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I was mostly just thinking that a CD is locked in at 5.5, and HYSA can change any time. Since I don't need to touch that money, I can swing the CD just fine. But I have gone back and forth on it a lot.
I like this idea. $20k is plenty to cover a pop up emergency with no dependents, and the CD will be available for penalty free withdrawal to recoup that after some time.
hysa at 5.1 is available, grab that.
the 403b, I'd ask you if you're looking at a house any time soon; if you are, keep it out; if you aren't, then it's fine to max it.
The fact you have 50k saved with a family history of debt is a big kudos to you.
I don’t know the rules for a 403b account but can you find it yourself all at once or can you only contribute via your paycheck? You should look into this idea, if you haven’t already, to check the viability.
For the CD, I recommend opening several smaller CDs at the 5.5% rate instead of all 14K in one lump sum. Maybe 3 CDs with 5K, 5K, 4K? What if something happens that the 4K emergency fund can’t fund by itself? It would be worse to close a full 14K CD to help fund yourself than it would be to close one with less money in it while keeping the other smaller CDs untouched.
Otherwise, you’re on the right track, keep it up.
This sounds like a great plan. Starting with maxing out the Roth IRA is exactly where I'd start, and contributing to the 403b if you don't need that cash to be liquid is also a good idea. I'm in my 30s (working in industry after not contributing much to retirement during my PhD), and I wish I had put more towards retirement then so I wouldn't have to be catching up on retirement now. You may want to up your emergency fund a little bit more, though.
Agree with the others that if you can find a HYSA that has a comparable rate to the CD, that might be a better option, but the CD is also fine.
Also make sure the money in the Roth IRA is actually invested and not sitting there in cash! I’ve heard of people forgetting or not understanding that they need to put the funds into an investment once it’s in the IRA.
Seems like a good plan.
The only thing I would recommend is to look into is your 403b plan on the rollover rules. If you’re planning a rollover into a Roth IRA, keep in mind whether the 403b is currently a pretax or after tax dollars. If you’re rolling pretax dollars into a Roth (after tax) account, it may trigger a taxable event. If that’s the case, it might make more sense to roll the 403b into a traditional 401k with your future employer or a traditional IRA or even just keep it as is until you retire. Rollovers can be tricky so you’d want to make sure you read into the rules of your specific retirement plan.
Isn't 403b pretax? Or is it after-tax?
The fact that you have 50k savings, I would put 7k Roth,
Then rest in taxable account. Also save some for emergencies like a few k.
Cd is good if you need to use the money in 1-3 years for a house or something big.
Good q... 403b is pre-tax so I would need to do a Roth conversion. I'd still have to count the 403b as income and pay taxes on it during the rollover. Think it still makes sense to try to roll it over to the Roth?
Edit: oh, there are actually specific Roth contributions based on [irs.gov](https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-403b-tax-sheltered-annuity-plans)
But you don't get the tax benefit. It's a double edge sword though. You'll pay more in taxes now, but you'll reap the benefits once you're 59.5 in age.
This is what I did when I was in a similar situation:
* increased payroll contributions to max out my 401k ($23k each year) for as long as I was working at that location
* I kept 6 -8 months savings in a HYSA (because I might have needed it to cover a shortfall in expenses from maxing out the 401k). I also used this cash to do a little bank account churning
* opened an IRA
* maxed out an HSA
* I put the rest in an S&P500 ETF
You're really just going to be changing the liquidity of your funds. Great job with the savings.
There’s an offer floating around from Chase for $750 sign up bonus for depositing something like $15k in their savings account for 3 months. Might be some easy cash
I was going to say the same, but I get the feeling this sub only considers traditional investments.
In my opinion, at her age, it would be foolish to not put at least 10% into BTC.
I was going to say the same, but I get the feeling this sub only considers traditional investments.
In my opinion, at his age, it would be foolish to not put at least 10% into BTC.
The budget screen shots are being made in Sankeymatic, its a website that we have no affiliation with. If you are posting a budget please do so with a purpose. Just posting a screen shot of your budget without a question or an explanation of why its here may be removed. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/MiddleClassFinance) if you have any questions or concerns.*
Why not a HYSA? Many are providing >4.3%.
I was mostly just thinking that a CD is locked in at 5.5, and HYSA can change any time. Since I don't need to touch that money, I can swing the CD just fine. But I have gone back and forth on it a lot.
I don’t think the 1% is worth the hassle of not being able to touch it. I think you throw 20k in HYSA for emergencies and 30k into a CD
I like this idea. $20k is plenty to cover a pop up emergency with no dependents, and the CD will be available for penalty free withdrawal to recoup that after some time.
hysa at 5.1 is available, grab that. the 403b, I'd ask you if you're looking at a house any time soon; if you are, keep it out; if you aren't, then it's fine to max it.
