Possible job change soon, please help with advice

[akwaddy]

Hi everyone, and thank you for taking the time to read my post. I've read many studies and have browsed the forum for a couple of years now. I'd like to get some other opinions on my current situation to see what you think would be best for someone like me and the why behind it. Let's get right in.

Me/Current job
25 years old
$45,000 salary
No kids (1 fur baby)
Bank job, hopefully transitioning to Accounting soon

Assets
$6500 savings
$20,000ish 401k
$14,000ish Roth IRA
Car - worth around $11-12k

I have around $200-400 in my bill-paying checking account as well as my spending checking account as a buffer, but will occasionally make additional payments and/or savings with excess to maintain this level of $200-400 above my normal transaction volume/balances.

(I also use Acorns and an app called Dobot for automated savings and have around $500 in each. I've used these casually and don't pay much attention to them. They are essentially automated savings apps; Acorns uses round-ups from card transactions, Dobot does a 12 month look back based on where you are and analyzes how much to move into the account)

Debts
Student Loans - $22k (will go up from still being full-time and continuing education)
Car loan - $4500 @ 2%
Credit card - pay off monthly and carry no balances, roughly pay $300-350/month to pay it off (cell phone bill, utilities, Spotify, gym membership is charged every month)

Monthly Expenses
Rent - $710
Car - $360 (I usually add more on top to help expedite the payoff)
Phone Bill - $92 (this consists of my cell phone with AT&T as well as the wifi with AT&T)
Utilities - $60-85 (Midwest has fluctuating weather right now, and I keep it to where I'm comfortable)
Spotify ($10)
Gym - $30 (very active, I'm a personal trainer as well...this is also currently suspended due to COVID)
Food - $200-$225/month (I never eat out, meal-prep all of my food, and prepare everything not prepped at home)

Absolute emergency options
1) Savings
2) CC's, around $60k in limits across my 5 I have ($0 balances)
3) Unsecured personal line of credit of $14k @ currently 8.75% ($0 balance)

I'm looking at transitioning to the Accounting field as that is my major and I have no experience. My main concern is potentially a reduction in my income for an entry-level position and/or a job loss should COVID continue/get worse and still have debt hanging over me. My main goal is to pay my car off by end of year, and I will without being any more aggressive, as well as have $10k in savings. With the car loan being gone, this would give me closer to 12 months of expenses in cash and I feel that would suffice for someone like me from a comfort level, maybe it's overkill/overpreparedness, but I think what's happening right now is a good validator for me personally.

Do you think it is wise to pay my car off early, NOW? Or, would you continue paying a set amount so that when JAN 1, 2021 rolls around, the car note is gone? And basically any extra money, funnel to my savings account? Should I continue halting my ROTH IRA contributions until the loan is gone and I've reached my savings goal, and then resuming with a goal of maxing out by next years deadline? I will still continue to contribute to my 401k, I get a 6% match.

I recently signed up with Doordash, but have yet to make a delivery just yet. I've considered driving only weekends at night for a few months to take advantage of peak times and use this money ONLY for debt. Also, there is potential that the CPA I'm meeting with soon may work out something on a part-time basis, and if that works out, I will use that money probably split between 20% savings, 80% car loan. Is that wise? Focus on just one?

For the student loans, that will be my only debt after the car is gone. Do you think I should begin making payments on those? My goal is to become a CPA with my education, so I imagine that the higher income will allow me, at that time, to expedite paying those off. I know mathematically, a depreciating asset is never something to finance. Also, I have considered selling my car and buying something cheaper. The car is my "thing", maybe dumb in most people's view, but it is what it is. For what I would be looking at in a price range of $4-7k, I cannot find too many I really enjoy. I've had this car since 6k miles and it's up to around 66k, so it is clean as a whistle in terms of maintenance and being mechanically sound. It's a 2014.

Once the car is paid and savings goal met, would you begin paying down the student loans, or investing, and with the higher income down the road (2-3 years), make it a focus, at that time, to dedicate maybe 1-2 years and eliminate it? I have no intention of buying a home right now or in the next 3 years as I do not know where I want to be long-term, so no plans of saving for a down payment, although I will still continually to add to savings, albeit smaller amounts, so maybe that will naturally happen through savings.

Excuse my thoughts being all over but I do appreciate any feedback. I'm sure there are things I've left out to help with answering, so please post and I will respond.

[akwaddy]

Hi Peter, I appreciate the advice. I'm hoping, really, maybe this can begin as a part time job aside from my primary one and I can grow into a full time role. This was actually a referral from someone in my network that T'd up this opportunity. On Indeed and other sites, a lot of Accounting jobs require a year or two of Bookkeeping, Accounts Receivables/Payables, Payroll, etc....which I do not have. I did start taking Quickbooks Online training because it's free to learn some bookkeeping but I haven't used a lick of anything in the real world, so who knows.

[Dicey]

Don't accelerate the car payoff when the loan is at 2%. Save that money for an EF/Transition fund.

Start with the Order of Investment Sticky:

https://forum.mrmoneymustache.com/investor-alley/investment-order/

And fund your damn Roth! You can never get skipped years back. The earlier you invest, the longer your money has time to grow. Therefore, you will need to invest fewer actual dollars to achieve your goals. It's cool when your money makes more money that you do.

