05-21-2007, 09:24 PM
How much, as a percentage, is the right amount?
It seems there are many opinions on this. I read a lot of personal finance/investing blogs and have learned a lot, but the one question that varies widely is how much.
And furthermore, the most frequent advice is to max out the 401(k). Then Max out an IRA (roth or traditional), then maybe index funds. So what about generic savings? How much should go in there?
And how many people really make enough money to max out their 401(k), their IRA, invest in other instruments, and contribute significantly to monthly savings?
Our HHI easily puts us in the top 5%, but we don't have near enough money to max all these things out and contribute to a generic savings account and still put food on the table, shirts on our backs keep the lights on.
Are we spending too much? Probably, but we try not to. We shop smartly at Costco, only buy name brand clothes or accessories as special treats (birthday, anniversary, etc.), limit ourselves to eating out once per week, use coupons, use cash back cards, we only have one car payment and it's not for an extravagant vehicle, I work from home so little gas is burnt by me, my broadband, landline and some of my cell bill are paid for by my employer, in the winter the thermostat is set low and in the summer it is set high, we try not to frequently turn on the A/C or heat, we rarely take vacations, and we always try to find the best deal on whatever it is we need to buy.
We have no credit card debt. Only have one car payment and my wife's student loan. Of course we do have 2 kids in daycare which is a huge expense. But I wonder how other people, that are not as fortunate as we are, do it.
So are people really maxing out their retirement and savings, or are these just best case scenario statements?
My wife and I do contribute to our 401(k)s, but do not come close to maxing them out. Since we are not maxing them out, we also do not have IRAs, but we do contribute significantly each month to an online savings account.
Am I alone here?
It seems there are many opinions on this. I read a lot of personal finance/investing blogs and have learned a lot, but the one question that varies widely is how much.
And furthermore, the most frequent advice is to max out the 401(k). Then Max out an IRA (roth or traditional), then maybe index funds. So what about generic savings? How much should go in there?
And how many people really make enough money to max out their 401(k), their IRA, invest in other instruments, and contribute significantly to monthly savings?
Our HHI easily puts us in the top 5%, but we don't have near enough money to max all these things out and contribute to a generic savings account and still put food on the table, shirts on our backs keep the lights on.
Are we spending too much? Probably, but we try not to. We shop smartly at Costco, only buy name brand clothes or accessories as special treats (birthday, anniversary, etc.), limit ourselves to eating out once per week, use coupons, use cash back cards, we only have one car payment and it's not for an extravagant vehicle, I work from home so little gas is burnt by me, my broadband, landline and some of my cell bill are paid for by my employer, in the winter the thermostat is set low and in the summer it is set high, we try not to frequently turn on the A/C or heat, we rarely take vacations, and we always try to find the best deal on whatever it is we need to buy.
We have no credit card debt. Only have one car payment and my wife's student loan. Of course we do have 2 kids in daycare which is a huge expense. But I wonder how other people, that are not as fortunate as we are, do it.
So are people really maxing out their retirement and savings, or are these just best case scenario statements?
My wife and I do contribute to our 401(k)s, but do not come close to maxing them out. Since we are not maxing them out, we also do not have IRAs, but we do contribute significantly each month to an online savings account.
Am I alone here?