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Personal Finances / Credit Cards and Consumer Debt


Subject:  Re: Balancing debt vs Investing Date:  1/3/2013  11:30 AM
Author:  Jacketfan Number:  306624 of 312777

I do already have a pretty good 401k and max out on both the 401k contributions as well as their ESPP. I am also putting away quite a bit for my daughter's college.

aj already mentioned the risk with ESPP and the idea of prioritizing retirement and college savings. As a subset of "max" on the 401k, is that max for their contribution, or max allowable? If you are maxing beyond their contributions, you might consider diversifying into a Roth IRA (or even 401k if your employer offers it.) My opinion is tax rates have no where to go but up, so doing all of your savings in the "tax deferred now" category adds tax risk.

Also, the Roth can serve as a hybrid retirement/college savings vehicle, IF you are careful about segregating the amounts targeted for college in some recordable way, and are willing to give up the long term retirement savings room.

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