Can I start Investing if I still have Student Loans and Medical Debt.
Can I start Investing if I still have Student Loans and Medical Debt.
Ive been reading and researching as much as I can and I'm still left with questions as to if its too late for me to invest at my age or when is a good time to actually start investing.
Im contemplating borrowing money from my 401k to pay off credit card debts, and then on then on the other hand im thinking i should just pay them off in chunks and as quickly as i can.
Im 35 and made 76,000 this year and i feel like its to late and honestly starting this whole thing is a little intimidating. I have couple thousand saved up which is for a rainy day in a high interest savings.
Maybe I need this explained to me like im 5. Finances and money has always been intimidating and it isn't until these past 5 years ive been saving and trying to do something for me future.
Should i pay off the credit cards and some medical bills first before i worry investing?
I recently made a budget as well.
Im contemplating borrowing money from my 401k to pay off credit card debts, and then on then on the other hand im thinking i should just pay them off in chunks and as quickly as i can.
Im 35 and made 76,000 this year and i feel like its to late and honestly starting this whole thing is a little intimidating. I have couple thousand saved up which is for a rainy day in a high interest savings.
Maybe I need this explained to me like im 5. Finances and money has always been intimidating and it isn't until these past 5 years ive been saving and trying to do something for me future.
Should i pay off the credit cards and some medical bills first before i worry investing?
I recently made a budget as well.
Re: Can I start Investing if I still have Student Loans and Medical Debt.
In personal finance, it’s never too late. This finance prioritization flowchart might be helpful:
https://imgur.com/personal-income-spend ... es-lSoUQr2
From
https://www.reddit.com/r/personalfinanc ... _flowchart
https://imgur.com/personal-income-spend ... es-lSoUQr2
From
https://www.reddit.com/r/personalfinanc ... _flowchart
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Re: Can I start Investing if I still have Student Loans and Medical Debt.
It's never too late to start.
Dave Ramsey is good for "getting out of debt" motivation.
If you post some info on your debt amounts and their interest rates as well as your budget you can get some advice here.
What are your options for HSA or 401k and do you get any matching money from employer?
For tax related purposes, are you single, married or have any dependents?
Dave Ramsey is good for "getting out of debt" motivation.
If you post some info on your debt amounts and their interest rates as well as your budget you can get some advice here.
What are your options for HSA or 401k and do you get any matching money from employer?
For tax related purposes, are you single, married or have any dependents?
Re: Can I start Investing if I still have Student Loans and Medical Debt.
Search for “The Money Guy Show” on YouTube. They offer a more serviceable sporadic to debt and getting started with investments than Dave Ramsey does. Of particular interest to you would be their “financial order of operations” which details the proper order to attack your problems.
Also, the “Getting Started” series of videos in the Bogleheads wiki is a great place to start.
Also, the “Getting Started” series of videos in the Bogleheads wiki is a great place to start.
Advice = noun |
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"Remember, there's always money in the banana stand." - George Bluth, Sr.
Re: Can I start Investing if I still have Student Loans and Medical Debt.
First off, you're definitely not too late to start investing.
Pay down high-interest debt first, since it’s costing you the most.
If you can, consolidate debt or find a way to lower the interest on it.
Once that’s under control, start investing even small amounts to begin building wealth for the future.
Keep up with your budget and make sure you're saving for both emergencies and retirement.
Pay down high-interest debt first, since it’s costing you the most.
If you can, consolidate debt or find a way to lower the interest on it.
Once that’s under control, start investing even small amounts to begin building wealth for the future.
Keep up with your budget and make sure you're saving for both emergencies and retirement.
Re: Can I start Investing if I still have Student Loans and Medical Debt.
Have you thought about transferring those balances to other cards with low interest offers?adhm357 wrote: Sun Jan 26, 2025 3:00 pm Ive been reading and researching as much as I can and I'm still left with questions as to if its too late for me to invest at my age or when is a good time to actually start investing.
Im contemplating borrowing money from my 401k to pay off credit card debts, and then on then on the other hand im thinking i should just pay them off in chunks and as quickly as i can.
Im 35 and made 76,000 this year and i feel like its to late and honestly starting this whole thing is a little intimidating. I have couple thousand saved up which is for a rainy day in a high interest savings.
Maybe I need this explained to me like im 5. Finances and money has always been intimidating and it isn't until these past 5 years ive been saving and trying to do something for me future.
Should i pay off the credit cards and some medical bills first before i worry investing?
I recently made a budget as well.
I’m not a fan for borrowing from a 401k unless it’s to purchase a home (which is an investment in itself) or an emergency.
The problem, if you have not first dealt with the psychology behind the debit, you could be back in the same situation with a loan on your 401k & high credit card debit.
Transferring balances to lower interest and closing the old ones is preferable.
Another thing, say you get into a real bind and become unemployed unable to pay your credit cards. If you default on them or declare bankruptcy, your credit tanks for a number of years but that’s not necessarily a bad thing. Even people with poor credit are able to buy cars and take mortgages and after 5 or more years, you would start to recover.
If you have the same situation, it could become messy with a 401 loan. Credit card creditors can’t go after your 401k if your default, and you don’t derail your future retirement. You only wreck your credit and that you can fix.
I don’t know how much you have in your 401k but let’s take a look at one with 50k. You are 35, let’s assume you will retire at 65. I highly recommend that you continue the minimal to get the max contribution from your employer. So let’s say you put 5% they match 4% for 9%. Now, for illustration purposes, I will use an old fund with a moderate allocation called Wellington. It’s 2/3 stock 1/3 bonds. I’m using this fund because it has history back to 1929 and easy to benchmark.
You will invest based on your tolerance for risk and could easily be more aggressive with much better results.
