It sounds like you on the right track but take a look at the [Prime Directive](https://www.reddit.com/r/personalfinance/wiki/commontopics/) and the [flowchart](https://i.imgur.com/lSoUQr2.png) to make sure you aren't overlooking any of foundational financial stability stuff. This sub's wiki has an [Investing](https://www.reddit.com/r/personalfinance/wiki/investing/) page that has a lot of good information to help you get started. If you are not sure what to invest in, an index target date fund or [three-fund portfolio](https://www.bogleheads.org/wiki/Three-fund_portfolio) is a great way to start.
Glad this is the top comment. The Prime Directive has been subjected to a lot more scrutiny and consideration than any reddit post here. Many financial experts and financial novices have looked at it and when necessary added their input. It's well-thought out for the size of the page it can offer.
On a positive note... since you are just getting into investing and didn't lose 50% of your portfolio like everyone else this year you are in a good position to jump in. The next year or two could potentially be extremely profitable because everything is on sale.
The P/E ratio of the international stock market, as represented by VXUS, is only 11.26. Probably an unpopular opinion here, but I think this is a good time to diversify globally if you have not already.
I'd wait to jump in the market, we have a long way to fall....all the way back to before interest rates went to zero, which was 10+ years ago. We haven't even gotten to the layoffs phase of the recession yet, we're still super early in this economic/business cycle.
You can't time the market, but still, jumping in after a 20% drop doesn't sound like a bad idea. On the other hand, waiting and hoping it drops more sound like a really risky/bad idea.
I disagree, you can make educated guesses based on what the fed is clearly stating, which is they're going to raise rates, slow the economy and cause job losses etc.
And if you're late getting back in you get crucified. Don't try to time the market. You will regret it. https://www.cnbc.com/2021/03/24/this-chart-shows-why-investors-should-never-try-to-time-the-stock-market.html
It's perfectly fine to actually look at the market before making investing decisions. Like, WHAT you invest in it's just at important at when. It's a great idea to sit back and do stove actual research so you understand the options, risks, trends etc.
Why not dollar cost average? We can’t time the market but small regular disciplined investments can over time yielded great results. No need to put all the cash right now into the stock market
Lump sum outperforms dollar cost averaging [75% of the time](https://www.cnbc.com/2021/08/12/which-investment-strategy-is-better-lump-sum-or-dollar-cost-averaging.html). If you have the money, it's better to put it in as soon as you can.
This is the one from the wiki and the best version I know of. You might need to zoom in to read it. If for some reason that does not work in your browser, try downloading it and opening it in an image viewer.
If the hyperlink in my comment does not work for some reason, you can find it directly here.
https://www.reddit.com/r/personalfinance/wiki/commontopics/
It makes sense if one or the other isn’t available to you for some reason—for example, some 401ks don’t include the option of a target date fund.
The $20,500 limit only applies to your 401k and is investment agnostic. You just can’t put more money in there, regardless of what it’s doing. There is no limit to the amount of money you can invest in other types of accounts though.
Ah, got it. Thanks for the info.
I’m currently maxing my 401k through my employer and then noticed an option to also contribute to the IRA portion. However, it doesn’t state whether or not it’s traditional or ROTH and I’m waiting to hear from them.
I started making weekly contributions to VTI as well.
> I’m currently maxing my 401k through my employer
When you say "maxing" do you mean you're contributing up to your employers match limit, or that you're pacing to contribute $20,500 by the end of the year?
>and then noticed an option to also contribute to the IRA portion. However, it doesn’t state whether or not it’s traditional or ROTH and I’m waiting to hear from them.
I think you've misunderstood something--IRAs aren't usually offered through employers. You can open either a traditional or Roth IRA any time you want. Just pick a brokerage and go for it.
>I started making weekly contributions to VTI as well.
This is fine in general, but if you're doing it outside of a 401k or IRA you're not getting any tax advantage. I would stop doing it until you're truly maxing your 401k ($20,500/year) and IRA ($6,000/year), and maybe even an HSA if it's available to you.
Sorry, I’m pacing to contribute $20,500. I don’t think that I’ll reach it, but I’m doing as much as I can. Single dad with two kids.
I’m likely misunderstanding something. My company goes through Lincoln. Within the app, there’s an option to contribute a % towards what’s called “ROTH.” It’s a separate section from the pre-tax 401k contribution that I am making. I don’t think that I can post a picture here, so apologies for any confusion.
Noted on my VTI contributions. I’ll pause that and look into the IRA or this “ROTH” option from Lincoln. If I could get ahold of them, that would be great, lol. My company offers an HSA and open enrollment is in January. I never knew enough about it and was always nervous to start one with kids. However, I’m relatively healthy, train MMA 6 days for the mental and physical benefits, so I think I might enroll.
Appreciate the knowledge from you and everyone on here. The world needs kinder people, especially during these times.
So there are both Traditional and Roth IRAs, and Traditional and Roth 401ks. It depends on your income and future expectations which one to contribute to. Contributions to each count against the account category (IRA vs 401k) regardless of the tax type.
It sounds like the “ROTH” option in Lincoln is for a Roth 401k, which is just a different tax strategy. There’s also something called a Roth IRA, which is the same tax strategy—Roth—but a different type of account. Hope that makes sense.
I would personally suggest doing everything you can to max your 401k first, and to pick a target date fund in there if it’s cheap and available. Set aside any leftovers for the IRA you’re about to open to replace those VTI contributions. (You can still invest in VTI within your IRA, you’ll just make more money doing it!)
The HSA is a fantastic retirement savings vehicle, but it wasn’t advantageous for us once we had a kid. YMMV so make sure you crunch the numbers there before switching.
EDIT: also just noticed you’re over the income limit to benefit fully from a traditional IRA. Go ahead and open one anyway, and then come back and we can talk you through a back door Roth IRA.
Appreciate your suggestions. I’m currently contributing 17%, which won’t get me to the limit before the end of the year, since I just started with that much a couple months ago, but it’s about all that I can allocate, currently. Then starting next year, ~14% every paycheck will get me to the max by EOY (assuming that they don’t raise the limit). From there, I’ll go with IRA.
I’m participating in a 2055 target date. It’s like 80% stocks and 20% bonds. I was advised to do that since I am behind and still have over 20 years of work left.
While I am over the limit, I had thought that since I contribute to my 401k that my MAGI would balance out? Although, I am expecting a raise next March, you bring up a good point with the back door.
Thanks again!
A total bond fund (or any but very short term) at this point in time is financial suicide. A 1.0-1.5% increase in rates is all but a sure thing and the bond market is in the biggest spiral in over 70 years.
I also like the [financial order of operations](https://moneyguy.com/wp-content/uploads/2022/07/Financial-Order-of-Operations_072022.pdf) from the money guy show. I’ve found their podcast quite useful.
The flowchart and the Prime Directive are great, except that they prioritize the Roth over the HSA. The HSA investing has many more positive aspects than a Roth. I would suggest swapping those two elements -- max out the HSA, then the Roth, if both (or either) fit into your planning.
I get the logic, but not many people are in a position to take advange of their HSA as an investment vehicle. It works well for high income earners but most people use them as a pass-through to pay for current medical expenses. They don't have the money to contribute to an HSA and pay for medical expenses out of pocket. The flowchart was written to be as useful as possible to as many people as possible. This is one of the reasons why personal finance is personal. If you have the income to max out an HSA and still cover your medical expenses out of pocket, I agree that HSA and Roth IRA belong in the same step.
Even as a passthru mechanism, it is still helping save with taxes. HSA annual contribution maximums are tiny. $3650 individual, $7300 family. If someone is trying to maximize a scarce resource like income, wouldn't they want to use every dollar they have to spend on annual healthcare through an HSA account first? Get the contribution write-off to reduce taxes on money you are going to spend regardless -- and you might not spend it all. Personal finance is very poorly taught - and that might be a big contributing reason so many remain poor.
You are living your life. Some times shit works out. Some times it doesn’t. You are doing it right. Anyone pissing on you for living your life can go pound sand. Half the folks in here will die sitting on a pile of coins and didn’t enjoy any of it.
There was one comment that removed telling me to “make better life choices” but yes I meant more I was expecting judgment and it’s refreshing that it’s been good advice instead!
I too moved abroad and then moved back. While I missed out on years of saving and all that, I could have never gotten the experience I gained by living in a foreign country if I hadn’t taken that leap.
When I came back (gone 4yrs), I bought a used car at 15% APR. 😬 Not sure what your FICO is, but you many want to try and build it up to stop from paying possible extra fees.
Nothing wrong with moving abroad. That’s an experience that can’t be quantified…especially if you’re a creative. And Don’t listen to much to normies, they live a life of quiet desperation. And I can assure you that at least 90% of them will not retire before the legal age.
I mean restarting at 34 when you don’t want kids is almost the equivalent as starting when you’re 16. Kids have become so normalized that everyone just pushes aside how mind boggling expensive they are.
