23 year old new college grad- plz help me with my budgeting and saving! (deposit, transfer)
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Location: Chapel Hill, NC, formerly NoVA and Phila
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Quote:
Originally Posted by Sandpointian
You are in a great position.
1) Rent--Dallas is cheap and property taxes are high. Rent simply in a safe 'hood.
2) Pay down CC debt immediately
3) buy a good used car
4) Max out 401K plus IRA--invest in a broad mutual fund from a place like Schwab with plenty of international exposure. Avoid the fads.
5) When you feel the urge to splurge, do so with intelligence
Fixed price lunch rather than dinners out
More home cooking
Wine rather than hard liquor or beer
Forego electronic toys
Buy 2-4 year old technology--don;t chase the cutting edge.
Good smart clothes--avoid the top retailers
Pay down your student debt--but after the CC
DO NOT let your cc bill top 1000 for longer than one month. Discipline.
Try to save 30% of your gross salary inclusive of the IRA & 401k. You are used to living on peanuts--take advantage of that default austerity.
Use that high savings to pay down your student debt.
You should be able to pay it off completely within three years.
You are in a great position. The next three years are critical. You have a chance to exit with considerable cash and freedom from debt. DO it right and you'll be in a great position going forward.
You have a master's in accounting and you're asking a bunch of people on the internet how to handle your money?
rofl hahahaha!
aw dang, i puked milk out my nose.
but seriously...you're smart to worry about your finances. it's such an important aspect of your life, and nobody ever really teaches it to you, not even accounting school. Pick up Ramit Sethi's "I Will Teach You To Be Rich". If you can ignore the stupid title...the book is actually full of stellar advice; plus it's geared towards recent college grads.
It's so simple....and yet I managed to f- it up so badly. Read my thread about how a decent income and moderate debt out of college can snowball into a nightmare.
Here's some advice that I should have taken myself out of college that would have saved me years of heartache, sadness, and tears.
1. Don't buy anything big until your debt is gone. There's no reason you have to live better than you did in school just because you have a job. If you don't have the cash you can't afford it. If you have to have a car don't finance what you can't pay off in 2-3 years. Others in your firm may drive a Lexus, BMW, or a Merc....but they have either been there a while or they are up to their neck in debt too (maybe not but just assume they are).
2. Don't run up your credit card.....pay it off each and every single month. Do not get more than one card. It's not necessary. Usually the maximum on one card is enough to royally mess things up for you.
3. Put 8-10% in your 401k. More if possible. The more you save the more comfortable and earlier you'll be able to retire.
4. Put another 8-10% into an accessible savings account. Cash on hand in an emergency....there is nothing more comforting.
I really dislike the mindset of pretty much all cable tv advice givers, especially in regard to a professional with a degree in a field that ought to equip them to make much smarter decisions "than your average bear". Their advice is generally geared to getting screw-ups out of the ditch, not high achievers on a high way to wealth. Go to the library, not TV!
Anyone with a masters in accounting degree ought to be not just capable of using spreadsheets to determine the wisest allocation of their income / fastest means to grow wealth / best way to minimize taxes BUT ALSO to do some projections of their upcoming needs.
In my opinion the value of slamming every penny you legally can into tax advantaged accounts as quickly as possible is a no-brainer. If you further do the research needed to getting the money working for you the odds of your success are off the charts. In addition to building wealth and forcing you to live below your means, it will foster the habits needed to be not just a "non spender" but what "wealth accumulator". The skills that professional money managers like Peter Lynch and Charles Ellis share in their books is invaluable.
When comes to how to spend money on needed items I have found some of the info in Consumers Reports to be helpful -- their "best used cars" is a great way to not just get a low priced car, but one that has much lower average operating /ownership costs.
Similarly I really believe that real estate can be a great tool or a terrible burden. I have seen many people overspend on rent and buy the wrong kind of property at the wrong price and waste a great deal of money. A bit of research into the rental market and you might find a very good deal to rent, allowing you to save for an eventual purchase. If you shop well and purchase the right kind of property that too can be a way to build equity in an accelerated manner. If you don't yet have knowledge about what makes one property at a certain price a good deal and another at similar price a waste you should devote some time to gaining that knowledge. Even if you don't plan on being a landlord the basics of what goes into being a real estate investor can be a very valuable skill. I learned a bit from my dad, but a lot from trial and error, and some from good authors like Robert Bruss.
