Looking to start saving

Okay... so I'm 27, wife is 29. We have student loans to pay off, we're hoping to get a house in the next year or so, and hoping to start a family soon.

On top of all that, I've been looking ahead to see what I should do in terms of putting money away for both emergency/rainy day funds, retirement, and education for our kids in the future.

I have... honestly, no idea where to begin. We don't have much disposable income - I can put maybe $25-50 a month into something, so the large CD's and such seem to be out of the question, at least for now.

I was looking at the possibility of opening an IRA, or a 401k - I supposedly have one through my current job, and had one at my previous job as well, though I need to get the information on them.

Any advice on where to begin, good (reliable/impartial) sources of information, et al?

 

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Don't forget you'll need about 20% of the value of the house to put down on it to buy it. Most everything today pays little interest so CD's and savings bonds are out. It is hard to say which type of investment would be best for you because they all have risks.

 

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It isn't true. Not everyone needs 20% down for mortgage. That depends on credit quality. However, if a borrower doesn't have 20% down they will need to purchase mortgage insurance unless they are a veteran. In which case, mortgage insurance isn't required. Further not all risks have risks. Federally insured bank deposits are considered risk fee.

 

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*nods* That's part of the short-term saving I'm hoping to do

 

No not everyone but a vast amount do because they do not have the income to qualify for a home.

 

Yes but they pay very little interest.

 

I suggest you learn as much as you can about your 401K. And if your employer offers to match your contributions, you should take full advantage of it.

Some 401k plans allow you to borrow from them. But you should only borrow from your 401k for special needs as in an emergency or rainy day.

I suggest you commit to saving 10% of your income. You said you could contribute up to $50 per month. Those are after tax dollars. 401k contributions are pretax dollars (Roth excepted). So you can actually afford a larger monthly contribution/saving in your 401k.

You are young so you can and should invest in stocks. You need more risk in your portfolio. But you shouldn't be foolish. You need diversification. No more than 20% of your savings should be in any one investment.

For someone with little business knowledge or interest, I suggest investing in a market ETF like the SPY or a good growth mutual fund. If you invest through a 401k the small dollar investments you are making are generally acceptable.

 

Don't forget that there are stocks that are going to not be around long due to many things that can destroy a company as my investment in Enron will attest to. You can never tell so be very careful.

 

You used to be able to get out of paying for mortgage insurance if your home is valued at 20% more than your mortgage. Even with no money down.

 

Good news... startin at 27 an 29 is young enuff to get all that done... if you stick to a good plan that you begin now... an by now i mean... start putin that $25 to $50 in a savings account to use as an emergency fund an alredy you'r beter off... dont that feel good to know you can afford a car repair... etc... yes.!!!
If you can do beter than 25 to 50... do it... an by the time you get you'r emergency fund built up you will have learned what to invest in... especially if you join this forum:::
https://www.bogleheads.org/

You will be glad you did... an after a short time you will be educated an prepaired to jump on 401k investments like ugly on ape.!!!

 

Diferent ways to go about it:::
At 21 we was broke an got married... an wit a loan we bout a new traler (5 thousand) an put it in a traler park... an a year later we bout a 3/4 acre lot for 2 thousand... an 5 years later we sold it all for 10 thousand an put that down on a house (30 thousand).!!!

 

Nice success story

 

Luckily i had parents who were much like the "Leave It To Beaver" parents --- minus the education... nice house an middle class income... who passed on to me good health... a very high iq... the notion of keepin a job... not livin beyond you'r means an payin bills on time... an luckily... the girl i married over 40 years ago had simular values... so the way i see it... if you dont count the "luck"... ie... everthang (which is all thangs) which was beyond my control that made me what i am... why... im a self-made successful man

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How about you... whats you'r story.???

PS:::
Welcome to Sciforums.!!!

 

Aside from a rainy day fund and taking advantage of your company's 401k matching, paying-down your debt should be the first priority as an "investment". Anything you gain by investing elsewhere will be lost via the interest you didn't avoid on your student loans.

 

Thing is, my student loans are on an income based repayment program already - looking at them, there is a snowballs chance in hell they will be paid before they hit the cutoff date for forgiveness

 

So continue to build you'r emergency fund while takin full advantage of you'r 401k... then pay off the student loans as soom as possible... then you'r on level ground to continue on wit you'r dreams... eh.???

 

Kitt should take a look at his lifestyle. A more frugal life style might provide Kitt with more money to save. The key is consistency.

 

If you can earn more interest (after tax) in your savings than you incur on your debts then don't pay off your debts until you have to.
Also, before you make any decisions, decide not just what you want to achieve financially but when you want to achieve it, and then plan accordingly.
It is one thing to plan solely for retirement in another 40 years, but quite another to also want to have lump sums crystallising every 5 years for significant vacations with the partner, without significantly impacting the retirement plan.

And speak to an adviser - one you trust or is recommended by a friend you trust - as they can be invaluable, even when you're just starting out on the financial-planning road.

One thing, though, is to have a reasonably grounded and sensible idea of where your career may lead in terms of earnings.
If you think you're always going to be in the lower end of the pay scale then saving small and early is good.
If you're fortunate and think your salary will quickly rise then, to be honest, saving $25-50 a month isn't going to do too much in the long-term, and for the few years you're on relatively low income may you may get more benefit from a better immediate lifestyle... better to have a good meal once a month than be miserable while you save.

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Not sure how much more frugal we can get, to be honest... only things at this point we could cut out would be our cell phones and cable/internet, but I need both since I'm essentially on call 24/7 for work and need to be both accessible and be able to remote in to assist. Could possibly stop eating I guess...

 

I've always seen the economic imperative as a slave master. When I had income from jobs I always lived on less than 1/2 my earnings, so that for every day-month-year of slavery to the economic imperative, I would have a day-month-year of freedom. (don't get me wrong, I have always loved to work, I just hate to have to.)

Buying a home at the current low mortgage rates should beat renting within a couple years---IF You ain't gotta move for your job.