New College Grad

[Kinosh]

Hello everyone. I've read MMM for a long time but just decided to register...

Need some help with a general assessment of my situation. There are three main areas of focus:

1) I have lived on 8-12k in bare bones expenses while in college. I studied engineering and had to move often for work. The basic story is that I earned ~100k in five years of school and spent ~70k. The spending includes my private pilots license (a long time dream of mine that was completed prior to my father dying) and elective travel. At this point, I hold a BA in Mech Eng. and approximately 20k in a roth and post-tax accounts. I have a full time job starting in a week with my coop company. I will be moving to Texas in the next year. 62k salary ( to be adjusted once I get to Texas) and full benefits. I am 23.

2) After my father died a year ago, I saw my sister struggling with college costs. My grandfather, cousin, and myself collectively allocated ~25k towards getting her schooling finished. 12.5k remains and she is on track to graduate. We decided we wanted to ensure she graduated on the degree she was halfway thru. I can finish my commitment with another 4.5k worth of expenses. She spent half her time in community college then transitioned to a four year school.

3) I have approximately 10k in debt split between my mother and a Discover card at 4% interest. No student loan debt. Based on past repayment trends (from when I earned ~80k by working ridiculous hours as an engineering coop), I think I can repay this in approximately 12-15 weeks. This does not include my signing bonus because it has a clawback provision.

I had a month between school and college and decided to go on a 4 wk x-country road trip (2.5k of Discover debt. I do not regret this. With the exception of the trip debt, most of it came from financial shocks after my father died and I have a plan to get rid of it quickly.

Current plan is to allocate ~20% towards my 401k and use the remainder to pay off the 10k in debt. Once the debt is paid off, build an emergency fund to 15k. Once that is done, allocate 50% of salary to various savings and live off the rest.

Current expenses (past year, valid one more month):

Car fuel: $20/month (100 mi/ month to a job in suburbs)
Car Ins: $65/month
Health Ins: $220/month (my mom begged me to stay ln her plan because of things)
Rent: $200/month (I act as a handyman for the landlord)
Food: $125/month (Roomie and I cook alot)
Entertainment: $250/month (bars are a known weakness)
Tools/parts: $80/month (I buy car repair parts and tools to install them, slowly building my toolkits)
Savings: 10% of all DD/paychecks
Income: ~$800 on average.

Again, my income is about to jump to ~5.2k/month pretax. I'm mostly looking for "how have I messed up" and "what would you do in my situation" type of advice.

[mxt0133]

I would find it hard for anyone to say that you fucked up and are in a world of hurt in your situation.  Seriously at 23 with a positive net worth and a job above the median income, kudos to you.

1) Do you have any plans to continue your education?  If you do now is the time to do it since you are still in college mode. Once you get settled in post college, it will be much harder to get the momentum back once the next life milestones come, relationship, marriage, kids, ect.  Do your best to get your employer to pick up the tab if you can swing it.

2) Very admirable to help your sister out, again with your financial situation, I can't really fault you with offering to help.  I would have maybe done as an interest free loan.  I'm with the skin in the game camp.  If you had to work and take on debt to finish college, I don't see 12k as being a crushing amount of debt to complete college.  For me it would give me a great sense of pride to know that I did it on my own, to a degree, without handouts.

3) With your other misc debt, a faster way to pay it off would be to get a part-time job.  However, make sure your opportunity cost for taking on another job is low.  Meaning your performance at your full-time job does not suffer, your expenses don't go up because you don't have time to cook, clean, ect.

I'll add a few things that you didn't explicitly ask advice on but might be relevant to your situation.  Since you like to travel, to minimize your costs I would look into travel hacking.  That 2.5k road trip could have be done in half or less if you would have signed up for some credit cards with sign on bonuses.

Also to keep lifestyle inflation down, you need to have a goal or a plan on what to do with your new fire hose of income.  That is what most new graduates fall into when getting their first high paying professional job.  I was always saver but after graduating college making 4x I have ever made, I started to eat out more, take nicer vacations, give more expensive presents, ect.  Without a concrete short to medium term goal, I thought a 30% savings rate was more than enough for a 30-40 year career.  Things would be completely different if I knew about FIRE in college.

Nice job, you are off to a great start but don't let up.  You can be FIRE in less than 10 years and never have to work for money another day in your life if you choose to.