What are my investment options? How should I save money?

My husband and I are 28, 27 years old, and we have a 3 month old baby. We bought our first house this year, but have no equity yet. We have about $50K in debt (cars, credit cards, and school loans) that we are hoping to pay off in just a few years. We have NO MONEY SAVED right now. Our gross income last year was about $60K and we were barely getting by, but is jumping to over $105K in 2008 because of job changes. We have thought about starting investing for retirement, but are afraid to go with 401k's or the like because we don't anticipate staying with the same employers for more than 2-4 years at a time. My hubby wants to pay off all debt, then save; but I think it is important to do both.

What are our options for saving for retirement besides an employer's 401k. Will changing jobs "too soon" affect 401k investments? What would you do in our shoes, and how much would you save? How much income do you think we should save in liquid funds as opposed to "for retirement"?

It's good to see that you're thinking ahead. Many people don't. They're called "too broke to retire."

If you have no savings, then the first thing that I would do is to save for an emergency fund. Professional financial advisors usually recommend 6-12 months worth of normal expenses in an interest-bearing savings account or mutual fund money market account. This will help carry you through if one of you becomes ill and can't work or if one of you loses your job. I had this and it was invaluable when I got laid off.

I agree with you. I would pay debt and invest to the degree possible. The key to building wealth is time and compounding of returns. Getting out of debt is a wonderful goal. However, it is much more difficult to accumulate a large retirement fund if you start late. I started my retirement investing when I was 27. I'm now 50 and I am well on the way to a comfortable and secure retirement.

Don't be afraid to invest in a 401k even if you plan to change jobs. The money that you invest is portable. You can roll it over into an IRA and keep it regardless of when you change jobs or how many times. You will lose your employer's contribution if you leave before you are vested in the plan. Of course, you'll never get the employer match if you don't invest in the plan so don't worry too much about that.

You might also want to think about a 529 plan to save for college for your baby. At 3 months old, you have lots of time to build a nice fund to pay the tuition.

If you need more help, you might want to consider seeing a professional financial advisor. Get one who charges an hourly fee, not one who works on commission. An unscrupulous commissioned advisor may steer you into investments that are profitable for him instead of those that are profitable for you. A fee-based advisor does not have that conflict of interest. The cost will be much less than the cost of making a bad decision.

Good luck!

you can do a roth IRA for retirement or put $$ into a money market acct (earns interest but acts as a checking acct). check out www.daveramsey.com=-===great website!!

Roth IRA right now. Don't do 401K until you pay off the credit cards. Car and student loans are a fixed rate. You should have 3 months of expenses saved in liquid funds in a bank too.