How can I save more?

Question

Hi everyone, this is not a real estate question but more of a personal finance question on how I can save more for my future. I am currently working part time, I have a 401k and a savings account. I am in the process of saving as much as I can for my first rental property, I will be living in one unit and renting the other. I'm in my mid 30's and feel like I should be doing more for my retirement but not sure what else I should be doing. Do I need, or would you recommend a Roth IRA? Any other suggestions?

I appreciate everyone's input, thanks!

Steve Vaughan · Answer

I'd first attack any bad debt like credit cards or car loans.  Best risk-free and tax-free return out there. What do you have for bad debt?

After that I would probably do my 401k up to the match, then ROTH IRA if I was a normal w-2 person.

But if I wanted to (and do) invest in RE to radically change my and my familie's future: I'd knock out the bad debt, do the 401 up to the match, then save save save while I learn about RE.

PB&J, drive a functional beater, don't go to coffee shops, malls or convenience stores unless you're working there for your 3rd job @Elsa M.!

Brendon Woirhaye · Answer

@Mark S.' suggest to "track every expense" may be a good exercise.  You may be surprised at some of the things that add up.

If your taxable income is relatively low (likely if you are working part time), it might be better to follow @Steve Vaughan's and Mark's suggestions to get the most company match (if any) from your 401(k), then fund that Roth IRA.  You can take those contributions (but not earnings) out of the Roth in the future, which can give you flexibility, but also that money has no tax liability into the future, which is fantastic for the long term.

Check with your employer if they offer a Roth 401(k) option.  The traditional 401(k) is great later on when you are paying higher tax rates, but Roth is better early on.

As far as investing in the stock market, do that through your 401(k) / Roth accounts.  Don't pay an expensive advisor or manager, put the money in low cost funds to take advantage of national or international economic growth (consider Vanguard index funds or ETFs, or the Fidelity / Schwab / xxx equivalents).

Mark S. · Answer

As others have stated:

1.) Build emergency fund.

2.) 401(k) up to match (Make your controbutions ROTH, if possible in your plan).

3.) Max Roth IRA (contributions, not earnings, can be withdrawn at any time - assuming the investments haven’t plummeted below your starting point - tax and penalty free)

4.) Build more liquid cash in a high yield savings account for REI investment (back out Roth IRA contributions if you must - but I wouldn’t tap the 401(k) loan)

While doing the above:

A.) Read Set for Life.

B.) Track every dollar you spend

C.) Cut out unnecessary expenses

April Vogt · Answer

@Elsa M. It might be difficult to determine a plan of action without having a few more specifics.

Are you maxing out your 401k? Do you have a match?  How many months of living expenses so you have, or hope to have saved up?  The maximum you can personally contribute to your 401k this year is $18,500. Are you already hitting this and hope to save more for retirement? The maximum for a Roth IRA, $5500. If saving more for retirement is one of your goals, keep in mind that you have until April 17th, 2018 to contribute for 2017, meaning that it not too late to start and do a full contribution for last year.

If you're still looking for ways to add to retirement funds, consider using an HSA:

https://www.investopedia.com/articles/personal-fin...

Ryan Cox · Answer

@Elsa M. there are a few financial platforms that could work for you to deliver some financial advice - Learnvest & Wealthfront are two that come to mind but there are a lot of options out there (disclaimer - I do not sue either)

Other things to consider regarding your financial future

1. Assess your current finances

2. Create a budget

3. Set goals

4. Create an emergency plan

Elsa M. · Answer

Thanks everyone, perhaps I didn't explain myself very well. What can I be doing to contribute more to my retirement other then a 401k and savings account?  Would you guys recommend speaking with a financial adviser? I'm hesitant because I feel like they just want to make money off of me. I hear a lot about the S&P index fund,  should I invest in stocks? How would I get started?  I feel like I should have more then just a 401k but not sure what I should be doing. I currently have no debt.

Thanks again!

Logan Allec · Answer

Sometimes the best way to save more money is to make more money...there's only so much you can save by lifestyle changes...

Cody Evans · Answer

What has helped me is getting together all my expenses. I have started saving like $100 a week on food while eating better(Bonus!). I also suggest finding a side hustle. I am putting a few hundred dollars into my real estate license to make money and get experience that way. I can't go back in time and make better decisions but I can massively improve my situation as soon as 2 years from now. For me, higher education is an option gross twice as much salary from my 8-4 job.

A big help is having a competent partner to assist financially. This can be a friend or most likely a good woman.

Best of luck, get disciplined and strong!

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