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I recently re-opened a Mint account to keep track of my poo poo, I've been spending way too much on gas station pop and cigarettes. I finally got all of my debt tacked on there along with my school loans. Just so I stop freaking out, can someone say if $5k in the hole isn't too bad of a situation to be in at 25?
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Dec 9, 2013 10:45
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Lblitzer posted:I recently re-opened a Mint account to keep track of my poo poo, I've been spending way too much on gas station pop and cigarettes. I finally got all of my debt tacked on there along with my school loans. Just so I stop freaking out, can someone say if $5k in the hole isn't too bad of a situation to be in at 25? Some would say any debt is an emergency situation. Just how bad it is really depends on your entire financial picture. What's the interest rate on that debt, what's your income, and what are your other expenses?
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Dec 9, 2013 13:10
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Lblitzer posted:I recently re-opened a Mint account to keep track of my poo poo, I've been spending way too much on gas station pop and cigarettes. I finally got all of my debt tacked on there along with my school loans. Just so I stop freaking out, can someone say if $5k in the hole isn't too bad of a situation to be in at 25? That's a tough question to answer. If you're making $100k/year, then this really isn't too bad and can be quickly fixed. If you're making a more average wage (or less) and have lots of obligations, this might be tougher for you to fix. What does your income and expenses look like?
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Dec 9, 2013 14:44
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Lblitzer posted:I recently re-opened a Mint account to keep track of my poo poo, I've been spending way too much on gas station pop and cigarettes. I finally got all of my debt tacked on there along with my school loans. Just so I stop freaking out, can someone say if $5k in the hole isn't too bad of a situation to be in at 25? If you have a college degree and that 5k includes your student loan, you're doing pretty good. Keep at it, get it paid off next year and you're off to a great start. If that 5k is all consumer debt, there might be a problem.
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Dec 9, 2013 15:42
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I've got $2.3k in credit card debt @ 13%, mostly used as an emergency source (I know, I know). A student loan for $3.1k, and I've got two years of school left and the rest of tuition is going to cost me $8.5k. I'm working retail right now and bring in around $13k a year working around 30/hrs a week. My car does need a few repairs but I own it and my parents lent me another car in the interim. I do spend a bit more aggressively than I really need to, but I figure this and working a Mint account are good places to start in realizing how to better spend my money. I also have no 401k or retirement plan set up yet and would like to do that 5 years ago. Where can I start with looking at options for that?
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Dec 9, 2013 17:59
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Lblitzer posted:I've got $2.3k in credit card debt @ 13%, mostly used as an emergency source (I know, I know). A student loan for $3.1k, and I've got two years of school left and the rest of tuition is going to cost me $8.5k. I'm working retail right now and bring in around $13k a year working around 30/hrs a week. My car does need a few repairs but I own it and my parents lent me another car in the interim. I do spend a bit more aggressively than I really need to, but I figure this and working a Mint account are good places to start in realizing how to better spend my money. I also have no 401k or retirement plan set up yet and would like to do that 5 years ago. Where can I start with looking at options for that?
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Dec 9, 2013 18:43
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Lblitzer posted:I've got $2.3k in credit card debt @ 13%, mostly used as an emergency source (I know, I know). A student loan for $3.1k, and I've got two years of school left and the rest of tuition is going to cost me $8.5k. I'm working retail right now and bring in around $13k a year working around 30/hrs a week. My car does need a few repairs but I own it and my parents lent me another car in the interim. I do spend a bit more aggressively than I really need to, but I figure this and working a Mint account are good places to start in realizing how to better spend my money. I also have no 401k or retirement plan set up yet and would like to do that 5 years ago. Where can I start with looking at options for that? Ohhhh ok, that is not a great situation to be in. Nothing to be panicking about but you need to start fixing poo poo. It's normal to have a huge debt-to-income ratio if you're still a student, but that credit card debt is worrisome. Get ride of the credit card debt first and foremost, before you even start thinking about retirement savings. Set aside some money (Say $500?) for the next emergency, so you don't have to go deeper into debt when that happens. Regarding the car situation, how bad are the repairs? How much are you paying in insurance? Would you be better off - if your parents are down with this - selling yours and using their for a while?
