Firm:
Alliance Wealth Management
Job Title:
CEO and Founder
Biography:
Given Jeff's unique interest in the financial markets and his excited to meet new people, being a financial advisor was the perfect fit for his career. He started his career as a financial advisor with A.G. Edwards & Sons in 2001.
In January of 2005, 4 years into his career, he was called upon to support Operation Iraqi Freedom. Anticipating his return, he attained the Chartered Retirement Planning Counselor designation between mission and duties during his downtime in Iraq.
As soon as he returned from Iraq, he resumed his career as a financial advisor. His goal was to provide financial guidance to people in all areas including: investments, insurance, taxes, and estate planning. In November 2007, he became a CERTIFIED FINANCIAL PLANNER™ practitioner, and a month after that, he formed Alliance Investment Planning Group LLC. Since then, Jeff created his own registered investment adviser named Alliance Wealth Management LLC.
With the hope of helping people make sense of investing and their personal finances, Jeff launched his own personal financial blog called Good Financial Cents and life insurance site Life Insurance by Jeff. With so many different options out there, Jeff hopes to ease the fog and help others make clear and smart financial decisions. He currently writes for Forbes, US News & World Report, and CNBC. In addition, he has been featured in major sites such as Huffington Post, Wall Street Journal, Reuters, Kiplingers, and Fox Business.
Jeff resides in Carterville, IL with his wife, Mandy, and his three sons Parker, Bentley, and Sloane and daughter Janella.
Education:
BA, Finance, Southern Illinois University
Assets Under Management:
$38 million
Fee Structure:
Fee-Based
CRD Number:
156712
Insurance License:
#7532717
Considering the amount you're investing based on your income, I think you'll be in excellent shape to retire at 70 or even much sooner. But getting to your question about the Roth 401k, yes, I think that's an excellent choice. In your tax bracket, it's well worth giving up the tax deduction now in favor of zero tax in retirement. In addition, if you leave your job, you'll be able to do a Roth IRA conversion more easily (without all the messy tax consequences) that come with a traditional 401k. At your age, you want to keep your options open, and that's with the Roth 401k does for you.
As to where to hold riskier investments, there are pros and cons on both sides. In a tax sheltered account, large capital gains will escape immediate taxation. But if you take losses, they won't be tax deductible. In a taxable account, you will pay tax on capital gains, but at the lower long-term capital gains rate. Also, if you take a loss you can write it off against your income for up to $3,000 per year.
You'll have to decide which of the two you like better. If you do well with your stock selections, you'll be better off with a tax deferred account to avoid the taxes entirely. But if you expect losses, the taxable account route may be better. Hard to predict, but you have to consider your investment skills into the mix.
For 2018 you can earn up to $17,040 without affecting you Social Security benefit. The excess will reduce your benefit by $1 for every $2 in earnings. With an income of $19,800, the excess earnings will be $1,760, which will reduce your benefit by $880, or about $73 per month.
The penalty goes away if you delay collecting Social Security at your full retirement age.
You already have a retirement plan at work, and your wife is contributing to hers, so I'd recommend applying the raise to paying down the credit cards. At $480 per month, that's almost $6,000 per year. You can pay off the credit cards in two and a half years at that rate.
I like this strategy in your situation for three reasons:
1) You have student loan debts you're paying, so it makes sense to make the credit cards go away;
2) Once the credit cards are paid, you'll be free to invest more money in your wife's 401(k);
3) The interest rate you're paying on the credit cards is probably higher than you can earn in the 401(k).
In essence, paying off the credit cards now frees you up to save more later, while at the same time lowering your overall financial risk.
The personal loan interest rate of 17.8% is high, but it's a lot better than the 26% you're now paying on your credit cards. The best part of the arrangement is that you'll be free and clear in 36 months. That by itself is no small advantage. One of the fundamental problems of credit cards, especially those with high interest rates, is that they keep you locked into a permanent debt cycle. That's precisely why they're referred to as "revolving debt". Taking a term loan to pay them off is the best strategy.
You haven't explained why you're taking an additional $2500 on the personal loan, but it could result in the monthly payment being higher on the personal loan than it is on your assorted credit cards. You'll have to be ready for that.
As to the impact on your credit score, paying off the credit cards will definitely help. Just make sure you don't close them out. You want as much unused credit on your credit report as possible.
That said, they'll be a temporary negative hit to your credit score as a result of the new loan. After all, since it's brand-new, you won't have a credit history on it. The real question is whether the paid credit cards will offset or exceed the drop from the new loan. But eventually, as you begin making payments on the personal loan, your credit score will improve. But that assumes you keep all your credit lines open, and don't use them to borrow more money.
It's a good strategy, so good luck!
You can do a W2, but you can also do a 1099. Either establishes earned income for your son, which is required for any retirement plan contributions. Between the two, the 1099 is easier to file, since you as the employer don't have to pay payroll taxes, like FICA or FUTA. But make sure your business files a tax return. In order to pay your son, you'll have to show the pay deduction on your own return, such as on a Schedule C.
The bigger problem will be finding a bank or broker that will allow a Roth IRA for a minor. There are a few out there, but you'll have to do some research to find them.