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- [00:06]
A
This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor Deanna's in Pennsylvania. Hi, Deanna. How are you?
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B
Good. How are you?
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A
Better than I deserve. What's up?
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B
So my question for you. My boyfriend and I graduated college last. I graduated last August, he graduated last December. Combined, we had a little bit. $100,000 in student debt.
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A
Okay, you're not combined, you're not married. So how much do you have?
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B
I had 60 and he had about 55. 60 right around there.
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A
Oh, okay. All right.
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B
Yes, yes. And then we. I'm set to pay mine off in December and he's set to pay his off in December. So we're going to be student loan free.
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A
Good for you.
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B
In just about a year.
- [00:59]
A
Good for you.
- [01:00]
B
So, yeah. So planning long term wise, we're looking to probably get engaged in the next year and a half. So one thing that we are talking about is combining finances after we are married and we are looking at what to invest in once we get to that point. The next year is going to be saving up. We're planning on having around 50,000 to put as a down payment on a house. We don't want to, want to really buy anything over like 150,000 and then, you know, double up our mortgage payments and pay off our house as quickly as we can. But the one big question I had with all of this is I own my own marketing firm, so I cannot invest in a 401k where a company would match it. So my question to you is, would it be smart to open something like a Roth IRA to start investing in now to so that you know, we can be millionaires when we retire.
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A
Good for you. Well, it sounds like you're doing a lot of planning. Congratulations. And of course, let me clarify one thing before I go back to that question. The house we're going to buy is after you're married to, right?
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B
Yes. Correct. Yep. We would not be combining finances or.
- [02:16]
A
Buying a house together. It's very, very dangerous. Very dangerous to buy a home with someone you're not married to. Okay, all right. So now, so it's pretty simple. Just at that point, you would have, let's say you're married, you're out of debt, you have an emergency fund, and you buy a home with 50,000 down. You're at what we would call baby step four at that point. And that means you start putting 15% of your household income away towards retirement. And then you work your Budget and have a life. And any money you can squeeze out of it, you throw at the house and pay the house off early, which was your plan, and that's how you outlined it. Okay, so then that brings us to how do we do 15% of our income? Yes, I would start with two Roth IRAs. One of you each have one. You could start that now, for that matter.
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C
I was going to say. Yeah, absolutely. Well, after the debt's paid off, once.
- [03:07]
A
Your debt's clear, and you can just sit down with a SmartVestor Pro, which is the people that help our listeners do investing. And they've been vetted by us and they have the heart of a teacher and they'll teach you. You have available to you a couple of things with your marketing firm that you can also do. Roth, you can do a. It's a SEP ira, a Roth SEP ira, Simplified Pension Plan, it's called. Now, do you have any employees in your marketing firm?
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B
No. Nope, just me.
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A
Okay, then that's very easy. So you can put up to 16% of your income with a formula. Ends up actually being about 13 when the formula is applied. But you can put a bunch of your income aside in a SEP ira, SEPP Simplified Pension Plan, and simplified employee Pension plan. Now, warning, if you do hire people later and they're with you more than two of five years, whatever you put in that year that they reach that point, you would have to put in the same percentage of their income. So it works really well for a solopreneur like you, but it doesn't work well for a small business that has five employees. Okay. You also, in addition to that, can do a simple IRA, which is a 401k for small businesses.
- [04:28]
B
Okay.
- [04:29]
A
And you can set it up as $15 to set the account up. They're very inexpensive. Set up to set up a 401k in a big company like ours is tens of thousands of dollars a year in administrative fees. But for a simple. It's designed for small businesses. Again, warning, if you have that and you hire someone, you're required to match the first 3% of what they put into their IRA if you have that simple program going. But point being, there's two types of ways you can get money in and you actually can do both of them technically.
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C
And three, if you include the Roth.
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A
And do the Roth and do the Roth. So you'll be able to get to your 15% very easily. Make sure they're all going in good growth stock mutual funds, and they're all Roth, which is tax free growth.
- [05:13]
C
Yeah. And then your husband, once you guys get married, can be investing as well in a 401k if he's at work, too. So you guys will be tackling it from multiple different areas, which is great. But, yeah, I appreciate the plan. And maybe you guys fast forward up the engagement. You know, I'm a fan. If you know you're gonna be engaged in a year and a half, go.
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A
Ahead and shorten it like Rachel did.
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C
Start the. Start the process. Get the ball moving.
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A
Rachel and Winston came and said, we want to get married right now.
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C
I know when we're young.
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A
Okay. All right.
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C
No, we waited.
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A
You waited about 10 months.
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C
No, 10 months.
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A
10 whole months.
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C
But I'm like, yeah, yeah. There was no good job, Deanna, though. But honestly, very impressive. You guys, just fresh out of college just in the last year, have a plan to pay off the debt, knocking it out, looking forward to the down payments, thinking about investing all of it. I mean, you are in a perfect position and time in your life to start all of this, so congratulations.