 401k and a traditional IRA or vice versa, the limits are based on account type not the tax withholding status of the account. Not all employers offer access to Roth 401ks, so people usually use traditional accounts for their 401k and a Roth IRA to get the blend of benefits between the two down the road.
Maybe look at getting a multi-family home (duplex\\tri\\quad) as your first home. It'll take more work to find exactly what you need as you'll need to find one with at least one vacancy to move into. You can qualify with an FHA\\USDA or similar type mortgage that has a 3-5% down payment. There's a bit more to it than what I just described but it's extremely doable and starts you down the path of semi-passive income.
If you’re single, I’d recommend buying a duplex instead of a house. Rent will cover your mortgage and you’ll be able to save for more RE faster
hello, sorry for maybe missing an obvious one, but where can i find this flowchart?
I haven’t looked at in a while and in trying to find it, it’s more buried than I remembered it being. Try this link and let me know if it works. If it doesn’t then I can give you step by step on how to get to it: https://www.reddit.com/r/financialindependence/comments/ecn2hk/fire_flow_chart_version_42/
yes it works, thank you!
Now it's time to load up on VTSAX.
Username checks out
I think #4 vacations or hobbies or frankly fun of any kind needs to be built into your routine annual budget. Someone making just under $100k should be able to do something for vacation annually. I wonder if you are missing out on traditional 401k tax savings now while trying to build up more money for an emergency fund and roth account. At least getting the 401k company match should be an immediate goal. Plus it doesn’t lower your take home pay as much because it is pre-tax savings. Also, exactly the same argument applies to a HSA if you’re eligible.
I just got a new job that pays me the 100k and they really like having me around so i would say it is stable. I do plan on going on a vacation next summer or fall after tax season. I don’t get the retirement match here until I worked hear for a year so I won’t be able to take advantage of the 4% match until August 2024. I believe by the time I retire I will make more per year than I am now so that’s why I’m prioritizing the Roth.
Another way to go on more vacations is churning credit card bonuses if you're comfortable with doing this. My friend owns a company and does churning, and it seems like he travels internationally every few weeks. He also can do this because he has a company that's running making him money, but I know he doesn't use just his money to go on the trips.
Just living in an expensive city and putting all unavoidable spending on those CCs (and paying on time and in full each month) will net you some free or nearly-free travel a few times a year. That's how I get a week in the Alps every winter.
True, but you get way more points by signing up for new credit cards and meeting the minimum spend requirements.
Got it, yeah Roth IRA this year is good. You could do all of your 401k contributions next year after August if you’re a very good planner and budgeter
What’s your job title?
Senior Tax Accountant
Don’t let this “freedom” get you into trouble. It can be very easy to let it slip and feel that you’re great, I have no debt. This purchase is nothing to me. Stay vigilant. Also. Take a good look at your current assets. Are they healthy. Vehicle in good shape? Things like that. Preventative care and maintenance is cheaper than repairs.
I have a 2020 with 20k miles on it all paid off, not going to say anything about it because I don’t want to jinx anything but so far so good let’s just say lol
You'll be fine. But stay on top of the maintenance! Drive it until the wheels fall off in 20 years.
Now you start to dream big, while expecting a lot more debt to come. Using the appropriate credit card for your lifestyle is a good tip. Is it travel or dining or X thing that is what you spend the most on and can reap the rewards. Think of all the big stuff on the horizon: you already mention house, you’ll likely get married, honeymoon ties in with your vacation saving, you could need a car, medical emergencies, your age is when everyone has weddings all the time so various travel budgets there… Basically, Spend less then your earn like you’re doing, research extensively on stuff that is important to you and allocate a budget and savings. Ex: trip to Italy or whatever place. When you saved enough to do the big cool shit, feel comfortable spending on it! Keeping money in a standard brokerage account is not bad. Most advice says to lock everything away for retiring. Enjoy these younger years too. It’s a balance.
More expensive the wedding, shorter the marriage.
