Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Should I remove auto loan debt or increase savings in ROTH IRA (or 401K) first?
Debt: Remaining House Mortgage $149k 30year @ 3.25% Fixed (making extra payments to pay off in the next 15 years), car loan (47 months left) $25k @ 2.9%, Currently pay $585 per month for car loan.
Ability to save $1800 a month. Marginal tax rate is 25% right now.
Her age 32
My age age 34
Desired retirement in 27 years
Currently only contributing to 401k up to the match for both of us. No Roth IRA account open.
Any comments or advice. If I pay $1K extra a month to auto, it be paid off in july 2014.
Your Auto loan APR is low.
I would put $5500x2 (11k) per year into a roth. Use the rest ($883/mo) to pay down your auto loan.
Now is the time to put money into your roth's so it has time to build over the next 27 years. If/when/ you have kids other cost will start up and having started the roths Now will help in the later years when you might not be able to fund them.
Your Auto loan APR is low.
I would put $5500x2 (11k) per year into a roth. Use the rest ($883/mo) to pay down your auto loan.
Now is the time to put money into your roth's so it has time to build over the next 27 years. If/when/ you have kids other cost will start up and having started the roths Now will help in the later years when you might not be able to fund them.
Thank you for responding.
Should I max ROTH IRA or add more to 401k? I think this question gets multiple answers just curious on what others think.
Generally speaking you should do 401K to the point of the match.
Then do Roth to the Roth Limits
then if you still want to put more away for retirement then do 401K again.
401K are limited to the number of funds/investment options you can put your $'s
Roth just about anything can go into it.
- Individually stocks, Bonds, just about any mutual fund, ETF's ..
Generally speaking you should do 401K to the point of the match.
Then do Roth to the Roth Limits
then if you still want to put more away for retirement then do 401K again.
401K are limited to the number of funds/investment options you can put your $'s
Roth just about anything can go into it.
- Individually stocks, Bonds, just about any mutual fund, ETF's ..
Thank you. I perfer index funds and my 401k have lousy index funds and mutual funds are expensive.
How do we determine if our taxes will go up or not by time retire? Does it depends on our income increasing?
When I retire, i will have $0 income besides the money in 401K, but guess that will count as income, right?
Since you're already contributing to your 401(k) up to the employer match, I would agree with maxing out a Roth and putting the rest of your available discretionary income toward the car note.
Since you're already contributing to your 401(k) up to the employer match, I would agree with maxing out a Roth and putting the rest of your available discretionary income toward the car note.
So its better to pay car off before maxing out 401K to the limit?
So its better to pay car off before maxing out 401K to the limit?
It's a matter of personal preference, I'm just speaking from my own perspective. I personally would first contribute to the limit of the employer match, then focus on retiring any debt besides the mortgage, and once that's done fully max out the 401K.
If you run the numbers you may find that you're better off from a standpoint of net returns by maxing out the 401K first and keeping the car loan around a while, but I like the fact that eliminating debt gives me more flexibility.
It's a matter of personal preference, I'm just speaking from my own perspective. I personally would first contribute to the limit of the employer match, then focus on retiring any debt besides the mortgage, and once that's done fully max out the 401K.
If you run the numbers you may find that you're better off from a standpoint of net returns by maxing out the 401K first and keeping the car loan around a while, but I like the fact that eliminating debt gives me more flexibility.
Thanks,
Do you recommend maxing out Roth before attempting to max out 401k?
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
