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psychoslowmatic said:   If you plan to max 401k once you get out of debt, have you thought about maxing 401k then borrowing it back? I basically look at it like future you is borrowing from the present year's contribution limit.
  Wow!  That is an excellent point... that may change Suze Orman's tune if she thought about it like that.

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Dus10 said:   
psychoslowmatic said:   If you plan to max 401k once you get out of debt, have you thought about maxing 401k then borrowing it back? I basically look at it like future you is borrowing from the present year's contribution limit.
  Wow!  That is an excellent point... that may change Suze Orman's tune if she thought about it like that.

Woah. Haven't thought about that at all. Will put some serious thought into this. Thanks

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debtblag said:   
Dus10 said:   
psychoslowmatic said:   If you plan to max 401k once you get out of debt, have you thought about maxing 401k then borrowing it back? I basically look at it like future you is borrowing from the present year's contribution limit.
  Wow!  That is an excellent point... that may change Suze Orman's tune if she thought about it like that.

Woah. Haven't thought about that at all. Will put some serious thought into this. Thanks

  Well, in that situation, it only really makes since if you are choosing between maxing out 401k contributions or paying off debt.  If you are already maxing it out, it doesn't make since unless your alternative is to lower your contributions.

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Dus10 said:   
debtblag said:   
Dus10 said:   
psychoslowmatic said:   If you plan to max 401k once you get out of debt, have you thought about maxing 401k then borrowing it back? I basically look at it like future you is borrowing from the present year's contribution limit.
  Wow!  That is an excellent point... that may change Suze Orman's tune if she thought about it like that.

Woah. Haven't thought about that at all. Will put some serious thought into this. Thanks

  Well, in that situation, it only really makes since if you are choosing between maxing out 401k contributions or paying off debt.  If you are already maxing it out, it doesn't make since unless your alternative is to lower your contributions.

I think it's accurate to say that I'm choosing between the two. In 2014, I sent over $40,000 to retirement accounts or student loan payments

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debtblag said:   
Dus10 said:   
debtblag said:   
Dus10 said:   
psychoslowmatic said:   If you plan to max 401k once you get out of debt, have you thought about maxing 401k then borrowing it back? I basically look at it like future you is borrowing from the present year's contribution limit.
  Wow!  That is an excellent point... that may change Suze Orman's tune if she thought about it like that.

Woah. Haven't thought about that at all. Will put some serious thought into this. Thanks

  Well, in that situation, it only really makes since if you are choosing between maxing out 401k contributions or paying off debt.  If you are already maxing it out, it doesn't make since unless your alternative is to lower your contributions.

I think it's accurate to say that I'm choosing between the two. In 2014, I sent over $40,000 to retirement accounts or student loan payments

  What's the interest rate on your remaining debt?  If it's all student loans at <7% I think I'd rather max 401k and IRA then throw everything after that at the loans.  Of course, if you want a house or something that the debt is getting in the way of, that's one thing, but if you're just committed to bettering your financial situation then I think you'll be better off 30 years down the line by maxing retirement and taking longer to pay off the loans.  Either choice is great though.

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psychoslowmatic said:   
debtblag said:   
Dus10 said:   
debtblag said:   
Dus10 said:   
psychoslowmatic said:   If you plan to max 401k once you get out of debt, have you thought about maxing 401k then borrowing it back? I basically look at it like future you is borrowing from the present year's contribution limit.
  Wow!  That is an excellent point... that may change Suze Orman's tune if she thought about it like that.

Woah. Haven't thought about that at all. Will put some serious thought into this. Thanks

  Well, in that situation, it only really makes since if you are choosing between maxing out 401k contributions or paying off debt.  If you are already maxing it out, it doesn't make since unless your alternative is to lower your contributions.

I think it's accurate to say that I'm choosing between the two. In 2014, I sent over $40,000 to retirement accounts or student loan payments

  What's the interest rate on your remaining debt?  If it's all student loans at <7% I think I'd rather max 401k and IRA then throw everything after that at the loans.  Of course, if you want a house or something that the debt is getting in the way of, that's one thing, but if you're just committed to bettering your financial situation then I think you'll be better off 30 years down the line by maxing retirement and taking longer to pay off the loans.  Either choice is great though.

The highest among them is at 7.65% (Originally 7.9% with the 0.25% discount for automatic payments) and my MAGI is high enough that I don't get to deduct student loan interest paid.

Luckily (?!), I have nearly $35,000 of that high-interest debt -- enough that making decisions about <7% debt is something I won't have to deal with for at least another year.

