Topic Title: Case Study - New career, need direction
Hello MMM, I've been lurking here for a few weeks and I love the website so far. A little bit about me: I'm 25 years old. After a few mediocre physical-labor type jobs I finally landed myself a decent career at the end of last year. I spent the past 6 months in Virginia training for the position and will finally be fully qualified in one week. While I was staying down there (housing was paid for) I received site adjustment and some extra pay which allowed me to tackle my auto loan (now paid off 100%) and my student loans (not done yet). I've been listening to Dave Ramsay's radio broadcast for the past year or two and it lead me in the right direction but MMM seems like the next step and FIRE by 35-40 years old is now my ultimate goal. Now that I'm back home and living on my own, weeks away from a substantial raise (once I'm qualified officially) I figured it would be a good idea to post a case study so I'm prepared to tackle my finances even harder once I'm making more money. If you read this all, thanks for your time/help!
Income:
I currently make ~$52,000/year ($24.45/hour).
Take home ~$2,500/month
In a few weeks I will be making ~$62,000/year ($29.75/hour I believe)
I can't work any overtime until I'm qualified. I've been told by other employees to expect $75,000+ with overtime once I am.
I will update this post once I've had a month w/ the new income
Current expenses:
Rent: $400/month
Utilities: Unknown (Just moved in last month, will update)
Groceries: ~$175/month
Phone bill: $60/month (on my parents family plan)
Auto insurance: $120/month
Gas: $400 (50 minute commute each way, 19 MPG SUV)
Restaurants: $140 last month (this month is far less as I stopped buying food for breakfast/lunch @ work)
Bars: Avg. $120/month
Hair cut: $40/month
Total: $1455
Remaining: $1045
- Last month the majority of this went towards student loans and paying off my SUV (now paid off)
Assets:
Savings: $1,000 (emergency fund)
401(k): $8,000 (I'm at 6% traditional w/ 5% company match and 2% roth)
Roth IRA: $800
Brokerage: $800
Windfall: $3,000 from relative that passed away, currently planning to use towards car down payment.
Liabilities:
Student Loans: $13,500 total (paid off approx. $10k in the past 5 months)
- $7,600 @ 6.55%
- $1,500 @ 4.25%
- $4,100 @ 6.55%
- $170 @ 4.25%
Specific Question(s):
1. Is renting for $400/month (fairly cheap IMO) worth being 45-50 minutes from work?
2. After my raise should I increase my retirement contribution or focus on student loans first?
3. Should I take out the money in my brokerage account and add it to my Roth IRA? I was going to attempt to invest in individual stocks but it seems like a better idea to pump it into my Roth and buy into a Vanguard index fund once I have enough money
4. I would like to pay off my student loans in a year at least which would require $1,125 per month approx. Is this do-able with my raise/less money spent on food/bar?
Minor Update: I emailed the dealership tonight and told them I want to cancel my order for the new car. I will be selling my SUV this weekend and looking for something reliable that I can buy in cash.
Next step, move closer to work!