strider
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Post by strider on Mar 29, 2011 12:51:36 GMT -5
Hello everyone. I'm 23 years old working at a university full time. I have graduated college and I only have 7000 in debt from school (lots of scholarships, holding 3 jobs, and graduating early).
Anyways I feel I'm doing better than alot of my peers but installment loans scare the crap out of me.
I have about 6000 saved up over one year right now. I have a pension fund at the moment as well that gets matched with 5% of my salary.
I'm able to save about 1000 a month and want to buy a car or save for a house. However with job volatility (major layoffs have been announced) I believe I should sit tight at the moment and not pay off my student loans or buy a car.
Is this a smart move?
Anyways this is my first topic on the boards. I used to lurk on Your Money back on msn when it was around.
Good to be a part of the board.
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Jake 48
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Post by Jake 48 on Mar 29, 2011 12:58:14 GMT -5
Welcome, sit tight, you will need to post a budget for the boards to give more meaningful answers
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busymom
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Post by busymom on Mar 29, 2011 13:07:14 GMT -5
Welcome aboard! This recession isn't any time to hurry & buy anything expensive, so I'd take it "slow & easy" just starting out. There's some sharp minds on these boards, so as Jake suggested, if you can give some info like your monthly rent payments, etc, you can get help setting up a budget, then we'll get you working on your goals. Congrats on the low student loans! You're doing better than a lot of recent grads!
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azphx1972
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Post by azphx1972 on Mar 29, 2011 13:15:53 GMT -5
Welcome! What's the interest rate on your student loans, and what's the condition of your current car (if you have one)?
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❤ mollymouser ❤
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Post by ❤ mollymouser ❤ on Mar 29, 2011 13:35:30 GMT -5
At this point, I'd continue to save money for emergencies, difficulties in getting "the" job after college, and a car replacement. Your student loans are presumably in deferment while you're in school, right? You can always pay them down in large chunks once you've graduated, obtained your dream job, and have a nice savings cushion.
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Tiny
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Post by Tiny on Mar 29, 2011 13:42:49 GMT -5
That pension fund is nice and all... but I'd seriously consider putting additional money towards retirement (like a Roth IRA)... You sound like my brother - he had a job with a pension as a 25 yo - but also contributed to other retirement savings. He retired at 50 (2 years ago). His pension is nice enough, but with the extra retirement money he (and his wife) are in an even nicer retirement. Some of the other guys he worked with didn't do the optional "extra savings" for retirement and so they are still working...
I wish I had saved more back in my 20's - a couple thousand extra a year back then wouldn't have made much of a difference in my lifestyle (alittle less take out, a little less alcohol, fewer clothes I never wore anyway).
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strider
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Post by strider on Mar 29, 2011 13:51:46 GMT -5
Welcome, sit tight, you will need to post a budget for the boards to give more meaningful answers Ok, I will use a takehome budget due to deductions, taxes, and a gym membership+parking that I consider essential while I work here. Takehome: 2600 Student loans: 150 Rent: 290 (I have a roommate in a small apartment) Car Insurance in mom's name: 70 Phone: 90 (phone/data/text and I consider it a want) Food: 120 Gas: 110 Utilities: 120 (heat/water/internet) Fun money: 200 (entertainment/netflix/beer/video games/etc...) = Grand total is 1150 So with 1450 a month extra I definitely have some wiggle room. I hear of massive layoffs and benefits changes soon so I think I should weather the storm first. I only have to wait until July since we're on a 2 year budget. I just received great marks now that I completed my first year here so performance shouldn't be a factor in a layoff.
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strider
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Post by strider on Mar 29, 2011 13:57:23 GMT -5
That pension fund is nice and all... but I'd seriously consider putting additional money towards retirement (like a Roth IRA)... You sound like my brother - he had a job with a pension as a 25 yo - but also contributed to other retirement savings. He retired at 50 (2 years ago). His pension is nice enough, but with the extra retirement money he (and his wife) are in an even nicer retirement. Some of the other guys he worked with didn't do the optional "extra savings" for retirement and so they are still working... I wish I had saved more back in my 20's - a couple thousand extra a year back then wouldn't have made much of a difference in my lifestyle (alittle less take out, a little less alcohol, fewer clothes I never wore anyway). Thinking about starting an IRA and putting 250 a month into it. I used alot of my first year for buying better clothes, paying off moving expenses thanks to a personal loan from my folks, and outstanding credit card debt during college that I just paid off a few months ago. I also paid off one of my student loans. Thanks for the suggestion.
