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Depends on how long he's had each one - if that's the oldest card, he should keep it. Actually, if he only has two cards total he should keep it. It's not going to hurt him unless he uses it again or if there's a fee.
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Apr 20, 2013 01:06
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Thank you all for your advice. Both of lines of credit are closed, and I am in repayment. I will be paying down the Discover as fast as possible, and will apply the budgeted payment to the Chase once the Discover is taken care of.
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Apr 20, 2013 04:15
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Looking for some opinions from the more experienced- Short Version is I got a $3500 tax return this year. I'm using it wisely, so here are my options: Student Loan #1 -$8866 @ 6.8% Studen Loan #2 - $2685 @ 6.8% Work 401K Loan - $1575 @ 4.5% (didn't know it at the time, but this has to be repaid either through auto deductions from my paycheck or paid in full) Due to the limitations of the work 401k I instinctively want to pay that off first, but that leaves more money at the higher APR. I'd take the $50 every month that I'd save from that repayment and add it to SL#2 The other side of me wants to pay SL #2 off first, and put the rest in savings (I already have 2k saved, but I'm a single dad so I'm worried it's not enough). SL #2 doesn't have a required monthly payment yet, so it wouldn't free up any money to apply towards another loan, and it feels weird to me still to have money in savings that could be used elsewhere. Pros/Cons? savesthedayrocks fucked around with this message at 12:23 on Apr 20, 2013 |
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Apr 20, 2013 12:19
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savesthedayrocks posted:Looking for some opinions from the more experienced- I would pay off the 401k loan right away. If you ever stopped working for them for any reason the loan would immediately be due (I think you have 60 days) and if you don't pay it, it is considered an early withdrawal that is taxed and penalized. The rest you can either put in savings or put it on your smaller loan. Its ok if you put it in savings, especially if there is something going through your mind and you want the extra security for now, and then when the clouds clear a few months later you put it on the smaller student loan. If you do that you probably end up paying an extra $10 in interest.
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Apr 20, 2013 15:22
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Zeta Taskforce posted:I would pay off the 401k loan right away. If you ever stopped working for them for any reason the loan would immediately be due (I think you have 60 days) and if you don't pay it, it is considered an early withdrawal that is taxed and penalized. I agree 401k loans are dicey. As for savings, yes, having them is a good idea even if you have debt. Emergency fund, yes? Do you have any regular money going into savings? Also, are you paying regularly on your loans? One idea is to recalculate your withholdings so you're not getting a big refund next year, and instead use the extra money in your paycheck toward the loans every month. That'd require some math so you should talk to the tax thread maybe if you think that would be a good idea.
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Apr 20, 2013 15:35
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Zeta Taskforce posted:I would pay off the 401k loan right away. If you ever stopped working for them for any reason the loan would immediately be due (I think you have 60 days) and if you don't pay it, it is considered an early withdrawal that is taxed and penalized. Awesome, thank you! I admit I didn't do much research before taking the loan, so I wasn't aware of that fact either, but makes sense. Nothing in mind security wise, but being broke sucks so $10 is worth the piece of mind. Eggplant Wizard posted:I agree 401k loans are dicey. Yeah, I have an emergency fund. Once I hit 2k I stopped putting money into it from my check and moved that to pay down debt. It's easier for me to rationalize not saving $50 or so a month instead of over $2k though. I admit I need to talk to a tax pro. The year before last I owed a little over 1k, so I panic'd and went super conservative even though the two years were polar opposites with life changes. I'll find someone to talk to about future taxes though.
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Apr 20, 2013 17:57
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savesthedayrocks posted:I admit I need to talk to a tax pro. The year before last I owed a little over 1k, so I panic'd and went super conservative even though the two years were polar opposites with life changes. I'll find someone to talk to about future taxes though. Try running some numbers through this calculator http://www.dinkytown.net/java/Tax1040.html If you see this year progressing like last year, same number of dependents, filing status, etc, you can opt for bigger paychecks and smaller refund next year. If you had a larger paycheck and things didn't feel so tight and you were consistently saving and paying down decent chunks of debt, you might feel more at peace with the idea of putting the extra on the smaller student loan. But in the meantime, it sounds like you have been through some really big life changes and its understandable and logical that you feel better about having more money in savings.
