Author Topic: What am I doing wrong with my Finances?  (Read 4639 times)

Bevn182

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What am I doing wrong with my Finances?
« on: February 03, 2017, 05:31:22 PM »
Hey everyone,

I am pretty new to Mr.Money Mustache website hence signing up here.I have a few questions to ask in terms of my finances.

Life Situation: I am a 26 year old female, living in Los Angeles,California.I graduated last year and I was able to find a job in my field unfortunately the pay is low but I am grateful for the work as its hard to find work in my field.I am pretty frugal to be able to live off my salary in an expensive city like LA.

Gross Salary/Wages: $35,360 , working in Public health (full time job).I have a side job that brings in $10 k a year.

Pre-tax deductions 401k: $100 per pay check(no employee match)

Adjusted Gross Income: $2200 monthly from full time job and about $776 from part time job

Current expenses
Rent   $445
Car Insurance   $41
Dining (Lunch/Dinner/Etc.)   $20
Utilities   $30 
Transportation   $80
Groceries   $60
Medical Insurance  $100 
Phone (cell)   $0 
Credit card $0 (paid in full every month)

Living Expenses total   $786


I have no phone bill as I rely on wifi alone. I started biking/public transportation to work as sitting in traffic was killing my mental well being.At the moment I cant move close to work as I have a pretty good living arrangement.

Assets:
$2k in 401k
$2k in liquid cash
Car is paid off worth $4k according to Kelly blue book

Liabilities:
                               
Student Loans:
Direct Subsidized Stafford $4,301.87 3.150%
Direct Subsidized Stafford $5,317.75 3.610%
Direct Subsidized Stafford $2,629.98 4.040%
Direct Unsubsidized Stafford $3,032.32 4.040%
Direct Subsidized Stafford $4,383.25 4.410%

I started out with $31 k and I have paid it down to about 19k as of now.

Total Student Loan Payment:$224 minimum payment

Estimated Net Cash Flow per month towards student loans ~$2k/month

Specific Question(s):

1)What am I doing wrong with my finances?
2)Should I continue to pay down my loans aggressively or start saving for retirement more aggressively?
3) I am being pressured to look after family back home but with my student loans, I feel like I don't have anything in my budget to spare as I want to be debt free but my family doesn't understand as they think I am hiding money from them.In addition,they want me to take out a personal loan of about $10k so they can start various business as there are no jobs over there.As much as I want to help,at the moment my hands are tied with my own debt but they just cant seem to understand that. I don't know what to do about the situation.



esskay1000

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Re: What am I doing wrong with my Finances?
« Reply #1 on: February 03, 2017, 05:43:55 PM »
Wow, from my POV I don't think you're doing anything wrong - stop being so hard on yourself!  My main advice would be to pay down those loans as fast/aggressively as possible, which you seem to have already gotten a great start to doing. Even though those interest rates are relatively low, you need to get outta debt.  After they're gone, you take that same money and sock it away in VTSAX or similar index funds and you will see it grow like a beautiful flower :)

I think you're doing great, and the 10K in extra income shows your hustle. As for the family request, I say be diplomatic but stern in saying "no". An easy comeback is "I have 20K in student loans, I don't want to be in debt and I'm prioritizing that issue" If they love you they'll understand.

swick

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Re: What am I doing wrong with my Finances?
« Reply #2 on: February 03, 2017, 05:45:09 PM »
Welcome to the forums!

Living in LA on what you are is incredible, you don't have a spending problem, you have an income problem - and a family problem.

First, the income problem. Do you have room for advancement in your field? Could you move somewhere with a LCOL or would pay higher for your field or allow for faster advancement? (Although your expenses are super low)

Are you currently living with family? Where does the expectation to help out family "back home" come from? Did they provide any $ or support to help you through school or get established in the USA?

If YOU make the choice to help out family back home, you need to be very clear on how much you are willing to help and stick to it. DO NOT TAKE OUT A PERSONAL LOAN FOR ANYONE!!!

Unfortunately, you have reached the point in adulthood where you have to learn how to relate to your family and parents as "an adult" and not a child. This can be a rocky time while you are establishing and defining your boundaries and how you want to be treated as an adult while still maintaining family relationships.