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debtblag said:   
psychoslowmatic said:   
debtblag said:   
Dus10 said:   
debtblag said:   
Dus10 said:   
psychoslowmatic said:   If you plan to max 401k once you get out of debt, have you thought about maxing 401k then borrowing it back? I basically look at it like future you is borrowing from the present year's contribution limit.
  Wow!  That is an excellent point... that may change Suze Orman's tune if she thought about it like that.

Woah. Haven't thought about that at all. Will put some serious thought into this. Thanks

  Well, in that situation, it only really makes since if you are choosing between maxing out 401k contributions or paying off debt.  If you are already maxing it out, it doesn't make since unless your alternative is to lower your contributions.

I think it's accurate to say that I'm choosing between the two. In 2014, I sent over $40,000 to retirement accounts or student loan payments

  What's the interest rate on your remaining debt?  If it's all student loans at <7% I think I'd rather max 401k and IRA then throw everything after that at the loans.  Of course, if you want a house or something that the debt is getting in the way of, that's one thing, but if you're just committed to bettering your financial situation then I think you'll be better off 30 years down the line by maxing retirement and taking longer to pay off the loans.  Either choice is great though.

The highest among them is at 7.65% (Originally 7.9% with the 0.25% discount for automatic payments) and my MAGI is high enough that I don't get to deduct student loan interest paid.

Luckily (?!), I have nearly $35,000 of that high-interest debt -- enough that making decisions about <7% debt is something I won't have to deal with for at least another year.

  Well, you've got 57,800 + 18000 for this year = 75,800.  I'll ignore the match.  You can typically borrow 50%, so you could borrow 37900 which would wipe out the 7% debt.  A loan kind of counts as a bond since it'll return whatever interest rate you're paying, so your asset allocation will be way too bond heavy for a while.  And there's all the limitations about immediate payback if you separate from your employer, and very important, you need to make sure your plan will let you continue to contribute to the 401k with an outstanding loan, some don't.  Also you may not be able to pay extra toward this loan unless you pay the whole thing off.  But if you can live with these limitations and your plan is good it might be worth it.

If you don't want to, 7% is pretty close to the long term average stock/bond return, so your plan to contribute to the match then switch to debt paydown is probably going to give you the best outcome.

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Time for a February 2015 update. Last month, I:

  • paid off $2,400 of Student Loan Debt to bring it down to -$102,800
  • added $1,500 to Retirement Savings to increase it to $59,300

  • In total, I added $3,900 to Net Worth to increase it to -$43,500

What I'm proud of: Paying off $2,400 in student loan debt is good! After a 2014 where I had some good months and long stretches where I hardly paid off any debt at all, I'm looking for both progress and consistency this year. I'm proud of this strong start.

What was challenging: I had a surprise monster cavity that needed an expensive crown, for which I had to pay a budget-busting $500 out of pocket! Luckily, I have an emergency fund to deal with these sort of surprises -- and a Health Savings Account for tax-advantaged payment. The lesson here was definitely to brush and floss more frequently.

Here's how I spent money in January:

  • 59% Debt repayment and retirement savings. Slightly lower than my 61% goal for the year
  • 15% Rent
  • 15% Food, health, and personal care. Stupid crown...
  • 7% Travel and transit. A bit overblown because I prepaid for some travel I'm doing in February and March.
  • 4% Utilities and everything else

As for my greater goal of getting to a net worth of zero by the end of this year, $3,900 gets me 8% of the way there, so I'm definitely on track. Thanks for reading and thanks for all the advice!

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Good job debtblag

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Looks like we're at the start of a new month, so it's time for a March 2015 update: In February, I

  • Paid off $2,500 of debt, bringing it down to -$100,200
  • Added $5,700 to Retirement savings to bring it up to $62,500

  • In sum, this brought my net worth up $8,200 to -$35,100

What I'm most proud of this past month: I'm most proud that I'm keeping my debt payments consistent this year. Last year, different months saw payoff amounts falling in the wide range of $0 and $3,500.  After two months of 2015, my range is almost negligible. 
What challenged me: The thing most likely to have blown up my budget was a wedding several states away that I extended a couple days into a mini-vacation.  However, because it was in low-cost Charleston, SC, I didn't spend much more over the course of the trip than I would have had I stayed home in high-cost New York City.
Lessons for next month: I'd like to look into doing my taxes next month as well as review where my career's headed -- both of which have a pretty big effect on my debt pay-down.

