Right now at your age per DR you should NOT be putting into either because you have debt. You should complete baby step #2 and then since there are no college concerns for you, you should start a 401K UP to and and including what your company matches. He then suggests a Roth IRA for the difference between what you get in matching to 15% for retirement.
The logic behind this is you will be debt free in a year or so following his plan and 1 year of a small amount into the 401K vs what you are currently paying in interest on the charge cards will wash out.
Then you only do up to what the company will match in 401K because they, not you decide where the money will be invested. The remainder you put in a Roth good growth fund and leave it alone. There you have control over what is done with your money, where in a 401K the company does.
Of course if there is a huge matching, or tax advantage then you might want to look at it differently.
Example: several years ago dh was on the cusp of two tax brackets. By him joining the company 401K program our income actually went UP $50 a pay period due to the fact the pre-tax option dropped us down to the lower bracket. So check your tax options as well.
When I worked for the University of Michigan, we had the same option. But we even if we didn’t contribute, we got 5% from the university. So you wouldn’t miss on the extra 5%, just the match.
time is a big factor in investments. That’s one part of DR I can’t wrap my mind around. I am debt free and it feels wonderful but am very happy I did not wait till the point in my life when everything was paid off to start to invest. I was working full time and buying stock at 17, made other dumb mistakes like selling my stock to pay for my first husband’s gambling debts….wow, what I would have now if all that had been there during splits and all the years of growth. Never got into serious debt with any credit cards, always invested, always gave. That was just how I chose to live, would not want to wait till the last step to do either. Never had a chance at an employee match but always put in to deferred comp from almost the first chance I was eligible, never had to borrow from it and never regretted it.
We have a 403b situation, where, if we put in 5%, my employer puts in 10%…so not only is it missing out on the free money from a 1:1 match, it’s missing out on that extra 5%. The benefits of it, including the tax advantage now, outweigh the interest we may pay on other things. Others may disagree, but it’s the one thing we are doing that I’m not sure whether it follows Dave exactly, but we’ve decided not to ignore that 10% of my salary every year….
You want to contribute at least enough to maximize the match. For example if the company will match 6% of your contributions you want to contribute 6%. You also want to check to make sure how often you are allowed to make changes to your deferrals. Some plans only allow changes quarterly, semi-annually or annually. Here is a link for a take home pay calculator to help you determine how your paycheck will be affected.
because I didn’t sign up several years ago – however, better late than never. So, if I go with 3%, it’s approximately $40 less out of my pay, should I try to go with a higher %? I’m a little concerned about my take home pay since it’s just me and the critters and the mortgage etc.
They’ve taken what they’ve taken – he was very evasive and would not help out at all. (Surprise, surprise.) He said they got a lawyer involved, etc. And that a garnishment costs another $200.
So, I set up a withdrawal from 401K and will get the mortgage in on time (I hope). Friends from all over have helped out with food and gasoline and one friend even went in and paid for my husband’s insulin and heart medications. And we have a few more paychecks coming in this month, so we should survive.
Unless the money is in your hot little hands in the form of green paper, it is not yours!!!
We went round and round two different times on an auto loan for another Sean Patterson, even spelled differently. They insisted it was my ds because he had the audacity to go the same college as the Shawn Patterson did. I had to threaten lawsuit to even get them to look at the ssn. Luckily ds was unemployed at that point so they didn’t get to garnish him like they tried.
The next time you talk to Mr. Manager ask him for the last 4 of the ssn and make him repeat it over and over until you get it. Just keep interrupting him until he slows down and gives it to you properly. The fact he’s rushing on means he knows something is wrong. Then point out to him that is not your ssn. Also demand to know when the court judgment was and what it was for. You will need all that info to get it straightened out.
when they were supposed to take from someone else?!? I’m basing this on the fact that the account they were dealing with had a different SSN than yours… I think they screwed up, PERIOD. If that’s the case, the only way you could get the money back will likely be a lawsuit of your own. If it goes that far, get them for 10x what they took from YOU…
After much pushing of the ‘0’ button I reached a human being. She says she doesn’t know how much they took, but no, they cannot take any more. My paycheck will be fine on Friday. I asked about making some sort of arrangement so I could get my husband’s medications and so forth. She transferred me to a manager.
He rolled off my name and someone else’s last 4 digits of SSN and didn’t pause long enough for me to say “That’s not right.” Then he said “Oh, there is a cease and desist code on your account, so I can’t talk to you.” I faxed in the “permission to talk to me” letter he asked for. (Bad idea? good idea? neutral?) and noted that despite this “code” they have called my 15 times on my cellular phone at work after the date that he acknowledged this communication.
Mr. Manager person is supposed to call me back at noon. Let’s see what story he cooks up now.