Hello all! I am 26, have recently graduated law school, and am fortunate to have a job. Despite scholarships, I graduated with a large amount of student debt. I also lived above my means in a very expensive city while a graduate student. I now wish to repent and live responsibly, but need this forum's help formulating a plan.
I'm doing some things right, but I'm doing many things very wrong. I would love to be able to knock my debt out as quickly as possible, but I am worried that:
1. I need to save money for a house/retirement/children/etc. and I will lose out on time and compounding interest if I delay putting money in a savings account/401(k)/Roth IRA while I am eligible;
2. If I save/invest my money, and I lose my job, then it is there to withdraw, even if at a penalty. If I pay my loans off instead, I will have nothing to show for my hard work (the student loans can always be forgiven after 25 years in the absolute worst case scenario that I lose my job and can't get a similar salary elsewhere and am forced to go on income based repayment);
Income: I net around $4700 a month. I started working only two months ago. There are lock-step raises every year, and a potential for an annual bonus if I bust my ass.
Assets:
Around $2,200 in a checking account, already spoken for in my monthly budget for November.
$1,000 in a savings account which I have designated my Emergency Fund.
Old Japanese sedan that I bought used for $2500, likely worth around that.
A motorcycle worth $11,200 according to KBB, but I doubt I could get more than $9,000 on the private market for it. I am trying to sell it.
Liabilities:
$4,476.25 - 0% - old Credit Card Debt that is at 0% for 11 more months.
$8,315.85 - 6.99% - Motorcycle Loan
$16,641.19 - 7.875% - Private Student Loan
$118,571.43 - 3/4 of it is 6.8%, 1/4 is at 7.9% (enrolled in auto debit so I get a .25% reduction) - Federal Student Loans
Current monthly expenses:
$1395.74 - Federal Student Loans (designed to be 10 year repayment, could be reduced with IBR/Consolidation, etc.)
$0.00 - Private Student Loan - I am not sure what the payment will be, but it will start in a few months
$174.21 - Motorcycle Loan
$111 - Credit Card Minimum payment.
$57 - Health Insurance
$107.50 - Crossfit Gym
$9.99 - Spotify music service
$27.50 - Motorcycle insurance
$37.50 - Car insurance
$4.99 - Rouxbe membership fee (online cooking school)
$60 - fuel
$22 - haircut
$200 - work clothing (I work at a conservative law firm, I am required to wear a suit every single day. I put away $200 a month to save up for suits to build a wardrobe. I currently own only three and they are old and look like shit. Looking the part is important in this career and so this is an important part of my budget).
$25 - dry cleaning
$400 - groceries
$200 - dining out
$20 - misc. recreation and leisure with the gf (movie, etc.)
$20 - donations
$50 - I put away $50 dollars a month towards inevitable car repairs/service
$250 - I put away $250 a month towards travel because I have never been back to my birth country since leaving as a refugee in 1994 and I am committed to visit it in 2014. However, my debt is making me rethink this.
I don't pay rent anywhere because I am living in my parent's basement. My employer pays for my cell phone.
I know the obvious next moves: sell the bike, get rid of the bike loan and insurance, stop dining out, forget about a trip to my birth country, get rid of the crossfit gym, and pay off my debt.
However, as I stated in the beginning, I don't know anything about saving for retirement or a house and whether I should be doing that at the same time as paying off my debt so as not to lose out on Roth IRA benefits while I am eligible. Once I am eligible, I plan on maxing out my employer's matching to 401(k). Other than that, any input would be appreciated. Do I focus on debt first and foremost? Do I max out annual Roth IRA limits, and then focus on debt?
Thank you all!