Hi everyone,
Here's where I started about 15 months ago:
https://forum.mrmoneymustache.com/case-studies/case-study-nearly-35-moderate-debt-practically-no-savings/msg1617616/#msg1617616I'm happy to report that here's where I'm at now:
Credit card debt: $0
Emergency fund: $5,000
401k: Have been contributing between 5-10%; balance is up to $8,200
Monthly expenses: holding steady at $1,975-2,000 per month
Overall, it's felt great to be free of credit card debt, build an okay EF, and ensure I'm prioritizing 401k contributions. On the downside, I haven't touched my student loan ($41,000) other than paying about $50 above the monthly minimum, so this is still an area of concern. However, bigger picture: after searching for a new job for the last several months, I received an excellent offer that will increase my salary from $53,000 to $78,000. I'm not eligible for a bonus this year, but will be in 2019. The target bonus would be somewhere around $10,000. I have a week off before my new job starts on 10/29. Until then, I'm trying to game plan and devise a strategy that will allow me to speed up my financial rebuild.
In terms of income planning for the new job, based on my math, I should be netting about $3,700 per month after taxes, benefit deductions, commuter expenses, and a projected 8% 401k deduction. That leaves me with somewhere around $1,700 to throw at additional savings, retirement needs, and debt. In thinking about ways to allocate this, I thought I might spend my first few months allocating $1,000 to my EF until it reaches $10,000. I'd use an additional $450 for Traditional IRA contributions and continue doing that year round. The extra would go towards my loan. After I hit $10,000 in the EF, I could potentially throw that $1,000 per month at the student loan. The other option would be to go 50/50 on paying down the loan and increasing my 401k contribution. The one variable is added monthly expenses, specifically housing. I'm currently only spending $700 per month on rent (girlfriend and I pay $1,400 per month which we split evenly). With the new job, my girlfriend is already mentioning that she'd like me to contribute more, as her income is relatively low. She's asked that I increase my share to $900. If I do so, I'd still have ~$1,500 after expenses. The other consideration, of course, is possibly moving to another place or closer to my new job, where rents will be higher. I'd like to keep my rent down for as long as possible, but understand that it may not be entirely possible. Still, would be curious to know what you think is a realistic jump in rent that would still allow me to be in good position. More importantly, what would be your updated strategy for savings, retirement, and student loan debt? I want to hit the ground running and not squander the opportunity in front of me.
Few other details of importance:
- new company's 401k plan matches 50% up to 6%
- contributes 2.5% of bi-weekly base salary into a pension plan
- in addition to bonus, typically makes an additional yearly 1-4% contribution into 401k at same time bonus is paid out