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Question for SA on Retirement

May 18th, 2019 at 03:56 am

I’ve been so busy at work that I didn’t eat lunch yesterday. I found myself getting dizzy as I drove home. This is a habit I do not want to start. I ate my lunch for dinner and went straight to bed.

My mom gave me two dozens of eggs 🥚 and two packs of two chicken breast 🍗that I could easily turn into eight. I decided to split with my sister since I know she’s struggling and for some reason my mom is so mean to her. I have no clue why. My mom is just mean but she’s worst with my sister.

I checked CC9 💳 account today and the payment hit, yay 😀. I know I had paid it, and it would clear but nothing like the words processed and actually seeing the reduction of the balance. Next week I’m throwing $500 at that baby and she’ll be down to $1300. Two payments in June and she’ll be done ✅.

I’m thinking that CC10 will be done in December and then it’s the dreaded student loans 👩🏾‍🎓.

I wanted your thoughts, I’m 45 and I had stopped the contribution, following Dave’s plan, to my retirement. I’m thinking that once CC10 is paid off I should start back, at least at 3%. It’s going to take about three years for me to pay off the student loans. Or should I follow the plan, pay off the student loans and then throw 15-20% to my retirement. I can also max out my HSA that can be a vehicle for retirement as well.

What’s your thoughts?

13 Responses to “Question for SA on Retirement ”

  1. creditcardfree Says:

    Do you get a match from your employer for your retirement contributions? If so, definitely contribute enough to get the full match. Do you have any retirement savings? I do think you should start retirement in some form in the new year, primarily because of your age. If you were far younger, it wouldn't be as big of an issue to wait.

  2. MonkeyMama Says:

    It also depends on the interest rate of your student loans. I agree with Dave's plan if you are paying usurious interest rates. What are the interest rates?

  3. Amber Says:

    Thanks everyone, there is no employer match and the interest on the loan is about 5.85%. I can not locate on the site 🤦🏽‍♀️🙄

  4. MonkeyMama Says:

    In that case, I would focus on retirement, contributing as much as you can. I wouldn't give any priority to a loan with a reasonable interest rate. I really dislike debt and I know student loans can be particularly nasty/scammy. But it is what it is. I'd personally make retirement savings my #1 priority (after high interest debt is paid) and then maybe focus on trying to refinance out of any nasty loans. IT may take some time to do the latter, but you can't get back the time for retirement investing.

  5. Fire and I Says:

    Contribute to retirement. The student loans are at a reasonable interest rate. Let the retirement interest compound. You could also run the numbers and see how many months extra it would take to pay off the loans if you contribute to retirement and how much you will come out ahead/behind using a conservative rate of returns on retirement.

  6. DW Says:

    If you were truly following Dave, the first four sinking funds would not exist . Retirement should take priority over them (fun/vacation, gifts, sorority, Christmas Club). It may sound selfish, but you’re in your forties. You need the bonus of time to grow your funds. Pay yourself first. None of the four sinking funds will fund your retirement.

  7. Jenn Says:

    In your shoes I wouldn't even wait for the CCs to be paid before getting some amount going to retirement. Since there is no match, I wouldn't bother with the 401k. I'd open a Vanguard Roth IRA and an HSA if you're eligible and split your contribution between them. This year, just save something in those accounts while you pay off the CCs. Then raise your game next year, while paying toward the student loans.

    I think you should prioritize retirement, then CC debt, then student loans, then mortgage. You've shared that your mother isn't very nice, your sister is worse off than you financially, your dad has passed away, your brother is manipulative, and your SO is a drain rather than a help to your finances. Given that, you need to take care of YOU. I started saving for retirement when I was 30, and I'm both thankful and kicking myself for not starting sooner now that I'm in my 50s. Don't delay!

  8. Petunia 100 Says:

    Do you have any retirement savings now? The thing is, you cannot pay for life's basic necessities with a lack of debt; you need money.

  9. creditcardfree Says:

    I was thinking about your situation, the fear you have about not paying your mortgage at times and find it interesting that you don't have any retirement, doesn't that scare you, too? I'm not trying to create fear for you, but question why there is a difference. Do you not expect to see retirement?

    There are 13 funds at Vanguard that require only a $1,000 minimum. These are the STAR fund and I think all of the Target Retirement Balanced funds. I would start with the latter one that matches your expected retirement date 25 years from now, Target Retirement 2045. Of course, I think it's wise to understand what you are investing in and how mutual funds work, how your principal is not guaranteed. If this is completely unknown territory, it might be wise to do some research and ask questions before you invest. In your case I might actually take $1000 from your EF to start the funding, then make an automatic payment after one paycheck a month. The max you can contribute to a Roth each year is $6,000, or $500 a month. I'm not saying you have to start with that amount, but $50 to $100 a month might be a place to start.

    I do think there needs to be a balance between saving for retirement and paying off debt, unless you are gazelle intense and can get debt paid off in two years or less, something should always go to retirement.

  10. rob62521 Says:

    Although I think Dave Ramsey has great ideas, I would disagree with him on this. I think you need to start funding retirement. As I tell my younger friends, compound interest is your friend, even if you can't fully fund your retirement accounts. As much as you want to get rid of those student loans, you do need to focus on planning for your retirement too.

  11. Dido Says:

    Agree with the other advice you are seeing here. TIME is your most important ally in the search for a comfortable ally. Failing to fund for retirement now gives you too short a runway before you actually will retire and you probably won't be able to make up for it with savings. You would have to save about 30% of your income for retirement over a 10-year time horizon to get about the same income as saving 10% of your income over a 20-year time horizon. The further out you go, the more powerful time is as an ally. It's all about compounding, as Rob says. I'm sure you've heard the apocryphal rice and the chessboard story (if not, see it here: http://www.dr-mikes-math-games-for-kids.com/rice-and-chessboard.html). The first few squares/years it doesn't look like much is happening; the power of compounding is mostly in the final years, and the longer a runway you give yourself to save, the more likely you will be to be able to have a comfortable retirement. And unlike money, you can NEVER get time back once it is gone!

  12. FrugalTexan75 Says:

    Amber, I agree with the other comments. Retirement is so much more important to be funded than paying off student loans - especially at that low of interest. I agree also that you shouldn't wait to have your cc's paid off to start putting some away. I'm 43 and have about $300k in retirement, etc. funds - and worry still that I haven't done enough. (especially since my husband is 52, and probably won't work past 60, if that.) My DH still has a student loan - we pay $50/mo on, I'm a-ok with paying just that. The $4k or so owed is much more useful in the here and now or put towards retirement growth funding.

  13. terri77 Says:

    I think you should at least contribute enough to get a match if eligible.

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