Comments on: $10k to put away http://blogs2.startribune.com/blogs/kablog/2008/07/02/10k-to-put-away/ Put the \"personal\" back in personal finance, the \"me\" in money management, the \"I\" in investing. Sun, 08 Nov 2009 11:47:40 +0000 http://wordpress.org/?v=2.3.3 By: bsimon http://blogs2.startribune.com/blogs/kablog/2008/07/02/10k-to-put-away/#comment-9349 bsimon Mon, 07 Jul 2008 20:24:16 +0000 http://blogs2.startribune.com/blogs/kablog/2008/07/02/10k-to-put-away/#comment-9349 is it long-term money or short-term? If the former, I'd go with a mutual fund. Our long term money is in a target retirement fund & is considered to be part of retirement planning. At Roth IRA funding time, money gets moved from the taxable account to the Roth. If its short term money, I'd go with a money market fund. If I had a fat new check for $10K, the priorities would be: 1) make sure emergency fund is fully funded - should be in liquid assets, like a money market fund, or higher rate savings (like Kara's ING). 2) pay down high-interest debt - if necessary allocate 100% to paying down expensive debt 3) make sure IRAs are funded 4) allocate up to 25% for 'I want it' spending - but ONLY if I didn't have high interest rate debt. 5) tuck away for a rainy day; I like mutual funds for this, with full knowledge they can lose value (like over the last 2 months) is it long-term money or short-term?

If the former, I’d go with a mutual fund. Our long term money is in a target retirement fund & is considered to be part of retirement planning. At Roth IRA funding time, money gets moved from the taxable account to the Roth. If its short term money, I’d go with a money market fund.

If I had a fat new check for $10K, the priorities would be:

1) make sure emergency fund is fully funded - should be in liquid assets, like a money market fund, or higher rate savings (like Kara’s ING).
2) pay down high-interest debt - if necessary allocate 100% to paying down expensive debt
3) make sure IRAs are funded
4) allocate up to 25% for ‘I want it’ spending - but ONLY if I didn’t have high interest rate debt.
5) tuck away for a rainy day; I like mutual funds for this, with full knowledge they can lose value (like over the last 2 months)

]]> By: Betsy http://blogs2.startribune.com/blogs/kablog/2008/07/02/10k-to-put-away/#comment-9345 Betsy Sun, 06 Jul 2008 16:19:07 +0000 http://blogs2.startribune.com/blogs/kablog/2008/07/02/10k-to-put-away/#comment-9345 I think you are starting with the right question -- how to get that chunk of cash out of Splurge's reach. 3% in a savings account seems *way* more boring when, with a few keystrokes, you could turn it into a TV and a vacation and a massive Target run and four manicures and a bunch of consignment store furniture (or whatever your hot button impulse buys are). So if that's the goal, keeping it safe, put it somewhere where it will be the safest from the influence of internalized consumer appetite while still garnering an interest rate as close to or higher than inflation as you can. For me that's a CD, for you it might be your ING account or it might be increasing your contributions to your 401 (k) from your paycheck to take advantage of the tax break and using the current dollars to supplement your income. Assess your discipline level and invest accordingly. But boredom should not be the decision-maker. Just a factor in assessing your discipline level. I think you are starting with the right question — how to get that chunk of cash out of Splurge’s reach. 3% in a savings account seems *way* more boring when, with a few keystrokes, you could turn it into a TV and a vacation and a massive Target run and four manicures and a bunch of consignment store furniture (or whatever your hot button impulse buys are).

So if that’s the goal, keeping it safe, put it somewhere where it will be the safest from the influence of internalized consumer appetite while still garnering an interest rate as close to or higher than inflation as you can. For me that’s a CD, for you it might be your ING account or it might be increasing your contributions to your 401 (k) from your paycheck to take advantage of the tax break and using the current dollars to supplement your income. Assess your discipline level and invest accordingly.

But boredom should not be the decision-maker. Just a factor in assessing your discipline level.

]]> By: Carla http://blogs2.startribune.com/blogs/kablog/2008/07/02/10k-to-put-away/#comment-9343 Carla Thu, 03 Jul 2008 17:28:33 +0000 http://blogs2.startribune.com/blogs/kablog/2008/07/02/10k-to-put-away/#comment-9343 Suze Orman is recommending having 9-12 months in an emergency fund since it could take longer to find jobs if a person needed to. Suze Orman is recommending having 9-12 months in an emergency fund since it could take longer to find jobs if a person needed to.

]]> By: David http://blogs2.startribune.com/blogs/kablog/2008/07/02/10k-to-put-away/#comment-9341 David Thu, 03 Jul 2008 12:42:35 +0000 http://blogs2.startribune.com/blogs/kablog/2008/07/02/10k-to-put-away/#comment-9341 10K would fill up your Roth or Standard IRA for 2008. Or if you have already filled it up you can hold on to it until January and use is for 2009. Many investments are currently "on sale"... 10K would fill up your Roth or Standard IRA for 2008. Or if you have already filled it up you can hold on to it until January and use is for 2009. Many investments are currently “on sale”…

]]> By: Gus http://blogs2.startribune.com/blogs/kablog/2008/07/02/10k-to-put-away/#comment-9339 Gus Wed, 02 Jul 2008 23:14:28 +0000 http://blogs2.startribune.com/blogs/kablog/2008/07/02/10k-to-put-away/#comment-9339 One hand of blackjack at Mystic Lake...double it up! One hand of blackjack at Mystic Lake…double it up!

]]> By: Ryan http://blogs2.startribune.com/blogs/kablog/2008/07/02/10k-to-put-away/#comment-9338 Ryan Wed, 02 Jul 2008 22:51:36 +0000 http://blogs2.startribune.com/blogs/kablog/2008/07/02/10k-to-put-away/#comment-9338 The funny thing about dollars, by the way, is that they fluctuate just like everything else. It might be a good idea to diversify out of them somewhat. If not totally, then maybe partially. Certainly, you'll always have to pay your mortgage in dollars, but have you seen the prices for food and gas lately? Lose your job, and emergency savings doesn't go quite as far as it used to. -Ryan The funny thing about dollars, by the way, is that they fluctuate just like everything else. It might be a good idea to diversify out of them somewhat. If not totally, then maybe partially.

Certainly, you’ll always have to pay your mortgage in dollars, but have you seen the prices for food and gas lately? Lose your job, and emergency savings doesn’t go quite as far as it used to.

-Ryan

]]> By: Ryan http://blogs2.startribune.com/blogs/kablog/2008/07/02/10k-to-put-away/#comment-9337 Ryan Wed, 02 Jul 2008 22:48:41 +0000 http://blogs2.startribune.com/blogs/kablog/2008/07/02/10k-to-put-away/#comment-9337 I'd say gold, silver, foreign equities or securities. But all that is way too risky in comparison to the strong dollar. Oh, wait... What happens to everyone's "liquid emergency savings" if inflation steals them away as the dollar declines? This is why I love the textbook financial advice. But I'm just a fear-mongerer. The dollar couldn't fall by half *again*! -Ryan I’d say gold, silver, foreign equities or securities. But all that is way too risky in comparison to the strong dollar.

Oh, wait…

What happens to everyone’s “liquid emergency savings” if inflation steals them away as the dollar declines?

This is why I love the textbook financial advice. But I’m just a fear-mongerer. The dollar couldn’t fall by half *again*!

-Ryan

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