When it comes to credit card usage, the only really important thing is that you avoid being charged interest. There seems to be some confusion about this above, so let me point out that you do not have to zero out your balance before your billing date to do this. You always have some length of time (about a month) after your monthly bill comes in to pay it to avoid any interest charges. Depending on the timing of your purchases that means you can wait to pay for them for 1-2 months while still avoiding interest entirely. For instance, if you buy something on the first day of a billing cycle, you will get the bill for it a month later, and then you have another month to pay that bill. As long as you pay every credit card bill off in full by their due dates you will never be charged interest.
Unless you're already in a very stable financial situation, don't get another credit card just to increase your credit score.
It's easy to think of credit score as a "personal financial reliability score" and go "I WANT TO INCREASE THAT", especially when you've got a personality which enjoys gaming (seek high score, etc). Try not to think about things that way. What will matter more in the short term is credit card rewards, for things you can pay off of month-to-month. Look at your current card. Are you spending a lot on a category which you're not getting at least 2% rewards on? Maybe look for a new card.
I can say, looking back at my credit card usage, I made two mistakes: closing my student credit card for no reason (literally it was, "well, I'm not a student anymore, so..."), and maybe not getting a second card a bit earlier when I was in a good position with income/job/etc. But past a certain point, having a higher credit score doesn't actually do anything for you - you're getting approved regardless. Maybe you're getting a larger initial limit, but that's more factored off your income, and if you're at the score where that's happening, you've already GOT a lot of credit, so it matters a lot less.
Beyond that, the only "I should apply for another card to eventually improve my credit history" decision I'd make is, if I'm in a secure financial thing and always pay off my cards, and I'm applying for one new card for some reason, maybe look for another one or two to apply for at the same time since I'm going to get the ding for the hard pull of credit, so I might as well do all of them at once and then have the average build up from that one period of time instead of stretching them out.
Can someone elaborate what it means for credit card usage and how it affects credit score? Is it best to barely use a credit card every month, or at least pay off purchases as soon as possible, not wait until the end of the month?
Another question, I want to invest in a Roth IRA for retirement, what would be the best way to invest? I spoke with a family member and they recommended using Fidelity mutual funds. I read that Ideally I want to manage it once every 6 months or a year, and I want whomever manages it not to take a lot in fees.
Is this generally good advice?
Yes. The usual advice around here is to open your IRA with Vanguard and buy their index funds, but Fidelity is honestly just as good for its index funds these days.
General info about investing accounts: An IRA/401k/brokerage account/etc is just a container for cash and investments. "Investing into an IRA" doesn't make sense as a concept. If you put cash into an IRA, it's not being invested. It just sits there as cash. The way it works is you open the IRA, deposit cash into it, and then use that cash to purchase an investment. You can hold just about any combination of cash and investments you can imagine in an IRA.
Is there any other way I can invest for retirement, excluding 401k?
Sure, you could open a traditional brokerage account alongside your IRA and invest an unlimited amount of money into that. The only caveat is that exposes you to additional tax liability. It's not really a big deal, and is easy to deal with come tax time. They'll send you a form each year with everything you need for your taxes. Because of the additional tax liability, though, don't invest in a traditional brokerage account until you've already maxed out your IRA contributions and put enough into your 401k to get the company match.
What would be the best way to use a Roth IRA to save for retirement?
Put money into it, buy index funds, don't panic when they drop in value.
Unless you're already in a very stable financial situation, don't get another credit card just to increase your credit score.
It's easy to think of credit score as a "personal financial reliability score" and go "I WANT TO INCREASE THAT", especially when you've got a personality which enjoys gaming (seek high score, etc). Try not to think about things that way. What will matter more in the short term is credit card rewards, for things you can pay off of month-to-month. Look at your current card. Are you spending a lot on a category which you're not getting at least 2% rewards on? Maybe look for a new card.
I can say, looking back at my credit card usage, I made two mistakes: closing my student credit card for no reason (literally it was, "well, I'm not a student anymore, so..."), and maybe not getting a second card a bit earlier when I was in a good position with income/job/etc. But past a certain point, having a higher credit score doesn't actually do anything for you - you're getting approved regardless. Maybe you're getting a larger initial limit, but that's more factored off your income, and if you're at the score where that's happening, you've already GOT a lot of credit, so it matters a lot less.
Beyond that, the only "I should apply for another card to eventually improve my credit history" decision I'd make is, if I'm in a secure financial thing and always pay off my cards, and I'm applying for one new card for some reason, maybe look for another one or two to apply for at the same time since I'm going to get the ding for the hard pull of credit, so I might as well do all of them at once and then have the average build up from that one period of time instead of stretching them out.