Anyway…
Let’s take the 50k and see what compounding it does with your contributions over 30 years. For this, lets pretend you never make more than 75k a year. Yours 5% + 4% from your employer amounts to $562 per month.
https://www.portfoliovisualizer.com/mon ... ax2ya2S1dv
At 65, you would have on average $1,412,000 in todays money! <- That is a very conservative amount and most likely you will easily do much better.
Now, hopefully, eventually, you will earn more money….
So, no, it’s not hopeless! Figure out a way to keep your max employer match, set it, forget it, pretend it’s not even there, just another tax and don’t borrow from your 401k.
Lots of people don’t realize that every dollar you invest in a 401k, also slightly lowers your federal AGI! Lower AGI = lower tax.
One other suggestion, if you been working for your employer for a few years, especially if you started before COVID, Fish around, make sure you are getting paid what you are worth. In my industry before retirement, I was an IT Director. Before COVID, I could get a decent help desk guy out of school for 35-40k to start entry level. I recently spoke to my old boss who runs 32 IT departments. He tells me that he can’t even hire a good entry level help desk candidate for less than 55-60k. They demand more and go somewhere else when you offer them less.
Earning more is an easy way to pay that debit down fast! Make sure you are earning what todays job market will pay.
Good luck,
John
Last edited by itnetpro on Sun Jan 26, 2025 5:50 pm, edited 6 times in total.
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Re: Can I start Investing if I still have Student Loans and Medical Debt.
If your job offers a 401(k) (or similar retirement account) that matches your contributions, make it a priority to contribute enough to get the match.
That’s what we call “free money” on this forum.
If yoy are willing to post specifics about your living expenses and debt amounts (including interest rates), you’ll get good advice here about budgeting.
You have many years to work and save. You’ll be OK once you have a plan.
Good luck.
That’s what we call “free money” on this forum.
If yoy are willing to post specifics about your living expenses and debt amounts (including interest rates), you’ll get good advice here about budgeting.
You have many years to work and save. You’ll be OK once you have a plan.
Good luck.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Re: Can I start Investing if I still have Student Loans and Medical Debt.
The more I listen to the Money Guy Show, the more I like it. These guys know what they are doing, and Financial Order of Operations can provide the answers to help in your decision on where to put the next dollar.KingRiggs wrote: Sun Jan 26, 2025 4:09 pm Search for “The Money Guy Show” on YouTube. They offer a more serviceable sporadic to debt and getting started with investments than Dave Ramsey does. Of particular interest to you would be their “financial order of operations” which details the proper order to attack your problems.
Also, the “Getting Started” series of videos in the Bogleheads wiki is a great place to start.
Re: Can I start Investing if I still have Student Loans and Medical Debt.
Forget about investment until that debt is paid. That will be the best investment you could make. You can do it.
Re: Can I start Investing if I still have Student Loans and Medical Debt.
You do want enough in checking/savings so you aren't bouncing checks, but otherwise what interest rate are you earning in "high interest savings" vs. what interest rates are you paying on your debts and (roughly) how much do you owe at the different interest rates?adhm357 wrote: Sun Jan 26, 2025 3:00 pmI have couple thousand saved up which is for a rainy day in a high interest savings.
See Investment Order. Where are you in that list, and how do those suggestions look to you?
Starting to Plan. Advice and suggestions.
[Thread merged into here --admin LadyGeek]
I had posted the other day about how I'd like to start investing for the future but was not sure how to and some you guys responded with some suggestions and advice. Someone said to post some numbers (ie: budget and debts)
So checked out the flow chart that was sent and I'm working on a plan and I need a bit of guidance. (Won't be the last time.)
0. First thing in the flow chart is to set up a budget.
I started one on google sheets this month and have been keeping up with it all month. My budget as of right now is $3,960 after taxes and 401k contribution. I had 4% going into 401k and 3% going into Roth401k that is set up through my employers ADP. About a week ago i opted to only put into my 401k. So right now with every paycheck I have 7% of my earning going into my 401k. My employer matches, not sure what percentage and once a year I get a profit sharing deposit. I'm hoping in the next month or two I can have a all the kinks ironed out regarding my budget. Just right now I can see somethings I can cut out. I have a bout $15,000 in the 401k at the moment. I haven't set up realistic goals. What would be examples of a goal? Something like, I'd like to have x amount of money when i retire, or x amount of money for a down payment. I'm a little unclear on this.
1.Setting up emergency fund.
I use Ally banking for the savings account. It offers a 4.7% interest rate. I have a little over $5,000. With splitting rent and utilities with my partner, with what I have in there is 6 months rent and utilities.
That is pretty much all the liquid funds I have. I also have about $3,000 invested in crypto which I put in on one coin hoping to 2x or 3x my initial investment. I understand its a gamble. I'm hoping that that money will help my pay off some of the credit card debts and recently purchased an engagement ring which set me back a little. So a house and family is in the future hopefully.
2.Contribute to employer-sponsored funds.
I contribute 7% to my employer funded 401k, with once a year profit sharing. They match but I'm unsure what percentage. I need to find out. I had 4% going into 401k and 3% going into Roth401k that is set up through my employers ADP. About a week ago i opted to only put into my 401k. So right now with every paycheck I have 7% of my earning going into my 401k.
3.Paying off debts.
I have three credit cards. 1 that's $75 away from being totally paid off (Discover). 1 that I still owe $5,236 on it. With an APR of 31.24% (Capitol One). 1 that I owe $2,614 (Ally) with no interest rate if paid off within the year.
What I did is I took out the Ally credit card and did a balance transfer of the Discover and Capitol one card to it. Not fully on the capitol on. I'm on track to pay that off within the year. I made messed up and started using the Capitol One card again which racked up the credit on that which I'm slowly paying off as well. A big chunk of my budget is trying to pay these down. Hoping the bonus I get from work and hopefully some crypto earnings will help with this, but in the mean time I'm allocating my earnings from work to pay these down.
