Date: Tue, 21 Feb 2006 15:26:11 -0600
From: "Elle" 
Newsgroups: misc.invest.financial-plan
Subject: Re: Investment Options for Money to Spare?
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	=H2W7

Batesrt,

I second the thrust of what Jim says, particularly with
regard to first  maxing out your employer's match in your
401(k), then contributing to a Roth IRA.

Other things to consider:

Any car or school or other debts? If so, how much, for how
long and at what interest rates?

Do you have an emergency fund of around a year of living
expenses, in case you lose your job or some other accident
befalls you? (Fortunately money market rates are around 4%
now for such emergency funds. Not a bad return at all for
cash lying around.)

Are you married? If so, do you have life insurance?

Do you plan to have kids? If so, have you considered saving
for their education in various tax-advantaged plans?

Do you have your monthly expenses laid out on a spreadsheet?
(If not married, plan to marry someone who also does this.
These days--looking around--I wonder if choosing one's
spouse prudently is among the best hedges against winding up
poor.)

Do you have an idea of how much you need to save for
retirement? If not, then to help you strategize, experiment
with some of the tools linked at
http://home.earthlink.net/~elle_navorski/id4.html . The
'saving for retirement' calculators at
http://www.fincalc.com/  are particularly quick and dirty
(and so accordingly crude), but they get a person thinking.

Is your mortgate a 30- or 15-year fixed rate? Or is it an
ARM? Your rate of 5.5% is a very good rate (historically
speaking) that should seriously tempt you not to pay it off,
IF the 5.5% is for the life of the mortgage. On the other
hand, there are people like me who hate owing money unless
it's a great deal. Few people are willing to guarantee the
return on stocks in the next 30 years will be at least 5.5%.
(I think it will be, but if someone said at least 8%, I'd
really be hesitating to agree.) Generally thinking, if one
thinks the stock and bond markets (allocated per one's
wishes) will return greater than the mortgage rates for the
life of a fixed rate mortgage, then it's financially best
not to pay off a mortgage. The only battle is one of
emotion: Being free of having the lender on your back.

Lastly, be wary of the herd. The savings rate of Americans
today is negative, and at its lowest since the depression.
Personal bankruptcies are occuring at a record rate as well.
Don't be one of these clowns who is looking poverty in the
eye (or being 'owned' by a credit card company for the rest
of his/her life).

Fun, nightstand reading that reinforces these points is _The
Millionaire Next Door_.