Hello, I am new to this board. I am interested in finding out about begining my retirement planning. Howevre, I have several obstacles. I am a 26 year old woman, who feels I should have started this a long time ago. I have invested $500.00 in a Roth IRA. I just graduated college, with a hugh accumulkated debt (approx $20,000. I have also been unem,ployed for four months as I have discovered that my field of choice is over populated in this area. A move is financially out of the question. When I get a job, it lookas as if my income will be approx (20,000) with additioanl (14,000) from my husband. He is 38, and has no retirement fund begun. Where do we begin? Should we do something together for our retirement plans? Seperate? Should we attempt to pay off our debt first, then add to what I have already started? (I have no idea his current debt status, I think it is around $1200. We have only been married a month). He is looking to finance a car soon, and we want to buy a first house for both of us. Neither has owned before. What do you suggest?Again, Thank -you for all of your helpSassy
sassyseagull Date: 9/14/99 8:46 PM Number: 13901 I am a 26 year old woman, who feels I should have started this a long time ago. ... I just graduatedHuh? I can't imagine any way to have started sooner. You're getting an excellent, early start. A realistic appraisal will serve you better than undeserved guilt in your investments and many other aspects of life.accumulkated debt (approx $20,000. ... Where do we begin? Should we do something together for our retirement plans?First read the Fool School's 13 steps to Foolishness. There is a link from the home page. You'll know some of it, but will find many useful tidbits. The urgency of paying off the debt depends on the interest rate, but the general guideline is to get it paid off first. You will be retiring together, so you should be planning that together. I like the books The Richest Man in Babylon and The Wealthy Barber for learning the "secrets" of acquiring wealth. In summary, the secret is to live below your means, save at least 10% of your income, and invest in good companies. You will find many useful corners in Fooldom as you undertake the various steps.
Start by going to "What does it take to invest Foolishly? The 13 Steps":http://www.fool.com/School/13Steps/13Steps.htmand then jump over to "Retirement Planning":http://www.fool.com/Retirement/Retirement.htmYou might also want to read "Dig Yourself Out of Debt":http://www.fool.com/credit/credit.htmDon't forget to read the message boards. You will learn a lot by just reading the questions and answers that come in.26 is a good time to start with planning. 38 is a bit older, but it sure beats many people that do nothing for planning their entire lives. Good luck! Taylor
I will agree with WilliamLipp's first paragraph in #13902, and disagree somewhat with the second paragraph. Doesn't it make more sense to pay down the debt before thinking about cars, houses, and investments? Naturally, the cost of living (rent, mostly) where sassyseagull lives is the big driver. But if two incomes are producing $34,000, then the loss of one of them is going to produce a big cash flow problem. Then it's a major penalty to get at the invested money, whether it's in a Roth IRA or in a house.I'm not saying I'm right here.
JABoa Date: 9/14/99 9:50 PM Number: 13904 Doesn't it make more sense to pay down the debt before thinking about cars, houses, and investments?I think we have a difference of style, not of opinion. If she reads through the Fool School, she will probably come to the same conclusions you have. I enjoy directing people towards the path of discovery.
Sounds like you're off to a good start. Here's my 2 cents.#1--pay off the debt first, I always consider that a guaranteed return of whatever % you're being charged. You could invest in the market, but you could loose that money as well. Paying debt is a sure thing that will free up more money down the road.#2--hold off on the car until you're debt is paid off. No sense in creating more debt unless it's an absolute emergency where you're other car has been wrecked beyond repair. Don't worry about keeping up with the Joneses.#3--the house is a good thing but not totally necessary (see above). However, if you can own instead of rent for maybe $100 more a month, probably a good thing.#4--keep reading and learning.
