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... so i never really used my company 401k ( what i shame i work for a huge company ) i'm going to start it up very soon. ...
Good move. Many firms offer some sort of matching contribution -- it's hard to beat getting free money. Tho, as holders of Enron discovered too late, it's often prudent to not overweight holdings in one's employer! <g>
 

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And Lets Not Forget That In Your 401k, That Money Comes Off Before Uncle Sam Takes His Share, So Depending On Your Tax Bracket, That Could Equate To $only .70 Coming Out Of Your Check For Every $1.00 You Contribute
 

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And Lets Not Forget That In Your 401k, That Money Comes Off Before Uncle Sam Takes His Share, So Depending On Your Tax Bracket, That Could Equate To $only .70 Coming Out Of Your Check For Every $1.00 You Contribute
That's on a traditional 401k. Many companies offer roth-401k's...The money you contribute to a roth-401k (or roth-IRA) are after-tax dollars....so you pay the tax on the money now...BUT...and here's the best part...you NEVER pay taxes on the earnings even when you withdraw the money at retirement!
 

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That's on a traditional 401k. Many companies offer roth-401k's...The money you contribute to a roth-401k (or roth-IRA) are after-tax dollars....so you pay the tax on the money now...BUT...and here's the best part...you NEVER pay taxes on the earnings even when you withdraw the money at retirement!
Thats why I have a Roth ira, since I only have a traditional 401k at work. And try to max out both yearly, I meen I dont want to turn wrenches forever :)
 

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BRAVO well done, agtitan!

To Brutal: May I suggest you add to your 401k until the company match (free money) is fully utilized, then max out your and your wife's Roth IRA and if you can go back max out the 401k. IIRC the max 401k amount is 16,500 (or is it 15.5?).

Just an idea.
 

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BRAVO well done, agtitan!

To Brutal: May I suggest you add to your 401k until the company match (free money) is fully utilized, then max out your and your wife's Roth IRA and if you can go back max out the 401k. IIRC the max 401k amount is 16,500 (or is it 15.5?).

Just an idea.
It's $15,500 for 2008, but if you're over 50, you get an extra $5000 limit.
 

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I've been reading ramsey, and it seems to me he's got some good ideas, Although I dont' agree w/ everything.

What do you think is more important, starting investing or becoming debt free? We have about 20k in student loans. Do you think we should pay those off first, or start investing and pay the minimum on the loans? I'd like to get rid of as much debt as possible.

I think one thing we are going to do too is pay off my wifes car quickly. We owe about 10k on it, and going back down to 1 car payment would be great. Plus, her interest rate sucks.
 

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posting to subscribe and read later when I have time
 

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... What do you think is more important, starting investing or becoming debt free? ...
I'd vote for first participating in your employer's retirement plan if it's decent, but I'd still put half my energy into paying down the debt. Your rate of return on paying down the debt will be equal to the rate you're paying on the debt. If your employer's plan is poor or non-existent, I'd put concentrate almost completely on debt payment (leaving some cash for emergencies of course). When the debt is retired, then save like crazy.

I'm also not a believer in the old bromide that having a mortgage is a good thing because of the tax savings. Ya pay the bank $1.00 and the government gives you back $0.25. Not so good. Better to pay the whole thing off and keep the $1.00. I'm also not a believer in the lousy late 1990's advice that it's better to invest your money in stocks than pay down the mortgage because stocks provide better returns. I'd frankly rather earn a guaranteed return equal to what I'm paying the bank for my mortgage than put it all into the market and hope for better. The market's a fine place to invest, but an investor can take nothing for granted. Ask the people who invested when the NASDAQ was at 5000 ... just before it fell 62%.

Good luck and congratulations for thinking about these things. You're ahead of a great many people in these matters.
 

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I'm also not a believer in the old bromide that having a mortgage is a good thing because of the tax savings. Ya pay the bank $1.00 and the government gives you back $0.25. Not so good. Better to pay the whole thing off and keep the $1.00. I'm also not a believer in the lousy late 1990's advice that it's better to invest your money in stocks than pay down the mortgage because stocks provide better returns. I'd frankly rather earn a guaranteed return equal to what I'm paying the bank for my mortgage than put it all into the market and hope for better. The market's a fine place to invest, but an investor can take nothing for granted. Ask the people who invested when the NASDAQ was at 5000 ... just before it fell 62%.
I think everyone's tolerance for risk and reward is different. True, the market will burp every now and then. But in the long run, equities return 10% which is far better than bonds. The younger people on this Board should have a healthy dose of stocks. They can weather downturns and still end up with the market rate of return.
 