I mean, having a Sterling credit rating versus just a pretty good one can matter for interest rates on mortgages or car loans. But that's mostly slight within the range that is set by the Fed/LIBOR that you have no control over. (Unless you work for a London bank. Did anything ever happen with that price fixing scheme?) But since you are just starting out those are really not problems to be concerned about.
0
Options
thatassemblyguyJanitor of Technical Debt.Registered Userregular
What I know about 529s:
1. Can only be used for college stuff without massive penalties. If you're not sure based on family history if college is in the cards, it's no good.
2. It can be transferred to others in the immediate family, so if they do get scholarships they can pass it to their kids.
3. You can use any state regardless of residency.i use NY as they have good vanguard funds.
4. If you have a strong idea of the type of school you think they'll go to, look into tuition vouchers that let you buy a percentage of tuition each year.
Additional things of note,
Earnings/Gains of the monies are not taxed which is an immediate savings of 20-30% (depending on SiG & SiG's husbando tax brackets)
Some states offer incentives for in-state people, so check those before heading off to a different state like NY.
Contributions are not tax deductable for the parents/donor, but family members can maybe get some tax benefit with some gift-tax voodoo.
So if at this moment I do not have any loans, it seems like it would be best to open a few credit cards and use them, not go above 30% or so, and make sure I pay them off before the billing period. Correct?
I'd say be even more conservative and not go above 10%. Just personally speaking.
That 10% is at the end of the cycle, correct? So if I buy something and it go at 20%, pay it off the next day so it is back to 0%, and the cycle is a week away and I do not use my card during that time so it remains at 0%, it will then show that I owe $0. I would then be good, correct?
You’re over thinking the balance thing. In my experience there are three things that really matter, a long history, no missed payments, and if you’ve ever successfully paid off a big loan.
Get whatever credit card you actually need, pay it off in full at the end of every month, and forget about the rest. It will take several years for your credit rating to get up there but just keep chugging along.
If you are ever in a position to buy a car, maybe think about a low interest rate loan.
"The world is a mess, and I just need to rule it" - Dr Horrible
If you're concerned about keeping track of your credit score, open a Credit Karma account. CK tracks your scores at both TransUnion and Equifax. You can check on it whenever you like. If you have a change, CK will give you reasons why, and they will give you tips on how to improve it.
They get paid by recommending you credit cards based on your usage. You can choose to ignore or take advantage of those offers as you see fit. It will not change how your information is handled.
A few things:
1) 529s can be changed to benefit anyone you'd like. It does not have to be an immediate family member. It can even be you. There isn't an age restriction, either.
2) Usage rules are fairly generous. Need a laptop or desktop for school? You can use 529 money. Need to pay for rent or a meal plan? Yep. It may be a bit difficult to justify a larger expense, though, such as a car.
3) If you have to withdraw for non-school usage, you are charged a heavy penalty above any tax implications.
I don't have enough experience with it yet, but my understanding is that you can also use 529 funds for training, certification, and trade schools. I recommend you check with an advisor or other professional if you end up going that route.
Our 529 Plan is through Fidelity but I haven't reviewed the details in a while; so I'll probably take this as a reminder to do that.
Huh I did not know you could open an account in any state.
Oregon lets you deduct a certain amount for your state income taxes I think. I'll look into it.
VA gives you $4k per household. What's neat about that is Grandma lives in the same state, and can also put up to $4k in her own account, giving a present to the grandkid and writing it off on her state taxes.
This might vary by state, but VA also has a in-state tuition pre-pay option: buy semesters of college now at the rate set, betting that college rates will go up higher than the 529 plan is selling them at (and that your kid wants to go in-state, otherwise it just goes back to normal 529 money).
It's run by the same people as the plan I'm in (Georgia), except you appear to have a few less investment options. The expense ratios on the funds are slightly higher than the absolute best stuff, but that difference is demolished by the state income tax deduction. I would probably just use the Age-Based Portfolio unless you want to do a bit more manual management in the more aggressive options.
Also, the terrible new Republican tax law made it so that you can also use 529s for K-12 private schools now, not just college.
So good news, I checked my credit and it turns out I am doing well there, so I am happy with that. I am still looking into investing for retirement and I was suggested to look at Vanguard retirement funds.
Any thoughts or experience with this? I am interested because it seems easy to set up and doesn't require much management. I know for retirement I do not want something with a lot of fees or have it take a large percentage out, and it doesn't look like it does, though I do not have much experience with this. Would there be a better option for retirement?
My understanding is that Vanguard is perfectly fine to have mutual funds with. Looking at their list on their select funds page, expense ratios don't seem too bad (the .4x% ones are a bit on the high side compared to what I'd normally want to get, but there's plenty of cheaper options there) - I actually have some Vanguard stuff in my Fidelity account, amusingly enough.
