I’m 27 years old, living in Portland, Oregon, filing single, with no human dependents (just a dog). I have some loan debt, but I'm not at all underwater. My main problem is that I'm not saving as much as I would like, or rather, I'm not making the best use of the money I do have available. And that's not a bad problem to have, relatively speaking.
Gross Salary:
- Annual: $96,000
- Monthly: $8,000
Pre-tax deductions (per month):
- 401k: $480 (getting 50% match)
- HSA: $200 (just dropped from $400/month to not over-contribute, but still won’t quite max)
- Medical: $100
- Dental/Vision: $20
Total: $800
Taxes: (per month):
- Federal: $1178
- Medicare: $108
- Social Security: $464
- State: $512
Total: $2,262
Monthly take-home: $4,938
Normal living expenses:
- Rent: $1,275
- Utilities: ~$45
- Internet: $65
- Phone: ~$35
- Dog food: ~$25 (actually about $40 every other month)
- Dog wellness plan: $43 (I won’t be renewing next year)
- Gym: $12 (thanks to $65 employer reimbursement)
- Groceries: ~$225
- Car insurance: $91
- Gas: ~$50
- Renter’s insurance: $17
- Haircut: $25
- Misc/household: ~$100 (includes things like expensive apartment laundry machines, a recent trip to Fedex, etc.)
- “Work food” (basically coffee, the odd lunch, etc.): $115
- “Just for fun”: $200 (dinners/outings with girlfriend mostly)
- Subscriptions (Spotify, etc.): $24
Total: $2347 (approximately)
Monthly minimum debt expenses (details below): $451
Monthly surplus: $2,140
Assets:
- 401k: $16,247
- Acorns: $17 (laughable, but it seemed harmless enough to sign up)
- Cash (Barclays/BofA checking): $5,609
- HSA: $795 (turns out I’ll have a monthly $5 fee until it reaches $5,500 or so)
Total: $22,668
Liabilities:
- Student loan #1: $6,892 @ 6.55%
- Student loan #2: $7,094 @ 3.61%
- Not sure on individual minimums, but collective is $230
- Car: $12,248 | Min: $221 (just refinanced to reduce from $380/month)
- IRS: $3671 (surprise new addition—no monthly payment, at least not yet)
Total: $29,905
Net worth: -$7,237
This is looking at spending for a typical month, not including a few larger one-off/emergency purchases I’ve made recently, which will thankfully stop going forward. I know there are a couple of obvious places to trim fat already (Sup, car payment?). “Work food”, for example, is due to me working remotely and wanting to get out of my apartment so I don’t go crazy, so I usually end up in a cafe. It should be easy enough to go somewhere I can bring my own coffee and pack a lunch instead, as long as there's wifi. “Just for fun”, as it says, right now is mostly for outings with my girlfriend, but she’s soon going to be moving out-of-state, so that will likely be trimmed back a bit automatically. We’re still staying together, but coincidentally she’s going to school in the city where my company is based, so I’ll have quarterly flights paid for, and I can extend my stays however it makes sense—so it might average out to roughly the same expense. And yeah, of course stuff like subscriptions can be tossed out at any time. I’m also warming up to the idea of getting a place with a roommate once my current lease is up next March, especially if my brother who’s likely moving to the area is open to it.
The IRS debt just came as a surprise this past week, because I somehow missed that self-employment tax wasn’t accounted for when I filed last year (now thankfully w-2). It’s a real bummer because I feel like I was just starting to pick up steam on my debt repayment/savings allocations, but now I need to account for that. My current plan for doing so:
1. Pay IRS debt immediately with cash (action required by August 2nd, no matter what)
2. Pay minimum on other debts (currently allocating $660 extra toward student loans, paid ahead until May 2018)
3. Build up proper emergency fund by pouring monthly surplus into Barclays savings until it reaches ~$10,000
4. Return to aggressive debt repayment, still allocating ~$1000/month to savings
As far as a longer-term plan goes: I definitely want to retire ASAP. It looks like with current spending/saving habits I can conservatively expect no more than 10-15 years until then. I don’t quite know what to plan for when it comes to ER spending (I feel like I'd be getting ahead of myself at the moment), but it’s currently hard to imagine my expenses increasing that much, unless of course I have kids (and in that case, I hope to still keep the increase to a minimum by having solid habits ingrained by then).
I can expect fairly consistent raises at my current job (somewhere in the area of 3-5%/year). I’m also not accounting for it or banking on it at all, but my company just switched to a quarterly profit sharing model, which should be paid out for the first time in October, assuming there’s anything to pay out. Best case scenario, that will put anywhere from a few hundred to a couple thousand in my pocket per quarter (minus taxes), which I plan to immediately dump into debts.
For the time being, I still find myself questioning how best to allocate the monthly "surplus", so most of the time a big chunk of it ends up sitting in my checking account (available to pay off credit card that’s used for everything). I’m definitely debt averse, and really want to get to rid of what I currently owe, but at the same time, I also want to plan for travel, and I want to buy a house eventually (also hoping for a rental property or two), or I think about buying index funds, or even just contributing more to my 401k. I know I want to build up my emergency fund first, but what’s the best plan of action after that?
Thanks everyone!