Meager Income

Pay Off Debt, Retire Comfortably on Meager Income, Win the Lottery, Not Necessarily in that Order

I’m reducing my 401(k) Contribution

Posted on | February 26, 2015 | No Comments

The stock market has been great for almost 6 years straight now.  Today, the Dow Jones average closed at 18,214.42, the S&P 500 closed at 2110.74, and the Nasdaq closed at 4987.89.  At these prices, I’m skeptical that the stocks can continue on their upward trajectory without a correction.  Take a look for yourself below at how the averages have performed in the last 5 years:
02_26_2015_StockAverages
I’m preparing myself to expect a more normal, single-digit, return from stocks moving forward, at least in the short-term.  Thus, I’d like to pay off my debt and wait for the stock market to drop sharply before increasing my contribution again.  Currently, I have $7497 in debt that I’d like to retire this year.  At a minimum, I plan to still save an average of at least $1000 a month in my 401 (k) account.
By doing this, I’ll still be able to receive my company match and still defer some of my tax liability into the future.  Meanwhile, I’ll wait for the next buying opportunity.  Last year, between the company match and my contribution, I was able to contribute $15,626.25.    I also plan on contributing the maximum amount to my Roth IRA for 2014.  I have about a month and a half to raise the $1500 I need to top off my Roth IRA for last year.

 

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