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Sum Dum Gai
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Post by Sum Dum Gai on Mar 29, 2011 13:58:47 GMT -5
I second putting some aside for retirement. When I look back on the amount of money I blew in my early twenties on truly stupid crap (eating out constantly, bar tabs, etc) it almost makes me sick. Sure you have the pension right now, but if you do get laid off you might not even be vested, and you never know if your next job will have a pension. The earlier you start the easier it is later.
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strider
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Post by strider on Mar 29, 2011 14:04:07 GMT -5
Noted. At this very moment I'm waiting until July to make sure I'm not part of the layoffs. Then I'll work out a plan for an IRA. Thanks everybody.
Also Dark Honor, I do eat out and drink quite a bit but typically just the weekends. Afterall that's where people my age are at. However, I do cook 4 nights+ a week and I just make sure I pregame before the bar first!
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Sum Dum Gai
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Post by Sum Dum Gai on Mar 29, 2011 14:07:13 GMT -5
Also Dark Honor, I do eat out and drink quite a bit but typically just the weekends. Afterall that's where people my age are at. However, I do cook 4 nights+ a week and I just make sure I pregame before the bar first! There's nothing wrong with enjoying the money you make. I don't mean to imply that at all. Just make sure all your bases are covered first. I could have been saving money in my early twenties and still going out plenty. If you do that, you'll be ahead of where I'm at, and trust me, 30 comes quick.
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strider
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Post by strider on Mar 29, 2011 14:14:07 GMT -5
Also Dark Honor, I do eat out and drink quite a bit but typically just the weekends. Afterall that's where people my age are at. However, I do cook 4 nights+ a week and I just make sure I pregame before the bar first! There's nothing wrong with enjoying the money you make. I don't mean to imply that at all. Just make sure all your bases are covered first. I could have been saving money in my early twenties and still going out plenty. If you do that, you'll be ahead of where I'm at, and trust me, 30 comes quick. Yeah I make sure that the necessities are covered first. I would be upset if my entertainment budget EVER exceeded that. I do agree I should save money in my twenties and will start to do the retirement thing. I think 250 is a good starting point since that is 3000 and is close to 10% of my takehome salary. I could still make a car payment if I decided to get one. Speaking of which my car probably won't make it one more winter. It's not the biggest deal in the world and I have no problems driving a used car. I just know that the one I have won't make it much longer. I'm just hoping that it kicks the bucket after July. If I need to buy a beater I will but I was hoping to get a 2007/2008 Honda or something similar.
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Peace77
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Post by Peace77 on Mar 29, 2011 14:17:11 GMT -5
At this time, I would focus on increasing the the emergency fund / savings to at least $10,000. Don't increase your retirement funds until you know that your job is secure. Consider looking now for a better paying job.
Your budget does not include anything for car repairs/maintenance, medical/dental expenses (not covered by insurance), gifts/charity, clothing, or misc. such as haircuts. You can ignore those categories for awhile but they will crop up. Include some funds in savings for those items.
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strider
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Post by strider on Mar 29, 2011 14:24:58 GMT -5
Peace: At the moment my savings is kind of all in one big pot at the moment. I do have 6000 (over 7000 in a few weeks) in the bank right now for my emergency fund. I consider that to be over 6 months based on my living expenses right now. I am looking for a different job right now but nothing has matched my current one so far. I still have some time. As for a miscellaneous budget I have not tracked as much. I make sure the car is maintained, haircut is appropriate length, new clothes are bought regularly as well. So I don't save the full 1450 every single month. It may go down to the "paltry" 1200 or so once in awhile but I still feel like I'm ahead at this point. Medical/Dental/Health insurance is all deducted from my paycheck and I expect to take home less very soon due to the economy. At the moment I don't really pay much for deductibles. I would say though that yes I should save about $1000 a year aside from my EF for the "random crap" fund.