That being said, before going out and making a personal retirement account (I assume you'd be looking at a traditional IRA?), I'd ask if you've got a 401k through work or anything like that. If your work offers one, that would probably be a good place to start, too. A lot of employers match contributions, etc.
My understanding is that Vanguard is perfectly fine to have mutual funds with. Looking at their list on their select funds page, expense ratios don't seem too bad (the .4x% ones are a bit on the high side compared to what I'd normally want to get, but there's plenty of cheaper options there) - I actually have some Vanguard stuff in my Fidelity account, amusingly enough.
That being said, before going out and making a personal retirement account (I assume you'd be looking at a traditional IRA?), I'd ask if you've got a 401k through work or anything like that. If your work offers one, that would probably be a good place to start, too. A lot of employers match contributions, etc.
Thanks for the reply, I am looking at using a Roth IRA for now. I do not have access to a 401k, but I expect to have access to one in two years, otherwise I would definitely do that.
Target Date Funds are good if you are the type who prefers to not have to think about anything and can just ignore what's happening with the market. If you tend to be more motivated, which I assume is the case, you might want to use straight index funds since the expense ratio is better.
Depending on your age and risk tolerance, go 100-90% in equities, either a S&P 500 index fund or whole market index fund with the balance in a Bond index fund. If you want to get exposure to international markets slice up the equities how you like. Say 50% US, 30% Developed, 20% Developing or something. Readjust every ~decade by shifting up Bonds by 10%.
20 years old: 90% Equities / 10% Bonds
30 years old: 80% Equities / 20% Bonds
40 years old: 70% Equities / 30% Bonds
50 years old: 60% Equities /40% Bonds
60 years old: 50% Equities / 50% Bonds
70 years old: 40% Equities / 60% Bonds and hopefully you actually retire.
That's relatively conservative (I'm 32 and still 100% equities, but I'm also trying to play catch-up from recession shit jobs in my 20's and grad school) but easy to follow and you'd save more in fees than the Target Date.
My understanding is that Vanguard is perfectly fine to have mutual funds with. Looking at their list on their select funds page, expense ratios don't seem too bad (the .4x% ones are a bit on the high side compared to what I'd normally want to get, but there's plenty of cheaper options there) - I actually have some Vanguard stuff in my Fidelity account, amusingly enough.
That being said, before going out and making a personal retirement account (I assume you'd be looking at a traditional IRA?), I'd ask if you've got a 401k through work or anything like that. If your work offers one, that would probably be a good place to start, too. A lot of employers match contributions, etc.
Thanks for the reply, I am looking at using a Roth IRA for now. I do not have access to a 401k, but I expect to have access to one in two years, otherwise I would definitely do that.
Traditional IRAs are like 401ks in that the money that is put into them is pre-tax (ie, they reduce your total tax burden right now, so you can put more in), and instead you will pay tax on them when you withdraw money from your IRA (presumably after retirement, which means your income would likely be drastically reduced, so you shouldn't have many income taxes to pay anyway, so the difference shouldn't matter). Roth IRAs, on the other hand, are done with current post-tax money, but no tax is paid when you retire. So from the perspective of preparing for retirement, if you don't have any other retirement account available, traditional would probably get you a little more bang for your buck.
I'm 40 and still 100% equities. I'm willing to deal with the relative volatility.
If you're willing to do the extra homework, you can mirror a target date fund with your own funds. Nearly every target date fund has a breakdown of how the percentages change year-to-year. If you take note of those changes, you can move your percentages around once a year and not have to pay the extra points. (though admittedly the difference is likely small enough that it's worth it to let the fund do it itself)
My understanding is that Vanguard is perfectly fine to have mutual funds with. Looking at their list on their select funds page, expense ratios don't seem too bad (the .4x% ones are a bit on the high side compared to what I'd normally want to get, but there's plenty of cheaper options there) - I actually have some Vanguard stuff in my Fidelity account, amusingly enough.
That being said, before going out and making a personal retirement account (I assume you'd be looking at a traditional IRA?), I'd ask if you've got a 401k through work or anything like that. If your work offers one, that would probably be a good place to start, too. A lot of employers match contributions, etc.
Thanks for the reply, I am looking at using a Roth IRA for now. I do not have access to a 401k, but I expect to have access to one in two years, otherwise I would definitely do that.
Traditional IRAs are like 401ks in that the money that is put into them is pre-tax (ie, they reduce your total tax burden right now, so you can put more in), and instead you will pay tax on them when you withdraw money from your IRA (presumably after retirement, which means your income would likely be drastically reduced, so you shouldn't have many income taxes to pay anyway, so the difference shouldn't matter). Roth IRAs, on the other hand, are done with current post-tax money, but no tax is paid when you retire. So from the perspective of preparing for retirement, if you don't have any other retirement account available, traditional would probably get you a little more bang for your buck.
