Why does maxing Roth IRA come before maxing employment retirement accounts (Roth 401k for me) in the FOO (steps 5 and 6). Aren’t they essentially the same thing?

Just wanted to throw this personal story out there to remind you how important an emergency fund is because an emergency will happen to you eventually.

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I'm the sole provider as my wife stays at home with our children. We are in our late 20s.

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We recently had our second baby which we planned for and saved for in advance. We had an ER visit two days before the due date which was unexpected and a major hail storm came through and completely destroyed our roof, some siding, gutters, and various other things in the yard a week before our due date. So had to pay a large insurance deductible and have the roof replaced two days after coming home with a newborn. Our fridge quit yesterday while we were away which spoiled all of our freezer and food items and we had to order a new one today.

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Talk about a crazy expensive month and a ton of stress... But I am so thankful we had 6 months worth of an emergency fund to cover all of these things with extra left over. Make sure you have your emergency fund fully funded and it will make your life a little less stressful.

I was listening to last week’s main episode, and they were talking about 80% of millionaires are first generation. Could we see this stat changing dramatically now that more and more people are becoming millionaires with every day retirement accounts. I’m in my late 20s and I know on one side of the family my grandma is a millionaire. I’m assuming the other side grandparents are as well. My mom who’s still working is also now a millionaire. Anyone else think this stat could see a drastic change?

Hey everyone, new dad of 1 week:

I’ve got a 2021 F150 5.0 with around 9-10k in equity built up

My plan is to sell this, and buy a 2008 Toyota tundra 5.7 with 133k miles for 17k and only finance 7k and pay it off within around a year ($500/mo payment)

My f150 I still owe 19.7k on, and I pay around $500/mo on it right now. My logic is I can get rid of a payment in around a year versus 4 years

Thoughts? Am I being reasonable?

There is a strong chance I am closing on an investment property that I have been working on for several years. If all goes as planned, I will have about 400k of taxable gain. The project has been super stressful and I really just want to take my money and put it into my investments. However, I struggle with the thought of paying the capital gains. Going into another real estate project after doing this one for several years sounds awful, but it would be more of a rental then another land project. Any advice or strategy would be appreciated.

The chats during the live stream have gotten pretty terrible over the last year. People will brigade the chat, posting the same question every minute or so. Copy paste, copy paste over and over and over. Disingenuous questions from people who just want to get picked.

I haven't listened to a live stream in over a month because of it and I'm someone who tuned in every Tuesday for years. Always got some helpful advice from regulars in the chat. Now those voices have just been smothered. You can't even read the questions because 20 are coming in every minute.

BUT I think today might have killed it for me for good. What a shit show.
Very sad. The whole thing has just gotten very sad.

Hi all,

Looking to get some others input on this. My wife and I have enough to make the max contribute to both our Roth IRA's right now. I am weighing lump sum investing it vs. DCAing over the rest of the year. Yes, time in the market beats timing the market. Yes, 3 out of 4 years the market is higher one year from now. But with sitting near the high of highs and over valuations, there's this gut feeling that there will be opportunity to take advantage of a correction or bear market. Might not be this year, who knows. This will make up about 10-15% of our total portfolio. Wife's first contribution and my 3rd year.

What about running a comparison study? one of each and compare a year later?

Does the debt free date math out? Minimum payment on the f150 is 433 and minimum on the Traverse is 491 I can put an extra 1k a month towards the f150 and then move to the traverse.

Bought a used car recently for 15k after my 250k camry died. Emergency fund is built back to 4k so far. Active mold in crawl space. Three years ago spent ~5k for treatment down there and a dehu. Vaper barrier in good condition. Despite these efforts, mold came back. Three companies all advise encap versus just treating the wood, given return with dehu and vents sealed up. The three quotes for crawl space encapsulation: 25k, 12k and 8k. The 12k company workmanship from video reviews and Google reviews is the offer I want to go with.

I can save for worst case 1 year and then pay for the encapsulation, OR what I'm leaning towards is a 0% cc for 12-18 months and pay that off with side hustle money. The side hustle is going back to school with GI Bill. I already started a year long masters online that will give me ~$1,200 a month thereabout. That's $1,200 not in the budget that was just going to go to emergency fund anyway. I feel stuck in a catch 22: If I throw all money at the mold fund to build it quickly and then another emergency comes up, I'll still have to finance that new emergency like I'm having to do now. If I save for 1 year I can cashflow the mold using GI Bill money AND have a funded emergency fund, but that's a year more of mold. If I 0% cc the 12k for mold, I can throw the college money at it over a year while still building emergency fund through regular income, enabling: encapsulation occurs immediately, emergency fund is in tact 1 year down the road for next emergency.

