Hi Redditors, please help me to make a decision, could definitely use your input. I got divorced recently after 20 years of an abusive marriage where my ex made all of the decisions and now am learning to live on my own so I’d really appreciate your advice.
Here is my situation:
I make mid $50K. After taxes and deductions I bring home a little over $1,500 every two weeks. I currently contribute 5% to my company’s 401K (that’s how much is matched, invested in a target date fund). I have a brokerage account with Vanguard (managed by them) and Roth IRA also with Vanguard (split equally between VTSAX and VTIAX) which I started last year and have already made my full 2021 contribution. I recently inherited $80K which I put into a high yield savings account which brings next to nothing.
I am thinking if I should max out my 401K contributions ($1K per pay period). That means my paycheck will not cover my mortgage and daily expenses and I will need to use money from the HYSA. Since the interest rate is so low, I think the tax benefit of 401K contributions outweighs it. Am I correct so far? Having my paycheck cut so drastically, I won’t be able to contribute to Roth without using the HYSA money. So I guess that $80K would have to stay in the bank to cover my mortgage, daily living expenses and Roth contributions.
The other option is to put $80K into the Vanguard brokerage account while the market is doing so well and continue contributing the same 5% to 401K.
Which option should I choose? What would be the right path? Thank you.
Submitted April 20, 2021 at 08:41PM by Hip-N-Happy https://ift.tt/2QitMEp