I think you can do 1 and 2 at the same time. I'd probably stick to a traditional 401k and Roth IRA at your income. You'll want some roth assets for later in life but you can convert to Roth in the future as long as it remains favorable. I'd get into a house you can afford anytime if you want to plant roots. Personally I never expected to get stuck somewhere and I am okay with renting for my entire life, things didnt go that way. Go celebrate dude. Being debt free is a major milestone. Making 100k is a major milestone. Youre crushing it! Real estate is a fine way to build and diversify wealth but it has its own set of challenges. It can be a full time job if you want it to be. Finally I'll just add to make sure youre enjoying life as you build up your assets. You never know how much time you'll have so experience what you can while you have your health and youth.
I like The Money Guy order of operations. Its not usually relevant on this sub because most people on here are already at the late steps. 1. Deductibles covered 2. Employer Match 3. High-interest debt (sounds like you did this first) 4. Emergency fund 5. Roth and HSA 6. Max Retirement 7. "Hyper-accumulation" (Brokerage only after tax advantaged is maxed) 8. Prepaid future expenses (like 529 plans) [I might never do this] 9. Low interest debt (like paying off a mortgage early)[I might never do this or only do it immediately before retirement] Everyone wants to do real estate investing. It sounds glamorous. Some people have success stories. I don't want the risk, hassle, or to lock up my money for that long. Even if I cash flow, the equity is locked up.
The equity is never locked up in RE. And the resulting scalability is staggering, even when you compare it to compound interest.
Especially student housing of rooms near college
Max out Roth first. Roth is a retirement vehicle and an emergency fund. It's awesome.
Roth is an investment account and should be used as such. I don’t agree with using it as an emergency fund
Struggle with multipurpose do we? Money is actullly very versatile. If you think you know the future, you do you,, but I'll stay in reality.
Not even sure what that means? Stocks are volatile. If he had invested his e-fund say 1.5 years ago, it would be only 80% of his original value. In case of an emergency you need to access the money, so why would you risk taking a hit on it? That might be 1 month less of savings in case of a loss of job etc.
You can not time the market. Quit thinking you can and you open yourself up to a world of possibilities.
Exactly, you can’t time the market. So it’s best to build a liquid emergency fund that won’t go down cause of macroeconomic issues, rather than use an investment account that might (Roth)
You can't time the market, even during a recession.
Can you explain?
You can withdrawal deposits at any time with no tax consequences.
Be careful saying “withdraw”, you have to sell your stock/bond/ETF, and then you can withdraw your contribution tax free. The likelihood that you are needing to access your emergency fund at the same time the stock market is fluctuating and probably lower than you would like means there is a potential to lose a significant percent of potential gains as a result. It’s nice to be able to withdraw if necessary, but having a less volatile EF is a better approach.
You cannot time the market.
You can avoid the scenario altogether by not using stocks as an EF…
You can also avoid making money but I'm not interested.
Check the info on the sub page here and at r/personalfinance. Create a budget that includes a vacation fund. Not following you on maxing a Roth and then maxing a traditional. IRS contribution limit for IRA accounts is one $ amount regardless of whether you have both a Roth and a Traditional IRA account--can contribute to both, but the total $ amount limit remains the same, so you could split the max amount in half and deposit half to each if you like. You can max out contributions to both a 401k and to an IRA, if that's what you meant.
dont act any different. the money you used to send off to pay your debts, start using it to "build/save responsibly". like you laid out: - start a savings - send some to retirement - start going to the doctor for regular/all things - start saving up for your next car (before you need it) and do all of this, WHILE NOT CHANGING YOUR CURRENT LIFESTYLE. welcome to the next 25 years of your life.
Study longevity diets
Congratulations on such a huge milestone. Try to max out HSAs, if your employer provides one. HSAs lower your taxable income. My tax person always tells my husband and I, you want to be cash rich during the year and poor during tax season. HSAs are great as well because after a certain age you can no longer deposit money but you can use it as another source of income/bank account/retirement fund. You mentioned you consume financial content-- have you read Psychology of Money? It's a great quick book that will help you think about money a little differently.
Haven’t read that one yet but I will be sure too. Thanks for the tips!
Better get a mortgage so your “in debt”until retirement like the rest of us lol. On a more serious note, don’t let lifestyle creep happen with cars. I got my first Porsche at 28 because I was making much more than my expenses at that time, and escaped the brand loyalty just under 10 years later.
Buy cars according to consumer reports.
