21 hours ago
Saturday, April 17, 2010
Learning Something New
I got my taxes sent in and will have some more money to pay against my debt. I was looking at my retirement funds and discovered 2 things. I've been putting $350 from each paycheck into a retirement fund at work. That's a good thing. But if I'm going to follow Dave Ramsey's plan, I need to stop that until I get all debt except my house paid. That will be more money, each month, to pay my debt off. I was also checking to see if the IRA's I have are allocated the way he recommends. I found $8,000 that was just sitting there!! It was earning some interest but not in any kind of investements. I had to do some research and find some funds to put the money into. That done, I feel less broke LOL. Not money I can use towards full-timing but It will be there later, and It's working for me now!! I was also happy to learn that the job I have doesn't pay into social security. It's kind of a quasi state gov't job and we don't pay into social security. Out money is invested in a retirement plan. One plan was stopped the year after I started my job but It's still there for those of us that got into it. Being the non-money, person that I am, I never changed it. The research I've done indicates that was a good plan LOL. Sometimes we just luck out I guess :0) Since my biggest worries about this life change are financial, it makes me feel better to know that I have been planning for my older age, even without trying much. Working from home today. Time to bring in some more of that cash. Another day closer to being OUT OF HERE!!
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If you can discipline yourself to make extra $350 payments from each paycheck it would be very effective. You don't have to wait until you get a statement to make an extra payment. Just keep the address and account number and put it into a note with the extra payment. Be sure the account number is on your check. I did this in the 90's when we had some balance left on our cards.
It might also be better for you to take the automatic payments off your cards. Consider the interest you are paying. Do you really want to pay that amount of interest on you cable etc. each month?
We use our credit cards for everything! American express if possible, or Master Card if AMEX is not accepted. Last year I got $450 back from AMEX in the form of a COSTCO check. (Used it for regular purchases and got over $300 in cash back) And $250 from Master Card. This while not paying one cent in interest, or annual fees.
We use them, but we pay them 100% every month.
BUT if you think there is a possibility that you will use the money you are not putting in the retirement account to just make your regular payments, think twice about it. Better it be going into the retirement account now that off into thin air. If you would need it, you can withdraw it from a retirement account. You are charged something like a 10% penalty, but that is still less than what your average credit card interest rate is these days.
Just some thoughts.
Be careful about how you investments you make with the money that is there. Ramsey wrote his book during a time when investments were booming. I don't know how much he has updated the information. The market is still pretty volatile. Unless you have a long time till retirement, I think a lower interest rate on a safe investment such as a money market is better than a slightly higher rate on an investment that could crash and loose value. Again just my opinion, but after the first downswing in the market we pulled out and shifted much of our retirement fund to safer places. We have NOT made hardly anything on them for the last two years, but unlike many of our friends we have not lost much either. To me it is a bird in hand is better than two in the bush.
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