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Dec 9, 2013 18:47
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Lblitzer posted:I've got $2.3k in credit card debt @ 13%, mostly used as an emergency source (I know, I know). A student loan for $3.1k, and I've got two years of school left and the rest of tuition is going to cost me $8.5k. I'm working retail right now and bring in around $13k a year working around 30/hrs a week. My car does need a few repairs but I own it and my parents lent me another car in the interim. I do spend a bit more aggressively than I really need to, but I figure this and working a Mint account are good places to start in realizing how to better spend my money. I also have no 401k or retirement plan set up yet and would like to do that 5 years ago. Where can I start with looking at options for that? You're not totally boned yet, but if you keep going in this direction you'll be in a lot of financial pain in the near future. Do you have to pay on those student loans yet since you're still a student? If you can get a hold of things now and stop running up the credit card you can turn this around. Do you have any emergency cash savings presently? 2.3k in credit card debt with only ~1k/month of income is a bit of a hole to dig out of, but very much doable if you can direct even a couple hundred dollars per month to pay down that debt ASAP. Fortunately for you the APR is "only" 13% (instead of 20%+ like a lot of people in bad debt) which I take it to mean that you haven't trashed your credit yet or missed any payments so good work there at least. If you're 25, still in school, still have student loans, and have consumer debt IMO don't worry about retirement savings just yet. Paying off that credit card debt is a guaranteed "return" of 13% which is significant. Once the card is paid off then start looking at long term savings, assuming your student loans aren't oppressive. What is your student loan situation? Federal loans or private? Interest rate? Payment schedule? Those details can change how you should deal with them quite a lot.
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Dec 9, 2013 18:56
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Lblitzer posted:I've got $2.3k in credit card debt @ 13%, mostly used as an emergency source (I know, I know). A student loan for $3.1k, and I've got two years of school left and the rest of tuition is going to cost me $8.5k. I'm working retail right now and bring in around $13k a year working around 30/hrs a week. My car does need a few repairs but I own it and my parents lent me another car in the interim. I do spend a bit more aggressively than I really need to, but I figure this and working a Mint account are good places to start in realizing how to better spend my money. I also have no 401k or retirement plan set up yet and would like to do that 5 years ago. Where can I start with looking at options for that? As others have already said, you are headed down a dark path, but you haven't quite gone too far to turn back yet. You need to make that credit card debt your top priority, and have a sea-change in your spending habits. Mint will help you see where you've pissed it away to, but it doesn't have the strongest budgeting tool. It might be sufficient for your needs, but try the YNAB free trial too and maybe ask your parents for it for Christmas if you find it useful.
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Dec 9, 2013 19:37
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Lblitzer posted:I've got $2.3k in credit card debt @ 13%, mostly used as an emergency source (I know, I know). A student loan for $3.1k, and I've got two years of school left and the rest of tuition is going to cost me $8.5k. I'm working retail right now and bring in around $13k a year working around 30/hrs a week. My car does need a few repairs but I own it and my parents lent me another car in the interim. I do spend a bit more aggressively than I really need to, but I figure this and working a Mint account are good places to start in realizing how to better spend my money. I also have no 401k or retirement plan set up yet and would like to do that 5 years ago. Where can I start with looking at options for that? The way I see it, your top priority needs to be finishing school and not dig yourself deeper in the process. If you were only going to make $13,000 a year in retail the rest of your life, trying to pay back $5,000 in consumer debt and stay on top of auto repairs and life in general would be tough. If I were you I would budget so that you are not going deeper in consumer loan debt, borrow as minimally as I could on student loans for the remainder of your school and make sure you graduate on schedule and get a better job. If you graduate and have only made minimum payments during that 2 years, then you did good. Mint is a tool, but it is not the solution; there are probably things you didn't need to buy, but I doubt you are extravagant on a huge level. If you were making $40,000/yr and everything else remains the same, your situation becomes quite reasonable.
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Dec 9, 2013 20:21
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Lblitzer posted:I recently re-opened a Mint account to keep track of my poo poo, I've been spending way too much on gas station pop and cigarettes. I finally got all of my debt tacked on there along with my school loans. Just so I stop freaking out, can someone say if $5k in the hole isn't too bad of a situation to be in at 25? Depending on how casual a smoker you are and your cost of living, it's also very possible that you can't afford to smoke at your income. When I smoked I always put cigs in the "non-negotiable" department like groceries and gas for the car, but when I go back and calculate what I spent on cigs while I was working retail at your age it was literally the difference between breaking even and the sizeable consumer debt I managed to accrue. At a pack a day I spent $2300/year, which is about how quickly my CC balance crept up every one of those years. This was masked by the fact that I bought my cigs with cash and paid for "emergencies", flights etc. with the credit card; it's all the same pocket and in hindsight the emergencies were a lot less negotiable than smoking.