I would be concerned right now about putting all your money into SL repayment if you do not have at least a bit of an emergency fund.

Bevn182

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Re: What am I doing wrong with my Finances?
« Reply #3 on: February 03, 2017, 05:56:18 PM »
Yes there is room for advancement but since I was a new graduate with no experience,I had to start at the bottom and I don't mind it.

No I don't live with family..I won a green card and I was able to come to the states by myself.Family is still back home.No they didn't provide any support to help me through school but being from an African culture,we are required to provide for family plus the fact that I am in America,they see that as financial freedom.I have tried to explain to them my situation but they don't understand as its different over there and I understand but at the same time i have my own obligation.


pbkmaine

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Re: What am I doing wrong with my Finances?
« Reply #4 on: February 03, 2017, 06:09:13 PM »
Take care of yourself first. Just keep telling them that you must pay off your student loans. After that, save for your own retirement. No one is going to take care of you but you.

pbkmaine

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What am I doing wrong with my Finances?
« Reply #5 on: February 03, 2017, 06:26:15 PM »
If you would like to connect with a woman who also comes from African culture and struggles with some of the same issues, check out this journal:

http://forum.mrmoneymustache.com/journals/geek-girl-building-a-statsh-from-scratch-in-fr/

marty998

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Re: What am I doing wrong with my Finances?
« Reply #6 on: February 03, 2017, 06:50:29 PM »
You just need to be patient. Not a lot can happen in 4 days, but a lot can happen in 4 years.

By the time you are 30 you'll have a couple of years more experience in your field. You'll probably progress up the ladder a little bit if you work hard and give your best efforts.

Every pay rise will actually be worth more than the value of the rise, because your student loan debts will have reduced or been zeroed out.

Avoid the big loss makers - cars, financed furniture and gadgets. Fill your life with experiences and hobbies that make you happy, but won't be an ongoing financial burden to you.

And choose your partner well if you meet someone. Don't settle for someone who doesn't have their shit together.

Good luck, and look after your future self.

Mezzie

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Re: What am I doing wrong with my Finances?
« Reply #7 on: February 03, 2017, 07:21:49 PM »
Taking out loans to help family won't help in the long run because you won't be able to keep that up. My in-laws send money to their home country (and we contributed to pay for healthcare for an aging relative there), and I don't see that as a bad thing at all, but you need to be in a secure place first, I think (barring life-or-death medical needs). Once you are, you can choose how much is reasonable to send home and maybe index that percentage to your raises.

Right now, it looks like you're doing well!
http://forum.mrmoneymustache.com/journals/preparing-for-forced-early-retirement-due-to-disability/

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cchrissyy

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Re: What am I doing wrong with my Finances?
« Reply #8 on: February 03, 2017, 09:25:50 PM »
You're doing great!

I think you're just going to have a year or two that feels like this, but given a little time those loans will be paid off and your income will rise and you'll feel more comfortable

Until those loans are paid off, don't send much home. You really do have to take care of your own security first. don't take out a loan to send $ back, no way. Send something, but focus on paying off your loans and then you can send a little more if you want. But don't give in to the pressure to give beyond your means.

Good luck, you're doing really well so far!

AlienRobotAnthropologist

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Re: What am I doing wrong with my Finances?
« Reply #9 on: February 03, 2017, 10:40:43 PM »
You seem pretty frugal. The easiest way to improve your situation is try to move somewhere, likely out of state, that gives better pay relative to the cost of living. I'd recommend the same to your family members. Everybody I know from K12 and from my family have moved across the country plenty of times as necessary to find work. That, or you can try to find a career that pays better, even if it's less enjoyable, but that's a decision you need to weigh for yourself.

firelight

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Re: What am I doing wrong with my Finances?
« Reply #10 on: February 03, 2017, 11:19:34 PM »
You are doing great! Keep hard at your loans, don't give in to family pressure (I know easier said than done, I come from a similar background and can totally relate to family obligations being a pressure on you) and don't spend on stuff that won't make you happy on the long term. For your family, keep mentioning your loans and say you can't take any more because of them.

