Author Topic: Moving out of parent's house - what should I know?  (Read 1619 times)

Hey It's Me

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Moving out of parent's house - what should I know?
« on: May 17, 2015, 07:00:19 PM »
I'm 22 years old and moving out of my parents house. I have a $42,000/year income, and will be looking for apartments (really a room for rent in a 2/3 br apartment) for $400-650/month with utilities included.

Here are my current savings:
  • $3500 in liquid cash
  • $10,000 in 401K/tIRA

Income:
  • Job: $3500 Gross
  • Side gigs: $600 Gross
  • Total: $4100 Gross

Here are the expenses I foresee:
  • Rent: $400-600 (probably ~$500 w/ utilities)
  • Transportation: $120 (monthly bus pass for work. If I'm close enough I'll bike)
  • Groceries: $175 (Partially subsidized because of breakfast/lunches at work)
  • Haircuts/Grooming/Laundry: $50
  • Gym: $15
  • Phone: $20
  • Total: $780-980

My worry is I only have ~3x my monthly spending in cash. I've stopped my 401K contributions (previously at 65% since I was front-loading) to ensure I won't run out of money in the case of an emergency. Any advice as to what I'm missing? Where I can cut? This is my first time on my own and I'm feeling apprehensive.

forummm

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Re: Moving out of parent's house - what should I know?
« Reply #1 on: May 17, 2015, 07:23:57 PM »
It sounds like you're being overly worried. If you make $42k -$18k -$5500, your AGI is only going to be around $20k, and your exemptions will take care of most of that. So you're looking at around $40k net, with most of that going to retirement accounts. And your remaining ~$17k should be more than enough for your <$12k expenses. So you can even have some more cash at the end of the year to put in a taxable account. Nice going!

Make sure you're accounting for health insurance (either through your parents or your employer). Everything looks good!

firewalker

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Re: Moving out of parent's house - what should I know?
« Reply #2 on: May 17, 2015, 07:29:52 PM »
Have you already calculated your net income (after taxes, health insurance deductions)?How long have you had the current job?

innkeeper77

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Re: Moving out of parent's house - what should I know?
« Reply #3 on: May 17, 2015, 07:32:00 PM »
With estimated expenses that low and your income so high, you look fine to me. I wouldn't worry about it. Unexpected expenses and desires can usually be delayed if needed, and you have more than one income stream. If you lost your job your side gigs would almost pay for everything while you looked for a new job. Plus, you can increase your emergency fund rapidly over the next few months.

I would personally be sure to have a credit card for true emergencies, but also for regular use. If you don't have one, but are responsible to ALWAYS pay it off on time so you pay no interest, I would get one before moving out. (Discover gives card to people with no credit- I'd find a friend with one, and use their referral link- $50 per person bonus that way)

Just be careful to pay attention to lifestyle inflation. You have a good income in a low cost area- you are in a great situation, with far more in savings than most Americans in your position would have.. I would not completely stop the 401k contributions, as I cannot really see an emergency where you would need so much cash at one. Maybe put them back up to 20% or 30%?

And look into putting $5500 into a traditional (or roth if it makes sense) IRA- the fees are usually lower, and it gives you more control than a 401k. Plus, you can max both if you want to.. the usual hierarchy is this: 401k to the match, then max the IRA, lastly max your 401k. If you prefer less interaction the 401k isn't a bad thing, just usually not better than an IRA. (If you max both, great!)

Best of luck!