Author Topic: New reader/follower looking for overall financial advice/guidance  (Read 3077 times)

jerseyboy

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Hello everyone. I've recently discovered this blog and I am beyond grateful that I did. Since I'm still reading up on the many different topics and trying to take it all in, I thought it would be a good idea to ask some more experienced Mustachians for some general financial/life advice for my current situation.

Single, recently turned 22
Gross Income 60k
No debt
25k saved
Required to have a car for work since there is no permanent office location, (this is a killer) will be averaging about 50 miles of driving a day give or take. Currently drive an Chevy SUV that averages about 20-22 mpg (this needs to change)
If there is any other important information that would help with giving some advice please ask!

Finding this blog made me realize I am in a good position but at the same time it has created some fear that I could somehow mess this up if I don't make the smart/correct moves.  Any simple/general advice will be greatly appreciated.

Specific questions.
1. I know there is a blog post on top 10 cars for smart people, it is a bit outdated, so any advice on a car to get nowadays?

2. Company's 401k is pretty rough, match 25% up to 6%. Thoughts on how much I put into that and Roth IRA?

3.What to do with the 25k

4.This one might be a bit tricky, thoughts on relationships for a younger mustachian.  At 22 years old, I am enjoying myself and I'm not currently interested in entering serious relationship.  When the time comes, how the heck would a semi-mustachian go about finding a partner with similar/related interests in terms of living the frugal lifestyle. I also believe finding this person would be near impossible since western culture has a majority of girls my age wanting a white range rover and expensive clothes/shoes/dinners after every paycheck. Maybe I'm looking in the wrong places.

Thanks for existing, really. I've just found this place but i can already see how awesome it is and will be. Enjoy your Sunday!




Bracken_Joy

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Re: New reader/follower looking for overall financial advice/guidance
« Reply #1 on: October 02, 2016, 02:38:29 PM »
Welcome welcome! If you would like a comprehensive budget breakdown, the case study template will get you great answers. Here: http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/

1. http://forum.mrmoneymustache.com/ask-a-mustachian/car-recommendation-for-a-young-professional/ and http://forum.mrmoneymustache.com/welcome-to-the-forum/new-(used)-car-recommendation/ and http://forum.mrmoneymustache.com/welcome-to-the-forum/recommendations-for-best-used-cars-under-$10-000/ are all good threads.

2. MDM's investing order holds the answers you seek! (10 yr treasury yield is currently 1.6%, so 6.6% for step 2 and 4.6%  for step 7 below)
Quote
WHAT
0. Establish an emergency fund to your satisfaction
1. Contribute to 401k up to any company match
2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.
3. Max HSA
4. Max Roth or Traditional IRA based on income level
5. Max 401k (if 401k fees are lower than available in an IRA, swap #4 and #5)
6. Fund mega backdoor Roth if applicable
7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.
8. Invest in a taxable account with any extra.

WHY
0. Give yourself at least enough buffer to avoid worries about bouncing checks
1. Company match rates are likely the highest percent return you can get on your money
2. When the guaranteed return is this high, take it.
3. HSA funds are totally tax free when used for medical expenses, making the HSA better than either traditional or Roth IRAs.
4. Rule of thumb: trad if current marginal rate is 25% or higher; Roth if 10% or lower; flip a coin in between
5. See #4 for choice of traditional or Roth for 401k
6. Applicability depends on the rules for the specific 401k
7. Again, take the risk-free return if high enough
8. Because earnings, even if taxed, are beneficial

3. See above

4. Can't help on this one- happily married to someone I've known since I was 11.

jerseyboy

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Re: New reader/follower looking for overall financial advice/guidance
« Reply #2 on: October 02, 2016, 02:49:27 PM »
This is great, thanks for the reply!

Goldielocks

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Re: New reader/follower looking for overall financial advice/guidance
« Reply #3 on: October 02, 2016, 06:01:45 PM »
If you travel/ drive for work, be certain to take a log of your miles that you drive and the destinations, every day.

You can claim tax rebate (if not employer mileage) for the miles travelled IN EXCESS of your "normal" commute.  Without an permanent office, your normal commute is usually to you home office -- e.g., zero miles, so it is all tax deductible.

As for cars, look for a reliable, 4-5 years old (or older, if you like) sedan that is not snazzy, in terrific condition.   Reliable, neat, tidy, decent mileage.   e.g., Toyota Corrolla.     Think of it was a "work car" and not a reflection of your image.

Save your 25 k until you know what to do with it.  Bond fund is ok to start, don't lock it down, and have it available for use in the next 18 months, which includes spending a few thousand on a new to you vehicle.  So many changes are coming in your next 5 years, you should have a clear vision of goals.

