|01-06-2006, 12:23 PM||#1|
I am, in reality, a moose
Join Date: Aug 1999
Location: RTP, NC
financial check up time
Ok, for all of you who have:
IRA's (traditional and roth)
401k's (and their variants)
and any other types of investments...
The turn of the year is not a bad time to sit down and review your investments to make sure that they are performing up to your investment/retirement plan...
(yes, you should have a plan...you know the old adage: those who fail to plan, plan to fail)
it is time to dump all those dogs in your portfolio...anything that is performing under the various index funds, should be candidates for review, possible sale and reinvestment...but all in accordance with your plan.
For those of you who don't have IRA's, 401k's etc etc etc as well as those of you who have any revolving (read that as credit card) debt...NOW is also the time to sit down, do your budget and figure out:
1) how you plan to clear the decks of credit card debt: how much debt do you have? how much more can you send above and beyond the credit card company minimum?
2) how much you can start contributing to your regular savings (non-retirement) plan? (in a perfect world you should have 6 months of living expenses at your finger tips...that's a lot, so start with: 1 month's rent, car payment, car insurance, gas and food...roof, food and getting to work...if you can get there, start working on month 2, then 3, then 4 etc until you reach the 6 month mark)
3) how much do you have to start putting away for your retirement?
Once you have determined what you can comfortably part with each month, you have your plan (woohoo!)...now comes the hard part:
executing on that plan.
You have to be ruthless here: put that money where the plan says it belongs FIRST...you get paid on friday? that check should be written and sent no later than friday night...I can almost guarantee you: if you have that money in your pocket when you go out friday night, you will not have it to send out saturday morning...
If you should stumble and miss doing this...don't dispare and give up...learn from your mistake and pick up right where you left off...missing a (singular) self-payment is not the end of the world...don't let it discourage you...just get right back in the ball game the next week/pay period.
if you are having difficulty determining where money should go, here is a good set of rules of thumb:
- housing (it stinks to be sitting in the rain) - this includes light, heat, water BUT NOT cable TV
- food (gotta eat....this BTW is grocery food, going out to eat food is a luxury item...waaaayyyy down the list)
- transportation (gotta get to work...no work, no money)
now that you have the basics taken care of, you move onto:
- who do you owe money to? who charges you the most for that "pleasure"? Highest interest rate debt gets paid 1st and the most and then you work your way down from there.
- emergency fund (6 months is nice, but settle for 1 month if you have 0, 2 months if you have 1 etc etc).
- retirement fund: any time your employer is going to GIVE you money for investing money TAKE IT...you wouldn't turn down a guy who walks up to you and hands you a $20, would you? same rule applies here..someone gives you free money, smile, take it and RUN. So 401k's are 1st, Roth IRA's are 2nd and regular IRA's are 3rd.
after the above are taken care of, then you can start buying toys and other luxury items...
have a good, prosperous happy new year!
Veritas Principium Libertas
Last edited by mbossman2; 01-06-2006 at 01:25 PM.
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