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Apr 20, 2013 18:23
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Yeah, I'd say using the extra (after the 401k loan is paid off) to pay toward the other loans OR savings is a fine idea. I'm glad you have an e-fund  More cushion is always nice though.
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Apr 20, 2013 19:20
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I got a pre-approved offer for a credit card in the mail. Looks pretty good - major card company, 12.99% APR, 0% interest on balance transfers for 15 months, no annual fee. I have 4 cards with a significant amount of debt on them (something like $15k all together) which I would very much like to pay off. The worst card has an APR of 23.99%, the others are around 17-18%. I don't really use the cards anymore, and I'm confident that I would use this new card for good rather than evil (racking up more debt). For what it's worth, I have decent credit (around 720). I called the card company to see what kind of credit limit they could offer me, but they said they'd have no way of knowing if I don't submit an application. If I apply and get approved, I don't get the opportunity to refuse the card. If they give me a credit limit of $400, it's not really worth the trouble. I could cancel the card immediately, but I'd prefer not to have all that on my credit report. Any advice?
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Apr 23, 2013 00:54
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They're not going to approve you and give a super low limit. Go for it, you have nothing to lose.
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Apr 23, 2013 01:10
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So since I hosed up and didn't use all my Healthcare FSA money this year, I'm wondering what happens to it. Does my employer get it back, or somebody else?
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Apr 23, 2013 01:37
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PongAtari posted:I got a pre-approved offer for a credit card in the mail. Looks pretty good - major card company, 12.99% APR, 0% interest on balance transfers for 15 months, no annual fee. I have 4 cards with a significant amount of debt on them (something like $15k all together) which I would very much like to pay off. The worst card has an APR of 23.99%, the others are around 17-18%. I don't really use the cards anymore, and I'm confident that I would use this new card for good rather than evil (racking up more debt). For what it's worth, I have decent credit (around 720). Sure, you have nothing to lose by applying for it, and not telling you the limit you would get was the correct answer. (There is no way anyone could know). If you don't like the card and you cancel it, the affect on your credit is minimal. You have far bigger problems than a 5 point hit to your credit (like $15,000 in credit card debt for instance) Just a few thoughts. First, assuming you get this card and you do balance transfers, I would use different words than "pay off". You will have paid off zero dollars of debt. You are moving it around. Those are pretty high rates and you should get the best rates that you can, but paying back $15,000 just became maybe 10% or 15% easier. I'm cool with that, but don't let up one bit, don't think you are a genius who beat the system. Don't think of it as free money. You still need to be throwing everything at it, it is still a monster. Finally, you don't say what major card company it is, but be advised that they don't offer 0% cards because they are nice and want to see you get out of debt. They offer them because they are extraordinarily profitable. You can't ever be one minute late, ever, or the entire game is done. Don't ever get sick and forget, don't move and misplace your statement. FISHMANPET posted:So since I hosed up and didn't use all my Healthcare FSA money this year, I'm wondering what happens to it. Does my employer get it back, or somebody else? You forfeit it. As to where it goes, it depends on your employer. They can donate it to charity or use it to offset the costs of administering the program, but per IRS rules, they can not give it back to you.
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Apr 23, 2013 02:19
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FISHMANPET posted:So since I hosed up and didn't use all my Healthcare FSA money this year, I'm wondering what happens to it. Does my employer get it back, or somebody else? Company gets to decide, and they almost always will put it toward the cost of running the fund, even though they could theoretically give you an extra 2 1/2 months to spend it in the next year. Also, about 40% of people forfeit at least a dollar each year. A good system.