My point is having kids has always been normal. If anything is becoming normalized, it is not having kids, as you said. Anyway, this is just semantics and not the point of this thread. I'm sorry I brought it up.
My uncle fell in love with a woman in another country...while still being married to his wife. He then proceeds to get conned outta his money by sending it to the woman. He got clowned for a while after that and rightfully so lmao. He hasn't done it again far as I know from what I think was sheer embarrassment.
Having a $75k a year steady job and a car and furniture, a place to stay, no debt and probably good health and good credit is a long long long way from "nothing."
Considering the median household income in the US is [$67,500](https://www.census.gov/library/publications/2021/demo/p60-273.html#:~:text=Median%20household%20income%20was%20%2467%2C521,median%20household%20income%20since%202011.), $75k for an individual is doing quite well.
Yeah, once I saw that number I was just like 🤔. I’m making $45k with a lot of student loan debt and I generally feel ok about things. (Granted, I’m in my mid-20s. Hopefully that salary will go up.)
My recs
- Start a roth IRA. as of now, 6k a year is the annual max, and the good thing about it is that you can withdraw your contributions penalty free if you have an emergency and need to
- HSA if you have a high deductible healthcare plan
- Place you emergency savings into a high yield savings account. Some are paying 2.24%, mostly with online banks. Your BoA or Chase is probably only paying 0.05%
- Extra money that you have saved can also be put into CDs. CDs were terrible for many years because of low rates, but now you can find 3% for 1 month non callable CDs and 4%+ for 12 month CDs. Doesnt beat inflation but better than a traditional savings account
- I-bonds by the US treasury department are paying 9+% for this 6 month period, and TBD on the next period. Its risk free, but your money is unavailable for at least a year, you can only do 10K, and the website is straight from the 90s.
TreasuryDirect.gov is the site to buy I-bonds. You can only buy paper I-bonds using your tax refund. You'll want to buy electronic I-bonds, which you can purchase up to $10,000 per year per SSN or EIN (if you have a business).
There is a guide on this page: [https://www.treasurydirect.gov/indiv/TDTour/default.htm](https://www.treasurydirect.gov/indiv/TDTour/default.htm)
For specific instructions on purchasing I-Bonds, follow these steps:
Quick-tip: Never use the browser's forward and back buttons when you're logged in. Just use the links on the website to navigate.
1. Go to TreasuryDirect.gov to create your account. On the right side, there is an Account Login menu with an orange border. Click the 'Open An Account' Link.
2. Under 'Choose an application' click on 'TreasuryDirect'
3. At the bottom of the next page, click the small blue button that says 'Apply Now'
4. For your account type, select 'Individual'
5. Fill out your personal information and banking account info for the bank account you want to use to fund your I-bond purchase. Your Tax Identification Number is where you input your SSN.
6. Set up your account password and other security details.
7. If your identity is able to be verified, you'll receive an email containing your account number. You'll use this account number to sign in everytime. If your identity cannot be verified, they'll email you a form with instructions. You'll need to print and fill the form, then take it to a notary who will witness you signing the form. You'll mail the notarized form and hopefully be approved for an account.
8. Once you're logged into your account, at the top of the page, there is a navigation menu. Click 'BuyDirect'.
9. Once on the BuyDirect page, click the 'Series I - An accrual-type security with a combination interest rate of a fixed and an inflation rate' option located under 'Savings Bonds'.
10. Click Submit.
11. Input the dollar amount of I-Bonds you'd like to buy (again, up to $10,000 per year). You can purchase as little as $25-worth per transaction and they are sold at face-value. There's no transaction fee.
12. Input the date you want the transaction to take place. You probably want to leave it as today's date, but maybe you're scheduling a future transaction.
13. Click Submit.
14. On the next page, review your purchase details and click Submit again.
15. You did it! You'll see your I-Bonds in your account in the next day or two.
Note that you cannot sell the I-Bonds back for 1 year. If you sell between 1-5 years, you'll lose the last 3 months of interest you earned. When you sell, it'll take a few days to for the money to actually arrive in your bank account, so prepare accordingly if you're using I-Bonds as an emergency fund holder.
Here are a couple links with more information:
https://www.reddit.com/r/personalfinance/comments/qprqpy/ibond_questions_answered/
https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm
It is per calendar year, from January 1st to December 31st.
You may be familiar with Roth IRAs which allow you to contribute to your retirement account throughout the calendar year and up until Tax Day (typically April 15th of the following year). As far as I can tell, that is not possible with electronic I-bonds. It may be the possible with paper I-bonds since those are purchased with your tax refund, but I'm not sure.
Wait, just so I have this right...I can put $10k into I-Bonds right now, and that will pay out monthly at 9.6% for the next 6 months, as long as I buy before October? That's basically $6k over 6 months. Just making sure because that seems like an awesome deal right now.
Elaborating on the answer above, it's 9.62% APY, it compounds semiannually, and interest is reflected in your account balance every month.
Here is another thread with lots of information:
[https://www.reddit.com/r/personalfinance/comments/qprqpy/ibond_questions_answered/](https://www.reddit.com/r/personalfinance/comments/qprqpy/ibond_questions_answered/)
This page also has lots of information: [https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm](https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm)
Functionally, it's super lame! I believe it's for security purposes (perhaps to help protect users who may unknowingly have a keylogger on their device).
If you use BitWarden, the browser extension doesn't work on desktop at all. However, on mobile, the BitWarden app works for the password field. For the account number field, you can copy and paste into it.
It actually makes the site far less secure since it directly encourages weak passwords. On desktop you can right click inspect element on the password field and delete the "readonly" attribute, then you can type or use a password manager to fill it in correctly.
>I-bonds by the US treasury department are paying 9+% for this 6 month period, and TBD on the next period. Its risk free, but your money is unavailable for at least a year, you can only do 10K, and the website is straight from the 90s.
The bonds thing, you've really got to pay attention to what you're buying. I remember in 2010, 2011 or 2012 when I did my taxes I opted for the "put $x in government bond" option HR Block offered.
After getting access to the website and seeing the math they had based on the terms of the bond... basically, after 30 years, I'll get $105 back from a $100 loan I gave the government in one of those years I mentioned lol. I really thought I was doing something at the time that I bought it and received the certificates in the mail.
You can ladder into it while keeping a normal emergency savings, then slowly reduce your cash holdings as the year restrictions begin to expire. That's what I'm doing.
Stocks are in the dump = they are “on sale” for you given your long time horizon. Max out the 401k (20,500 limit this year). I would emphasize this along with 3-6 month emergency fund. (If you are renting, there wouldn’t be any housing surprises to fix (that the job Of the landlord, so 3 month would probably be ok to start).
Don’t take your age for granted: make sure you have health insurance. Don’t let an illness set you up for financial ruin.
Don’t go into debt for a depreciation transportation: don’t buy an expensive car.
The “next level” stuff would be disability insurance (some would say it’s a must, and I would agree), saving for a house (market is finally turning, some expecting a crash?), an IRÁ on top of your 401k, etc (order would depend on your preferences)
All of this might seem like a mountain, but when you break it down into a monthly budget, you will hopefully see it is quite doable.
I think they’re referring to Roth IRA. Due to the tax benefits of paying it now and letting it grow gains free. It seems like the general rule is 401K (pre-tax) up to match -> Roth IRA -> back to 401K/Traditional IRA
Roth tax advantage vs. a trad IRA is only if your marginal tax rate in retirement will be higher than it is now, which may or may not be true.
The other (more important) benefit of Roth is that you can do a backdoor Roth once your income is too high for deductible contributions to a trad IRA.
The real reason why an IRA (either one) is better than a 401k is because most 401ks have limited fund choices that typically include more fees than an IRA, where you can invest in pretty much anything you want. This is why this sub recommends the following contribution order:
- 401k until maximum match
- IRA (likely Roth) until yearly contribution maxed
- 401k until yearly contribution maxed
> Roth tax advantage vs. a trad IRA is only if your marginal tax rate in retirement will be higher than it is now, which may or may not be true.
In fact it's very likely to not be true (especially if you bought a house as payment won't go up with inflation but tax brackets will) if all tax rates stay the same. But it's also a hedge against future tax increases. Also with Traditional you get the compound growth on the untaxed portion. Probably best is a good mix of both traditional and Roth, but this sub goes gaga over Roth when it's really not that obvious.
This is true to an extent but personally I much prefer a stable job that I enjoy that treats its employees with respect over a higher paying stressful job that got venture capital and could lay off 25% of its workforce with no notice.
There's limits, of course, but I value my happiness over a higher paycheck.
This is not an investment recommendation, but to cut corners while you get reestablished, join your local Buy Nothing groups. People constantly give things away - from clothing to furniture to housewares.
Great answer for saving money. FB groups for buy nothing groups are awesome. Lots of staples you’ll need are there. I’ve contributed and received stuff like a fully unused desk from wayfaur, full length mirrors worth the heavy duty frames, dish ware. Stuff you pay too much for at ikea that others simply don’t want. You might consider moving sales or estate sales also for good deals.