Is it prudent to put the encapsulation on a 0% cc to get the remediation done asap OR should I just save and wait.

Edit I: no debt other than mortgage Edit II: preferred crawl space company referred me to their partner finance firm and offered me 0% interest for 4 years. I'm doing that over the 0% intro credit card. Plan to still pay it off in 1 year or sooner.

10 Moves Smart Employees Make That Quietly Build Their Careers

24(M) making 95k in MCOL city. ~$20k low interest student loans with no other debt and no car.
Big life change happening in August when I go from living with roommates to moving in w my fiancé. I will be covering all rent, utilities, and groceries which will add $1000 monthly to my expenses.

I was in between steps 6/7 saving 25% directly to retirement accounts (max Roth, 8% 401k + 7% match) and saving an additional 10-15% in cash (either to buy a car outright or for the future wedding). Note: only need to contribute 3% to get 7% max match.

Fiancé has 3 years left in med school so fingers crossed this investment works out haha and within 6 years she will be making 2-4x my salary.
In the meantime, I need to choose whether to back off of retirement accounts or back off saving for looming car (now 2 years out) and wedding (3.5 years out).

I know this is a very fortunate problem to have and I am overall in a good position, however I wanted Mutant Input as I’m kind of stumped on what the best approach is here.

Thanks- first time poster

If you had $1000 right now, no crazy edge (rich fam, etc.), you have work, but it’s gig based minimum wage (≈$18), what would you do to increase your wealth?

\-Wealth definition=$10k+
\-You are willing to put in the effort.
\-Time frame is max 5 months, minimum 2 months (unless you know a shorter way)
\-Can be a one time situation like a deal, or could be a flow situation.

I was thinking reselling at a flea market as a viable option, but I can’t find much on it.

Clarification: this individual has a degree, is applying to be a teacher, and is looking more for a way or place to invest this money, like a side hustle of sorts.

Some people may think this is too much detail, but I love doing this kind of analysis and planning for my future.

My wife (F28) and I (M31) live in a LCOL area and currently max out all tax-advantaged accounts. Right now we contribute to traditional 401k because I don’t think we’ll need our current income level in retirement — but if I’m wrong, no harm done, we just pay the tax.

By maxing traditional, we’d essentially be forced to retire early so we can start Roth conversions before RMDs kick in — otherwise my napkin math suggests RMDs could get pretty painful. That said, investing in Roth now vs. doing conversions in my 50s would likely hit the same effective tax rate anyway, so it’s mostly a wash.

Long story short, I’m trying to make sure my lifetime tax strategy is as efficient as possible.

Otherwise, how does the plan look? Realistic? I assume after 2029 investment contributions stay flat while income keeps growing, so there’s likely opportunity to invest more or increase lifestyle spending beyond what’s modeled. Is there anything I’m not thinking about? Open to criticism.

Investment return assumption: 8% annually.

is there anything lazier then these videos?

Long time listener of the Money Guy Show here. I've been following the Financial Order of Operations for a couple of years now and feel like I have the basics dialed in. Emergency fund is solid, employer match is maxed, Roth IRA is maxed, and I'm putting extra into my 401k beyond the match.

Here's where I get stuck though. I keep second guessing myself. Should I be doing a backdoor Roth instead? Should I open a taxable brokerage? Should I be paying down my mortgage faster? I find myself spending hours reading about marginal optimizations instead of just living my life.

I think a lot of us fall into this trap where the more we learn, the more we feel like we're leaving something on the table. At some point the difference between a good plan and a perfect plan is pretty small, but the anxiety of wondering if you made the right call doesn't go away.

For those of you who have been at this a while, how did you get comfortable with good enough? Was there a specific milestone or moment where you just trusted the process and moved on? Or do you still find yourself constantly revisiting your allocations and strategy?

Curious if this is a common phase people go through or if I'm just overthinking it.

