Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
General questions (while I'm young!)
Old 01-24-2007, 07:05 PM   #1
Confused about dryer sheets
 
Join Date: Jan 2007
Posts: 1
General questions (while I'm young!)

Hey all! My pop put me onto this site, and to be quite honest, I haven't browsed much yet. So, if me questions are easily answered by linking me to another thread, by all means, go for it. Let me give you my rundown.

Me - 27
Wife - 32
Monthly take home $4500
House payment $1225
Car payment $600 (financed a new used for 3 1/2 years)
No credit card debt
About $4000 in student loans
Only about 5% equity in house
401k started 7 months ago with a balance of $2500 and 10% of my income going in.
2 kids (and we're planning on no more)

Lately, my wife and I have been much more careful about our spending. From documenting where it goes, to eating leftovers instead of going out. Whaddaya know, we found an extra $1200 in our checking account after less than 3 months. We've always talked about early retirement, but this got us excited. It made us realize, that we don't have to give up much, to gain a whole lot. We are still relatively young, and I'm looking for my best course of action. Up until now, I've been claiming single and 0 on my paychecks, and have been receiving a handsome refund on the order of 3k to 3500 depending on if we are claiming my stepson that year or not. This year, that is going into savings, which is at zero right now. First off, should I change that to claiming married and one, and have that money automatically drafted into some form of investment, so that money is working for me, and not the government. My other question is, beyond a little cash on the side, what do I do with this newfound 3-400 dollars per month, that I've earned, solely by not spending money on crap! Would it best to slug most of it in a roth? How about a mutual fund? If so, which one's would be my best bet? I'm invested in mostly mutual funds, with a company stock match in my 401k, so I guess you'd say, I'm fairly risky on that end. I know, I'm not really on the road to early retirement by investing a grand total of 550-650 dollars a month, but I'd like to think it's a start. I also live in a relatively low cost of living area, and the house we are living in is one we will most likely stay in for at least 3-5 years. That is a bare minimum on that one. Any help would be greatly appreciated. Thanks!
__________________

__________________
theguyonthecouch is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: General questions (while I'm young!)
Old 01-24-2007, 07:35 PM   #2
Recycles dryer sheets
Arc's Avatar
 
Join Date: Sep 2006
Posts: 370
Re: General questions (while I'm young!)

Welcome aboard! I'd say your are off to a great start. Seeing the light is more than half the battle. Also if you save $600 per month for 25 years and earn 8% per year, you've got 568K at 52. As you become more knowledgable and earn more income you will most likely want to save more - and that is how you get obsessed with with ER - and once obsessed there will be no stopping you. Congratulation on your terrific start!
__________________

__________________
Arc is offline   Reply With Quote
Re: General questions (while I'm young!)
Old 01-24-2007, 07:52 PM   #3
Thinks s/he gets paid by the post
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 1,930
Re: General questions (while I'm young!)

Short answers b/c I'm donating plasma and am typing only w/ my right hand:

1. Reduce your w/h so you get small refund or even pay a little in April. Read up on "safe harbor" at IRS site.
2. $ should go where needed, which depends on your goals. If you want to retire early: max 401k up to employer match, then Roth for you and wife, then max rest of 401k up to govt limit, then after-tax saving.
3. If you pick a mutual fund, I would recommend a low-cost index fund, like VFINX, VTSMX or Vanguard Target Retirement funds.

Good start, though!!!

2Cor521

__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is offline   Reply With Quote
Re: General questions (while I'm young!)
Old 01-24-2007, 07:53 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
bbbamI's Avatar
 
Join Date: Dec 2006
Location: Dallas 'burb
Posts: 8,962
Re: General questions (while I'm young!)

Congrats to you on starting out so young and thinking about retirement!

My suggestion would be to not let the tax man keep your money all year long and send it to you in a refund. Try to make it a wash at tax time. You may want to consider depositing your extra money into a money market account until you have at least 6 to 9 months of an emergency fund.

The rest....invest.
__________________
There's no need to complicate, our time is short..
bbbamI is offline   Reply With Quote
Re: General questions (while I'm young!)
Old 01-25-2007, 01:21 AM   #5
Full time employment: Posting here.
 
Join Date: Apr 2005
Location: Duesseldorf, Germany
Posts: 942
Re: General questions (while I'm young!)

In your shoes I would start building an emergency fund of 3x monthly take home, probably in low cost money market funds.
Pay yourself first. I never wait how much money is left at the end of the month but I transfer it in the beginning.
Next step would be to kill debt. My priority is to save interest payment unless I am 150% sure to make significantly more with other investments.
This will quickly free income to max out other investments.
As you are already into saving you might enjoy the ideas at www.slnet.com (forums) and www.stretcher.com as well.
__________________
chris2008 is offline   Reply With Quote
Re: General questions (while I'm young!)
Old 01-25-2007, 07:25 AM   #6
Thinks s/he gets paid by the post
Leonidas's Avatar
 
Join Date: May 2006
Location: Where the stars at night are big and bright
Posts: 2,847
Re: General questions (while I'm young!)

I second Chris's recommendation about an emergency fund being a priority. "Stuff" that breaks (cars, furnaces, etc.) has to be repaired or replaced, and of course there are always even less pleasant events like illness and layoffs. Having the money ready to deal with such things means your first resort won't be to use the credit cards and dig yourself into a hole you've managed to avoid so far.
__________________
There is no pleasure in having nothing to do; the fun is having lots to do and not doing it. - Andrew Jackson
Leonidas is offline   Reply With Quote
Re: General questions (while I'm young!)
Old 01-25-2007, 08:24 AM   #7
Thinks s/he gets paid by the post
Coach's Avatar
 
Join Date: Nov 2005
Location: Colorado, USA
Posts: 1,128
Re: General questions (while I'm young!)

Great start! You've learned secret number 1 -- control expenses. You are on the road to early retirement.

Hopefully you've signed your last car loan.

You would enjoy reading "The Millionaire Next Door."

Welcome to the forum!

Coach
__________________
"Comprehensive health insurance is an idea whose time has come in America." President Richard M. Nixon, February 6, 1974
Coach is offline   Reply With Quote
Re: General questions (while I'm young!)
Old 01-25-2007, 09:14 AM   #8
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,563
Re: General questions (while I'm young!)

Welcome to the board, Guy, and to your Dad too.

You're on the right track, and the "extra" money should make a great couple of IRAs for you & spouse after funding the 401(k)s.

As for "what" to buy, you'll need to decide what asset allocation you're comfortable with. One of the classics on that subject is Bernstein's "Four Pillars" book, which should be at your local library.
__________________

__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Young Pup looking for wisdom PsyopRanger Hi, I am... 102 01-13-2007 08:10 PM
Best Answers to the Standard Questions TromboneAl Other topics 20 07-27-2006 11:19 AM
Brewer: MLP's questions etc lswswein FIRE and Money 6 03-25-2005 11:52 AM
Welcome Young Dreamers! BigMoneyJim Young Dreamers 56 04-06-2004 11:39 AM

 

 
All times are GMT -6. The time now is 11:15 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.