So, if you have a plan (10-20-70), have a savings account, now it is time to deal with your discretionary or extra income. Here are some more steps:
1. Start saving in a 401k plan (if your employer has one) sometimes they will match your contributions (meaning if you put in 200 they will put in 200 up to a certain percentage). A 401K plan is a savings plan that is tax deferred until the time that you take the money out.
2. Getting a financial advisor and investing in good mutual funds. Index funds (mutual funds that follow a financial market) are usually more stable. It is best to get a financial advisor for these types of decisions. When you talk to them make sure that you set up a Roth IRA, this will allow you to invest and at age 59.5 can withdrawal your money tax free.
3. Home ownership is another great way to set yourself up financially. When you purchase a home, you will be paying off the mortgage, can deduct the interest of the payment on our taxes, and you will have an investment that will increase value over time (right now it might be another 7 or 8 years).
August 9th, 2008 at 6:04 pm
#3: and homes are on sale now! If you can get a mortgage … harder to do nowadays … then it’s good time to buy.