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  1. #1
    Stephanie
    Guest

    Default Order of Importance?

    Is there a general rule of thumb about what debt should be paid off in

    what order? And where do long-term goals fit in?



    For example, if you have:

    debt: credit cards, home loan, auto loan

    long-term goals: college fund(s), retirement fund, emergency fund



    Assume your credit card interest rate is larger than your mortgage

    interest rate.



    And assume you can only put money in one at a time (a tad unrealistic

    I know, but for the sake of argument let's assume you don't have

    enough to do all at once).



    How would you order, from "Pay off or Invest in First" to "Pay Off

    Last or Invest in Last"?



    Thanks for playing!

    Stephanie








  2. #2
    Yolonda
    Guest

    Default Order of Importance?



    Check out Dave Ramsey – he has
    awesome advice on financial matters.



    But to answer your question:

    *You must have shelter so pay the house
    always.

    *Autos are also important so pay that one
    (or sell it and get a cheap used one).

    *All other CC debt should be paid in the “snowball”
    method. (You can always call the CC company and ask them to reduce your
    interest rate OR transfer balance to a lower interest card.) List them
    all from lowest to highest balance. Pay all minimums but add extra to “A”;
    when “A” is paid off add the money you had been paying them to “B”
    and continue down the line until all is paid off.



    I wouldn’t start a college fund or
    retirement fund until debt is under control (you have to be able to make it to
    then<font size="2" color="navy" face="Wingdings">10.0pt;font-family:Wingdings;color:navy;">J)



    I do recommend putting a little aside for
    an emergency fund (even $10-$20 per paycheck) is a good way to start.










    Is there a general rule of thumb about what debt should be paid off in

    what order? And where do long-term goals fit in?













  3. #3
    mem68
    Guest

    Default Order of Importance?

    subscribe to Dave Ramsey and Mary Hunt. In the mean time-Save an Emergency

    Fund that would pay the bills for 3-6 months. Then I would start w/ the bill

    that has the highest interest and pay it down.Join a lot of frugal

    sites.Then work on the next highest interest one and pay it down. Freeze the

    credit card. Brown bag work and school lunches.

    It is nice to do 401 K if your employer matches you. Have something (my

    daughter did 2% savings)w/ helt from your check.(credit unions w/ your work

    are nice.)

    Have you cked out 529 savings for college fund? Or U Promise that uses

    points when you shop at certain stores(groceries,etc.) can join on line.

    ck the gov.org for grants.

    ----- Original Message -----

    From: "Stephanie" <thedarks@astound.net>

    To: <Budget101_@yahoogroups.com>

    Sent: Monday, April 07, 2008 4:47 PM

    Subject: Budget101.com : Order of Importance?





    > Is there a general rule of thumb about what debt should be paid off in

    > what order? And where do long-term goals fit in?

    >








  4. #4
    mem68
    Guest

    Default Order of Importance?


    I would not take my 401K out to pay off a debt. You would prob have to pay a penalty. If using 401K for retirement (I have read)if you only w/draw 4%, it will last your lifetime.
    It took me some time to get to where I could pay my April bills w/ March social security ck.
    [quote]
    ----- Original Message -----
    From: Kristin
    To: Budget101_@yahoogroups.com
    Sent: Tuesday, April 08, 2008 10:20 AM
    Subject: Re: Budget101.com : Order of Importance?


    What if you have a large amount of debt, yet have $20,000 in retirement. Should you take out the money from a 401K to pay off the debt?







  5. #5
    Kristin
    Guest

    Default Order of Importance?

    What if you have a large amount of debt, yet have $20,000 in retirement. Should you take out the money from a 401K to pay off the debt?

    Stephanie wrote: Is there a general rule of thumb about what debt should be paid off in
    what order? And where do long-term goals fit in?

    For example, if you have:
    debt: credit cards, home loan, auto loan
    long-term goals: college fund(s), retirement fund, emergency fund

    Assume your credit card interest rate is
    larger than your mortgage
    interest rate.

    And assume you can only put money in one at a time (a tad unrealistic
    I know, but for the sake of argument let's assume you don't have
    enough to do all at once).

    How would you order, from "Pay off or Invest in First" to "Pay Off
    Last or Invest in Last"?

    Thanks for playing!
    Stephanie




    Kristin
    Streamwood-Barrington and Bode


  6. #6
    Shawn
    Guest

    Default Order of Importance?

    <div style="font-family:times new roman, new york, times, serif;font-size:10pt;">

    I wouldn't recommend it. You get a huge tax if you take it out and not above a certain age. I think it is 40% tax on the 401K or something like that.





    You can temporarily put your 401k percentage to 2% or lower if you get serious about paying off debt quickly. I only did this when we got serious in other areas of cutting costs.
    <DIV style="FONT-SIZE: 10pt;FONT-FAMILY: times new roman, new york, times, serif;">


    ----- Original Message ----
    From: Kristin <holm_kristin@sbcglobal.net>
    To: Budget101_@yahoogroups.com
    Sent: Tuesday, April 8, 2008 9:20:34 AM
    Subject: Re: Budget101.com : Order of Importance?