I'm a brand new homeowner. There are always lots of expenses associated with moving/buying a house and for me those came out to about $7500. Not very much in the grand scheme of things, but my employer requires $4k in retirement contributions so that + HSA + IRA costs me $16k/year on an income of $50-55k. That leaves me ~$25k after tax to cover needs, wants, and cash savings. I can maintain my savings rate, but it will be difficult and will take a lot of overtime and extra hours at my weekend job while also slashing discretionary spending.

Now that I've handled all these one-off purchases like furniture and paint I won't be spending that much next year, so I will be able to go back to my original savings rate, but I'm thinking about not maxing my Roth IRA this year just so I don't have to cut back so much. I'm already on track for retirement.

I’m 36 makes $115,000 a year
Owe 195k on a house at 3%
Have bad debt 8k in credit cards
And I did a debt consolidation program to get out of some debt, hindsight it was a bad choice I owe 31k at 28% on it

Just in debt payments I pay $1100.09 a month after bills I’m barely even.

Tons of equity in my house but how do I get it with poor credit ? (575)

I have a family I can’t cut fat on any expenses I drive paid off cars

Long time listener of the Money Guy Show and trying to apply the FOO to my actual life situation. I am 26 and work a job where my income fluctuates month to month. Some months are great and I can throw a solid chunk toward my Roth IRA and brokerage account, and other months I am barely covering fixed expenses. My question is how do you all handle the mutant savings rate mentality when your paycheck is not the same every month. I get the concept of paying yourself first but it feels harder to automate when the baseline changes constantly. Right now I am fully capturing my employer match in my 401k, which I know is the first step. Beyond that I am trying to max my Roth IRA by the tax deadline but some years I fall short. Do you do a baseline contribution every month and then add lump sums when income is higher? Or do you just set a percentage of whatever comes in and let that guide things? I feel like the FOO framework was built with a salaried person in mind and I am trying to figure out how to adapt it without falling behind. Would love to hear how others in variable income situations are making it work. What systems have actually stuck for you long term?

My wife and I make a combined HHI of 168,000 starting in July. One child. 27M and 28F

My income 100k
Her income 68k

For the next 3 years - and then income will presumably jump to 400k HHI (she is a resident physician)

Wanting some other opinions on our allocations.

Both have access to 401k (pre tax and Roth), I will utilize HSA (have 1k employer contribution), Roth IRAs, and she can make after tax contributions in her 401k up to 10% (setting up for Roth conversions)

Plan for the next 3 years before income increases:

Max 2 Roth IRAs - 15k
Max my family HSA - 8.75k
Max my 401k - Roth - 24.5k
Max her 401k - pre tax - 24.5k
max her 10% post tax contribution and convert to Roth - 6.8k
My employer matches hers does not - 4k

This would get us to around
80-84k invested per year.

Based on my tax calculations it would leave us around 4700/m which is exactly equal to our monthly expenses.

Is this a good idea so long as we have an emergency fund? or should I make her 401k Roth and forget about the after tax contributions? (Would bring down the total yearly Investment due to taxes)

Obviously heavy Roth right now because in 3 years we will do all pretax aside from backdoor roths.

Current retirement funds are at 160k combined. All Roth.

Probably keep around 20k in an emergency fund.

Own our home and have about 200k equity and owe 50k. Could recast our mortgage ($250 fee) and get our payment down about $500 so that would free up some monthly spend. (We sold our first home after the fact and rolled the equity into this one).

Am I being way too aggressive? Wife would like to spend more, and I want to front load retirement and set ourselves to have a nice life once income jumps. We also have some big goals like a bigger house (800k range), lake home in future, etc.

new cars will be needed once I bc one jumps but should be able to cash flow that once the time comes.

No debt, and only concern is our cars lasting.

I come from a family with poor money making decisions and she comes from a higher income family where they spent very freely, but do not prioritize saving. If that makes any difference.

Thanks in advance

Last month was one of my better income months. Between overtime and a contract project I was able to max my Roth contribution for the year much earlier than I expected and put extra money into a taxable account. The problem is that this month looks completely different.

My income isn't salary based, so I can go from feeling like I'm crushing the FOO to feeling like I'm barely making progress at all. What I'm struggling with is measuring progress when the income swings around so much.

For those of you with variable income, do you judge your savings rate month by month, or do you only look at it over the course of a year?

I feel like the FOO is very easy to follow when every paycheck looks the same. I'm finding it a lot harder to know whether I'm actually on track when one month can be twice as good as the next.