I think what happened to us, is we used to live paycheck to paycheck... things got better, and we've lost sight of our money. All I really know is I have no debt (except one of my cars, a student loan, and my mortgage), I have plenty of STUFF, and we can do what we want when we want to.

Except that now I'm turning 30 in a few months ( ), and I am realizing I need to START saving for our retirement. We have virtually nothing done on this.... DH has something through his job, but it's minimal at best - I think a few thousand maybe. I have a few thousand in a Keogh (what?!) account through my work. But that is it. We also don't have any type of emergency fund.

So - this is what my budget looks like. I'm comfortably paying everything, so I'm not really concerned about cutting anything at this point.

Mortgage - $1770
Van payment - $350 (plus I pay an add'l $50/month - auto deduct)
Insurance for both cars - $250
Water - $70
Electric - $200 (fluctuates, $120-300/mo depending on the weather)
Cable/phone/internet - $115
Cell phones - $190 (DH kindly upgraded us to the iPhones a few months ago , and I can't seem to get my bill lower)
Gas - $700 (this we may cut if we start carpooling... we discussed it over the weekend)
Food - $700 (this is high, I know, but I buy local and organic, and I'm not really willing to cut this)
Student Loans - $100
TOTAL: $4495

We don't budget for entertainment, clothes, etc, at the moment - we tend to just buy what we want. . It's a bad habit... I'm working on getting this under control. We do have a LOT of credit cards, but don't carry any balances - we charge and pay monthly what we use... they're all for the points.

Our monthly income is around $6000/mo. This is take home pay - after insurance and DH's 3% to his 401K. This also does not include OT, which I make a TON of from Oct-Dec.

So - that leaves us around $1500 every month that apparently we're blowing on... Stuff.

I am admittedly money stupid - it took us 7 years of marriage to stop getting repoed, running up crazy cc's, getting evicted, etc. I'm amazed when I see where we are now.

My questions are - what are my best options at this point for retirement savings? My employer does not offer anything through our company for me to contribute to - DH's does, but I know nothing about it.

What's my best bet for saving towards an emergency fund? What types of accounts should I learn more about?

I'm open to any suggestions

here's what I would do.

download from your cc statements or bank statments your spending for the last 4 months. Figure out what that "stuff" is.

You've come so far (CONGRATS), you don't want to nickle and dime yourself out of retirement.

For an emergency fund, look at money market accounts where you can draw (limited thesedays) interest on your funds. I would build that up. Some say 3 mos of expenses, I am most comfortable at 6 mos (but not there now).

Then I would look at maximizing through your 401k or possibly ROTH. You can also look at investing in index funds, which tend to grow at the same pace as the S&P.

One of the most painless ways I've found to build and EF is to have automatic withdrawls done to a savings account.

If your employer offers this sevice, that's even better. That way, it'll reduce your net take home but you'll barely notice it, while your savings account is growing.

I suggest getting quicken or msmoney - whichever you prefer. Since you are using cc's it should be quite easy for you to track your expenses with that. If you don't want either of those, you can do it manually (or create your own spreadsheet, etc) but that requires saving every receipt, keeping track of every $ spent, etc.

Once you have input a couple of month's statements in there, you will know where your money is going. This doesn't mean that you have to wait a couple months to find out - most banks allow statement files to be downloaded for months or even years.

Your emergency fund should be in a money market account. ING Direct and Vanguard are good choices, there are others. Check first to see what different ways you can access your money - ACH transfers to your checking account, check-writing, ATM card, etc. You'll want to set up an automatic transfer every payday to move money into the money market account. Vanguard can do this, others do as well. I think 6 months' expenses (not 6 months' income) is a good target amount.

For retirement, don't be overwhelmed by the options. You can start simple, but the important thing is to start. Since you don't have any employer plan like a 401k, you should set up a Roth IRA or traditional IRA at Vanguard, Fidelity or other place. I think the Roth IRA would be the right choice for your age. You can't deduct your contributions, but all future earnings will be tax-free when you withdraw in most cases. You can open an IRA at Vanguard online and designate your contributions to be invested in the Vanguard 500 Index Fund. Once you've gotten started, you can worry about learning mopre about investment choices and develop a more sophisticated strategy (I recommend reading up on "asset allocation"). But don't delay until you feel like you know everything there is to know, since that will only delay you from starting. Contributions should be set up to come from your checking account automatically.

I like Vanguard because they have a tremendous amount of information on their site, they have very low fees, and if you want to pay for investment advice they offer that as well.

Next step is to learn more about the plan offered at your husband's employer.

Okay... to be clear about how money dumb I am, I am befuddled completely by this last statement.

