Submitted by lions239 t3_127x6sk in personalfinance
frozenwaffle549 t1_jegbiwj wrote
Well, I can tell you are well on your well to becoming a millionaire by the time you are in your forties lol, so good job being so diligent. You could back off on your Roth 401k and your HSA in order to fund this home purchase. While you can use the HSA as another retirement vehicle, I would recommend just having enough to cover any out-of-pocket maximums and put the rest in your IRA so you have more variety. It may be best to rent since you are so young and remote no need to rush into a condo because of interest rates or the economy. Try this calculator.
frozenwaffle549 t1_jegbpnn wrote
I forgot to mention you are killing it. Don't forget to enjoy some of it. You may find out that your future spouse hates the condo you purchased lol
lions239 OP t1_jegd4jp wrote
Haha, we will see about that. In the game of life when it comes to that, I am much, much farther behind.
frozenwaffle549 t1_jegf7rr wrote
Well, I can tell you it doesn't get any easier as you age. So spends some of that money to experience new things and meet new people. You will be MUCH more interesting that way. You won't earn 78k your whole life; it will go up.
lions239 OP t1_jegidpw wrote
You're definitely right. I've been trading an entire life in exchange for living far away at home and it hasn't done me any good. I'll have the rest of my life to save money. I guess now I just need to take these words and make them reality.
frozenwaffle549 t1_jegjrr4 wrote
Just from reading your "Financial Stats" it was obvious you lived like no one else in order to, later on, live like no one else. You paid the price now go reclaim the some sort of life you don't currently have. You are already ahead of 80% of Americans take the WIN.
lions239 OP t1_jegcglj wrote
Wow judging from my lack of knowledge on a lot of those variables in the calculator, I definitely have a lot more to learn before I even consider buying. It's just rents are skyrocketing where I live and just using the Zillow estimates of mortgage, interest, insurance and HOA, depending on the condo, it comes out to less than or about the same as renting in the area.
Online it says my rate of return on the Roth 401k is 0.55%, is this normal? It seems low?Your ballpark of "becoming a millionaire" is that possible with these retirement accounts? Or should I be out there now slowly learning also about other ways to invest?
frozenwaffle549 t1_jeggp1o wrote
I can see why you think comparing the bottom number is the same, but it's not comparing apples to apples. There are a lot of hidden costs the owner bears.
You may be looking at a time horizon that is too small. At .55% you might as well keep it under your mattress lol, but a quick search says the "American Funds 2060 Trgt Date Retire R6" over the last 5 years has returned 14.89%. I would suggest you open an account with vanguard and get a target date fund from them (VTTSX) and pay lower in fees (0.43 VS .08%) also read the book " I will teach you to be rich" by Ramit Sethi.
lions239 OP t1_jegiuz5 wrote
Oh yeah the time horizon is just the over the amount of time I've had the 401k, so about a year and a half. Thanks for the book rec, I'll check it out!
As for the other rec, would one of the ways I would accomplish this is by reducing my Roth 401k contribution to the company match and then using that money? What kind of "account" do I open with them? Is that what a Roth IRA would be or this is something different?
Also, for my federal student loans, should I just pay those off monthly once it resumes? Any reason to explore just paying them all off at once right now?
frozenwaffle549 t1_jeglikn wrote
When you read the book it will explain it in more detail but yes. The Roth 401k option is an employer-sponsored retirement account and the Roth IRA as the name suggest is an Individual Retirement Account.
Again, I would recommend reading the book first but yes you would open an account with them that is an IRA, not the brokerage one. Then use the money you have to max it or at least work up to a goal of a total of 15-20% of your gross salary.
As for the student loans technically you are legally and morally obligated to repay the loans but politics being politics I would hate for you to be holding the bag when the president wipes away student debt in order to buy votes. So I would set aside just enough to pay it in full and see which way the wind will blow on that decision. (My money is on its not happening)
lions239 OP t1_jegnasw wrote
Awesome, thanks for all the insight.
I doubt anything will actually be canceled, I don't expect it to be. So I guess when the time comes where no more pauses or cancellations are in sight, then I will just pay it off in one time with what I set aside to avoid the interest.
Last question, I know this is discussed a lot and I've been reading here and online, but in the short term, my first course of action will be to open a HYSA. Any advice there? I've gathered that Ally, Capital One, Discover seem to be the most popular even if there are others with higher rates, but these seem to be the ones people stick to since the rates are "safer" and won't decrease as much as others may. Is this the route I should go?
After reading a bit more, perhaps I should consider Ally's No Penalty CD... and maybe do ~65k of my ~74k?
frozenwaffle549 t1_jegstqc wrote
HYSA doesn’t matter who you go with. The purpose of the account is to play defensive and be liquid. If you want lock up your money that’s fine but if you are spending time making a decision between like 4.5% and 4.75%. Then you are wasting your time and thinking too small.
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