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Posted: 27 Jun 2013 12:55 PM PDT
Here's an email I recently received from a reader:
I'm a 28 year old female, married with two children (ages 3 and 1). I work for a state government agency. Upon hiring, I was set up in the state retirement system to deposit 6.5% of my income into a retirement account (401a). From what I understand, my agency deposits a match of 6% of my salary into a state accumulation account. As of today, I have $12,869.03 in my state retirement account - this account currently earns 5% interest each year. I was also enrolled in a 401K and 457 when I was hired. I have a total of $11,695.52 between both of these accounts. I have my money set up in various investment funds within these two accounts, most of it going to a 2050 Target Fund (any advice here?).
Before being employed with the state, I was in the military and I signed up for a Thrift Savings Plan account and have left the money in there. I currently have a total of $5,556,47 in TSP. This is also distributed among various investment accounts.
Here's, a little backstory for you. Growing up, my parents never really taught me anything about finances. We lived paycheck to paycheck and often struggled to make ends meet. They were pretty bad with money and as a result, I sort of followed in their footsteps (my husband had a similar experience throughout his life). When I joined the military, a lot of my peers advised me to start saving for retirement and so I did. However, I never really learned much about investing. As I've gotten older, I've started to gain interest in finances and investments though I have much more to learn. I'm glad that I did at least start saving for retirement early, but I'm really at a loss about what steps I should take next. I'm thinking of finally rolling over my TSP account into one of the other investment accounts but I'm not sure which - the 401a (I'm not sure if I can even roll funds into this account), 401k, 457, or start a new investment account with it? Any advice?
Regarding the rest of my financial situation, I am currently in debt. We purchased a house in 2010 but the local market hasn't really driven the price up much so we're upside down on our mortgage (~$154,000). We also have a car note for about $13,000. And, we are in credit card debt - owing about $14,000 to several creditors. I earn about $3,000 a month from my job. Since my husband and I are both prior military, we both received a GI Bill that pays for our education. He goes to school full time and earns about $1,350 - $1,400 monthly in stipends. I also go to school online and receive about $650 monthly in stipends. We have no student loans and alternate our schedules (he goes to school in the evenings) so we don't currently have any day care expenses. We have put together a budget and with it, we believe we can pay off all of our credit card debt within the next two years (hopefully sooner). We've made getting out of credit card debt our first priority. Afterwards, we will really focus on building up our savings and paying off the car. Does this sound like a good plan? I know we've made mistakes especially with getting ourselves into so much debt so early in life, but we are working hard towards digging ourselves out of the hole.
I hope you can offer some insight into my situation and hopefully guide me in the right direction. Thank you in advance for any suggestions you can provide.
What's your advice for her?
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