    What if you have a large amount of debt, yet have $20,000 in retirement. Should you take out the money from a 401K to pay off the debt?



    Stephanie wrote:


    Is there a general rule of thumb about what debt should be paid off in
    what order? And where do long-term goals fit in?

    For example, if you have:
    debt: credit cards, home loan, auto loan
    long-term goals: college fund(s), retirement fund, emergency fund

    Assume your credit card interest rate is larger than your mortgage
    interest rate.

    And assume you can only put money in one at a time (a tad unrealistic
    I know, but for the sake of argument let's assume you don't have
    enough to do all at once).

    How would you order, from "Pay off or Invest in First" to "Pay Off
    Last or Invest in Last"?

    Thanks for playing!
    Stephanie




    Kristin
    Streamwood-Barrington and Bode



  7. #7
    D S
    Guest

    Default Order of Importance?



    Stephanie,





    It depends. If this a Roth 401K then I highly recommend it. In my case, I was $20,000 dollars in debt, and I maintain a Roth 401K. I had input a couple of grands per year. I decided to pay it off immediately. I cash out with a lot of fear of the consequences of hugh amount of taxes to pay. I learned from my accountant that I didn't owe a penny because the stock market was doing poorly that I was losing money. Therefore, I had no tax.





    If the 401K is with employee earnings directly under your job such as the government. You will have to pay the taxes on those because you didn't participate in 401K after taxes such as the Roth 401K or Traditional 401K.



    ----- Original Message ----
    From: Shawn <shawnonline@sbcglobal.net>
    To: Budget101_@yahoogroups.com
    Sent: Tuesday, April 8, 2008 9:36:15 AM
    Subject: Re: Budget101.com : Order of Importance?






    <DIV style="FONT-SIZE: 10pt;FONT-FAMILY: times new roman, new york, times, serif;">


    I wouldn't recommend it. You get a huge tax if you take it out and not above a certain age. I think it is 40% tax on the 401K or something like that.





    You can temporarily put your 401k percentage to 2% or lower if you get serious about paying off debt quickly. I only did this when we got serious in other areas of cutting costs.
    <DIV style="FONT-SIZE: 10pt;FONT-FAMILY: times new roman, new york, times, serif;">


    ----- Original Message ----
    From: Kristin <holm_kristin@ sbcglobal. net>
    To: Budget101_@yahoogro ups.com
    Sent: Tuesday, April 8, 2008 9:20:34 AM
    Subject: Re: Budget101.com : Order of Importance?


    What if you have a large amount of debt, yet have $20,000 in retirement. Should you take out the money from a 401K to pay off the debt?



    Stephanie <thedarks@astound. net> wrote:


    Is there a general rule of thumb about what debt should be paid off in
    what order? And where do long-term goals fit in?

    For example, if you have:
    debt: credit cards, home loan, auto loan
    long-term goals: college fund(s), retirement fund, emergency fund

    Assume your credit card interest rate is larger than your mortgage
    interest rate.

    And assume you can only put money in one at a time (a tad unrealistic
    I know, but for the sake of argument let's assume you don't have
    enough to do all at once).

    How would you order, from "Pay off or Invest in First" to "Pay Off
    Last or Invest in Last"?

    Thanks for playing!
    Stephanie




    Kristin
    Streamwood-Barringt on and Bode



    You rock. That's why Blockbuster's offering you one month of Blockbuster Total Access, No Cost.


  8. #8
    D S
    Guest

    Default Order of Importance?

    If you participated in Roth IRA 401K meaning you paid with after tax dollars and the stock market loss money, you don't pay any penalty. Because you will be retaining the money you put in. I learned that from my accountant, the hard way!



    ----- Original Message ----
    From: mem68 <mildreda@lcs.net>
    To: Budget101_@yahoogroups.com
    Sent: Tuesday, April 8, 2008 6:26:07 AM
    Subject: Re: Budget101.com : Order of Importance?






    I would not take my 401K out to pay off a debt. You would prob have to pay a penalty. If using 401K for retirement (I have read)if you only w/draw 4%, it will last your lifetime.
    It took me some time to get to where I could pay my April bills w/ March social security ck.
    [quote]
    ----- Original Message -----
    From: Kristin
    To: Budget101_@yahoogro ups.com
    Sent: Tuesday, April 08, 2008 10:20 AM
    Subject: Re: Budget101.com : Order of Importance?


    What if you have a large amount of debt, yet have $20,000 in retirement. Should you take out the money from a 401K to pay off the debt?






    You rock. That's why Blockbuster's offering you one month of Blockbuster Total Access, No Cost.


 

 

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