Case Study: Opportunity to "reboot" my life and want to get it right

[Coonz]

Income:
Full time job: $2300+/mo (after taxes)

Current Expenses:
Rent: $650 (moving this month)
Internet: $25
Utilities: $45
Gas for car: $30
Groceries: $160
Restaurants/Bars: $30
Massages: $100
Misc (concerts/gifts/redbox/REI/etc.): $100
Loan Payments: $350 ($150 on HEL, $50 to other parent, $150 on the rest- I'm actually paid quite a few months ahead on the federals but I realized I would rather have some savings than throw everything at loans)

Total: $1490

-My parents are happily paying for cellphone/insurance and ignore my offers to pick up the bill
-Some people may view massages as a luxury, but I view them as a health measure after some major surgeries and compounded stress injuries :)

Loan Balances:
HEL through Parent: $7000 @ 3.25%
Parent: $1800 @ 0.00% (in no hurry to collect)
Fed: $4300 @ 4.25%
Fed: $2600 @ 3.15%
Fed: $3500 @ 3.61%
Fed: $2000 @ 3.61%

Total: $21,100


Checking account: $3600

-I do not qualify for a 401k through work yet and did not stay long enough at my last job to start a 401k (they required a year)

Background:
I am 24 and have been working full time for maybe 8 months at this point. I went to a four year college to pursue my artsy passions and then went to a technical school to, you know, actually have a job. The loans are from my five years in college (tuition/living expenses/study abroad/tools). My parents have been extremely supportive in my endeavors and they are financially secure so they insist on picking up some expenses while I'm "young".

The reason I am writing this case study is because I don't think this career is a good fit (very specialized/limited, low income potential, doesn't utilize my strengths/interests). Oh, and my boyfriend (whom I live with) and I are splitting up. This provides a great opportunity to reevaluate all parts of my life and I want to set myself up for success. I will be staying with my family (free) for the next month or so and my gas will probably double as I currently can bike commute.

Questions:
Should I relocate (currently PDX area)? Retrain for a higher paying career? Or find a side gig? Stick it out with this job until my loans are paid off? How do I balance saving (for possible plans like relocation, job retraining, lasik surgery, eventually a newer vehicle, etc) and loan repayment? How much more should I pay on loans? Is it time to open a Roth IRA?
There is so much great advice on this blog and this forum and hopefully you can give me some insights as I develop a new life plan :). I'm young and not tied down so I might as well take advantage of this! Thanks in advance, this experience has me a little bewildered at the moment.

[DanielleS]

Have you quit yet? If not, you may want to reevaluate whether or not you'll quit at the same time as moving and breaking up with a serious partner. That would be three major life changes at once. Perhaps you should keep the job for a while, at the same time cogitating about what to do next.

I am and have been my whole life, a writer. What I did while working was write at night and on the weekends. Doing your art at those times is an option for you. Jobs are just never going to be fulfilling for most people. But, the thing is we need money to survive!

You are asking good questions, and you need some space to figure them out. Upheaval in a life is always a good time to take stock.

[Prairie Stash]

What do you want in life? Do you want a new car more than early retirement? First thing is to realize that every choice has consequences.

In general partying off loans yields more freedom. Higher paying jobs also grant freedom. Saving in your 20's means freedom of choices in your 50's due to compounding. Conversely spending it all when young adds years of work; it's your choice.

I would repay in full one loan before making a single choice. If you can't pay anything off when it's easy then adding debts will be a mistake. If you can do it then you'll personally see the benefits of paying loans early. From my viewpoint it's a ridiculously easy task.

[Retired To Win]

Why not plan to stay with your parents a  little longer (even paying them some rent)?  You could accomplish 2 things doing that.  With your rent savings, you could build up a starter Emergency Reserve Fund (which you really should plan over the next year to build up further), and you could operate from a stable base (with emotional support, even) while you analyze and decide what to do about your employment and all the other questions that are buzzing around in your mind.  And you would be in a better -- and more flexible position -- to balance off employment and location opportunities.

Good luck.

[Coonz]

Oh shoot- My phone seemed to delete my reply.

Thanks for the responses. I am quite fond of radical life changes but perhaps this might be a good time to sit still.

I am still at my job but have been applying to different places during the last couple months just to see what is out there. I am not particularly concerned with retiring early, but I am concerned with financial security- debt free in 3-5 years, opening retirement accounts, having a savings cushion and a bit of FU money. Haha and don't worry I'm not going to buy some spendy new car- I just realize my 15yo car with poor gas mileage may need to be replaced in the next five years.

I'll be saving money while living with family and I'm expecting quite a bit more $$$ incoming as we sell our furniture. How much should I keep in savings and what should be my end of year goal? Should I open up an IRA or put that money into loans until they are gone (I've calculated I can comfortable do this in 3 years at my current job).

I was definitely spoiled in spending most of my life working in the arts. It just felt too unstable when I have 20k to pay back. I'm not good at sitting in cubicles or at computers or doing monotonous work. I get stir crazy if I go too long without immersing myself in my passions.

[frugaldrummer]

I would focus first on saving up six months living expenses in an emergency fund. This can keep you afloat if you lose a job, or if your car blows up unexpectedly, etc.

Second priority would then be split between saving for a future car, and retirement savings.

May I ask, what is the technical field you work in now? And if you could have your perfect dream job, what would that be?

[Chrissy]

Yes, you definitely need some cash.  I'd focus on that first.  Start with just three months of projected expenses plus apartment down payment, first month's rent, and some new furniture.  Work up to six months projected expenses and car down payment (or full payment!).