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Dec 9, 2013 21:20
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Thank you for the advice everyone, really appreciate it. I've been wanting to get a better hold on my finances since using my CC a bit more, and am a bit worried that it'll take me years to pay that off. Knowing that if I take the right steps, it can be managed much quicker. My car needs about $400 in repairs, headgasket replacement. This beats out the actual shops around town and thankfully I know a few mechanics who can swing me a better deal. This should be able to cover me for two my years sans brakes and other general maintenance that I can do alone. Insurance is $42/month which is one of the cheapest I've found. I spend a lot on fast food, and really have been lazy in making it to the grocery store to get myself some food. I always try to buy enough to last me two weeks and become extremely discouraged when I have to get more within that time. I'll typically spend around $75 in groceries but lately I've been eating out almost daily. Cigarettes are $7/pack and I'm smoking about 3-4 packs a week. I'd love to quit and I know starting with my food and cigarette habits are probably my best place to start. I only became worried about my retirement situation based on the fact I was told in high school economics that it's better to start off young and put even a couple bucks every two weeks in then it is to start late. I guess my CC debt is the first thing to tackle here though. I did get YNAB, but haven't sat myself down to learn how to work it properly, with making a gas station or fast food run daily, it discourages me from inputting those purchases every day and seeing my initial cash amounts dwindle so quickly. I'm living relatively comfortably right now and do have more at hand than I did 6 months ago, but I know I'm cutting corners at the moment and need to get a strong hold of this before it gets worse. Edit: Forgot to also add the one area I am actually proud of is my cellphone, jumped onto Republic Wireless, bought their Moto X for $300, but am on their monthly $10 plan. The phone is going to pay for itself in just over a year with how much I'll be saving. cage-free egghead fucked around with this message at 22:09 on Dec 9, 2013 |
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Dec 9, 2013 22:00
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Head over to Goons with Spoons to get some great ideas of how to eat on the cheap. Even ignoring the cigarettes, if you can stop buying fast food and start eating cheaply your body and wallet will thank you. It's surprising how much fast food adds up over time. I know you want to fix everything right away but I would start by changing one bad habit -- trying to change everything at once can be stressful. Also, let that discouragement you feel from inputting those purchases work in your favor. If you force yourself to input everything then the thought of entering that crap on your budget should discourage you from buying fast food in the first place.
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Dec 10, 2013 03:08
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Greetings, financially secure goons, and those on their way. I'll try to keep the E/N relatively brief. I've finally decided to make well thought out decisions and plan what to do with my money. Not that I have saddled myself with debt, but I had wasteful and credit damaging habits (buying too many prepared meals, letting payments lag, etc) I have noticed that once you start tracking every time you spend, as well as get in a mindset of smart spending, you wind up wanting to minimize waste and actually feel better about not spending than emotional spending. Not that I've ever experienced "retail therapy" The good: -$0.00 current credit card debt -Around $575 in a traditional IRA -Car paid off in fine condition (2005 Ford Focus) -Stable job -Relatively low expenses -Low "wants" The bad: $19,674.12 in student loans. $8,296.61 subsidized at 3.4%, and $11,377.51 unsubsidized at 6.8%. $ 1,823.62 left for a CPA prep course -No credit card -Less than $1,000.00 in savings -Work does not match 401k contributions. The ugly: -My credit is a nuclear wasteland with salted earth. You know how everyone says if you're stuck with a charge that you know you don't owe, it's better to pay it off than to deal with the credit score hit? I've known that forever, but I was real stubborn in the past. Stuck with a bill I absolutely know I don't owe? Won't pay it. Go ahead, hit my credit. -I had two separate claims against me that ended up being charged off. Those were several years ago, and it appears as though both will drop off by mid-2014. -Got very behind several times with my car, even got repossessed except I got it back. Repossession does not seem to show on the credit reports I looked at. -Behind a few months on student loans. Alright, that's basically the last 11 years of my life summed up. It's time to assess the damage and move forward. Current income is around $2,100 a month after taxes and current expenses I can think of (excluding a catch-all "Fun" expense) are $1,420, so just under $700 a month gain. I am behind by $850 in student loans and I have no emergency fund. I also really need to schedule my CPA exams so I will have enough time before course access runs out, as well as to light a fire under my rear end to study harder. I take it the best course of action is to get the student loans current, then work on the emergency account, then CPA courses? I am fairly confident in my situation- if my car broke down, I'd take the bus/train. If I lost my apartment, I could move back home. I won't be getting laid off/terminated any time soon. I think in the next month, I at least want to get one part of the exam set in stone. Then begin the emergency fund. After that, how do I go about re-establishing credit? I was thinking of waiting for the two charge-offs to drop off my credit report, then join a credit union and get a $500 ($300?) secured credit card to build it back up. Once I get a few thousand in an emergency fund: Company doesn't match 401k contributions, student loans have low rates, and the CPA prep loan's interest is built in, do I just throw it all to a Roth IRA and try to get as much as I can in by tax day? Whew, that was a lot, sorry. Six months from now I think I'll be golden, but I have some decisions to make sooner than that.
