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Financial help
Old 08-11-2004, 11:22 AM   #1
 
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Financial help

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I am 39 years old and want to be sure I am on the right track or rather get on the right track with my finances.
I have about $180,000 equity in my home, $40,000 in 401k funds, 23,500 in cash. Owe $17,000 on a car, have a 9 year old. What can I invest in -- what are some smart money moves?
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Re: Financial help
Old 08-11-2004, 12:48 PM   #2
 
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Re: Financial help

I would start by not imbedding huge files in your post!

You mention that you owe 17K on a car and have 23.5K in cash. If the interest rate on the car loan is 4% or more, paying off the car will save you more $ than any investment will give you in the next year safely.
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Re: Financial help
Old 08-11-2004, 02:44 PM   #3
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Re: Financial help

Well, Cut-Throat is riight from a purely financial point of
view, but I think you need to keep a 6 mo reserve of
cash for emergencies. Pay off the loan as fast as you
can within that limitation. Put your 6 mo reserve in a
money market that allows check writing. When you
get the car paid off, start buying I-bonds. Keep maxing
out your 401k in the meantime.

Cheers,

Charlie
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Invest in a library card.
Old 08-11-2004, 02:54 PM   #4
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Invest in a library card.

Then go read Tom Stanley's "Millionaire Next Door" and/or "The Millionaire Mind" followed by William Bernstein's "The Four Pillars of Investing" or Frank Armstrong's "The Informed Investor".

While you're finishing the books-- max out your 401(k) & IRA contributions, save at least 10% of your gross pay, and don't pay more for debt than you'd earn on savings. It's probably better to pay off the car loan but you'll know after you finish reading.
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Re: Financial help
Old 08-11-2004, 04:19 PM   #5
 
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Re: Financial help

You should have some exposure to the stock market in the 401K. Something like 50%-70%, depending on your stomach for market flucuations. Consider a diversified bond fund for the remainder. Don't worry if the stock and bond market goe down, just keep on contributing the max.

You've come to the right place for advice.

--JB
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