---
---
---
---

13 Comments / Post A Comment

NoReally (#45)

Dissent! Canceling a card to take another will only ding your score a tiny bit for a little while (and it’s completely unfair and ought to be against the law, like punishing you for transferring a balance, it’s just behavior hey don’t like, not irresponsible) and reward cards can be very cool if well-played. You have to use them like your debit card, and never be surprised at the balance. Even prepay. I put everything I can on Discover, pay it off every month, and get a couple of hundred dollars a year of totally free money, and sometimes discounts on big stuff. Most of my utilities and all of my groceries. Plane tickets. Free money!

DrFeelGood (#401)

@NoReally But isn’t some of your credit history erased with that particular card when you cancel it? I think that’s what he’s saying.

myrna.minkoff (#272)

Switch to Ally for savings AND checking. I never knew I could love a bank…

What are the pros and cons of a traditional IRA and a roth IRA? why are you always promoting a roth?

Tuna Surprise (#118)

@kira fisher@twitter
Roths are post tax and traditional are pre-tax. When you retire, money taken out of your traditional IRA will be taxed at the income tax rates in effect at that time. Money taken out of a Roth at retirement will be taken out tax free.

Two points.
1. If you are poor now, you are probably paying a low tax rate (e.g. 15%) and will get a smaller benefit from deducting a traditional IRA from your taxes now but you will likely be paying a higher rate at retirement (rates now top at 35%).
2. Rates are at a historical low, so the chances are that 40 years from now the top rate will be much, much higher than 35% so you are better off paying taxes now. Rates have been as high as 90% (and 50% in the not-to-distant past) so the good gamble is that they are going up.

Mike Dang (#2)

@kira fisher@twitter Yes! What Tuna says. A Roth IRA is also what every financial advisor says a young person should have, and I agree. Also, you get a hefty penalty for withdrawing money from a traditional IRA before you are 59.5 years old. With a Roth, you are allowed to withdraw any amount of money you contribute to it without a penalty. After it has been open for five years, you’re also allowed to withdraw up to $10,000, including the earnings on top of your contributions, to buy your first home.

DrFeelGood (#401)

@kira fisher@twitter Roth = pay tax now; traditional IRA, 401(k) = pay tax later. It’s good to have both so that you lower your overall tax burden, but when you’re young its really smart to have the Roth, since you’ll hopefully be making a lot more money when you retire, so you’ll have some tax-free income available to you.

Fidelity is great. I’ve had retirement funds with Vanguard, Merrill Lynch and American Funds and recently moved everything to Fidelity. For someone who doesn’t understand what they are doing with their retirement funds, they have BY FAR the most helpful customer service and they don’t charge any fees for their IRAs (not sure if Vanguard does, just throwing it in there).

DrFeelGood (#401)

@down the rabbit hole I believe with Vanguard, you only pay based on the transactions you make – so each time I buy or sell, I pay a small fee. I like Vanguard because their philosophy is, historically money managers have done no better than the markets themselves. So they are very low cost because they aren’t actively managing it and charging management fees.

candybeans (#68)

So great, I love this website. Follow-up on this point: “The first two things you should be doing is paying off your debt, and starting an emergency fund[.]” Let’s say I have $800 extra at the end of every month (haha!). And let’s say I have, oh, about a condo’s worth of debt, and just burned through my emergency fund during a long spell of unemployment. What proportion of my extra cash should I be throwing at my (~7.6% interest rate) student loans, and what should I be stocking away in my ING/Ally savings account? Thoughts, smart people?

Mike Dang (#2)

@candybeans I once asked a financial advisor about this (because I too have tons of student loans) and he said, “It is more important to develop an emergency fund than to pay off debt ahead of time.” So I would pay the minimum payments on your student loans, and sock as much as you can into a savings account. Remember that with student loans, you are allowed to write off up to $2,500 worth of qualified student loan interest during tax time (qualified student loans are loans that were taken out to pay qualified education expenses, which include tuition, fees, room and board, and books.)

I love these advice posts. I have always been good about saving, so I haven’t had any big problems (so far!!! knock on wood!!!), but I’ve fallen into the trap of, “Oh, I’m decent with money, so I’m ok.” Whereas I know that now that I’m getting further into my 20s, I really need to be doing more grown-up things with my money. I have one tiny mutual fund that doesn’t really earn that much (to be fair, I haven’t put enough into it for it to be earning tons of interest), but I want to look into other options and keep putting it off. This is motivating me to stop putting it off any more.

DrFeelGood (#401)

When I started my first job, I used to loove checking the amount of $ that I had put in the 401(k) each pay period, such a dork.

Post a Comment