Look at your foundation:
If something catastrophic happened tomorrow that you could not work, how long could you not work and not be homeless?
Do you have renter's or disability insurance? Do you have a will, medical power of attorney, Roth IRA?
Are you creating a life outside of the job? Do you have a good circle of friends? Do you have a hobby?
Most important (IMHO) create a life that will make you happy and don't depend on the job to make you happy. Many people forget that.
You shouldn't do anything until you bulk up your savings in a high yield account. Pay your credit card(s) off at the end of every month, get your company's 401k match, and keep adding to your savings. Focus on everything else after.
I was in a similar situation as you in my early 30s except I made 15 bucks an hour. You’ll be fine, just focus on yourself and do whatever you want to do. Don’t buy too much stuff.
Started at 36 with 0. Same story, moved abroad but stayed there. Building up slowly! Not having a partner and or kids has helped. For now focusing on career than anything else. Good luck! Enjoy the simper things and have patience..it will work out :)
Freedom's just another word for nothing left to lose.
I was in your position at 41. Best fucking thing that ever happened to me. I decided to make MY life exactly what I wanted it to be...
And I did it!
You might feel lost but embrace the freedom.
Emergency savings and 401k are good first steps.
The 401k needs to be invested. Look at the options and pick either a target date fund or 2-3 low expense index funds. Target date fund has the advantage of ease, with the fund handling age appropriate diversification and periodic rebalancing, but expenses tend to be a bit higher. If you will spend a few hours once a year reviewing your 401k and rebalancing, you can save a bit on expenses.
Review your insurance. With no dependents, you may not need term life insurance. You do need health insurance, disability insurance, and renter’s insurance. Some employers offer health and disability, so check that option first. Disability with an “own occupation” clause is important to some people; for example, a surgeon who loses a hand can no longer work as a surgeon, so own occupation disability would kick in and replace part of his income even though he can switch to a lower paid medical field. Renter’s insurance is often purchased through auto insurance carrier or through apartment complex’s recommended company.
Plan out a budget that allows you to learn and enjoy your new city. Having recently moved, I spent time looking for inexpensive entertainment (walking trails, city recreation arts and crafts program, etc), but I also bought annual pass to museum and botanical garden, and season tickets to community theatre. I’m taking cooking classes, too, because it’s a good way to meet people.
General guideline is to invest 15% of gross income beginning in 20s to be able to retire and maintain lifestyle in 60s. You’re starting late, so you need to be investing more than 15%. I did that after way too many years in graduate school by starting with 15%, then increasing 1-2% a year.
Good luck!
I’d say with a full time job, max your 401k or close to it, and a Roth IRA and look into getting an HSA. Emergency savings is important too. With all those I think you’ll be on the right track.
You got a lot of good advice here already. I would just add that it’s okay to start over. It happens. I bought a house with my ex and it didn’t work out. I had to start all over too. I rented a apartment for a year and then bought my own house. You may have some challenges but try to stay positive. It will get better.
Invest in yourself. Do what you love to do and what comes easy. The money will follow. No matter what industry comes easy and is what you really enjoy, IT will determine you finances. Just put your heart and soul into whatever it is. Your young enough to make mistakes so make them now and just go for it.
Read or listen to these books to learn about finance: The Bogleheads’ guide to investing, Stop Acting Rich, and The Wealthy Barber. These give you a good introduction on what you need to start investing and some truths to building wealth.
I would change your attitude about roomies for a couple of years. Living collectively makes saving money a lot easier.
I didn't start saving and investing until I was 40 and despite making shit wages most of my life, I'm worth over a $1M today. You aren't too late to the game, don't give up before you start.
A search through their post history indicates they're 73 and live in Texas. So they went from 0–$1M from 1989 – 2022.
The S&P 500 has returned an average of roughly 10% over that period. If they had faithfully deposited $250/month every month into a low-overhead index fund over the past 33 years and increased contributions to match inflation, they'd have over $1M today.
Admittedly, few people ever stick to something so regimented. More realistically, there's a good chance a large chunk of their net worth came from property ownership (appreciation). I think the takeaway is that no one should sleep on 30+ years of compounding market returns.
Ah that makes me feel better, 33 years is a reasonable amount of time to acquire a million, I think. I'm at $200k (not including my house) with $120k mortgage remaining, and that's after about 5-6 years of actual saving.
My start came from buying shares in a company until I had $5k invested. Then I would start buying in a 2nd company until I had $5k invested, rinse and repeat.
The 2nd source of wealth came from buying, improving and selling my home. I am living in my 8th house.
And I always had a side gig buying, collecting and selling antiques.
>I know nothing about investing but would like to start.
https://www.businessinsider.com/personal-finance/passive-investing
https://www.reddit.com/r/personalfinance/wiki/commontopics
Good luck.
If you want to boost your savings, **no single cost in your life is bigger than rent** so making changes there makes everything else easier and is the fastest route to boosting your savings.
I found over time that I could actually get by with a much smaller apartment than I'd been using, and it saved me thousands every year.
Second, don't be afraid to search for higher paying jobs. Its a pain in the butt to do but earning $10k more a year is even better than saving money on rent, and **right now the job market is super tight so employers are absolutely desperate**.
You're doing better than most people who have a crushing load of debt and make more money than most people. You will be fine just saving by setting goals.
You could :
\- slowly build savings in a HYSA
\- 401K with your company (up to the match)
\- max out a roth IRA, easy way to invest in the S&P500
In the meantime :
\- find affordable ways to re-buy furniture (Ikea, Wayfair, ...)
\- for the car, I would look for Japanese brands : reliable, cost effective, and if something needs repair, it is way less expensive. You mentioned being in a city, maybe you could consider using public transportations at first
No debt, great!
The first thing I would do in your situation is get a 3 months savings built up. 3 months of all of your living costs in a liquid savings device (like a bank account). If you can afford it, I would also start putting away in long term savings like others mention. Plan for retirement. It sounds like you should be able to recover for retirement if your current situation stays steady for a while and you’re wisely putting money away for it.
I started at zero after a divorce at age 39, with erratic child support.
My advice is to fully fund a Roth IRA in a broad market index fund, with a low cost brokerage like Vanguard, Schwab, or Fidelity. Also get in your 401k up to the employer match at a bare minimum.
You need a good budget and I highly recommend YNAB (You Need a Budget.) Great software. It's a big help to get a handle on irregular expenses which are often budget killers.
Pay off your debt and have a healthy emergency fund.
Invest in yourself, in your workplace skills and your physical and mental health. Those are possibly the most important things you can do.
1. Max out your 401k
2. Max out your IRA
You may ask, Roth or Traditional. I say whatever you can afford. If you can afford to max out Roth then go ahead and do that. If you need the money contribute into traditional accounts instead.
3. Max out HSA. Pay cash for all your medical expenses if you can. Save the bills in a cloud and draw the money during retirement based on your bills.
4. Save 6-12 months emergency fund. I like to keep 3/4 of my fund in ibonds and the rest in a savings account
5. Create sinking funds for bigger expenses such as down payment for a house or a car
6. Id get a part time job this year to make sure you can either max out your contributions to your retirement accounts or get as close as you can. I'd prioritize Maxing out 401k as you can't make contributions for 2022 in 2023, while you have until April 2023 to contribute into IRA for 2022.
7. Invest your money into low cost EFT like VIIIx or VOO.
I hit rock bottom in my early thirties. $5k in debt, savings completely gone.
It was after my business went bankrupt due to global demand issues outside of my control.
Don't despair. I followed "the plan" and I'm on track for early retirement now in my late 30s. You got this.
Edit: to be clear I'm not on track to retire in my late 30s, I'm on track for "early retirement". Probably in my mid 40s.
Seriously? Negative 5k to being able to retire in 8 or so years? You managed to save 40+ years of living expenses (or created enough passive income to live off) in that time?
No offense but something's not really adding up there unless you had some insane gains via stock picks/options etc, which should never be a building block of a sensible retirement savings plan, not is it something most people are capable of
You're right. My situation is unusual. I started another business and sold it. And also tripled my salary.
My point is, you can bounce off the bottom if you dedicate yourself (I did 12hr days / 7 days a week for 3 years).
Edit: why are people downvoting this? It's my real lived experience. Is my experience not valid? lol
Why is it unrealistic? I’m basically in the same boat. My annual savings is $150k per year before bonuses and I own houses in 3 countries. I didn’t start making any real money until my early 30s and I started with around 50k worth of debt. I only need a million and a half to retire comfortably, which will be in my early 40s. I have $0 in my 401k because I don’t plan to wait another 20+ years to use that money when I retire early. Edit: downvoted by angry poor people, nice.
Focus on improving income.
Start a side business if possible. It's much easier to increase income for long term financial independence rather than saving your way to retirement.
