First off, I'm grateful to have come across personal finance blogs in the past few months. However, reading so many success stories has really weighed me down -- like to the point of depression where I don't find joy in much of anything and don't feel like I deserve anything that costs money (besides necessities) due to my financial shortcomings. It's true, comparison is the thief of joy, but I can't really seem to control my thoughts. Regardless, I have some plans, but would also like some insight from all you pros! Apologies in advance if this is somewhat scattered.
I'll be 29-years-old at the end of next month. I know it goes against all things finance savvy, but I'm putting off saving for retirement until I'm 30. Like MMM says, debt is an emergency and I have so much I'm not very proud of. I moved in with my boyfriend and racked up about $11k in credit card debt to furnish our condo...that we're renting. I was previously CC debt free, and just had student loans, but I love decorating and it is what it is (this would be my dream job;). I plan to have that paid off by the end of 2016, i.e. my 30th birthday.
A little background: I came from a family who apparently loved debt. My parents are divorced, but each managed to foreclose on each of their houses. I was basically told that all I needed to do was go to college, and I could get any job I wanted. No one really taught me the importance of selecting a major. You'd think graduating near the top of your class would make you a little smarter, but alas, I was going off my parents. My mom has had a six figure salary for almost 15 years with nothing to show for it. Like literally, nothing. However, she managed to become fairly successful as a supply chain manager (salary-wise) coming from another country and having not completed her Bachelor's (she was studying economics and is a statistics wizard), hence her advice to "just go to college". My dad loves to gamble. He had over a million dollars saved up when I was a teenager and blew it all, now working as a machine operator making $9.50 per hour at the age of 63.
Well, I got accepted to a big ten, in-state university and financed the whole thing, including books, living expenses, and partial food expenses. I graduated with $90k in student loans...with an English degree. I was originally going to school to become a teacher, but due to some unforeseen circumstances, had to withdraw for a semester. Which meant I had to withdraw from the College of Teaching within the university. I'd have to wait a year to reapply, and then wait to get re-accepted, and then wait to start taking teaching classes again. All-in-all, it was going to add about three more years to my college education, so I decided to graduate with a Bachelor of Arts in English, with a minor in advertising/communication.
I dated a guy for four years, who had his finances together. He had $60k saved by the time he was 23, and an additional $40k in his 401k by the time we broke up (at age 26). While it's definitely best we broke up, if it weren't for him, I likely would have never started saving. This sparked a great interest in saving, so I began paying down my student loans, as well as building an emergency fund. Today, I have $20k saved up and $58k left in student loans. I still didn't comprehend the need for a 401k when retirement was SO far away, and I also wasn't really making enough to fund one when my priorities were saving the emergency fund and paying down my student loans.
I ended up in the legal field. I work as a paralegal/legal assistant (title has changed between jobs). I currently make $55,500, but I get paid overtime, and am closer to $63k for this year. Additionally, my mom gives me $400 per month (helping with my student loans), sometimes more, so I'll make close to $68k by the end of the year. My take-home pay is generally $3600 per month, with my mom's money in there too. This is definitely the most I've ever made. It's great that I get paid for my overtime, but since I'm hourly, it's pretty frowned upon. There's an "acceptable" amount, but last year, they advised that we should try our best to cut back, so it's no guarantee.
So there we go -- take-home pay is usually around $3600 per month, after taxes.
My monthly bills are as follows:
-Rent: $700
-Car Payment: $353.48
-Car Insurance: $184.70
-Student Loans: $500.82
-Planet Fitness: $10
-Monthly Spending for gas/groceries/cosmetics/life in general: $600
-Utilities: ~$80
TOTAL: $2429
I'm also putting $850 per month toward that CC debt to have it paid off by the end of next year, and will throw anything extra into savings. Why do I have a car payment? Well, I was pretty desperate after my last car. I financed a used 2007 Honda Fit in 2011, for around $12,000. Last year, I still owed $6000 on it, but spent about $3000 in repairs the year prior. I probably got a dud, but I pretty much lived at the dealership with that car and with our midwest winters recently, I kept getting stuck in snow. On top of that, my mom lives four hours away, and there were several times when I'd drive there in the winter, that I would have to sleep in my car overnight because I kept sliding everywhere and couldn't see. Pretty unsafe to do in the middle of nowhere for a 5'1", 105 pound female. Anyway, after being so fed up, I decided to give up my dream car (yes, I WANTED a Honda Fit so badly), for a more practical crossover SUV. But since I still owed on my Honda, I had to pay that off and thus, ended up with a higher monthly payment.
My current boyfriend and I have been together for almost two years and talk about marriage pretty frequently. I wouldn't be surprised if he pops the question early next year. He recently got a new job, but haaaaaates it. He hates the field in general, and got lucky with his last job, but they lost the account so he had to find something new. He's considering a career change and it might require going back to school, which he would try to do without accruing anymore debt. Anyway, his current financial situation is that he's debt-free, has $4k saved up, and another $5k in his 401k. Not the best, but I give him mad props for living within his means on a lower salary and being debt-free. That is total awesome sauce to me and a great place to build a successful future upon.
We're considering living with his mom for a year or two after our lease is up to save up for a 20% down payment on a house. Clearly, currently paying $1400 a month in rent is ridiculous and we have friends who have $300k McMansions with a lower mortgage payment. Our home buying budget would be around $150k, $200k max. It would probably suck to live with his mom for two years (we all get along, but the house is quite small), but being able to save close to $20k per year would be amazing. We would continue putting that $1400 per month in savings, instead of just saving "whatever we can".
My plan for age 30 is to start investing. Since my monthly payments won't be changing by then, my game plan would be to save 10% of my income into my 401k (which does not offer a match, but a year-end contribution); max out a Roth IRA, as well as add an additional $3000 per year into my high yield savings account, totaling $14,000 per year in savings. That's really the best I can do until my lease on my car is up and until I can stop putting $700 a month toward a down payment on a house.
OH, I almost forgot the most depressing part of my situation. I had to take out private loans my first two years of college because my mom made too much money for me to qualify for federal loans. I used my dad on my FAFSA application the last two years because he was unemployed. Anyway, my mom co-signed for me on a $25,000 loan, my very first year of college. While I made every single payment on it, my mom filed for bankruptcy while this loan was in repayment. The loan agreement had an auto-default clause, wherein it automatically went into default if either person filed for bankruptcy. I tried to see if there was a way out of this to no avail. The bright side is that this loan hasn't accrued any interest since it's now at a collections agency. My mom's bankruptcy is lifted at the end of 2016, and based on the horror stories I've read online, I'm likely to get sued or have my wages garnished / they might take every spare dollar I earn. My mom keeps saying this loan is her responsibility because it was her fault it went into default. She's even said she'd take a loan out of her 401k to pay it off, but it brings me to tears to even think about. She's almost 52 and can't even get a reliable car (obviously because she doesn't have any money saved and can't get approved for a loan in bankruptcy). I want her to be able to breathe for the first time in her life. Despite her poor decisions, I can honestly say it was all for my brother and I. I'm crying just typing this. She deserves a lot more :\
So that's my outline. I guess I'm asking if it's an okay one considering my situation? The rest of my student loans are set to be paid off in five years, and I feel as okay as I can about that given my circumstances. There's a part of my that would love to knock them out sooner, but that would require sacrificing saving for retirement, and I know that's not wise. If any of you have suggestions on how to further boost my income / other career fields I could go into, please chime in! After the holidays, I'm considering taking on a part-time job for an extra 10-15 hours per week.