Hey everybody,
I'd like to say hello to you all, as this is my first post on the MMM forum. I've read a lot of personal finance websites out there, and this is the only one that had me cracking up but at the same time feeling like I've learned how to be a bit wiser with my hard earned cash. I'm hoping you acolytes of badassity can provide some advice for a young college graduate just starting out.
I graduated in May and I'm starting a job this month making $48k or $4k monthly, pre-tax. My employer has a matching 401(k) plan of 5%. I have no savings or investments to speak of, and few assets beyond my bicycle and charming personality. No emergency fund yet. I'm paying $1000/mo for my room with utilities and a bit left over for extra expenses, and I'm carpooling with a friend to work and I'm going to compensate with gas money ($100/mo approx). I like to eat, so I'm budgeting myself $400/mo for groceries and dining, and planning on making all of my own meals. Still on my parents' health insurance and phone policies. I expect my expenses could be $1500/mo at a minimum, but will probably be around $1750/mo.
I have $7460 in student loan debt, 2 Stafford loans of $3730, one at 3.4% and one at 4.5%. My parents say not to pay these off and just pay the minimums, but I've read that the interest that accrues on student loans is tax deductible which gives me even less incentive to pay more than the minimum.
I also have a simple credit card with 1% cash back, I'm planning on paying the balance in full each month just to build up some credit.
My goal for now is to live frugally while building up some credit and also having some fun. My hobbies are pretty cheap (reading, running, cycling, hiking), but my long term goals are pretty expensive (get a pilot's license, buy a house, etc.) Early retirement sounds nice but I've dedicated myself to a path of badassity and financial freedom regardless.
So I have a few questions:
-I think I could save/invest half my income, but what else can I do?
-How much should I contribute to my 401(k)? I'm going for the match at the very least, but I was fooling around on Excel and figured I could afford to contribute 15% easily, leaving me with approx. $2250 to max a Roth IRA, build my emergency fund, and cover my expenses. Alternatively, if I contribute around 27%, my taxable income would be in the 15% bracket (around $34k) rather than the 25% bracket. Would I be able to contribute this much (which is a lot) to my 401k and drop a tax bracket? Is this even feasible/advisable?
-I'm assuming that starting out I should be a bit more aggressive with my 401k. How should I pick which fund to invest in?
-What should I do about my student loans? I'd like to build up some savings now, but it would also be nice to be out of my limited debt.
-How should I go about investing in a 401(k) and a Roth IRA? I've heard some people get the match on the 401(k) then max out the Roth then go back to the 401k, but this seems a little bit involved. Wouldn't it be easier to just be contributing a higher percentage from the get-go?
-What about building up an emergency fund?
I'm sure you guys will have lots of great advice for me, and probably some things I hadn't even considered. Thanks!