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Apr 23, 2013 02:20
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Potentially stupid question: I use my online bank account (Ally) for checking and savings thanks to this thread. I like it a lot more, with one exception: I have a ton of cash in and out of pocket from playing poker. I need to be able to deposit it. Right now, I have a free student checking with sovereign so I can use that to deposit and instantly transfer through. I imagine they won't like this. Also, after I lose my student checking account, I'll be feed for minimum balance issues. What are my best options? Should I just use my online bank for the savings interest and keep a normal checking account at something like sovereign?
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Apr 23, 2013 02:44
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Why don't you think they would like it? Would it be violating the terms as far as balance limit or number of transfers you can make? Alternately, would you eat more than a few bucks in fees if you just deposited it at a different bank's ATM?
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Apr 23, 2013 02:47
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Yeah, maybe they wouldn't care. I don't think it would be breaking any terms or anything. Ally says they will cover ATM fees. Not sure if that covers deposits.. to be honest I didn't even think you could deposit cash to a different bank for some reason. Guess that's why I'm in the newbie thread. I'll look into it!
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Apr 23, 2013 02:49
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Thoguh posted:Why don't you think they would like it? Would it be violating the terms as far as balance limit or number of transfers you can make? Ally refunds ATM fees. If he can deposit through an ATM he's not a member at, then that'd be a good way. That being said yeah just transfer it to yourself from the student account, and in the meantime look around for another checking account without a fee. Credit union?
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Apr 23, 2013 02:49
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Thoguh posted:Why don't you think they would like it? Would it be violating the terms as far as balance limit or number of transfers you can make? ATM's that accept foreign deposits are not super abundant. That said, something about depositing cash into an ATM kind of scares me. If this is a regular "problem" (is that the right word?  ) then I would open an account at a credit union or community bank.
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Apr 23, 2013 02:55
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Fantastic thread, all! I have learned a ton by reading through this entire thing. One question tho that my husband and I had is about Mint. He is a little leery about putting all the stuff into Mint cause he is a bit concerned about the security of it. Overall is it pretty safe etc to have all the info in it?
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Apr 23, 2013 03:48
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I'd like a little critique of my emergency fund. INCOME: GI BILL (BAH): $2,454 (is occasionally pro rated when the semester ends/vacation. I take classes year round so this only amounts to about 3 1/2 weeks per year) VA Disability:$255 (pretty much guaranteed) Total=$2,709 EXPENSES Rent: $1,075 Car insurance: $80 Utilities: $50 Food/Drinking:$700 (I'm not an alcoholic, I swear) Gym: $180 Leisure: $200 TOTAL=$2285 DEBT N/A ASSETS ROTH:$11,200 Stock Portfolio: $20,000 Savings account: $1,000 Total: $32,200 I'm 25 and single. I live in a very expensive city so some of these numbers are certainly inflated compared to many living in other parts of the country. In the summer I'll be starting a 6 month intership where I should net at least $3600 per month and possibly as much as $4500. I then have one more semester until I graduate where I'll almost certainly get a solid 50k+ per year job. I continuously read that I should have 3 to 6 months of living expenses sitting in a checking account, but this seems extreme for my situation. I have $1,000 sitting in a checking account and a credit card with no balance and a $7,000 limit on it. Doesn't this offer me more than enough of a cushion? I figure if something catastrophic happened I could put all my day to day expenses on a card while I sell/transfer some stock. I'm also curious as to whether my safety margin should increase when I leave the security of government benefits for a full time job? Any suggestions are welcome.
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Apr 23, 2013 04:02
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Amethyste posted:Fantastic thread, all! I have learned a ton by reading through this entire thing. Mint is read-only. If someone gets your Mint password they can't move money around. Mint uses the same backend as your bank so it's as secure as your bank's website. They are owned by Quicken and do store usernames/password server side but are encrypted and on a separate database. https://www.mint.com/how-it-works/security/faq/ FCKGW fucked around with this message at 04:09 on Apr 23, 2013 |
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Apr 23, 2013 04:06
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Your credit card is NOT an emergency fund. An emergency fund isn't necessarily for if you lose your job, but for things like auto insurance, health problems, etc. You should increase your emergency fund while you can and also see if you can reduce some of your food/drink spending (which is probably not unreasonable, since it looks like even you recognize it as being high). Just cooking more at home and eating out less will drop that bill considerably.