I have a dentist bill which automatically come out of my account once a week of $30. I believe I have about $6000 left on that.
Student loans of around $25,000 which I haven't paid any of since I graduated from the tech school I went to. Over $10,000 of interest on that loan.
For the sake of full transparency I don't want to pay that nor do I know id be able to pay that off and still be able to save for a house, for the future. I need health insurance which Ive been looking into. It all seems very over whelming at the moment.
Also paying $500 a month for a car note and $188 in insurance.
I'm not sure where I am in the in the flow chart because it seems like in trying to do 0-3 all once.
I am willing to share my budget spreadsheet I made or any other info that you guys think would help.
I will keep reading and looking into all the links that were shared and educate myself more.
Any advice would be greatly appreciated.
Thank you.
I had posted the other day about how I'd like to start investing for the future but was not sure how to and some you guys responded with some suggestions and advice. Someone said to post some numbers (ie: budget and debts)
So checked out the flow chart that was sent and I'm working on a plan and I need a bit of guidance. (Won't be the last time.)
0. First thing in the flow chart is to set up a budget.
I started one on google sheets this month and have been keeping up with it all month. My budget as of right now is $3,960 after taxes and 401k contribution. I had 4% going into 401k and 3% going into Roth401k that is set up through my employers ADP. About a week ago i opted to only put into my 401k. So right now with every paycheck I have 7% of my earning going into my 401k. My employer matches, not sure what percentage and once a year I get a profit sharing deposit. I'm hoping in the next month or two I can have a all the kinks ironed out regarding my budget. Just right now I can see somethings I can cut out. I have a bout $15,000 in the 401k at the moment. I haven't set up realistic goals. What would be examples of a goal? Something like, I'd like to have x amount of money when i retire, or x amount of money for a down payment. I'm a little unclear on this.
1.Setting up emergency fund.
I use Ally banking for the savings account. It offers a 4.7% interest rate. I have a little over $5,000. With splitting rent and utilities with my partner, with what I have in there is 6 months rent and utilities.
That is pretty much all the liquid funds I have. I also have about $3,000 invested in crypto which I put in on one coin hoping to 2x or 3x my initial investment. I understand its a gamble. I'm hoping that that money will help my pay off some of the credit card debts and recently purchased an engagement ring which set me back a little. So a house and family is in the future hopefully.
2.Contribute to employer-sponsored funds.
I contribute 7% to my employer funded 401k, with once a year profit sharing. They match but I'm unsure what percentage. I need to find out. I had 4% going into 401k and 3% going into Roth401k that is set up through my employers ADP. About a week ago i opted to only put into my 401k. So right now with every paycheck I have 7% of my earning going into my 401k.
3.Paying off debts.
I have three credit cards. 1 that's $75 away from being totally paid off (Discover). 1 that I still owe $5,236 on it. With an APR of 31.24% (Capitol One). 1 that I owe $2,614 (Ally) with no interest rate if paid off within the year.
What I did is I took out the Ally credit card and did a balance transfer of the Discover and Capitol one card to it. Not fully on the capitol on. I'm on track to pay that off within the year. I made messed up and started using the Capitol One card again which racked up the credit on that which I'm slowly paying off as well. A big chunk of my budget is trying to pay these down. Hoping the bonus I get from work and hopefully some crypto earnings will help with this, but in the mean time I'm allocating my earnings from work to pay these down.
I have a dentist bill which automatically come out of my account once a week of $30. I believe I have about $6000 left on that.
Student loans of around $25,000 which I haven't paid any of since I graduated from the tech school I went to. Over $10,000 of interest on that loan.
For the sake of full transparency I don't want to pay that nor do I know id be able to pay that off and still be able to save for a house, for the future. I need health insurance which Ive been looking into. It all seems very over whelming at the moment.
Also paying $500 a month for a car note and $188 in insurance.
I'm not sure where I am in the in the flow chart because it seems like in trying to do 0-3 all once.
I am willing to share my budget spreadsheet I made or any other info that you guys think would help.
I will keep reading and looking into all the links that were shared and educate myself more.
Any advice would be greatly appreciated.
Thank you.
Re: Can I start Investing if I still have Student Loans and Medical Debt.
Its a 4.7% interest rate on the savings account. In the list I'm around 0-3. Idk how to link it but it pretty much explains my situation.FiveK wrote: Mon Jan 27, 2025 1:03 amYou do want enough in checking/savings so you aren't bouncing checks, but otherwise what interest rate are you earning in "high interest savings" vs. what interest rates are you paying on your debts and (roughly) how much do you owe at the different interest rates?adhm357 wrote: Sun Jan 26, 2025 3:00 pmI have couple thousand saved up which is for a rainy day in a high interest savings.
See Investment Order. Where are you in that list, and how do those suggestions look to you?
Thank you for the link.
Re: Can I start Investing if I still have Student Loans and Medical Debt.
Thank you for the response. I make a good amount of money for the field I'm in. Everywhere else Ive looked on indeed is much less then what I'm making now. Plus profit sharing and contributions to the 401k. For now I'm gonna stick here. The next step would be top start my own business but that a whole other thing. I decided not to take any money out of the 401k. I did make a post about my situation to hopefully get more guidance on how to proceed. I'm not sure how to link it.itnetpro wrote: Sun Jan 26, 2025 5:01 pmHave you thought about transferring those balances to other cards with low interest offers?adhm357 wrote: Sun Jan 26, 2025 3:00 pm Ive been reading and researching as much as I can and I'm still left with questions as to if its too late for me to invest at my age or when is a good time to actually start investing.
Im contemplating borrowing money from my 401k to pay off credit card debts, and then on then on the other hand im thinking i should just pay them off in chunks and as quickly as i can.
