Moving out west, but I need to make some changes first

[rk2012]

This will probably be longer than needed, but here it goes. I'm a single 29 year old, with an ok salary putting me in the 25% bracket making about $55K, living in Western New York State. I freelance on the side occasionally to bring in extra in income, but not much. I have no credit card debt. I have about $44K in student loan debt at 4.5%. I have about $7500 in student loan debt at 7% that I'm working on paying off first. I graduated about 6 years ago with $60K total.

Here's my current expenses per month:
$275/month rent (my half, split with roommate. 2500sq. ft house.)
$200 utilities (my half, gas, electric, internet, split with roommate)
$425 student loans (about 50/50 principal and interest)
$91 insurance
$325 car (I'll explain)
$25 gas
$250 food (I'm pretty strict on what I eat. I don't eat out. I don't snack. Close to nothing processed.)
$75 cell (I cannot get rid of this, since I develop apps)
About $1500 total per month


Up until last year, I paid little attention to saving. I was more worried about paying my expenses. After a promotion, it put me in a much better situation. Here's what I'm currently saving per month:

$370 401K (employer matches $160)
$200 in a savings with basically no interest
$100 in a ROTH IRA
$200 which sits in a brokerage account because I don't know what to do with it.

2x a year, an extra $1000 is put into the 401K from a bonus.


My balanaces are about:
$22K,000 in a 401K
$1,600 in ROTH IRA
$2,000 in brokerage, with $1,000 invested in a Schwab TIPS ETF
$3,500 in a savings account


And here's where I'm going to get the flack. I made some poor decisions after getting my job right after college. I purchased a used car for $12K at 18.9%. Yeah. In 2010 I rolled the balance ($6K) into a new car lease, which I have about a year remaining. It's a 2010 Honda Insight, the Honda version of the Prius, which I'll have the option of purchasing at the end of the lease for $12K. I'll have only about 20,000 miles on it at that time. I put on about 5,500 miles per year, with a few trips here and there. That could probably be reduced greatly if I walked or biked to work, but winters are pretty rough here and there's literally no way to walk it. Since I'm stuck in the lease, should I try to sell the leased car? With my current savings, I really don't have enough to purchase a beater to get around in, and have at least a month or two saved up to cover an emergency.

So, with my situation outlined, my main goal for getting my ducks in order aside from retiring at a decent age, is that I will be moving out west to Seattle, for reasons I don't want to get into. But, I need to get myself on a better plan, since my expenses are going to be much higher. If it takes a year or two to do that, I'm ok with that. But, I honestly don't know where to begin. I've started reading through all these forums (with some incredible support and advice) trying to find my way. 

So, my main questions are these:

1) I don't know if the student loan debt at 4.5% is okay to pay as I currently am for the next 15 years or so?
2) Should I sell the remainder of my car lease? And buy a used car? If moving to a location with public transportation, I won't need it.
3) Where should I be investing my money? Or should it be going towards student loans? And how much should I be saving?

[nolajo]

So, by my quick math, you should be bringing home around $3400 a month from your day job and you've only got about $1500 in fixed expenses, which is great. I'm insanely jealous of your rent, by the way. But you're only saving a total of $870. Where does the other $1000 go? That's almost a third of your take home that I don't see here and it would make a huge difference.

First, I would get rid of the car and get yourself a more modest one. Word in the forums is that it's hard to find much for less than $4000, but you should have that within a month or two and still have an emergency/slush fund. With the number of miles you don't put on the car, you should be ok taking a hit in terms of efficiency, just look for something that's reliable. Then I would knock out that student loan at 7%. That's about as much as anyone would tell you to expect from the stock market, and it's guaranteed. Once that's fully paid off, your cash flow will be that much better. The loans at 4.5% are high enough to not put them totally on the back burner but they will take quite a while. I would probably continue to pay them off a bit ahead of schedule, but not put all my efforts there - maybe just keep paying $425, but just to those loans after the $7000 is paid off.

Once you've got that higher interest rate loan paid off, I'd jump into the market with the standard index funds/bond funds, etc. I'm no expert, so I'll refer you to the investment board here. That said, if you're planning a cross country move, be sure you're also socking away something for that. Moving tends to be more expensive than you think.

Good luck!

[rk2012]

Thanks for the advice! On the take home pay, a large portion (25%) of my yearly income comes from bonuses a couple times a year. After 401K deduction, taxes and such, it's about $2800 per month I would usually have. The missing portion is where I should be doing better, though.

The rent is certainly not typical around this area. I had an amazing opportunity come up a few years ago and the landlord has been excellent. I definitely will not give it up for a while.

[nolajo]

Ah, I see. That makes more sense. You still should have about $800 after your expenses and what you save already though, so the basics of my earlier comment should still work. Now, if you're not sure where that $800 is going, finding and fixing that leak is step number one. Once you've found that money the other goals are fairly attainable.

[Dicey]

Just wondering: since Seattle is a very "crunchy" place (in a good way!), could you get more for your hybrid if you sold it once you got there? I admit it, I'm not anti-car. *Gasp.* It does sound like you have other areas in your budget where you could make big savings gains without taking a bath on the vehicle just yet.

That rent is an amazingly sweet deal. Are you really prepared for what housing could cost you in the great Pacific Northwest? When are you moving? If you really have as much as two years before you pull the trigger, at least it might give you a chance to suss out a similar deal.

[jpo]

Why only $100 in the Roth and $200 into a brokerage? You could put all $300 into the Roth and still be under the max.