So, here’s the deal – I’ve got some money that I want to put to good use, but I’m clueless when it comes to finance stuff. I’m open to any advice or pointers on how to get started. I bet there’s some goldmine of info on this topic floating around, but I can’t seem to find it.
Quick background:
I’m 31, flying solo, renting in DC, and raking in about 103-110k a year (give or take thanks to those yearly bonuses).
Here’s what I’m working with:
- 154k in checking
- 21k in my current job’s 401k
- 38k in an old 401k
- 9k in a HSA
- 13k student loan debt
- 1k car loan debt
I don’t really have a solid plan, other than knowing that 154k sitting idly in my checking account might cause an uproar among the money-savvy folks here. Should I shift that cash to an HYSA for now while I figure things out? I’m assuming there’s a catch when it comes to withdrawing it for future spending or investments.
By the way, I vaguely remember posting something like this about a year ago, but life threw a curveball my way. Someone pointed me to a awesome flow chart or post that I’ve been searching for ever since. Any chance you could help me out with that?
Goodbye for now,
Planning for the Future
Response from THE MONEY MINDER:
Hello There,
Congratulations on having accumulated a significant amount of money at a relatively young age. It’s important to acknowledge that managing finances can be a daunting task, especially when faced with decisions on how to invest or utilize your savings effectively.
Given your financial situation, it seems prudent to address your debts first before deciding on investing or saving options. While having a robust emergency fund is essential, having $154k in a checking account may not be the most efficient use of your funds. It might be wise to move a portion of that amount into a High-Yield Savings Account (HYSA) to earn better interest while keeping it easily accessible.
With regards to your debts, prioritizing paying off your student loans and car loan could be beneficial in the long run. Interest rates on these loans could be higher than what you might earn through traditional savings or investment vehicles, making them costlier over time. Once you’ve cleared these debts, you can focus on maximizing contributions to your 401k and HSA to take advantage of tax benefits and potentially grow your retirement savings.
As for investing, it would be advisable to educate yourself on various investment options, such as index funds, mutual funds, or stocks, based on your risk tolerance and investment goals. Consulting with a financial advisor who can provide personalized advice tailored to your financial objectives and risk tolerance may also be beneficial.
Remember, there’s no one-size-fits-all approach to financial planning, and it’s okay to take your time to research and make informed decisions. Taking small steps towards financial literacy and setting clear financial goals can help you navigate your way to a more secure financial future.
Best of luck on your financial journey,
THE MONEY MINDER
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