<Hello, I am new to this board.> Welcome aboard!!!<I am interested in finding out about begining my retirement planning.>You came to the right place; Motley Fool is a great place :)<Howevre, I have several obstacles. I am a 26 year old woman, who feels I should have started this a long time ago.>To start with, you do not have "obstacles", you have "challenges". Challenges are what educate us and make us grow, and inevitably make us better human beings. You are starting at the right time - it's never too late to start your retirement objectives :)<I have invested $500.00 in a Roth IRA. I just graduated college, with a hugh accumulkated debt (approx $20,000. I have also been unem,ployed for four months as I have discovered that my field of choice is over populated in this area. A move is financially out of the question.>Starting in a Roth IRA is an excellent place to start!!! I personally own Vanguard's Index Trust fund (Nasdaq: VIGRX) for two reasons: one, because of Vanguard has one of the lowest fees in Mutual Funddom and two, it concentrates on the best of the S&P 500 stocks. It always outedges the market. Most funds underperform the S&P 500; so check your mutual fund's performance to the S&P 500 and check the fees to ensure you're not getting ripped off! And don't let any slick talking agent/broker/insuranceman talk you out of moving your fund either! (if you decide to change funds).<When I get a job, it lookas as if my income will be approx (20,000) with additioanl (14,000) from my husband. He is 38, and has no retirement fund begun. Where do we begin? Should we do something together for our retirement plans? Seperate? Should we attempt to pay off our debt first, then add to what I have already started? (I have no idea his current debt status, I think it is around $1200. We have only been married a month). He is looking to finance a car soon, and we want to buy a first house for both of us. Neither has owned before. What do you suggest?>First off, I suggest NOT financing a car *sigh*. You want the least number of people dipping into your pocket each paycheck as possible. You can eliminate one person by NOT financing a car - the bank. Why would you pay the bank money that would fund both of your Roth IRA accounts for 4 or 5 years? I drive a 1987 Tempo - it looks nice, there's no car payment, and insurance is less than $400 per year. And forget leasing...leasing is renting. The advantages of leasing is great if your a business owner (tax writeoff on the business), but for non-business owners it's a ripoff. Sure, the monthly payments are cheaper, but you'll be faced with a big balloon debt at the end OR you'll be stuck in leasing another car and the cycle continues. NOT FOOLISH WISE! Buy an older car that looks/runs nice for a grand or two...you'll be glad you did!!!Secondly, I would encourage Roth IRAs for each of you - just be dang sure that your fund is performing with or better than the market. I don't dick around as I said...I use Vanguard's VIGRX fund because year after year it performs extremely well. Some funds are hot this year, but cold the next. I prefer consistent returns that the VIGRX fund gives me. (Go to www.vanguard.com if you are interested; and no, i do not work for Vanguard; I'm just a joe schmoe investor).Third, for your other investments other than Roth IRAs retirements, I would high recommend Drip stocks (Dividend Reinvestment Plans). There's a huge write up here in the fool in it. You can buy stock directly from virtually every major corporation on the market (except for Microsoft) and bypass stockbrokers and their fees. You have to start out buying one share to set up your account (thru Temper of the Times at www.moneypaper.com - will cost you only $20 for that one share or National Association of Investing Corp at www.better-investing.com for $15). And after your account is set up, you get a monthly statement like a bank statement where you can choose to invest each month from $25 up to $10,000+ each month (Coca-Cola is $10/month). You are not obligated to invest each month...it's your account. I treat mine like a savings account, so each month I drop $25 in each one I have. I highly recommend Intel being your first one. Most DRIP companies provide buying stock/account maintenance for free, but some charge fees - avoid stocks that charge fees, and Moneypaper's website denotes the companies which do! That $25 a month adds up quickly over the course of the year; and your stocks can double when a stock split occurs (tho the price is halved, making it more affordable for more investors).So, in a nutshell:1. Great start on the Roth; get hubby's going:2. Use an S&P 500 index fund from your fund family and check into the fund fees (you will not beat Vanguard, tho they have minimums - $1,000 minimum to open an account, $100/mo minimum).3. You'll be able to save that quickly by avoiding a new car payment...and NEVER LEASE!!!). Buy an older, nice looking car to avoid the car payment, and instead of paying the bank that money, pay yourself with it :) 4. check into those DRIP stocks where you can buy stocks direct from companies for FREE!...you won't regret it!!! Be Foolish with your money...you don't have much of it, so maximize what you have :) And, best wishes and best of luck on your job search! Keep searching and something will turn up! The Pendulum of Life always seems to swing back in our favor sooner or later, so keep your chin up :)Email me at email@example.com if you have ANY questions...I'll be happy to help or steer you in the direction of those who can! :)Best regards,DY
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