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Dec 10, 2013 03:38
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The 401k situation sucks but we can't help you fix that. I'm going to highlight the most troubling things about your post though:Moneyball posted:You know how everyone says if you're stuck with a charge that you know you don't owe, it's better to pay it off than to deal with the credit score hit? I've known that forever, but I was real stubborn in the past. Stuck with a bill I absolutely know I don't owe? Won't pay it. Go ahead, hit my credit. gently caress THAT NOISE. If someone says you owe money, demand that they prove it, in writing. Your credit score isn't worth getting bent over by every two-bit fraud. Moneyball posted:I am behind by $850 in student loans and I have no emergency fund. I also really need to schedule my CPA exams so I will have enough time before course access runs out, as well as to light a fire under my rear end to study harder. I take it the best course of action is to get the student loans current, then work on the emergency account, then CPA courses? $1000 emergency fund first. That way when you come up short in the future, you can still pay your bills. You're not going to starve but the baby emergency fund is about breaking patterns. In your case, breaking a pattern of not paying your monthly bills. Moneyball posted:After that, how do I go about re-establishing credit? You don't need it right now, and you won't need it unless you plan to buy a house with no down payment, so ignore it until your real problems are solved. Moneyball posted:Once I get a few thousand in an emergency fund: Pay off your student loans. Those rates are not low.
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Dec 10, 2013 03:54
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I received a letter today from Capital One. I get a ton of mailings from credit card companies and I generally rip them to shreds and throw them out. This one said "Account Information Enclosed" on the outside - I've never had an account with Capital One so I opened it to see what was going on. It was just a single sheet of paper titled "What does Capital One do with your personal information?" I called their customer service to ask why I'd received the mailing (there was no mention of a specific account or anything in it so I wanted to see what was up). The woman wanted my SSN but I refused to give it, finally upon only having my full name and address she told me that there was not a credit account associated with my name but there was a savings account. I was transferred to someone who was supposed to explain how to deal with it but he wouldn't do anything if I didn't give him my SSN. He did say that I could take the letter into a branch to see what's up. Has anyone ever heard of this? I'm totally baffled as to what is going on. It seems like some sort of weird identity theft but why would someone open an account and give them my own actual address? I had a fraudulent charge on my credit card a few months ago that I took care of and got a new card from my other bank, and all of this is starting to make me pretty nervous.
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Dec 10, 2013 04:47
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Call the number on their website and see what's up. A bank isn't going to steal your info because they probably already have it.
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Dec 10, 2013 04:54
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For the first time in my life I actually have a real job. Now that I'm trying to do more than just stay alive with my money, I need help. Loans: $8500 in subsidized student loans. I graduate in May. I don't have to pay and I don't accumulate interest until then, but once the interest starts, it's 6.7%. Assets: $9000 emergency fund in a crappy low-interest savings account, car is paid off Income: 45k/year, though I am expecting this to go up in March-ish to somewhere between 55k-70k, but I don't know for sure. Right now I get paid every other week, about 1300 after taxes. Budget: This is a rough sketch of what I was living on each month while I was building an emergency fund. This doesn't include stuff like saving for bigger car repair funds, Christmas presents, etc.: $450 - Rent and bills $100 - gas/routine car maintenance $250 - groceries & stuff like soap, TP, etc. $250 - restaurants, bars, coffee shops, soda at the gas station, etc. $100 - spending money (clothes, gifts race registrations, gym fee, etc.) ------ $1150 I just bought YNAB but I am struggling to figure out how much of my income I should be saving and how I should be saving it. It would be nice to have a little more financial leeway day to day. Goals: I am a little fuzzy here. I know I need to pay off my student loans starting in May. I may even be able to save so that by May I can pay them off in full, but I don't know if that's the best plan? I will probably need/want a new (used) car in about 2 years. I am planning to move in 3-4 years. I want to start investing/saving for retirement now. I am 25. edit: I guess I didn't really include an actual question here. I want to know what to do with the money I don't spent. I was considering putting my emergency fund into a money market savings account, but I don't know if that's the best way to go? Should I pay off my student loans first before I start any other savings? How much should I be saving per month for retirement and how should I do that (my job doesn't offer 401k matching)? Is my budget, I don't know, reasonable? T. J. Eckleburg fucked around with this message at 22:17 on Dec 10, 2013 |