It seems like a traditional IRA is better if I am making more now, but expect to make less when I retire, correct? Right now I do not make much and I expect to make much more in the future, hopefully more when I retire. Since my income is taxed low, would it be advantageous to take the tax hit now then?
My understanding is that Vanguard is perfectly fine to have mutual funds with. Looking at their list on their select funds page, expense ratios don't seem too bad (the .4x% ones are a bit on the high side compared to what I'd normally want to get, but there's plenty of cheaper options there) - I actually have some Vanguard stuff in my Fidelity account, amusingly enough.
That being said, before going out and making a personal retirement account (I assume you'd be looking at a traditional IRA?), I'd ask if you've got a 401k through work or anything like that. If your work offers one, that would probably be a good place to start, too. A lot of employers match contributions, etc.
Thanks for the reply, I am looking at using a Roth IRA for now. I do not have access to a 401k, but I expect to have access to one in two years, otherwise I would definitely do that.
Traditional IRAs are like 401ks in that the money that is put into them is pre-tax (ie, they reduce your total tax burden right now, so you can put more in), and instead you will pay tax on them when you withdraw money from your IRA (presumably after retirement, which means your income would likely be drastically reduced, so you shouldn't have many income taxes to pay anyway, so the difference shouldn't matter). Roth IRAs, on the other hand, are done with current post-tax money, but no tax is paid when you retire. So from the perspective of preparing for retirement, if you don't have any other retirement account available, traditional would probably get you a little more bang for your buck.
It seems like a traditional IRA is better if I am making more now, but expect to make less when I retire, correct? Right now I do not make much and I expect to make much more in the future, hopefully more when I retire. Since my income is taxed low, would it be advantageous to take the tax hit now then?
Yeah, probably.
I dunno your situation, but it's pretty rare for somebody in a low tax bracket to have enough money to save in an IRA.
If that's your situation, then sure.
every person who doesn't like an acquired taste always seems to think everyone who likes it is faking it. it should be an official fallacy.
This was mentioned in the economy thread, but probably should go here, too: check your exemptions/withholdings. The IRS is doing some funky things with their withholding tables.
More concretely, I no longer understand the stock market, but it's getting miiiiighty tempting to cash out some of my long-term stocks I've held onto from my company's employee purchase plan. Because MAN.
Its not a bad time to cash out but what are you going to do with that money instead? Throw it in a CD?
Don't know! That's the problem!
But the stock is higher now than since it was falling off the cliff in the 2000 bubble burst, and part of me is convinced this tariff stuff will hit the market EVENTUALLY. I'm not going to pull out entirely, but I've got a decent amount I've got long-term gains on.
I've got a meeting set up with a fiduciary next month to start planning out a separate portfolio/etc (next step now that my wife and I have our wills/trust made up, although we still need to transfer some of our assets into it), so they'll probably get invested sometime in the near future.
I'm generally not a fan of holding onto individual stocks anyway, so I'd recommend you sell and pay the long term gains tax, then roll it into a Roth account of some sort and buy ETFs. I'm guessing this is what your adviser will say at the meeting, but I'm just giving that advice based on what you've said here.
I'm generally not a fan of holding onto individual stocks anyway, so I'd recommend you sell and pay the long term gains tax, then roll it into a Roth account of some sort and buy ETFs. I'm guessing this is what your adviser will say at the meeting, but I'm just giving that advice based on what you've said here.
Yeah. That being said, our work basically does this "monitor the stock over a...4 month period, I think it is, set the lowest price in that window, we buy at 15% below that lowest price from the company" for up to 5% of our paycheck. You can then hold onto it or sell immediately. That's basically been fixed at the max since I was hired, since the 15% discount is free money, even if you decide to turn around and sell immediately. I've been holding by default, and then selling periodically as I needed (buy a car, down payment on house, pay for wedding, etc) or as the stock hit new highs and I felt like it. So I don't have a tooooooon of stock, but I've got a decent amount and the dividends aren't awful (I think last year I got about a grand?).
I decided to bite the bullet and sell because I've still got a few from 2015/2016 floating around.
Anyway, since I got married, Roth isn't an option anymore (which I realize is a "oh no, what a problem to have" sort of thing). We've avoided opening a private separate investment account, but that's basically the next step at this point. As noted, I've got a meeting set up next month to talk with a person, and my wife and I have fully recouped our savings from the "oh no my MIL is in the hospital we have to fly to asia right now" thing last year, so that'll probably happen in the next month or two.
Yeah that's a traditional ESPP and it sounds like you're doing a good job keeping your percentages fairly low.
