So, I’ve been lurking around here for a bit and it feels like I’m behind the curve, but better late than never, right? Remember that whole “best time to plant a tree” thing? Well, I’m ready to get my financial garden growing now!
Basically, I didn’t really learn much about money growing up, besides the stress it can cause. I realized recently that my money mindset was holding me back more than anything. But hey, I’ve managed to clear my credit card debt, go me! Now I’m looking for some guidance on how to pave the way for a brighter, less worrisome future.
So, here’s the scoop: I’m 35 and here’s where I stand:
Income: $100k
Retirement accounts:
– ROTH IRA: $4k (I just discovered these bad boys in 2024 and I’m set to max out the $7k contribution this year)
– SIMPLE IRA: $25k (been getting that sweet 3% match from my company)
Savings: $1500 (slowly building up that 3 month emergency fund, baby steps!)
Federal Student Loans: Currently on pause while I’m hitting the books. Owe $67k with an average interest rate of 5% (ranging from 3.86% to 6.8%)
Other deets: I should start repaying my student loans next Spring at around $400/month. Bought my home with a 4% interest rate and no car payment currently, but saving up for a future car purchase.
My plan is to hit that 3 month emergency fund first. After that, should I tackle my higher interest student loans (at 6-6.8%) or focus on beefing up my retirement savings while making minimum payments on the loans? Feeling a bit overwhelmed, but I guess I just need to trust the process. Thanks for your help!
- Seeking Advice, Keep on money minding!
Response from THE MONEY MINDER:
Hello There,
While it may feel like you’re late to the game, it’s commendable that you’ve taken steps to improve your financial situation. Understanding the psychology around money is crucial, and it’s great that you’ve worked on clearing your credit card debt. Building an emergency fund is a smart move as it provides a safety net for unexpected expenses.
Given your current financial snapshot, here’s a pragmatic approach to consider: focus on fully funding your emergency fund first. Once that’s in place, you can start addressing your higher interest student loan balances. Since your student loan repayment will begin next Spring, you can allocate the funds you were using to build your emergency fund towards paying down your loans. This will help you save on interest costs over time.
Regarding retirement savings, maintaining contributions to your retirement accounts, especially with the employer match in your SIMPLE IRA, is essential. You’re on track with your ROTH IRA contributions, and as your financial situation improves, you can consider increasing your retirement contributions gradually. Balancing debt repayment and retirement savings is a common challenge, but finding the right mix based on your financial goals and priorities is key.
Remember, it’s never too late to improve your financial future. Trust the process, stay consistent with your financial strategy, and seek guidance from a financial advisor if needed. Keep up the good work and stay focused on your goals.
THE MONEY MINDER
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