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Started By
Message
Extra cash every month- what to do with it?
Posted on 3/20/11 at 7:36 pm
Posted on 3/20/11 at 7:36 pm
I am currently debt free except for my mortgage.
I contribute to the 401k at work up to the point that they match, so I take advantage of the free money that they are offering.
I have a comfortable cash reserve that will last me 6 months if I lost my job.
Have about $75k of equity in my home.
Every month, I have $2,000 additional cash to save, invest, pay off mortgage, etc.
What should I do with it? I am 32, married with one kid.
My thought is to max out my contribution to a Roth IRA, but starting in month 3, my contribution to that will be maxed out. What should I do with the cash after that? Do I just up the contribution to my 401k at work? I would prefer not to invest taxed money into a mechanism that will be taxed when I end up taking it out. What are some other options?
I contribute to the 401k at work up to the point that they match, so I take advantage of the free money that they are offering.
I have a comfortable cash reserve that will last me 6 months if I lost my job.
Have about $75k of equity in my home.
Every month, I have $2,000 additional cash to save, invest, pay off mortgage, etc.
What should I do with it? I am 32, married with one kid.
My thought is to max out my contribution to a Roth IRA, but starting in month 3, my contribution to that will be maxed out. What should I do with the cash after that? Do I just up the contribution to my 401k at work? I would prefer not to invest taxed money into a mechanism that will be taxed when I end up taking it out. What are some other options?
5
Posted on 3/20/11 at 8:06 pm to Springlake Tiger
first off, do you qualify for a roth?
Based on what your saying, sounds like you might have a high income job.,
If you do, definitely max it out on both you and your wife if she works.
That will take care of 10,000 of it. Then I would look into some mutual funds and sit down with someone who can help you understand your risk tolerance and go from there
Based on what your saying, sounds like you might have a high income job.,
If you do, definitely max it out on both you and your wife if she works.
That will take care of 10,000 of it. Then I would look into some mutual funds and sit down with someone who can help you understand your risk tolerance and go from there
Posted on 3/20/11 at 8:40 pm to Springlake Tiger
quote:
I would prefer not to invest taxed money into a mechanism that will be taxed when I end up taking it out.
401K only gets taxed on the back end.
Posted on 3/20/11 at 9:05 pm to BallyHOO
quote:
401K only gets taxed on the back end.
i know. besides the roth IRA, are there any other vehicles with decent returns that aren't taxed on the back end?
Posted on 3/20/11 at 9:16 pm to Springlake Tiger
What about a 529 college saving plan?
Posted on 3/20/11 at 9:21 pm to TheHiddenFlask
got one of those already, had about $4k in it. little girl is 2, so it is pretty well on its way.
Posted on 3/20/11 at 9:37 pm to Springlake Tiger
Max out 2 Roths (1 for you, and one for spouse), then work on maxing out the 401-K.
Posted on 3/20/11 at 9:38 pm to Springlake Tiger
HSA. 100% tax free money if used properly. This guy explains the details. LINK /
eta: not a scam
eta: not a scam
This post was edited on 3/20/11 at 9:51 pm
Posted on 3/20/11 at 10:09 pm to Springlake Tiger
quote:
pay off mortgage, etc.
This ........after you max the Roth for you and wife.
Posted on 3/20/11 at 10:10 pm to TigerDeBaiter
quote:
TigerDeBaiter
Legit article. Thanks.
Posted on 3/20/11 at 11:51 pm to Springlake Tiger
If you're doing that well, I'd just beef up my liquid savings and spend money on vacations.
Posted on 3/21/11 at 12:25 am to Springlake Tiger
quote:First, max out the 401k. Second, you need to have non-retirement based investments. When you're young, you can invest in growth mutual funds or something like that. You need a financial planner/advisor. Be sure to get one by referral and not through the phone book or internet. Find out in advance how the planner/advisor gets paid.
My thought is to max out my contribution to a Roth IRA, but starting in month 3, my contribution to that will be maxed out. What should I do with the cash after that? Do I just up the contribution to my 401k at work? I would prefer not to invest taxed money into a mechanism that will be taxed when I end up taking it out. What are some other options?
