Wednesday, May 14, 2008

Talk With The Financial Advisor

Tonight I had an appointment with a financial advisor. I am pleased to say that it was two hours well spent. He was able to analyze my situation and accounts and recommend a plan of action. If you've been keeping up with my blog, I have been saving $100 a week and it has been automatically transferring from my bank account to a money market account. Right now that account has about $1966 and is only earning 2.96% Based off my previous blog post, I was having a dilemma on whether or not I should pay off my credit card or keep the money in my account. He was able to show me the big picture and I have decided that it is not worth my effort to try to save money while paying off debt. My 11% on my credit cards should be a priority instead of saving it at 3%. I have also decided to stop contributing to my 401k and only contribute to my Roth 401k since I was putting in 10% of my paycheck in each. Now I have freed up 10% of my paycheck and can put it towards debt. The faster I pay off my credit card debt, the sooner I can begin to save towards my next purchase which is my house. I will also be maxing out my Roth IRA by contributing $416 a month to equal $5,000 (max) by the end of the year. I have also setup a fund for my child. I was currently saving $200 a month and putting towards SPY. Now I will be investing it towards mutual funds. My financial advisor was able to explain everything in full detail and I'm glad I made the time to schedule the appointment which I had been procrastinating for the past month.

What's new in my financial plan:
I have consolidated all my accounts (Sharebuilder and T.Rowe Price) into one account.
I will be maxing out my Roth IRA.
I will no longer contribute 10% to my 401k and put it towards paying debt.
I will be contributing $200 a month for my child in mutual funds.
I will focus on paying off debt instead of saving money, so when my debt is at $0, I will then start to save and earn a positive return.
Once I have paid off all my credit card debt, I can begin to start my house down payment fund.
I just paid off my entire Best Buy debt which was $2042 at 23%.

I also have made a goal not to listen to the radio while I am in my car and I will only be listening to audio cds. I am currently listening to Donald Trump's "Think Like a Billionaire." Lots of great ideas and a good mindset to have.

1 comment:

JoeTaxpayer said...

Congratulations on having a plan. One question - did your 401(k) match the deposit? If so, I advise depositing enough just to get the match. That's free money, and worth more than paying off debt faster. If you are in the 15% tax bracket, Roth is the way to go, as you earnings rise and you work your way to 25%, the pre-tax IRA or 401(k) make more sense. My main page has an article on this topic.