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 Post subject: Trying to start out right
PostPosted: Tue Feb 26, 2008 10:51 pm 

Joined: Fri Feb 15, 2008 4:11 pm
Posts: 71
I'm 22, graduated college last June, and entered the work force in July. Between that time in this, I've taken quite an interest in Personal Finance and am thinking just as much as the future as I am about now each and every day. I'm extremely lucky in the event that I graduated college entirely debt free. (I grew up in a family that preached saving and investing -- my grandpa opened a small fund at a ridiculous 18% interest when I was born, hello tuition).

I found myself a gig in IT Consulting, a great growing company with a decent starting rate ($47,000/year with solid benefits), and opportunity to grow my career. I like my job quite a bit, I like the company I work for quite a bit, and I like the ability to learn something new, everyday. I told myself that I would live quite frugally for a year and really decide where my money should and could go before I dig myself into a hole that I don't want to get into.

When my last roommate said he was transferring to a different school, instead of getting my own place that I knew I could afford (but not save that much -- I need to feel like I am BUILDING for something), I took a different friend up on an offer, to rent a room in their house for a mere 450$/mo with Utilities split 5 ways. This hasn't been my ideal living situation, but it's been fun and really allowed me to get things moving on the right foot financially and to learn about what I can do with my money. I have a lease here until August, then I will move on and probably pay near double for a place of my own. This will be difficult to adjust to.

I drive an older car (93 Civic) that is cheap on insurance, great on gas, and is entirely paid off, so I don't have to worry about a car payment. A new (well, gently used -- I'll let somebody else take that deprecation hit) car will be in my future in the next few years, but I am hoping to drive the Civ until she can't go on no more. I've been doing a lot of research and building my credit (I graduated with next to nothing) so when the day comes I should be in good shape.

I started funding my 401(k) right off the bat: 7%. I told myself when my employee contribution of 3% hit that would give me a solid 10% and that would be good for a while... when I thought my employee match started at 6 months. Turns out, it didn't, and it's 12 months instead (so, it'll start in July). This made me look into Roth IRAs (This site was so useful, thank you!), so I threw my tax return and some savings to max out 2007 in one shot and have setup automatic monthly contributions for 2008 instead of funding my 401(k). I will resume funding the 401(k) enough to get the full employer match as soon as that kicks in. The ability to use my Roth IRA as a means to buy a first house is enticing, although I will hope that it doesn't come to that, but it's good to have options, it doesn't appear as if I'll ever regret opening my Roth IRA, so I'm glad I've got the Roth going to let time work it's magic. I hope to fully fund my Roth IRA in 2008 as well as get maximum contribution from my employer on my 401(k).

I've made a budget and kept it, living well inside my means (I live on about half of what I make), and I've built a nice $9,000 cushion (ING Direct) on top of the ~$4,000 in my Roth IRA (Sharebuilder). I laugh at others my age who have their paycheck accounted for before it gets in their hands or have fallen thousands of dollars in debt due to frivolous spending. I've made some large purchases (new computer, Plasma TV), but these are my hobbies and bought quality and sought out good deals to enjoy them for years to come.

I hope to update this as time goes on as my career grows and big decisions dealing with money arise, as well as to read over my past thoughts to keep myself disciplined as I grow my career and life ahead. Now, to get that mid-year promotion...


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PostPosted: Tue Feb 26, 2008 11:23 pm 

Joined: Fri Feb 15, 2008 4:11 pm
Posts: 71
Current Post Tax and Health/Dental Insurance Premiums Monthly Income (February, 2008):
~$2500. Sometimes I work overtime (which pays me half 40-50 hours, time and a half 50+) allows me to make more.

Current Budget (February, 2008):
Rent: $450
Utilities: $100 (Allocated, better to budget high than to budget low)
Cell Phone: Corporate plan for minutes, additional fees of data plan and unlimited text messaging ($45 monthly) deducted from paycheck.
Food: $200 (Includes groceries and dining out)
Gas: $75. This has been the high amount for the several month history I've had. Recently, I've had a schedule that has allowed me to work from home two days a week and riding the bus to work (bus pas provided by employer) also allows me options to save more and avoid the hassle of traffic.
Car Insurance: $42. (250/6 months - Currently still on my Parents' insurance plan, need to shop around and get a few quotes before May when I open my own plan).
Roth IRA Contributions: $400

Total Current Budget: $867 for necessities. $400 for Roth IRA Contribution. Rest goes to Savings.

Current Credit Limit: $1300 (February, 2008). Paid by in full monthly.


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PostPosted: Wed Feb 27, 2008 5:50 am 
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Joined: Thu Apr 05, 2007 5:20 am
Posts: 515
Location: Birmingham, AL
You mention $4,000 in an IRA with Sharebuilder. Are you contributing every month and getting dinged for a $4 trade? If so, I would consider moving my investments elsewhere like Vanguard that have investment minimums, but don't ding you each time you invest.