I have a planner/advisor who I knew at LSU and consider a friend. Mine gets paid a front load fee on all investments, but that's it. If you think that maxing out on your 401k is going to be enough for your retirement, think again. I have maxed out for twenty years and I have other investments, and I'm still not rich. It sounds like you're in a good place now. Get some professional advice to make sure you end up in a good place later.
Posted on 3/21/11 at 5:22 am to wrlakers
right now the best rate of return is probably paying off your mortgage- Imagine how it will feel to be totally debt free- when you get the mtg paid off lets us know
Consider giving some to a charity or church- something you are passionate about- there are many great causes out there
Consider giving some to a charity or church- something you are passionate about- there are many great causes out there
Posted on 3/21/11 at 6:43 am to 756
build a trailer park.
Posted on 3/21/11 at 6:53 am to LSUtoOmaha
quote:
If you're doing that well, I'd just beef up my liquid savings and spend money on vacations.
I really don't see a problem with living for the present occasionally. Sometimes I feel like the MTB can be all about the future, but if you can save up a quick 6k and go on an awesome trip...then that could very well be worth it.
Whether I would sink money into my mortgage would depend on where I live and what the housing market conditions presently and in the future will look like. Sinking a ton of funds into a house is somewhat of an old-school way of thought based on the housing market appreciating in value.
If you are in the house that you want to live in for the rest of your life--by all mean, pay off the mortgage ASAP. However, if circumstances could involve you moving or considering a move in the future, then I would be a little slower in the paying off the mortgage decision.
I personally do not see myself donating to a charity until my financial future is clear. It doesn't sound like you are there just yet, so that wouldn't be my first choice. However, if you think there is something worth giving to then it is your money to contribute.
This post was edited on 3/21/11 at 6:55 am
Posted on 3/21/11 at 9:43 am to 756
quote:
right now the best rate of return is probably paying off your mortgage-
This, like I said........
Posted on 3/21/11 at 11:32 am to LSUDad
Depending on your rate, paying off the mortgage is not always the best thing to do. Does it make you feel good? yes, but is it the smartest thing to do when you are looking at the return of money. Not necessarily.
Lets look at an example:
Lets say you have a 500,000 mortage. A 30 year mortgage at 5% you are paying $2672.97 a month, a 15 year mortgage you are paying $3937.56 a month. Thats a difference of $1264.59 a month
Lets say you got an annual return of 8% on that 1264 a month. That would equate to $1,897,258 after 30 years. Lets say you paid the 15 year mortgage off and then invested $3937 a month at an annual rate of 8% you would have $1,371,629
So either way the house is paid off in 30 years and you either have 1.9 millon roughly or 1.4 million roughly.
not too mention all the tax deductions from having a mortgage.
Yes, it feels good, but it's not always the best avenue to take
Lets look at an example:
Lets say you have a 500,000 mortage. A 30 year mortgage at 5% you are paying $2672.97 a month, a 15 year mortgage you are paying $3937.56 a month. Thats a difference of $1264.59 a month
Lets say you got an annual return of 8% on that 1264 a month. That would equate to $1,897,258 after 30 years. Lets say you paid the 15 year mortgage off and then invested $3937 a month at an annual rate of 8% you would have $1,371,629
So either way the house is paid off in 30 years and you either have 1.9 millon roughly or 1.4 million roughly.
not too mention all the tax deductions from having a mortgage.
Yes, it feels good, but it's not always the best avenue to take
Posted on 3/21/11 at 11:46 am to cbtullis
(no message)
This post was edited on 11/27/11 at 10:25 pm
Posted on 3/21/11 at 11:49 am to topstunter
quote:
I would make sure that I have proper life insurance...taking care of your investments is important, but if your family loses you...they lose the greatest asset they have
Agreed. And with that type of extra money I would be looking at some permanent with a company that pays good didvidens as that is something like a Roth where you can get tax free growth
This post was edited on 3/21/11 at 11:50 am
Posted on 3/21/11 at 1:34 pm to cbtullis
Completely off topic and probably not something you are willing to post. But.... Whats your net worth?
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