I am looking at my accounts now (I have 2 checking, a savings for my husaband and me together, and one for the kids together). One of my checking accounts, is where my paycheck is direct deposited, bills are paid, etc. I don't use my debit card, I use credit cards strictly, and then pay with auto-pay from this account. At the end of my payperiod (the day before I get paid again), I pay anything outstanding, and transfer the extra money to savings. My other checking account, is strictly for my mortgage. I have half of my payment auto transferred bi-weekly, and then the payment is automatically deducted from this account monthly. I've paid one mortgage payment ahead by deducting the funds from my other account twice a month for the last year.

Looking at my accounts right now, I have $1495 in savings already, and $320 I'll be sending over tonight.

I have no idea if this system is usefull at all, but it's the first system that I've been able to stick to ever... We've been doing it this way for about a year.



My employer does not offer that. We are a very small company, and didn't even offer direct deposit until this year. I suppose I can set up an account and just have the funds trasnferred out like my mortgage payment above, correct?



Heh... truthfully, I do have a pretty good idea of where my money goes. I have a lovely collection of Coach bags that I've acquired over the last year, and in the last few months I've moved into shoes . DH has every gaming system known to man, and the games to go with them... My kids I actually shop carefully for, I shop clearance sales and buy the next sizes up. I don't spoil them - they get what they earn for the most part.

Our other BIG expenditure is travel. We do a LOT of short-distance trips (mainly Disney, because we have annual passes, but also Miami, this weekend we are going to the Shuttle Launch on the other coast)... so far this year, we've done Vegas, LA, San Diego, NYC (twice), etc etc... it's thrilling to be able to do it, I think, so I've OVER done it. I know I need to cut this back drastically... there's no need to go to Disney 8 times this year.


DH is currently contributing 3% - I found out from him this morning that his employer will match up to 10%, but he can contribute up to 25%. Would it be better for him to up this to 10%, to maximize his employer contributions, or the full 25%? Obviously we can afford it, but do we want to tie up our money that way? Or, is upping the contributions a game we should start after the emergency funds are in place? Or maybe I don't even have all the information I need to know which option is best.

Thanks for the advice so far . I grew up with very, very little, and I always assumed I'd just... be happy having financial stability... but now I feel like I'm almost drowning in it all... it's a little overwhelming.

eta... I also realized, hardly any of this takes into account DH's money - he has a separate account, that his money is DD to, and he spends it on a lot of our daily stuff - if we stop at Costco, or go out to eat, or Target, or whatever... Stuff. But, he always has money left over.... he must have a couple thousnd sitting around, but I don't really know how much.

Instead of transferring whatever is left over into savings, move it up a notch and treat it as an actual bill. It must be paid with the others and before you start spending the excess.

Also, have DH bump up his contributions to get the max 10% match. It's free money and you will not find a better return elsewhere.

Lorasmom,

Like a cc payment, like a car loan. Just put savings on auto deduct. I promise you that you will not miss the money! I had not started saving for retirement until I found these boards, so I am not very far ahead of you (and I just turned 30 a few weeks ago ). I have Roth IRA's through T. Rowe and the money for both DH's Roth and mine is taken out automatically on the first of the month. Same with emergency fund money. I pay my sitter through EFT from my ING account to hers. I auto transfer enough money every money to compensate for babysitting as well as $100 for savings.

It's great that you have no debt, but if anything ever happens to you or DH to where you couldn't work, you need back up, especially with those kids!!

(I hope you have life insurance for both of you as well).

SG

Emergency fund first. I don't know if baddies will impact opening an account - I don't think it will. Vanguard has check-writing and ACH transfers to and from their money market account (Vanguard Prime Money Market) and you can also do wire transfers if you had to. I don't think there's anything else to worry about. You can set up regular transfers from your checking account to the money market fund. They pay a competitive interest rate.

The matching funds from your husband's employer is free money, and you need to take advantage of it beyond the 3% you're doing now. You need to set up a budget for your spending beyond what you have in your OP, to include your travel/entertainment expenses, etc. As long as you just do what you want you will never have the discipline to save. Once you've budgeted your remaining spending, then you know how much more you can contribute to your husband's plan to get the matching funds. Do not underestimate the value of the matching funds. If you increase his contribution to 10%, you are actually going to be saving 20% because of the matching funds! And those contributions are tax-free so putting in 10% will only cost you about 7.5% because of the tax savings.

Look, it seems like you are in a position to really build up some wealth over time. It's not hard, but it takes discipline. Budget for your needs, for your travel, for your husband's spending money, set up the emergency fund, then milk those matching funds as much as you can. Don't fall into the trap of thinking "Oh, if we save 10%, that's enough, so we should spend all the rest." If you can do everything you want to do and still save 15%, 25% or more, then do it.

YES!! Bump his contributions up to the 10% that the company matches at the VERY least - that is FREE money...

Depending on performance, don't necessarily do the max allowed of 25%, you would want to look at how that has done before you decide on that.

SG! I spend too much time in GF, I forget there are other boards here

So - okay. I'm looking at the Vanguard Prime Money Market. It has a minimum of $3000 to start. I don't have $3000 today. So... I'm going to start budgeting $500/monthly to put into savings, and when I build up the $3000, open the Vanguard acct.?

