Author Topic: Finances for someone just starting out.  (Read 4308 times)

FloridaFarmer

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Finances for someone just starting out.
« on: January 21, 2014, 07:25:55 AM »
A short introduction about myself and where to go with my finances. I am a recently graduated student with a degree in Agricultural Operations. I currently do not work in that field, but I might one day. Please feel free to help critique my budget and ask more questions about it if necessary.

Expenses.
Home
Rent $250.00 per month
Electric $40-70.00 per month
Internet $39.00 per month
Vehicle
19 miles to work each way five days a week
18MPG 2006 GMC sierra I bought new in cash.
190 miles a week plus around town driving.
Auto insurance $295.00 per six months with Geico
Personal
No debt
Phone Bill $90 through sprint a little over a year on the contract. I have been looking at Ting or republic wirless but have not made the switch.
Current savings $3,600
Income after tax $700 biweekly paycheck
My job pays my medical insurance and they give me $700 per year in a health savings account.
Military reserve pay $250 per month
Farm income per year for Citrus average has been $10,000.00
Other income through side projects $3,000.00
I honestly do not keep track of my food bills well enough to track them, but I suppose I should for in the future. I eat fast food relatively often and I eat with my parents and friends quite a bit. I cook at home very little, but when I do its sandwiches and whatnot.
Any advice and questions about my budget on where to go and what to do would be helpful.

Khan

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Re: Finances for someone just starting out.
« Reply #1 on: January 21, 2014, 07:39:09 AM »
18mpg, 19 miles each way to work.
That's 8$ a day just to go to work with your current vehicle.
The 190 miles you're doing per week? ~40$. Of your 700$ paycheck, 80$ of it goes to gas. 160$ a month.

Fix that for one thing. I'd recommend fuel efficiency instead of moving. Try to combine errands too.

FloridaFarmer

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Re: Finances for someone just starting out.
« Reply #2 on: January 21, 2014, 07:46:10 AM »
I agree, but I am not sure what to get. The cars I have been looking at that I could either sell my truck and then buy or trade in for seem to be very over priced. The vehicles that are of relatively low miles 80-100K are all about double the value of my truck around 3k I didn't know if it would be worth wiping out my savings for a vehicle trade. Any Thoughts.

rocksinmyhead

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Re: Finances for someone just starting out.
« Reply #3 on: January 21, 2014, 08:54:10 AM »
congrats on the super low rent and no debt!

I agree, but I am not sure what to get. The cars I have been looking at that I could either sell my truck and then buy or trade in for seem to be very over priced. The vehicles that are of relatively low miles 80-100K are all about double the value of my truck around 3k I didn't know if it would be worth wiping out my savings for a vehicle trade. Any Thoughts.

EDIT: bad calculation, see below

I would definitely start keeping track of your food spending since it sounds like it might be high.
« Last Edit: January 21, 2014, 10:56:23 AM by oscarsmom »

FloridaFarmer

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Re: Finances for someone just starting out.
« Reply #4 on: January 21, 2014, 09:22:36 AM »
Yes the lowest cars with decent gas mileage I have seen are around 6K. What mileage did you use to figure that payback range with?

FloridaFarmer

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Re: Finances for someone just starting out.
« Reply #5 on: January 21, 2014, 09:36:50 AM »
My main question is since for the foreseeable future, I will continue to gain money what should I start doing with my money. Each year I get a large chunk of cash from the farm I manage in my part time. I know that reducing expenses is a part of the goal, but I feel like I should also be investing my money somehow.  I am either looking to put improvements into my home like a tankless water heater and a mini-split AC system. I currently have window units. Or invest it in something like lendingclub. This past year I used the money to finish paying for school and investing in farm projects and farm infrastracture that really needed updating.

AlanStache

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Re: Finances for someone just starting out.
« Reply #6 on: January 21, 2014, 10:18:08 AM »
Firstly congrats on being in a fairly good position with low-ish expenses.

Investment: all depends on what you want to do with the money.  If you want a home down payment in a few years then that is totally different than generic long term retirement investing.  (assume you are in your mid 20?). 

Lending club is probably not where you want to go.  Is very hard to get out of if you wanted to use the cash for something else.  Also has short track record, potentially big pit falls.  Most here recommend it being not more than 5% of your total investment portfolio.  And for that 5% it will take a majority of your time.  LC is not for beginners.

In your place I would think about at least partly funding a IRA independent of anything else that would get the really long term compounding on your side so it can grow for decades.

