Originally posted by antonlsu
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Emergency Funds
Originally posted by Acameron52 View Post
Do y’all think it would be smart to pull some cash out of my savings and fund my emergency fund right away or just start slowly putting money into it as I can?
I would not pull out of an IRA or 457 to fund it, but if you just have a cash account you could convert the whole thing. Savings is savings and only good if you manage it correctly in times of need.
Sent from my iPhone using TapatalkLast edited by bmac; 05-02-2019, 07:49 AM.
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Originally posted by antonlsu View PostDon't contribute at all to any 401k/IRA until all your debt is paid off? I think that's too broad of a statement. For example, I still owe on my 2016 RAM, however its at less than 1% interest, why would i pay that off when I can earn more than 1% on my money?
Also, if your company matches your IRA/401K investment, you're just throwing away free money not to atleast invest up to the % that they match.
The mentality of having debt in and of itself is what he says to get away from completely. The mindset that it is free or almost free money doesn't matter. Its a mentality thing, if you didn't have a payment, even if it was 0% interest, that money would be going straight into savings/retirement. Also, if you are a young man, the amount you would miss out on for a 401k company match will more than made up for when you're not paying any kinds of debt repayments.
Only reason we got new vehicle was because last one was totaled in a not at fault wreck, otherwise we would still be driving the older used/paid for vehicle. New vehicles are a worthless endeavor. Unless it is a business write off or a necessary expense for your line of work that your company doesn't pay for, most consumers have no business owning/buying any new vehicle if they are like most middle class families. That money spent robs retirement funding/planning as well as weddings/college, etc for if/when you have kiddos!
All food for thought!
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Dave Ramsey's investment advice is known to be sub par.. His niche is more about helping people who seem to not understand basic personal finance get out of debt.
OP..I'd suggest you start here. There is a wealth of great information to start with.
Last edited by ntxshooter; 05-02-2019, 08:07 AM.
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It's been a long time ago but, when I was at your stage in life I was married to a nervous Nelly of a wife. Very conservative and not crazy about putting our money in stocks. To ease her mind, we put one full month of expenses in savings (she wanted two) and then bought six months of CDs that had a six month maturity. Each one would cover all our expenses for a month. At the time, CDs were yielding higher rates than savings accounts. The thought process was savings would cover one month and then we could cash out a CD each month if needed.
BTW, I'm still married to the same woman but, she is a lot calmer about finances these days. She still wants way too much money in our money market account but, I gave up on that battle years ago. I also don't do the CDs anymore but that's just because with age and investing, we have other accounts we could draw on.Last edited by Rush2Judge; 05-02-2019, 08:13 AM.
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Originally posted by ntxshooter View PostDave Ramsey's investment advice is known to be sub par.. His niche is more about helping people who seem to not understand basic personal finance.
OP..I'd suggest you start here. There is a wealth of great information to start with.
https://www.bogleheads.org/wiki/Outl...ncial_planning
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Originally posted by Twipper333 View Post
He also says don't even contribute to any IRA/401k/Life Insurance, etc until you have gotten rid of ALL debt except mortgage and then have 3-6 months in liquid cash sitting in the bank.
Always contribute to an employer matched 401k if you have one.
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Originally posted by Throwin Darts View PostDave Ramsey has plenty of crappy advice on certain topics but this one has to take the cake. It is absolutely insane to not contribute to an employer matched 401k. It's a 100% guaranteed return on your contribution. Failing to contribute up to the employee match to pay off say a truck note forgoes a risk free guaranteed 100% return and incurs ordinary income tax on the funds used. Say you're in the 25% income tax bracket and you earn $1. You can contribute that dollar to an employer matched IRA and end up with $2 or you can divert it and end up with $0.75 after income tax.
Always contribute to an employer matched 401k if you have one.
If you have all of that debt, you need to get rid of that first and then catch up your retirement. Those are extreme scenarios and unfortunately is more common than not having much debt, especially with the younger generation.
I commend the OP for thinking about this while he is younger. It shows a level of maturity I wish I had had.
For those that don't have much debt, say a vehicle, etc and they are not keeping food out of their kids mouths to do so, I agree that they absolutely should contribute the maximum of their company match for 401k in order to avoid missing out on free money.
401k's shouldn't be the sole retirement investment instrument though, IMO!
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Originally posted by DirtyDave View PostSome of yall are getting way too complicated.
Emergency Funds and Investments are 2 different things. Keep it that way.
Do not put your EF in any risk. Just a Regular old Savings Account.
Don't Gamble with money you can't afford to lose
Stock market isn’t a gamble. You can constantly get 10% as stated above [emoji51]
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Originally posted by Acameron52 View PostNo sir, just out of my normal savings account. I don’t want to touch those accounts.
Personally, I hold a 6mo-1yr salary in a money market account, but I'm in government contracting and could lose my job at any day. But generally would hold 6-1yr of expenses to be comfortable in a normal job.
Sent from somewhere
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