Oh, and you deserve a pat on the back. You're made a great start. Twenty-five with almost a year's gross salary invested is excellent! It took me until I was thirty to have a year's salary in the bank!

[Joel]

Pursuing an accounting degree, you should be considering public accounting after you graduate. Get involved with beta alpha psi or whatever accounting organization exists at your school.

[marty998]

I'd advise against Doordash.. .I assume this is one of those shitty delivery apps that screw merchants by taking an outrageous cut of the order value, and their drivers but not giving them any employment rights?

The wear and tear on your car plus petrol costs plus it potentially may void your insurance if you're driving for a commercial purpose.... it's likely going to be uneconomic for you to be doing this. Focus your energies on your accounting career and making the best you can of that.

If you get the accounting job there shouldn't be a need to do the low value hustles. You can then spend the extra time living life and indulging in your hobbies and interests.

[akwaddy]

I appreciate all of the advice! I met with a CPA today and he is going to introduce me to the CEO and we're going to have lunch soon most likely. From the sounds of it, nothing may immediately come from it as they are really focused on hiring those with a 4 year degree, but are open to supplement their Bookkeeping side, which I am taking a Quickbooks online course through Quickbooks as it is free. So, something could come from that, but if not, I still will walk away with new ideas and a refreshed motivation to get more focused on what skills are desirable.

So, for now, my money moves will continue to build my savings and work towards eliminating my car by the end of the year or early 2021. Both of my initial goals can be accomplished, but if I have some time before I actually make a switch, I will most likely prioritize my car first, as my current employment and income is 100% stable.

[Laura33]

First, great start!  Sure, the car isn't ideal.  But you seem to have done a good job at keeping your overall expenses low and saving a fair bit.  I get the sense that you have a lot of hustle and drive in you, and that will serve you very well long-term.  Immediate thoughts:

Listen to @Dicey.  Paying off debt that's at 2% is not the best use of your money, either long-term or short-term.  Long-term, you need to have your money invested.  Short-term, if the shit hits the fan and the jobs all go away and you can't make the payments, they can repossess your car just as easily when it's 98% paid off as when it's 2% paid off.  Since many things are in flux right now, I'd suggest taking the extra that you're paying off now and putting it in an EF.  Then, if you get to the end of the year and everything's stable and maybe you have that new accounting job, you can take a chunk of the EF and pay off the car all at once. 

Stop the DoorDash stuff.  There are people out there who need every penny they can get to cover their costs and pay down debts, who have to chase any source of available income.  That's not you.  You have more than ample income to cover your current expenses.  So you don't have to chase whatever current dollar you can find; you can afford to do whatever you need to to maximize your long-term opportunities and income.  Right now, it sounds like your best option is accounting.  So why not take the next year and throw yourself into getting that experience that you need to qualify for those next jobs?  You're already doing that with Quickbooks and looking at this possible job.  Devote yourself to that.  Your most valuable asset right now is you, and the best investment you can make at this point in your life is whatever it takes to improve your skills and experience and thus increase the value of that asset.  You can afford to think long-term and strategically, so do so.

Stop fixating on debt and start focusing on net worth.  This is how you win long-term.  Yes, it is important to keep your carrying costs low, particularly where you might lose all or part of your income.  That's why I started with the EF; you always need to protect yourself against your downside risks first.  But long-term, if you're going to be as successful as you can, you need to focus on maximizing your net worth.  And often that means NOT paying off low-interest debt.  Yes, it will be great to have that $4500 monkey off your back; that will improve your net worth by $4500.  But you're a finance guy, so do the math:  what's your net worth if you pay the minimum on the loan and invest the rest in the market? 

What you are really missing here is the power of compounding, and at your age, that's the single-most important lesson you can learn.  I know you understand it intellectually, but you really need to feel it, and you need to control your emotional reactions (no debt!) to make the financially more prudent choice.  The thing is, compounding isn't just money -- it's time.  Rule of 72 says that if you get around a 7% return, your investments will double every 10 years.  So the more you can front-load your retirement investing, the faster your 'stache will grow, and the sooner you will reach FI and be in control of your life.  And that means that once you have your EF covered, the most important thing you can do is maximize your tax-sheltered retirement investments.  Added bonus of a Roth being, of course, that it can serve for both.

[akwaddy]

Hi everyone! Life update:

I have accepted a new job with the accounting firm and will be working in the Advisory Services side, which I am absolutely ecstatic about!
I also received my final commission from my job, and have gone ahead and axed my car loan, and brought my savings to right around $8100 now. I'm gonna be rolling my 401k to my IRA, and will have to do some more research on what to put it into.

I'm pretty stoked to get going!!

[Kem]

Very nice on the job.

Generally debt under 5%....you are much better setting extra cash into an emergency fund and then investing.   Spilled milk here though.

Short answer, 100% VTI.  Low expense total us market etf run by vanguard.  (read simple path to wealth, or Pete's blog)
 
You can go with more expensive funds (if you want lower realized returns), 'free' funds (if you don't mind unproven trackers), or more complex scenarios (maybe add x% to the vxus international fund?).  Stick away from speculation and churning

[bloodaxe]

One idea with DoorDash:

If your area is bike friendly you can do deliveries using a bike. You would get paid to exercise and could do away with your gym membership.