10 steps for saving

[jeanniedot]

I have been looking for an easy guide for how prioritize saving and investing for someone making between 50k & 1M. Unfortunately I have never been able to find something something simple. The idea for my list is that you should complete each step until you run out of spare savings. Higher earners will move down to the later steps.

I would be interested in hearing everyone’s opinions. I understand that the biggest issue is that it only focuses on saving, and doesn’t compete with bills and cost of living.

1) Pay off high yield (>~6%) debt (i.e. credit card)
2) Contribute to 401k matching program
3) Invest is Roth IRA (if income is below 161k/240k single/marrried)
4) Contribute monthly into a high yield savings account until you have 3-6 months of spend
5) Contribute max pre-tax/Roth amount into 401k (23k), assuming you have good plan options
6) Contribute max into IRA (7k)
7) Contribute max to IRA (69k) and complete mega backdoor Roth conversion
8) Pay off debt between 4-6% interest (I.e car)
9) Invest, preferably in index funds, with some bonds and high yield savings depending on age and risk
10) Do not pay off debt with interest rates lower than the high yield savings (house, car, loan)

 

[clothilde]

@jeanniedot Instead of that, read the side bar.

 

[pjpaker1]

@jeanniedot It's in the side bar. There's an entire flowchart.

 

[meredithhww]

@jeanniedot Look up the prime directive, or money guy FOO don’t reinvent the wheel

 

[jeanniedot]

@meredithhww Thanks. Exactly what I was looking for

 

[blueberry25]

@jeanniedot Why does this advice only apply to people who make between.$50k and $1M?