Matching is always a great idea, even a 25% match.  Just do it.   60k is a good, strong salary for a single 22 yo.

Good luck!

With This Herring

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Re: New reader/follower looking for overall financial advice/guidance
« Reply #4 on: October 02, 2016, 07:50:31 PM »
I've never had cause to use it, but there is a "Mustachian and Single" forum section you could try when you want to find someone frugal and long-term.  And you are definitely looking in the wrong places.  Try parks and libraries over nightclubs.

I look forward to seeing your case study!

jerseyboy

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Re: New reader/follower looking for overall financial advice/guidance
« Reply #5 on: October 02, 2016, 09:09:05 PM »
Thanks for the response Goldielocks and Herring.  The Toyota corolla is looking like the right move, and I'll definitely start going to parks/libraries more often ;)
I just started working so ill be waiting until my insurances/tax/401k kick in before posting a detailed case study.  Quick question, would i totally re-edit my original post in this topic or would i start a new topic?

FIRE_at_45

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Re: New reader/follower looking for overall financial advice/guidance
« Reply #6 on: October 02, 2016, 09:25:52 PM »
One thing I wish I did at your age was have roommates.  Somehow after university/college I seemed to think I was grown up and wanted to live alone.  It is much more expensive...and sometimes a lot less fun to live alone.  This is a huge way to reduce your spending and really start cranking up your savings rate. 

Start designing your life around things that you like to do that don't cost a lot of money (I also didn't do this).  For example, I like to play tennis.  I don't go to the tennis club I go to the free courts in my neighbourhood (that's Canadian spelling eh).  I also like to bike and that's free.  Hiking is free minus the costs to get to the location (meetup groups can reduce the commute costs). 

Read, read, read and repeat.  I started reading when I was your age but the internet was not much back then.  There are so many great blogs and great books where you can become an expert within a year. 

And congratulations - $60 K is a great salary for 22 or 52.  You can save an amazing amount being single and having full control of your actions. 

Regarding being single...at your age most people are broke.  Find someone who has common interests that are cheap (like above) and you should be good to go.

Good luck!

Bracken_Joy

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Re: New reader/follower looking for overall financial advice/guidance
« Reply #7 on: October 03, 2016, 08:04:04 AM »
Thanks for the response Goldielocks and Herring.  The Toyota corolla is looking like the right move, and I'll definitely start going to parks/libraries more often ;)
I just started working so ill be waiting until my insurances/tax/401k kick in before posting a detailed case study.  Quick question, would i totally re-edit my original post in this topic or would i start a new topic?

I would post a new thread, and start the title with "Case Study: [insert title]" It'll get a lot more traffic, people like them. Be warned though: some people can be very harsh ("face punches" in the lingo around here). Don't take it personally, and just take what's of use to you in the thread. People tend to get a bit zealous when they're first implementing all this, and can take the zealotry out on newcomers.

Be sure to post the link in this thread to the full case study though, so you don't lose any of us who have commented already =) That way we don't miss the new thread.

mozar

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Re: New reader/follower looking for overall financial advice/guidance
« Reply #8 on: October 03, 2016, 04:51:02 PM »
Quote
At 22 years old, I am enjoying myself and I'm not currently interested in entering serious relationship

My advice is not assume that when when you are ready to settle down, women will all of the sudden come out of the wood work to meet you. If you know that's what you want start looking now. As you get older more and more people will couple up and there will be fewer people available.

1. You should figure out what your hobbies are and go to events. Like if you are into hiking join a hiking meetup. Ask women on low cost dates so you can get practice.
2. You should also join OKCupid. It's over whelming at first, but you can figure out scientifically which types of people you are interested in. "Optimal Cupid" is a good book about this.
3. Be completely honest with yourself about what you want. If appearance is the most important thing to you there will be tradeoffs for compatibility.

Mother Fussbudget

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Re: New reader/follower looking for overall financial advice/guidance
« Reply #9 on: October 03, 2016, 05:55:09 PM »
Welcome - you're taking the right steps that most of us wish *WE* had taken at your age - by seeking out advice and information. 

As Bracken_Joy said, follow MDM's advice on 'Investing Order'.  As for 'Investing Fundamentals' and 'What To Invest In', read JHCollins' "Stock Series"

Again, Welcome!

jerseyboy

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Re: New reader/follower looking for overall financial advice/guidance
« Reply #10 on: October 15, 2016, 11:16:20 AM »
Thanks for the input Mozar, you brought up some very good points especially as the 20s pass the amount of quality girls out there starts dwindling!

Thanks for the welcome Fussbudget, I'll start up the Stock Series reading sessions in the near future.

I hope everyone enjoys this Saturday and Sunday!  I will be posting up a new thread with a detailed case study sometime soon.