financial questions (buying a house, 401k/IRA, stock market?)?
financial questions (buying a house, 401k/IRA, stock market?)?
I recently won a lawsuit in which I was awarded $25k.
After paying off debt and spending a bit myself I should have give or take, $15k. (debt being a BIG chunk!)
After all credit card debt is payed, the only debt I have left is $9k in student loans and then about $9k in an auto loan
I've been thinking what to do with the rest.
I currently have a 401k from my workplace that I opened when I turned 21 (Im 27 now) would it be wise for me to roll this over to an IRA with my bank? and then perhaps taking some of the money and starting a CD?
Should I do the above and then play around in the stock market? (though I know NOTHING when it comes to stocks)
Could I possibly put some of that money as a down-payment on a house? I would get the first time home buyer credit which is tempting and I could actually own property then as well which is a bonus
Answers:
Chosen Answer
CPA/CFA TB: Hello Thomas. It sounds like you are financially put together. Paying off your credit card is a great idea. If I were you, I'd put $5,000 into a ROTH IRA not a Traditional IRA. I'd then think about a house. If your budget can afford a house payment, then I say do it. It is a buyers market right now. I'd put no more than 7,500 down on the house. Use the other $2,500 for savings. That way you have a little emergency fund should you need it. Good Luck.
2009-07-13 01:02:27
CPA/CFA TB: Hello Thomas. It sounds like you are financially put together. Paying off your credit card is a great idea. If I were you, I'd put $5,000 into a ROTH IRA not a Traditional IRA. I'd then think about a house. If your budget can afford a house payment, then I say do it. It is a buyers market right now. I'd put no more than 7,500 down on the house. Use the other $2,500 for savings. That way you have a little emergency fund should you need it. Good Luck.
2009-07-13 01:02:27
$so fresh so clean$ (3 for 3): I will answer question by question.
"I currently have a 401k from my workplace that I opened when I turned 21 (Im 27 now) would it be wise for me to roll this over to an IRA with my bank? and then perhaps taking some of the money and starting a CD?"
The only way you can rollover a 401 (k) plan into an IRA is if you leave the job, get laid off, or get fired. You can't rollover a 401 (k) plan as long as you still have that job.
"Should I do the above and then play around in the stock market? (though I know NOTHING when it comes to stocks)"
The first thing you will want to do is to educate yourself on stocks and different investment. Investing for Dummies is a recommended read. (Not calling you a dummy, that's the name of the book.)
http://search.barnesandnoble.com/booksearch/isbnInquiry.asp?r=1&ISBN=9780061153235&ourl=Investing-for-Dummies%2FEric-Tyson
Here is more literature.
http://www.investopedia.com/dictionary/default.asp
"Could I possibly put some of that money as a down-payment on a house? I would get the first time home buyer credit which is tempting and I could actually own property then as well which is a bonus"
Well, seeing as how you still have debt, I would pay down or pay off the student loans and car loan first. This can help your credit score and give you a better chance of qualifying for a home loan. If you have any left, put about 10-20% of whatever is left over into a savings account. If any left after that, consider a Roth IRA. It builds tax-free earnings, qualified withdrawals can begin at age 59 1/2 pending you've owned it for 5 taxable years, and you can borrow against the principal at any time.
http://individual.troweprice.com/public/Retail/Retirement/IRA/Roth-IRA
I would save separate money from my job for a down-payment for a house. But for right now, I would try to get rid of all the debt I can.
I would also talk to a certified financial advisor that will map out a plan for you based on your current situation.
2009-07-13 01:06:54
2009-07-13 01:06:54
rajan l: It would be much better to buy a house than indulge in stock market as you are a novice there. Also in stock markets many have lost money including me who has lost all his savings since nothing is sure there.
So a house is the best.
2009-07-15 17:10:48
2009-07-15 17:10:48
Tim: First, I hate to say it but $25,000 is not a really a a very large sum.
- you don't mention if you actually have any savings - not in a retirement plan. You also don't share your income and expenses. SO anything here is just general
For somebody your age, your first goal should be to establish some financial stability, focusing on investing opportunities may sound fun, but you may want to study up a bit before eyou go down that path. Right now I think you should work to establish a better foundation.
If I understand correctly that you have 15k in credit card debt?
Then this whole thing is a no brainier - pay it off NOW. put the rest of the money in the bank and keep it there.
Unless you have a relatively good income, for somebody your age to owe 24,000 in Consumer debt is actually pretty bad.
-As a rule of thumb, student loan debt is the cheapest debt you can have - I would not look to pay it off just yet. - but if you have not consolidated it - you should look into it. I just read that consolidation rates are the lowest they have ever been
2009-07-16 20:28:32
2009-07-16 20:28:32