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Dec 10, 2013 21:26
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T. J. Eckleburg posted:For the first time in my life I actually have a real job. Now that I'm trying to do more than just stay alive with my money, I need help. OK, so you have a enormous (for your expenses) emergency fund, and roughly $1200 a month surplus until March/April where you may have closer to $2k a month surplus. Your only debt is $8500 in student loans that don't begin accumulating interest until May. You don't mention a 401k, so I'm assuming you don't have one. The big thing is that if you want to come out of this in the best possible way, don't raise your expenses considerably. I would take $3k out of your emergency fund, leaving you with almost 6 months expenses in there and fund a Roth IRA for 2013 immediately. Through February, finish of 2013 contributions up to the max of $5.5k. March/April/May savings account, then you should be able to have roughly $4-6k to put towards the loans (I thought there was a 6 month grace period after graduation before interest started to accrue though). Finish off the loans, max out 2014 Roth IRA. At this point you are out of debt, you have all your 2014 savings done, and you can separate out your other savings goals, let your hair down expenses wise, or whatever you feel like doing.
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Dec 10, 2013 22:24
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T. J. Eckleburg posted:I may even be able to save so that by May I can pay them off in full -Others might disagree, but consider using $5500 of your savings to start a Roth IRA fund this year, but invest it as close to zero risk as possible for now. Combining emergency funds and retirement savings is generally not a good idea but you're in the one position where it makes sense. Soon you'll probably be able to max your Roth out every year AND rebuild up an emergency fund. Someday when you've rebuilt that $5500 "outside" the retirement account, you'll be able to convert this initial deposit into a regular retirement investment. Basically you'd be giving yourself a 1-year head start on a capped retirement investment.
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Dec 10, 2013 22:24
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Remy Marathe posted:-Others might disagree, but consider using $5500 of your savings to start a Roth IRA fund this year, but invest it as close to zero risk as possible for now. Combining emergency funds and retirement savings is generally not a good idea but you're in the one position where it makes sense. Soon you'll probably be able to max your Roth out every year AND rebuild up an emergency fund. Someday when you've rebuilt that $5500 "outside" the retirement account, you'll be able to convert this initial deposit into a regular retirement investment. Basically you'd be giving yourself a 1-year head start on a capped retirement investment. I know we have had this debate before, but a Roth IRA isn't an emergency fund, nor is an emergency fund an investment. He has until April to fund the IRA. His emergency fund may be a bit heavy so take some of it and invest it for real.
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Dec 10, 2013 22:39
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Remy Marathe posted:-Others might disagree, but consider using $5500 of your savings to start a Roth IRA fund this year, but invest it as close to zero risk as possible for now. Combining emergency funds and retirement savings is generally not a good idea but you're in the one position where it makes sense. Soon you'll probably be able to max your Roth out every year AND rebuild up an emergency fund. Someday when you've rebuilt that $5500 "outside" the retirement account, you'll be able to convert this initial deposit into a regular retirement investment. Basically you'd be giving yourself a 1-year head start on a capped retirement investment. You actually have until April 15th of the next year to finish making this year's IRA contributions, so he's not actually under so much time pressure to get it done to need to do this. Otherwise I'd agree.
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Dec 10, 2013 22:42
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Zeta Taskforce posted:I know we have had this debate before, but a Roth IRA isn't an emergency fund, nor is an emergency fund an investment. He has until April to fund the IRA. His emergency fund may be a bit heavy so take some of it and invest it for real. Remy Marathe fucked around with this message at 22:50 on Dec 10, 2013 |
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Dec 10, 2013 22:43
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Couldn't he just put the Roth IRA contributions into a money market so he can get his 2013 contributions in? Penalty-free withdraws for principal/contributions, right? It's certainly dangerous to think of an IRA/investment as an emergency fund and vice versa, but for the short term in which the risk is small (e.g. this guy, with assumed-to-be stable employment and large amount of extra income), I don't think it's the end of the world, given that this "situation" will be over within months. I personally think that maxing the 2013 contribution Roth IRA, maintaining a 3-month emergency fund, and knocking out the debt ASAP (should be pretty quick if that budget is accurate) is best in the long term. Additionally, if it is an option, perhaps consider getting an interest-free loan from family. (WARNING: THIS IS NEVER A GOOD IDEA but it could be for some people/families. ESID.)