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Apr 23, 2013 04:07
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Ignoranceisbliss88 posted:I figure if something catastrophic happened I could put all my day to day expenses on a card while I sell/transfer some stock. I'm also curious as to whether my safety margin should increase when I leave the security of government benefits for a full time job? Any suggestions are welcome. It's better than having nothing, but still you probably should have an emergency fund of at least 3-6 months. You're possibly fine at 3, because you're not directly in arelationship and dont have children. But, what if your investments/stock are at a point where you really should not sell it? What if you lose your job at the same time your investments are doing poor? Keep an emergency fund. 3-6 months at least would work for you.
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Apr 23, 2013 04:23
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totalnewbie posted:Your credit card is NOT an emergency fund. Why can't it be a temporary fix while waiting to sell stocks? The majority of my protfolio (75%+) is in well diversified ETFs. There's very little opportunity in my life for a massive unexpected expense. I have great health insurance, I rent my apartment, I have no obligations to support anyone, and I could easily do without my car if needed. My Portfolio is diversified domestic/small cap/large cap/industry/geography (with a nice little chunk of negative beta) so even if the 2007 crash repeated itself I doubt I'd lose more than 60% of my total value. It seems like socking away 3-6 months (6-12k) in a checking account would be costly. I'm not trying to come off as combative here, I'm just playing devil's advocate. I understand the logic of the 3-6 month cushion and the obvious downside to using a credit card as an EF, I just feel like I'm in a slightly unique position (i.e. little obligation with plenty of relatively liquid assets). Tell me why I'm an idiot for thinking this, haha.
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Apr 23, 2013 05:04
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Ignoranceisbliss88 posted:Why can't it be a temporary fix while waiting to sell stocks? The majority of my protfolio (75%+) is in well diversified ETFs. There's very little opportunity in my life for a massive unexpected expense. I have great health insurance, I rent my apartment, I have no obligations to support anyone, and I could easily do without my car if needed. My Portfolio is diversified domestic/small cap/large cap/industry/geography (with a nice little chunk of negative beta) so even if the 2007 crash repeated itself I doubt I'd lose more than 60% of my total value. It seems like socking away 3-6 months (6-12k) in a checking account would be costly. I'm not trying to come off as combative here, I'm just playing devil's advocate. I understand the logic of the 3-6 month cushion and the obvious downside to using a credit card as an EF, I just feel like I'm in a slightly unique position (i.e. little obligation with plenty of relatively liquid assets). If you are in a good place financially with 1) lots of relatively liquid assets and 2) limited potential liability, then you don't need an emergency fund, frankly. The whole point of an emergency fund is that it provides liquidity if/when your income blows up and/or your expenses balloon. If you have liquid funds to draw on already, don't bother.
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Apr 23, 2013 06:05
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Ignoranceisbliss88 posted:Why can't it be a temporary fix while waiting to sell stocks? The majority of my protfolio (75%+) is in well diversified ETFs. There's very little opportunity in my life for a massive unexpected expense. I have great health insurance, I rent my apartment, I have no obligations to support anyone, and I could easily do without my car if needed. My Portfolio is diversified domestic/small cap/large cap/industry/geography (with a nice little chunk of negative beta) so even if the 2007 crash repeated itself I doubt I'd lose more than 60% of my total value. It seems like socking away 3-6 months (6-12k) in a checking account would be costly. I'm not trying to come off as combative here, I'm just playing devil's advocate. I understand the logic of the 3-6 month cushion and the obvious downside to using a credit card as an EF, I just feel like I'm in a slightly unique position (i.e. little obligation with plenty of relatively liquid assets).
