Do you pay yourself first??

[Roupey03]

Re: Do you pay yourself first??

I was thinking about it. I really plan on getting married soon after I graduate so I was going to used the saved money to pay for a wedding or other expenses.

[Ima saver]

Re: Do you pay yourself first??

Opening one at your young age will almost guarantee that you will be a millionaire. Think about it! I got married at home, had a little party, spent about $200 and it was fun. Still married after almost 30 years and never regretted not spending the money

[cashqueen]

Re: Do you pay yourself first??

I put 10% into the 401K plan and 10% into a credit union acct. I've been putting 10% into the 401K but I just started putting another 10% into the credit union. I hope to add to the CU amount by spending reduction. The CU money will be used for Christmas and car ins. Then any extra in there at 12/31 will be swept into our mutual funds. We want to buy new living room furniture next year so I guess we will use part of the CU money as a 'furniture fund' too. After DH's student loans are paid off (hopefully in another 14 months) I will bump my 401K up to 20%.

[Ima saver]

Re: Do you pay yourself first??

That is great cashqueen!! Good plan!![Automated by GetSmile]

[rob62521]

Re: Do you pay yourself first??

We were like Ima, we had a small wedding, a nice honeymoon, but saved money on the wedding to put 20% on our first house. Sometimes I wish we had spent a bit more on the wedding, but that's usually when I see the cool things other people did, but we are still married and happily so, and we figure that is what counts.

Roupey is doing great; I agree with Ima, opening a Roth IRA would be great because whatever is put in would really pay interest for years and years.

Cashqueen, you are doing a fine job of saving!

[Roupey03]

Re: Do you pay yourself first??

You guys are starting to talk to me into the idea of a ROTH IRA. Is it best to go with my local bank that handles my checking accounts or is it better to look else where. I am currently with Huntington in Ohio.

[rob62521]

Re: Do you pay yourself first??

Roupey,

I'm not sure the best answer for this. We went through a stockbroker because I had my annuity with him. Our Roth IRAs are through American Funds and we feel this is a good company to deal with. But you need to ask some other people to see what would for you.

[Roupey03]

Re: Do you pay yourself first??

Thanks for all the advice guys.

[Ima saver]

Re: Do you pay yourself first??

roupey03, it is best to open a roth ira with a mutual fund. We have another thread about this somewhere. I alway reccomend vanguard index 500 cause that is where I have mine, but you need a minimum to open it.
We discussed some of the funds that will let you open for as little as $50 as long as you agree to let them automatically take $50 a month out of your checking. Those would be T. Rowe Price and American Century mutual funds.
If you can't do the $50 a month, then just start with a bank roth ira.

Oh, I didn't say, but the minimum at Vanguard to open a fund is $3000.

[Roupey03]

Re: Do you pay yourself first??

What are the penalties for taking money out of a ROTH IRA?

Do you have to make monthly contributions?

What kind of returns can I expect from a ROTH IRA?

Could I take just 1,000 dollars lump sum and stick it in a ROTH IRA?

[Ima saver]

Re: Do you pay yourself first??

You cannot take your money out the first 5 years, but the whole point is never to take it out until you retire. that is the purpose of a Roth IRA. It is an INdependent Retirement Account!
You do not have to make monthly contributions unless you sign up for the $50 a month automatic withdrawal.
A mutual fund roth will adverage LONG TERM around 10%.
The problem is, if you only have $1000, you probably need to go to a bank or research mutual funds with $1000 limits to open.
A Bank roth ira, will probably not pay out more than 5-6% interest, but that is still ok. You can build it up and roll it over into a mutual fund roth when it gets to $3000. The mutual fund company will do it for you.

[disneysteve]

Re: Do you pay yourself first??

A mutual fund roth will adverage LONG TERM around 10%.

This demands some clarification. The long term average of the US stock market is 10-12%. The return of any particular mutual fund will depend on what that fund is investing in. As I explained in the other thread, a mutual fund may invest in a wide variety of investments - stocks, bonds, real estate, etc. A fund investing in large company stocks will perform differently than one investing in small company stocks or one in international stocks or junk bonds or Pacific Rim companies.

Most financial planners recommend using 7% as the long term return for a well balanced portfolio.

[wai98007]

Re: Do you pay yourself first??