As your parents age (I'm assuming that is the family you need to support back in home country), you'll need to support them more. For that to happen, you need to be in a good place yourself. Think 10 years down the line. At that time, you need to have finished your loans, gotten to a good place in your career and have enough retirement savings so you don't have to worry about it. Also, if you are planning a family, you need to think of money for it too. Again, this sounds like a lot but you have ten years to do all this and time is on your side. Keep at it and keep going! :)

Tuskalusa

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Re: What am I doing wrong with my Finances?
« Reply #11 on: February 03, 2017, 11:28:32 PM »
You are doing a wonderful job! 

I agree with others on the forum that personal loans to family members often don't work out well. I can see that sending money home (as a gift...not a loan) to help may be important.  If you could wait until your student loans are paid, you will be in a better place to help....modestly but consistently.

You are doing a great job taking care of yourself, and with creating a good and stable life here in the US. Keep doing what you're doing, pay off your debt, and grow your emergency/cash cushion. You off to a great start!

Canadian Ben

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Re: What am I doing wrong with my Finances?
« Reply #12 on: February 03, 2017, 11:52:45 PM »
You have a 74% savings rate!

That's beyond excellent.

You are simply at the starting line of growing your stash. If you can continue like this (even without any raises) you would be ready to FIRE in 8 years.

Kansas Terri

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Re: What am I doing wrong with my Finances?
« Reply #13 on: February 04, 2017, 12:23:08 AM »
You are living on that little in LA? I SALUTE you! I KNOW what the cost of living is like over there!

It hurts to say no to family.

And, my family was not asking me for loans, they just thought I should be more city like them instead of being country like I wanted. They were greatly concerned that I was a 20 minute drive from a city: what if I should get hurt? But, I could not stand city life and so I said no over and over again: it would have been much harder if they had been asking for loans as well.

Perhaps you could blurt out that the student loans are bleeding you white, and so you are as broke as they are? It would not be a lie, really, as you ARE paying a good bit of money into the loans. It is more of a little white li, such as "Do you like this hair style on me?" or "does my new dress make me look fat?"

People have to be themselves. Do not move closer to them if you do not want to, and do not give them a loan. If the bank will not loan them money for a business, then they do not consider their business to be likely to succeed. Over half of the new businesses go bankrupt in the first year alone, and if they do you will not be paid back as they would not have the money to do so. If they were capable of scraping together enough money then they would have already done so.

I think you are doing great!

California is an expensive state: I grew up there. But, it was one big city and I hated cities. It really bugged my parents when I moved to a less congested state and did not live in a city, but I am what I am and I am living my life according to my own needs and not my parents need to feel that I was living in the safety of a city . And I needed to get out of the city because I cannot stand the constant congestion.

Kansas Terri

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Re: What am I doing wrong with my Finances?
« Reply #14 on: February 04, 2017, 12:50:02 AM »
Oh, I did not realize you are from Africa. And, it sounds like you have an extended family structure to boot. OK, I am going to change my advice a bit.

You REALLY need to tell your parents and other relatives that you borrowed so much to pay for your schooling that you are working 2 jobs to pay off the 5 loans you have and you just CANNOT afford to borrow more.

Then tell them you can only send them perhaps $50 a month because they are your parents, but that you really cannot send any money to other relatives at this time. For me, anyways, this would work.

I can hear some of the Mustashians hyperventilating at the idea, but in an extended family you not only receive support from your family you are also expected to give it.

I grew up in an extended family, and if somebody wanted to add a room to their house they would have 8 willing workers at a phone call, if somebody wanted to paint you would have a dozen teenagers as well as it was good for us to learn this stuff, if somebody was unemployed there were a dozen people calling in with ads they had seen for help wanted, etc. This helped us all lot in life, but just as you receive help you are expected to give it: EVERYBODY is more prosperous for it. And her family thinks she can do more than she can.

Everybody wants their family to know they are doing well and everybody brags a bit. But they think she is doing better than  she is, and telling them that she has already taken out all of the loans she can get might help. And, with her income level, I suspect that a $10,000 loan  is more than she could manage even if she could get it. And that is *IF* she can get it. Student loans are easy to get: other loans may not be.

