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1. Consolidate all spending on a credit card that gives cash back. Autopay all bills that don’t levy fees with it. Pros: no need to worry about points or black

1. Consolidate all spending on a credit card that gives cash back. Autopay all bills that don’t levy fees with it. Pros: no need to worry about points or blackout dates; maximize cash back; facilitates budget tracking with annual summaries and integration with budgeting sites (otherwise you’ll have to do it manually). Examples: Double Cash 2% cash back, Apple Card 1-3% depending on payment method 2. Direct deposit your paycheck into one bank account that your credit card from 1 and investment account from 4 are connected to (set it up so only investment account can debit from the bank, not vice versa). Autopay remaining bills from 1. Pros: only worry about paying one bill (credit card); only the hub bank account is exposed, bulk of savings is isolated in investment account. 3. Max out 401k and IRA every year using automatic deductions from your paycheck/bank account. Pros: saving/investing on autopilot; lower taxable income 4. Consolidate and invest all savings (and roll over old 401k accounts) into an index fund at Vanguard or Fidelity. Auto-deduct from your paycheck in increasing amounts until you hit the pain threshold. Pros: automatic diversification; one place to monitor your investments; maximum investing on auto-pilot.

MuffinFlavored 7y ago
> 3. Max out 401k and IRA every year using automatic deductions from your paycheck/bank account. > Pros: saving/investing on autopilot; lower taxable income Does it ever make sense to do Roth 401k instead of traditional 401k?
- dragonwriter 7y ago
  If you are expecting to be in a higher tax bracket in retirement (counting traditional IRA/401K income) then Roth IRA/401K may be a better choice, since it is after tax when invested but tax-free when withdrawn. Most workers will have substantially higher income subject to income tax during working years than in retirement even with IRA/401K withdrawals as taxable income, but that's not always the case.
  - mooreds 7y ago
    For a roth IRA there are two other benefits (not familiar with Roth 401k, so won't speak to that). * Hedge against different tax rates in the future. Even if now you think you'll be paying a lower rate when retired, there's no guarantees. * You can withdraw your contributions, though not your earnings, without penalty before retirement. If you add 5k/year for a number of years, that starts to add up should you need to tap it for an emergency or other investment opportunity (real estate or bootstrapping).
    - matthew_e 7y ago
      I believe you can withdraw early on roth 401k funds as well. You can at least roll it into a roth IRA which I know for sure you can withdraw early from with no penalties. It seems like nobody talks about this, but it's a really nice perk. I put half of my first 2 years of 401k contributions into roth when I started working, and it was great knowing it was there just in case.
  - MuffinFlavored 7y ago
    I was under the impression that if you contribute the annual limit (currently $19k) every year for 40 years (25 - 65), then pull 1/20th the account value per year once you retire (65 - 85), Roth makes more sense because the amount you will be pulling will be $4.15m, which would be $17.3k/mo before any additional investments (like a maxed out Roth IRA every year). That's $207.5k/yr in income at retirement from just the 401k alone, which would suck to get taxed on I'm sure.
  - torstenvl 7y ago
    I disagree with your analysis. Taxes due are going to be less a function of your income and more a function of tax law. At least in the United States, we have enjoyed many years of low and lowering taxes, at the expense of ever-increasing debt, and are likely reaching the limits of what we can expect the magic of monetary theory to insulate us from. Upshot: tax rates will have to increase substantially in the medium term.
    - 7y ago

MuffinFlavored 7y ago

> 3. Max out 401k and IRA every year using automatic deductions from your paycheck/bank account. > Pros: saving/investing on autopilot; lower taxable income Does it ever make sense to do Roth 401k instead of traditional 401k?

dragonwriter 7y ago
If you are expecting to be in a higher tax bracket in retirement (counting traditional IRA/401K income) then Roth IRA/401K may be a better choice, since it is after tax when invested but tax-free when withdrawn. Most workers will have substantially higher income subject to income tax during working years than in retirement even with IRA/401K withdrawals as taxable income, but that's not always the case.
- mooreds 7y ago
  For a roth IRA there are two other benefits (not familiar with Roth 401k, so won't speak to that). * Hedge against different tax rates in the future. Even if now you think you'll be paying a lower rate when retired, there's no guarantees. * You can withdraw your contributions, though not your earnings, without penalty before retirement. If you add 5k/year for a number of years, that starts to add up should you need to tap it for an emergency or other investment opportunity (real estate or bootstrapping).
  - matthew_e 7y ago
    I believe you can withdraw early on roth 401k funds as well. You can at least roll it into a roth IRA which I know for sure you can withdraw early from with no penalties. It seems like nobody talks about this, but it's a really nice perk. I put half of my first 2 years of 401k contributions into roth when I started working, and it was great knowing it was there just in case.
- MuffinFlavored 7y ago
  I was under the impression that if you contribute the annual limit (currently $19k) every year for 40 years (25 - 65), then pull 1/20th the account value per year once you retire (65 - 85), Roth makes more sense because the amount you will be pulling will be $4.15m, which would be $17.3k/mo before any additional investments (like a maxed out Roth IRA every year). That's $207.5k/yr in income at retirement from just the 401k alone, which would suck to get taxed on I'm sure.
- torstenvl 7y ago
  I disagree with your analysis. Taxes due are going to be less a function of your income and more a function of tax law. At least in the United States, we have enjoyed many years of low and lowering taxes, at the expense of ever-increasing debt, and are likely reaching the limits of what we can expect the magic of monetary theory to insulate us from. Upshot: tax rates will have to increase substantially in the medium term.
  - 7y ago