My wife and I each have a 401(k) from our former employers that have been sitting around gathering dust and we're looking to take more control of our finances. She has ~$26.5k at Wells Fargo and I have ~$3600 with Fidelity, of which we are both 100% vested. I feel like we're behind the 8-ball in this regard, but not too much so as I'm 30 and she's only 28 and finally are set in jobs that we can comfortably call careers. We are also contributing the max to our current employers' 401(k)s to get the most out of our company match (hers with John Hancock, mine with Fidelity again).
Our combined incomes allow us to contribute to a Roth IRA (looked at the companys and decided Vanguard is probably the way to go), but I'm wondering if this is our best rollover option and am looking for some direction with our other finances.
Points to consider:
- We have a small emergency fund of $1000 built up in our savings account.
- I am a Quicken junkie and am on top of our spending (even though I liked MS Money's Cash-Flow Forecast MUCH better).
- We are going to have the last of our credit card debt paid off completely by October by making $1500 monthly payments (current remaining balance of ~$11k at 12.65% APR). I'm thrilled about this, as we were able to knock ~$7k off the balance in the last two months, significantly moving up our pay-off date.
- We have one car payment that we pay $500/month to with a remaining balance of $18.6k at 6.99% APR.
- I have a universal life insurance policy ($80k benefit amount) that my parents started for me 25 years ago. I took control of the policy when I was old enough and it currently has a cash value of ~$2700 which I pay a premium of $90/quarter.
- We just closed on the short sale of our home in AZ (relocated to TX for work) and are happily renting an apartment here in the Houston area. Our lease is up in December, but we don't have any immediate plans for home ownership again at this time.
- We don't have any children right now, but are planning to after we are out from under our credit card debt and have freed up more income.
- What would you suggest we do with our old 401(k)s? A single fully funded Roth IRA for the both of us and a traditional IRA for the rest of the rollover amounts? Two Roth IRAs - one fully funded by her rollover and one partially funded by my rollover - and a traditional IRA for the rest of her rollover amount? Something else?
- What would you suggest investing in with the IRA/IRAs, assuming they're funded to the max of $5k? Target Fund/Funds ($1k minimum)? Index Fund/Index Funds ($3k minimum)? A combination of each? Something else?
- Once the credit card is paid off, do you recommend paying off the car loan quicker, or is the 6.99% APR small enough to not worry about and contribute more to our 401k/IRA(s)/savings?
- What would you do with the life insurance policy? Anything? My thought was that I could use the money to fully fund the rest of my Roth IRA and then put the rest into savings (or traditional IRA).
I know this is a lot of information at one time, but we're really looking to get our ducks in a row and start paying ourselves.
Thanks for your help in advance!