I wasn’t sure which place to post this in so if it should be moved let me know. This is my first time posting!
Life situation: Single, I rent a house with 3 roommates in Saint Paul, MN and work in downtown Minneapolis as a data analyst, no dependents, and I’m 25
Gross salary/wages: $52,000 a year
Paycheck deductions:
Transit: $30.35 (I commute ~8 miles to work either on public transit or my bike)
Federal Income Tax: $228.52
Social Security: $122.12
Medicare: $28.56
MN Income Tax: $94.06
Roth 401k: $100.00 (this is 5%, the minimum required to get the company 4% match)
Net bi-weekly take-home (after deductions): $1396.39
Total: $2792.78/month
Other income:
I also get another $1000 a year for coaching a men’s water polo team for 6 weeks in the Fall. I don’t really factor that into the equation much, but I’ll just leave it here anyways. As a side note, because of this 6 week job, I get access to a gym all year long!
Current monthly expenses:
To get the below breakdown, I averaged my spending in each area over the past 8 months
Rent: $375
Utilities (internet, heat, water, electricity, trash removal): $55
Car/renters insurance: $55
Gas: $30
Cash withdrawal: $70
Grocery: $70
Eating/drinking out: $140 (Feel free to roast me for this one but trust me, I know)
Shopping: $40
Activities: $200
Miscellaneous: $62
Total spending: $1,097
I’ll explain my spending here a bit.
Cash withdrawal: usually much, much lower because I pay for everything on a cash back credit card, but I withdrew $500 while on vacation in Greece this summer
Shopping: includes house supplies, things for bike maintenance, etc. Basically, any shopping that is not food or drinks
Activities: includes non-recurring events like pro sports games, concerts, membership to the science museum, going to the movies, etc. but mostly recurring expenses like soccer and water polo league fees. Unfortunately you can’t really play organized sports without a league fee and I definitely don’t want to stop playing.
Miscellaneous: includes one-off spending, like oil changes, co-pays for dentist/doctors visits, 2 haircuts a year, etc.
I’m recognize that I am very lucky in that being under 26 means I am still on my parents’ health and dental plans. They also currently still pay my cell phone bill on their family plan, even though I’ve offered to start paying my portion numerous time over the last year. Once they agree to start letting me pay, it’ll be $30-$40/month. Also, once I turn 26 this time next year, I will be using my company's pre-tax insurance plans, but I don’t have all the details on that at the moment.
Assets:
Cash: $7,600
1999 Ford Escort: bought for $1200 a year ago
Road bike: worth $800 (bought for $100, thanks to boyfriend owning a used sporting goods store)
Vanguard personal Roth IRA: $1000
Liabilities:
Student loans: $1,260.08, interest rate @ 3.150%
I will be paying off my last student loan this week (!!!!) which means I will be completely out of debt!
Comments:
I traveled around the world for a year after I graduated from college in May of 2015, and since coming back and starting work full time in September of 2016, I’ve focused pretty much all my extra money on my student loans. I know there is some debate about loan interest rate % vs. possible investment % gain (my loan %s were not above 4.4%) however, I also know myself and I didn’t want debt hanging over my head so that’s why my main focus has been my loans. Basically, because these are paid off, I’m going to have a fairly decent amount of money every month that I’m not sure what to do with and I’m very interested in the whole idea of FIRE.
I know I didn’t break down my spending in super detail, and I know there are some places I can decrease spending, especially eating/drinking out. I'm working on it, and now that I recently moved it will be easier. I don't even want to explain what my living situation was up until a month ago. But, if I’m being honest, I’m not super concerned since I save a very solid chuck of my income each month already.
My main question is:
What would you do with the extra 50-65% of income each month if you were in my situation with no debt?
Related questions:
-Which is more important, maxing out my IRA or contributing a higher percentage to my 401k? My thought had been to keep contributing the minimum on my 401k until I’ve maxed out my IRA each year.
-I know that I should/want to start a general investing account. I would do this through Vanguard as well. In relation to the above question, is this account more or less important than my retirement accounts?
-I also want to start saving for a future house downpayment (hopefully buying in the next few years once the Twin Cities market takes a turnaround), but don’t want the money just sitting there in a bank savings account not gaining any interest either. I’ve never had to save up that much before, so I’m not sure where to start. What is a good plan for this kind of saving?
Any help or advice is much appreciated, thanks in advance!