Im 35 and made 76,000 this year and i feel like its to late and honestly starting this whole thing is a little intimidating. I have couple thousand saved up which is for a rainy day in a high interest savings.
Maybe I need this explained to me like im 5. Finances and money has always been intimidating and it isn't until these past 5 years ive been saving and trying to do something for me future.
Should i pay off the credit cards and some medical bills first before i worry investing?
I recently made a budget as well.
I’m not a fan for borrowing from a 401k unless it’s to purchase a home (which is an investment in itself) or an emergency.
The problem, if you have not first dealt with the psychology behind the debit, you could be back in the same situation with a loan on your 401k & high credit card debit.
Transferring balances to lower interest and closing the old ones is preferable.
Another thing, say you get into a real bind and become unemployed unable to pay your credit cards. If you default on them or declare bankruptcy, your credit tanks for a number of years but that’s not necessarily a bad thing. Even people with poor credit are able to buy cars and take mortgages and after 5 or more years, you would start to recover.
If you have the same situation, it could become messy with a 401 loan. Credit card creditors can’t go after your 401k if your default, and you don’t derail your future retirement. You only wreck your credit and that you can fix.
I don’t know how much you have in your 401k but let’s take a look at one with 50k. You are 35, let’s assume you will retire at 65. I highly recommend that you continue the minimal to get the max contribution from your employer. So let’s say you put 5% they match 4% for 9%. Now, for illustration purposes, I will use an old fund with a moderate allocation called Wellington. It’s 2/3 stock 1/3 bonds. I’m using this fund because it has history back to 1929 and easy to benchmark.
You will invest based on your tolerance for risk and could easily be more aggressive with much better results.
Anyway…
Let’s take the 50k and see what compounding it does with your contributions over 30 years. For this, lets pretend you never make more than 75k a year. Yours 5% + 4% from your employer amounts to $562 per month.
https://www.portfoliovisualizer.com/mon ... ax2ya2S1dv
At 65, you would have on average $1,412,000 in todays money! <- That is a very conservative amount and most likely you will easily do much better.
Now, hopefully, eventually, you will earn more money….
So, no, it’s not hopeless! Figure out a way to keep your max employer match, set it, forget it, pretend it’s not even there, just another tax and don’t borrow from your 401k.
Lots of people don’t realize that every dollar you invest in a 401k, also slightly lowers your federal AGI! Lower AGI = lower tax.
One other suggestion, if you been working for your employer for a few years, especially if you started before COVID, Fish around, make sure you are getting paid what you are worth. In my industry before retirement, I was an IT Director. Before COVID, I could get a decent help desk guy out of school for 35-40k to start entry level. I recently spoke to my old boss who runs 32 IT departments. He tells me that he can’t even hire a good entry level help desk candidate for less than 55-60k. They demand more and go somewhere else when you offer them less.
Earning more is an easy way to pay that debit down fast! Make sure you are earning what todays job market will pay.
Good luck,
John
Re: Starting to Plan. Advice and suggestions.
You have a lot going on but a few things stood out to me.
1) You have several comments like "not sure", "I don't know", etc you should spend some time finding out the details.
2) Getting the 401k match is very important but once you find out just how much of a match you get I would reduce your 401k contributions to be just enough to get the match and use any cash which is freed up to pay down debt.
3) You need to get health insurance. It seems odd that you would work at a company which has a 401k but no health insurance. Even something like a car accident and a trip to an emergency room could leave you with lots of debt.
4) Ignoring the student loans will not make them good away, you need to find out all the details about those including the interest rates.
5) Finding some sort of side income or part time job, working overtime, or finding a higher paying job is likely necessary so figure out what sort of things you can do.
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Re: Starting to Plan. Advice and suggestions.
Continue planning your budget and other priorities, reduce spending in any way possible while paying off the credit card debt. That should give you some time and space to figure out some of the other stuff. I would sell the crypto to pay down the credit card debt as well as pulling enough more cash from savings to pay of the Cap One card. Pay off the remainder of the credit card debt before the 0% deadline. You also need a plan for health insurance, the car payment and insurance costs and the student loans. Eliminating credit card debt is the short term goal. Then you need medium goals and longer term goals for managing debt, investment and houses etc.
Re: Can I start Investing if I still have Student Loans and Medical Debt.
adhm357 - In order to provide appropriate advice, it's best to keep all the information in one spot. I merged your update back into the original thread. If you have any questions, ask them here.
(Thanks to the member who reported the post and provided a link to this thread.)
(Thanks to the member who reported the post and provided a link to this thread.)
-
- Posts: 13048
- Joined: Thu Dec 27, 2018 2:06 pm
Re: Can I start Investing if I still have Student Loans and Medical Debt.
Welcome to the forum.
It’s never too late to start investing. But you have to be willing to do the hard work to clean up your financial situation first. It is fixable. Your debt is standing in the way right now of living low stress, buying a house, supporting the extra cost of a future family.
Is your partner aware of your financial situation? Is your partner in a similar financial position (low savings, debt)?
What led to your debt? Do you think you can control overspending on credit cards in the future?
Is this a complete summary of your debt?
- $25000 student loans (paying $0) - what is the interest rate? Are you not paying because the loans are in forbearance or because are you in default?
- $6000 dentist (paying $130/mo) - paid off in 4 years
- $75 CC1
- $5236 CC2 31.24%
- $2614 CC3 0% if paid off in 2025
- $500/mo car loan - when does the loan end?
Is this a complete picture of your assets?
- $15k 401k
- $5k EF
- $3k crypto
Consider the following:
1) no more credit card usage
2) get healthcare coverage. what is the $188/mo you are paying in insurance? This is important to obtain. Does your employer offer a good plan? Have you looked into plans on the ACA marketplace, if eligible? In the future, you should also have disability coverage and, with a spouse/family, you need life insurance.
