The word on the street…
Posted on June 13, 2006 19 Comments
I recently asked my best girl friends to share their top financial concerns right now. All those asked were in the 26-28 age range, about half are married and all work full-time. Here are their responses:
Savings and Debt
- #1, ALWAYS for me is, should I pay off my credit cards or put that extra money in savings. I’ve heard so much conflicting information on that.
- What is the best avenue for saving money (i.e.what yields the most interest: MMA, annuity, stockmarket, etc.)
- What is the best way to save for a down payment?
- Where does all my money really go anyway? – How much can i afford for an apartment in the city right now?
- Also, is is smart to pull out a home equity line on your house, to pay off other bills. Again, conflicting opinions on that.
- Is structuring a cash-value life insurance policy to serve as a investment vehicle a good strategy? (structured as an investment policy NOT a death benefit policy).
Retirement
- I don’t have a retirement account. (No 401K for the state and, having only actually been working for fewer than two years, I’m just not in a place where I feel like I can start an IRA). I literally think about it every single day and it KILLS me because it is the ONLY area of my life that is that unorganized. I’ve decided that a 401K is going to be a MAJOR factor in my job negotiations.
- How in the heck am I ever going to retire?
Student Loans
- Egads!!! I will be paying them until I’m like 50!!!!
Career
- In switching jobs, finding one that will pay me enough to survive in Chicago and pay my student loans.
>>>>>>>>>>>>>>>>>>>>
Some of these questions are very basic, while others are more advanced, clearly. I’ve already addressed several of these topics because they’re top of mind for me, too! (Be sure to read through some of my previous posts to read up on retirement, savings, spending tips and student loan repayment information.) While I plan to address several of these questions directly in the next few days here, feel free to share your best advice with us in the posted replies! Also, I’m interested to know – what are your top financial concerns right now?
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June 14th, 2006 @ 1:19 am
I’m 26, single, work full-time. My top concerns are that I have very little savings ($3000) with little chance of saving more anytime soon (non-profit job, high rent in NYC). I also don’t have the retirement thing squared away. I know I should put money into my 401k (my employer doesn’t contribute anything, it’s all up to me), but I feel like I can’t part with anything, not even the $20/week I promised I would start putting in in December.
June 14th, 2006 @ 9:21 am
Late 20s, married. Interested in paying off some modest credit card debt and student loans, while at the same time saving for a rainy day and a dream home. Also interested in retirement savings for the immediate tax benefits (both of us have good plans at work). We have a little bit of room to spare at the end of each month (about 10%), but we are weak with impulse purchases and throwing away money on stuff we don’t really need. So we’re interested in changing our spending habits.
June 14th, 2006 @ 12:11 pm
Can’t wait to see how you answer some of these. Many are straight-forward, but others should be quite interesting to respond to.
June 14th, 2006 @ 3:38 pm
For me, it’s making a job change…but I am having a difficult time when my current position consumes so much of my time.
June 14th, 2006 @ 4:16 pm
Early 30′s, married, 2 young (under 4) children. Right now, our major concern is getting out of debt (2 credit cards and a HELOC). I just want to be done with that! Once we get that out of the way then we will concern ourselves with more retirement dollars and college money. I’ve learned over the last 6 months that I most defintely a concentrate on one thing at a time type person when it comes to financial goals.
June 14th, 2006 @ 4:23 pm
I am young (23) and I just bought my first house. I used Down Payment assistance from the state and my only standing debts are car payment and student loans (almost paid off)(credit cards are paid off monthly) I regularly put $ into savings, but I do worry about financing unexpected expenses on the house and making sure not to use that money for non-emergency house expenditures.
June 14th, 2006 @ 5:51 pm
I’m 28, married, hoping to start a family soon. So far this year we have paid off $8K in credit cards and are hoping to have them completely paid off by the end of the year. Once we start our family I will probably not work, so my concern is getting rid of that debt to decrease our monthly outlay, and saving, saving, saving. I’m anticipating a raise next month, and every cent of that will directly into savings.
