New Member: Need Advice

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
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Topic Author
Dreamer716
Posts: 2
Joined: Sat Jan 12, 2019 1:29 am

New Member: Need Advice

Post by Dreamer716 » Sat Jan 12, 2019 1:39 am

Hi everyone, was referred to this forum by a member asking on what I should do once my student loan repayments are completed. I'm a 2nd year pharmacist who has devoted the past year aggressively paying off student loans. I should be completed, knock on wood, first week of July of this year. I have not enrolled in a retirement plan or anything. I was wondering what I should once my student loans are paid off. I'm currently single, 26, and live with my parents (not changing anytime lol, sons dont move out of their homes in my culture). I currently make 3300 every paycheck bi-weekly after taxes. I read somewhere I should contribute $192 into a ROTH IRA, $111 into HSA per paycheck, and $711 per month into a 401k plan that my company matches 5%. Is this a sound plan? Whats the benefit of contributing to a HSA?

Blake7
Posts: 132
Joined: Fri Mar 30, 2018 2:52 pm
Location: USA

Re: New Member: Need Advice

Post by Blake7 » Sat Jan 12, 2019 9:47 am

Congrats on almost being debt-free.

Here’s what I would do, considering you have a good income little else to worry about debt/expense wise except your student loan (I presume, as you didn’t mention other debts):

1) While finishing paying off your debt, make sure you have at least a small emergency fund in place, a few $k. Also consider putting $5.5k into a Roth for 2018 (you have until April 15 this year to do it, and you’ll loose that opportunity forever if you don’t). You can put $6k/year for 2019 into a Roth (I’d do that later in the year after the loan is paid off). Either all at once or spread out through the year, it doesn’t matter that much, just take advantage of maxing it out.

2) In July, build your emergency fund up to 6 months of expenses and max out your 401k ($19k/year is the max for 2019). The HSA contribution is pre-tax, and the amount you put in it depends on your situation, but your number sounds reasonable. Hopefully someone else will chime-in on the HSA as I’m not that familier with them.


stan1
Posts: 6288
Joined: Mon Oct 08, 2007 4:35 pm

Re: New Member: Need Advice

Post by stan1 » Sat Jan 12, 2019 9:58 am

It's great to pay off your student loans quickly, but to be honest I'd be maxing out contributions to your Traditional 401K now since that income is not taxable especially if you live in a high income tax state like CA or NY. Also you want to get the matching contributions which it sounds like right now you are not taking advantage of. At least contribute enough to your retirement plan to get the matching contributions.

Flyer24
Posts: 599
Joined: Sun Apr 08, 2018 4:21 pm

Re: New Member: Need Advice

Post by Flyer24 » Sat Jan 12, 2019 10:18 am

stan1 wrote:
Sat Jan 12, 2019 9:58 am
It's great to pay off your student loans quickly, but to be honest I'd be maxing out contributions to your Traditional 401K now since that income is not taxable especially if you live in a high income tax state like CA or NY. Also you want to get the matching contributions which it sounds like right now you are not taking advantage of. At least contribute enough to your retirement plan to get the matching contributions.
I agree to get the 401K match while you are paying down the loan.

retiredjg
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Joined: Thu Jan 10, 2008 12:56 pm

Re: New Member: Need Advice

Post by retiredjg » Sat Jan 12, 2019 10:28 am

Dreamer716 wrote:
Sat Jan 12, 2019 1:39 am
I read somewhere I should contribute $192 into a ROTH IRA, $111 into HSA per paycheck, and $711 per month into a 401k plan that my company matches 5%. Is this a sound plan? Whats the benefit of contributing to a HSA?
While the advice might suit the person it was intended for it may not suit your situation.

For example, you may not be eligible to contribute directly to Roth IRA (you may make too much money). You may not be eligible for an HSA if you don't have a high deductible health plan. $711 per month to a 401k plan is way less than what you should contribute if you can afford it. You can and probably should contribute a full $19k a year.

In general, if you can afford to save this much, you should put $19k into a 401k and $6k into Roth IRA if you can contribute directly or if you are willing to use the "back door" method. In addition, explore HSA and FSA opportunities - that will depend on your health plan options.

Check out the Wiki (link near top center) for specific information about investing priorities, HSA, FSA, etc.

Topic Author
Dreamer716
Posts: 2
Joined: Sat Jan 12, 2019 1:29 am

Re: New Member: Need Advice

Post by Dreamer716 » Sat Jan 12, 2019 10:35 am

Thank you so much for the responses. And yes right now the student loans is the only outstanding debt. The general consensus I get is to completely max out the 401k plan especially since I live in a high income state (NJ).

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ruralavalon
Posts: 14484
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: New Member: Need Advice

Post by ruralavalon » Sat Jan 12, 2019 10:44 am

Welcome to the forum.

Congratulations on being debt free, that's great :) .

Dreamer716 wrote:
Sat Jan 12, 2019 10:35 am
Thank you so much for the responses. And yes right now the student loans is the only outstanding debt. The general consensus I get is to completely max out the 401k plan especially since I live in a high income state (NJ).
That's right.

Please read this wiki article, Prioritizing Investments.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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