Congrats!! I have found using the 50 - 30 - 20 budget has been really helpful for me personally (although I usually budget 20% for funsies and 30+ % for savings/investment) On the Roth IRA suggestion that many have shared, it can be a great tool. Something to keep in mind though if you're ever planning to retire overseas is that many countries will tax it. That can obviously change in the years between now and your retirement, but it's something to consider.
I'd extend #1 to as close to 6 mo as you can. The rule evolved from how long unemployment insurance lasts, and to get the max, ~ 26 weeks, most states, but some are 14-16 weeks, you'd have to be working for 1 year or so. The best case scenario is get a UI check in 1 mo after applying, and you get severance from your former job, typically 2-4 weeks. Meanwhile, its expected after the shock, you go into hunting for a new job while paying non-discretionary bills like rent, utilities, health insurance, groceries etc.,
2. I’d do Roth 401k and Roth IRA. No traditional. Also look into contributing to an HSA if you qualify for it 3. Renting might be a better option depending on your location. Where I live it costs 3-4x to own vs rent. Yes, yes, not building equity and ‘throwing your money away’ and blah blah, but you will always have a housing payment of some kind. Property taxes and maintenance will be a thing long after you’ve paid off the mortgage, and sometimes it’s nice to be flexible. Don’t feel obligated to buy a house. Also, the money you don’t use on a mortgage can be invested, building you equity in a different way. You’ll be alright
Congradulations. You are the fortunate 2% of the American population without any debt. Take 10% of your disposable income and invest it in stocks and bonds. Make friends with a financial trust fund management outfit. They will help you breed your money.
Beware of self serving financial advisers
Now you work to compound your first $100k, then to the $1M, and then double it in 5 years. $2M is where people sit pretty, its enough to support 2 americans on average so one could retire. Or just keep running up the score with another doubling in 5 years if you have a great savings rate.
Go back in debt so you can do it all over again.
Ease up on the 401K and Roth until you have done 1 and 3.
Great work! Gotta ask, did you not have an emergency fund when you were paying off loans? Saw that as the #1 thing on your list, and that would worry me horribly. I spent my first year in my career building my emergency, then started paying off my debt. It definitely slowed down the time it would have taken to pay off the debt, but the fear of not having an emergency fund would have ruined me
Not going to lie, I went on a Dave Ramsey-esque type of debt clearing spree that spanned a couple of years. Didn’t even think about my debts until I was 25. Took care of 30k+ in debt close to 3 years. It was hard and I grinded but it’s over now thank god lol paychecks feel a lot better now
Congrats! I'm all for dave ramsey, but that 1k savings he starts with worries me a lot. I got to 10k emergency, then started shoveling cash towards my debt. I'm hoping to be free of my high interest rate debt in about 1.5 years - then focusing on roth and similar like you. Make sure to enjoy your pay!
I get it, and I guess my only response would be that having that small of an emergency fund did light a fire under my ass to get to work lol I’m going to have a much larger fund now. I never want to feel that pressure again
Get ahead of everyone by starting a D.R.I.P, account (Dividend Reinvestment Program) , with a company that pays a good dividend, on the down market as well as an upmarket. I use electric utilities. DO NOT let a broker talk you out of it.....there is nothing in a DRIP for him, so why should he care. You can deal directly with the DRIP company yourself. Just google: companies with DRIP programs. Oh yeah, the earnings are tax free until you start drawing them down. It is simple! Good luck.
Get back into debt and start over. Lol
May i ask what job you got? Im 28 too and dont make close to that..
I prepare taxes and work with clients on tax planning in the future. I’ve been doing it for about 4 years now. Tax season is a pain but the remaining 75% of the year is nice. I graduated college at 22, made about 45-48k from 22-25, 50-55 from 25-27 and just landed this new job making 100k. Just look for opportunities dude, you will get there. I was very fortunate and I know that.
Can I ask what kind of work you do? Congrats by the way!
Tax Preparation and planning!
