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Hi my name is OmNom and I'm not a financial train wreck. Financially I might be a bit more liquid than I like and need plan for what to do with my resources. Financial Profile: Student Loan Debt - $4,132 @ 5% Cash Reserves - $30,000 Stocks - $11,000 Income Property - Bought in May for $59,368 Valued at around $72,000 and no mortgage, Monthly Income: Server Job - $3,600 (average for the year based on YNAB figures. Ranges from $2,900 - $5300) Income Property - $825 (gross) Monthly Expenses: Fixed expenses - $1,350 average Everyday Expenses - $1,000 average Total Outflow - $2,300 average Ok, so now what? For the past 4 years I ran my own business, and I'm only now looking to get into the corporate world. I have no 401k or IRA, and I liquidated the majority of my equities to buy the property. I have a second interview coming up on the 5th for a position in digital marketing which would be a small pay cut from where I am now, but with growth potential, benefits and bonuses. They would offer a 401k with a percent match based on the how the company's profits are at the end of the year. To get where I am now I've just been methodically good with my money and learned to live comfortably with a little less, though it does help that my hobbies are pretty much cheap out doorsy things. After two years of methodical tracking I am able to see where my major spending points are and where I need to trim. Being in So. Cal there isn't too much I can do to lower my rent. I am turning to the wisdom of BFC to help me make a better long term plan for my finances.
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Dec 30, 2015 09:51
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OmNom posted:Hi my name is OmNom and I'm not a financial train wreck. Financially I might be a bit more liquid than I like and need plan for what to do with my resources. Is there any reason why you haven't paid off that student loan? You seem to have more than enough cash reserves to knock it out, and that's a guaranteed 5% return. Can't comment on the retirement front since I'm not American, but you may be interested in the concept of financial independence.
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Dec 30, 2015 11:57
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Buy some sensible shoes and a Chevrolet.
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Dec 30, 2015 14:55
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Well you are already on to your biggest problem, your income is way to low. Try to get a corporate gig where your bonus is paid based upon some metric where you have no control of it but it is always rated as good. Maybe the complaint department of Optimists International.
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Dec 30, 2015 14:59
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Agreed with the guy who said to pay off the student loan. You won't miss $4132 from your cash reserves, they're still more than ten months of expenses, plus you have a sizable taxable investment account as well(over 4 months of additional expenses). Take that guaranteed 5% return and run with it. Hell, I'd say go ahead and on January 1, fund a Roth IRA for both 2015 and 2016 with $11,000. That would leave you with $15,000 cash and $11,000 taxable stocks. That is plenty with your outflow. Nail Rat fucked around with this message at 15:18 on Dec 30, 2015 |
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Dec 30, 2015 15:16
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Nail Rat posted:Agreed with the guy who said to pay off the student loan. You won't miss $4132 from your cash reserves, they're still more than ten months of expenses, plus you have a sizable taxable investment account as well(over 4 months of additional expenses). Take that guaranteed 5% return and run with it. The interest I'd save in paying it off is $1,000 at this point since I paid it down very aggressively last year. It's a savings of $250 a year over the next four years and I figured I could put the 4k towards another property or into a retirement vehicle. I do agree with your perspective, the payoff cost would be easily recouped over the next few months. It must be a mental thing, I've worked my way up from nothing in my early 20's, and I guess I get a little paranoid about losing liquidity sometimes.
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Dec 30, 2015 18:58
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I would pay off the loan. Best bang for the buck. If you qualify for Roth IRA do that as was suggested already. Then I would look at all the retirement options and invest in anything that is tax advantaged.
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Dec 30, 2015 20:34
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OmNom posted:The interest I'd save in paying it off is $1,000 at this point since I paid it down very aggressively last year. It's a savings of $250 a year over the next four years and I figured I could put the 4k towards another property or into a retirement vehicle. You're not gonna get a whole lot more than 250 a year by putting that loan money into a retirement account anyway.
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Jan 1, 2016 01:08
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Paid the student loan off 1 minute ago. Feels good to be officially debt free.
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Jan 4, 2016 18:52
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Close the thread now before you fall down a well.