Nothing new, but you can also open a traditional IRA account if you can't get into a Roth. Then if you're so inclined, you can convert parts of it to Roth once a year.
I'm generally not a fan of holding onto individual stocks anyway, so I'd recommend you sell and pay the long term gains tax, then roll it into a Roth account of some sort and buy ETFs. I'm guessing this is what your adviser will say at the meeting, but I'm just giving that advice based on what you've said here.
Yeah. That being said, our work basically does this "monitor the stock over a...4 month period, I think it is, set the lowest price in that window, we buy at 15% below that lowest price from the company" for up to 5% of our paycheck. You can then hold onto it or sell immediately. That's basically been fixed at the max since I was hired, since the 15% discount is free money, even if you decide to turn around and sell immediately. I've been holding by default, and then selling periodically as I needed (buy a car, down payment on house, pay for wedding, etc) or as the stock hit new highs and I felt like it. So I don't have a tooooooon of stock, but I've got a decent amount and the dividends aren't awful (I think last year I got about a grand?).
I decided to bite the bullet and sell because I've still got a few from 2015/2016 floating around.
Anyway, since I got married, Roth isn't an option anymore (which I realize is a "oh no, what a problem to have" sort of thing). We've avoided opening a private separate investment account, but that's basically the next step at this point. As noted, I've got a meeting set up next month to talk with a person, and my wife and I have fully recouped our savings from the "oh no my MIL is in the hospital we have to fly to asia right now" thing last year, so that'll probably happen in the next month or two.
Roth is always an option, even if you're beyond the income phase-out, you just have to use the 'backdoor' Roth through a Traditional IRA. It's pretty easy if you're not maintaining a traditional IRA currently, but if you do have one with funds in it, the taxes could get a little funky.
Regarding credit cards, I let go my longest standing credid card, roughly 20 years old, due to not using it. Kinda dumb, but I lost 15 or so points on my credit score with literally no other changes. I still have excellent credit, but kinda stung from an ego/high score perspective.
I’m a little worried because in a few years I may close my second longest held card, local bank- might relocate. So I recommend, if you have a card, use it a few time over the years to maintain longevity. Just little stuff to keep it active.
I'm generally not a fan of holding onto individual stocks anyway, so I'd recommend you sell and pay the long term gains tax, then roll it into a Roth account of some sort and buy ETFs. I'm guessing this is what your adviser will say at the meeting, but I'm just giving that advice based on what you've said here.
I sell my ESPP the moment it hits. It helps that my company stock isn't particularly great (basically flat in 2017, which is pretty bad), and the discount basically adds up to around $1k/year in free money after taxes.
Also, the Vanguard TR funds are good to hold if you either A) don't have enough free cash to meet the minimums for the component funds or don't want to deal with it and are OK paying a few points of extra cost.
The cost difference from rolling your own isn't very pronounced until you can hold the Admiral-class funds or want to hold the ETF versions instead...and even then we're talking .14% (IIRC) for the TR fund vs .08ish if you DIY.
The place to be careful is with places like Fidelity where they have index-based and active-based versions of their TR funds, where the index version is like 0.15% and the active is 0.45%.
Regarding credit cards, I let go my longest standing credid card, roughly 20 years old, due to not using it. Kinda dumb, but I lost 15 or so points on my credit score with literally no other changes. I still have excellent credit, but kinda stung from an ego/high score perspective.
I’m a little worried because in a few years I may close my second longest held card, local bank- might relocate. So I recommend, if you have a card, use it a few time over the years to maintain longevity. Just little stuff to keep it active.
Agree. I purposely let my oldest card lapse a few years ago. I was luckily able to recover relatively easily.
My current oldest card is one I want to change to a different rewards program, but I'm unsure if it will be considered a "different" card from the perspective of my credit file.
Regarding credit cards, I let go my longest standing credid card, roughly 20 years old, due to not using it. Kinda dumb, but I lost 15 or so points on my credit score with literally no other changes. I still have excellent credit, but kinda stung from an ego/high score perspective.
I’m a little worried because in a few years I may close my second longest held card, local bank- might relocate. So I recommend, if you have a card, use it a few time over the years to maintain longevity. Just little stuff to keep it active.
Agree. I purposely let my oldest card lapse a few years ago. I was luckily able to recover relatively easily.
My current oldest card is one I want to change to a different rewards program, but I'm unsure if it will be considered a "different" card from the perspective of my credit file.
So, as part of doing my taxes, I found out something surprising - I paid off my Stafford loans last month.
Which means that, as of this month...I no longer have any major debt in my name.
Well, guess it's time to get a mortgage :V
Actually, that's something me and my wife have been talking about. We've held off on a house due to things at work being in flux, but she wants a house of her own.
