So how can I get my money working best for me??
Life Situation: 25, Single, 0 dependents, Metro area, Tennessee USA.
Gross Salary/Wages: $54,000 [What is your monthly Net?]
Taxes: Standard
Current expenses per month:
$500 for rent
$60 for utilities and internet
$30 for phone
$55 for all health insurance
$100 for gas
$300 for groceries
$125 for gym
$200 fun fund, eating out etc.
$1,370 spent per month
So Monthly Net - 1370 = What?
This will let us know what your monthly save is
Assets:
Money in the bank: $20,000
Car: Kelly Blue Book is like $650, plan on driving it into the ground
Currently have $2,200 in a traditional IRA
Where is the 401K that you are contributing to for the 5% match?
I'd like to have $12,500 for a down payment on a house (life partner providing other half) and $7,500 for a car though I dont know when ill need this. Along with safety net in bank.
So in other words, you want to know what to do with your $20,000 while saving an additional $20,000 for down payment and car.
If you are spending $1,370 per month, that is $16,000 a year. Even if taxes, health insurance and current 401K contribution are 20% of your gross, that means you're saving almost $30,000 a year, or $2500 a month?
I think that your options are pretty straightforward for the first two steps. First, get a Roth IRA to start saving $5,500 a year. This is post tax money that doesn't get taxed on withdrawal. Bonus, if you want, you can withdraw the principal for a home purchase in the future as a safety net. I'd be comfortable with you even doing the 2018 and 2019 both immediately in January to get money in the Roth, and then replenish the safety net if that makes you dip below 20K.
Second is max out your 401K. If you're running an excess of $2500 a month, you can max your 401k for roughly $1200 in post tax dollars, not even counting that you already are putting in some case. That still leaves you with over $1000 a month to save.
That means that if your horizon for a car and home purchase, at the same time, is 20 months away, you're set. Put aside some cash to get a lawyer to draw up a joint tenant cohabitation agreement for when you purchase the home if you are not married beforehand, since that ounce of prevention is worth the pound of pain.
The biggest question regarding the home purchase is that since you just now got into the 'real world' job, is this location the final location? If you don't have objective reasons to stay where you're staying, make sure you have a year or two under your belt in your career and career location before making that commitment.
If you do nothing else but max 401K and Roth, and loosen the purse strings to a 20K spend, you'll be FIRED in 13 years. That's not putting the extra 12K a year you have left over, or any raises towards a brokerage savings account that could easily get you done in 9 years.