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... The younger people on this Board should have a healthy dose of stocks. They can weather downturns and still end up with the market rate of return.
You're right about risk/reward and this too. Being north of 50, I'm a bit more conservative in my investing strategy than before. Regardless of income, it seems that most everyone spends every dime they earn in good times and bad times, hence never save and are completely ignorant about money matters. Years ago I read that most people spend more time planning their vacations than they do their retirement and I think it's true.
 

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Erik,
I am 21 and keep saying I will start a mutual fund when I get some extra money but it seems I never really have enough to really start one. I talked to a guy here in town and he gave me a booklet to review but he said normally you would need 2k to start. Im not a big risk taker so I really do not want to invest in stocks and i really dont have time to watch them all the time. Im hoping this tax return I should have a hefty amount since I pay for all my school tuition cash and I can use that as a write off up to a certain amount (im pretty sure you know about that). So, I may be able to start one early next year. So should I stick just a smaller percentage in stocks and then majority in mutual fund? I know you said the younger you are the more stocks b/c you have more time but I would rather know how much money I had instead of going up and down.
 

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Discussion Starter #35
Erik,
I am 21 and keep saying I will start a mutual fund when I get some extra money but it seems I never really have enough to really start one. I talked to a guy here in town and he gave me a booklet to review but he said normally you would need 2k to start. Im not a big risk taker so I really do not want to invest in stocks and i really dont have time to watch them all the time. Im hoping this tax return I should have a hefty amount since I pay for all my school tuition cash and I can use that as a write off up to a certain amount (im pretty sure you know about that). So, I may be able to start one early next year. So should I stick just a smaller percentage in stocks and then majority in mutual fund? I know you said the younger you are the more stocks b/c you have more time but I would rather know how much money I had instead of going up and down.
If you don't like the risk of possibly losing money, you can put money in a fixed income mutual fund, bank CD, or a money market account (like ING Direct online). You'll get less returns than the stock market, because they are much less risky
 

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I've got mutual funds in morgan stanley. They've been there for awhile and dont gain very much. Im not sure what the percentage is, but so far im down -$150.00 sometimes it goes up, sometimes down. But never more than 1 point. i have a feeling its gonna take awhile.

im 23 and it's at $17.5k
 

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Hi Pro2x! Being 21 the place you ought to be (imho) invested in equities (aka stocks). NOT in single common stocks but a good stock mutual fund such as vanguard's s&p500 index fund. Instead of thinking of them as "risky" think "short term volatility- long term growth".

With that in mind don't invest anything if you think you'll need it soon. Invest with the long term in mind.

Hopefully you do not have a truck payment. As Dave Ramsey says, "the car payment is the mantra for the middle class". Think about it: say you saved $500 per month at a 9%return in 5 years you'd have more than $35,000! In 10 years $83k and 20 years you'd have more than $239,000! Hope you enjoy the truck.

To be honest with you when I was 21 I never did any of that. Of course no one ever told me and if they did I don't know if I would or could follow that advice.
 

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OK, I did it...I started my mutual fund thats setup for long term growth (15+ years). I put down $500 and for now Im doing $50/month but will eventually do more. Im paying for school, my truck, insurance, all bills, etc so thats good enough. I done a 80/20 split with my 80% being more risk...The shares I bought with this mutual funds where $9/each and they are doen 16% from last year...Hopefully, this will turn out to work very well. I feel so responsible now. lol
 

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... Hopefully you do not have a truck payment. As Dave Ramsey says, "the car payment is the mantra for the middle class". Think about it: say you saved $500 per month at a 9%return in 5 years you'd have more than $35,000! In 10 years $83k and 20 years you'd have more than $239,000! ...
That's a shocking number! We meet lots of people who say, "We figure we'll always have a car payment" and I quietly wonder WHY? Sheeesh -- buy something, take good care of it, pay it off and save the payements you'd make on a new car and eventually viola, you forever escape the financial imprisonment of car payments. It takes sacrifice though and it appears that most people aren't willing to make it. Perhaps with a new financial reality dawning in America, perhaps being frugal will be in vouge ..... well maybe.

OK, I did it...I started my mutual fund ...
Good for you! Given the massive selloff we've seen recently, your timing may be impeccable. Eventually the market capitulation will wear itself out and things will stabilize. Meanwhile, global markets have a large hangover of soured debt to deal with. With interest rates headed lower, perhaps stable dividend paying stocks will eventually be attractive.

Bad things eventually happen when people and governments spend money they don't have.
 
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