3) get a 2nd job asap to generate income that 100% goes toward paying off your debt.
4) you need a realistic budget and to stick to it. Cut unnecessary spending.
- Move to a lower rent apartment or move in with family.
- You don’t need to eat out, travel, go to a bar or buy new clothes for the next year while you pay down debt.
- Is there an opportunity to sell the car for a lower cost car? Do you need a car?
5) Your financial net worth is negative. You can’t invest or company match your way out of the debt. Sell the crypto $3k and stop the 401k contributions $5k to pay off CC1 & CC3 and pay down most of CC2. Use the $ from jobs 1 & 2 to pay down CC2.
6) for now, continue paying on the dental debt and car loan (unless you can sell/exchange). If you can stick out a 2nd job for awhile, pay off the dental debt quicker than 4 years. Without more info it’s hard to have a plan for the student debt but don’t ignore it.
7) before you start investing, build up your emergency fund.
Best wishes. I am rooting for you! Keep posting here if you have questions.
It’s never too late to start investing. But you have to be willing to do the hard work to clean up your financial situation first. It is fixable. Your debt is standing in the way right now of living low stress, buying a house, supporting the extra cost of a future family.
Is your partner aware of your financial situation? Is your partner in a similar financial position (low savings, debt)?
What led to your debt? Do you think you can control overspending on credit cards in the future?
Is this a complete summary of your debt?
- $25000 student loans (paying $0) - what is the interest rate? Are you not paying because the loans are in forbearance or because are you in default?
- $6000 dentist (paying $130/mo) - paid off in 4 years
- $75 CC1
- $5236 CC2 31.24%
- $2614 CC3 0% if paid off in 2025
- $500/mo car loan - when does the loan end?
Is this a complete picture of your assets?
- $15k 401k
- $5k EF
- $3k crypto
Consider the following:
1) no more credit card usage
2) get healthcare coverage. what is the $188/mo you are paying in insurance? This is important to obtain. Does your employer offer a good plan? Have you looked into plans on the ACA marketplace, if eligible? In the future, you should also have disability coverage and, with a spouse/family, you need life insurance.
3) get a 2nd job asap to generate income that 100% goes toward paying off your debt.
4) you need a realistic budget and to stick to it. Cut unnecessary spending.
- Move to a lower rent apartment or move in with family.
- You don’t need to eat out, travel, go to a bar or buy new clothes for the next year while you pay down debt.
- Is there an opportunity to sell the car for a lower cost car? Do you need a car?
5) Your financial net worth is negative. You can’t invest or company match your way out of the debt. Sell the crypto $3k and stop the 401k contributions $5k to pay off CC1 & CC3 and pay down most of CC2. Use the $ from jobs 1 & 2 to pay down CC2.
6) for now, continue paying on the dental debt and car loan (unless you can sell/exchange). If you can stick out a 2nd job for awhile, pay off the dental debt quicker than 4 years. Without more info it’s hard to have a plan for the student debt but don’t ignore it.
7) before you start investing, build up your emergency fund.
Best wishes. I am rooting for you! Keep posting here if you have questions.
Re: Can I start Investing if I still have Student Loans and Medical Debt.
Reasonable advice except the part about stopping contributions. I would lower them to the minimum you need to keep the full company match. Those contributions are not taxed. Not only will you loose money by not taking the employer match, you are also adjusting your AGI up diminishing a potential larger tax refund.HomeStretch wrote: Tue Jan 28, 2025 7:46 am Welcome to the forum.
It’s never too late to start investing. But you have to be willing to do the hard work to clean up your financial situation first. It is fixable. Your debt is standing in the way right now of living low stress, buying a house, supporting the extra cost of a future family.
Is your partner aware of your financial situation? Is your partner in a similar financial position (low savings, debt)?
What led to your debt? Do you think you can control overspending on credit cards in the future?
Is this a complete summary of your debt?
- $25000 student loans (paying $0) - what is the interest rate? Are you not paying because the loans are in forbearance or because are you in default?
- $6000 dentist (paying $130/mo) - paid off in 4 years
- $75 CC1
- $5236 CC2 31.24%
- $2614 CC3 0% if paid off in 2025
- $500/mo car loan - when does the loan end?
Is this a complete picture of your assets?
- $15k 401k
- $5k EF
- $3k crypto
Consider the following:
1) no more credit card usage
2) get healthcare coverage. what is the $188/mo you are paying in insurance? This is important to obtain. Does your employer offer a good plan? Have you looked into plans on the ACA marketplace, if eligible? In the future, you should also have disability coverage and, with a spouse/family, you need life insurance.
3) get a 2nd job asap to generate income that 100% goes toward paying off your debt.
4) you need a realistic budget and to stick to it. Cut unnecessary spending.
- Move to a lower rent apartment or move in with family.
- You don’t need to eat out, travel, go to a bar or buy new clothes for the next year while you pay down debt.
- Is there an opportunity to sell the car for a lower cost car? Do you need a car?
5) Your financial net worth is negative. You can’t invest or company match your way out of the debt. Sell the crypto $3k and stop the 401k contributions $5k to pay off CC1 & CC3 and pay down most of CC2. Use the $ from jobs 1 & 2 to pay down CC2.
6) for now, continue paying on the dental debt and car loan (unless you can sell/exchange). If you can stick out a 2nd job for awhile, pay off the dental debt quicker than 4 years. Without more info it’s hard to have a plan for the student debt but don’t ignore it.
7) before you start investing, build up your emergency fund.
Best wishes. I am rooting for you! Keep posting here if you have questions.
The government pretty much pays you to save.
We spent many years with excessive debit loads but never stopped our matches. It retired me at 52 with 57Xs our highest grossing income year.
Especially when you are first starting out and your money is not able to work for you. Eventually, when that investment starts to increase, your investments will take on a life of their own and your contributions will become insignificant in comparison to the gains they will return.