Giving her parents a small amount of money every month might help: I do not know. I do not know enough of the situation.  Bevn182 is obviously very bright: she would know better than I.
« Last Edit: February 05, 2017, 05:26:07 PM by Kansas Terri »

babybug

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Re: What am I doing wrong with my Finances?
« Reply #15 on: February 05, 2017, 10:10:36 AM »
OP, I also came by myself to US from Africa, 20 years ago. Luckily my family is independent and prosperous. But extended family, beware. I've been back there many times, and almost every single person that receives regular cash from abroad, is lazy, dependent and entitled. It's welfare. There's no incentive to work or build a business when​ you know free lunch is guaranteed.  Do not let anyone guilt you into supporting their livestyle when you're working and sacrificing to build yourself up. If your parents are really struggling or your siblings need help with tuition, you can chip in a little. Or major medical emergencies. But never agree to give the whole amount just a fraction and only if you're comfortable.

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little_brown_dog

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Re: What am I doing wrong with my Finances?
« Reply #16 on: February 06, 2017, 10:09:50 AM »
I am in your field and I know the feeling, believe me. I made about the same after graduating with my masters despite being top of my class and having worked multiple part time jobs in my field during my degree program. My recommendation to you is to absolutely rock it at your workplace and show that you are worthy of a rapid promotion. You also need to tell your boss you are looking to grow so you can be put on a timeline for promotions. If they can’t give it to you, or expect you to work for years at your pay level (not uncommon in pub health or clinical research positions) then you need to start working elsewhere once you have a solid 8 months or so under your belt.
 
I started around the same salary – after 9 months at my job my first boss basically told me she never promotes people within 2 years, regardless of how experienced/awesome they were, because she felt you had to have at least 2 years before you “earned” the right to be promoted. I was already doing work far beyond my title and payscale, so hearing that was the nail in the coffin even  though I had only been there a short while. I put the word out and had my friend who worked at a hospital send my resume to her recruiter. He found a team interested in interviewing me, and during that interview I made it clear that the reason I was looking was because there weren’t sufficient opportunities for me to use my degree and skills at my current workplace and that I was highly motivated to find a place where I could grow and show what I could do. That landed me a job at around 40k (5k increase over previous job). One year later after busting butt, I was promoted and got to 48k. By the time I left to be a stay at home mom, I was at 51k which is a very good salary in our field.

In fields like public health, you absolutely have to be a bit aggressive about wanting promotions or searching for new/better paying opportunities because you can easily sit and rot in those low level 30-40k positions and never even break the 50k barrier in your entire career. Many of us in the field are so thankful to have a job, we have to take whatever we can get but that can handicap us too. You have a job now and experience, use that to your advantage (with your employer or with other employers). You might have to be willing to branch out and do different things, get into management level work, or research, or whatever but it is possible to move up income wise. Good luck!
« Last Edit: February 06, 2017, 10:13:32 AM by little_brown_dog »

Bee21

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Re: What am I doing wrong with my Finances?
« Reply #17 on: February 14, 2017, 02:19:02 AM »
You are doing well.

Don't let them pressure you into a situation you are not comfortable with. Just say no to their unreasonable requests. No, sorry, i am unable to do that. Have a line in your budget for helping out family, say 100 a month, and stick to it. Under no circumstances should you take out loans to help them. If they can't afford to start a business, they shouldn't start a business.

Let them think what they want. You know you are not hiding money from them.

In my experience, people in the home country have an unrealistic picture about life in America etc. They have no idea how hard it is to start life from scratch and to be alone in a foreign continent. Yes, life back home is hard, but you are facing your own challanges. Don't let them drag you down with unrealistic expectations.

SwordGuy

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Re: What am I doing wrong with my Finances?
« Reply #18 on: February 15, 2017, 09:50:20 AM »
What country are you from?  What is the median individual income there?

Sample site with some numbers.  Might be better ones out there, but it's good enough for initial discussion purposes.

https://www.givingwhatwecan.org/post/2016/05/giving-and-global-inequality/

For example, median GDP per person in Ethiopia is $858 a year.   Mean is $1500.

If you gave that much a year, it would be like you stayed in that country and gave them your entire wage.