This was mentioned in the economy thread, but probably should go here, too: check your exemptions/withholdings. The IRS is doing some funky things with their withholding tables.
More concretely, I no longer understand the stock market, but it's getting miiiiighty tempting to cash out some of my long-term stocks I've held onto from my company's employee purchase plan. Because MAN.
Wouldn't you be limited by trading windows for the ESPP?
I worry that my ESPP is becoming much too high of a % of my overall net worth, but it's always most volatile around the times when my trading window is actually open...
So, as part of doing my taxes, I found out something surprising - I paid off my Stafford loans last month.
Which means that, as of this month...I no longer have any major debt in my name.
Well, guess it's time to get a mortgage :V
Actually, that's something me and my wife have been talking about. We've held off on a house due to things at work being in flux, but she wants a house of her own.
We're in a similar boat. Just finished my student loans in September and now we're looking at houses. The new tax law really changes the incentives to suburban NYC home ownership.
This was mentioned in the economy thread, but probably should go here, too: check your exemptions/withholdings. The IRS is doing some funky things with their withholding tables.
More concretely, I no longer understand the stock market, but it's getting miiiiighty tempting to cash out some of my long-term stocks I've held onto from my company's employee purchase plan. Because MAN.
Wouldn't you be limited by trading windows for the ESPP?
I worry that my ESPP is becoming much too high of a % of my overall net worth, but it's always most volatile around the times when my trading window is actually open...
Short-term volatility isn't a concern if it impacts your overall financial plan. You're usually better off long-term by reducing your risk via selling it and moving it to other things than trying to extract every maximum penny of gain.
Holding a ton of company stock isn't ideal for normal people because the downside risk would hit at the same time you had the highest chance of losing your income.
Posts
It's easy to think of credit score as a "personal financial reliability score" and go "I WANT TO INCREASE THAT", especially when you've got a personality which enjoys gaming (seek high score, etc). Try not to think about things that way. What will matter more in the short term is credit card rewards, for things you can pay off of month-to-month. Look at your current card. Are you spending a lot on a category which you're not getting at least 2% rewards on? Maybe look for a new card.
I can say, looking back at my credit card usage, I made two mistakes: closing my student credit card for no reason (literally it was, "well, I'm not a student anymore, so..."), and maybe not getting a second card a bit earlier when I was in a good position with income/job/etc. But past a certain point, having a higher credit score doesn't actually do anything for you - you're getting approved regardless. Maybe you're getting a larger initial limit, but that's more factored off your income, and if you're at the score where that's happening, you've already GOT a lot of credit, so it matters a lot less.
Beyond that, the only "I should apply for another card to eventually improve my credit history" decision I'd make is, if I'm in a secure financial thing and always pay off my cards, and I'm applying for one new card for some reason, maybe look for another one or two to apply for at the same time since I'm going to get the ding for the hard pull of credit, so I might as well do all of them at once and then have the average build up from that one period of time instead of stretching them out.
Yes. The usual advice around here is to open your IRA with Vanguard and buy their index funds, but Fidelity is honestly just as good for its index funds these days.
General info about investing accounts: An IRA/401k/brokerage account/etc is just a container for cash and investments. "Investing into an IRA" doesn't make sense as a concept. If you put cash into an IRA, it's not being invested. It just sits there as cash. The way it works is you open the IRA, deposit cash into it, and then use that cash to purchase an investment. You can hold just about any combination of cash and investments you can imagine in an IRA.
Sure, you could open a traditional brokerage account alongside your IRA and invest an unlimited amount of money into that. The only caveat is that exposes you to additional tax liability. It's not really a big deal, and is easy to deal with come tax time. They'll send you a form each year with everything you need for your taxes. Because of the additional tax liability, though, don't invest in a traditional brokerage account until you've already maxed out your IRA contributions and put enough into your 401k to get the company match.
Put money into it, buy index funds, don't panic when they drop in value.
I mean, having a Sterling credit rating versus just a pretty good one can matter for interest rates on mortgages or car loans. But that's mostly slight within the range that is set by the Fed/LIBOR that you have no control over. (Unless you work for a London bank. Did anything ever happen with that price fixing scheme?) But since you are just starting out those are really not problems to be concerned about.
Additional things of note,
Earnings/Gains of the monies are not taxed which is an immediate savings of 20-30% (depending on SiG & SiG's husbando tax brackets)
Some states offer incentives for in-state people, so check those before heading off to a different state like NY.
Contributions are not tax deductable for the parents/donor, but family members can maybe get some tax benefit with some gift-tax voodoo.
Oregon lets you deduct a certain amount for your state income taxes I think. I'll look into it.
You’re over thinking the balance thing. In my experience there are three things that really matter, a long history, no missed payments, and if you’ve ever successfully paid off a big loan.
