{ "media_type": "text", "post_content": "I know the usual advice for saving is emergency fund - 401k up to match - max IRA - max 401k - HSA?/personal brokerage. However, where does saving for a house deposit and car deposit (want used but only ~2-3 yrs old) fit in? I’m 26, 100k salary and have been trying to put away 3k per month into HYSA/emergency fund, was maxing 401k at ~$800 per pay period (lowered to $400 a month a few months ago since no firm match and would like to put $ into HYSA/house/car fund), and $500/month to max IRA.", "post_id": "610057acc95cee002003bd53", "reply_count": 11, "vote_count": 1, "bowl_id": "59064a3cb12379001006592c", "bowl_name": "Personal Investment Chatter" }

I know the usual advice for saving is emergency fund - 401k up to match - max IRA - max 401k - HSA?/personal brokerage. However, where does saving for a house deposit and car deposit (want used but only ~2-3 yrs old) fit in? I’m 26, 100k salary and have been trying to put away 3k per month into HYSA/emergency fund, was maxing 401k at ~$800 per pay period (lowered to $400 a month a few months ago since no firm match and would like to put $ into HYSA/house/car fund), and $500/month to max IRA.

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I see you just saw the chart I posted haha. I'll post it here again if anyone needs. Anyways, I would say spending goals like home/car fall wherever works for you. Ideally, you make enough money to where you max all tax-advantaged accounts first, then keep excess cash in a HYSA for your near-future purchase. Of course, not everyone is fortunate enough to be able to do that. If it's a very important/must-have goal (e.g. you NEED a car next year), then I'd say it probably comes right after you get your 401k match (basically free money). If it's slightly less important or can be delayed, it slowly goes down the chart until it reaches the bottom.

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Gotcha. Maybe you can do the math backwards then. Save 40k (or however much more you need) in a HYSA, and anything leftover goes into HSA/IRA/401k. Use whatever timeline works for you (1 year? 3 years?). The logic is reverse to common advice, but it could work if it's a big goal of yours.

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One option is to build up 401k and borrow from the 401k for your first time home purchase down payment. You'll have stock market risk though and may be susceptible to lagging returns. Another consideration is that you have to pay back the borrowed funds within a certain period of time (5 years?). But at least you'd be paying yourself back. If that doesn't sound appealing, there's no shame in reducing retirement fund contributions to save in a cash account.

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I'm not aware of a requirement like that. You should be able to mix cash + borrowed funds for the down payment.

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Just a note, I usually hit the HSA max before I go for the IRA because the HSA is triple tax advantaged, whereas the Roth IRA is only twice tax advantaged, just something to consider. Second, if you are not receiving a 401k match, you can skip those contributions until you max the HSA and IRA. Once you get your savings number up to 20-25% of your income, you are safe to put the rest aside in savings to get to a decent down payment. For your first home, don’t worry about hitting the 20% mark if it’s seeming extremely unattainable with your current salary and the area you need to live in. First home isn’t the worst thing to go 5% or 10% on a 30 year if you can swing that. You’ll likely move down the line, and that next home can be at 20%. I’ll also say I don’t recommend borrowing from your 401k. That’s just going to set your retirement savings back a lot for not much of a return on paying down for a house.

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Okay, thank you so much for the advice! I appreciate it a lot. It’s very helpful, I’ll be following it!

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For ref, I was in grad school for Chem (stipend basically let me break even with expenses) until 24, had only a 50k salary in Boston until October 2020 and hardly saved because of COL in Boston, so I’m a bit behind with finances. I now have $2k in Citi savings, $16.5k in Barclays HYSA, $2k in HSA, $12.5k in 401k, $3k in IRA (just started this year, should’ve opened one years ago 😠) and I pay off my credit cards every month (usually around $1.5-$2k statement each month). I have a feeling I’ll be taking out of my HYSA for any house and car deposits, right?

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