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reader79
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Post by reader79 on Mar 29, 2011 14:40:39 GMT -5
You could always save the $250 or so in a Roth IRA, where you can remove your contributions without penalty if you have an emergency. If your salary increases significantly, you may not be eligible for a Roth in a few years. And this account can be invested conservatively if you want to use it as a backup EF.
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strider
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Post by strider on Mar 29, 2011 14:47:35 GMT -5
I'm facing a salary decrease so I don't think it's going to go up a whole lot unless I take a different job within the university. I would like to keep my retirement accounts and my emergency fund separate if I can help it.
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Deleted
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Post by Deleted on Mar 29, 2011 15:08:36 GMT -5
I would put a line item in your budget for the car repair, clothes and hair cuts/misc. 5% of your salary is not a lot. I would be saving at least 10% on top of that for retirement. Yes, I would start that now, even if you may get laid off. You need about $11-12 to pay your bills if you got fired, not too hard to find and your UE would cover a portion as well. Just start putting something in your Roth for 2010 before 4/15/2011, start with $260/month going into Fidelity and you will be fine.
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phil5185
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Post by phil5185 on Mar 29, 2011 15:11:04 GMT -5
Takehome: 2600So - about a $45,000 gross? Speaking of which my car probably won't make it one more winter. It's not the biggest deal in the world and I have no problems driving a used car. I just know that the one I have won't make it much longer. I'm just hoping that it kicks the bucket after July. What kind of car? Year? Odometer reading? What was your major? And is that the field that you are working in with your current job?
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strider
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Post by strider on Mar 29, 2011 15:13:25 GMT -5
1994 grand prix. It has 160,000 miles and bought at a police auction.
My major is in IT. I live in a no income tax state so my gross is less but not too far off from $45,000. I am working in the filed I wanted to study for since I was 16. Part of the reason I graduated early is because I was able to take head start classes in high school for computer networking. I thorougly enjoy it.
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strider
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Post by strider on Mar 29, 2011 15:14:54 GMT -5
I would put a line item in your budget for the car repair, clothes and hair cuts/misc. 5% of your salary is not a lot. I would be saving at least 10% on top of that for retirement. Yes, I would start that now, even if you may get laid off. You need about $11-12 to pay your bills if you got fired, not too hard to find and your UE would cover a portion as well. Just start putting something in your Roth for 2010 before 4/15/2011, start with $260/month going into Fidelity and you will be fine. I haven't the first idea on investing in funds/IRAs. I will be reading the investing board soon as well when I get closer to that point. Thanks for your post.
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Deleted
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Post by Deleted on Mar 29, 2011 15:21:53 GMT -5
I would put a line item in your budget for the car repair, clothes and hair cuts/misc. 5% of your salary is not a lot. I would be saving at least 10% on top of that for retirement. Yes, I would start that now, even if you may get laid off. You need about $11-12 to pay your bills if you got fired, not too hard to find and your UE would cover a portion as well. Just start putting something in your Roth for 2010 before 4/15/2011, start with $260/month going into Fidelity and you will be fine. I haven't the first idea on investing in funds/IRAs. I will be reading the investing board soon as well when I get closer to that point. Thanks for your post. Your 23 years old, just use a target date fund from Fidelity for when you are 60-65, just start the savings.
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strider
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Post by strider on Mar 29, 2011 15:26:24 GMT -5
Closer as in a few months....Not at retirement lol.
Target Date fund huh? Interesting. Well I'll probably be working until 70 based on social security gradually being moved up eventually. Set a date for 70 or the current law which is 67?
I guess I could take retirement before social security as well. Choices!
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DVM gone riding
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Post by DVM gone riding on Mar 29, 2011 15:32:10 GMT -5
do you own a car then and are thinking about replacing it?? I did this when I graduated and while i love my car and make enough to afford it, I wish I had found these boards first and reconsidered how I did it. I would start saving in a seperate fund what you think you would feel comfortable spending a month on a car payment for the next year and then use that money plus your trade and buy a cheaper car that will last (maybe 10k type of car) and then drive it the grave
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Deleted
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Post by Deleted on Mar 29, 2011 15:32:50 GMT -5
Closer as in a few months....Not at retirement lol. Target Date fund huh? Interesting. Well I'll probably be working until 70 based on social security gradually being moved up eventually. Set a date for 70 or the current law which is 67? I guess I could take retirement before social security as well. Choices! And that is what saving for retirement early gives you, choices. Personally I would put $3100 in Fidelity for the 2010 year, all of it is their cash fund all pull the $260 out every month. If you do loose your job you can remove your money from the Roth IRA with no penalties, if you do not you can still save another $5000 for the 2011 tax year. But you may be more risk averse than I am.