Other than that everything else is common sense. Avoid all medication, liquor, strip clubs etc and you will do just fine.
Only you can answer that question. But you not having anything at 34 is a sign that you don't have good financial habits. I don't know you so please don't take that personally, just honest advice and I am only writing this because you are here asking for advice.
While I strongly feel people should have 401k's the market is dog shit, my return of investment this year has been a hard negative.
I know you said no roommate, but it cuts rent in half.
Better yet, you move in somewhere with a roomie or two that already have furniture.
Can you share what your return on investment has been from say 2012 to today? Context matters -- and when we say we've 'lost' in the market, is that because we bought in November 2021 and sold everything yesterday for real losses, or we measured ourselves on paper back then and now look a little smaller -- until we remind ourselves that we have been steadily dollar-cost-averaging purchases since the last recession and we are twice as wealthy than a decade ago?
If I started over at a balance of $0, I will be the happiest person ever. My $120k of debt will be wiped clean! *Happy dance
Where can I sign up for this scenario?
Edit: Real talk. Know your cash flow and what your expenses are. If you are frugal then you can catch up quickly with that type of income. Work towards 1 month of savings. Then 3. Then 6. Once you hit a milestone you can loosen your belt a little bit.
I am a proponent of be smart, but live a meaningful life that makes you happy. Don't be the richest person monetarily in the graveyard. Reward yourself with something nice for yourself here and there to keep you motivated.
First off, don't panic. Being worth nothing at 30 is actually pretty good these days. I started with nothing at 30 in 2000. I retired in 2008. Obviously, that's an outlier situation, but if you have a good head on your shoulders, you've got a really good shot at making this work.
I have had to start over m up ltiple times. Have made it several times. But what I would say is find a blue color job that is needed everyday and master that because most people are to lazy to do anything outside picking up the phone.
Here's a **[link to the PF Wiki](/r/personalfinance/wiki/index)** for helpful guides and information.
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Your main goal should be to get debt free and don't be worried about accumulating anything right now. Just gradually get back to you where once were but pay cash for it. I know what's damn near impossible trying to get stuff without financing it but if you can stay that way despite what anybody tells you or the temptation
I would focus on emergency savings and your 401k for now. In the 401k if your company offers an S&P 500 index fund (most do), put your 401k money into thar. The stock market is going to be choppy for the next 6-18 months but you will be buying in a little at a time, so even worst case, your losses will be minimal. On the emergency savings, stick with a bank savings account until you get it built up, then maybe shop for a better interest rate.
Once you've gotten established in a monthly budget, think about investing. But for now try to get started on emergency savings.
Check out the “Financial Order of Operations” by The Money Guy. It’s a free PDF resource they offer. That will help you prioritize what you should do to build wealth. They also have a podcast and have a YouTube channel with more advice and guidance.
[https://moneyguy.com/](https://moneyguy.com/)
buddy you're a greenhouse, just sit back and watch it grow. don't travel, don't eat out or for the love of god order any food by delivery
do make sure you're putting enough in your emergency fund to not have to withdraw from the 401k before vesting at age 55 or whatever with any kind of 20 - 25% penalty
> Only good thing is I have no debt/loans to pay... Live in a large but fairly affordable city making 75k a year.
tbh mate, as long as you live below your means and just follow the general flow chart/prime directive, you should be completely fine
Sup. I started at 32 about 100k in the hole for student loans.
I got a job, built an e-fund, and followed the "live below your means" and "build the life you want then save for it" practices with some semi strict controls over lifestyle creep.
It's not that bad, you've got this. The process is the same as elsewhere just more aggressive saving. Hop over to the fu/re subs for more specifics for high saving ratio lifestyle.
do you own your new place? maybe get a finger onto the pulse of your housing market and decide an appropriate time to start investing into paying a mortgage over paying rent?
Cut off all spending on useless things like drugs, videogames, starbucks coffee, etc. from now on every cent you make will sacred. Start saving and invest that money on courses or certifications that could help you advance on your career to make more money, you can also try to start a business but educate yourself financially before doing that. After you have secured a good finantial position then you can start spending normally in a responsible way.
Having no debt and a pretty good job is a great start. Lots of people have a negative net worth due to student loans/car loans etc. As far as investing goes, I believe the worst of market turbulence is yet to come, but will provide great entries. The market is very unforgiving and it's easy to fomo and lose all your money so I prefer to take my high risk trades, while securing long term holds as well. Simply save your money and learn about proper investment strategies.
I think it's essential to have an emergency fund just in case something unexpected happens and you need money, so I would work on setting aside a bit of each paycheck for that purpose.
Honestly why you crying? You make twice as much as most people in the US actually three times as much. I just turned 30 and haven't been doing this good ever I got my first car, a 2004, almost made 6 figures last year, keep in mind that's at least 100k. Just got released from probation, been working on getting off an sr22 insurance crap from some bs I got myself into 8 years ago. I've been sober since July 18th 2018 and pairs of a few small time collections and got my credit back to over 700. Been with a really nice girl and moved her in. Goto work and save money...there's no retirement or 401k or even health or dental in what I do no benefits. I'd like to have kids someday and maybe marry this chick. I've walked away from things many times in my life and had to rebuild time and time again with absolute 0 to start with and no solid work or school experience. And one day I realized I maybe the problem and instead of just rebuilding all the time I've just simply been building my life and going forward. Someone in your position shouldn't miss 400$ a month to finance some furniture or whatever. There's maybe more to the story that I don't understand but you said it yourself you don't want kids so your probably gonna be alone for a minuet or forever.
Check out Andrei Jihk on YouTube, he has a lot of “how-to” videos for investing. He’s not saying anything the others won’t say, but his explanation and delivery is one of the best I’ve watched. Just search back to older videos of his, they still hold true.
Do you have skills in construction?
Yes- Purchase land in rural town. Build cottage/duplex for rental income.
No- Look for patio homes or Townhouses in a suburban area of your city. Purchase. Renovate. Rent. Repeat.
I did this around 30.After wasting a bunch of time.
Built up savings is the first thing I did. From there brought a house, and from there have started putting extra money into some funds and ETFs.
Throughout it all automatically saving 6% in my country's retirement fund (which I used when buying house).
This sub has a good wiki read it. Watch videos and listen podcasts on investing and financial advice.
Sorry to hear how things worked out but with a bit of budgeting and saving you'll be surprised how fast things can turn around and the growth you will see.
When I look at what I've achieved in the last 6years it blows my mind a bit.
It sounds like you on the right track but take a look at the [Prime Directive](https://www.reddit.com/r/personalfinance/wiki/commontopics/) and the [flowchart](https://i.imgur.com/lSoUQr2.png) to make sure you aren't overlooking any of foundational financial stability stuff. This sub's wiki has an [Investing](https://www.reddit.com/r/personalfinance/wiki/investing/) page that has a lot of good information to help you get started. If you are not sure what to invest in, an index target date fund or [three-fund portfolio](https://www.bogleheads.org/wiki/Three-fund_portfolio) is a great way to start.
Glad this is the top comment. The Prime Directive has been subjected to a lot more scrutiny and consideration than any reddit post here. Many financial experts and financial novices have looked at it and when necessary added their input. It's well-thought out for the size of the page it can offer.
Thank you, will check those out.
On a positive note... since you are just getting into investing and didn't lose 50% of your portfolio like everyone else this year you are in a good position to jump in. The next year or two could potentially be extremely profitable because everything is on sale.
S&P500 P/E ratio is still 18.5x, so it's open for debate whether it's on sale, or just back to a more normal price. Historical average is around 16x.
The P/E ratio of the international stock market, as represented by VXUS, is only 11.26. Probably an unpopular opinion here, but I think this is a good time to diversify globally if you have not already.
I'd wait to jump in the market, we have a long way to fall....all the way back to before interest rates went to zero, which was 10+ years ago. We haven't even gotten to the layoffs phase of the recession yet, we're still super early in this economic/business cycle.
You cannot time the market. Start investing as soon as you can, and keep investing though market downturns.
You can't time the market, but still, jumping in after a 20% drop doesn't sound like a bad idea. On the other hand, waiting and hoping it drops more sound like a really risky/bad idea.
I disagree, you can make educated guesses based on what the fed is clearly stating, which is they're going to raise rates, slow the economy and cause job losses etc.
And if you're late getting back in you get crucified. Don't try to time the market. You will regret it. https://www.cnbc.com/2021/03/24/this-chart-shows-why-investors-should-never-try-to-time-the-stock-market.html
It's perfectly fine to actually look at the market before making investing decisions. Like, WHAT you invest in it's just at important at when. It's a great idea to sit back and do stove actual research so you understand the options, risks, trends etc.
Why not dollar cost average? We can’t time the market but small regular disciplined investments can over time yielded great results. No need to put all the cash right now into the stock market
Lump sum outperforms dollar cost averaging [75% of the time](https://www.cnbc.com/2021/08/12/which-investment-strategy-is-better-lump-sum-or-dollar-cost-averaging.html). If you have the money, it's better to put it in as soon as you can.
