In my previous post I was trying to figure out what is best to do with the 10% of my paycheck that should be reserved for my 401(k), but can’t be for one full year.
The obvious solution was to begin contributions to my Roth IRA that I hadn’t been contributing to in the past year or so. However, I have been thinking about this situation in the back of my mind since making my last post and then it occurred to me. What would be the best use for this “extra” money? Right then it jumped at me: It’s the Debt, Stupid!
How many articles have I read about whether it’s better to contribute to a retirement plan (i.e. 401(k), Roth, others) or pay down debt.
The rule is to follow the percentages.
If you’re gaining 8% – 12% on your plan and your massive amount of debt is at an 8%+ interest rate then you have a leak that will prevent you from really making any sort of progress. Thinking back, I think it’s the reason that I stopped Roth IRA contributions in the first place. The 401(k) was at least supplying me with a company match – which made it worth adding to.
So, my plan for the next year is to increase my debt payments even more – that way by the time my 401(k) actually does kick in maybe I’ll be in a position where I can contribute even more than my 10% goal in an effort to play catch up on a year lost.
So the question now is, how much is enough? My “contribution” will be post-tax so I wonder if I can still make the 10% or not. We’ll have to see. I’ll try forwarding 10% of my pay to debt on my next paycheck and we’ll see if that effects my budget at all.
Well – the new job is going really well. There’s a lot of stuff to learn, but everyone is really nice and I feel that it’s a great fit for me.
The only thing that is bad so far is that it’s a one year wait for enrollment in the 401(k). Ouch!
I must have misunderstood during the interview process because I had thought that the one year referred only to when I’d be eligible for the profit sharing program (which is pretty sweet by itself).
Oh well – it’s too bad I can’t keep contributing to my old 401(k) which is still at the former job. But there are some positives (I guess):
- Bigger overall paycheck now that my 10% 401(k) deposit isn’t being taken out
- Opportunity to begin investing in my ROTH IRA again.
I haven’t received a paycheck yet from the new job so I’m honestly not really sure what the bi-weekly number will be, but I’m obviously looking forward to the raise being tangible.
Has anyone used Wesabe.com? I’d be interested to hear your feedback/thoughts. I was just reading an article in the WSJ titled, Managing Your Money in Public View and am interested in using the service.
The initial concerns are always security, but the article and their site seems to claim that security isn’t an issue. So, the only thing that matters now is – is it useful?
A little while ago, I posted that I was entering an active job search.
It went VERY well – I went through a recruiter for the first time in my life. And although I wasn’t sure what to expect, the entire process was fairly easy, very quick and extremely successful.
The entire process went about 3 days (I know – I was shocked too).
Why is it relevant to this blog?
Well, there’s some more money coming my way and that means I can pay off my debts faster.
Very exciting. In fact, I’m not sure what I’m more excited about? The new job or the bigger debt payments. Either way, it’s close.
Thanks to everyone that wished me luck on the job search – either through a comment or an e-mail – it worked!
Like I said before, it feels good to see the good numbers increase and the bad numbers decrease each month. God, is it slow though. Oh well…I should get a nice little bump up in the amount I can contribute soon – details in next post.
As for the bankrate.com experiment – You’ll notice I only made it to day 5. Why is that? ‘Cause weekdays are easy to keep track of – it’s the weekends when you’re out and about that are difficult. Let’s face it – I’ve said it before – I need to make whatever I do painless and automatic or else eventually I just won’t do it anymore.
The first step in victory is learning where it is you’re most likely to lose.
…is that a quote? ‘Cause I think it sounds good…and I’m pretty sure I just made that up.
Today, when reading the introduction to the 7-day spending challenge on Bankrate.com, I began to think I was reading a story written about me…
“I was trying to go from Monday to Monday,” says Vitale. “I carried a little notebook and would write it down if I stopped for coffee or went to the drugstore. Wednesday night I went to buy gas and I didn’t have enough cash. I had to resort to my credit card to get me through the rest of the week. I was shocked and a little disappointed.”
So, I’m going to subject myself to the 7-day challenge and document it on COD (that’s Climbing Out of Debt by the way).
So – the lapse in paying down my credit cards is due to my impulse Red Sox ticket purchase – but again, seeing “Dice-K” complete the sweep of the Yankees on ESPN Sunday Night Baseball was well worth it…I think.
Oh well. A couple percentage points at a time and soon enough I’ll get there. Slow and steady wins the race and blah, blah, blah… 
Honestly though, it does feel really good each month to see my progress or even areas where I need to work harder/better at. It makes debt reduction tangible and allows me to focus on areas that are important to my overall goal.
