So recently I decided to lower my percentage I am contributing to my retirement. Yes you heard me correctly! I LOWERED it.
I have been contributing 30% of my paycheck to my 401K and Roth IRA, however I sat down with my dad to review my finances and we came to a new conclusion.
As some of you may know, I have right around $35,000 left on my student loans. And while I have been paying almost $600 EXTRA (on top of my minimum payment), I could be contributing more.
The way to make that happen is to lower my percentage of retirement allocation. So after a lengthy conversation with my pops, we decided that by lowering my percentage to 20% I could be putting an extra $800-$1000 a month to my loans.
All the while still putting a large amount away into 401K.
I’m not going to lie, it hurt my soul to take away that 10%, but my dad reminded me that the faster I pay off my loans, the more money I can be saving. And he had to remind me that 20% is still a massive chunk of cash – especially at my age.
So even though it killed me a little to do it, this will help to pay off my loans WAY faster and allow me to get back up to that higher percentage – maxing out my 401K.
So with this new payoff plan, I’ll be DONE with my loans no later than 2020. At which point I can start maxing out my 401K once again!
Sometimes you have to look at the short term to realize the benefit of the long term.
If you want to hear more about my personal long and short term goals I have a whole post on it here!
Sometimes the things you are doing that you think are the right thing for you might not be. It’s always a good idea to get a second opinion from someone you trust! Whether that’s a financial advisor, a parent or someone else – it can be helpful to have a second pint of view.
As much as I like to think I know everything – I unfortunately do not, and I can b very narrow minded about things.
Be open to new ideas and opinions and think about your long and short term goals to determine what is best for you and your financial future!