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Apr 23, 2013 13:03
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Ignoranceisbliss88 posted:There's very little opportunity in my life for a massive unexpected expense. I have great health insurance, I rent my apartment, I have no obligations to support anyone, and I could easily do without my car if needed. The whole point of an emergency fund is that it is for situations that you do not or cannot anticipate. If an expense is something that you can predict and plan for, then it should be part of your budget calculations. So the fact that you can't see the emergency in advance isn't really a reason not to have a fund for it. Does this make sense? The point of an emergency fund is that it is a set amount of money that is 100% guaranteed in value and access that you can rely on in pretty much any situation. Your credit card is neither of those things - your credit line can be reduced or canceled pretty much at any time. I mean ultimately this is a risk calculation, and this thread tends toward very conservative risk analysis because it makes sense to guide people trying to understand their finances into the safest habits. If you think that this is an acceptable level of risk for you, ok, but make that calculation that neither the availability of your credit line or the value of your stock is guaranteed in the same way that an emergency fund is.
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Apr 23, 2013 14:38
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Ignoranceisbliss88 posted:Food/Drinking:$700 (I'm not an alcoholic, I swear) Two things here: 1. That is a LOT to spend on food & going out. Seriously. Separate it into groceries, restaurants, & drinking. Consider adding the latter two to "leisure," although it might be good for you to get an idea of how much you spend eating out vs drinking vs coffee shops. It may surprise you. Learn to cook; it'll get you dates. Ignoranceisbliss88 posted:I'll almost certainly get a solid 50k+ per year job. 2.  I know this is true in some fields but dude, be careful here. The unemployment rate for people in your age bracket is much higher than for others. Being a veteran could work for OR against you, too. Depends a lot on your disability and how you sell your skills. Just don't count chickens. I know you're also counting on your internship for the summer. That's awesome. However, you yourself are about $1000 unsure on exactly how much it'll be. Regardless, whenever you change situations, be careful not to adjust your spending habits too far upward with your earnings. It's a lot harder to cut expenses once you've got used to them than it is to plan ahead before you spend too much in the first place.One good reason to have a real sized emergency fund is to get you in the habit of saving. With $1000, you've started that habit. Don't quit now. A serious reason to have a serious emergency fund: yes, you could use your credit card. In a medical or housing-related or family emergency, however, you could pretty quickly run out of that $1000 & $7000. Then, sure you can sell your stocks at a loss, and hopefully you're done paying for expenses so you can pay off that credit card immediately. There's a good chance it won't be that easy though. A lot of people use their credit cards in emergencies and they end up with huge debt. It's not something to mess around with. Ignoranceisbliss88 posted:It seems like socking away 3-6 months (6-12k) in a checking account would be costly. It's not costly to save money. I know people get all  about losing money due to low savings rates, but inflation hasn't been that bad and the security and discipline of saving cash is worth it. You know what's costly? Paying 20% interest on the emergency you put on your credit card. Oh, but you'll pay it off by the end of the month? Using what? That's what an emergency fund is for.Please stop trying to calculate your personal risk. You can't. It's not how life works. Here's one set of things that could cause you to need an emergency fund. It's not a comprehensive list, but it's better than some. Another important point: Ever heard the expression "when it rains, it pours"? Of course you have. There's no guarantee that you'll only get one emergency per financial quarter. ---- I'm coming off as an rear end in a top hat here and I am sorry. I have had emergencies (mostly pet-related  ) and having that emergency fund meant it wasn't a problem. My first bill for one pet problem was already $1000. I got up to about $2000 by the time it was over. I had plenty of savings, so it was okay. I made a lot less than you, too, at the time.
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Apr 23, 2013 14:40
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Ignoranceisbliss88 posted:Why can't it be a temporary fix while waiting to sell stocks? The majority of my protfolio (75%+) is in well diversified ETFs. There's very little opportunity in my life for a massive unexpected expense. I have great health insurance, I rent my apartment, I have no obligations to support anyone, and I could easily do without my car if needed. My Portfolio is diversified domestic/small cap/large cap/industry/geography (with a nice little chunk of negative beta) so even if the 2007 crash repeated itself I doubt I'd lose more than 60% of my total value. It seems like socking away 3-6 months (6-12k) in a checking account would be costly. I'm not trying to come off as combative here, I'm just playing devil's advocate. I understand the logic of the 3-6 month cushion and the obvious downside to using a credit card as an EF, I just feel like I'm in a slightly unique position (i.e. little obligation with plenty of relatively liquid assets). I'd personally have a little more money (maybe $2000-$3000) in your fund just so you don't have to liquidate stocks at the slightest expense, but besides that you should be fine.