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strider
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Post by strider on Mar 29, 2011 15:36:48 GMT -5
My mom technically owns the car but it's absolutely paid off by now. No payments are made towards it.
I have been saving for awhile now with the thought of some of that $6k going towards a car. It'll be 9k in the EF by the time it's July. If I'm still here I'd like to apply 3k to a car for a downpayment. I've seen some honda civics for around $12k and around 50,000 miles. At 48 months it's only a touch over $200 a month.
I just hate being under 25 for insurance. It's the worst. You'd think I'd get a damn good lower rate for a college education, good credit, and only student loan debt. No dice. Gotta love that age discrimination.
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sapphire12
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Post by sapphire12 on Mar 29, 2011 15:38:00 GMT -5
Congratulations to the milestones you've made to this point! You have a good head on your shoulders, so I'm sure you will be fine. At 23, the only things you need to hurry up and do are start saving for retirement and a "life happens", I think you called it carp fund. Everything else will happen when it should provided you adequately plan for it.
The others here have given you good advice. If you need to step back and digest what they've said, then do it. Best wishes to you.
It's very refreshing to see a 20 something planning for his/her future.
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strider
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Post by strider on Mar 29, 2011 15:38:31 GMT -5
Closer as in a few months....Not at retirement lol. Target Date fund huh? Interesting. Well I'll probably be working until 70 based on social security gradually being moved up eventually. Set a date for 70 or the current law which is 67? I guess I could take retirement before social security as well. Choices! And that is what saving for retirement early gives you, choices. Personally I would put $3100 in Fidelity for the 2010 year, all of it is their cash fund all pull the $260 out every month. If you do loose your job you can remove your money from the Roth IRA with no penalties, if you do not you can still save another $5000 for the 2011 tax year. But you may be more risk averse than I am. Roth IRAs are after tax correct? Meaning that when I retire I don't have to pay tax on them? Maybe a stupid question.
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strider
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Post by strider on Mar 29, 2011 15:39:23 GMT -5
Congratulations to the milestones you've made to this point! You have a good head on your shoulders, so I'm sure you will be fine. At 23, the only things you need to hurry up and do are start saving for retirement and a "life happens", I think you called it carp fund. Everything else will happen when it should provided you adequately plan for it. The others here have given you good advice. If you need to step back and digest what they've said, then do it. Best wishes to you. It's very refreshing to see a 20 something planning for his/her future. Thanks for the encouragement. It's hard because I know I'm few and far between with managing money. Just trying to get some advice.
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Deleted
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Post by Deleted on Mar 29, 2011 15:44:28 GMT -5
And that is what saving for retirement early gives you, choices. Personally I would put $3100 in Fidelity for the 2010 year, all of it is their cash fund all pull the $260 out every month. If you do loose your job you can remove your money from the Roth IRA with no penalties, if you do not you can still save another $5000 for the 2011 tax year. But you may be more risk averse than I am. Roth IRAs are after tax correct? Meaning that when I retire I don't have to pay tax on them? Maybe a stupid question. Not stupid at all, yes that is what a Roth is. By doing this you do not lose the freedom to pull on the money, if you need it, but you get tax free earnings.
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sapphire12
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Post by sapphire12 on Mar 29, 2011 15:55:37 GMT -5
[[/quote] It's hard because I know I'm few and far between with managing money. Just trying to get some advice.[/quote]
I know how you feel. I was a 20 something making smart choices and trying to get people to do right is still tough at 40.
In the words of Dave Ramsey: "Live like no one else and you will live like no one else."
While this economy has been tough for many, there are a few of us who have done well because we kept a job and we've made and/or are making smart financial choices.
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