That first 100k is the hardest hump to get over and you still have a long way to go.
If we had stopped contributions and instead paid debts off, most likely we would have just created more debt and there is no way we would have been retired today with what we have. It took a while but we were able to manage the debit into lower interest debt and eventually pay it off.
Manage the debit into lower, seek ways to lower the interest. When times were rough, we just kept moving it to new balance transfer offers that charged you a fee (essentially interest) to carry it interest free for 12-18 months.
It’s the interest on the one that’s really killing you and the compounding on the student loans….
Look, I don’t walk in your shoes so I don’t pretend to understand why you have this debit. What I will tell you, as our nest egg was growing, the times I felt the most hopeless that we would ever pay it down. All I had to do was log into my 401k and realize that no matter what happens, I was well on my way to financial independence because I kept contributing to my future.
Celebrate every milestone, every 1k you pay off and every 10k your investments grow. Before you know it, you will be in a position to retire on your terms.
If anything, it may take longer to pay that debt off, but when you see how much you have invested, especially as you pass the milestones, it will offer you encouragement and hope. That goes a long way towards not creating new debt.
John
Last edited by itnetpro on Tue Jan 28, 2025 9:34 am, edited 2 times in total.
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Re: Can I start Investing if I still have Student Loans and Medical Debt.
OP, imo you need to get debt free asap which is why I recommended stopping your 401k contributions and forgoing the match. Others feel you should continue contributing as the match is free money.
Here is an alternative - your employer makes a lump sum match once a year. Check your 401k plan provisions but possibly it doesn’t matter when you make the 401k contribution during the year. If that is true, stop the contributions for the first part of the year to pay down the debt including the 31% CC. If you get a bonus/2nd job/cut expenses enough, you have the option later in the year to start up contributions again and receive some/all the match.
Here is an alternative - your employer makes a lump sum match once a year. Check your 401k plan provisions but possibly it doesn’t matter when you make the 401k contribution during the year. If that is true, stop the contributions for the first part of the year to pay down the debt including the 31% CC. If you get a bonus/2nd job/cut expenses enough, you have the option later in the year to start up contributions again and receive some/all the match.
Re: Can I start Investing if I still have Student Loans and Medical Debt.
Hang in there. I know it looks intimidating but with a plan and some discipline you can right the ship. Can you roll the the high interest CC2 balance into the CC3? It would save you some interest. Do you have medical insurance? One trip to the ER could be disastrous without insurance. I echo getting some sort of 2nd job to increase your income.
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Re: Can I start Investing if I still have Student Loans and Medical Debt.
The suggestions offered by Homstreatch are good ideas. No more credit card usage. Pay off the "$75 CC1". Sell the $3k crypto and use to pay off part of the "$5236 CC2 31.24%". Get a second job.
I think it's probably a bad idea to borrow from your 401k. But it depends on your specific facts. Wiki article, Prioritizing investments,.
What funds do you currently use in your 401k account. What funds are offered in your employer's 401k plan? Please give fund names, tickers and expense ratios. Does your employer's 401k plan offer an employer match? If so what is it?
Do you have any other accounts? What are your current living expenses? What are the specific types, amounts and interest rates for each of your your debts, including the student debt and the car loan? What is your tax bracket, both federal and state? What is your tax filing status? About how much in total will you be able to contribute annually to investing and paying off debt?
Please add this further information to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place. Please follow this format: Asking Portfolio Questions.
It's never too late to start investing. It's not too late to start investing at age 35. Since you do have a 401k account, you have already started investing.adhm357 wrote: Sun Jan 26, 2025 3:00 pm Ive been reading and researching as much as I can and I'm still left with questions as to if its too late for me to invest at my age or when is a good time to actually start investing.
Im contemplating borrowing money from my 401k to pay off credit card debts, and then on then on the other hand im thinking i should just pay them off in chunks and as quickly as i can.
Im 35 and made 76,000 this year and i feel like its to late and honestly starting this whole thing is a little intimidating. I have couple thousand saved up which is for a rainy day in a high interest savings.
Maybe I need this explained to me like im 5. Finances and money has always been intimidating and it isn't until these past 5 years ive been saving and trying to do something for me future.
Should i pay off the credit cards and some medical bills first before i worry investing?
I recently made a budget as well.
I think it's probably a bad idea to borrow from your 401k. But it depends on your specific facts. Wiki article, Prioritizing investments,.
What funds do you currently use in your 401k account. What funds are offered in your employer's 401k plan? Please give fund names, tickers and expense ratios. Does your employer's 401k plan offer an employer match? If so what is it?
Do you have any other accounts? What are your current living expenses? What are the specific types, amounts and interest rates for each of your your debts, including the student debt and the car loan? What is your tax bracket, both federal and state? What is your tax filing status? About how much in total will you be able to contribute annually to investing and paying off debt?
Please add this further information to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place. Please follow this format: Asking Portfolio Questions.
Last edited by ruralavalon on Tue Jan 28, 2025 10:06 am, edited 3 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: Can I start Investing if I still have Student Loans and Medical Debt.
You found the right place. I haven't seen it posted yet so here is the link to the getting started page
https://www.bogleheads.org/wiki/Getting_started
As someone else said though, you need to first focus on some of these debts. The 31% credit card debt is an actual, honest to god emergency. That's like a millstone around your neck. You absolutely, positively have got to get rid of that. At that interest rate the principal doubles almost every two years.
