Friday, March 22, 2013

Bogleheads ? View topic - Making decisions on 401(k) and student ...

Not sure if this should go in this forum or in Personal finance, but since I'd I'm reevaluating 401k options I figured this would be fine.
I'm still a relative newbie when it comes to financial matters, so forgive me if I'm missing pertinent information.

Emergency Funds: Whatever is in my checking account about $7,000
Debt: $17,555.92 student loan at 4.5%, $17,864.55 at 6.8% (oy)
Tax Filing Status: Single
Tax Rates: Federal 25%, I live in NYC so I pay NY state and city tax. Just started new job in New Jersey so I will be paying NJ State tax as well. Not sure what the rates are.
State of Residence: NY
Age: 28
Desired Asset Allocation: Mostly stocks. I believe my investing nature is aggressive, and I have a little bit of a later start than I would have liked.

Other Info
Salary: 64,000
Roth IRA: ~$5,300 in Vanguard Target Retirement 2050
401(k): ~$5,000 with Prudential

Here's the deal. I had my old job for about 2 years and was not making much. Company matched 100% up to 4.5% on 401k and I have about $5,000 in that account. I just started a new job making more (thankfully) and I have new 401k options and I'll have some extra income to either put into the 401k or try and pay off my loans.

I'm currently making the minimum payment on the 4.5% loan which is $177.65 and I'm paying $322.35 a month towards the 6.8% beast. The $322.35 is above the minimum payment (I just selected it to make my monthly total toward loans 500). When I had some extra cash I decided to open a Roth IRA and put money in there instead of paying a large amount towards high interest rate loan. I'm really torn between what the best strategy for me is. I lament the decision to undertake the loans but what's done is done.

Here are my 401k options:

Vanguard Windsor II Fund Admiral Shares, .27%
Daily Liquidity Stock Index Fund, 0%
Harbor Capital Appreciation Fund, Instl Class, .66%
Daily Liquidity Mid Cap Index Fund, 0%
American Beacon Small Cap Value Fund Instl Cl, .83%
Daily Liquidity Small Cap Stock Index Fund, 0%
William Blair Small Cap Growth Fund (I), 1.25%
Vanguard Global Equity Fund, .54%
Dodge & Cox International Stock Fund, .64%
Daily Liquidity Intl Stock Index Fund, 0%
Fidelity Diversified International Fund, .90%
BlackRock Intl Opportunity Portfolio, Instl Class, 1.27%
Lazard Emerging Markets Portfolio Instl Shrs, 1.14%
Vanguard REIT Index Fund Investor Shares, .26%
Moderate Aggressive Asset Allocation Portfolio, .29%
Aggressive Asset Allocation Portfolio, .30%

There are a few more, but these are the non fixed income options. The company will match 100% of the first 3% and 50% of the next 2%. I had 10% coming out of my paycheck for 401k from my last job, so I was thinking of doing the same or upping the percentage. However, I have a feeling I should be doing whatever I can to get rid of the 6.8% loan. I just know that the more you can pump into the 401k now, the more you can let time value of money do its thing.

I live with my girlfriend and we split rent. I own my car. Also, I'll be eligible for bonuses at work during and at the end of the year. Any bonus money will go towards the loan. I should also mention I have the option of making Roth 401k contributions.

So......what is my best plan of action?

Source: http://www.bogleheads.org/forum/viewtopic.php?f=1&t=113261&p=1647826

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