"100% of people who do not save money do not have any!"--Dave Ramsey

[Isaac Zachary]

What makes more financial sense now that I'm about through paying off the Avalon?

Take that $200 I was spending on it per month and save that for my next car? That way in less than 5 years I'll have $10,000 saved up for that car, which coincidentally will be about the time the Avalon will hit 15 years old and 200,000 miles.

Or should I use that $200 per month to keep the Avalon it tip top shape? It could use a little body work and paint, a little uplholstry work. At some point it will need another HV battery for a couple grand. I could try to find every part that has any rust whatsoever and try to sand it all out and paint it really good.

[redpoint5]

0. Establish an emergency fund to your satisfaction
1. Contribute to your 401k (traditional or Roth - see "Why #4" below) up to any company match
2. Pay off any debts with interest rates ~5% or more above the current 10-year Treasury note yield.
3. Max Health Savings Account (HSA) if eligible.
4. Max Traditional IRA or Roth (or backdoor Roth) based on income level
5. Max 401k (if
- 401k fees are lower than available in an IRA, or
- you need the 401k deduction to be eligible for (and desire) a tIRA deduction, or
- you earn too much for an IRA deduction and prefer traditional to Roth, then
swap #4 and #5)
6. Fund a mega backdoor Roth if applicable.
7. Pay off any debts with interest rates ~3% or more above the current 10-year Treasury note yield.
8. Invest in a taxable account and/or fund a 529 with any extra.

As an aside, while janitorial work makes decent money and is a respectable job, your intelligence seems like you could be earning more doing something else.

As an aside, aside, I would be tempted to keep my emergency fund in a stock market index fund. A credit card could cover any unexpected expense interest free for 30+ days while you sell whatever amount of stock is necessary to pay off the balance. The advantage is your emergency fund is on average earning ~7% (inflation adjusted).

[Isaac Zachary]

Originally Posted by redpoint5

0. Establish an emergency fund to your satisfaction
1. Contribute to your 401k (traditional or Roth - see "Why #4" below) up to any company match
2. Pay off any debts with interest rates ~5% or more above the current 10-year Treasury note yield.
3. Max Health Savings Account (HSA) if eligible.
4. Max Traditional IRA or Roth (or backdoor Roth) based on income level
5. Max 401k (if
- 401k fees are lower than available in an IRA, or
- you need the 401k deduction to be eligible for (and desire) a tIRA deduction, or
- you earn too much for an IRA deduction and prefer traditional to Roth, then
swap #4 and #5)
6. Fund a mega backdoor Roth if applicable.
7. Pay off any debts with interest rates ~3% or more above the current 10-year Treasury note yield.
8. Invest in a taxable account and/or fund a 529 with any extra.

As an aside, while janitorial work makes decent money and is a respectable job, your intelligence seems like you could be earning more doing something else.

As an aside, aside, I would be tempted to keep my emergency fund in a stock market index fund. A credit card could cover any unexpected expense interest free for 30+ days while you sell whatever amount of stock is necessary to pay off the balance. The advantage is your emergency fund is on average earning ~7% (inflation adjusted).

Sounds good! So far:
0. I'm good with my Emergency Fund I think

1. I've never had a 401K, so I'll have to figure out how to open one.
2. I don't have any debts.
3. We have an HSA account. So I could do that.
4. I don't have an IRA or ROTH. I guess I better figure out the difference.
5. Um, ok.
6. I'll figure that out if I get to that level.
7. I don't have any debts.
8. Ok.

Aside: I probably could make more money elsewhere. I'm just not sure what that is though. I'm making more money than I ever have, and I've had many different jobs over the years.

Aside Aside: I was thinking of investing in the stock market for that very reason. I wonder if a 401K, IRA or ROTH can be a stock market investment, or are those just a type of savings account?

I guess you're saying don't put any cash towards a car than necessary?

[Isaac Zachary]

So from what I'm reading here, I would have to have an employer that offers a 401k in order to get a 401k. So that means I would need a Roth. The max contribution for a Roth is $7,500 for those over 50 years old. I'm still trying to figure out the benefits of having a Roth account over a regular ol' savings account.

[freebeard]

If you find out what happens to an IRA if you are terminated, let me know. That uncertainty held me back.

My plan is simply to live within my means on Social Security. That means no amphibious car, of course, but robotaxi flying cars are looking more likely. (Jetoptera) Maybe a jet ski ecomodded with an annular thruster duct?

[redpoint5]

Originally Posted by Isaac Zachary

Sounds good! So far:
0. I'm good with my Emergency Fund I think

1. I've never had a 401K, so I'll have to figure out how to open one.
2. I don't have any debts.
3. We have an HSA account. So I could do that.
4. I don't have an IRA or ROTH. I guess I better figure out the difference.
5. Um, ok.
6. I'll figure that out if I get to that level.
7. I don't have any debts.
8. Ok.