Thanks as always to the kind words, advice, and motivation to keep on trucking. Hope everyone else had a solid February

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Time for an update for April 2015:

This past month, I paid off $2,400 of my student loans, bringing my total down to ($97,800). This is 76% of the original $129,000

I also added $2,200 to my retirement savings, bringing it up to $67,400. That's a 524% improvement over the $11,000 I had when I started this thread

Taking the sum of these, I added $4,600 to my net worth, which now stands at ($30,400). After starting the year at ($47,000), I'm 35% of the way to erasing that negative net worth and bringing myself to net worth zero by the end of the year

Phew! How was everyone else's month?

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Have you looked into SoFi for student loan refinance?

EDIT:

Just searched, you did.  What's your blended rate?  I think a variable rate SoFi could generate some good savings for you.

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Posting again since the sofi thing came up. Right now sofi (and commonbond) have a 1.92% 5 year variable rate.

I re-re-financed from sofi to commonbond and got my 3.92 10 yr variable rate down to 1.92 5 yr variable.

Worth looking into if you havent already!


Im down to 110k on mine, but am now in no hurry to pay them off so just stockpiling $$$ and getting > 2% return.

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mrbeaubo said:   Have you looked into SoFi for student loan refinance?

EDIT:

Just searched, you did.  What's your blended rate?  I think a variable rate SoFi could generate some good savings for you.

When my blended rate was around 7 1/2% in 2014, I was quoted around 6 1/2%

I've been told that SoFi has gotten a lot more funding since then and can offer better rates so I'll be looking to try again soon now that my blended rate is around 7.0%

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jd2010 said:   Posting again since the sofi thing came up. Right now sofi (and commonbond) have a 1.92% 5 year variable rate.

I re-re-financed from sofi to commonbond and got my 3.92 10 yr variable rate down to 1.92 5 yr variable.

Worth looking into if you havent already!


Im down to 110k on mine, but am now in no hurry to pay them off so just stockpiling $$$ and getting > 2% return.

  Wow! That sure is some difference. You wouldn't happen to know if your experience is typical, would you?

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jd2010 said:   Posting again since the sofi thing came up. Right now sofi (and commonbond) have a 1.92% 5 year variable rate.

I re-re-financed from sofi to commonbond and got my 3.92 10 yr variable rate down to 1.92 5 yr variable.

Worth looking into if you havent already!


Im down to 110k on mine, but am now in no hurry to pay them off so just stockpiling $$$ and getting > 2% return.

  Looks like we have uncannily similar profiles short of my in-the-money mortgages on investment properties. I'll check them out and keep you posted

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I'm still deciding whether it's unrelated to my debt payoff... or if there's nothing that's more related to my debt payoff, but figure I might as well mention it:

The other big thing I did in March was get engaged.

I'm currently researching all of the ways this affects my finances and will report back soon. Thank you.

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debtblag said:   I'm still deciding whether it's unrelated to my debt payoff... or if there's nothing that's more related to my debt payoff, but figure I might as well mention it:

The other big thing I did in March was get engaged.

I'm currently researching all of the ways this affects my finances and will report back soon. Thank you.

  Marry a breadwinner like I did, makes life easier.  Yes I'm one of the few that has financially BENEFITED from marriage, don't let all these FW naysayers fool you, it happens.

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mrbeaubo said:   
debtblag said:   I'm still deciding whether it's unrelated to my debt payoff... or if there's nothing that's more related to my debt payoff, but figure I might as well mention it:

The other big thing I did in March was get engaged.

I'm currently researching all of the ways this affects my finances and will report back soon. Thank you.

  Marry a breadwinner like I did, makes life easier.  Yes I'm one of the few that has financially BENEFITED from marriage, don't let all these FW naysayers fool you, it happens.

Unless things change drastically over the next couple years, that won't happen in my case. My income isn't huge, but it's multiples bigger than hers...

 

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mrbeaubo said:   
debtblag said:   I'm still deciding whether it's unrelated to my debt payoff... or if there's nothing that's more related to my debt payoff, but figure I might as well mention it:

The other big thing I did in March was get engaged.

I'm currently researching all of the ways this affects my finances and will report back soon. Thank you.

  Marry a breadwinner like I did, makes life easier.  Yes I'm one of the few that has financially BENEFITED from marriage, don't let all these FW naysayers fool you, it happens.

  I think most people benefit financially from marriage, or at least could if they went about it appropriately (of course, most of these aspects don't require marriage but are true of general cohabitation).  My wife has never really made that much money, but she also has only worked a small amount of time throughout our marriage; that being said, I have had a significantly greater drive to increase my earnings because of my family.  If I were single, I wouldn't have much of an issue living in an extremely humble dwelling that I could buy outright with one month of my current salary.  I also wouldn't mind being a bit of a gypsy and seeing the world.