I have a quick comment about Vanguard. I hope this realates to paying yorself first. I believe they (vanguard) have a fund called the "star" fund that only requires $1000 to start. It is a mix of quite a few of their funds. If I understand it correctly, you can begin with a star fund and then switch it to another vanguard fund when you have reached the minimun. I would not suggest looking into a bank IRA. My wife recently stopped working to take care of our first daughter and she had $ in an employer 401k plan. We wanted to roll the $ over into an IRA and make monthly contributions. We did quite a bit of research and most banks do not offer "no load" mutual funds. This means that they take a hefty chunk (around 5%) out of the money you put into your IRA, or they take it out when you withdraw your $. Vanguard and TRowe Price offer a big variety of "no load" funds. It is well worth saving enough $ for the minimum with Vanguard or TRP in order to miss the load. If I remember correctly, TRP offers funds that only require $1000 or $1500 to start. Both TRP and Vanguard have very extensive websites. I have also found their phone customer service to be superb! You should be aware that Vanguard and TRP do take between .3% and .8%. However, that beats 5% by a lot. They will also charge you $10 a year or something like that if you balance is below $5000. That is a sad fact you must face I guess for the other perks of their funds. Hope that helps. We actually decided to go with TRP.

Sorry this was a long post in the wrong place. I know I saw a different thread about it somewhere on the site. I am sure if you searched Vanguard you would come across it easily enough.

It is important to pay yourself first

[Broken Arrow]

Re: Do you pay yourself first??

I have a quick comment about Vanguard. I hope this realates to paying yorself first. I believe they (vanguard) have a fund called the "star" fund that only requires $1000 to start. It is a mix of quite a few of their funds. If I understand it correctly, you can begin with a star fund and then switch it to another vanguard fund when you have reached the minimun. I would not suggest looking into a bank IRA.

Yes, that is what I have been told as well. It's worth contacting them to see what your options are.

We did quite a bit of research and most banks do not offer "no load" mutual funds. This means that they take a hefty chunk (around 5%) out of the money you put into your IRA, or they take it out when you withdraw your $.

Strange. Well, it's possible, but my credit union has told me that their IRA program works essentially the same as way as their savings, only with a slightly higher interest. Therefore, while the return is always guaranteed, and there are no loads to worry about, my own bank representative has privately told me that it's still not worth it. At the current rate of... 5.13% APY, I'd have to agree!

[lexi_kaye]

Re: Do you pay yourself first??

Yes and no. I do automatically have amounts taken to each savings account each pay. And, 6% to 401K automatically (matched by company). Despite my current debt situation, I feel it stupid not to put the 6% in my 401K being I will get 6% free from my company. And, the savings acts like my emergency fund. Except, that I periodically rob it to pay down my credit card debt. Every couple months, if I notice it is starting to get high (around $1000), I take most of it out and pay down my credit card I am working on at the time. Then, the money starts building up again. It has worked for me so far. I know I should keep an emergency fund, but others tell you you should not save if you have higher interest rates on your debt that you would earn on savings. So, this is my compromise. Currently, I have over $1300 in savings, but with the car inspection looming near, I am waiting until that is done and over with and sure I don't need to dip into savings for repairs. Then, I will lump most of that into my credit card I am working to pay off right now. I know I could always charge some major emergency if I have to, but I really don't want to have to go that route.
But, here is where the no comes in, I also have my budget extremely tight. Leaving myself very few dollars each pay for myself. I usually can go out to eat with friends about once every two weeks, and really spend no other money on myself right now. Not until the credit card debt is more manageable. I have been very agressive in paying it off. But, it has taken me years to get this angry at my debt and to realize what it took to pay it off. For literally, years, I paid the minimums on my credit cards and saw the balances stay the same. Then, the bf had job setbacks and he brought financial troubles to our relationship and I footed the bills for several years. So, when things turned around, I decided that I didn't want that debt looming over me anymore. Literally, I will bet it was about 8 years with pretty much the balances staying the same, perhaps I even charged a little at Christmas each year, etc. Not really using the cards much, but once in a while all the same. Now, they are off limits totally and my snowball amount is finally enough to start making a little bit of a difference. At this rate, it should be about another 2 years and all my credit card debt should be gone. YEAH! Wonderful when I see how far I have come. I am now even looking at ways to make more money so I have more of a snowball!
When things finally get back to normal, I do plan on more going into savings and investments, and that will be automatic withdrawals so I don't even miss that money.