Get whatever credit card you actually need, pay it off in full at the end of every month, and forget about the rest. It will take several years for your credit rating to get up there but just keep chugging along.
If you are ever in a position to buy a car, maybe think about a low interest rate loan.
They get paid by recommending you credit cards based on your usage. You can choose to ignore or take advantage of those offers as you see fit. It will not change how your information is handled.
@So It Goes I believe I've linked Clark Howard's 529 Guide in the past. His people keep it updated regularly. I recommend you start there for info: http://clark.com/education/clarks-529-plan-guide/
A few things:
1) 529s can be changed to benefit anyone you'd like. It does not have to be an immediate family member. It can even be you. There isn't an age restriction, either.
2) Usage rules are fairly generous. Need a laptop or desktop for school? You can use 529 money. Need to pay for rent or a meal plan? Yep. It may be a bit difficult to justify a larger expense, though, such as a car.
3) If you have to withdraw for non-school usage, you are charged a heavy penalty above any tax implications.
Here's a good primer on qualifying expenses: http://www.dummies.com/personal-finance/college-savings/higher-education-expenses-that-qualify-for-529-college-savings-plans/
I don't have enough experience with it yet, but my understanding is that you can also use 529 funds for training, certification, and trade schools. I recommend you check with an advisor or other professional if you end up going that route.
Our 529 Plan is through Fidelity but I haven't reviewed the details in a while; so I'll probably take this as a reminder to do that.
VA gives you $4k per household. What's neat about that is Grandma lives in the same state, and can also put up to $4k in her own account, giving a present to the grandkid and writing it off on her state taxes.
This might vary by state, but VA also has a in-state tuition pre-pay option: buy semesters of college now at the rate set, betting that college rates will go up higher than the 529 plan is selling them at (and that your kid wants to go in-state, otherwise it just goes back to normal 529 money).
http://www.savingforcollege.com/529_plan_details/?page=plan_details&plan_id=44
It's run by the same people as the plan I'm in (Georgia), except you appear to have a few less investment options. The expense ratios on the funds are slightly higher than the absolute best stuff, but that difference is demolished by the state income tax deduction. I would probably just use the Age-Based Portfolio unless you want to do a bit more manual management in the more aggressive options.
Also, the terrible new Republican tax law made it so that you can also use 529s for K-12 private schools now, not just college.
https://investor.vanguard.com/mutual-funds/target-retirement/#/
Any thoughts or experience with this? I am interested because it seems easy to set up and doesn't require much management. I know for retirement I do not want something with a lot of fees or have it take a large percentage out, and it doesn't look like it does, though I do not have much experience with this. Would there be a better option for retirement?
That being said, before going out and making a personal retirement account (I assume you'd be looking at a traditional IRA?), I'd ask if you've got a 401k through work or anything like that. If your work offers one, that would probably be a good place to start, too. A lot of employers match contributions, etc.
Thanks for the reply, I am looking at using a Roth IRA for now. I do not have access to a 401k, but I expect to have access to one in two years, otherwise I would definitely do that.
Depending on your age and risk tolerance, go 100-90% in equities, either a S&P 500 index fund or whole market index fund with the balance in a Bond index fund. If you want to get exposure to international markets slice up the equities how you like. Say 50% US, 30% Developed, 20% Developing or something. Readjust every ~decade by shifting up Bonds by 10%.
20 years old: 90% Equities / 10% Bonds
30 years old: 80% Equities / 20% Bonds
40 years old: 70% Equities / 30% Bonds
50 years old: 60% Equities /40% Bonds
60 years old: 50% Equities / 50% Bonds
70 years old: 40% Equities / 60% Bonds and hopefully you actually retire.
That's relatively conservative (I'm 32 and still 100% equities, but I'm also trying to play catch-up from recession shit jobs in my 20's and grad school) but easy to follow and you'd save more in fees than the Target Date.
I'd opt for a Traditional IRA over a Roth IRA if you don't have a 401k - https://www.dailyworth.com/posts/272-ira-vs-401k-what-s-the-difference
Traditional IRAs are like 401ks in that the money that is put into them is pre-tax (ie, they reduce your total tax burden right now, so you can put more in), and instead you will pay tax on them when you withdraw money from your IRA (presumably after retirement, which means your income would likely be drastically reduced, so you shouldn't have many income taxes to pay anyway, so the difference shouldn't matter). Roth IRAs, on the other hand, are done with current post-tax money, but no tax is paid when you retire. So from the perspective of preparing for retirement, if you don't have any other retirement account available, traditional would probably get you a little more bang for your buck.