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No May update and we are nearly to June. Got any news?

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Dus10 said:   No May update and we are nearly to June. Got any news?
 Ah, I'm sorry about that. I thought I'd written this out.

As of the beginning of May, here were my numbers:

  • I paid off $2,400 of my student loan debt, bringing the total down to $95,400
  • My retirement savings increased by $3,600, bringing its total to an even $71,000
  • Summing the two, I increased my net worth by $6,000 in April

I'm proud that my debt payments this year have been very consistent and the total is dropping quickly as a result of this focus. While it may look like I sent a lot of money toward retirement, I put in just 6% which is what my company matches up to. The rest of it was that employer match plus a lot of help from the market.

Life-wise, my fiancee and I started having some serious money talks, including discussing long-term retirement goals, and potential medium-term costs -- kids, homes -- and shorter term money questions like a wedding or setting up joint account.

May and June have a bit more promise in bringing direct changes to my debt payoff and net worth building. More to follow.

Thanks for reading

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RE: setting up a joint account. Don't do it!
mildly joking.
It's ok to have a joint account, but I recommend keeping individual accounts. Move money from individual account to joint account to pay for joint expenses. You never know what might happen, and co-mingled funds are no longer your $$.


congrats on the progress.

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imbatman said:   RE: setting up a joint account. Don't do it!
mildly joking.
It's ok to have a joint account, but I recommend keeping individual accounts. Move money from individual account to joint account to pay for joint expenses. You never know what might happen, and co-mingled funds are no longer your $$.


congrats on the progress.

  I have to concur on this.  There can be no end to the amounts of ridiculously that can occur because of just dumping all of your combined income into one account.  I have a money market checking that I use for my big monthly expenses which include mortgage, auto loan, and student loans and that money is direct deposited.  Then, other bills go into a join checking that is also direct deposit with a little bit of a buffer... remainder to my own.  If need be, I can transfer money around.

EDIT: however, we are completely open about finances and we have access to statements and such... no hiding of info (but then again, I am married... I wouldn't do that with a fiancee... I would wait until you are married.  It's like that saying about woman giving something away for free... same for breadwinners when it comes to finances).

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Re: Joint accounts

Consider keeping a google doc spreadsheet ledger instead... Ive been with GF for 7 yrs now and this is still what we use. You buy something for joint usage or pay at a restaurant or cover rent, you are responsible for putting it in the spreadsheet. Takes about 15 minutes a month. Whoever is behind at the end of the month pays rent. EZPZ and no worries about co-mingling money

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imbatman said:   RE: setting up a joint account. Don't do it!
mildly joking.
It's ok to have a joint account, but I recommend keeping individual accounts. Move money from individual account to joint account to pay for joint expenses. You never know what might happen, and co-mingled funds are no longer your $$.


congrats on the progress.

  But we're in love! And we're different!

No, you're right. That's how we're looking to do it. We'll have an Ours account that we each put in enough to jointly cover bill, then his and hers accounts for the rest of our money.

We've also discussed signing documents saying my current interests in rental properties are mine throughout.

Also, it should be said that neither of us has any intentions of ever leaving the relationship.

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jd2010 said:   Re: Joint accounts

Consider keeping a google doc spreadsheet ledger instead... Ive been with GF for 7 yrs now and this is still what we use. You buy something for joint usage or pay at a restaurant or cover rent, you are responsible for putting it in the spreadsheet. Takes about 15 minutes a month. Whoever is behind at the end of the month pays rent. EZPZ and no worries about co-mingling money

Not a bad idea.

I already do this with current roommates and joint utility bills. When the fiancee and I move in together, it would be an option worth considering. One knock against it for us would be that it would be an extra step when we have very predictable bills anyway.

 

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Here's my June 2015 update.

Debt: I paid off $2,600 bringing my total to -$92,800
Retirement: I increased my investments by $1,300 bringing my total to $72,300
Net worth: Combining the two, I increased my net worth by $3,900 to -$20,500. So far this year, I'm up $27,000.

The most important step in May was to re-apply for a loan refinance with SoFi. My estimated rate was half of what I'm paying now, meaning potentially tens of thousands in savings over the life of the loan.

The big difference between this year's debt payoff and last year's is that I'm way more consistent in my monthly paydown. I attribute this to switching strategies between 2014 and 2015. Last year, I tried my best to save money all month, then sent what was left over to pay off debt. This year, I'm making a huge payment at the beginning of the month, then figuring out how to live on what's left.

It's the sort of thing that shouldn't work -- but the numbers so far are showing it does...at least for me.

Hope everyone else had a great May

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