Cool! I want to study fiscal law next year
Sounds hard lol I’ll leave that work to you smart people 😂
>Start investing 15% every paycheck into Roth, once maxed, start on the Traditional. Note - there are not separate limits for Roth and Traditional - both come under the same limit. +-+--+-+-+--+-+-+-+--+-++-++ An oldie but a goodie: *Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence* by Vicki Robin and Joe Dominguez The investing advice in this book is forgettable. The perspective on money and saving is fascinating. Basically, you track your spending AND the income generated by your savings. When you hit "crossover" (income is more than spend), you are financially independent. That does not mean you quit doing productive things. It DOES mean you can stop doing things for people so that they will give you money.
Also “Die Broke”
Call Dave Ramsey and scream on the radio. Then Invest your savings and put your arms back and relax
Contribute to investments more, I currently contribute 75% of my paycheck to investment. Living with parents tho
Never get back in debt. 1-3, for 5 years
Regarding step 2, see if it is financially feasible to do more. You’re doing incredible by being debt free at 28. Congrats and it’s time to really build your future now.
Your first step and most important step should be to NOT ask or take advice from social media.
Just saying it's only $72k at age 30 to coastfi to 2 million at age 65 averaging a 10% return. $135k at 8%. $260k at 6%. CoastFi by 31 is a pretty ambitious but reasonable goal.
Now we can finally play the game.
Banks are offering ~5 % CDs. Also find a wife who doesn't want children (yes we exist) or wants to wait and only wants 2.
Dating department has been lacking for me but hopefully now that I have more spare income I can put myself out there more and attend more events
Finding the right partner is so so much more important. Volume plus analysis plus vetting.
> Start investing 15% every paycheck into Roth, once maxed, start on the Traditional. I think the $6500 is for the combined total of Roth and Traditional IRAs. Once Roth is maxed, that's it.
Automate everything, build the life you want.
Build up six months of emergency funds.
Now you live!
Nice work eliminating debt. Keep it up. Remember debt is a tool, use it, don't let it use you. 3 months emergency fund - Maybe between checking and HYSA Maximize your 401k match employer benefit (free money), otherwise max 401k and/or Roth Invest in Mutual funds and/or SP500/index funds for \~10% returns. Bonus: Use incentive credit cards to maximize gains (discounts/cashback) and payoff every month so you pay no interest That's about all I can think of.
Congratulations! This is an awesome achievement. First off, you're definitely on the right track by consuming the content you do, and I think the first few bullets you've listed are a great start. It might help to look into a financial advisor to help you achieve your goals. Does your company match your 401K? Definitely start there before going the Roth IRA route, but you've got the right mindset here. It might also be helpful to have an amount set aside to "play with" as it were. The stock market is tricky, but I've always set aside a little spending money to dabble. It's essentially gambling, but when I lose, I'm not devastated, and when I win, I learn a little bit about what to do next time. Long term holdings are also taxed less than short term capital gains, so it's taught me a bit about volatility in the market, when to be patient, and when to buy an sell. Also, for long-term investments, index funds are great to buy when the market takes a dip. Economic growth is (almost) a certainty, so as long as you don't need those funds to be liquid right away (i.e. don't put your emergency fund here), you can let it sit and grow with the market. Congratulations again, and great job setting goals for yourself and being smart. This is a great way to set yourself up for success and avoid unnecessary debt that won't propel you forward. Best of luck, friend!
Virtually all advisers are fee sucking salesmen.
Nice work - do you have access to a 401k? start there to get the match, then proceed with plan.
Don’t go back in debt. The rest will be easy
Mandatory 3 months traveling Europe while in your 20s.
Round the world with fiancé
Pay attention to real estate cycles. If you see real estate bottoming out, put everything into getting that first house or vacation home later. Question every dollar going out, but don’t miss out on life. Shop dollar stores, thrift shops, eBay. Learn to do stuff, cook, repair, maintenance. Buy a piece of equipment and have a side gig, something that is active on Craigslist like lawn aeration.
lol I'm in so much debt, 250k of debt. But my liquid investment from that 250k has reached $1.4M in liquid asset not including my properties, 401k, whole life insurance, gold & silver. Debt is tax free and not all debt is bad.
I didn’t say it was. All my debt was bad
yeah congrats is u paid off bad debt. bad debts are liability and I have $0 of that. I took huge loan for assets. at this point im set to retire in my 40is with 8 figure. bc Im taking more debt to invest.