Income Distribution

I'm 22, debt free (thanks parents), and I got a full time job 6 months before I graduated and started paying rent (thanks parents, again).

Where the money goes:

1. First: 100% on Track to Max out my Roth 401k by September 07 - $15,500 Personal Contribution, $7,750 Company Match
1. Taking the maximum 60% paycheck deduction
2. Started Feb. 12th
3. End - Early Sept
4. The 50% Company match is why this option is the #1 place for spare cash.
   
2. Second: Maxed out my 2006 and 2007 Roth IRA ($4,000 Each)
1. Interest earned on contributions is never taxed
2. As versatile as a brokerage account - Invest in mutual funds, stocks, bonds, etc.
3. After 5 years, take out up to 10K (contributions + interest) for your first time home purchase, medial, or educational expenses - TAX FREE!
   
4. Take out your contributions, with no tax penalties.
   
3. Third: Contributed to my Vanguard Brokerage Account, 100% Vanguard STAR Fund - Expecting a higher yield than my 5.00% WaMu Savings Account.
1. I wanted a fund that had a low min contribution ($1,000), and a fairly conservative stock to bond ratio, 60/40. I need this brokerage money to pay rent, so lets not blow it.
   
4. Fourth: 5.00% WaMu Savings
5. Fifth: Checking Account: $200 Max - I transfer money in from the savings account when I need to pay the Amex Bill. Utilities is automatically taken out, so is rent.

The benefits of saving for retirement at age 22 are exponential. My favorite online toy is the: Compound Interest Calculator. The 60 year old version of myself is hugging the 22 year old version of myself, right now.

After retirement, I'm looking for the best interest rate. I do all of my finances through Vanguard - My company 401k, personal IRA, personal brokerage account (Vanguard Mutual Funds only). Vanguard is an amazing company and I'll write a separate post on this later. In summary - the expense ratios and lack of fees, combined with the iron clad diverse mutual and index funds, make Vanguard a clear choice for passive investors.

Of course, there are many different opinions on where to put your money, Regular IRA, Roth IRA, etc. There's no right answer. But, this is my recommendations - It's smart, and again, 60 year old self, hugging 22 year old self.