Author Topic: New College Grad looking for help  (Read 4737 times)

testrail

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New College Grad looking for help
« on: July 26, 2012, 09:27:00 PM »
Recently graduated college in May...started new job the following week, now that I've began making more than around minimum wage, how do I begin growing my mustache. 

Stats are as follows:

my stats:

No College Debt! working 2 concurrent job + scholarships = free schooling

No debt at all actually

Net savings as of right now...

appx...2k in 401k I'm maxing out already

2k in Roth 401k

$3000 slush savings fund

$500 I began saving for my next car

$7k in mutual fund account

3k in savings bonds...mostly matured

Own 2000 Toyota Camry with 95,000 miles outright

Salaried at 52k/year gross 6% 401k match w/ 4% end of year bonus pay out.

Live in Girlfried:

2 years left in school

Will finish at about 16k in debt

Currently working appx. 30 hours (40 when not in school) making slightly more than minimum netting appx. 11k take home annually

Owns 2001 Olds Alero outright (140,000+ miles)

No real savings to note at moment...

Combined:

Rent is $870/month (wasn't introduced to this until recently, so I botched that one)

Total monthly expenses including rent, at roughly $1950

Biking is not an option...both live relatively close to work, (me 5 miles away, her 2) but it's all by highway

I guess what I'm asking is what do I do from here?  Am I doing it right?  All other monies I earn is split between the mutual fund, the IRA, car and slush fund?  Are our expenses to high?   How do I do it better?  If I want to be able to quite the grind by 40, with the typical 1.8 kids and everything else, how do I do it mustachian?






arebelspy

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Re: New College Grad looking for help
« Reply #1 on: July 26, 2012, 09:58:14 PM »
Biking is not an option...both live relatively close to work, (me 5 miles away, her 2) but it's all by highway

The direct route is highway, but is there a slightly longer route via side streets? 5/2 mi. isn't that long.
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englyn

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Re: New College Grad looking for help
« Reply #2 on: July 26, 2012, 11:21:43 PM »
Recently graduated college in May...
No debt at all actually...
Am I doing it right?
That and you're reading MMM already = a resounding YES. Well done.

If I were you, I'd work out your required savings rate then use that to adjust the Balanced Money Formula accordingly. If you now have negative money for Wants, find out if you can cut down your Needs.

Failing that, acknowledge that your (personal and combined) income is likely to get a whole lot better in 2 years or so and adjust timeframes/expectations accordingly.

Also make sure that slush fund is earning interest somewhere.

gooki

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Re: New College Grad looking for help
« Reply #3 on: July 27, 2012, 04:30:41 AM »
Just keep doing the basics right and you'll be fine. Avoid lifestyle inflation, and especially avoid any unnecessary subscription services.

$2k a month expenses for two adults including rent seems good to me.

I'd look at dropping to one car if possible. 2 miles can't be walked?

grantmeaname

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Re: New College Grad looking for help
« Reply #4 on: July 27, 2012, 06:39:09 AM »
So right now, you bring home $4300 a month and spend $1900? That's a 55% savings rate, and if you keep that up, you're on track for retirement in 15 years! To answer your question, I'll agree with the others and say you're doing an incredible job.

As far as how you're saving now:
1. why do you need a new car, especially one so expensive it requires a 'new car' fund?
2. I wouldn't contribute to your mutual fund account until your IRA and 401k are both maxed for the year. Does your 401k plan have good choices? Is your IRA at a bank, or have you opened it somewhere like Vanguard or Fidelity where you can hold investments?
3. What is your 'slush' savings for? Do you find you only spend it for big, unexpected expenses (car repairs) or does it get spent out of every month? I'm skeptical about anything labeled 'slush'. Remember, if it doesn't go into your retirement accounts, it's not helping you retire.

arebelspy

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Re: New College Grad looking for help
« Reply #5 on: July 27, 2012, 07:18:37 AM »
If I were you, I'd work out your required savings rate then use that to adjust the Balanced Money Formula accordingly. If you now have negative money for Wants, find out if you can cut down your Needs.

Following the balanced money formula is one of the best ways to spend much more than you should be.  It is one of JD Roth's worst favorite things, and that's saying a lot.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

testrail

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Re: New College Grad looking for help
« Reply #6 on: July 27, 2012, 06:22:31 PM »
So right now, you bring home $4300 a month and spend $1900? That's a 55% savings rate, and if you keep that up, you're on track for retirement in 15 years! To answer your question, I'll agree with the others and say you're doing an incredible job.