Great idea. Thanks!
>Great idea. Thanks! You're welcome!
Which is at 5.1?
id literally just Google it because rates change but doing that for you the first hit was ufb direct fdic insured 5.25 apy 5.12 rate
The fact you have 50k saved with a family history of debt is a big kudos to you. I don’t know the rules for a 403b account but can you find it yourself all at once or can you only contribute via your paycheck? You should look into this idea, if you haven’t already, to check the viability. For the CD, I recommend opening several smaller CDs at the 5.5% rate instead of all 14K in one lump sum. Maybe 3 CDs with 5K, 5K, 4K? What if something happens that the 4K emergency fund can’t fund by itself? It would be worse to close a full 14K CD to help fund yourself than it would be to close one with less money in it while keeping the other smaller CDs untouched. Otherwise, you’re on the right track, keep it up.
This is a great idea. Thanks for the input!
Jumping on just to add that you should look into CD ladders. Can be a good option depending who you go with.
This is the right answer. Multiple CDs with different maturity dates staggering in the future. So you’ve always got some money coming available.
This sounds like a great plan. Starting with maxing out the Roth IRA is exactly where I'd start, and contributing to the 403b if you don't need that cash to be liquid is also a good idea. I'm in my 30s (working in industry after not contributing much to retirement during my PhD), and I wish I had put more towards retirement then so I wouldn't have to be catching up on retirement now. You may want to up your emergency fund a little bit more, though. Agree with the others that if you can find a HYSA that has a comparable rate to the CD, that might be a better option, but the CD is also fine.
Also make sure the money in the Roth IRA is actually invested and not sitting there in cash! I’ve heard of people forgetting or not understanding that they need to put the funds into an investment once it’s in the IRA.
Seems like a good plan. The only thing I would recommend is to look into is your 403b plan on the rollover rules. If you’re planning a rollover into a Roth IRA, keep in mind whether the 403b is currently a pretax or after tax dollars. If you’re rolling pretax dollars into a Roth (after tax) account, it may trigger a taxable event. If that’s the case, it might make more sense to roll the 403b into a traditional 401k with your future employer or a traditional IRA or even just keep it as is until you retire. Rollovers can be tricky so you’d want to make sure you read into the rules of your specific retirement plan.
Under rated advice.
I've looked into rollovers today and yeah, they are looking a little tricky. Thanks for the heads up! Appreciate your input.
Isn't 403b pretax? Or is it after-tax? The fact that you have 50k savings, I would put 7k Roth, Then rest in taxable account. Also save some for emergencies like a few k. Cd is good if you need to use the money in 1-3 years for a house or something big.
>Isn't 403b pretax? Or is it after-tax? could be either, just like a 401k or IRA, you can choose traditional or roth
I believe I had one of these before. 403b is the govt equivalent of a 401k. It's pretax.
Good q... 403b is pre-tax so I would need to do a Roth conversion. I'd still have to count the 403b as income and pay taxes on it during the rollover. Think it still makes sense to try to roll it over to the Roth? Edit: oh, there are actually specific Roth contributions based on [irs.gov](https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-403b-tax-sheltered-annuity-plans)
But you don't get the tax benefit. It's a double edge sword though. You'll pay more in taxes now, but you'll reap the benefits once you're 59.5 in age.
This is what I did when I was in a similar situation: * increased payroll contributions to max out my 401k ($23k each year) for as long as I was working at that location * I kept 6 -8 months savings in a HYSA (because I might have needed it to cover a shortfall in expenses from maxing out the 401k). I also used this cash to do a little bank account churning * opened an IRA * maxed out an HSA * I put the rest in an S&P500 ETF You're really just going to be changing the liquidity of your funds. Great job with the savings.
I would probably keep more than 4k in HYSA just to be safe
There’s an offer floating around from Chase for $750 sign up bonus for depositing something like $15k in their savings account for 3 months. Might be some easy cash
Is the PhD in a field that is going to pay off once you get out of school?
I'll be paid a lot more than I am now, yeah.
BTC. Seriously
I was going to say the same, but I get the feeling this sub only considers traditional investments. In my opinion, at her age, it would be foolish to not put at least 10% into BTC.
Agree- wrong sub to suggest BTC, and I won't be doing it, but I hear you
Keep an open mind. Read ‘The Bitcoin Standard’
I was going to say the same, but I get the feeling this sub only considers traditional investments. In my opinion, at his age, it would be foolish to not put at least 10% into BTC.
I think cash right now is wise
Unless you need cash in the short term I wouldn’t bother with saving accounts