Joined:
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Posts:
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TN, USA
Posted: 10/19/2025 3:39:19 PM EDT
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wanted to throw out to the forum our financial situation and see if anyone had any suggestions on what to pursue next. We have solid income in a low cost of living area (130k.) bought our house in 2020 and have a 2.1% interest rate, only issue is we need a bigger one and would like to find one in 3-5 years. Probably have 100k equity in our current home. Debt: Car loan: 2 more years, 11k owned at 2.75% Student loans: 3k (5%), 8k (4%) 6k (3.5%) Our investments could be better, we have about 20k invested in work 401k's and we're 30 years old. What to tackle first? I feel that we have plenty of discretionary income, but it feels that if you're trying to save for a home, pay down debt, and invest at the same time it's hard to see any progress. Any advice welcome. 
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Set aside your highest deductible. Max employer match for 401k's. High Interest debt. (at 30, your 5% student loan is in this category, barely) 6 months salary reserve (+ sinking fund for house upgrade) Max HSA and Roth IRAs etc... Attached File Moneyguy's Financial Order of Operations |
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1. Pay off all toxic debt (credit cards, high interest rates). 2. NEVER carry a balance on a credit card month to month. 3. Build an emergency fund of 6-12 months of *expenses* and keep it liquid, such as in a High Yield Savings Account (HYSA) or Money Market Fund (MMF) 4. Contribute to your 401k up to the company match maximum. 5. Contribute to an HSA (if offered/eligible) up to the maximum allowed. 6. If your 401k plan allows, contribute to a Mega Backdoor Roth. https://thecollegeinvestor.com/17561/understanding-the-mega-backdoor-roth-ira 7. If you do not have access to a Mega Backdoor Roth through your 401k, contribute to a ROTH IRA (unless income ineligible, then use Backdoor Roth IRA method. https://thecollegeinvestor.com/38006/how-to-do-a-backdoor-roth-ira 8. Go back and finish contributing to the 401k plan, up to the maximum limit ($23,000 in 2024, plus $7500 for age 50+). 9. If offered a Company Stock plan (ESPP/ESOP) that gives you shares at a discount, AND you can sell immediately upon stock purchase, contribute the maximum amount to this program and sell each time. You should participate in this regardless of any choices or order of operations above. This runs in parallel to everything else. 10. Open a taxable brokerage account and begin investing here, and/or real estate, and/or side business. 11. Consider funding children's college in 529 plans or taxable brokerage account, or other state advantaged options. 12. Limit the amount of vehicle debt you carry, as vehicles can be one of the biggest barriers to building wealth. Between depreciation and interest, this can be a wealth evaporator. Invest all of these in a low fee Total US Equities Market index fund like VTI/VTSAX/FSKAX (if offered) or an S&P500 index fund like VOO/VFIAX/FXAIX, to start. DONT TOUCH it. Just be steady and don't change, be careful who you listen to, and don't make emotion-based moves into cash because what you just "know", likely is not so. Recommended reading: https://www.amazon.com/Simple-Path-Wealth-financial-independence/dp/1533667926 https://www.amazon.com/dp/1119847672?tag=arfcom00-20 https://www.amazon.com/Richest-Man-Babylon-Original-Classics/dp/B0C1J5ML66 https://www.amazon.com/The-Millionaire-Next-Door-audiobook/dp/B0000547HR I don't know that you are already living beyond your means, but it sure looks like you are, or possibly you focused on debt repayment instead of investing for WAY too long. You are WAY behind on retirement, and I would absolutely play catchup on that before taking on more/bigger debt, for sure. At 30 years old with 130k income and LCOL, you should be close to $130k at age 30, and $260k by age 35. 15% of your income is $19,500. That's what you should have been putting in retirement EVERY year. Pay yourself first, and build your emergency fund and plan for your future. Once those are back on track, then focus on the "wants". |
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Originally Posted By FALARAK: 1. Pay off all toxic debt (credit cards, high interest rates). 2. NEVER carry a balance on a credit card month to month. 3. Build an emergency fund of 6-12 months of *expenses* and keep it liquid, such as in a High Yield Savings Account (HYSA) or Money Market Fund (MMF) 4. Contribute to your 401k up to the company match maximum. 5. Contribute to an HSA (if offered/eligible) up to the maximum allowed. 6. If your 401k plan allows, contribute to a Mega Backdoor Roth. https://thecollegeinvestor.com/17561/understanding-the-mega-backdoor-roth-ira 7. If you do not have access to a Mega Backdoor Roth through your 401k, contribute to a ROTH IRA (unless income ineligible, then use Backdoor Roth IRA method. https://thecollegeinvestor.com/38006/how-to-do-a-backdoor-roth-ira 8. Go back and finish contributing to the 401k plan, up to the maximum limit ($23,000 in 2024, plus $7500 for age 50+). 