Hello all,

So I'm hoping I could get some advice from individuals who "wish they started sooner," and what their advice would be for investing and retirement.

I just rolled my 401k over to Vanguard because I changed jobs. I have $9,800 in retirement. I put it in a fund called Vanguard Total Stock Market Index Fund (VTSMX).
I then opened a Roth IRA and put $300 in it but no idea what to buy into or do with it.  

I can put in up to $300 a month into investing/retirement. Other than that my income goes to debt, such as a ridiculous education bill that I will have for a long time and wish I never got.

So my question, as a beginner not good with terms, what should I look into doing to help build towards retirement or just investing? I already know a big thing is to pay everything off but seeing as that will be a while I don't want to miss out on the compound interest I could have been earning.

Any advice or thoughts?

ETA: I have $1000 in emergency money - I know I need at least 3 months so I will continue to grow that.
I do not currently have a mortgage.

You are going to make a higher return paying off your debt than an IRA will compound.

Student loans are usually anywhere from 4-8% which is higher than most portfolios will perform.

IIRC VTSMX that you used is pretty good.  I also like VOO (Vanguard's 500 mirror ETF).  Both are good low fee options.

In my 401k the options aren't as good as those.  I use a target date retirement fund along with Fidelity's Mid cap and small cap funds.  Decisions to use those were based upon how well the funds have performed over the life of the fund.  I would probably have almost all of that money in VOO if it was an option in my 401k.

Sounds like you have a lot of catching up to do, but given the interest on your student loans, your probably better off focusing on the debt before upping retirement contributions.  The key is paying the debt off as soon as you can and immediately moving that surplus into your retirement accounts.

My student loan interest is 4.5% and 6.5% on $40,000. My payments are $429 a month starting in May.

I will definitely look into VOO and see what they look like.

I know I can save a lot in interest over the live of the student loans by paying it down/off, but I want to feel like I'm contributing to something else for the future instead of just debt for another 10 years. By then I will be 37 and nothing together for retirement. Trying to get ahead but school is making it rough.

I was around 30 before I finally got my stuff together, so don't feel too bad.

1) Always max company matching, if available - that's a 100% immediate free return and beats any debt pay-down you could do, so long as you're not missing payments as a result. If you'd miss payments by maxing match, then do as much as you can to max match without missing payments.

2) STOP SPENDING!!! Until you've got a comfortable buffer in checking/savings, every lunch, every tank of gas, everything you spend money on, you need to run through your "adult filter" and see if you need it, or if it's too extravagant. And even if it makes sense to spend a little today, work on how you can plan to spend less tomorrow. Eat bologna sandwiches you made Sunday night for a week. Clip coupons and look for sales.

3) Pay down debt, highest interest rate first, and maintenance on the others, until it's all gone. You need to do 2) in order to have the money to work on 3).

1) When I had company matching - I matched it. Unfortunately, the new company has no retirement program so I am on my own for it.

2) I stopped spending about 2 years ago, Credit Cards are no longer exist to me and I don't ever shop. I'm on a budget to pay down my debt.

3) I've been doing the debt highest rate first, and then rolling it to the next debt when it's paid. But I want to 'pay myself,' towards my future instead of feeling like I'll be sitting her paying debt for 10 years due to bad decisions regarding continuing education. No one told me as a young adult it would be a bad idea, it was always "you need a college education," and now I have one and I regret every bit of it.

Unless someone's offering you sweetheart IPO shares in the latest tech marvel, paying down debt is usually a better return than expected returns from most common retirement investments, until you're talking paying down a 2% car loan or 3.25% 30yr mortgage.

The intelligent discriminator is that if your expected return on the investment is higher than the price you're paying on the debt, it's safe to invest before paying down the debt, keeping in mind that you must at least service the debt to avoid fees and penalties.