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Apr 23, 2013 16:22
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So you all may remember my post from a few weeks ago about getting my own place and how it was going to be very expensive for me. Based on everyone's advice I ended up talking with some friends that also happened to need a roommate and we just got approved for a place that will end up being closer to work and cheaper in rent than I'm paying now. Thanks for the advice everyone! A new question: I have a 401K and TSP (government employee 401K basically) account from my old job. Should I roll those into my new 401K, combine both into an IRA or just keep the accounts? Most of the contributions were Roth but I don't want to run into any early withdrawal or tax penalties with the standard contributions.
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Apr 23, 2013 16:31
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Most generally you're probably best off rolling both over into an IRA, so you get to pick exactly which funds you want and can get lower fees. You can split it up into Traditional and a Roth IRA, or depending on how much there is and what your tax situation is like, convert it all to Roth.
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Apr 23, 2013 17:23
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axeil posted:So you all may remember my post from a few weeks ago about getting my own place and how it was going to be very expensive for me. Based on everyone's advice I ended up talking with some friends that also happened to need a roommate and we just got approved for a place that will end up being closer to work and cheaper in rent than I'm paying now. Thanks for the advice everyone! Congrats on the first part Repost your question in the retirement thread to get answers from people who nerd out about that stuff.
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Apr 23, 2013 18:35
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Eggplant Wizard posted:
That linked article has some good insight. Whenever I think of "things that could drain my emergency fund" the thought of paying funeral expenses or last-minute-stoopidexpensive travel had never occurred to me. Huh. That's also the same reason why I don't own pets (even though I would like to). I can afford normal pet expenses, but I can't afford to spend thousands every time my dog would do something stupid like swallow a button or fistfight a raccoon.
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Apr 23, 2013 19:30
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Ignoranceisbliss88 posted:Why can't it be a temporary fix while waiting to sell stocks? The majority of my protfolio (75%+) is in well diversified ETFs. There's very little opportunity in my life for a massive unexpected expense. I have great health insurance, I rent my apartment, I have no obligations to support anyone, and I could easily do without my car if needed. My Portfolio is diversified domestic/small cap/large cap/industry/geography (with a nice little chunk of negative beta) so even if the 2007 crash repeated itself I doubt I'd lose more than 60% of my total value. 10-8 posted:Because you don't want to have to sell part of your portfolio in a bear market. I think this needs to be emphasized. The most important aspect of an emergency fund is its liquidity. I'm sure you understand already, but by turning your cash into some other form of asset, you make it more difficult to access those funds. You might be worth a million dollars but if it's 100% sunk in your house, you're in trouble if you need a couple grand to fix your car. Yeah, you're rich, but it's all in a form that you can't spend. Obviously, that's an extreme example and yeah, you're right, you can sell your stock. But, if you're holding those stocks (and it appears you are) then you're betting that they'll rise in the long run (otherwise, why are you holding them?). Selling in a bear market is the worst thing you can do (in fact, you should be doing the opposite). But, emergencies don't care about how the market is doing. Yes, you incur some "loss", but that is the price you pay for liquidity. In the long run, the amount of "loss" due to holding essentially cash is not significant versus what you're aiming for when you retire. You could easily make up for it by cutting some nights out and being more frugally minded. The best thing about your situation, though, is that you can probably afford to build it up slowly. That is, there's no need to cut contributions to your retirement fund, for example, just to get that emergency fund going. But, from my personal point of view, having only 1k in cash and a CC is not a great position to be in in the long run, even if you have other assets that you could sell to cover the emergency.
