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Old 09-13-2017, 08:48 AM   #61
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Originally Posted by magua View Post
I get the match part regarding putting away now as opposed to using his part of the match to pay off debt. However you cannot truly save anything when you are still paying interest and principle on debt.

So when the match is met annually pay the debt down.
Amen. We tried to do both for a few years and it just didn't work. In the end we made no real progress in anything.

When you have no payments, you can pile up cash faster than you think.

That's why we'll never have a boat payment again. There's not a boat or vehicle in the world nice enough for me to see $500 or more going to a bank and not my investments.

A few years ago saving 10k for a car was an insurmountable task. Car payments were just an assumed way of life. Now we can save that much in 3 months...after saving for retirement in addition.

I don't look down my nose at people who finance cars or toys. Life is short and you need to enjoy it. We financed our boat when we bought it...and got to enjoy it and make memories sooner. I don't regret it, but I'll never do it again.

Not having payments is one part of the equation. Budget is the other. We track everything down to the PENNY. Every purchase is tracked. Every dollar has a purpose, every month. Before we started doing this we were eating out all the time and wasting so much money it wasn't funny. Then we applied a military like discipline to our budget. Our lifestyle hasn't really changed, but it literally feels like we got a 50% raise. And it actually makes it EASIER to go out to eat or buy something because we know there's money in the budget for it.

We never argue about money anymore. Just the other day we needed to buy my MIL a plane ticket and a hotel room. No problem...already an account set up for incidentals like that. Before I would bitch and moan about it and we'd have an argument. Those days are over.

Gotta run your household like a business.
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Old 09-13-2017, 09:21 AM   #62
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Amen. We tried to do both for a few years and it just didn't work. In the end we made no real progress in anything.

When you have no payments, you can pile up cash faster than you think.

That's why we'll never have a boat payment again. There's not a boat or vehicle in the world nice enough for me to see $500 or more going to a bank and not my investments.

A few years ago saving 10k for a car was an insurmountable task. Car payments were just an assumed way of life. Now we can save that much in 3 months...after saving for retirement in addition.

I don't look down my nose at people who finance cars or toys. Life is short and you need to enjoy it. We financed our boat when we bought it...and got to enjoy it and make memories sooner. I don't regret it, but I'll never do it again.

Not having payments is one part of the equation. Budget is the other. We track everything down to the PENNY. Every purchase is tracked. Every dollar has a purpose, every month. Before we started doing this we were eating out all the time and wasting so much money it wasn't funny. Then we applied a military like discipline to our budget. Our lifestyle hasn't really changed, but it literally feels like we got a 50% raise. And it actually makes it EASIER to go out to eat or buy something because we know there's money in the budget for it.

We never argue about money anymore. Just the other day we needed to buy my MIL a plane ticket and a hotel room. No problem...already an account set up for incidentals like that. Before I would bitch and moan about it and we'd have an argument. Those days are over.

Gotta run your household like a business.
Pretty much my way of thinking too. I won't say that I will never have another car or boat payment again, but I will say I will never have more than one at once. We tend to buy good quality stuff, and hold onto it for a while. Both vehicles were bought new, and getting up there in miles on mine, but no intention of changing up anytime soon.
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Old 09-13-2017, 09:22 AM   #63
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Originally Posted by NCSUboater View Post
Amen. We tried to do both for a few years and it just didn't work. In the end we made no real progress in anything.

When you have no payments, you can pile up cash faster than you think.

That's why we'll never have a boat payment again. There's not a boat or vehicle in the world nice enough for me to see $500 or more going to a bank and not my investments.

A few years ago saving 10k for a car was an insurmountable task. Car payments were just an assumed way of life. Now we can save that much in 3 months...after saving for retirement in addition.

I don't look down my nose at people who finance cars or toys. Life is short and you need to enjoy it. We financed our boat when we bought it...and got to enjoy it and make memories sooner. I don't regret it, but I'll never do it again.

Not having payments is one part of the equation. Budget is the other. We track everything down to the PENNY. Every purchase is tracked. Every dollar has a purpose, every month. Before we started doing this we were eating out all the time and wasting so much money it wasn't funny. Then we applied a military like discipline to our budget. Our lifestyle hasn't really changed, but it literally feels like we got a 50% raise. And it actually makes it EASIER to go out to eat or buy something because we know there's money in the budget for it.

We never argue about money anymore. Just the other day we needed to buy my MIL a plane ticket and a hotel room. No problem...already an account set up for incidentals like that. Before I would bitch and moan about it and we'd have an argument. Those days are over.