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Dec 10, 2013 23:42
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You know, given that he already has a substantial emergency fund, is looking at $20k take-home pay left over after non-debt expenses next year, and the grace period should actually prevent any interest accumulating on that loan until November, in his position I'd be entirely comfortable funding a Roth in regular installments and investing it normally. With just a little help from his excess emergency savings, he can max the 2013 and 2014 IRA, pay the loan off interest-free, and then even give himself a little Christmas bonus at the end of the year.
Kilty Monroe fucked around with this message at 00:12 on Dec 11, 2013 |
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Dec 11, 2013 00:09
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To clarify: I actually thought I didn't qualify to have my interest paid in the six month grace period, but further investigation shows that apparently I don't have to make payments or accrue interest until November 2014. Also, my job situation is not all that stable right now. I'm a temp, 3/4-time employee, but my boss wants to hire me full time, the funding just hasn't gotten approved yet. He said "don't worry, I usually get what I want," so I am extremely optimistic, but not certain. So I don't have a 401k but maybe I will then? So, wow, thank you guys for your advice. I'm not sure I understand it all yet. In light of the above, I think I want to err on the side of less risk. I do not think I understand Roth IRAs at all even though I read the link in the OP. But, basically to summarize a low-risk plan from what you guys are saying: I should maybe take 2-3k out of my emergency fund so that I can contribute as much as I'm allowed to a Roth IRA by April 15? After that I should focus on paying out my student loans, then beefing my emergency fund back up and maxing out next year's Roth IRA? I especially do not understand this comment: quote:consider using $5500 of your savings to start a Roth IRA fund this year, but invest it as close to zero risk as possible for now. If I have that all right, though, should I do anything different with the money I am keeping in my emergency fund? I read (I think in the OP) that a money market account is a good idea for keeping an emergency fund, that is basically like an online savings account that I can only make so many withdrawals from per month, right? Sorry I am so clueless. I have basically been broke forever until very recently. It means I am pretty accustomed to keeping expenses down, though. Oh, and that budget is based on tracking my actual spending, some months I spend more, like this month there's an extra $200 for Christmas presents but generally yeah my expenses are quite low!
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Dec 11, 2013 05:17
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Before the wall of text, you shouldn't stress out about the yield you get on your emergency fund. It doesn't exist to grow, it exists to be accessible and safe. re "consider using $5500 of your savings to start a Roth IRA fund this year, but invest it as close to zero risk as possible for now.": So when you set up a Roth IRA, you determine what sort of fund(s) your money is invested in. For example if it were retirement investing you were doing, you might (if you're generally clueless about investment like myself) pick a target retirement fund based on the date you aim to retire. Generally the further out the date the riskier and more volatile the value in the short term- obviously NOT what you want for your emergency fund. This is why people rightly say your retirement should not be your emergency fund; they have completely opposing purposes. However there are also low-risk options for allocating that Roth money, including money market funds. It'd be silly to do that with your retirement savings at your age, you might even see worse yields than a savings account. But I'm not talking about retirement savings just yet because if you're the cautious type you don't technically have $5500 right now to put into a high risk investment that you refuse to touch. You're risk-averse, your job's not a guarantee, but you have good prospects. Say you do this with your emergency money- $5500 -> Low-Risk fund in a Roth IRA for 2013 $4000 -> whatever bank. Probable case- In 2014 you make 45k, and manage a $20,000 surplus. $8000 student loans $5500 Roth 2014 $5000 to your e-fund, bringing it back up to $9k $1500 left over At this point, with your emergency fund replenished, you could move that initial $5500 from 2013 into real retirement investment of your choice; an option you don't have if you just sit on the emergency money this year. Worst Case- poo poo goes horribly wrong, and you cash out your emergency money in 2013. Retirement savings is delayed, same as if you never started the Roth.
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Dec 11, 2013 07:13
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T. J. Eckleburg posted:
Where the gently caress do you live that your rent is only $450? I'm. Only jealous, I live in Philly and my rent is $1100 (granted it's a two bedroom). I would just say good job being on the ball with general finances, most people are not in your position at that age.