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Apr 23, 2013 21:09
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Eggplant Wizard posted:Two things here: No offense taken, I prefer plain speak. I know I spend a lot on dining out and drinking. This is because A) my city is extremely expensive and B) it's a luxury I enjoy. I spent 4 years in some not so nice places and feel comfortable indulging a bit. If forced to, I could easily trim this to 300 dollars a month. I agree, I can't anticipate everything. I think I'll slowly increase my emergency fund to $2,000. My internship pays $27 an hour, I'm just not positive about the overtime (and will treat any as a winfall). I have no real plans to change my spending habits with the added income. I plan on bumping up my Emergency fund to 2k and fully funding my Roth. I realize that my employment is not guaranteed after graduation. I've had my credit card through my credit union for seven years now and have an interest rate of 8.9%. Either way, point taken. When I see large sums of money in checking accounts I can't help but see DCF equations in my head...something I obviously need to get over in relation to a E-fund. I'm in sort of a stasis right now in terms of finances. I'm a full-time student with the luxury (paid for in blood, sweat, and tears) that covers 100% of my tuition and gives me a living stipend. I'm being a bit undisciplined right now and only saving about $200-400 a month. I want to make some medium term plans/goals that at least acknowledge that I'm quite likely to have a pretty big bump in income in a year. This doesn't mean I'll start spending money I haven't earned yet, but that I'll position myself to best take advantage of this upcoming opportunity. I know I'm coming off as a little "know it all" here. I've been blessed with an innate desire to save and maximize returns on my money. I left my four years in the military with $40,000 in savings/investments, something that's not normal for an 18-22 year old earning $20,000 a year. I think that advice on this forum tends to be pretty conservative, and for good reason (a natural compensation for some of the wildly irresponsible things some people do). Maybe its arrogance, but I think my personality/knowledge base will keep me from making big financial mistakes. I want to know the raw numbers behind the cost benefit analysis in a decision without any consideration of human tendencies. I think this mentality has backfired a bit with my emergency fund. I'll be sure to increase it. Any other advice would be appreciated, thanks.
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Apr 24, 2013 05:08
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How much money is good enough to have in savings for someone my age? I am 25 years old. My wife is 28. Together, we make $112,000 a year, but have only been making that much in the past year. We have no debt. No consumer debt, no student debt. Nothing. Our jobs are secure. (Cannot foresee being fired any time soon). Unexpected expenses wise: 1. We live in Australia, so no risk of large medical bills. 2. Our car is 10 years old and has been given a clean bill of health, and only has 46,000 miles. We repair it regularly. 3. We are saving more than 30% of our income every week. 4. No kids. Possibly in the next two years. We are able to live off my income alone. Currently, we have $17,000 in our savings accounts, and $18,000 in our superannuation. (Australian retirement fund system). By the end of the year, I have us targeted to have $33,000 in our savings accounts. That means we'll be 26, and 29, with no debt, and $33,000. I keep thinking that this is just too low, that we're so far behind. I see people on this forum talking about having like $50, $60, or $70,000 and they're younger than I am! Am I doing something wrong? My budget is airtight, there's nothing more we can really cut out of it. I mean we splurge here and there but definitely nothing crazy, we save more than 30% and our housing costs are only 22%. Unfortunately recently we've had to spend money on a few necessary things, (doctors appointments, a couple of fines). I look at that $17,000 figure and it makes me nervous. But I don't know whether that's just me being anal. What do you all think? (I should add we started the year with $12,000, so our net worth is going up, at least). CelestialScribe fucked around with this message at 07:49 on Apr 24, 2013 |
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Apr 24, 2013 07:45