As far as how you're saving now:
1. why do you need a new car, especially one so expensive it requires a 'new car' fund

2. I wouldn't contribute to your mutual fund account until your IRA and 401k are both maxed for the year. Does your 401k plan have good choices? Is your IRA at a bank, or have you opened it somewhere like Vanguard or Fidelity where you can hold investments?

3. What is your 'slush' savings for? Do you find you only spend it for big, unexpected expenses (car repairs) or does it get spent out of every month? I'm skeptical about anything labeled 'slush'. Remember, if it doesn't go into your retirement accounts, it's not helping you retire.


That is not neccassarily

It's new to me, not actually new.  I know that in about 5 years, my car will need to be replaced, so I'll need to get something newer.  I want to be able to buy it with cash when that times comes. 

Not sure what you mean maxing a 401k.  I get all the match, but after that, I'd rather have some more control as to where it goes, instead of the couple dozen options I have now.  My IRA is sharebuilder through ING.  What does hold investments mean.  Are you talking like specific stock?

Slush is for car repairs, medical stuff(nothing yet thus far), manuvering myself between paydays if things come due at inopportune times. When ever I tap into I am sure to replace it by the next payday + at least $20.  It currently is in an ING savings account getting about 1% interest.

testrail

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Re: New College Grad looking for help
« Reply #7 on: July 27, 2012, 06:37:39 PM »
Biking is not an option...both live relatively close to work, (me 5 miles away, her 2) but it's all by highway

The direct route is highway, but is there a slightly longer route via side streets? 5/2 mi. isn't that long.

Sadly, we'd have to cross a couple major highways during rush hour. Net savings of maybe spend 30% less on gas isn't worth the time/going to work gross in my mind.  I'm all for biking and used to ride 12 miles to get to the store, but it just doesn't seem to have a value to me.  I've calculated my mileage at a total of $.31/mile, and less for her.  The time savings alone seem to be worth it for me.  However, we do walk to the grocery store, so that is something at least.

NestEggChick (formerly PFgal)

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Re: New College Grad looking for help
« Reply #8 on: July 30, 2012, 04:07:47 PM »
My IRA is sharebuilder through ING.  What does hold investments mean.  Are you talking like specific stock?

If you have your IRA at Schwab, Vanguard, etc. then you can invest the money in stocks, bonds, index funds, ETFs, etc.  Generally the rule of thumb is to get your maximum employer 401K match first.  After that, max out your IRA (and decide whether you prefer a traditional IRA or a Roth).  Third, max out your 401K.  This will get you the best tax advantages and lowest fees, since your IRA fees will most likely be lower than your 401K fees.

The maximum you can contribute to a IRA is $5000 and the maximum to a 401K is $17,000.  That's per person, so when your girlfriend graduates and gets a full time job, she can contribute the same amount separately, even if you are married at that point.

Keep in mind that with a Roth IRA you can access the contributed funds before age 59 1/2 with penalty.  You can access the interest without penalty if it is to be used for a down payment on a home, medical expenses, and some other things, as long as they follow certain rules.  However, with a traditional IRA and a 401K there are penalties for withdrawing funds early, so if you plan to retire early, keep this in mind and plan accordingly.

You're already in a great position - congratulations!  I'm impressed by what you've already accomplished.

englyn

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Re: New College Grad looking for help
« Reply #9 on: August 02, 2012, 08:07:28 PM »
Following the balanced money formula is one of the best ways to spend much more than you should be.  It is one of JD Roth's worst favorite things, and that's saying a lot.

I should have explained. I meant using the basic idea of x% savings, y% needs, z% wants.
Choosing where you want to be on the required savings rate page may give you 55% savings, 40% needs, 5% wants. Means you have both a plan for the future and some fun now.

arebelspy

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Re: New College Grad looking for help
« Reply #10 on: August 02, 2012, 08:46:27 PM »
Following the balanced money formula is one of the best ways to spend much more than you should be.  It is one of JD Roth's worst favorite things, and that's saying a lot.

I should have explained. I meant using the basic idea of x% savings, y% needs, z% wants.
Choosing where you want to be on the required savings rate page may give you 55% savings, 40% needs, 5% wants. Means you have both a plan for the future and some fun now.

Ahhh, much better.  Yeah, targeting some for wants is not bad at all, for some people.  Targeting as much as he does in weird proportions is the big issue I have with it.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.