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Dec 11, 2013 11:47
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The wife and I have always had a savings account, but we just noticed the pathetic percentage rate we were getting from our bank (.5%). It looks like the most we are seeing is .9%, if lucky. Which is fine; I understand interest rates are low, but what's the best option for an account where we just dump extra money into, but also need quick access to if an unexpected bill comes up or we just want to go on a vacation? Again, since it has to be easily accessible, we know the interest rate is going to be poor, but we'd still like the best interest rate possible. I am assuming just a regular savings account at the highest percentage rate I can find? Just asking in case I am missing something obvious. (Sorry if this is the wrong thread for this)
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Dec 11, 2013 15:42
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Miyamotos RGB NES posted:what's the best option for an account where we just dump extra money into, but also need quick access to if an unexpected bill comes up or we just want to go on a vacation? Again, since it has to be easily accessible, we know the interest rate is going to be poor, but we'd still like the best interest rate possible. There are some weird workarounds to get higher than 0.9-1% (see: https://www.mangomoney.com/what-is-mango), but that can be a good bit of work. A savings account is really your best option today, and 0.9-1% is the best available.
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Dec 11, 2013 15:54
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T. J. Eckleburg posted:To clarify: I actually thought I didn't qualify to have my interest paid in the six month grace period, but further investigation shows that apparently I don't have to make payments or accrue interest until November 2014. Also, my job situation is not all that stable right now. I'm a temp, 3/4-time employee, but my boss wants to hire me full time, the funding just hasn't gotten approved yet. He said "don't worry, I usually get what I want," so I am extremely optimistic, but not certain. So I don't have a 401k but maybe I will then? In light of your work being not completely stable, I think you can still fund your 2013 Roth, but should keep it in a money market fund while that's still up in the air. I'd say do it in installments of $1375 at the start of the next four months and you won't have to take anything out of your other savings just yet. After that, start kicking all of your surplus income towards that loan to wipe it out by November. Once you get officially hired full-time, you can flip your Roth allocation over to real investments and put your raise towards maxing your 2014 Roth as well as taking advantage of any 401k matching that's offered. In the worst case scenario where you lose your job instead, then between your existing savings plus being able to tap into what you put into your Roth if you had to, you should have a very healthy cushion to live off of while you find new employment, even with a student loan hanging over your head. T. J. Eckleburg posted:If I have that all right, though, should I do anything different with the money I am keeping in my emergency fund? I read (I think in the OP) that a money market account is a good idea for keeping an emergency fund, that is basically like an online savings account that I can only make so many withdrawals from per month, right? Your existing bank savings are fine. A money market fund is just the closest thing to a savings account that you can put your Roth IRA contributions in (aside from not being FDIC insured). If you did want to squeeze a little yield out of your regular savings, though, you can transfer some of it in a high-interest savings account at an online bank such as Ally. Be sure you keep enough locally to cover a sudden emergency if you had to, as transfers back out from Ally can take 3 business days. baquerd posted:There are some weird workarounds to get higher than 0.9-1% (see: https://www.mangomoney.com/what-is-mango), but that can be a good bit of work. A savings account is really your best option today, and 0.9-1% is the best available. https://www.mangomoney.com/what-is-mango 6% APY.  What's the catch?
Kilty Monroe fucked around with this message at 16:10 on Dec 11, 2013 |
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Dec 11, 2013 16:06
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Your expenses are basically nothing. Just throw it in a Roth and into the market. It's ridiculous to be so risk averse.
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Dec 11, 2013 16:28
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Kilty Monroe posted:https://www.mangomoney.com/what-is-mango They only give 6% on the first $5000. Furthermore, you have to direct deposit your paycheck with them, and I expect the 6% will slowly fall over the next few years as they suck in customers. It's just another marketing gimmick. Also check out their fee schedule: if I'm reading it right, it's $2 for an ATM withdrawal, (plus whatever the ATM was going to charge you anyway) - mind, this is the account your paycheck is going into.
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Dec 11, 2013 17:45
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Duckman2008 posted:Where the gently caress do you live that your rent is only $450? I'm. Only jealous, I live in Philly and my rent is $1100 (granted it's a two bedroom). I live in Raleigh, NC, but I rent a house with 3 other people. So my 1/4 of the rent is $350 and we split bills four ways, so it ends up being about 450 a month. No cable television or anything though. As far as I know, I live in an area with notably low cost of living across the board. Harry posted:Your expenses are basically nothing. Just throw it in a Roth and into the market. It's ridiculous to be so risk averse. Maybe, but I am really scared of being poor again.  Remy Marathe posted:Before the wall of text, you shouldn't stress out about the yield you get on your emergency fund. It doesn't exist to grow, it exists to be accessible and safe. Thank you so much for explaining all that. Kilty Monroe posted:In light of your work being not completely stable, I think you can still fund your 2013 Roth, but should keep it in a money market fund while that's still up in the air. I'd say do it in installments of $1375 at the start of the next four months and you won't have to take anything out of your other savings just yet. After that, start kicking all of your surplus income towards that loan to wipe it out by November. Once you get officially hired full-time, you can flip your Roth allocation over to real investments and put your raise towards maxing your 2014 Roth as well as taking advantage of any 401k matching that's offered. I think I am going to do this. It seems really safe and I don't see a downside. Thank you everyone. 
