Roni, With your income at this point, the tax savings will be worth it. If you start your own practice, you will have all kinds of options. I don't agree with folks like those at TMF - they all say "don't start saving until you pay off your credit cards." Hogwash! The average person would never save a dime on that basis, and credit is a tool to be used, not a "plague" to avoid. Save anyway, invest anyway. I think common sense should rule, not one theory or idea as a blanket solution for everyone.. And my guess is that Greg is directing his remarks to those who are living beyond their means, on an ongoing basis, and maxing 401k's or whatever. That's not common sense either. My Mom believed all those folks who said credit cards were bad, close them all and live on cash. After my Dad died (1984) she used the cash she had on hand to pay off all her debts (we didn't know she did this). Terrific!! Right! a widow on a fixed income with no cash reserve to fall back on. Then this past year, she needed to buy a car!! She couldn't get the best deal because she had screwed up her credit history by not using any credit at all for over 10 years. Then when EFX decided to delete one of the two old tradelines (she was joint with my Dad), she was dead in the water. Fortunately we talked the dealer into checking a different report, and she got a decent rate - but it could have been better.
Those who talk about The Univeral Financial Truths (6 months reserves, contibute maximum to the 401K, keep the debt ratio to 36%, yadda, yadda, yadda) are kidding themselves. Logical financial planning, obviously, takes deeper analysis than we could ever get into on a public message board or a newpaper columnist could give in 2500 words. We all have different goals. Perhaps I don't care about my retirement and figure I'm going to drive race cars and skydive for fun and will more than likely be dead at 60, anyway. What good is all that savings to me? What's so great about retirement in Sarasota, anyway? Or, say an employer is making a 5 to 1 match of contributions to a retirement plan. Who can pass that up, even if they have credit card debt? The point is: You're unique and need a unique plan. Don't listen to the "financial planners" who only look at one side of the equation: How much they can get you to invest (in order for them to make a commission). They're famous for totally ignoring one's debts, using pat answers like "refinance your mortgage loan only if you can lower the rate by 2%" to deflect the subjct; what folly. You could do better with Quicken. The Universal Financial Truths are for the same suckers who need dogma and orthodoxy as an opiate in all other areas of their life, too.
#4 Discarding financial statements. Credit bureau records remain for seven years-- and most understand that they're innaccurate. Bank and credit card statements for seven years might take up only a bankers box, but consumers can't stand having them around. Then they need the statements and pay the bank $5 a page for copies. And wait 10 days for them.
Telephone call, trust #5. Trusting anybody to do anything on the basis of a telephone call. And, at the very least, if something is negotiated over the phone, failure to to demand it be put in writing. For instance: Collectors and creditors who say they'll "get right on" that error to the CRAs. Earlier this month, a pager/long distance company hired a collector to deal with me because I hadn't paid the pager bill for three months. The only problem: I cancelled that pager contract three years ago. I called the pager company, walked up the chain of command until I found somebody to listen to me (wrong move-- I should not have spent the hour on the phone-- should have not wasted my time; should have sent the validation letter-- but I was bored). Got them to send a letter of apology, and they even sent a 30-minute LD card for my trouble (I know, at 5 cents a minute, that's $1.50-- big deal). But, guess who just sent me another bill. Two more and the collector will be back. Imagine all fun I'll have with the apology letter they sent.