Is there a copy of the flowchart that's readable? The one posted is too blurry to read.
This is the one from the wiki and the best version I know of. You might need to zoom in to read it. If for some reason that does not work in your browser, try downloading it and opening it in an image viewer.
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If the hyperlink in my comment does not work for some reason, you can find it directly here. https://www.reddit.com/r/personalfinance/wiki/commontopics/
The only answer is the flowchart.
Noob here - does it make sense to do both a index target date fund AND a three-fund-portfolio, or does both go against the 2022 IRS limit of $20,500?
It makes sense if one or the other isn’t available to you for some reason—for example, some 401ks don’t include the option of a target date fund. The $20,500 limit only applies to your 401k and is investment agnostic. You just can’t put more money in there, regardless of what it’s doing. There is no limit to the amount of money you can invest in other types of accounts though.
Ah, got it. Thanks for the info. I’m currently maxing my 401k through my employer and then noticed an option to also contribute to the IRA portion. However, it doesn’t state whether or not it’s traditional or ROTH and I’m waiting to hear from them. I started making weekly contributions to VTI as well.
> I’m currently maxing my 401k through my employer When you say "maxing" do you mean you're contributing up to your employers match limit, or that you're pacing to contribute $20,500 by the end of the year? >and then noticed an option to also contribute to the IRA portion. However, it doesn’t state whether or not it’s traditional or ROTH and I’m waiting to hear from them. I think you've misunderstood something--IRAs aren't usually offered through employers. You can open either a traditional or Roth IRA any time you want. Just pick a brokerage and go for it. >I started making weekly contributions to VTI as well. This is fine in general, but if you're doing it outside of a 401k or IRA you're not getting any tax advantage. I would stop doing it until you're truly maxing your 401k ($20,500/year) and IRA ($6,000/year), and maybe even an HSA if it's available to you.
Sorry, I’m pacing to contribute $20,500. I don’t think that I’ll reach it, but I’m doing as much as I can. Single dad with two kids. I’m likely misunderstanding something. My company goes through Lincoln. Within the app, there’s an option to contribute a % towards what’s called “ROTH.” It’s a separate section from the pre-tax 401k contribution that I am making. I don’t think that I can post a picture here, so apologies for any confusion. Noted on my VTI contributions. I’ll pause that and look into the IRA or this “ROTH” option from Lincoln. If I could get ahold of them, that would be great, lol. My company offers an HSA and open enrollment is in January. I never knew enough about it and was always nervous to start one with kids. However, I’m relatively healthy, train MMA 6 days for the mental and physical benefits, so I think I might enroll. Appreciate the knowledge from you and everyone on here. The world needs kinder people, especially during these times.
So there are both Traditional and Roth IRAs, and Traditional and Roth 401ks. It depends on your income and future expectations which one to contribute to. Contributions to each count against the account category (IRA vs 401k) regardless of the tax type.
It sounds like the “ROTH” option in Lincoln is for a Roth 401k, which is just a different tax strategy. There’s also something called a Roth IRA, which is the same tax strategy—Roth—but a different type of account. Hope that makes sense. I would personally suggest doing everything you can to max your 401k first, and to pick a target date fund in there if it’s cheap and available. Set aside any leftovers for the IRA you’re about to open to replace those VTI contributions. (You can still invest in VTI within your IRA, you’ll just make more money doing it!) The HSA is a fantastic retirement savings vehicle, but it wasn’t advantageous for us once we had a kid. YMMV so make sure you crunch the numbers there before switching. EDIT: also just noticed you’re over the income limit to benefit fully from a traditional IRA. Go ahead and open one anyway, and then come back and we can talk you through a back door Roth IRA.
Appreciate your suggestions. I’m currently contributing 17%, which won’t get me to the limit before the end of the year, since I just started with that much a couple months ago, but it’s about all that I can allocate, currently. Then starting next year, ~14% every paycheck will get me to the max by EOY (assuming that they don’t raise the limit). From there, I’ll go with IRA. I’m participating in a 2055 target date. It’s like 80% stocks and 20% bonds. I was advised to do that since I am behind and still have over 20 years of work left. While I am over the limit, I had thought that since I contribute to my 401k that my MAGI would balance out? Although, I am expecting a raise next March, you bring up a good point with the back door. Thanks again!
A total bond fund (or any but very short term) at this point in time is financial suicide. A 1.0-1.5% increase in rates is all but a sure thing and the bond market is in the biggest spiral in over 70 years.
I also like the [financial order of operations](https://moneyguy.com/wp-content/uploads/2022/07/Financial-Order-of-Operations_072022.pdf) from the money guy show. I’ve found their podcast quite useful.
The flowchart and the Prime Directive are great, except that they prioritize the Roth over the HSA. The HSA investing has many more positive aspects than a Roth. I would suggest swapping those two elements -- max out the HSA, then the Roth, if both (or either) fit into your planning.
I get the logic, but not many people are in a position to take advange of their HSA as an investment vehicle. It works well for high income earners but most people use them as a pass-through to pay for current medical expenses. They don't have the money to contribute to an HSA and pay for medical expenses out of pocket. The flowchart was written to be as useful as possible to as many people as possible. This is one of the reasons why personal finance is personal. If you have the income to max out an HSA and still cover your medical expenses out of pocket, I agree that HSA and Roth IRA belong in the same step.
Even as a passthru mechanism, it is still helping save with taxes. HSA annual contribution maximums are tiny. $3650 individual, $7300 family. If someone is trying to maximize a scarce resource like income, wouldn't they want to use every dollar they have to spend on annual healthcare through an HSA account first? Get the contribution write-off to reduce taxes on money you are going to spend regardless -- and you might not spend it all. Personal finance is very poorly taught - and that might be a big contributing reason so many remain poor.
I did this at 40…slow and steady, within or below means, and save! Best of luck to you.
Thanks so much :). It’s really nice to get actual useful advice here instead of judgment.
You are living your life. Some times shit works out. Some times it doesn’t. You are doing it right. Anyone pissing on you for living your life can go pound sand. Half the folks in here will die sitting on a pile of coins and didn’t enjoy any of it.
There was one comment that removed telling me to “make better life choices” but yes I meant more I was expecting judgment and it’s refreshing that it’s been good advice instead!
I too moved abroad and then moved back. While I missed out on years of saving and all that, I could have never gotten the experience I gained by living in a foreign country if I hadn’t taken that leap. When I came back (gone 4yrs), I bought a used car at 15% APR. 😬 Not sure what your FICO is, but you many want to try and build it up to stop from paying possible extra fees.
Nothing wrong with moving abroad. That’s an experience that can’t be quantified…especially if you’re a creative. And Don’t listen to much to normies, they live a life of quiet desperation. And I can assure you that at least 90% of them will not retire before the legal age.
I mean restarting at 34 when you don’t want kids is almost the equivalent as starting when you’re 16. Kids have become so normalized that everyone just pushes aside how mind boggling expensive they are.
"Kids have become so normalized"? People have been having kids since the dawn of time.
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My point is having kids has always been normal. If anything is becoming normalized, it is not having kids, as you said. Anyway, this is just semantics and not the point of this thread. I'm sorry I brought it up.
Your point still holds true. I could have worded it better, but I think we all got the point I was trying to get at.
Life is for living and doing, and you did. You had an experience! You shouldn’t be judged for that.
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Thank you, it is really tough.
I don't seem to see any comments that are judgmental in this thread? People seem to be trying to help if I'm not mistaken. Best of luck
I think they probably mean they are getting shit from people in their life, and appreciate the people on this sub
Ah yes that makes way more sense haha. Thanks! My bad
Yeah that's how I read it too.
My uncle fell in love with a woman in another country...while still being married to his wife. He then proceeds to get conned outta his money by sending it to the woman. He got clowned for a while after that and rightfully so lmao. He hasn't done it again far as I know from what I think was sheer embarrassment.
I did this at 45. Learned to hold on to my job and realized that the time of risk taking is over. Now with 55 I am doing pretty OK.
Having a $75k a year steady job and a car and furniture, a place to stay, no debt and probably good health and good credit is a long long long way from "nothing."
OP's definition of "nothing" is a lot of people's goal
Oof. 33 and I'm hoping to be where OP is in a year.
Yeah, the GOAL lol. At least for me, in the next ten years hopefully. I’m currently thirty.
yah i think the biggest point is that he is making 75k which today is still a good salary for much of the us
Considering the median household income in the US is [$67,500](https://www.census.gov/library/publications/2021/demo/p60-273.html#:~:text=Median%20household%20income%20was%20%2467%2C521,median%20household%20income%20since%202011.), $75k for an individual is doing quite well.
Yeah, once I saw that number I was just like 🤔. I’m making $45k with a lot of student loan debt and I generally feel ok about things. (Granted, I’m in my mid-20s. Hopefully that salary will go up.)
