Concern for the future

iVillage Member
Registered: 04-22-2003
Concern for the future
2
Sun, 12-12-2004 - 5:03pm

I'm nearing my CC debt-free status...next month, and I'm a little concerned. I have started outlining a new budget for the year, but I'm worried about what to do with all the extra money I'm going to have. It is nice to be more relaxed about money, but at the same time, I'm going to have to be more diligent than ever. I surely don't want to fall back into anything stupid. So far, I haven't created more debt for myself in a long time.

How did you deal with finally reaching the other side?

I will still owe on my car, but for me that is a good debt.

My quandry is this: I have re-enrolled in my 401k at 6% at start of New Year(where the company matches dollar for dollar), but I'm not sure about what to do with the extra...save it all, use it all on my car payment to pay if off sooner, or what kind of mix would be good - some save, some payment?

Suggestions?

TIA,
slojuly

iVillage Member
Registered: 02-19-2004
Mon, 12-13-2004 - 1:58pm

I can tell you what I plan to do. My goal is first to buy a home, and then to save as much for retirement as I can. I'd like save the limit for 401K, which I think is 11% or 12% (it may take me a while to get to that level). I will also start a Roth IRA, which I believe you can save $3,500 per year. It's not tax free investing, but the money grows tax free and is not taxed when you withdraw it (the opposite of 401k, and if you have wise investments that is a lot of tax savings later in life). Any left over I will put in a 529 plan for dd. That money goes in tax free, also grows tax free and is not taxed when it is withdrawn.

If I were you, I'd save some and put some toward paying off your car early. When you pay your car off, you could put the same amount you were paying each month into a car savings account, so when you need another one you can buy it in cash or at least have a nice down payment. For the amount you want to save, you can have it automatically withdrawn each paycheck and deposited in savings, so you aren't tempted to spend it.

Photobucket

iVillage Member
Registered: 11-13-2004
Sun, 12-26-2004 - 8:21pm
First of all, congratulations on getting out of credit card debt; that is quite and achievement!! If I were you I would save part of the extra money and use some for your car payment. You should have at least 6-8 months of expenses in an emergency fund. If you don't; or don't have an emergency fund AT ALL; I would use the extra money to fund that first before paying extra on the car. Good luck and happy new year!