Aside: I probably could make more money elsewhere. I'm just not sure what that is though. I'm making more money than I ever have, and I've had many different jobs over the years.

Aside Aside: I was thinking of investing in the stock market for that very reason. I wonder if a 401K, IRA or ROTH can be a stock market investment, or are those just a type of savings account?

I guess you're saying don't put any cash towards a car than necessary?

A 401k would be offered by your employer, and you would need to talk to HR to find out if they do employee matching. If they do, it's free money. Normal match limit is 4-6% of base salary.

I've not gone beyond step 4, so I haven't had to figure out 5.

401k, IRA, and Roth absolutely can be stock market. Index funds are essentially very low cost mutual funds, which is why everyone advises these instead of picking individual stocks or paying a ton for a managed portfolio (managed portfolios don't outperform the market).

If you go the 401k route, be advised that the default fund is usually a managed fund with high fees, so you will have to log into the website and choose something else.

The reason investing in the stock market is #8 on the list is because it has no special tax advantages like the other options. That said, it is a way to keep your money fairly liquid should you need it quickly. Can't withdraw from an IRA without incurring a penalty.

[Isaac Zachary]

Originally Posted by redpoint5

A 401k would be offered by your employer, and you would need to talk to HR to find out if they do employee matching. If they do, it's free money. Normal match limit is 4-6% of base salary.

I've not gone beyond step 4, so I haven't had to figure out 5.

401k, IRA, and Roth absolutely can be stock market. Index funds are essentially very low cost mutual funds, which is why everyone advises these instead of picking individual stocks or paying a ton for a managed portfolio (managed portfolios don't outperform the market).

If you go the 401k route, be advised that the default fund is usually a managed fund with high fees, so you will have to log into the website and choose something else.

The reason investing in the stock market is #8 on the list is because it has no special tax advantages like the other options. That said, it is a way to keep your money fairly liquid should you need it quickly. Can't withdraw from an IRA without incurring a penalty.

Ya, I don't have an employer that offers 401k's. I get offered 0 benefits here. No health insurance, etc. Just salary. There is no human relations department either.

[Xist]

This appears to be https://mrmoneymustache.com, in case you had any questions, like:

Originally Posted by redpoint5

Why #4

I am not going to compare and contrast with Dave Ramsey. First of all, I would need to look up his version, which almost nobody follows.

I am pretty sure that #1 is cut up all credit cards.
#2 is live on a diet that gives you diabetes [and other health problems] until you are out of debt.
#3 is to pay off your smallest debt first, which isn't as effective as paying off the highest interest rate first.
#4 is to max out your retirement as soon as you are out of debt.

Some people should not be trusted with debt, but pretty much all of Dave's criticisms of credit cards apply to debit cards.

I use credit cards for most of my purchases and ensure that I pay off my balance before I accrue interest.

Dave Ramsey cultists insist this doesn't work, but Bank of America says that I have earned $209.81 this year and $314.51 in 2022.

Just keep it under control and you get a little extra money.

Meet Kevin promoted credit card churning.

You are supposed to be able to find credit cards that offer cash for signing up [and using them enough], so you can make another couple hundred a year that way.

RedPoint, do you do that?

Getting your employer to contribute to your retirement is also free money, but I am a contractor, so I don't have that, benefits, and I need to pay my own taxes and social security.

People say that investment properties only increase in value equal to the inflation rate, but you put 20% down--or less, and your tenants pay off the rest.

You can (and should) deduct mortgage interest on your own home.

What Deductions Can I Claim for Rental Property?
As a rental property owner, you can claim deductions to offset rental income and lower taxes. Broadly, you can deduct qualified rental expenses (e.g., mortgage interest, property taxes, interest, and utilities), operating expenses, and repair costs.

Rental Property Tax Deductions

Real estate may be a better investment than stocks because at least some of it is tax-deductible.

[redpoint5]

Originally Posted by Xist

Meet Kevin promoted credit card churning.

RedPoint, do you do that?

Real estate may be a better investment than stocks because at least some of it is tax-deductible.

I don't churn credit cards, but it's very much on my radar. I'm just not disciplined enough these days and the allure of a couple hundred bucks doesn't get me going anymore. I don't even volunteer for overtime anymore, which in my earlier years I'd have fought over.

Real estate investing is a huge PITA. Most are probably better off with the MMM order of operations.

[Xist]

I looked up Dave's steps for his baby mamas because I kept remembering I needed to mention he said to donate to the less fortunate, but kept forgetting.

Forget them, right?!

Baby Step 1
Save $1,000 for your starter emergency fund.

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Baby Step 2
Pay off all debt (except the house) using the debt snowball.

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Baby Step 3
Save 3–6 months of expenses in a fully funded emergency fund.

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Baby Step 4
Invest 15% of your household income in retirement.

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Baby Step 5
Save for your children’s college fund.

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Baby Step 6
Pay off your home early.

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Baby Step 7
Build wealth and give.

Do or don't do. I am not a cop.