Hey, it's Louis.

Today we're teaching your emergency fund and your 401(k) to share a room without fighting,

👀 IN TODAY'S STASH

🌳 THE SHADE

You built the $1,000 nut.

You're feeling pretty good about yourself, and you should.

But grab some shade for a minute cause there's a decent chance you've stopped there, coasting on that first win instead of asking what's next.

Maybe you figure you'll get to the retirement account stuff eventually, once things settle down, once you've got more breathing room.

Brother, that's the same thinking that kept us in debt in the first place.

"Eventually" isn't a plan.

🌰 THE NUT

Alright my brother, let's kick this thing a little.

We've uncovered some of the things that keep us in debt, figured out how to avoid much of that nonsense, and built our $1,000 nut. That safety nut is sitting there now, ready to catch a blown tire or the lion's share of a busted water heater.

We have the knowledge and the means to keep Mr. Debt from feeling us up and whispering sweet nothings in our ear.

You've done great work and you should feel good about what you've accomplished. That feeling of not being a shitty Tuesday away from disaster, that's freedom brother.

You've accomplished a lot… but know that we ain't done yet. That first grand covers a flat tire but doesn't cover being out of work for a few months.

Losing a job is a different kind of kick in the acorns. It's a LaRusso-style crane kick right square in the nads.

That's where an emergency stash… the safety nut's bigger, slower cousin walks in.

The safety nut protects you from life's little pain-in-the-ass surprise attacks.

The emergency stash helps protect you from the big scary-ass ones; layoffs, medical, aardvarks, tigers and bears… you get the picture.

Most folks aim for three to six months of expenses. You're not going to build that overnight my man, and you shouldn't try. It's a slow-and-steady-wins-the-race thing.

The good news?

All that money you used to shell out on debt payments and interest? It's not going into that bottomless pit anymore… It's your wealth now, and it's time to put it to work.

If you haven't already, start building that emergency stash.

The good thing is you don't have to knock it out before you touch anything else.

Split that freed-up cheddar between building your emergency stash and feeding a retirement account, both running at the same time.

We'll get into the retirement account piece in a second. For now figure out the split that works for you; 60/40, 50/50, 37.123648593658/62.8763514063… whatever floats your dinghy.

Bottom line, some to the emergency stash, some to your retirement account.

What worked for me was building up a good chunk of my emergency stash and then going to work on my retirement account.

Now, on to our foray into the wide, wide, world of 401(k)s and why they are a good idea.

For some reason, I feel like Marty Stauffer getting ready to do an episode of Wild America. "Behold the majestic 401(K) and its lovely plumage. Here we see it in its natural habitat."

A 401(k) is a retirement account through your job, funded before taxes.

Most employers match part of what you put in, up to a point, and that match is free money. No strings attached. If your job offers one and you're not contributing enough to get the full match, you're leaving free money for your retirement on the table.

Here's what that looks like.

Say you're making $60,000 a year and putting in 4% pre-tax. That's $2,400 a year into your account. If your company matches up to 3%, they're kicking in another $1,800.

Now you're looking at $4,200 a year, so let me do the math… Yep, that's $1,800 more going into your account than you'd have put in on your own.

A Roth IRA works the opposite way.

You fund it with money you've already paid taxes on and here's the Taster's Choice feel good moment; when you pull that money out in retirement, you don't owe Uncle Sam a dime on it. Not on what you put in, not on what it grew into.

It's a bonafide tax-free payday later.

We're going to slow down and dig into both of these properly.

Next issue, we're going all in on the 401(k), matching, vesting, contribution limits, the whole nine. The one after that, we'll break down the Roth IRA the same way.

For now, just know both are good moves, and you've got two more issues coming that'll show you exactly how to put them to work.

Take a look at where you're at brother.

You're not living paycheck to paycheck or robbing Peter to pay Paul anymore. You're building wealth.

The safety nut protects the short term. The emergency stash protects the medium term.

And the 401(k) or Roth? That's you protecting future you from eating ramen and mayo for every meal when you're 75.

🐿️ THE STEP

This week, do two things.

First, figure out where your emergency stash actually stands. If you haven't started one, open a separate savings account, something you won't touch for everyday spending, and drop in whatever you can right now, even if it's $10. That's the seed.

Second, find out if your job offers a 401(k) match.

Log into your HR or benefits portal, or just ask whoever handles payroll, "Do we have a 401(k), and does the company match contributions?"

If you're already enrolled and not contributing enough to get the full match, most plans let you bump your percentage anytime.

If you're not enrolled yet, ask what it takes to get started. Some employers let you jump in anytime, others only during open enrollment.

Either way, don't sit on it. That match is money your employer is ready to hand you, and it's just sitting there until you claim it.

You don't have to solve your whole retirement this week. Take advantage the free money on the table while you figure out the rest.

Until the next Stash, protect your nuts brother.

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