And in the news

[dancerjodi]

Waltham is getting some more art. More studios (and potentially - an art supply store?) are moving into the old Jordan's Furniture Building on Moody:
http://www.dailynewstribune.com/localRegional/view.bg?articleid=49607

The State of the Union Address got me thinking about my own retirement $. I need to sign up for a 401k again (I had one at THP, had to wait before signing up for one here, and then held off in favor of paying off massive debt). I'm torn between continuing to pay off the debt, and signing up for a new 401k and rolling in the old THP stuff. My issue is, shouldn't I pay off what I'm paying 18% interest on first (versus putting into something that gains less interest)? I seem to remember that's what the Motley Fool guys recommended.

I think we're going to goffee tonight (after I run way too many errands out in the Wayland/Framingham/Natick area).

I was reminded of this song, because one of the CDs played during ballet class has it on it. I like the original from Quidam MUCH better than the one that stupid Josh Groban sings. The message is very important, I think. There's a lot I wouldn't have achieved in life if I wasn't allowed to fall. And PS, this is a livejournal cut. It is your friend when making long posts. Live it, love it, use it

Let me fall
Let me climb
There's a moment when fear
And dreams must collide

Someone I am
Is waiting for courage
The one I want
The one I will become
Will catch me

So let me fall
If I must fall
I won't heed your warnings
I won't hear them

Let me fall
If I fall
Though the phoenix may
Or may not rise

I will dance so freely
Holding on to no one
You can hold me only
If you too will fall
Away from all these
Useless fears and chains

Someone I am
Is waiting for my courage
The one I want
The one I will become
Will catch me

So let me fall
If I must fall
I won't heed your warnings
I won't hear

Let me fall
If I fall
There's no reason
To miss this one chance
This perfect moment
Just let me fall

Comments

401K stuff

[jetgrrl01.livejournal.com]

My issue is, shouldn't I pay off what I'm paying 18% interest on first (versus putting into something that gains less interest)?

That's true, except for the fact that many companies give you matching. At 100%, 50% or even 25%, you should always put in whatever it takes to get the matched funds (free money!) and then, while you still have debt, don't put more than that into the 401K until you pay down the high-interest stuff. Because if you're paying 18% interest but making 25% in matching, you're still coming out ahead for that bit of it.

If they don't have matching, then you're correct, though some people find it good to just put aside a little. Maybe even $100 a month or something, just to start the snowball of savings.

Re: 401K stuff

[devina.livejournal.com]

I agree with your first paragraph. :) I mostly disagree with your second, for a couple of reasons. One is that a 401k is pretax dollars, so you're reducing your tax burden by whatever amount you contribute, which is huge. The second is that a retirement savings are long term (and they grow tax deferred in a 401k), so compounding over 25 years is an extremely powerful force, even if "extremely powerful force" sounds silly. :)

Paying off the 18% is definitely important, but even without matching, the 401k is just as important, imo.

Re: 401K stuff

[jetgrrl01.livejournal.com]

I know what you mean, but the credit card debt (I'm assuming that's what's 18%) can often have a negative impact both pschologically and on the monthly budget. The sooner it gets paid off, the more freedom people have to do 401K or pay for other emergencies without adding to debt. I've spent lots of time on the Motley Fool credit card board, and I think people just feel so much better when they get rid of that debt.

So mathematically, I agree with you, but I think mental feelings of security in the short term make a difference.

Re: 401K stuff

[dancer.livejournal.com]

"The sooner it gets paid off, the more freedom people have to do 401K or pay for other emergencies without adding to debt."

I've been holding off part for mental reasons, part for not knowing if the #s add up. My minimum monthly credit payment is $400. Obviously, I'd want to pay more than that (and thats a huge chunk of change there). I'm not sure if I did 401k at X amount what the impact in my paycheck would be. I know its all pre-tax, but I have no idea what the brackets and such are (I could end up taking home more, or taking home a lot less, making the credit payments more difficult).

I know I won't have it paid off for at least another couple of years. It would really bother me to be throwing hundreds away each month that I could have taken from that 401k $ (granted also, I already have money in a 401k, its just not accumulating at the moment).

So I'm kind of stuck in the middle :)

I am totally not interested in finance at all. I don't care how things work, I just want them to work (and don't want to screw myself). Hence my thinking that a financial planner may be a good idea, or something. :)

Re: 401K stuff

[algorhythmic.livejournal.com]

In addition to a 401K, have you considered a Roth IRA? Whereas a 401K is pre-tax, the Roth IRA is post-tax. With the Roth IRA, you pay no capital gains tax when you withdraw at retirement. (When you withdraw from the 401K, you pay income tax.) Depending on your situation, this may be a better option than a 401K.

Yay !!

[wench33.livejournal.com]

Goffee !!


Kate

[jasonsmyr.livejournal.com]

I just got a minor raise.. and decided to up my 401k.. before I was just at min to get the free money from the company.. (6%) up to full (12%) The amount extra I started putting in to the 401k was 2x my raise.. but due to affect of pretax.. my twice a week pay check is only 3 dollars less than it was before the raise and boosting the 401K..

Pretax is your friend