I’m 25 years old and by all objective standards, doing well in life. I have no kids, live alone, and earn a salary of 92,000/year. I have several goals that I’d like to accomplish over the next few years, including: get out of debt (quickly if it makes good financial sense), max out my 401k contribution, buy one (eventually several) long-term hold rental investment properties, and continue to invest in retirement (Roth, Vangaurd mutual funds, etc…). Ultimately, I’d like to reach financial independence by age 40.
I’d appreciate any advice you can offer on how I can continue to build my stash.
I also have an immediate dilemma. Do I sell my company stock (47k, 25% YTD growth) and immediately pay off my student loans so that I can begin investing more into retirement and house savings fund, or do I continue to make monthly payments on my debt? I suspect that I will continue to squeeze my spending to make larger monthly payments (specifically looking at the car payment here), but realize it may take me a couple more years to do so.
(UPDATE - CORRESPONDS TO CHANGES IN RED BELOW) Thanks to the awesome advice I received on this forum, I've paid off a huge chunk of debt over the last couple of weeks after consulting a CPA (I selected stocks with very little capital gain). I'm also actively looking to sell my Jeep Cherokee and buy an older, used model car. Still debating on model/year so I'd greatly appreciate advice.
While I've made excellent strides to pay down my high interest debt, I'm still debating what to do next. Here's what I'm considering: Maxing out my 401k by increasing my contribution to ~35% by end of year, sell additional stock to continue to pay off low interest debt, or increase my cash reserves to save for a down payment on a rental property. I'm guessing that all are viable options, but still debating what is best or if there are better options out there (i.e. other investments, max HSA, max Roth, etc...). I'd appreciate any suggestions and also recommendations to further cut my expenses.
Thanks for the help!
Monthly Take Home Income: 4,808.82
Gross Pay: 7,666.67
Taxes: -1850.84
Allowances: 0
Benefits (Dental, medical, vision): -87.00
401k: -920
Take-home Pay: 4,808.82
Monthly Expenses: 2786.98 2,314.59
Rent: 950.00
Utilities (Electric + Water): 100
Car: 656.98
- Loan: 388.37
- Insurance: 118.61
- Gas: 150
Groceries: $200
Student Loans: 589.20 116.81
- Fed Sub & Unsub: 142.98 116.81
- Parent Plus: 446.22 $0 :)
Internet (no cable or subscriptions): $50
Cell Phone: $40
Other discretionary: $300
Assets: 55,570
Checking: 10,143
Savings: 7,182
401k: 21,245 (Currently contributing 12% w/ company match of 2%)
Company Stock: 47,000 17,000 – liquid, taxes already paid. I have 148,623 in unvested company stock. These vests will occur regularly, every 6 months. Currently growing at 25% YTD. These are taxed as income when they vest, but any incremental gains are subject to capital gains tax.
Liabilities: 23,681
Student Loans: $8,774
- Federal Subsidized 1 – 4,210 @ 3.61% Interest
- Federal Subsidized 2 – 3,003 @ 3.15% Interest
- Federal Unsubsidized 1 – 1,561 @ 3.61% Interest
- Federal Unsubsidized 2 – 1,782 @ 6.55% Interest
- Parent Plus 1 – 14,439 @ 7.65% Interest
- Parent Plus 2 – 13,385 @ 6.16% Interest
Car: 14,907 @ 5.49% Interest