June 14th, 2006 @ 8:51 pm
I would like to hear your reponse to paying credit cards versus saving. My husband and I are dealing with this question right now. We received a money gift from my in-laws recently and want to know if we should use it to pay down our credit card bills, put it in our money market account (we have several thousand saved), start an IRA (we have no retirement type account), or use it to help pay the downpayment on a home. It isn’t enough to pay for ALL of our credit card debt (which is sizeable), but it would make a very substantial dent.
June 14th, 2006 @ 9:52 pm
Let me start with this question: “Can you really afford NOT to contribute to a 401K account”? I recommend breaking out your paycheck to get your total monthly net income and play around with the numbers for what your 401K contribution would be percentage wise and how it would effect your overall net income…you will be surprised how little a larger contribution will effect your total (thanks to pre-tax). I recently started a new job and finally received my first check that had both insurance deductions and 401K and the amount I was contributing to my 401K was greater than the difference I saw in my check before those two things kicked in. You can always find a way.
June 15th, 2006 @ 10:51 am
Since we’re self-employed, our biggest financial concern is affordable health insurance…it doesn’t exist!
June 15th, 2006 @ 12:46 pm
I’m 25 and don’t have the option for a work-sponsored IRA. I’m a teacher, so I will get a pension (although if I leave my current position I’m not sure what happens). I have a Roth IRA that I need to contribute to again, but I heard I should be adding $6000 a year and the max I think is $3000-$4000. Everything the school puts out is biased so I’m not sure where to get info on what my actual retirement prospects are.
June 15th, 2006 @ 2:24 pm
I just finished reading an excellent book, “Total Money Makeover” by Dave Ramsey. It is a plainly worded book that gives you a place to start, especially if you are really in debt. There are success stories all the way through it, and some of these people were $120K in debt, PLUS a house!!! It is not a quick fix, but it will pay off in the end if you work with it.
June 16th, 2006 @ 12:36 am
I am currently trying to save a buffer so I can start YouNeedABudget and am having a hard time saving my “buffer” instead of paying off my credit card. I guess though this is the only way to break the cycle.
June 16th, 2006 @ 5:36 pm
I’m 25 F Single
I am concerned with being able to save 15% for retirement, save 20% of income and making those 15 year fixed payments. Living on a budget will have to be a way of life.
I’m worried about the falling value of the dollar and the state of our economy, and the fact that big wigs like Warren Buffet predict 8% returns from the stock market rather than what we’ve all been counting on. That means I have to be saving even more and changing my allocations to international companies and big caps.
June 16th, 2006 @ 7:57 pm
28 m m
To answer anonymous… I believe that when you pay credit card debt down you are savings automatically. You are savings the cost of your debt.
My concern is long term, how do you save for retirement while funding daycare and trying to beat PMI.
As soon as my wife and I get a bit a head something slaps us in the face.
June 20th, 2006 @ 6:22 pm
I’m going to address the importance of contributing to your 401(k) at a minimal $20/week rate.
I believe the 401k gets 8% yearly interest rate, at least for this i’m going to assume it does.
If your 26, and assume you will start deducting from your 401k at 60. Assuming you only do 20/week for 34 years you would have accumulated $168,526.95 in your 401k account.
See the bigger picture? Thats only 20 bucks a week and no increase during that 34 year period.
Same setup only assuming you contribute 100/week you would have accumulated $842,634.75.
20 bucks is a good easy start, imagine if your employer matched contributions?
June 20th, 2006 @ 6:24 pm
“What is the best avenue for saving money (i.e.what yields the most interest: MMA, annuity, stockmarket, etc.)”
Etrade is offering a 5.50% CD, which you can’t find anywhere else. its easy avenue for saving extra money for short term.
June 27th, 2006 @ 6:52 am
In my mind one of these questions is pretty well straightforward– you pay off your credit cards before you do ANYTHING else. This is more than just from a financial point of view.
If you pay off your debts first then the next month your lifestyle is “pre-adjusted” to starting an aggressive savings plan.
April 2nd, 2009 @ 9:43 pm
Always pay off your credit card each month. Always put some money into savings and retirement each month — even if you start out at $5…do something. Then challenge yourself to do more in the next 6 months to a year. Putting things off won’t make them better. Seize the day!!