ETA "plug the holes first, if they're emptying the bucket faster than you can fill it"

If you can swing it get a part time gig for a year or so, throw the extra dough at a your debt. get rid of it, then start building.  your are on the right track, IIRC 5k invested every year at 9% starting at 25 makes a million at 65.  you are a little behind but not too bad.

You're perhaps framing it wrong in your mind if you feel like paying down your debt isn't paying yourself the same way 401k savings are.  Paying down your debt is a guaranteed return of the interest rate.  401k savings are a speculative return, likely 4-9%, but nobody knows.  Unless you're incurring more than the standard deduction worth of deductible interest expenses, you can't even leverage the interest on your student loan to decrease your taxes.  This however won't make you rich, it is the "safe" approach.

I've yet to meet anyone who can time the market, but anyone can tell you the S&P 500 is at a high right now.  It won't go up forever, but nobody knows where it will stop.  So I wouldn't invest super heavy right now, ease in to it, so when the market finally corrects downwards, you can shift to investing more.  In the mean time pay down your debt.  The best strategy for an ignorant investor like me is to hold things a long time, and average out things by investing at a regular interval instead of all at once.  When I buy specific companies sometimes I win, sometimes I lose - I have never lost buying blended funds, I just haven't won "as big" as my occasional good picks.

The trouble with waiting for a downturn is that we're making america great again, so you might be waiting until 2020?

So you would prefer to be 37 and still paying for an education you got over ten years ago? Once you are debt free you can invest like crazy because you are not shelling out cash on payments.

Total stock mkt index is a good one, if you have growth index put some into that as well as small cap index all vanguard

This is good advice.

I agree with everyone else. I also graduated with $50k student loan debt about 4 years ago. My wife and I threw every dime we had at it and paid it off in 18 months.

We now contribute about 20% of our income to retirement includong filly maxed IRA and company 401k contribution matches whole saving for a house.

The point is, pay off that stupid woman Sallie Mae and move on with your life. As your income increased you will sit back on day and say "thank God I paid off my debt".

If we had not paid off our debt we would still be paying $400/mo in loans...

Debt payment will definitely yield a better return than the market right now that is at a historic high.

1) Check out Dave Ramsey, he is a great financial advisor/motivation coach. Being wealth is not as much about math is it is about behavior modification. Plenty of people with 6 fig incomes like doctors and lawyers live pay check to paycheck and have mountains of debt. Yet plumber, teacher, cops, firefighters, and garbage pickers can just as easily retire with millions of dollars.
2) Get out of debt ASAP. I would cut 401k savings back to just get your match, thats uually 6% with a 3% match but can vary by company. The sooner you get out of debt the sooner you take back control of your life and can start building wealth. $100k in your 401k means nothing if you owe $200k on your home, $50k on your cars, $30k on student loans and $5k on credit cards.
3) Start reading. Seriosuly, I didnt pick up a book for 10 years after high school. When i turned 28 I felt like I was in a rut and wanted to better my life. Thats when I discovered dave ramsey. Ive also read many other financial books.

I recommend the following:
Automatic Millionaire
Richest man in Babylon
The Success Principles
The millionaire Next Door
The 5 lessons a millionaire taught me

books on my to read list:
4 hour work week
Millionaire Habits
7 simple steps to financial freedom
Think and Grow Rich


You can also listen to them at work if you can access youtube.
Automatic Millionaire
https://www.youtube.com/watch?v=A8Nx6xZemG4

Millionaire fast Lane (30 Min Summary)
https://www.youtube.com/watch?v=I-XJRJxlfl4

Richest man in Babylon
https://www.youtube.com/watch?v=uJlHnFDdfRU

Think and grow rich
https://www.youtube.com/watch?v=X2aDtnmL6co

The 5 lessons a millionaire taught me
https://www.youtube.com/watch?v=RBzax3nS41s

if you read just one of these books a month for the next year you will have more financial knowledge than probably 95% of americans do. these basic principals can literally change your family tree for generations.

