Debt $ense

In light of Aleta’s comment below, I figured I’d break down how my 401(k) is arranged.

Since I get my company match in company stock, but don’t invest any of my own money into said stock, my existing balance mix is always a bit different than my future contributions.

That said, I make my contributions to 30 percent each international, large-cap and mid-cap stock funds and 10 percent balanced. I don’t contribute anything regularly to a pre-mixed fund, but I am moving half my company stock into that fund, with the other half in the balanced fund.

That means my actual balance now is: 6 percent company stock, 28 percent mid-cap, 26 percent international, 34 percent large-cap and 3 percent each balanced and pre-mixed.

In July, when I get my annual raise, I’ll also do my annual rebalancing to transfer money from the funds with a greater percentage than my plan to ones with a lower percentage. For example, some of the large-cap money will move to international and mid-caps, and my company stock will move to balanced and pre-mixed. It’s a good rule of thumb to do this once a year or so to make sure your overall investments don’t get out of whack. If a fund’s actual balance is way off your future contributions, then your risks and returns will be different than what you actually want (assuming your contributions reflect how you want your money distributed).

Depending on what the raise looks like, I might increase the contribution by a point or two. More likely, I’ll keep it at the minimum to get the full company match and increase my debt repayment. I should be able to add $15-$25 a week to the payment, which means another $60-$100 a month on top of the $580 I’ll already be paying. (Once my cable bill is adjusted to reflect the fact I now only have internet, I’ll be able to pay $8 more a week.) That will help me pay down debt faster, which means I can increase my contribution to about 15 percent by this time next year.