9. If offered a Company Stock plan (ESPP/ESOP) that gives you shares at a discount, AND you can sell immediately upon stock purchase, contribute the maximum amount to this program and sell each time. You should participate in this regardless of any choices or order of operations above. This runs in parallel to everything else. 10. Open a taxable brokerage account and begin investing here, and/or real estate, and/or side business. 11. Consider funding children's college in 529 plans or taxable brokerage account, or other state advantaged options. 12. Limit the amount of vehicle debt you carry, as vehicles can be one of the biggest barriers to building wealth. Between depreciation and interest, this can be a wealth evaporator. Invest all of these in a low fee Total US Equities Market index fund like VTI/VTSAX/FSKAX (if offered) or an S&P500 index fund like VOO/VFIAX/FXAIX, to start. DONT TOUCH it. Just be steady and don't change, be careful who you listen to, and don't make emotion-based moves into cash because what you just "know", likely is not so. Recommended reading: https://www.amazon.com/Simple-Path-Wealth-financial-independence/dp/1533667926 https://www.amazon.com/dp/1119847672?tag=arfcom00-20 https://www.amazon.com/Richest-Man-Babylon-Original-Classics/dp/B0C1J5ML66 https://www.amazon.com/The-Millionaire-Next-Door-audiobook/dp/B0000547HR I don't know that you are already living beyond your means, but it sure looks like you are, or possibly you focused on debt repayment instead of investing for WAY too long. You are WAY behind on retirement, and I would absolutely play catchup on that before taking on more/bigger debt, for sure. At 30 years old with 130k income and LCOL, you should be close to $130k at age 30, and $260k by age 35. 15% of your income is $19,500. That's what you should have been putting in retirement EVERY year. Pay yourself first, and build your emergency fund and plan for your future. Once those are back on track, then focus on the "wants". There may be some folks who want to add minor tweaks or major overhauls to the above advice, but it is EXTREMELY solid. I will add that many people do not fully understand what all those numbers and acronyms regarding employee benefits. If you are one of them, you really should set aside an hour or two to understand why 401ks, Roths, HSAs, and ESOPs/ESPPs are the equivalent of finding bags of money on the sidewalk and why you need to take advantage of them. Conversely, high interest and vehicle (and other depreciating asset) debt are the equivalent of you going to the ATM, filling a bag with money, and dropping it on the sidewalk. Finally, never leave yourself short on cash. If you leave the opportunity for life to kick you square in the dick, it will do it. The day you get laid off from work will be the day your wife rear ends someone, the furnace shits the bed, and your dog needs emergency surgery at 3am on a Sunday. |
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solid advice above. i found my guide when i found the financial order of operations from the money guys posted above. Originally Posted By Caulker: it feels that if you're trying to save for a home, pay down debt, and invest at the same time it's hard to see any progress. Any advice welcome. that is just what it feels like in the moment. keep making responsible financial decisions. the decisions will compound. one day you will be staring at your net worth wondering how it happened. |
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Some solid advice above but I’ll look at it from a different angle. I suspect you’re spending too much. Wasting money in places you shouldn’t be. You aren’t alone though. Lots of people do it. Rough math in my head says you probably are spending more that you should on frivolous stuff. With a $130k income in a low cost of living area, you should have more saved at your early 30s unless you finally got your jobs and haven’t been making $130k for long. Are you getting your full employer match to your 401k, if any? Vested or will be in any pensions? Need or want a bigger house? Lots of people buy way more house than they need/can afford. Don’t let your house strangle you financially. I know someone who is experiencing that now. It’s sad to watch. You have a great interest rate and are young (so plenty of time to pay on your mortgage over 30 years and invest). I would be VERY hesitant to give that up. Take a long hard look at your spending. Write out a budget. Lots of people are shocked when they actually see where their money is really going. Good on you for asking questions and looking for answers. Lots of people either never ask those questions or ask them way too late. You still have plenty of time to become financially independent. |
"It behooves every man to remember that the work of the critic is of altogether secondary importance, and that, in the end, progress is accomplished by the man who does things."
