Thanks, everyone, for all your advice, well-wishes and words of encouragement in the comments. And thanks to those of you who used ‘Contact Me’ to reach out directly. Thanks for talking me down from the ledge so-to-speak. I feel like I have a gameplan for the upcoming months. Read More
My Hazy Retirement Goals
In my last post -Part 1– I wrote about my back and forth struggle between allocating money toward debt payoff vs retirement savings. Hmm. What are my retirement goals? I’ll have to dedicate a separate post to this another time, because I haven’t thought it through yet. I only have hazy visions.
I’d like to marry rich and retire instantly. Ha. Wouldn’t we all, right? Short of a miracle like that, I’d like to plan to keep working for another 10 years in my industry at maximum salary and maximum savings. Around the age of 50 (or whenever I get laid off and can’t find more work or get burned out beyond repair), I’d like to go into ‘working retirement’ (financial freedom) for another 10 years until Read More
A Shift in Strategy
Once I killed my credit card debt and could focus on my student loan debt, my intention was to throw every spare dollar I had at it, to the exclusion of everything else. I planned to keep my retirement savings down to 5% to get my employer match. Lately, I’ve been reconsidering that position. Read More
Happy New Year!
It is that time of year again. I unveil my 2015 financial goals. Before I do, I’ll look back at my recent yearly goals.
- Pay off remaining $22,770 balance in credit card debt
- Open and contribute to 401k up to point of employer match when eligible
2014 Outcome: [partial success]
- Paid off $16,780 in credit card debt [remaining balance: -$5,990]
- Paid $8,720 in student loan interest [0.o -Yeah, this is insane.]
- Opened and contributed to retirement funds [+$6,578 (including employer match)]
In the footer and sidebar, I have added a tracker for my retirement and other savings to help me have a fuller picture of my finances.
- Pay off remaining credit card debt of $5,990
- Reach $20,000 in retirement savings
- Reduce student loan debt to $108,000
- Save $6,000 in savings (Yes, my lack of an emergency fund is scary.)
- Pay cash for an international trip – $??
My student loan goal doesn’t look like much of a drop, but you have to remember that the first $750 that I pay each month is just going to interest, not principal. So it will take nearly $15k in payments to get from $113k to $108k.
Undoubtedly, I have some more thinking to do to figure out how to prioritize all of these goals. Save for retirement or pay down debt?
Will a noble samurai rescue me from my quandry? Enter FS-DAIR
Financial Samurai has posted a formula for determining how to prioritize debt repayment vs. retirement funding. His FS-DAIR (Financial Samurai Debt and Investment Ratio), looks like the tool I’ve been hoping to find for a while now. How does it work? This chart lays it all out in a clear format.
Source and Image Credit: FinancialSamurai.com
Basically, any debt that you have carrying 10% or higher in interest, should be paid off post-haste, at the expense of any investing (beyond the 401k employer match). Once your debts have interest rates at 9% and below, things get interesting. Read Sam’s FS-DAIR post for examples of how this works. For instance, Sam uses the following as an example for someone deciding how much to put toward student loans vs 401k.
My student loan debt is made up of many separate loans with different fixed interest rates. I will need to run the numbers to see how this would shape my plan of attack. I’ll do a follow-up post on this in the not too distant future. Thanks, Sam for lending me a sword to use in my battle!
Net Worth – Double Debt Single Woman – January 2015
As my debt drops in 2015, I’ll be tracking my Net Worth. My first goal will be to see it drop down into the 5-digit zone. Soon you will also be able to track it here @Rockstar Finance. I will be pretty low on the ranked list, but I will be gunning for higher and higher slots. Watch out Finance Phoenix and Feisty Finance!