I have decided to max out my 401k

August 23, 2007
When I calculated the tax numbers it just made more sense to put 15% of the bonus into my 401k. For the next 12 months I plan to set aside 15% of my salary in my 401k. The next thing I will need to think about is increasing my Roth IRA contribution to the max allowed. While I had originally planned to use a portion of the bonus to pay down debt I have opted against that as my credit card debt is at 0% forever as long as I use my card twice per month. I will lower my tax bite significantly by putting the funds in a tax deferred account. I will use about $1,500 to bolster my emergency fund. That will put my emergency fund at over $5,000 by the end of September. My paycheck will be just a little lower but that is fine. I am on track to meet two of my 2007 goals: 1) An emergency fund of at least $5,000 and 2) maxing out my 401k.