Money getting tight...how do you adjust and save money?

[Laylas_Mom]

Money is getting tight for everyone right now. I was looking at my paycheck and I give my 401K at my job $50 a week. Im curious if people think its smarter to keep contributing to 401K since my job matches part or if its time to worry about next month and start putting the extra $50 into a savings account where its immediately available.

I wonder if the govt is just going to take away all Ive saved in my 401k anyways before Im even able to use it.

 

[Gpmo]

I know there is a way to calculate how much you can donate to 501k with out it reducing your take home pay. I think the best is to donate as much as you can.

 

[lil charlie]

I don't have 401K at my job so I split my savings. I put some in my safe as I save for bike parts or family vacations and I put the rest in a savings account. I don't like to play the market, to risky for me.

 

[Rainbow7]

Money is getting tight for everyone right now. I was looking at my paycheck and I give my 401K at my job $50 a week. Im curious if people think its smarter to keep contributing to 401K since my job matches part or if its time to worry about next month and start putting the extra $50 into a savings account where its immediately available.

I wonder if the govt is just going to take away all Ive saved in my 401k anyways before Im even able to use it.

I have been saying for years that putting money into any sort of retirement fund over which you have no investor controls is madness. You are essentially giving your post-tax dollars to someone else, to gamble on the stock market.
A friend of mine was putting $200/week into his superannuation fund. I said, "You idiot. - You could be paying off another house with that money, and I know which will be worth more in both the long and short term!"
He tried to tell me that his super-fund was doing well, etc, etc. Two years later the GFC came around and he lost all of the money that he had stupidly put into a fund that he had no control over. If he had put that amount of money into an investment property he'd have been half way to owning it outright, plus he would have had tenants helping pay the mortgage.

I also know a few older guys who were told by the lying retards who ran our Union (none of whom even graduated from high school) that they should put every spare dollar into superannuation. Those guys lost around $150,000 each, and have had to defer their retirements by 7 or 8 years!

 

[MelodicMetalGod]

401K is all about two things for me: 1) Matching and 2) Planning

Matching: As soon as it was available to me, I signed up and contributed enough to get the full matching amount available from my employer. After 6 years I was fully vested which means that my money was doubled in terms of contributions and all funds became mine. Now, if I wasn't gonna keep a job long enough to become fully vested, I would take another look and plan accordingly.

Planning: 401K's are just like any other tool in the box: They have a purpose and can be used to great advantage but if they're used incorrectly they can make the situation worse. You have to consider employer match, veting schedule, years to retirement, tax deferment benefits, etc. The younger you are and the more time you expect to be able to stay in the plan, the more options you have to make good use of 401K's but with good planning and understanding of the options most folks can find benefits in a decent plan.

Of course, if you have debt and expenses RIGHT NOW that will drive up your monthly expesnses or create more debt if you put money into the 401K, you have to consider if the 401K will provide you with greater income than the debt liabilities that will be created by not having that monthly contribution for current expenditures.

Like most thing, it's all grey, a balancing act and every situation is different and every person has different goals and risk/security thresholds. If you're really uncertain, get educated: If you have a 401K, you should have someone who is the plan administrator - talk to them and enlist their help in understanding your options and maybe even talk to a tax and/or financial planning professional. You want to make the best of the tools available to you and to do that you need to be informed and understand your options in the context of what YOU want to do.

Oh, and in addition to my 401K, I also try to keep at least 3 months take home pay in savings...because you never know.

One more thing: Get debt free before investing in anything. Nothing makes less sense than having money in savings/investments that gain you 3% year when you have debt that costs you 10%/year...that's a 7% year loss on your investment. Get debt free, THEN save/invest.

Best of luck!

 

[Commuta_Busa]

excellent post melodic.

the best advice: "Get debt free before investing in anything. Nothing makes less sense than having money in savings/investments that gain you 3% year when you have debt that costs you 10%/year...that's a 7% year loss on your investment. Get debt free, THEN save/invest."

 

[skydivr]

Melodic is right, getting out of debt is the best money you can save.

I am our company's 401k administrator. I opine:

1. If your company is matching, then you should, if possible, put away enough to max out the match. It's free money your company is giving you and they are giving it to other employees that are matching instead of you.

2. Depends on the company's 401k plan. If their 401k invests in it's own company's stock, stay out of it (or at least don't invest in the individual stock) as that's a conflict of interest for the company. You have to look at the specific funds in the plan, decide how much risk (vs. reward) you are willing to take. Most 401k's limit to about 7-12 funds that spread risk from money market (little reward) to some more risky funds with decent track records).

The real question is: What do you plan to live on when you reach retirement age? Investing in a 401k means you are giving up something NOW (BEFORE TAXES) in order to have something later (at hopefully a lower income tax rate). Putting money in a 401k when you could be paying of credit card debt at 25% or more is bad decision-making, but you have to have the self-disipline to SAVE it rather than it being saved for you by being taken out of your paycheck.

For some GREAT advice, find/listen to Dave Ramsey; he's gotten a lot people out of debt and changed their lives.

 

[Big Bo]

401k, if you need the money you can get your hands on it, at a price.