I am also going to start budgeting $400/monthly to travel, and the balance can go to clothes, extra stuff, etc. That still leaves $600 monthly unaccounted for... I will start watching this and see where it goes, and catagorize it as needed... I'm not so great at organization, so I don't know how successful that will be.

I'm off to research some more... I'm sooo confused

I would just open an ISA with ING and start an automatic savings plan right away. Pay yourself first, have it automatically deducted each pay check, you won't even miss it.

What is the difference between the two? I am okay budgeting my savings, I don't think we will miss it, and I believe we're disciplined enough to do it now. I just am confused about my options, and quite honestly, I've been reading all morning and it all makes as little sense as it did 3 hours ago.

Well the ISA(Investment Savings Account) at ING doesn't require you to have a minimum balance so you could start saving right away. The money is in a seperate account but still easily accessible. I'm pretty sure Money Market has a similar account but I'm in Canada so I can't comment on that for sure.

The key thing for me is having the account seperate from my checking account. The problem I see with having to keep a minimum balance is that you may have to cash out all of your funds in an emergency.

And I know people will probably scoff at me for saying this, but I don't worry too much about having the highest interest rate. As long as the cash stays liquid and it's there for me when I need it. I'll use other 'vehicles' to save for the long term.

Gotcha.

I bank with Wamu - They have a savings option with a 3.25% interest rate, no minimum. I think I will just go with that - it's super easy for me, and I don't do well with complicated .

That's what I would do. Keep the EF simple and automatic.

You can also look at other investment vehicles besides Vanguard. T. Rowe allows opening with a lot of funds for $50 - as long as you allow auto-deduct (which it sounds like you would want to do anyway).

Many firms now have target retirement funds (AKA accounts that invest at various risk levels in different types of products depending on when you plan on retirement. T. Rowe's come in 5 year increments IIRC, I think Fidelity does the same).

lora,
Vangard does not have a minimumm to open, but rather the funds in which you select may have various minimums to open. I suggest calling & let a agent walk you through the process of a ROTH, it was the BEST move I made towards my retirement after taking the company match 401K plan.

Good luck!

SG, I just read an article the other day about target funds. It turns out they can vary widely on how they do asset allocation. For example,
Schwab Target 2010 cash 5%, bonds 59.1%, stocks 29.3%, other 6.6%
Fidelity Freedom 2010 cash 13.5%, bonds 49.1%, stocks 24.7%, other 12.7%
T.Rowe Price Retirement 2010 cash 5%, bonds 59.3%, stocks 34.6%, other 1%
Vanguard Target Retirement 2010 cash 1.3%, bonds 48%, stocks 44.3%, other 6.4

In this example, Vanguard has 50% more invested in stocks than the Schwab fund for the same target date.

The point is that even with target funds, the investor needs to ensure the allocation is right for his/her risk tolerance, other assets and income.

Also one's retirement age

Of course

I'm comfortable with fairly moderate risk - many say I should be riskier, I'm just not ready

Alright Folks.

I'm pulling this old thread to update it.

By the grace of GOD I started this plan after this post, and managed to quickly build up a 3 month emergency fund. This came in very handy when I left my job at the beginning of August. This was NOT planned out, and probably not the wisest decision I've ever made, but I still believe it got to a point at my office where it had to be done.

I found a new job and started at the end of Sept. I was totally psyched - it was way better than my old job, paid more, more of a challenge, better company. Except I got laid off last week. Such is the economy in Florida.

When I say I've applied to HUNDREDS of jobs, I am not exaggerating.

Had I stopped messing around with my money and been more responsible earlier on, I would not today be panicking about paying my mortgage next month. We are, quite literally, planning on losing my dream house (which is a STARTER - it is not extravagent, it cost under $180K, 3 br... i'm not talking about some crazy honking McMansion here). Those trips I took all over the damn place earlier this year are seeming more and more silly every day.

Lorasmom-

No need to panic, times are tough all around, you can get through this. I read your other post, but figured I'd reply here.

I understand having to make a choice between the bills, lived that way for 3 years while I was in school and a single mom. Tough decisions all the way around.

Your decision to hold off on paying the mortgage, seems to be the only option you have. You could continue to dump money into a house, that you may end up losing, or your could pay your needed bills (ie, food, car etc) and save the rest for the inevitable. Without a steady income to support what you have, you will lose something. I'm guessing in this time, the best option is to lose the house. It will be much easier for you to rent a place, than it will to buy a new van, should this one get repo'd. See what I mean?

I don't know much about your situaiton, except from what you have posted, but remember that your not alone in this, there are people everywhere thinking the same way you are. The one thing to remember, to get a job, you dont need a mortgage, you can rent. But you will need a car, to get to and from!

Good luck to you

Brandy