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Dec 11, 2013 17:56
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T. J. Eckleburg posted:I think I am going to do this. It seems really safe and I don't see a downside. No, wait, you need to go buy a new full size pickup on credit first, or at least get involved with someone who needs $50 weekly manicures. BFC loses its entertainment value when you do everything right.
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Dec 11, 2013 18:23
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slap me silly posted:They only give 6% on the first $5000. Furthermore, you have to direct deposit your paycheck with them, and I expect the 6% will slowly fall over the next few years as they suck in customers. It's just another marketing gimmick. Also check out their fee schedule: if I'm reading it right, it's $2 for an ATM withdrawal, (plus whatever the ATM was going to charge you anyway) - mind, this is the account your paycheck is going into. I did some more reading on it and while it still looks possible to get a decent return on it, it's convoluted as hell. To get the savings account, it's mandatory to also get the prepaid debit card. That carries a $5 monthly fee in any month you load less than 500 bucks on it. So for 6% APY on $5000, kiss 1.2% goodbye right away unless you actually use the card enough to justify loading it that much (and incur the opportunity cost of not using a rewards card). Without direct deposit, the APY is only 2%, so that fee alone makes it worse than an account with Ally if you don't use direct deposit. These are also "promotional" rates, and the standard rates are 3% with/0.5% without direct deposit. I still couldn't find the information on how long the "promotion" lasts or what it takes to qualify for it. You can also only transfer your savings to the card, they can't be withdrawn or transferred any other way. You can withdraw from the card at an ATM with a $2 fee, but there's also $600 limit on how much you can withdraw from the card per month, which hurts your ability to use it in a real emergency and also strings out your withdrawals for more ATM fees. The only way to actually get all your money back at once is to close both the savings account and the card and then they'll send you a check, minus a $10 fee. Altogether, you can still get a decent chunk of that interest rate back out again, but for the hassle that the card involves, I'd rather just get a CD.
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Dec 11, 2013 22:42
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Aaaaand that crap is why I hate rewards checking accounts. I'll take my poo poo in the form of a straightforward 0.15% return, thanks. I love how they justify the $5k limit: "We believe that the amazing 6.00% is our contribution to improving our customers’ finances, and building a better America. Once customers have savings in excess of $5k, they have the tools and have established the right habits." Sure. It isn't 99% about enticing new customers while controlling the cost of marketing.
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Dec 11, 2013 23:38
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slap me silly posted:Aaaaand that crap is why I hate rewards checking accounts. I'll take my poo poo in the form of a straightforward 0.15% return, thanks. Yeah exactly. I've switched from BOA to Ally and so far it has been great. Very simple and I've only had one thing of cash that I couldn't deposit so far (only like $200). Otherwise, using square to take cash from people when that comes up is worth the hit to make up for no ATM fees and the higher rates. I only have to use Square every other month or something like that.
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Dec 12, 2013 00:14
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I'm 25 and I have $24k sitting in a regular checking account right now, with no debt at all. I've been putting 12% away towards a ROTH and getting a 6% match and occasional bonuses, with about $24K in there as well. I'm not exactly sure with what to do with the money in my checking account. I have Chase checking account and their savings account rate is terrible, I think it was a 0.1%. I probably should find a better savings account with a higher rate. I would need to keep a little more than most people in my emergency fund because I have a company car and would have to buy a car if I were to get fired/laid off/quit/etc, I feel I would be safe with $10k. Would it make sense to put the extra $14K and additional money into a mix between bonds and mutual funds? The next big purchases I can foresee would be getting married and a house in the next few years.
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Dec 12, 2013 02:16
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The Sock posted:I'm 25 and I have $24k sitting in a regular checking account right now, with no debt at all. I've been putting 12% away towards a ROTH and getting a 6% match and occasional bonuses, with about $24K in there as well.
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Dec 12, 2013 02:38
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