4) The easiest way to save more is not by earning more, that take time, you have to get more education, promotions, advance in your career, etc... but spending less is something you can do right now.
Stop going out to eat - People spend thousands a year on dining out
Cut cable - Save $100 a month, so $1,200 a year since I cut cable! if you like the feel of cable get "Channel master" its a over the air DVR that lets you record shows, fast forward through commercials, and has a complete TV Guide.
Rice and beans - My wife and I ate rice and beans 3+ days a week for a year while we paid off our mortgage
Buy generics, take stay-cations or put off vacations until major mile stones, its a great way to motivate yourself. We rewarded ourself with a trip to Florida after we paid off our home.
pack lunches - My co-workers go out to lunch every day, and they spend atleast $10 a day, thats $50 a week, or $2,600 a year. If you pack a pb&j for lunch every day over a 35 year period you would have several hundred thousands dollars. Thats more than 90% of americans have at retirement. I believe someone coined the term "Latte Factor"
5) Start now! the longer you wait the harder it is to catch up. And if you start in your 20s, get out of debt, stay out of debt and max out your 401k, by time you retire at age 60ish you will be sitting on a multi-million dollar nest egg.

EDIT: I see you don't own a home. When you are ready save up atleast 20% down, preferably more and buy within your means, unless you live in some big city like NY or San Francisco your first home shouldn't be over $200k, preferable more towards $100k, you can always upgrade later when you have the money. Also pay it off early, like within a few years. If you take out a 30 year loan you will usually pay more in interest than the value of the loan, IE you will end up paying $400,000 for a $200,000 house...that's a terrible deal! unless you are the bank haha

Follow this advice to a tee and you will be a millionaire.

Only thing I'm not crazy about with Dave is his all stock investing advice and the pay off your house ASAP advice. I agree paying off your house fast is important, but paying 200k off on a house costing you 3% interest when you could put 200k in investments earning you 6+% compounding interest doesn't make a lot of sense to me. I'm sure he has reasons why he believes that, but I'm just not convinced.

Other than that, we are on steps 4-6 now and should be millionaires in 12 years according to my estimate (I will be 43). My goal is to be worth a million by age 45! Thanks Dave!

Thanks everyone for the feedback. So far I'm realizing that I will go no where until I take care of that large school loan. Wish I knew then what I knew now, to not accept the school loans or to have started paying them as soon as I got them to avoid the interest they've gained. So I will make a plan to pay that down.

Also, I had ironically listened to an audiobook by Dave Ramsey last week. So I appreciate the links to to other Youtube material. I listen to them while driving to and from work.

I'll have to look into some side work to help pay it down faster. A second job isn't doable right now, but going back into online sales from home is an option.

I do not own a home, I live with my boyfriend currently and he owns the home. I still in the future would like the opportunity to buy a small plot of land but I just see the debt numbers going up right now so I will not be looking at that for a while.

Not paying off debt as early as possible and not diversifying my investments were my biggest mistakes. I lost a lot when the tech bubble burst in the 90s. I actually kept 30k in risky tech funds that I could have paid off both my cars with. I should have paid off the cars. Live and learn.

Sounds like you have the right mindset.

I dont know how serious you are with your BF but setting a goal of being debt free before youre married would be pretty cool. My wife and I did the typical mistakes right out of college, we ran up student loans and both bought brand new car. Then we and expensive wedding and bought a $200k house, which is WAY bigger than we need, i mean we have no kids yet but have 4 bathrooms and 4 bedrooms, i dont know what we were thinking! I guess we wanted to emulate the life style our parents had but they didnt get big houses and new cars until they were in their 50s.

FWIW its a lot easier to save once you get married. Our insurance went down, we no longer have two places were paying for, we dont go out to eat as often or spend as much money on entertainment as we are no long trying to uh "impress" the other person.