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Ignoranceisbliss88 posted:Maybe its arrogance, but I think my personality/knowledge base will keep me from making big financial mistakes. I don't believe the advice here is extremely conservative. It's fairly common sense stuff - don't accumulate debt, live beneath your means and save / invest for the future. You definitely have one big thing going for you - you're seeking out advice and taking financial planning seriously. But you just admitted arrogance - a very dangerous personality flaw - and claiming "knowledge base" while asking advice from an internet forum is kind of contradictory don't you think? Now here's my advice on your financial situation: 1) You don't have a job offer in writing yet. I would accumulate some savings now in case you're unable to find a job that starts right after graduation. Unless you want to live in your parents' basement. 2) You are disabled - that may make finding a job more difficult for you and will increase your future healthcare expenses. Keep that in mind. 3) Good job on the ROTH. But what investements are you putting in your ROTH? Also, are you telling me you are operating a fully taxable investment account without fully maxing out your tax-sheltered investment account first? Does that sound stupid to you? Sounds so to me! 4) A 100% stock portfolio is risky. I'm assuming it's in indexed mutual funds? What are you investing for? A down payment on a house? You may want to back off a bit on your risk exposure if you may need to access your investments in the near future. If it's for retirement - go hog-wild, as long as you can handle the fact that you may lose 30% of your assets in a single year due to market fluctuations. You may think you can handle the loss in theory, but as someone once said, "there's some things you can't teach a virgin with descriptions and diagrams." 5) The easiest way to become wealthy (Wealth accumulated = Income - Spending) is to limit your spending. Making more money at your job is very hard for most people, so the best way to be wealthy is to spend less. Think of becoming wealthy as a game of offense (salary) and defense (being frugal). You're currently playing a good offensive game - you're investing in your college education and you're doing an internship! Now just don't gently caress it all up on defense. INTJ Mastermind fucked around with this message at 08:20 on Apr 24, 2013 |
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Apr 24, 2013 08:15
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CelestialScribe posted:(I should add we started the year with $12,000, so our net worth is going up, at least). You're obviously fine, but saving 30% of $112,000 isn't all that much. You could do a lot better if you wanted to.
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Apr 24, 2013 09:09
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That's 112k before tax, I should say. Net income is just over 88,000. So I was actually wrong, I'm saving about 35% of that. Roughly. The numbers are off because I'm not in front of my budget right now but that's about right. I keep looking for places to save money, but it's difficult. Rent is high here and groceries are too. We don't eat out at all. I'm just worries that amount I have targeted is too small, is all. I keep comparing myself to all the younguns here who have much more cash than I seem to! CelestialScribe fucked around with this message at 09:21 on Apr 24, 2013 |
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Apr 24, 2013 09:16
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| # ? May 25, 2024 17:27 |
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INTJ Mastermind posted:I don't believe the advice here is extremely conservative. It's fairly common sense stuff - don't accumulate debt, live beneath your means and save / invest for the future. You definitely have one big thing going for you - you're seeking out advice and taking financial planning seriously. But you just admitted arrogance - a very dangerous personality flaw - and claiming "knowledge base" while asking advice from an internet forum is kind of contradictory don't you think? I think you underestimate the value of this forum. A pool of hundreds of well meaning people can provide a pretty incredible amount of knowledge. I think it'd be arrogant for anyone, regardless of profession or expertise, to disregard such a large amount of information. Even if it's thing you already know, its important to see other people's real world experience. My disabilities are rather minor and won't limit my career choices at all. I could probably even go back to the military if I wanted to. I assume by "tax sheltered investment account" you mean a 401k or traditional Roth? All of my income is tax free right now so it's not a concern. Also, general wisdom is to maximize your 401k employee match and then switch to a Roth. Saving a few thousand dollars now in taxes isn't anywhere near as advantageous as never paying taxes on withdraws from a long term investment account. About 75% of my portfolio is in low expense ETFs. The ETFs are a mix of domestic, foreign, mega/large/small, and emerging market holdings. The portolfio is quite agressive with a Beta in the 1.2 range. I realize this is quite risky, but it's not money I plan on needing anytime soon. I'm willing to take some risks now, I have the time to recover from any market crashes. I have no specific plans for the money but could easily use it for a downpayment in 5-10+ years. If I begin to see a specific use for the money I'll edge back on the risk and shift to some more fixed-income. I realize that I'm quite vulnerable to market shifts right now.
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Apr 24, 2013 14:45
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