My current savings is pretty much what I have been contributing to my current 401k and what it is gaining right now. I used to have a Roth IRA but its currently down to $500. A savings account under $500 and an emergency fund hovering around $100. I know its kind of sad. This is why I have been thinking of what I should do by the start of next year.
Take note that I probably will not start this until the new year starts, but below are the 'tentative' goals I have for the upcoming year.
- Start an Emergency fund Goal $1000
- Increase 401k contribution. Currently at 5% and bump up to 6%
- Restart contribution to IRA @ $50/per paycheck
Should I even start paying myself now or should I just focus put it all to my debt repayment?
I definitely think you need to have at least some savings even while paying down debt. The emergency fund is the biggest one. I would say to start working on that and as soon as its funded, increase your retirement savings. As you know through your recent vet emergency, as soon as you don't have the money to cover something in your budget (which is already tight due to debt) and no savings, it just gets added to the debt. Some savings would cover your butt if the worst were to happen. I found that I'm better when I focus on one goal at a time so yes, sending a bit of money to each account ensures you're balanced, but if the sh*t hits the fan, you can't (or at least shouldn't) take the money out of your retirement savings to cover you. This is my opinion, of course, and with everything else in personal finance, the decision is personal and up to you.
ReplyDeleteAll of the aforementioned goals!
ReplyDeleteI'm not sure what the difference is between a 401k and IRA. In Canada, it's RSP and TFSA, which I'm going to assume are the exact counterparts to 401k and IRA.
But I still contribute to retirement; first of all, because of compounded interest AND because it lowers my income and lowers the taxes I end up paying at the end of the year.
And an emergency fund is def important for... emergencies! $1000 is a great start :)