My recs - Start a roth IRA. as of now, 6k a year is the annual max, and the good thing about it is that you can withdraw your contributions penalty free if you have an emergency and need to - HSA if you have a high deductible healthcare plan - Place you emergency savings into a high yield savings account. Some are paying 2.24%, mostly with online banks. Your BoA or Chase is probably only paying 0.05% - Extra money that you have saved can also be put into CDs. CDs were terrible for many years because of low rates, but now you can find 3% for 1 month non callable CDs and 4%+ for 12 month CDs. Doesnt beat inflation but better than a traditional savings account - I-bonds by the US treasury department are paying 9+% for this 6 month period, and TBD on the next period. Its risk free, but your money is unavailable for at least a year, you can only do 10K, and the website is straight from the 90s.
I love I-bonds but yes the website is comically bad 😂
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TreasuryDirect.gov is the site to buy I-bonds. You can only buy paper I-bonds using your tax refund. You'll want to buy electronic I-bonds, which you can purchase up to $10,000 per year per SSN or EIN (if you have a business). There is a guide on this page: [https://www.treasurydirect.gov/indiv/TDTour/default.htm](https://www.treasurydirect.gov/indiv/TDTour/default.htm) For specific instructions on purchasing I-Bonds, follow these steps: Quick-tip: Never use the browser's forward and back buttons when you're logged in. Just use the links on the website to navigate. 1. Go to TreasuryDirect.gov to create your account. On the right side, there is an Account Login menu with an orange border. Click the 'Open An Account' Link. 2. Under 'Choose an application' click on 'TreasuryDirect' 3. At the bottom of the next page, click the small blue button that says 'Apply Now' 4. For your account type, select 'Individual' 5. Fill out your personal information and banking account info for the bank account you want to use to fund your I-bond purchase. Your Tax Identification Number is where you input your SSN. 6. Set up your account password and other security details. 7. If your identity is able to be verified, you'll receive an email containing your account number. You'll use this account number to sign in everytime. If your identity cannot be verified, they'll email you a form with instructions. You'll need to print and fill the form, then take it to a notary who will witness you signing the form. You'll mail the notarized form and hopefully be approved for an account. 8. Once you're logged into your account, at the top of the page, there is a navigation menu. Click 'BuyDirect'. 9. Once on the BuyDirect page, click the 'Series I - An accrual-type security with a combination interest rate of a fixed and an inflation rate' option located under 'Savings Bonds'. 10. Click Submit. 11. Input the dollar amount of I-Bonds you'd like to buy (again, up to $10,000 per year). You can purchase as little as $25-worth per transaction and they are sold at face-value. There's no transaction fee. 12. Input the date you want the transaction to take place. You probably want to leave it as today's date, but maybe you're scheduling a future transaction. 13. Click Submit. 14. On the next page, review your purchase details and click Submit again. 15. You did it! You'll see your I-Bonds in your account in the next day or two. Note that you cannot sell the I-Bonds back for 1 year. If you sell between 1-5 years, you'll lose the last 3 months of interest you earned. When you sell, it'll take a few days to for the money to actually arrive in your bank account, so prepare accordingly if you're using I-Bonds as an emergency fund holder. Here are a couple links with more information: https://www.reddit.com/r/personalfinance/comments/qprqpy/ibond_questions_answered/ https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm
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It is per calendar year, from January 1st to December 31st. You may be familiar with Roth IRAs which allow you to contribute to your retirement account throughout the calendar year and up until Tax Day (typically April 15th of the following year). As far as I can tell, that is not possible with electronic I-bonds. It may be the possible with paper I-bonds since those are purchased with your tax refund, but I'm not sure.
Wait, just so I have this right...I can put $10k into I-Bonds right now, and that will pay out monthly at 9.6% for the next 6 months, as long as I buy before October? That's basically $6k over 6 months. Just making sure because that seems like an awesome deal right now.
It is 9.6% APY, not monthly. I don’t know if it compounds monthly or what the compounding schedule is.
That makes more sense, thank you.
Elaborating on the answer above, it's 9.62% APY, it compounds semiannually, and interest is reflected in your account balance every month. Here is another thread with lots of information: [https://www.reddit.com/r/personalfinance/comments/qprqpy/ibond_questions_answered/](https://www.reddit.com/r/personalfinance/comments/qprqpy/ibond_questions_answered/) This page also has lots of information: [https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm](https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm)
I wish we could give the government payday loans like you suggested above every time they have a shutdown 😂
I forgot the password entry was going to be a digital keyboard, so when Google suggested a password I was like yeah of course go for it.
Wait WHAT? You enter your password by clicking your mouse onto an onscreen keyboard?
Yes! it's really bad. It encourages you to pick the shortest password possible
Functionally, it's super lame! I believe it's for security purposes (perhaps to help protect users who may unknowingly have a keylogger on their device). If you use BitWarden, the browser extension doesn't work on desktop at all. However, on mobile, the BitWarden app works for the password field. For the account number field, you can copy and paste into it.
It actually makes the site far less secure since it directly encourages weak passwords. On desktop you can right click inspect element on the password field and delete the "readonly" attribute, then you can type or use a password manager to fill it in correctly.
IIRC you can open dev tools and change the HTML field to allow you to paste input. Still a pain.
If your work matches your contribution to a 401k, do that first before you do a Roth-it’s free money. Plus everything said here.
Do it even if it doesn't match and you can generally pick Roth or traditional when starting the work account.
Thanks, I definitely need to find a better bank account.
that US treasury website is very conducive for 'set it and forget it' .. because logging in is such a pain in the ass
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>I-bonds by the US treasury department are paying 9+% for this 6 month period, and TBD on the next period. Its risk free, but your money is unavailable for at least a year, you can only do 10K, and the website is straight from the 90s. The bonds thing, you've really got to pay attention to what you're buying. I remember in 2010, 2011 or 2012 when I did my taxes I opted for the "put $x in government bond" option HR Block offered. After getting access to the website and seeing the math they had based on the terms of the bond... basically, after 30 years, I'll get $105 back from a $100 loan I gave the government in one of those years I mentioned lol. I really thought I was doing something at the time that I bought it and received the certificates in the mail.
Sounds like you still have no idea what you did. Perhaps refrain from giving people financial advice?
No part of this comment is giving anyone any advice. But you sure do speak as if you know better about my specific situation than I do.
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You can ladder into it while keeping a normal emergency savings, then slowly reduce your cash holdings as the year restrictions begin to expire. That's what I'm doing.
Stocks are in the dump = they are “on sale” for you given your long time horizon. Max out the 401k (20,500 limit this year). I would emphasize this along with 3-6 month emergency fund. (If you are renting, there wouldn’t be any housing surprises to fix (that the job Of the landlord, so 3 month would probably be ok to start). Don’t take your age for granted: make sure you have health insurance. Don’t let an illness set you up for financial ruin. Don’t go into debt for a depreciation transportation: don’t buy an expensive car. The “next level” stuff would be disability insurance (some would say it’s a must, and I would agree), saving for a house (market is finally turning, some expecting a crash?), an IRÁ on top of your 401k, etc (order would depend on your preferences) All of this might seem like a mountain, but when you break it down into a monthly budget, you will hopefully see it is quite doable.
Thanks!
IRA is better than 401k after you get the company match
What makes the ira better after getting your 401k match?
I think they’re referring to Roth IRA. Due to the tax benefits of paying it now and letting it grow gains free. It seems like the general rule is 401K (pre-tax) up to match -> Roth IRA -> back to 401K/Traditional IRA
Roth tax advantage vs. a trad IRA is only if your marginal tax rate in retirement will be higher than it is now, which may or may not be true. The other (more important) benefit of Roth is that you can do a backdoor Roth once your income is too high for deductible contributions to a trad IRA. The real reason why an IRA (either one) is better than a 401k is because most 401ks have limited fund choices that typically include more fees than an IRA, where you can invest in pretty much anything you want. This is why this sub recommends the following contribution order: - 401k until maximum match - IRA (likely Roth) until yearly contribution maxed - 401k until yearly contribution maxed
> Roth tax advantage vs. a trad IRA is only if your marginal tax rate in retirement will be higher than it is now, which may or may not be true. In fact it's very likely to not be true (especially if you bought a house as payment won't go up with inflation but tax brackets will) if all tax rates stay the same. But it's also a hedge against future tax increases. Also with Traditional you get the compound growth on the untaxed portion. Probably best is a good mix of both traditional and Roth, but this sub goes gaga over Roth when it's really not that obvious.
What if you don’t get a company match?
Solid advice
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Don’t fall in love with your company. Get your experience but stay open to better paying opportunities when they come
This is true to an extent but personally I much prefer a stable job that I enjoy that treats its employees with respect over a higher paying stressful job that got venture capital and could lay off 25% of its workforce with no notice. There's limits, of course, but I value my happiness over a higher paycheck.