Grow your skills in your choose vocation, but do everything you can to increase your knowledge of broad areas that have made others wealthy and you will never regret it.
I would pay off Credit Card's as fast as possible.
Get a 2-3 year old Used but new to you car.
A brand new, say Ford fusion is $ 23,000 = $381/mo for 6 year loan.
A 2008 model = $ 15,000 which = $250/mo for 6 years.
Over $9,400 saved!
Leave the Student loans where they are at.
Throw put as much as you can in savings for emergency fund and things like traveling (you are young, do it then!)
The more you can SAVE now, the better off you can be in the future.
After saving a lot for now, make sure you start a Roth IRA too.
Look at this sample budget.. the money goes fast!
Income $ 5,330.00
Housing 1,200.00
401 k 270.00
Food / eating out 600.00
Clothing 200.00
Car 400.00
Car Insurance 150.00
Gas 150.00
Utilities 300.00
Entertainment 100.00
Phone/internet 100.00
Cell phone 100.00
Health Care 250.00
Education 100.00
Credit cards 250.00
Student Loans 350.00
Emergency Fund 500.00
Travel (in savings) 250.00
Misc 60.00
Total Expenses $5,330.00
= $ 0 left
Any Expense amounts you can get LOWER than what I have here would be extra gravy that you can pay down the student loans faster.
Plenty of good advice on this thread. One thing I'd like to add is, train yourself now to always buy toys with cash. Browse around this site and read all about how people are under water due to excessive credit card debt - they claim they owe it due to charging basic necessities but I don't believe that. There is a reason why when my parents (or your grandparents) hit a rough patch it didn't send them spiraling into the poor house: they had to PAY cash for their toys, or put them on layaway. They did not finance the awesome TV, vacation etc.
I have a friend who earns $180k per year who recently confided in me that he maxes out his credit cards every year. Then he gets his big bonus, pays everything off and starts again. He works in the financial services industry so he knows better: One year without a bonus and he'll be very uncomfortable... lose his job the second year, and we'd seem him starting a thread on CD about bankruptcy. He's addicted to credit and can't say no to his wife and his children.
So that's my advice to you and everyone else just getting started. Don't get start financing your fun.
Hi everyone, I am new to the forum but it seems as though everyone here is pretty knowledgable and helpful- and representative of the general public so I would love your guidance/advice.
I just finished graduate school, my Master of Accountancy in particular, and am currently studying to take the CPA exam. I am starting a new job in Dallas as a Financial Analyst for a large corporation, making $81k plus bonuses and profit share. I am single, currently have about $26k in student loans to pay back, about $1k in cc debt, and hardly anything in my savings.
What do you think the smartest thing is that I do with my money? That salary is 5 times more than what I made all through college every year working in the mall so i know I will be set- I just wanna make sure im not reckless with it either. I really need a new car and was also considering saving for a home down payment. But I really am concerned as to whether I should hurry and pay down my student loans or spread it out. My employer will match up to 4% in 401k, dollar for dollar.
Any advice or input is appreciated! thanks!!
My advice is this:
Do not start to live a life of luxury because you have a good job. No need to buy a brand new car if it still works and do not get a place to live that has more than what you need.
Pay your debts first and then start planning for the future. Make it a point to save a percentage of you income. Pay yourself so to speak and make it a point not to use that money at all. Invest some of it and if possible save for a house. No need to buy one until you know you will move into it.
The bottom line? Live within your means!! As you go up the success ladder in life go ahead and get more of the things you want in life but within your means. Many do it the other way around and that is simply backwards.
Do not make the mistake many do when times are good. They start spending and investing too much and later when times are lean find themselves in a bind. Do spend and invest but protect some of the money for the future at all cost unless you have some catastrophic situation in life.
You have great day.
El Amigo
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thanks!!