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Jan 4, 2016 19:04
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https://www.youtube.com/watch?v=hMr3KtYUCcI
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Jan 4, 2016 19:12
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MrKatharsis posted:Close the thread now before you fall down a well. Nah man I'd take the liability insurance payout from the property owner and invest in something to help pay for my over priced american health care.
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Jan 4, 2016 19:28
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AgrippaNothing posted:Buy some sensible shoes and a Chevrolet. Then party till you're broke and they drive you away, it's okay.
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Jan 6, 2016 00:59
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Open a Roth IRA and start aggressively contributing.
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Jan 9, 2016 15:40
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OP, how old are you? Your lack of 401k worries me. If I squint my eyes and pretend that your $72k property is a 401k, it's not as troublesome. But 401k's don't get leaky roofs or mold or a busted AC unit or tenants that decide to stop paying rent. You make $800 gross from the property; what's the net?froglet posted:Can't comment on the retirement front since I'm not American, but you may be interested in the concept of financial independence. Do this. You don't have to take it to the extreme that some people do, but just having the idea in your head at all will change the way you approach money and saving. Money is a tool to buy your freedom. Ultimately, you should want to be able to live without money earned through labor, if you want. This isn't to say that you have to stop working, but that you could if you wanted. Or work less. Or do something that pays very little, but brings you joy. If your goal is financial freedom, you will see that you're not as set as you think. This isn't a criticism in any way, it's just a statement to light a fire under your butt. Don't start feeling comfortable because your labor allows you to live and have a little left over every week. What kind of life do you want to live, and how much would it cost? If you're already living your ideal life, you'll need $28k a year or so. If you had assets generating $28k a year, you would not ever need to work again. That could mean $690k in assets, using the 4% rule, or some combination of assets plus income generating property. If that property is earning you $400 a month, then you would need about $23k a year instead, plus $580k in other assets. If you had 6 properties earning $400 a month, you'd be set. These are all just general guidelines, you can play with the cost of living, or side income streams to find different asset goals, but the point is to start thinking about money/assets as things that generate money for you to meet whatever your goal is. If money wasn't an object, what would you do?
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Jan 9, 2016 18:35
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District Selectman posted:OP, how old are you? Your lack of 401k worries me. If I squint my eyes and pretend that your $72k property is a 401k, it's not as troublesome. But 401k's don't get leaky roofs or mold or a busted AC unit or tenants that decide to stop paying rent. You make $800 gross from the property; what's the net? Thanks for the thoughtful reply. I'm 33. In regards to the 401k, I've never worked for an employer who offers a retirement plan; in lieu of that I had started to invest in equities and property. So yes in a way I do look at my first property as a retirement plan with liabilities. The unit nets $660 a month after fixed costs, I have a tenant in there on a 2 year lease, and owe nothing on the place. FI is something that got me thinking more about my investments as well as my life decisions, ultimately I am more concerned with saving aggressively to build a real estate portfolio to get to the point where I will be bringing in COL + 20% a year in passive income; with a secondary focus on dividend yielding equities. Last week I interviewed with a company that is is offering decent starting salary in a tangentially related field to my experience, 401k with a paltry match and no full vesting for 5 years, not ideal but it would get my foot back in the corporate world and be a fantastic starting point to generating a better income stream. The most glaring reasons I don't have a more traditional retirement put together are: 1) Growing up poor and a poverty mindset throughout my 20's - while I am well educated, I lacked positive financial mentors who we're traditionally successful. 2) Undiagnosed ADD, leave the debate of it's existence at the door pls, I spent most of my teens and 20's dicking around hopping from odd job, to small but underreaching careers, failing various times at entry office gigs that could've opened more doors, got a sociology degree, never really found a well paying job that offered the retirement perks of a traditional lifestyle. Now I'm medicated and doing much better, started my own company, though it didn't work out , netted me enough to buy some income properties. 3)Just didn't care or get it. Something clicked in my late 20's and a vision for my life started to coalesce around the idea of not spending my life like most of my family in a pay check to pay check cycle; now I'm doing the best I can to learn a grow and keep the cycle broken. There is something that is more rewarding about saving for a tangible property than putting away in a Roth or other tax benefit investment vehicle which is an issue between me and learning to like delayed gratification and what not. I've done the math and I want a passive income generating portfolio, plus a decent retirement account. I'm just getting a later start than some.
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Jan 10, 2016 17:36
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