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Old 02-13-2010, 03:52 PM
 
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401k = after tax money, you're paying basically nil for taxes on your earned money and chances are you will be making much more than that when you retire, better to do a Roth IRA if you don't have a company match.

If you do, well, take a look at the vesting schedule and it still may make sense to do a Roth IRA.
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Old 02-13-2010, 05:12 PM
 
1,962 posts, read 3,752,628 times
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Quote:
Originally Posted by Colddiamond102 View Post
Bah! I budget about $300 normally for books, because I always buy my books very used off of Amazon instead of the bookstore (AKA extortionist office...$200 for ONE book *Paperback too!*..you cant tell me thats not highway robbery!).

This year, however, all of them switched to brand-spanking-new books. That= no cheap used ones for me to buy. UGH that made/makes me so MAD!

401K is taken out of my paycheck each week before taxes...so far Ive only put in about 5 bucks a week. That much doesnt hurt me at all,and I'll probably up it to $10 a week soon enough.

I dont want to be the broke old lady in the nursing home. I want to be the well-to-do one that can tell them all to go to hell while throwing things...
My apologies first of all for assuming you were male.

$200 for a textbook is major highway robbery

I do think you're in better shape financially than a lot of people. You can only do so much given the amount of hours and pay rate, so even if you're contributing $5 to your 401K, it's a great thing.
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Old 02-14-2010, 09:07 PM
 
Location: South Carolina
3,398 posts, read 6,964,574 times
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Quote:
Originally Posted by wheelsup View Post
401k = after tax money, you're paying basically nil for taxes on your earned money and chances are you will be making much more than that when you retire, better to do a Roth IRA if you don't have a company match.

If you do, well, take a look at the vesting schedule and it still may make sense to do a Roth IRA.
I plan on doing an IRA when I get out of this company (Hopefully within the next 2 years or so *fingers crossed*).
As it stands though, they match my 401k...thats the reason I opened it in the first place. Otherwise I would have hoarded that 5 a week somewhere else.

I am fully vested as well, which means if I walk away I take everything they've given with me.
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Old 02-15-2010, 05:58 AM
 
22,770 posts, read 25,218,368 times
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Quote:
Originally Posted by Golfinnova View Post
"live within your means with no debt, keep a $1k cash cushion or so if possible, get a credit card and use it once a month, and don't worry about 401k's and stock (yet). "

Good advice except the credit card part, that's part of the debt trap. He needs to stay FAR away from the credit cards and use a debit card instead.
I don't know what the "debt trap" is, I just know that without a credit line you do not build a credit score, and a credit card is the best way to establish a credit line. A credit score is important in U.S. society, unless you are already a millionaire.


I know that I have used a credit card for 5 years, and I'm not an idiot, so I don't have any problems. I am giving the OP the benefit of the doubt that she is not an idiot.
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Old 02-15-2010, 04:47 PM
 
1,962 posts, read 3,752,628 times
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Originally Posted by rubber_factory View Post
I don't know what the "debt trap" is, I just know that without a credit line you do not build a credit score, and a credit card is the best way to establish a credit line. A credit score is important in U.S. society, unless you are already a millionaire.
I know that I have used a credit card for 5 years, and I'm not an idiot, so I don't have any problems. I am giving the OP the benefit of the doubt that she not an idiot.
Here is a perfect example of the debt trap:
Should one use student loans to pay off credit card debt?

It happens when a person gets themselves into debt using more often a credit card, but also car loans, home loans, etc.
The point is while I congratulate you on your responsible use of a credit card, there are hundreds if not thousands more of people for every one that do not use a card responsibly. They can't make enough income to make the minimum payments and have to resort to other means to keep the credit card companies from harrassing you every day. Turn on the TV and count how many commercials involving some sort of debt payment/consolidation/bankruptcy there are in an hour and you get an idea.

With all due respect, credit is not that important. That's the kind of thinking that has gotten this country in the mess we are currently in right now. The sooner we as a society budget and plan for purchases using cash or debit card rather than kneel at the throne of FICO, we will become better financially.

As I stated in an earlier post, the OP has shown responsibility and will do well in life down the road.
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Old 02-15-2010, 06:12 PM
 
22,770 posts, read 25,218,368 times
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Quote:
Originally Posted by Golfinnova View Post
It happens when a person gets themselves into debt using more often a credit card, but also car loans, home loans, etc.
That can be easily solved, by not doing that. In no way does it negate what I said. Having an open line of credit is a good idea for anyone with a means to pay it back.

Quote:
With all due respect, credit is not that important.
Well, I think credit is important.

