My financial IQ is about non-existent. To give you guys understanding of where I stand, it might help to provide a brief synopsis of my background.
During my time in university, most of my basic needs were taken care of for me. Whether living in an apartment or at home, I didn’t really make those expenses my responsibility. Scholarships, grants, and a student loan of $20,000 took care of my other living expenses. I wasn’t scraping by or in a position where I was struggling and the importance of saving wasn’t instilled in me. After graduation, I went on a sabbatical to Korea where I taught English, with an engineering degree I might add, for 2 and a half years and spent 6 months traveling. Again my living expenses were taken care of by my employer and I would spend my time budgeting for travel expeditions and still living fairly comfortably on my income. Luckily I’m innately frugal with my money with spurts of extravagant spending. At this point, I was stunted in my education of personal financing and investing.
Fast forward to the present and I’ve been back stateside for little over a year. I spent the first 6 months struggling to find work and living at home while depleted of money and realizing that I’ve steered myself wrong. After landing a career I thoroughly enjoy, I believe it’s high time I begin the process of saving for my future.
I don’t want to spend my late years in regret due to poor financial circumstances; that needs to be the least of my worries. My focus now is to gain competency in this area and let the enjoyment of life be a product of that net gain.
OKAY, on to the numbers!
INCOME
Gross Annual Salary:
$95,000 - 105,000 for 2014 year
I expect this number to increase to $120,000 – 130,000 for 2015 – on
No other income source at this time.
INVESTMENTS/SAVINGS
401k:
$18,500 (vested 4% company matching and 3% company retirement contribution vesting in JAN2017) – 88% in stocks (30% company stock, 60% blended fund investment retirement fund, 10% US Large/Mid Cap Eq) and 12% US Savings Bonds.
Savings:
$15,000 - Bank of America Money Market Acct.
I’ve been throwing 30% of my income heedlessly into my retirement savings plan (401k) with little understanding on how to invest. I just hear the word diversify and so I’ve been doing what I believe that to mean. FYI, I am using Fidelity as it is linked with my company’s retirement savings plan.
I stupidly passed on HSA for this 2014 period as I have been recently educated on why it is a good idea to open one. Fidelity’s library resource, reddits /r/personalfinance forum, and of course MMM’s website have provided me with a wealth of beginning knowledge. It’s just taking a while to sink in and I have a lot to learn.
EXPENSES
I currently live with my mother in a family home. Due to my father’s passing last year, I care for all home-related expenses and others. There is no mortgage on the house. No property taxes are paid on the house as my father was 100% disabled from military service. Quite a blessing. The house is valued at around $320,000. It was purchased at $260,000 in 2006.
Home:
$370 – Insurance
$220 – Gas/Electric/Water/Sewage
Other:
$45 – Internet, no home phone
$175 – Cellphone plan for two. Pretty high and probably can find a way to lower this cost.
$610 - Car payment and insurance
$100 - Gas
$250 – Grocery, dining out, at the bar with friends, etc. Trying to cut down on the drinking as my fitness goals have become more of a priority.
$300 – This is just to consider other costs I may have such as clothes, travel, personal spending, etc. Usually everything is expensed while traveling, but I make it a priority to do a bit of personal sightseeing and purchase gifts for friends and family. It adds up.
$2070 – Total expenses per month
CLOSING THOUGHTS
I am thankfully debt free. My housing costs are ridiculously low given that the mortgage is paid off and there are no property taxes. The things I’ll be doing short-term from the advice I’ve seen on MMM or other resources:
- Looking into switching banks. I have not had many issues banking with BoA, but read on MMM I may get better interest rates on saving accounts going to another bank. Any thoughts on this?
- Maximize point potential with credit cards. Currently not doing so. Need to obtain the right cards for my lifestyle. MMM provided good pointers on this.
- Accumulate air miles and use it for my personal flights hopping around whatever region I’m in. That’ll save me 100s of dollars.
- Take advantage of an HSA next year.
- Look into investing with Vanguard. Haven’t even got a ROTH IRA started. Is it as simple as going to the website and opening an account? Guessing this isn't tied to your 401k, correct? Will I be able to transfer funds from 401k to ROTH IRA?
- Find ways to reduce expenses.
o Change cellphone plan when contract expires or see if there is any incentive in canceling early. I can possibly just use my company phone as personal, but there is several reasons not to so. In any case I can cut corners here.
o Obtain a bike, save on gas. Exercise is good.
The thing I’m looking into now is saving to put a down payment on a place. The family home I’m currently setup in is out in suburbia and I’d rather be setup in the city where I frequent for work and play being that I’m 28 and single. I’ve considered getting a condo/townhome as I’ll be traveling 6 months out of the year and I’d rather not bother myself with caring for a lawn and home repairs. Is this advisable? Or should I just get more of a temporary solution, such as an apartment.
It might be to my advantage to receive financial counseling. Do you guys feel the personal interaction of a knowledgeable expert on the topic would be more beneficial or can most of these things related to personal financing, investing, etc be obtained online?
I’m 28, single, and ignorant on how to best invest. Please teach me your ways, Mustachians! I have a long road ahead of me, but excited about the potentials. And I kind of want to grow a mustache now.