Gotta run your household like a business.
Awesome on budget/tracking spending.

Wish I could get my wife on a more disciplined course regarding finances.

Agreed wholeheartedly running the house likes business.
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Old 09-13-2017, 10:08 AM   #64
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I'm in the side of do both. match and put all the rest of any you have into the loan. with just 10k that would piss me off more than anything that i would just want to pay it off.

on another note though. can he even invest into the 401K yet??? i know the places i have worked you have a 6MO buffer before they even let you in.

If so i would tell him to take those 6 months and go nuts on the loans to kill them quick.

im 27 had no loans, my wife had 35k.. they are down to 14 now and i have been itching to pay them down faster...(we paid the min for a while) now we have doubled the payments on that and still live nicely.

for tax purposes you dont need to itemize to be able to claim interest on Student loans. at least in AR that is...

Find out if this is even a possibility for the next few months and just be thankfull that he is having this discussion with you in the first place and wants to pay it off.. i know so many more people in worse situations.

GL to him in his new career BTW
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Old 09-13-2017, 11:42 AM   #65
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Pretty much my way of thinking too. I won't say that I will never have another car or boat payment again, but I will say I will never have more than one at once. We tend to buy good quality stuff, and hold onto it for a while. Both vehicles were bought new, and getting up there in miles on mine, but no intention of changing up anytime soon.
Same here, we buy good quality stuff. At one point we had a boat payment and two vehicle payments. After we paid all that stuff off and saw how much we could put away, we realized how stupid that was. I'm not necessarily against car payments. We had a payment on my commuter that was $150, but I couldn't care less about the monthly payment (which is all anyone seems to care about). I care about the liability of owing someone money. I hate having that out there.

I'm also a cheapass when it comes to vehicles. 10k is expensive for me. My daily drivers have either 305k or 230k on them.
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Old 09-13-2017, 11:45 AM   #66
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Awesome on budget/tracking spending.

Wish I could get my wife on a more disciplined course regarding finances.

Agreed wholeheartedly running the house likes business.
Yeah I'm lucky. I handle all of our finances and investments, but she is more the saver than me. She hates spending money.

We constantly talk about where the budget is and what we are going to do as far as saving etc.
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Old 09-13-2017, 06:27 PM   #67
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This 100%. I would also remind him you can make more than one student loan payment per month which I found really helped. An extra $10 per week (basically a cost of lunch) adds up over 3-4 years.
T value of money can never ever be over estimated. Also since matching is free, it compounds the T value IMO.
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Old 09-14-2017, 02:21 AM   #68
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Depends how much money he's making. I'd max out on the 401K if at all possible to avoid taxes, keep the government's money working for him for as long as possible and maximize compounding interest from an early age. The advantage of the 401k is not only getting the "free money" for the match, but also having the opportunity to avoid taxes and have what you WOULD have paid to the government working for YOU for 30 or 40 years. I think it's not a good idea to contribute to a Roth until after you've maxed out on the tax-deferred opportunity of the 401.

Depending on what line of work he's in, he could possibly get a job that would result in his student loans being forgiven. My wife is a nurse and if she takes a job in an under served area, she can get her loans forgiven.

After he maxes out his tax-deferred option with the 401k, THEN he should put whatever he can into a Roth. I mange my own Roth through Ameritrade and have a mix of single stocks and mutual funds. I also put what I could into my 457 at work as a police officer, starting in my 20's, and even after a bloody divorce, had close to $1 million in that, along with a decent amount in my Roth.

Since I'm over 50, I'm in "catch up" mode and can contribute...what is it.... 23 or 24 K to my current 401k and 457. I put enough in the 401k to get the employer match, and the rest in the 457 because I can access that before 401k age.

Time is just as important as the amount he saves. Start early and max out if you can. Your ex-wife will thank you!

Also, there's a time and place to use other people's money, ie. the bank's. I kick myself for paying off my first house early. Especially since it cost me half of the equity to pay my hooker ex-wife off. I now have one paid-off house and one house across the street from Lake Michigan that I financed. The interest rate is 3.9% and the interest on the $190,000.00 loan is tax deductible. I can make 4% on my guaranteed interest account with Prudential on my 457, so it was a no-brainer to finance the house for as much as I could and keep my money in my 457.

Also, don't forget: If your boat has a head and galley, you can write off the interest as a mortgage/second house.
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