Theodore Roosevelt
Theodore Roosevelt
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Originally Posted By ColtRifle: I suspect you’re spending too much. Pay off the 4% and 5% debt, pay the debt below 4% on schedule and get all the matching available to you. Make sure you're investing aggressively since you're so young(sp500 or more aggressive). If you're not already, track all your spending into a few broad categories (house, cars, groceries, medical, etc) to know where your money is going and identify any unnecessary spending. Since you're so far from retirement the common guidelines of 3x your salary at age Y are a great place to start. Fidelity says at 30 you should have 1x your annual income saved for retirement. Get on the track Fidelity outlines and you'll be in excellent shape - the next goal is 2x your income at 35. |
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You are actually in a very good place given your age IMO. Since you asked, this is how I would approach it. 1. Focus on killing the student loans. 2. Kill the car loan asap. (and never have another car loan) I know this can be done because we did it for 35 years. Given your income I would think you could do this in a year or so. All of this should be done while taking advantage of any 401K company match. Once the loans are paid, start maxing out the 401K's. The way we did it was whenever we got a raise we applied the full amount to increasing the 401K. Lived on the principle that we were already living on the lower amount and it wouldn't be missed. (spoiler alert, we didn't miss it) After a few raises you are maxing out the 401K and you can then start enjoying your raises. |
Joined:
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TN, USA
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Originally Posted By VegasEggus: You are actually in a very good place given your age IMO. Since you asked, this is how I would approach it. 1. Focus on killing the student loans. 2. Kill the car loan asap. (and never have another car loan) I know this can be done because we did it for 35 years. Given your income I would think you could do this in a year or so. All of this should be done while taking advantage of any 401K company match. Once the loans are paid, start maxing out the 401K's. The way we did it was whenever we got a raise we applied the full amount to increasing the 401K. Lived on the principle that we were already living on the lower amount and it wouldn't be missed. (spoiler alert, we didn't miss it) After a few raises you are maxing out the 401K and you can then start enjoying your raises. Think we should work on padding our emergency fund first before tackling the debt? I've been sort of doing a debt avalanche method for debt payoff by going after the highest interest student loans first. |
Joined:
Sep 2023
Posts:
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TN, USA
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Originally Posted By FALARAK: 1. Pay off all toxic debt (credit cards, high interest rates). 2. NEVER carry a balance on a credit card month to month. 3. Build an emergency fund of 6-12 months of *expenses* and keep it liquid, such as in a High Yield Savings Account (HYSA) or Money Market Fund (MMF) 4. Contribute to your 401k up to the company match maximum. 5. Contribute to an HSA (if offered/eligible) up to the maximum allowed. 6. If your 401k plan allows, contribute to a Mega Backdoor Roth. https://thecollegeinvestor.com/17561/understanding-the-mega-backdoor-roth-ira 7. If you do not have access to a Mega Backdoor Roth through your 401k, contribute to a ROTH IRA (unless income ineligible, then use Backdoor Roth IRA method. https://thecollegeinvestor.com/38006/how-to-do-a-backdoor-roth-ira 8. Go back and finish contributing to the 401k plan, up to the maximum limit ($23,000 in 2024, plus $7500 for age 50+). 9. If offered a Company Stock plan (ESPP/ESOP) that gives you shares at a discount, AND you can sell immediately upon stock purchase, contribute the maximum amount to this program and sell each time. You should participate in this regardless of any choices or order of operations above. This runs in parallel to everything else. 10. Open a taxable brokerage account and begin investing here, and/or real estate, and/or side business. 11. Consider funding children's college in 529 plans or taxable brokerage account, or other state advantaged options. 12. Limit the amount of vehicle debt you carry, as vehicles can be one of the biggest barriers to building wealth. Between depreciation and interest, this can be a wealth evaporator. Invest all of these in a low fee Total US Equities Market index fund like VTI/VTSAX/FSKAX (if offered) or an S&P500 index fund like VOO/VFIAX/FXAIX, to start. DONT TOUCH it. Just be steady and don't change, be careful who you listen to, and don't make emotion-based moves into cash because what you just "know", likely is not so. Recommended reading: https://www.amazon.com/Simple-Path-Wealth-financial-independence/dp/1533667926 https://www.amazon.com/dp/1119847672?tag=arfcom00-20 https://www.amazon.com/Richest-Man-Babylon-Original-Classics/dp/B0C1J5ML66 https://www.amazon.com/The-Millionaire-Next-Door-audiobook/dp/B0000547HR I don't know that you are already living beyond your means, but it sure looks like you are, or possibly you focused on debt repayment instead of investing for WAY too long. You are WAY behind on retirement, and I would absolutely play catchup on that before taking on more/bigger debt, for sure. At 30 years old with 130k income and LCOL, you should be close to $130k at age 30, and $260k by age 35. 15% of your income is $19,500. That's what you should have been putting in retirement EVERY year. Pay yourself first, and build your emergency fund and plan for your future. Once those are back on track, then focus on the "wants". Good advice, we haven't been making this long (this is combined income). But we also spend somewhat frivolously. Going to start paying ourselves first. Do you suggest building a larger emergency fund first before tackling the debt? |
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I never kept a specific emergency fund sitting in a savings account like some people recommend I did have brokerage investments outside of my 401k. It might take a few days to get money but I can’t imagine an emergency where that wouldn’t take care of it If I was in your shoes I’d do a little of both paying off highest interest debt and paying myself via increased 401k or other investments. The time value of money is amazing but you can’t make up the time |