At the rate you're knocking down your debts, this amount would not slow you down very much.   
Obviously, if the wages where you are from are a whole lot higher, that's different.

Since they have asked for money "to start a business", ask what the business plan is.  Ask what will be bought with the money.  Etc. Etc.

If they don't know, they need to know before they start the business.

If they will not get you reasonable info, it was just a request for welfare disguised as something else.   

I don't help people who lie to me about what they need the money for, but that's just me.

Hope that helps.




Car Jack

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Re: What am I doing wrong with my Finances?
« Reply #19 on: February 23, 2017, 01:40:34 PM »
Perhaps a little trick to help with family.  In your next letter or communication, tell them that you had to borrow for school and now, the lenders are asking for their money back.  Let them know that you owe about $20,000 and that you're working multiple jobs just to stay alive and pay back your debt and that you don't know when you will ever pay off the debt.  Then ask them for $20,000 to pay off these loans.

That could certainly stop the begging for money from a "rich American".

good luck

PhoenixHeat

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Re: What am I doing wrong with my Finances?
« Reply #20 on: March 04, 2017, 07:27:19 AM »
You have a 74% savings rate!

That's beyond excellent.

You are simply at the starting line of growing your stash. If you can continue like this (even without any raises) you would be ready to FIRE in 8 years.

I agree with this sentiment. The optimist in me says look at things this way to remind you of how awesome your doing AND things are only going to get better!

Keep up the good work, man!

stevewisc

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Re: What am I doing wrong with my Finances?
« Reply #21 on: March 04, 2017, 08:40:59 AM »

Seem's like you are doing great!!!!

If they can’t give it to you, or expect you to work for years at your pay level (not uncommon in pub health or clinical research positions) then you need to start working elsewhere once you have a solid 8 months or so under your belt.
 
I started around the same salary – after 9 months at my job my first boss basically told me she never promotes people within 2 years, regardless of how experienced/awesome they were, because she felt you had to have at least 2 years before you “earned” the right to be promoted. I was already doing work far beyond my title and payscale, so hearing that was the nail in the coffin even  though I had only been there a short while. I put the word out and had my friend who worked at a hospital send my resume to her recruiter. He found a team interested in interviewing me, and during that interview I made it clear that the reason I was looking was because there weren’t sufficient opportunities for me to use my degree and skills at my current workplace and that I was highly motivated to find a place where I could grow and show what I could do. That landed me a job at around 40k (5k increase over previous job). One year later after busting butt, I was promoted and got to 48k. By the time I left to be a stay at home mom, I was at 51k which is a very good salary in our field.

Slowly look for a new job. (maybe get a mentor in the field)  I would second the story above.  In many organizations rapid promotion can be tricky, between HR and co-workers it is tough.  Without moving too fast (6 months) I would be great at what you do, let supervisors know you want more, get some good recommendations and be ready to promote yourself to a better job.  Look for jobs and once you get a better offer let your boss know - the pain of seeing you leave might get them to match it.    If not, head to the new place for a few years.  Keep building skills, connections and doing good work.   

PDXTabs

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Re: What am I doing wrong with my Finances?
« Reply #22 on: March 07, 2017, 08:21:58 AM »
1)What am I doing wrong with my finances?
2)Should I continue to pay down my loans aggressively or start saving for retirement more aggressively?
3) I am being pressured to look after family back home but with my student loans, I feel like I don't have anything in my budget to spare as I want to be debt free but my family doesn't understand as they think I am hiding money from them.In addition,they want me to take out a personal loan of about $10k so they can start various business as there are no jobs over there.As much as I want to help,at the moment my hands are tied with my own debt but they just cant seem to understand that. I don't know what to do about the situation.

1. Nothing.
2. That is up to you. There are more tax savings in 401(k) contributions, especially since the student loan interest is tax deductible. If you are confident that your job prospects are good I would personally focus on 401(k) contributions before paying off student loans at an advanced rate.
3. I would not take out a loan for your family. However, don't let people on this site tell you not to send them money. Children sending money to parents/aunts/uncles/siblings hasn't been done for a while in the US. However, that doesn't make it bad or wrong.