[Coonz]

Yeah, I see I am a bit low on cash after aggressively paying off the credit card and getting a head start on the loans. I only recently realized I would rather have some cash around for some of those exact circumstances like deposits on an apartment or living expenses during a potential job search.

I searched and found quite a few threads on where to stick the emergency fund (I admit that watching $$ accumulate in my checking relaxes me too much). I am thinking about opening up an account through Barclay- maybe their Dream account since I probably won't be touching that money often? Credit unions around here don't have great rates. Once the EF is funded then I could open their regular savings account that allows you to divide money into personalized subcategories so you can visualize what you have for each goal- or maybe that was a different site I was looking at. Information overload!

Current finance plan:
1. Put all surplus towards funding 6mo EF (Barclay?)
2. Next, maintain a smaller savings rate in a different account (for car etc.) while splitting the rest between loans and retirement (open up with Vanguard?). This savings split could look like 20% savings, 60% loans, and 20% retirement?
3. Loans are gone! Put that allocation towards retirement and reevaluate any other savings needs.

I work in specialized repair- for fun we can imagine that I repair Dyson vacuums. As for perfect dream job, I have read What Color is your Parachute and have spent much energy brainstorming and speaking with people in fields I might be interested in. I have yet to identify a specific job, but from experience I believe I would enjoy a fast-paced and varied leadership role perhaps in some sort of creative educational organization. I enjoy logistics and working with people and I have done a lot of event planning in the past. I am sure that I will find a good fit with some more trial and error :). It would be nice to make a bit more money, have a bit more flexibility, and feel positively about my work. I'm one of those people who needs to feel like their work is helping people.

[Spondulix]

Thanks for the responses. I am quite fond of radical life changes but perhaps this might be a good time to sit still.

I was definitely spoiled in spending most of my life working in the arts. It just felt too unstable when I have 20k to pay back. I'm not good at sitting in cubicles or at computers or doing monotonous work. I get stir crazy if I go too long without immersing myself in my passions.

A therapist once told me that we look to three places when things aren't "feeling right" in life - changing relationship, changing jobs, changing location. You're talking about all three. :) So I'd definitely follow your own advice and sit still for a while... not just in your job, but maybe in life. Try meditating. Do you art at home. Find a way to reconnect with yourself.

I've got two degrees in the arts and compromised in the field, too. I took a job in the technical side of the field, and felt like I was selling out for the first few years. Ten years later, most of my classmates had to get out of the industry or took technical jobs like me. It was one of the best decisions I've ever made to take that technical job because now I could always afford to do my art. I am my own sponsor. Funny thing is I have some friends who did manage to make a living with it, and now they're asking me to help. So, I'm getting some of the benefits of having the artsy job without having to go though the slog to get there.

The purpose of money is NOT to validate that we do art (or the value of our art). Do you really care if other people know that you're a talented artist or not? The thing is, even if you weren't in the arts, it could take 10 or 20 years to get to your "peak" performance in your career or get that job that you really desire. Most everyone (whether you're an artist or not) hates sitting in a monotonous work environment. Telling yourself you need to do your art full-time right out of school is just going to bring you misery. Do what you need to do to find your artistic freedom now, but don't assume that's going to come from your work. If your job is boring, go find something less boring - it could be the job, and not the career path.

[Coonz]

I like what your therapist said. That sounds like my formula. I also agree that I need to find a way for my art to exist in my world without it being my world- otherwise I get burned out. I will aim for a better balance and I definitely like the idea of being able to fund my own artistic endeavors rather than being at the constant mercy of others.

I guess I did not follow my "sit still" advice very well, but thought I would share with you helpful folks what ended up happening. I was SURPRISE offered the opportunity to do some conservation work a la Americorps for the next few months. I took it and am about to leave. Things ended on a nice note with boyfriend, things ended nicely with my job, and things are optimistic in the financial realm. I sold a lot of furniture from the move, the rest of my stuff is being stored with family, I will not need to rent a place for a few months (living outside), food is provided, and Americorps provides monthly stipends as well as an education bonus at the end that I can apply toward my previous loans.

Not exactly what I thought was going to happen in my life, but exciting none the less. I hope to come out of this super buff, with a need for less stuff, a deeper appreciation of nature, a slightly larger bank account, and an awesome life experience. Perhaps it will even bring more clarity into my life.

[Retired To Win]

Yeah, I see I am a bit low on cash after aggressively paying off the credit card and getting a head start on the loans. I only recently realized I would rather have some cash around for some of those exact circumstances like deposits on an apartment or living expenses during a potential job search.

I searched and found quite a few threads on where to stick the emergency fund (I admit that watching $$ accumulate in my checking relaxes me too much). I am thinking about opening up an account through Barclay- maybe their Dream account since I probably won't be touching that money often? Credit unions around here don't have great rates. Once the EF is funded then I could open their regular savings account that allows you to divide money into personalized subcategories so you can visualize what you have for each goal...

Current finance plan:
1. Put all surplus towards funding 6mo EF (Barclay?)
2. Next, maintain a smaller savings rate in a different account (for car etc.) while splitting the rest between loans and retirement (open up with Vanguard?). This savings split could look like 20% savings, 60% loans, and 20% retirement?
3. Loans are gone! Put that allocation towards retirement and reevaluate any other savings needs.

Good show on your plan!

For your EF account, Barclays is a good choice.  So would Sallie Mae.  I've used savings and money market accounts at both for my Emergency Reserve Fund.  But don't get too stressed over getting the best interest rate on this money.  Remember that your purpose for this stash is to have it liquid and accessible "just in case."

Good luck!