If you're willing to do the extra homework, you can mirror a target date fund with your own funds. Nearly every target date fund has a breakdown of how the percentages change year-to-year. If you take note of those changes, you can move your percentages around once a year and not have to pay the extra points. (though admittedly the difference is likely small enough that it's worth it to let the fund do it itself)
It seems like a traditional IRA is better if I am making more now, but expect to make less when I retire, correct? Right now I do not make much and I expect to make much more in the future, hopefully more when I retire. Since my income is taxed low, would it be advantageous to take the tax hit now then?
Yeah, probably.
I dunno your situation, but it's pretty rare for somebody in a low tax bracket to have enough money to save in an IRA.
If that's your situation, then sure.
the "no true scotch man" fallacy.
More concretely, I no longer understand the stock market, but it's getting miiiiighty tempting to cash out some of my long-term stocks I've held onto from my company's employee purchase plan. Because MAN.
Its not a bad time to cash out but what are you going to do with that money instead? Throw it in a CD?
Don't know! That's the problem!
But the stock is higher now than since it was falling off the cliff in the 2000 bubble burst, and part of me is convinced this tariff stuff will hit the market EVENTUALLY. I'm not going to pull out entirely, but I've got a decent amount I've got long-term gains on.
I've got a meeting set up with a fiduciary next month to start planning out a separate portfolio/etc (next step now that my wife and I have our wills/trust made up, although we still need to transfer some of our assets into it), so they'll probably get invested sometime in the near future.
Yeah. That being said, our work basically does this "monitor the stock over a...4 month period, I think it is, set the lowest price in that window, we buy at 15% below that lowest price from the company" for up to 5% of our paycheck. You can then hold onto it or sell immediately. That's basically been fixed at the max since I was hired, since the 15% discount is free money, even if you decide to turn around and sell immediately. I've been holding by default, and then selling periodically as I needed (buy a car, down payment on house, pay for wedding, etc) or as the stock hit new highs and I felt like it. So I don't have a tooooooon of stock, but I've got a decent amount and the dividends aren't awful (I think last year I got about a grand?).
I decided to bite the bullet and sell because I've still got a few from 2015/2016 floating around.
Anyway, since I got married, Roth isn't an option anymore (which I realize is a "oh no, what a problem to have" sort of thing). We've avoided opening a private separate investment account, but that's basically the next step at this point. As noted, I've got a meeting set up next month to talk with a person, and my wife and I have fully recouped our savings from the "oh no my MIL is in the hospital we have to fly to asia right now" thing last year, so that'll probably happen in the next month or two.
Nothing new, but you can also open a traditional IRA account if you can't get into a Roth. Then if you're so inclined, you can convert parts of it to Roth once a year.
Roth is always an option, even if you're beyond the income phase-out, you just have to use the 'backdoor' Roth through a Traditional IRA. It's pretty easy if you're not maintaining a traditional IRA currently, but if you do have one with funds in it, the taxes could get a little funky.
I’m a little worried because in a few years I may close my second longest held card, local bank- might relocate. So I recommend, if you have a card, use it a few time over the years to maintain longevity. Just little stuff to keep it active.
I sell my ESPP the moment it hits. It helps that my company stock isn't particularly great (basically flat in 2017, which is pretty bad), and the discount basically adds up to around $1k/year in free money after taxes.
The cost difference from rolling your own isn't very pronounced until you can hold the Admiral-class funds or want to hold the ETF versions instead...and even then we're talking .14% (IIRC) for the TR fund vs .08ish if you DIY.
The place to be careful is with places like Fidelity where they have index-based and active-based versions of their TR funds, where the index version is like 0.15% and the active is 0.45%.
Agree. I purposely let my oldest card lapse a few years ago. I was luckily able to recover relatively easily.
My current oldest card is one I want to change to a different rewards program, but I'm unsure if it will be considered a "different" card from the perspective of my credit file.
Can't just keep the old card and get a new one?
Which means that, as of this month...I no longer have any major debt in my name.
Well, guess it's time to get a mortgage :V
Actually, that's something me and my wife have been talking about. We've held off on a house due to things at work being in flux, but she wants a house of her own.
Wouldn't you be limited by trading windows for the ESPP?
I worry that my ESPP is becoming much too high of a % of my overall net worth, but it's always most volatile around the times when my trading window is actually open...
We're in a similar boat. Just finished my student loans in September and now we're looking at houses. The new tax law really changes the incentives to suburban NYC home ownership.
Short-term volatility isn't a concern if it impacts your overall financial plan. You're usually better off long-term by reducing your risk via selling it and moving it to other things than trying to extract every maximum penny of gain.
Holding a ton of company stock isn't ideal for normal people because the downside risk would hit at the same time you had the highest chance of losing your income.
I almost never use it since we put everything on an Amazon card now. Only time I've used it is on foreign trips because it has a 0% exchange fee.