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The Simple Dollar

Credit scores: Advice to a college student

Credit scores: If they're high enough, you can get a good credit card. Question No. 2 in this reader mailbag.

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Sit down with your wife and talk about where you want to be in five years. If you like where you’re at and want to simply retain it with more robustness, I’d pay off the debt. If you want a more secure retirement so you feel safe switching jobs later, I’d build the Roth IRA. If you want a home, I’d start saving cash.

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Your goals lead what you do with the money.

Q4: Preparing for job review
I’m writing to you looking for some advice as to what I can do to prepare for an upcoming Job Review (1 year). I feel like my job is going well, I am liked by those around me and I feel like my employers value me. However, I also feel like they don’t care how much work they give me – they just pile it on day after day with no regard – thus deadlines are stretched and my stress raises. I don’t feel like I am compensated fairly, but I don’t know if a raise is in my future or not. I suppose my question is: what do you suggest, if anything, to do to prepare for a job review?
- William

It depends heavily on your workplace. Is it a workplace that deals with candor well or not?

Based on your comments, it sounds either like your workplace doesn’t handle candid discussions very well or that you’re nervous bringing them up. If it’s the former, you’ll want to tread carefully, as people can view candor in such situations quite negatively. If it’s the latter, you need to bring this up if it’s bothering you.

This sounds like something that is negatively impacting how you feel about your workplace and thus impacting your performance. If that can easily be brought up in the workplace, it needs to be. Both you and your employer are losing because of this situation.

Q5: Pension or Roth?
I am a 25 year old police officer. Our current statewide retirement system takes a portion of our weekly pay and places it into the state account. For example, my gross pay this year is currently at $83,126 (I work a large amount of road details) and they have taken out $7730. When retirement age comes due at 45 years old we receive a portion of our top 3 years of salary, and I expect to be receiving somewhere in the range of $70,000 per year plus a new second career income.

In addition to the pension, I have a deferred compensation plan set up that I contribute $50.00 a week to and have done so since I started work. Due to raises the last three years in base pay I plan on starting a Roth IRA with the same $50.00 a week contribution.

Gross Pay – $83126
State Pension and Def Comp – $10030
8.28% contribution

You have told most people to contribute somewhere in the range of 10 percent to retirement savings. Do I add the deferred comp to the pension money that is taken out or should I contribute in addition to it with more in a Roth IRA? Does my pension put me in a different group of people who should look at retirement savings completely differently?

I currently own a home, have adequate emergency savings, and contribute extra payments each month to my mortgage.
- Ryan

I never, ever fully trust a pension. I usually view a pension as something that’s frosting on the cake if you get any when you retire.

Given that, I would at the very least fully fund a Roth IRA in the coming year. I think that’s your best route for retirement savings at this point.

Never, ever rely on a pension. I’ve seen far too many “guaranteed” pensions vanish out from under the feet of people who relied on them.

Q6: Living frugal versus organics
Anyway, my question is, how do you balance living frugally and using organic/vegan foods and products? Do you buy all organic foods? Beyond produce, how do you decide what is worth paying more for organic?