I've been in severe credit card debt most of my adult life, thanks in part to growing up poor with no financial education. Throughout my 11 year IT career at a large company, I've known several older people that have either had nervous breakdowns and left or died of heart attacks. This had an effect on my financial plan, which was basically to get a vasectomy, try to enjoy life without much care for a budget, and then die at 50 somehow. After selling my house last month, I'm rethinking that approach.
After not really ever expecting to dig my way out of debt, I have now done just that and have $45,000 left over. My wife has been a homemaker since we were married at the age of 18, but started working at a school for $25K a few years ago. Now that we have some money, she can afford to go to school to be a nurse, which she has always wanted to do. She has quit her job and we are moving into a cheap one-bedroom apartment this week which should make life easier and allow her to concentrate on this goal.
For the past couple of months, I've been reading a lot of r/personalfinance, and it has been incredibly helpful. Following the prime directive, I currently have $20,000 in a AmEx high-yield savings account as an emergency fund and have finally started contributing to my 401k up to the company match. I regret not doing this earlier, but the high-interest CC debt created a mental block and the multiple times I tried to learn what 401ks were about proved to be too daunting.
At this point, it seems that I should start contributing to an IRA. I really can't decide whether traditional or Roth is better for my wife and I, and this is where I'm looking for help. To add more detail, I recently received a decent promotion and make $80K with a potential 5% bonus, and of course my wife is not currently working. I'll probably end up working my current job forever, but don't see much room for growth past where I am. We also want to buy a nice small house in 3-4 years, and would like to save 20% for a down payment. We would probably be looking at a $225K house by current market prices. We had planned to move straight into another house from our old one, but were surprised that no one is accepting VA loans around here due to fierce competition. After several failed offers, we changed our plans to rent in a more convenient location than we could afford to buy at.
So, what would be best? Start contributing to IRAs? Which type for each of us? Otherwise, should we skip the IRAs in order to save more to buy a house? Or should we push that goal out farther and count on the extra money my wife will make once she becomes a nurse?
TL:DR: Former indebted nihilist sold house and now has $45K with $20K of that in currently in savings. Currently paying for my wife's nursing school but life needs to normalize a bit before I can accurately budget. I believe there is plenty of money to start maxing out our IRAs, but which type? Or should we do something else?
Submitted June 20, 2018 at 10:04AM by 34nowwhat https://ift.tt/2lkFWtb