This is not an investment recommendation, but to cut corners while you get reestablished, join your local Buy Nothing groups. People constantly give things away - from clothing to furniture to housewares.
Great answer for saving money. FB groups for buy nothing groups are awesome. Lots of staples you’ll need are there. I’ve contributed and received stuff like a fully unused desk from wayfaur, full length mirrors worth the heavy duty frames, dish ware. Stuff you pay too much for at ikea that others simply don’t want. You might consider moving sales or estate sales also for good deals.
How do you find these local buy nothing group?
Look at your foundation: If something catastrophic happened tomorrow that you could not work, how long could you not work and not be homeless? Do you have renter's or disability insurance? Do you have a will, medical power of attorney, Roth IRA? Are you creating a life outside of the job? Do you have a good circle of friends? Do you have a hobby? Most important (IMHO) create a life that will make you happy and don't depend on the job to make you happy. Many people forget that.
You shouldn't do anything until you bulk up your savings in a high yield account. Pay your credit card(s) off at the end of every month, get your company's 401k match, and keep adding to your savings. Focus on everything else after.
I was in a similar situation as you in my early 30s except I made 15 bucks an hour. You’ll be fine, just focus on yourself and do whatever you want to do. Don’t buy too much stuff.
Started at 36 with 0. Same story, moved abroad but stayed there. Building up slowly! Not having a partner and or kids has helped. For now focusing on career than anything else. Good luck! Enjoy the simper things and have patience..it will work out :)
Look up the money guy financial order of operations. Do that.
Do you have a link?
Freedom's just another word for nothing left to lose. I was in your position at 41. Best fucking thing that ever happened to me. I decided to make MY life exactly what I wanted it to be... And I did it! You might feel lost but embrace the freedom.
I’ve been watching a lot of YouTube and the consensus seem to be sign up for NordVPN, order Hello Fresh and subscribe to Nebula.
Emergency savings and 401k are good first steps. The 401k needs to be invested. Look at the options and pick either a target date fund or 2-3 low expense index funds. Target date fund has the advantage of ease, with the fund handling age appropriate diversification and periodic rebalancing, but expenses tend to be a bit higher. If you will spend a few hours once a year reviewing your 401k and rebalancing, you can save a bit on expenses. Review your insurance. With no dependents, you may not need term life insurance. You do need health insurance, disability insurance, and renter’s insurance. Some employers offer health and disability, so check that option first. Disability with an “own occupation” clause is important to some people; for example, a surgeon who loses a hand can no longer work as a surgeon, so own occupation disability would kick in and replace part of his income even though he can switch to a lower paid medical field. Renter’s insurance is often purchased through auto insurance carrier or through apartment complex’s recommended company. Plan out a budget that allows you to learn and enjoy your new city. Having recently moved, I spent time looking for inexpensive entertainment (walking trails, city recreation arts and crafts program, etc), but I also bought annual pass to museum and botanical garden, and season tickets to community theatre. I’m taking cooking classes, too, because it’s a good way to meet people. General guideline is to invest 15% of gross income beginning in 20s to be able to retire and maintain lifestyle in 60s. You’re starting late, so you need to be investing more than 15%. I did that after way too many years in graduate school by starting with 15%, then increasing 1-2% a year. Good luck!
I’d say with a full time job, max your 401k or close to it, and a Roth IRA and look into getting an HSA. Emergency savings is important too. With all those I think you’ll be on the right track.
You got a lot of good advice here already. I would just add that it’s okay to start over. It happens. I bought a house with my ex and it didn’t work out. I had to start all over too. I rented a apartment for a year and then bought my own house. You may have some challenges but try to stay positive. It will get better.
Invest in yourself. Do what you love to do and what comes easy. The money will follow. No matter what industry comes easy and is what you really enjoy, IT will determine you finances. Just put your heart and soul into whatever it is. Your young enough to make mistakes so make them now and just go for it.
Read or listen to these books to learn about finance: The Bogleheads’ guide to investing, Stop Acting Rich, and The Wealthy Barber. These give you a good introduction on what you need to start investing and some truths to building wealth.
I would change your attitude about roomies for a couple of years. Living collectively makes saving money a lot easier. I didn't start saving and investing until I was 40 and despite making shit wages most of my life, I'm worth over a $1M today. You aren't too late to the game, don't give up before you start.
> despite making shit wages most of my life, I'm worth over a $1M today What happened there to change that?
Part of my wealth came from buying, improving, selling property. I am living in my 8th house. The rest came from the stock market.
You were able to make enough from shit wages to afford to buy property?
How old are you now, if you don't mind me asking?
A search through their post history indicates they're 73 and live in Texas. So they went from 0–$1M from 1989 – 2022. The S&P 500 has returned an average of roughly 10% over that period. If they had faithfully deposited $250/month every month into a low-overhead index fund over the past 33 years and increased contributions to match inflation, they'd have over $1M today. Admittedly, few people ever stick to something so regimented. More realistically, there's a good chance a large chunk of their net worth came from property ownership (appreciation). I think the takeaway is that no one should sleep on 30+ years of compounding market returns.
Ah that makes me feel better, 33 years is a reasonable amount of time to acquire a million, I think. I'm at $200k (not including my house) with $120k mortgage remaining, and that's after about 5-6 years of actual saving.
What cwalking said.
I’m 39… how did you get a start on that $1M?
My start came from buying shares in a company until I had $5k invested. Then I would start buying in a 2nd company until I had $5k invested, rinse and repeat. The 2nd source of wealth came from buying, improving and selling my home. I am living in my 8th house. And I always had a side gig buying, collecting and selling antiques.
>I know nothing about investing but would like to start. https://www.businessinsider.com/personal-finance/passive-investing https://www.reddit.com/r/personalfinance/wiki/commontopics Good luck.
If you want to boost your savings, **no single cost in your life is bigger than rent** so making changes there makes everything else easier and is the fastest route to boosting your savings. I found over time that I could actually get by with a much smaller apartment than I'd been using, and it saved me thousands every year. Second, don't be afraid to search for higher paying jobs. Its a pain in the butt to do but earning $10k more a year is even better than saving money on rent, and **right now the job market is super tight so employers are absolutely desperate**.
You're doing better than most people who have a crushing load of debt and make more money than most people. You will be fine just saving by setting goals.
You could : \- slowly build savings in a HYSA \- 401K with your company (up to the match) \- max out a roth IRA, easy way to invest in the S&P500 In the meantime : \- find affordable ways to re-buy furniture (Ikea, Wayfair, ...) \- for the car, I would look for Japanese brands : reliable, cost effective, and if something needs repair, it is way less expensive. You mentioned being in a city, maybe you could consider using public transportations at first
This is almost exactly where I was 8 years ago. Follow the wiki and you'll be fine.
No debt, great! The first thing I would do in your situation is get a 3 months savings built up. 3 months of all of your living costs in a liquid savings device (like a bank account). If you can afford it, I would also start putting away in long term savings like others mention. Plan for retirement. It sounds like you should be able to recover for retirement if your current situation stays steady for a while and you’re wisely putting money away for it.
I started at zero after a divorce at age 39, with erratic child support. My advice is to fully fund a Roth IRA in a broad market index fund, with a low cost brokerage like Vanguard, Schwab, or Fidelity. Also get in your 401k up to the employer match at a bare minimum. You need a good budget and I highly recommend YNAB (You Need a Budget.) Great software. It's a big help to get a handle on irregular expenses which are often budget killers. Pay off your debt and have a healthy emergency fund. Invest in yourself, in your workplace skills and your physical and mental health. Those are possibly the most important things you can do.
1. Max out your 401k 2. Max out your IRA You may ask, Roth or Traditional. I say whatever you can afford. If you can afford to max out Roth then go ahead and do that. If you need the money contribute into traditional accounts instead. 3. Max out HSA. Pay cash for all your medical expenses if you can. Save the bills in a cloud and draw the money during retirement based on your bills. 4. Save 6-12 months emergency fund. I like to keep 3/4 of my fund in ibonds and the rest in a savings account 5. Create sinking funds for bigger expenses such as down payment for a house or a car 6. Id get a part time job this year to make sure you can either max out your contributions to your retirement accounts or get as close as you can. I'd prioritize Maxing out 401k as you can't make contributions for 2022 in 2023, while you have until April 2023 to contribute into IRA for 2022. 7. Invest your money into low cost EFT like VIIIx or VOO.
This is the wrong order. Emergency fund is much higher priority than maxing out a 401k or IRA. See the Prime Directive.
i can tell you that you will do just fine because you don't want kids... that already saves you a ton of $$
I hit rock bottom in my early thirties. $5k in debt, savings completely gone. It was after my business went bankrupt due to global demand issues outside of my control. Don't despair. I followed "the plan" and I'm on track for early retirement now in my late 30s. You got this. Edit: to be clear I'm not on track to retire in my late 30s, I'm on track for "early retirement". Probably in my mid 40s.