Doesn't your comment contradict the rest of your spiel, anyway? If credit isn't important to you, why not go ahead and rack up the debt?
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Old 02-15-2010, 07:50 PM
 
1,962 posts, read 3,752,628 times
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Originally Posted by rubber_factory View Post
That can be easily solved, by not doing that. In no way does it negate what I said. Having an open line of credit is a good idea for anyone with a means to pay it back.
While your solution is good, it's not being done because of inability to pay the debt off in the terms agreed to by both parties. Las Vegas has a reported unemployment of 12.1% which doesn't accurately figure those who are underemployed or part-time, when you add those underemployed the figure is closer to 18%. A lot of those people either have or are in the process of losing their homes, are months behind in credit card payments and have probably had their cars repossessed. Of my community of 19 homes, 3 are in foreclosure right now. All the TV attorneys (ambulance chasers) are on TV and radio here claiming now they do bankruptcies for $500 because they realize that people out here are broke.
Well, I think credit is important.
Whatever floats your boat
Doesn't your comment contradict the rest of your spiel, anyway? If credit isn't important to you, why not go ahead and rack up the debt?
I'll tell you about 2 people, which would you rather be:
A. 31 years old, maxed out on 3 credit cards. Working 2 jobs including weekends and yet can't keep up with minimum payments, having card companies call every day, falls behind on car payment so car gets repossessed, has to borrow money from family member to get car out of yard. Uses tax refund to pay family member back rather than apply it to credit cards.

B. 43 years old, runs his own business where he works 4 days a week with 3 day weekends. Hasn't had a car payment in 5 years, bought 2 2005 vehicles brand new using cash, has a 2003 E-150 for a work van fully paid for with 190,000 miles and running like a top. Starting to save cash for another work vehicle because of success of business. Paid for trip for 5 to Disneyland in cash and has cash saved up for spring break, uses cash for all business purchases, debit card for other purchases. Doesn't have to worry about credit card companies harrassing phone calls/letters. Has a Roth IRA, savings account, emergency fund.

Hopefully, you said "B". However, a lot of people are in the "A" group. BTW, both people are me, so I've seen the dangers of the debt trap firsthand.
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Old 02-15-2010, 08:05 PM
 
Location: Southern Minnesota
5,990 posts, read 11,211,204 times
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I'm 23 and I have exactly $4.90 in my savings account. You're doing excellent right now.
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Old 02-15-2010, 08:29 PM
 
2,038 posts, read 3,652,221 times
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I think its responsible to think of things according to basic needs, air, water, food, shelter on and on. Take away any of the first four needs and others suddenly become less important.

The same holds true for emergency funds before investments. Your investments are illiquid and you have to ask where would you be tomorrow if you didnt have a source of income.

Save for an emergency should you lose your job. That is your number one priority over investing.

When you have a few months pay that meets your basic needs, then try and sock away a percentage towards your retirement. Aim for 20% of your gross.

Remain debt free as much as possible. If you want a credit card, that's okay, just don't use it if you don't have the cash on hand to pay it off the next day.

Don't finance a car that is going to lose 60% of its value in 3 years. Drive cheap with cash.

There are a lot of people who mean well that want to warn you by using their cautionary tales about the debt trap and it's valid! There are others who use debt as a tool to further their business. This is risk. Avoid risk.

Credit means debt and its the number one product sold and marketed in this country. It's hard not to succumb.

Your diligence and passion is astounding to me. You sound like you already have the tools and good habits to succeed at anything you put your mind to, including saving and investing. Just make sure you have something set aside should the rug get pulled out from under you.

Last edited by Spraynard Kruger; 02-15-2010 at 08:53 PM.. Reason: speeling and fonix
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Old 02-15-2010, 09:44 PM
 
1,962 posts, read 3,752,628 times
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Quote:
Originally Posted by zendrive View Post
I think its responsible to think of things according to basic needs, air, water, food, shelter on and on. Take away any of the first four needs and others suddenly become less important.

The same holds true for emergency funds before investments. Your investments are illiquid and you have to ask where would you be tomorrow if you didnt have a source of income.

Save for an emergency should you lose your job. That is your number one priority over investing.

When you have a few months pay that meets your basic needs, then try and sock away a percentage towards your retirement. Aim for 20% of your gross.

Remain debt free as much as possible. If you want a credit card, that's okay, just don't use it if you don't have the cash on hand to pay it off the next day.

Don't finance a car that is going to lose 60% of its value in 3 years. Drive cheap with cash.

There are a lot of people who mean well that want to warn you by using their cautionary tales about the debt trap and it's valid! There are others who use debt as a tool to further their business. This is risk. Avoid risk.

Credit means debt and its the number one product sold and marketed in this country. It's hard not to succumb.

Your diligence and passion is astounding to me. You sound like you already have the tools and good habits to succeed at anything you put your mind to, including saving and investing. Just make sure you have something set aside should the rug get pulled out from under you.
Now that's a fantastic way of putting it all in perspective. WTG Zendrive
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