What I would do, today, literally right now, is liquidate the crypto and pay off the credit card as much as you can. And for context, I'm not anti-crypto, I've held some for over a decade at this point (mods, I don't think I'm breaking rules just by giving my personal background to provide color to my recommendation). But a 31% credit card is like the biggest anti-investment in the world. You are currently somebody else's retirement plan
I'd also highly recommend Dave Ramsey. When the time comes you can ignore his (bad) investment advice, but his get out of debt advice is spot on.
https://www.amazon.com/Total-Money-Make ... oks&sr=1-1
https://podcasts.apple.com/us/podcast/t ... id77001367
You also need health insurance. You are a car wreck away from financial devastation.
And to add, you haven't started too late. You make a very nice income, all these problems are eminently fixable. But you'll need a solid plan that you execute on and to avoid simple errors.
https://www.bogleheads.org/wiki/Getting_started
As someone else said though, you need to first focus on some of these debts. The 31% credit card debt is an actual, honest to god emergency. That's like a millstone around your neck. You absolutely, positively have got to get rid of that. At that interest rate the principal doubles almost every two years.
What I would do, today, literally right now, is liquidate the crypto and pay off the credit card as much as you can. And for context, I'm not anti-crypto, I've held some for over a decade at this point (mods, I don't think I'm breaking rules just by giving my personal background to provide color to my recommendation). But a 31% credit card is like the biggest anti-investment in the world. You are currently somebody else's retirement plan
I'd also highly recommend Dave Ramsey. When the time comes you can ignore his (bad) investment advice, but his get out of debt advice is spot on.
https://www.amazon.com/Total-Money-Make ... oks&sr=1-1
https://podcasts.apple.com/us/podcast/t ... id77001367
You also need health insurance. You are a car wreck away from financial devastation.
And to add, you haven't started too late. You make a very nice income, all these problems are eminently fixable. But you'll need a solid plan that you execute on and to avoid simple errors.
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Re: Can I start Investing if I still have Student Loans and Medical Debt.
+1ScubaHogg wrote: Tue Jan 28, 2025 9:45 am ... The 31% credit card debt is an actual, honest to god emergency.
OP, You're not too late. Keep learning, posting questions, etc. You'll get there, but do pay off the high interest debt first.
For little bit of context on my own savings journey... the first year I contributed to a 401k plan I was 30 years old, and I managed to retire comfortably at 50, so there's hope.
Regards,
"All of us would be better investors if we just made fewer decisions." - Daniel Kahneman
Re: Can I start Investing if I still have Student Loans and Medical Debt.
I started in my 20s retired at 52. Over the course of that time had much more debt than you. Just not at those interest rates. So like Retired & 50 said, there is absolutely hope!retired@50 wrote: Tue Jan 28, 2025 10:01 am+1ScubaHogg wrote: Tue Jan 28, 2025 9:45 am ... The 31% credit card debt is an actual, honest to god emergency.
OP, You're not too late. Keep learning, posting questions, etc. You'll get there, but do pay off the high interest debt first.
For little bit of context on my own savings journey... the first year I contributed to a 401k plan I was 30 years old, and I managed to retire comfortably at 50, so there's hope.
Regards,
You took the first step towards financial independence by saving 15k to date, continuing to contribute and making the decision not to borrow off your future.
You took the second step towards financial independence coming here and asking for help to figure out how to manage & eventually pay that debit off.
These are big steps that many in your position never take! They just keep grinding away with little to show for a lifetime of hard work, relying on SS to sustain them. I watched my poor grandparents waste away in state run retirement homes because they had saved 10k, buying into the idea that SS would be enough to retire on.
It really impacted me in my 20s and changed the way I saw the world. I did not want that for me and did something about it. Nobody gave us what we have today. It took a lot of blood, sweat, hard work, smart decisions & a little luck but here we are now and I believe you can to…
John
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Re: Can I start Investing if I still have Student Loans and Medical Debt.
I have some more debt on Affirm and Klarna I mention. Ive been taught how to work hard from a young age but not the importance of how to finance.HomeStretch wrote: Tue Jan 28, 2025 7:46 am Is your partner aware of your financial situation? Is your partner in a similar financial position (low savings, debt)?
What led to your debt? Do you think you can control overspending on credit cards in the future?
Is this a complete summary of your debt?
- $25000 student loans (paying $0) - what is the interest rate? Are you not paying because the loans are in forbearance or because are you in default?
- $6000 dentist (paying $130/mo) - paid off in 4 years
- $75 CC1
- $5236 CC2 31.24%
- $2614 CC3 0% if paid off in 2025
- $500/mo car loan - when does the loan end?
My partner has been saving she was in high school and has no student loans and she pays off he cards every month. Her father does all her financing for her so she is doing very well with her finances. I plan on sitting down with her and having a conversation after I make a plan for myself on how I'm going to get debt free.
After reading your comment and everyone else it kind of put me at ease, in the sense that it isn't impossible.
My first goal is to re-do my budget and see where I can cut costs, look into the health care, call student loans and get exact amounts of medical bills, see if I can refinance the car loan to decrease my payments.
Thank you for your response.
Re: Can I start Investing if I still have Student Loans and Medical Debt.
I did that already a few months to pay off the CC2 and started using it again which racked it up. Big mistake. Id like to get CC3 totally paid off within this year so I don't get hit with interest on that as well. Medical insurance is something I will be looking into.AB609 wrote: Tue Jan 28, 2025 9:25 am Hang in there. I know it looks intimidating but with a plan and some discipline you can right the ship. Can you roll the the high interest CC2 balance into the CC3? It would save you some interest. Do you have medical insurance? One trip to the ER could be disastrous without insurance. I echo getting some sort of 2nd job to increase your income.
Re: Can I start Investing if I still have Student Loans and Medical Debt.
ruralavalon wrote: Tue Jan 28, 2025 9:30 am What funds do you currently use in your 401k account. What funds are offered in your employer's 401k plan? Please give fund names, tickers and expense ratios. Does your employer's 401k plan offer an employer match? If so what is it?
