401K...I did it again for the Third Year



I hit unexpected debts and will miss my April deadline.

Those dang casinos and my non-winning streak.

Still on course to max out my contributions but I will not make my April deadline.
 
@pv_symbiotic CEE DOG was just saying, why max out your 401K beyond what the company matches, because at that point you dont really get anything in return, take the extra money and put in a Roth if you dont already have one. But from what I read in your post is that, your goal is to reduce your tax bracket, therefore you max out. But a Roth wouldn't allow you to do that since your tax rate would change. But hey as you said you're happy and it works for you, thats all that matters.
 
That is correct I'm happy and that's all that matters.

When you max out your 401K you go into a lower tax bracket, which means the government charges me lower taxes. Since the salary that my company pays me hasn't change...that means that more money is coming to me. If you are watching the news, both sides talk about paying less taxes, since I'm in a lower tax bracket I pay less taxes. My salary hasn't change so more of the money is coming to me.

So that is why you max out your 401k contributions.

Side note, it's a sacrifice and I love when I hit the contribution max amount because after that point my take home pay jumps up.

Don't confuse the Roth with this...take home money goes into the Roth not pre-taxed money. You can still put money into the Roth, but as I said that's a different subject. I'm only discussing the subject of 401k.
 
This is the time of year (tax season) when the sacrifice pays off for maxing 401k contributions. I due not owe taxes do to me lower the tax bracket that I'm in.
 
I do understand what your rationale is, but I have one word to say about maxing 401K's....ENRON!!! That money is never guaranteed to be there when all is said and done.
 
Jaguar Diehard said:
I do understand what your rationale is, but I have one word to say about maxing 401K's....ENRON!!! That money is never guaranteed to be there when all is said and done.
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That would only be a problem if you invested only in one stock. Putting your 401K money in mutual funds solves that problem.
 
SUJagFan said:
That would only be a problem if you invested only in one stock. Putting your 401K money in mutual funds solves that problem.
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True enough, but fund manager's were found to be "not-so-talented" when the market began crashing. Mutual funds are a better vehicle, (1) IF your company offers the right options, and (2) IF you select the right vehicle. Also, you need the ability to move your balance to whatever, wherever to maintain your accumulation with the least risk of loss. Some are limited to one move every 30 days. Remember fund managers move "mountains" of stock at a time. Those moves dictate a lot of what goes on in the market.
 
Jaguar Diehard said:
True enough, but fund manager's were found to be "not-so-talented" when the market began crashing. Mutual funds are a better vehicle, (1) IF your company offers the right options, and (2) IF you select the right vehicle. Also, you need the ability to move your balance to whatever, wherever to maintain your accumulation with the least risk of loss. Some are limited to one move every 30 days. Remember fund managers move "mountains" of stock at a time. Those moves dictate a lot of what goes on in the market.
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Meh.

The point is that Enron situations can be avoid by choosing a more diversified investment like a mutual fund. Using Enron to scare people out of investing is irresponsible because their problem wasn't investing. It was choosing to invest in only one stock.

If you're concerned about the performance of fund managers, you could always choose index funds. They are a cheap alternative and tend to outperform 80% of fund managers anyway.

The ability to move your money around is good, but an overrated option. I'm not sure why anyone would need to move their money around within the 401K more than once a month. You can't time the market and I doubt all of that flip-flopping will give you better performance over the long run. When I had a 401K, I adjusted my portfolio once per year. Maybe twice, but certainly not more than that. You're better off simply choosing your types of mutual funds and staying the course regardless of the ups and downs of the market.
 
UAPB 97 was correct in the first two things he stated. There is tax deferment with ones 401K as well as a IRA. The difference is in a 401K the money is taken out immediately by your employer and with an IRA you get the deferment when you file your taxes. The young brother new exactly what he was talking about (if that is what he was trying to say).

Now I don't know anything about a universal policy so I can't speak on it.........
 
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Hmmm.

So much confusion and misinformation.

I wonder if a Dave Ramsey styled financial course for our people would be successful ....
 

SUJagFan said:
Hmmm.

So much confusion and misinformation.

I wonder if a Dave Ramsey styled financial course for our people would be successful ....
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Dave answer is not the correct answer for everyone. Most of the stuff he teaches is common sense. One has to gauge their own situation and make the best of it. What works for you, does not mean it will work for me and vice verse. That doesn't mean my way nor your way is stupid. It is the end results that matter.
 
Tony said:
is it possible to wake up tommorrow and my stocks are worthless?
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All of your stocks?

Yes. However, unless you are only invested in one or two stocks, that would mean we are in all out world nuclear war or Armaggedon. In that case, your stock would be the least of your concerns. Otherwise, it's highly unlikely that every company you have invested in went completely bankrupt on the same day.

That's the purpose of diversification. To spread your investment among many companies and thereby reduce the risk that they all go broke at the same time. A portfolio of ten or twenty stocks would accomplish that necessary diversity, but mutual funds do an even better job became most invest in hundreds of stocks. Therefore, the chance of you waking up to find your stock investments worthless is practically nil.
 
CEE DOG said:
Dave answer is not the correct answer for everyone. Most of the stuff he teaches is common sense. One has to gauge their own situation and make the best of it. What works for you, does not mean it will work for me and vice verse. That doesn't mean my way nor your way is stupid. It is the end results that matter.
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Yeah, but I think some basic level of information would be helpful. I think a lot of finance is just a bunch of confusing jargon to many people. 401K, IRA, Roth IRA ... blah, blah, blah.

I'm thinking a plainspoken way of explaining these things would be helpful.
 
Tony said:
CDs?
T-bills?
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All have risk. The risk is small, but it is there.

You'll hear people say that government securities like t-bills have zero risk. That's not true. What if this country goes bankrupt, which many think we're close to doing? How will you get your money?

There's risk there. It's just small. But, that's why the return is low too.
 
SUJagFan said:
All have risk. The risk is small, but it is there.

You'll hear people say that government securities like t-bills have zero risk. That's not true. What if this country goes bankrupt, which many think we're close to doing? How will you get your money?

There's risk there. It's just small. But, that's why the return is low too.
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Therefore nothing in this world is guaranteed?

Sans death and taxes
 
Tony said:
Therefore nothing in this world is guaranteed?

Sans death and taxes
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:lol:

Exactly.

However, we don't let that stop us from making decisions which will possibly lead to a better life for ourselves in the future.

The key is not to eliminate risk. It is to minimize the risk while maximizing the potential for reward.
 
SUJagFan said:
:lol:

Exactly.

However, we don't let that stop us from making decisions which will possibly lead to a better life for ourselves in the future.

The key is not to eliminate risk. It is to minimize the risk while maximizing the potential for reward.
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sorta like gambling?
 
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