To be clear you are renting a place and paying 250$/mon?

EDIT: I assume you dont have a 401k or any sort of employer match?
« Last Edit: January 21, 2014, 10:21:02 AM by AlanStache »

FloridaFarmer

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Re: Finances for someone just starting out.
« Reply #7 on: January 21, 2014, 10:47:52 AM »
Yes, my share of the rent is $250 but I also have a roommate. I guess  I could have cut the internet and electric bills in half, but I figured that's worst case scenario.  We rent from a family member so I do not mind making investments in the home. As for the rest I will be 28 next month and I have a pension plan with my job if I retire from there but that is not likely. I am an emergency dispatcher, but I would like to move to something that I enjoy and hopefully pays more in the agricultural field. I am in no hurry because this job pays the bills and is a steady paycheck for now.

rocksinmyhead

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Re: Finances for someone just starting out.
« Reply #8 on: January 21, 2014, 10:55:49 AM »
Yes the lowest cars with decent gas mileage I have seen are around 6K. What mileage did you use to figure that payback range with?

whoops, I totally f'd that up. that's what I get for popping in to this forum while also trying to do actual work, I guess :)

assuming "new" car gas mileage of 25 mpg and an average gas price of $3.35/gal (I just googled "florida average gas price" but I thought their prices for oklahoma looked high, so might not be accurate), it would take you almost 6.5 years to break even. whoops! maybe not such a good choice... although I am surprised to see that your truck has depreciated that much. I guess 9 years is kind of a long time.

FloridaFarmer

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Re: Finances for someone just starting out.
« Reply #9 on: January 21, 2014, 10:59:41 AM »
Yes, since it's all paid for I have been looking into putting an air and exhaust system with an economy mode setting on a chip. To increase fuel efficiency. But have obviously not made any decisions yet.

Also for retirement it doesn't add up to much, but I also plan on staying with the military in reserve forces for the 20 years, so I have at least some additional retirement to look at with that. I am currently an E-4 planning to take the E-5 test next month.

It was a really cheap base model truck to begin with I only paid 11.5K new.
« Last Edit: January 21, 2014, 11:03:24 AM by FloridaFarmer »

AlanStache

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Re: Finances for someone just starting out.
« Reply #10 on: January 21, 2014, 11:08:42 AM »
Renting from family: Just be aware of what you may or may not get back in-terms of money from capital improvements to someone elses property, the time line for getting that return and the consequences of you leaving the area.

Your costs seem low (except gas) and you seem aware of what you are spending, might be best to look at the income side of the equation.  But still look at your food (and beer) expenditure.

Almost without question you should have an IRA (roth or traditional) and be funding it with what you are comfortable with each month via automatic transfer.  I would say this is almost job one for you.  Even if cash sits in the account for a month while you learn a bit on how to invest it.

There are few short cuts on learning to invest, you will just have to do the reading and get comfortable with index funds.  It really is not to bad, just read the links here on mmm and ask questions.  I get my 401k from work so I dont know the rules on contributing privately but that would also be worth an hour or two online.

FloridaFarmer

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Re: Finances for someone just starting out.
« Reply #11 on: January 21, 2014, 11:16:58 AM »
Yes, my food and especially beer expenses are likely higher than they should be. The rest is pretty low I do not really do that much outside of work and home and the farm.

I have no experience with an IRA I am about to go to work so I will read up on them on my breaks. Are they something I set up and make myself  or is that something I go to a bank or investor to do? I am very clueless to what that is and how they work. I never really budgeted much because I was either working full time and going to school part time or in military training centers. Both of which times I had plenty of surplus money so I never really took the time to learn about it. Looking back, that was likely a mistake.

AlanStache

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Re: Finances for someone just starting out.
« Reply #12 on: January 21, 2014, 11:27:08 AM »
IRA: basically go to a brokerage house's web site (vanguard is popular on mmm but I am with schwab) and click "sign up for new account" they will ask for personal info similar to a new bank account, then may send you stuff in the mail to be signed and returned.  the broker will probably prompt you to fund it, here is where you can probably set up automatic "pulls" from your checking, else set up your checking to "push" money. 

I assume vanguard has an IRA faq-read it.  Also read the wikipedia article.

But google around see if some other broker is better for you, people here like vanguard because of the low fees.  You could probably do an IRA in a brick and mortar bank/store but I have no experience with that, my banking and investments are fully online.