[optical8e]

I'm a single 26yr old trying to be financially responsible while working part-time and going to school part time. I’ve tried talking to my bank employees but I think they just want me to purchase their plans. I don't have or make enough to warrant paying for investment advice. I'm concerned that I may not be saving the right way. Specifically, I want to know if I should pay off my credit card debt (which has a very low interest rate) with some of my other investments. Also, should I use some of my current savings toward school expenses or continue to take out federal loans? Should I open a Roth IRA with Vanguard instead of adding to my company 401k? I hope to graduate in 2 yrs. I want to buy a house someday and a car. Here is a snapshot of my current income, investments and loans.

Part time salary as optician is 18,000yr

Company 401k (aggressive model) contribution rate is 9% NOT matched by company. Currently worth 4,000

My company stock is currently worth 4,000 for 80 shares. I purchase $10/month by paycheck deductions.

Vanguard growth and income fund is worth 4,000 and I contribute $50/quarter.

Vanguard money mkt fund worth 3,500 to use for school.

Parents help me out with small things like groceries on occasion.

I live month to month using all of my paycheck and don't have much left over after bills and rent are paid.

Also, I have about 7,000 of subsidized federal student loans out. Trying to avoid the unsubsidized loans.

I have credit card principal balance of 6,000 with fixed apr of 3.9% for the life of the balance as long as minimum payments are made on time (around 100 a month).

Thanks for reading and any advise will be helpful. --kevin

[ZoomBoom]

Given your current wages you may actually be better off with a Roth. You can't deduct your contributions but I doubt that would significantly impact your current situation. It also sounds like you value the long run and what's better than untaxed distributions in the future?

As for your credit card, I wouldn't pay it off if you are getting that rate. As long as your fund investments are beating that plus inflation your money is better off there. Given that inflation is usually 3-4% you need to see at least a 7.9% annual return with your fund. If the fund can't produce that annually then the fund isn't worth owning anyway. Why are you in an income fund, and does that fund have a load? Load's are do not make for better funds despite what any broker tells you (remember load's are 100% broker compensation so consider their motivation).

It would probably benefit you to sell a portion of your company stock and re-invest it in some other companies. I would suggest liquidating $3,000 worth and investing that in 3 different stocks. If you are not comfortable picking stocks then purchase some more funds, but remember not to pay a load.

[Fr_Chuck]

Here I will differ

I would pay off any credit cards and not use them, ( keep for an emergancy if you have to) but it is best not to get caught in credit card debt.

Then why borrow money if you don't have to, pay for your college and pay off or back as much college loans as you can.

So what if you graduate with zero dollars in the bank, if you don't have any debt, then you can really start saving money from your better income and no debt.

NO debt is always the way to go.

[CaptainForest]

Kevin,

My company stock is currently worth 4,000 for 80 shares. I purchase $10/month by paycheck deductions.

You purchase how many shares for $10?

What is the market price when you purchase it?

[ScottGem]

First, I would consolidate your student loans (if you haven't already) and pay them off over time, since your interest rate should be favorable. Since most of your investments are not liquid and your CC rate is low, I would also pay they off, though I would be more aggressive about it. Paying much more than the minimum payment.

I gather you will graduate as an optometrist or ophthalmologist. This means your earnings potential should be pretty good. Therefore, you don't need to be too concerned about retirement at this point. Continue with your 401k investments as well as the company stock (which I assume is through a stock plan).

I would then wait until you graduate and get that fulltime job and see what your income and expenses are. You can then work up a better plan for the home savings and retirement.

[FiatCredit]

These are very personal questions that depend highly on your comfort level and goals but...

I would not take out debt to avoid spending cash (assuming that's where your "savings" are held). There is one thing that is absolutely certain about cash, it's always going down in value. Putting your wealth into cash is an investment just like any other and the risks and rewards need to be evaluated. That being said, everyone should have some backup reserves for an emergency.

I would put a higher priority on paying off debt than putting money into the stock market.

You know for a fact that you owe the money @ 3.9% but there is no guarantee that the stock market will return you anything all, even your initial investment.

However, 3.9% fixed is a competitive rate so if you can find an investment that after taxes, fees, and inflation will give you a significantly higher return then there is a good argument for investing rather than paying off the loan.

If you want my perspective on investing have a look at this article I wrote... http://www.peakeconomy.com/articles/secret.html