After discovering MMM over the summer and making some initial changes in how I think about money, I figured it was time to join the forum and get some guidance on the next steps.
I’m a 26 years old single guy with a master’s degree in the humanities, and have been working for a year and a half as an admissions counselor at a selective liberal arts college. It's a fun job with lots of opportunities to travel, but it's not something I'm likely going to be doing for too much longer, so I'm trying to figure out how best to position myself financially to move forward. My gross salary is currently $35,000/year.
Monthly Take Home Pay: $1,850
Monthly Expenses
Groceries $150
Prepaid cell $10
Electricity $40
Gas Heat $44 *
Internet $45
Haircut $14
Laundry $6
Rent $650
Avg car maint. $7
Avg car taxes/fees $3
Fuel $70 **
Car Insurance $82
Includes:
-bodily injury to others 20k/40k
-optional injury to others 100k/300k
-damage to property 100k
-personal injury protection
-bodily injury from uninsured 100k/300k
-bodily injury from underinsured 100k/300k
-comprehensive deductible, $300
-collision deductible, $300
-towing and labor
-rental reimbursement 30/day max 900
-medical up to 10k/person
AAA memb. $7
Renter’s Insur. $10
Life Insur. (20k) $10
Student Loans $119 (see below)
SUBTOTAL: -$1,267/month
Debts
Student Loans $8,600 at 6%
SUBTOTAL: -$8,600
Assets
2002 Saturn SL1, owned outright $2,100
TIAA-CREF retirement acct*** $5,500
Cash, at 1.5% in credit union $8,700
H.S.A. from previous job $942
Whole Life Insurance cash value $1,300
SUBTOTAL: $18,542
Question #1: Does any part of the car insurance coverage look ridiculous, given the value and age of the car? What other cuts would you suggest? Commute to work is 10 miles/day roundtrip. Rent for apartments nearer to employer is usually $200-300 more per month (my current landlord hasn't raised rent on anyone in years, even though he could probably get closer to $900/month for the place where I'm currently living if he rented it at a market rate). I thought about bicycling to work, but taking a route without a major highway would double the distance, and I don't think I'm quite there yet physically (though I'd like to be!).
Question #2: What’s the best use for the $8,600 currently sitting in my checking account at 1.5%? Over the past year, I’ve paid down about $7,000 in student loans, starting with the ones that were 7% and 8%, so I was considering paying the rest of the loans off as quickly as possible. However, it’s likely that in the next year and a half to three years, I’ll probably want to make the switch to working as an independent college consultant/tutor, and so the idea of having enough cash on hand to cover expenses while I build up a client base is attractive as well. If I did that, I would likely be moving closer to family, where rent for a comparable apartment would be closer to $550/month.
Question #3: Speaking of which, what sorts of additional expenses should I be planning for if I do decide to start a consulting business in the next few years? What books would you recommend for learning more about the legal and accounting aspects of starting a small business? When it comes to health insurance, my state hasn’t expanded Medicaid as part of the ACA, and it appears that subsidies don’t kick in until you’re making a certain amount of money above the poverty line. If I don’t have significant income for the first few months (or more) of the business, what are my health insurance options?
Thanks in advance!
*utility expenses are for December. In the summers, electric is closer to 35, gas is closer to 18.
**I drive regularly for work and get reimbursed at $0.55/mile, which helps to offset fuel and maintenance costs somewhat, though it does mean the car has 95k miles on it.
***I’m currently contributing 5% of each paycheck, pretax, to VIFSX; employer will begin matching 10% in March.