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Originally Posted By Caulker: But we also spend somewhat frivolously. Going to start paying ourselves first. Do you suggest building a larger emergency fund first before tackling the debt? I recommend you start tracking expenses so you know where your money is going. |
Joined:
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Posts:
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TN, USA
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Originally Posted By Morgan321: If you don't have $3k available to pay off the 5% debt you're in worse shape than you let on. I recommend you start tracking expenses so you know where your money is going. We got that, was thinking more so about building the fund out to cover a year of expenses. |
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Originally Posted By Caulker: We got that, was thinking more so about building the fund out to cover a year of expenses. What payments are you making on the student loans? If you're making the minimum payments you're losing your shirt on them. If your payments are large enough to have them paid off in under two years or so I would be OK with that. Longer than two years and I would find money to get them paid off faster. You need to focus on tracking where your money is spent so that you can make changes to have more money to put towards savings. You're young so small changes now will make a huge difference in 30 years or so when you want to quit working. |
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Originally Posted By Caulker: Do you suggest building a larger emergency fund first before tackling the debt? Since all of your debt is relatively low interest - YES. If the 5% and 4% loans just burn your chaps.... sure you could knock those out quickly then go back and focus on the emergency fund. I'd not focus on early repayment of ANY debt at 3.5% or less, I'd rather see that money go into bolstering retirement and pay the debt over time. Math is in your favor significantly. |
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Originally Posted By Caulker: We got that, was thinking more so about building the fund out to cover a year of expenses. 6 months of expenses (not income) is usually fine for most people, UNLESS it would take longer to replace your income, or you have children and value security/peace of mind over the opportunity cost. Most of my working career I only ever kept 6 months expenses, and my expenses were pretty low until I had kids. 
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Originally Posted By Caulker: Good advice, we haven't been making this long (this is combined income). But we also spend somewhat frivolously. Going to start paying ourselves first. Do you suggest building a larger emergency fund first before tackling the debt? Lots of good advice so I don't have anything to add there. Just a comment.....LOTS and LOTS of people do exactly what you are doing. VERY VERY common. Low income and just making ends meet. Then you start making a good income and you live it up. Nothing unusual there. BUT....just don't keep doing it. Get your expenditures under control. Start saving and investing. Then, watch your net worth grow. It's hard when your friends/peers are pressuring you to spend like them. Ignore it. It's not that hard but does take some self discipline. Good luck! You got this! |
"It behooves every man to remember that the work of the critic is of altogether secondary importance, and that, in the end, progress is accomplished by the man who does things."
Theodore Roosevelt
Theodore Roosevelt
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not downplaying all the good advice in previous posts and it is good advice, but I would first start with hitting hard on what a couple of posts hinted at should be your first step. Find out where you are spending your money. track every dollar made and how ever dollar is spent. once you have this information you can start making budget plans, tackle your debt, and make inroads on all the good advice on investing I recently sat down with a cousin that begged me to help them as they were always in debt with no savings and made a decent income. just for example when we sat down and went through their spending, they were shocked to realize they had over 550$ a month in streaming services and cable tv. the other big one that was shocking was that they hit Starbucks several times a day that was routinely running them over 600$ a month. you don't need to live like a monk, feel free to treat yourself from time to time but it is amazing how much money you can free up for investing once you start paying attention to how your money is being spent. |
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Originally Posted By Caulker: Think we should work on padding our emergency fund first before tackling the debt? I've been sort of doing a debt avalanche method for debt payoff by going after the highest interest student loans first. Originally Posted By Caulker: Originally Posted By VegasEggus: You are actually in a very good place given your age IMO. Since you asked, this is how I would approach it. 1. Focus on killing the student loans. 2. Kill the car loan asap. (and never have another car loan) I know this can be done because we did it for 35 years. Given your income I would think you could do this in a year or so. All of this should be done while taking advantage of any 401K company match. Once the loans are paid, start maxing out the 401K's. The way we did it was whenever we got a raise we applied the full amount to increasing the 401K. Lived on the principle that we were already living on the lower amount and it wouldn't be missed. (spoiler alert, we didn't miss it) After a few raises you are maxing out the 401K and you can then start enjoying your raises. Think we should work on padding our emergency fund first before tackling the debt? I've been sort of doing a debt avalanche method for debt payoff by going after the highest interest student loans first. Yes, I'd have an emergency fund in place in case the HVAC or water heater goes out. |
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Nothing says you have to build the ideal emergency fund all at once. A passable E fund could be two or three months of expenses. In a year build it up to 4,5, or six months of expenses. Meanwhile work on the killer debts along the way prioritizing them as appropriate. Build a solid house. It isn’t done overnight (but you do have to put the effort in or it will never get built) |
The only hyphenated names I like are cartridge names......30-06, 30-40, 38-55 etc.