Do you have any other accounts? What are your current living expenses? What are the specific types, amounts and interest rates for each of your your debts, including the student debt and the car loan? What is your tax bracket, both federal and state? What is your tax filing status? About how much in total will you be able to contribute annually to investing and paying off debt?
The second job is something I'm considering. I need to figure out a solid realistic goal and take it from.
To answer some questions about the 401k, its a whole list of things broken down into Income, Growth & Income, Growth, Aggressive Growth. At the moment I have nothing allocated to anything. In each category i have a handful of options which I need to do a bit more research on as to what they are.
As for the other questions, I have an account with Wells Fargo and Ally for the high interest savings. Living expenses I'm figuring out with the budget I created this month and will revisit at the end of the month to fine tune it a bit. The other questions are stuff I have to look into a little more. Thank you for asking those because I didn't think about that.
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Re: Can I start Investing if I still have Student Loans and Medical Debt.
35 isn't too late. I didn't know the difference between a stock and a bond until I was just a few years younger than you.
In hindsight it wasn't optimal, but I paid off all my debt (student loans, minimal credit card debt) before I invested anything significant. I may have ended up with a little more on my deathbed by paying off my sub 3% student loans slowly and investing in stocks instead, but it will make no practical difference and there was huge peace of mind knowing that I owed nobody anything. As long as you save a lot and put it toward your net worth, either choice is fine.
In hindsight it wasn't optimal, but I paid off all my debt (student loans, minimal credit card debt) before I invested anything significant. I may have ended up with a little more on my deathbed by paying off my sub 3% student loans slowly and investing in stocks instead, but it will make no practical difference and there was huge peace of mind knowing that I owed nobody anything. As long as you save a lot and put it toward your net worth, either choice is fine.
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Re: Can I start Investing if I still have Student Loans and Medical Debt.
Look into these matters and post back, these matters will be important in setting your priorities.adhm357 wrote: Wed Jan 29, 2025 6:04 amruralavalon wrote: Tue Jan 28, 2025 9:30 am What funds do you currently use in your 401k account. What funds are offered in your employer's 401k plan? Please give fund names, tickers and expense ratios. Does your employer's 401k plan offer an employer match? If so what is it?
Do you have any other accounts? What are your current living expenses? What are the specific types, amounts and interest rates for each of your your debts, including the student debt and the car loan? What is your tax bracket, both federal and state? What is your tax filing status? About how much in total will you be able to contribute annually to investing and paying off debt?
The second job is something I'm considering. I need to figure out a solid realistic goal and take it from.
To answer some questions about the 401k, its a whole list of things broken down into Income, Growth & Income, Growth, Aggressive Growth. At the moment I have nothing allocated to anything. In each category i have a handful of options which I need to do a bit more research on as to what they are.
As for the other questions, I have an account with Wells Fargo and Ally for the high interest savings. Living expenses I'm figuring out with the budget I created this month and will revisit at the end of the month to fine tune it a bit. The other questions are stuff I have to look into a little more. Thank you for asking those because I didn't think about that.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: Can I start Investing if I still have Student Loans and Medical Debt.
My employer matches up to 3% contributions. At the moment I'm putting in 7% from each paycheck.ruralavalon wrote: Wed Jan 29, 2025 7:30 amLook into these matters and post back, these matters will be important in setting your priorities.adhm357 wrote: Wed Jan 29, 2025 6:04 am
The second job is something I'm considering. I need to figure out a solid realistic goal and take it from.
To answer some questions about the 401k, its a whole list of things broken down into Income, Growth & Income, Growth, Aggressive Growth. At the moment I have nothing allocated to anything. In each category i have a handful of options which I need to do a bit more research on as to what they are.
As for the other questions, I have an account with Wells Fargo and Ally for the high interest savings. Living expenses I'm figuring out with the budget I created this month and will revisit at the end of the month to fine tune it a bit. The other questions are stuff I have to look into a little more. Thank you for asking those because I didn't think about that.
As for the funds offered in my 401k, there is a long list of them. Broken down into Income, Growth & Income, Growth, Aggressive Growth. Ranging from Target Funds, JPMorgan Equity Funds. I took screen shots but Im not able to post them in this link.
I broke down all my debts that I have with interest, including the student loan and car loan. Ive got 23,902 on student loan with $196 going towards interest every month with a payment of $289 a month. Roughly take me 10 years to pay.
Car loan is at a 10.35% interest. I'm gonna be looking into refinancing. That's a 5 year loan I got with 4 years left on it.
I have $30 weekly payments going to the dentist and paid off two other medical things recently, and my discover card is completely paid off.
And the credit card and Affirm/Klarna loans. Close to $10,000 with all those.
My plan is get these cards and the Affirm and Klarna paid down.
Get the car loan refinanced as see if that lowers monthly payments. Start paying the student. I got forbearance until April to try and get whatever I can into these credit cards being paid off.
Besides what money I have in the 401k Ive got $6,000 in savings. Is this a good time to take out some of that money and pay off these cards? Keep that 3/4 month emergency buffer but use a bulk of it to get some of these cards down.
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Re: Can I start Investing if I still have Student Loans and Medical Debt.
Consider selling the $3k in crypto and using part of the $6k in savings to pay off the 3 CCs.adhm357 wrote: Tue Feb 04, 2025 6:31 am … Besides what money I have in the 401k Ive got $6,000 in savings. Is this a good time to take out some of that money and pay off these cards? …
Re: Can I start Investing if I still have Student Loans and Medical Debt.
35? Not at all too late. When do you plan to retire? 60 or later is 25+ years away. I personally plan to keep investing beyond retirement, so extend that timeframe out longer if you plan to do the same. Start small and increase when/if you can. Do keep paying off chunks of that debt. Some employers offer a yearly increase program in your contributions by a set amount, say 1% more per year, so you don't even notice it.
Light weight baby!