On the 401(K)
You can adjust your 401(k) percentages at any time. Most folks set it at a percentage so that they reach the IRS limit, which is 18,000.
18K/$102.5k = 17.56%
This means I would set it at 17%, since most of the time you can't do 1/2 points and 18% would be too much. You'll have to adjust it every time you get a raise to make sure you aren't going over the limit.
For your original question:
If your goals are basic financial literacy, then you've come to the right place! I might think about trying to do things that will set yourself up for life, that give you options rather than limit them. This means starting to save for retirement early, getting out of debt and staying out of debt, and having a big gap between your expenses and your income, and save the difference.
The big first steps are:
1) Save at least 1,000
2) Get out of debt
3) Save a proper emergency fund
4) Start saving for retirement
5) Save for medium-term goals
1) You already have 1K, great! Yay baby emergency fund!
2) Get out of debt --
- Sell the Jeep and pay for a car in cash (between 3-10K) with the proceeds/your savings. No one needs a fancy pants car like this, even if it is a lot of fun!
- Use the rest of your savings above the 1 or 2K emergency fund to pay your parents back - No need to have a loan when you have the money. Who cares if it is a free loan -- it is much better to not have to worry about it and know that you don't owe anyone anything!
3) After you're debt free, save a proper emergency fund. This would be 3-6 months expenses. This emergency fund is for "If I lost my job, could I live for X amount of months and not go into debt?" Looking at your expenses, that's about 1,500-2,000 a month. I might get to 3 months (6k total) and then slow down the savings on this to 150-200 a month moving forward.
4) Start saving for retirement - Since this can happen really quick, basically by shuffling around resources you already have, I would log in to Fidelity and set it for 17% today.
After you sell the car and no longer have that 500/month payment, I would start a Roth IRA too. Set up with Vanguard and choose low cost index funds. You are only 20K in gross income from the phase out, so I think you should take advantage while you can. This gives you diversity in your retirement accounts between pre and post tax.
5500 year/12 month = 458/month post-tax --> You can get this just by selling your Jeep!
5) Save for medium-term goals -- This is where you can do what you want! It really depends on your goals.
You could do rental property and/or investing - both are paths to early retirement.
Two basic options:
- Save for a house down payment - either for yourself, and then rent out extra rooms, or as a plain rental property
- Invest in a brokerage account, piling up cash. This would be you pile of savings to live on in early retirement until you could access to your 401(k) and IRA accounts.
Do this for 7-15 years, depending on how much you want to live on in early retirement and how much you are willing to save, and you could likely retire between ages 30 and 35. If you save 75%, you can retire at age 31. If you save 50%, you can retire at age 39.
I say - be ambitious, stretch yourself to see how much you can save by optimizing your expenses and still have a good life. Then calculate your savings rate and see if that's something you would like to maintain, so you have the option of getting off the career wagon if you wish. Lot of folks have found out that they rather do something else, if given the option. Having money stashed in a brokerage account gives you the ability to be take pivots in your career, if you wish, without having to think about your financial security.