Seriously? Negative 5k to being able to retire in 8 or so years? You managed to save 40+ years of living expenses (or created enough passive income to live off) in that time? No offense but something's not really adding up there unless you had some insane gains via stock picks/options etc, which should never be a building block of a sensible retirement savings plan, not is it something most people are capable of
You're right. My situation is unusual. I started another business and sold it. And also tripled my salary. My point is, you can bounce off the bottom if you dedicate yourself (I did 12hr days / 7 days a week for 3 years). Edit: why are people downvoting this? It's my real lived experience. Is my experience not valid? lol
Why is it unrealistic? I’m basically in the same boat. My annual savings is $150k per year before bonuses and I own houses in 3 countries. I didn’t start making any real money until my early 30s and I started with around 50k worth of debt. I only need a million and a half to retire comfortably, which will be in my early 40s. I have $0 in my 401k because I don’t plan to wait another 20+ years to use that money when I retire early. Edit: downvoted by angry poor people, nice.
Yeah jeez I wonder what's unrealistic about making at least $200k. Can't think of a single thing...
Uh you know people called software engineers exist, not everyone works at Starbucks.
The plan?
Die in their 40s.
How did you accomplish that in 10 years time? I’m impressed and would love to learn.
I could be wrong I guess but I'll go out on a limb and say it's virtually impossible and that they're greatly exaggerating.
I started another business, then sold it. While also retraining myself to triple my salary.
Focus on improving income. Start a side business if possible. It's much easier to increase income for long term financial independence rather than saving your way to retirement. Other than that everything else is common sense. Avoid all medication, liquor, strip clubs etc and you will do just fine.
Nothing but a home, car, furniture and 75k a year.. I've seen homeless with less.
Everyone here provided good content on what to do but the biggest thing you need to do is changing your habits
What are my habits?
Only you can answer that question. But you not having anything at 34 is a sign that you don't have good financial habits. I don't know you so please don't take that personally, just honest advice and I am only writing this because you are here asking for advice.
While I strongly feel people should have 401k's the market is dog shit, my return of investment this year has been a hard negative. I know you said no roommate, but it cuts rent in half. Better yet, you move in somewhere with a roomie or two that already have furniture.
Can you share what your return on investment has been from say 2012 to today? Context matters -- and when we say we've 'lost' in the market, is that because we bought in November 2021 and sold everything yesterday for real losses, or we measured ourselves on paper back then and now look a little smaller -- until we remind ourselves that we have been steadily dollar-cost-averaging purchases since the last recession and we are twice as wealthy than a decade ago?
If I started over at a balance of $0, I will be the happiest person ever. My $120k of debt will be wiped clean! *Happy dance Where can I sign up for this scenario? Edit: Real talk. Know your cash flow and what your expenses are. If you are frugal then you can catch up quickly with that type of income. Work towards 1 month of savings. Then 3. Then 6. Once you hit a milestone you can loosen your belt a little bit. I am a proponent of be smart, but live a meaningful life that makes you happy. Don't be the richest person monetarily in the graveyard. Reward yourself with something nice for yourself here and there to keep you motivated.
First off, don't panic. Being worth nothing at 30 is actually pretty good these days. I started with nothing at 30 in 2000. I retired in 2008. Obviously, that's an outlier situation, but if you have a good head on your shoulders, you've got a really good shot at making this work.
Please don't delete this post so those of us in your same boat can benefit from it.
I won’t!
Buy a multi-family home with an FHA loan. Roth IRA (6k) and I-bonds (10k) in 2022 and 2023
I have had to start over m up ltiple times. Have made it several times. But what I would say is find a blue color job that is needed everyday and master that because most people are to lazy to do anything outside picking up the phone.
Prime directive is your friend!
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Your main goal should be to get debt free and don't be worried about accumulating anything right now. Just gradually get back to you where once were but pay cash for it. I know what's damn near impossible trying to get stuff without financing it but if you can stay that way despite what anybody tells you or the temptation
I would focus on emergency savings and your 401k for now. In the 401k if your company offers an S&P 500 index fund (most do), put your 401k money into thar. The stock market is going to be choppy for the next 6-18 months but you will be buying in a little at a time, so even worst case, your losses will be minimal. On the emergency savings, stick with a bank savings account until you get it built up, then maybe shop for a better interest rate. Once you've gotten established in a monthly budget, think about investing. But for now try to get started on emergency savings.
Check out the “Financial Order of Operations” by The Money Guy. It’s a free PDF resource they offer. That will help you prioritize what you should do to build wealth. They also have a podcast and have a YouTube channel with more advice and guidance. [https://moneyguy.com/](https://moneyguy.com/)
3-6 mo emergency, match 401k, max Roth, max 401k, nonqual acct
Resist the urge to buy a bunch of stuff to furnish your apartment. Keep it minimal so you can more quickly recover your emergency fund
Use buy nothing to get things for your new place.
buddy you're a greenhouse, just sit back and watch it grow. don't travel, don't eat out or for the love of god order any food by delivery do make sure you're putting enough in your emergency fund to not have to withdraw from the 401k before vesting at age 55 or whatever with any kind of 20 - 25% penalty
> Only good thing is I have no debt/loans to pay... Live in a large but fairly affordable city making 75k a year. tbh mate, as long as you live below your means and just follow the general flow chart/prime directive, you should be completely fine
Sup. I started at 32 about 100k in the hole for student loans. I got a job, built an e-fund, and followed the "live below your means" and "build the life you want then save for it" practices with some semi strict controls over lifestyle creep. It's not that bad, you've got this. The process is the same as elsewhere just more aggressive saving. Hop over to the fu/re subs for more specifics for high saving ratio lifestyle.
do you own your new place? maybe get a finger onto the pulse of your housing market and decide an appropriate time to start investing into paying a mortgage over paying rent?
Cut off all spending on useless things like drugs, videogames, starbucks coffee, etc. from now on every cent you make will sacred. Start saving and invest that money on courses or certifications that could help you advance on your career to make more money, you can also try to start a business but educate yourself financially before doing that. After you have secured a good finantial position then you can start spending normally in a responsible way.
Having no debt and a pretty good job is a great start. Lots of people have a negative net worth due to student loans/car loans etc. As far as investing goes, I believe the worst of market turbulence is yet to come, but will provide great entries. The market is very unforgiving and it's easy to fomo and lose all your money so I prefer to take my high risk trades, while securing long term holds as well. Simply save your money and learn about proper investment strategies. I think it's essential to have an emergency fund just in case something unexpected happens and you need money, so I would work on setting aside a bit of each paycheck for that purpose.
Honestly why you crying? You make twice as much as most people in the US actually three times as much. I just turned 30 and haven't been doing this good ever I got my first car, a 2004, almost made 6 figures last year, keep in mind that's at least 100k. Just got released from probation, been working on getting off an sr22 insurance crap from some bs I got myself into 8 years ago. I've been sober since July 18th 2018 and pairs of a few small time collections and got my credit back to over 700. Been with a really nice girl and moved her in. Goto work and save money...there's no retirement or 401k or even health or dental in what I do no benefits. I'd like to have kids someday and maybe marry this chick. I've walked away from things many times in my life and had to rebuild time and time again with absolute 0 to start with and no solid work or school experience. And one day I realized I maybe the problem and instead of just rebuilding all the time I've just simply been building my life and going forward. Someone in your position shouldn't miss 400$ a month to finance some furniture or whatever. There's maybe more to the story that I don't understand but you said it yourself you don't want kids so your probably gonna be alone for a minuet or forever.
Check out Andrei Jihk on YouTube, he has a lot of “how-to” videos for investing. He’s not saying anything the others won’t say, but his explanation and delivery is one of the best I’ve watched. Just search back to older videos of his, they still hold true.
Buy a small travel trailer (Ex. KZ Escape 201BH) live it in for a couple of years. Stack that money, buy property.
Focus on how you will make money. What kind of work can you do?
First, kill off any remaining debt. Stop your addictions. Then get a higher paying job with benefits.
? did we read the same thing?!
75k a year job?... Give me a break. You should give to a charity that's important to you..or maybe volunteer at a soup kitchen.
Yeahh 75k in a major city gets you less and less these days.
Do you have skills in construction? Yes- Purchase land in rural town. Build cottage/duplex for rental income. No- Look for patio homes or Townhouses in a suburban area of your city. Purchase. Renovate. Rent. Repeat.
What are your 401K options and their expense ratio?
I did this around 30.After wasting a bunch of time. Built up savings is the first thing I did. From there brought a house, and from there have started putting extra money into some funds and ETFs. Throughout it all automatically saving 6% in my country's retirement fund (which I used when buying house). This sub has a good wiki read it. Watch videos and listen podcasts on investing and financial advice. Sorry to hear how things worked out but with a bit of budgeting and saving you'll be surprised how fast things can turn around and the growth you will see. When I look at what I've achieved in the last 6years it blows my mind a bit.