Answering a reader question
I received a message the other day from a fellow newlywed-er (am I still a newlywed at year 3?) She was asking for a little financial advice. So, I will share what I have and hopefully we can get some input from some of the readers.
Here is an excerpt from what she wrote:
As a newlywed, I just started to plan my life with a person.
I really like your advice about using the Roth IRA to save early.
I am wondering could you write more about those?
I really want to know what you would recommend a new married couple should save up for? A house, a baby, pay off loans,Roth IRA…or what else?
Well, I guess I will just share what my wife and I are currently doing. Since we are transitioning out of the newlywed phase (having been married almost 3 years) we are likely in a similar place.
My financial story
My wife and I (look to the right) both brought a decent chunk of debt into the marriage from our past mistakes and education expenses. Since we got married we have been focusing most of our energy on paying off all of our debt. I really like the debt snowball method for getting out of debt and for the most part we have been using it. The variation that we have made is that we have been funding a Roth IRA as well as our 401k’s.
By not putting all of our financial energy into paying off our debt, we realize that it will take a little bit longer. All of our debt is at 3% interest rate or less, so paying it off quickly is not a major issue for us.
Having learned from a few wise mentors in my life, I have come to understand the impact that time has over investments. Without getting into too much detail, I will just say that getting started investing early puts you at a high advantage. It is not just a little bit better than waiting, but a HUGE amount better. Having enough for retirement can be a breeze if you get started while in your 20′s. It was for this reason that I wanted to get the ball rolling with my investment portfolio.
I say all that to say: everyone’s financial decisions of what to save up for should be based on their personal situation.
For us, our current priorities (always subject to change) are:
- Getting out of debt
- Having plenty of cash for retirement
- Home ownership
- Kids and all the expenses they bring
Because of this we have been focusing about 75% of our financial energy to paying off debt and 25% to retirement. My goal is to finish paying off our student loans this year, which will allow us to start saving for the other priorities.
Personally, I hate debt. I can’t stand the feeling of being a “slave” to lenders as Proverbs puts it. I also don’t want to have to work when I am 75. My strong feelings with both of these issues guide my financial decisions.
So, do you have any financial advice for your fellow newlyweds? What do you think young married couples should be saving for?
{ 4 comments… read them below or add one }
Thank you for the post.
I think our goal will be getting out of debt first,too.
You know, I started our ROTH IRA because your previous post.
Thank you,
no problem, the question was a good one – thanks for asking
I would recommend adding “saving for your next car” once the debt is paid off. My husband and I are doing this so that we’ll hopefully be able to pay cash for our cars when they get replaced in the next 4-5 years (his car is already 10 years old now and mine is 8 years old).
I also really like the idea of funding your ROTH while getting out of debt. Good advice
In my opinion part of the challenge in finding correct advice is getting the right advisor!!! Say you don’t get on with the expert who is providing advice, and they don’t get your needs, it just won’t work. That’s why that I feel that it is quite a problem with buyers trying only call centres or the internet looking for advice on money. One on one in my view is the best method.
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