One piece of advice is to make sure you have goals. For us the hardest part was staying motivated, especially when paying off the mortgage as it was so large and took like 2+ years to pay off. We always try and keep short term (few months away), medium term (less than 5 years) and long term (10-20+ years) goals so we know what we are working for. Right now we are debt free but are saving for a vacation to Florida later this year, would like to make some renovations to our house within a year or two, would like to buy a vacation home in Florida in 10-15 years, and retire in about 20 years.

Last piece of advice. When I decide if I want to buy some non essential item I think of it not in todays value but in future value. If invested properly money can double every 10 years. So $1,000 today =
$2,000 10 years from now
$4,000 20 years from now
$8,000 30 years from now
$16,000 40 years from now

Making a IMO silly financial decision like buying a $30,000 car in your 20s right out of college (exactly what i did btw) could easily cost you $500,000 at retirement.

Im in my 30s now so I just multiple everything by 5 to get the rough future value. I just passed on a $100 pair of shoes because the ones im wearing are just fine and I would rather have the $500+ when Im older.

good on you for getting started! Some of us waited longer than you and are playing catch up.

My honest advice is to read up at Mr Money Mustache forum. Funny name, but good advice. Basically pay down whatever is more than 7% interest, since that's about market return after inflation. You can walk away from work forever and live off the interest once you hit 25x times your annual spending. so that number is much bigger if you spend a shit ton. Spending a lot on dumb stuff is dumb. Cars are one of the bigger leaks, eating out, drinking out, wasting money are the next.

we spend 25k a year on my student loans and day care, and are still close to maxing our 403 and Roth (like a 401 but for teachers). I teach so not a huge salary either. The difference is living cheaper and squirreling money away. pay your future self first. Invest, then take care of bills, then save for shit (house, used car in cash, vacation) then the left over is play money. I keep it honest and still get maybe $100 a pay check left over for gun money. That's why I have to sell stuff when I want new stuff, but I still do alright

I would also add:
The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns by John C. Bogle
The Bogleheads' Guide to Investing by Taylor Larimore and Mel Lindauer

Both great books.

beans+rice (ask dave ramsey)

Richest man in Babylon
https://www.youtube.com/watch?v=uJlHnFDdfRU

took from above poster,,, BEST (imho) intro book on investing for someone to read/ listen to.

It's fine to attack both in a balanced manner.  In fact, it's preferable.  Something about not putting all your eggs in one basket.

I disagree with the approach of wiping out debt first and then moving on to retirement but I guess that falls under the "different strokes" clause of investing.  My opinion is that it's better to deal with both in a balanced manner as long as one option is not dramatically superior to the other because you never know how the law will change with respect to the treatment of such debt nor do you know for sure what the market will do over the next 30 years.  

If you are paying 4.5%-6.5% on your debt then it is extremely clear that paying debt is not dramatically superior to saving and investing therefore my opinion is a balanced approach.  Odds are decent that money thrown either direction will perform about the same in the medium term but by splitting your efforts you'll have a bit of diversification if they don't.

Aside from that, the REAL key is to keep a lid on your expenses.  If your income grows, try to resist the urge to grow your lifestyle with it on a 1:1 basis.  It's really easy to slip into that trap of thinking you can afford that nicer car, nicer home, nicer whatever just because you happen to have the dough.  

Probably the most damaging things to a budget are those which are recurring like a rent payment, mortgage payment, cable bill, car payment, any kind of membership, ect.  Those are the things that chip away at you every month and after a couple decades add up to real money.  It's not that you can't have those things but think about them really hard when you are deciding if you want to spend extra $25 per month on a moon roof or an extra $300 per month on a place to live with a few extra square feet.

I'm about to turn 58 and still don't have any idea what I'm doing!

But it works for me...

Buy into some blue chip companies that pay good dividends, get into their drip program, go to computershare.com

That's one of my favorites as well. It explains the basic concept of invest and handling money in the form of a story, rather than some books which are heavy on numbers, statistics, etc... which can loose some people interest quickly