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PostPosted: Wed Feb 27, 2008 9:06 am 

Joined: Fri Feb 15, 2008 4:11 pm
Posts: 71
Sharebuilder had a promotion where I got 7 free automatic investments. The original $4,000 used 4 of those in a few index funds and other stocks that I thought were good buys right now, and I'll be contributing $200 twice a month into the money market account.

What I'll probably do is just invest when the money is there and there's a larger amount, that is, maybe invest every 2-3 months when I hit $1000 or $1200 at a time rather than each 2 week period.

I still have a few more promotional trades to use, but yes, then they will cost 4$ at a time, but I figure every few months, that's not that big of a deal at all. The main thing that's important to me as I'm allocating a bit of every month to my retirement, not that "I'm putting it in the market right away!".... I want to get the most out of every commission spent.


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PostPosted: Fri Feb 29, 2008 8:07 pm 

Joined: Fri Feb 15, 2008 4:11 pm
Posts: 71
Great news! I found out I was promoted today! I'll find out the actual dollar amount next week, but it's always good to see!

I'm a bit held back this month as I just purchased new contacts, glasses, and I'll have to buy new tires for my car. No problems making these purchases as they'll last me for a few years and the glasses are discounted per insurance. After this bulge of expenses, I should have no problem saving even quicker now.


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PostPosted: Sat Mar 01, 2008 12:16 am 

Joined: Mon Apr 30, 2007 11:03 am
Posts: 298
Location: Michigan
Congratulations on the promotion!


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PostPosted: Mon Mar 03, 2008 8:26 am 

Joined: Tue Apr 17, 2007 9:34 am
Posts: 124
Location: Deep in the heart'a
Congrats Egaas!

Have you considered saving your raise? The last time I got a promotion, I kept my budget at the same level and set up an automatic withdrawal to move the amount of money that represented my raise (after tax) into an ING savings account. I don't miss the money because I didn't let it get absorbed into the budget. It's a nice way to build up money for investing!

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PostPosted: Mon Mar 03, 2008 3:27 pm 

Joined: Fri Feb 15, 2008 4:11 pm
Posts: 71
The raise has already caused me to contribute to my 401(k) again, before I get the first bigger paycheck. I'm contributing enough so I will get full match and will continue to fund my Roth IRA. It should be at right around 5,000 by the April 2009 for 2008 contributions.

I'll definitely be saving a large portion of my raise -- I don't anticipate living much more lavishly anytime soon, budget won't grow any because of the promotion for the mean time. Still saving hard for a car and a house, those are the big things I desire right now, and it's one paycheck at a time towards those guys.


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PostPosted: Thu Mar 06, 2008 3:45 pm 

Joined: Fri Feb 15, 2008 4:11 pm
Posts: 71
The good news just keeps on coming!

On top of my raise, each employee working on the project that I am working on got a 500$ bonus today! It's taxable, but still, I'll take what I can get.

Also, due to the promotion, I'm given more extended benefits than I had coming at my previous level. Extended benefits are used for work-life balance stuff, or tech gadgets, but I've got enough receipts around from the last 6 months that I can take this near 700 dollar difference and get that as income as well.

Next paycheck will be the next one with the raise on it and a good lump of extended benefits, so regardless of having to drop a large amount on glasses, contacts, and tires, a large chunk will still get moved into my savings.


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PostPosted: Sun Mar 23, 2008 7:06 pm 

Joined: Fri Feb 15, 2008 4:11 pm
Posts: 71
Sunday night is a good moment of downtime in my life where I'll sit down and get myself ready for the upcoming week. Generally this involves laundry or cleaning up around the house, but it's also a time where I check my online banking and remind myself what I am working for throughout the week. I figure it's also a good time for me to update the old Fiscal Fitness Journal.

I got paid on Friday, paid off the credit card in full (I use it for purchases for things like the grocery store, gas station, etc), wrote checks to my roommates for rent and utilities and moved $1,000 over to my ING savings account.

Here is where my balances stand:

Checking: $514.
Savings: $9746.

Roth IRA: $4304.
401(k): $1829.

My new monthly take-home income is $3378.14. This includes starting to deduct 3% of my paycheck into 401(k) again in anticipation of getting that fully matched come July when I hit my 1 year anniversary with my company.

When I really think about it, that is truly awesome, in that fact that I make about 3 times what I could live for comfortably in the lifestyle that I currently have. Changes are coming up ahead, and I've drifted a bit from my budget that I had set, but I still managed to move $1500 to my savings account this month (400 of that gets funneled through to my Roth IRA...), and anytime you can do that in a month you have to call it a big positive. Some of this spending was necessities that won't come up that often (new glasses and contacts: about 400$ even after getting re-reimbursed from insurance, and 100$ on 2 new tires for my car), but I am still spending too much on daily conveniences as lunch at work, and going to drinks and coffee with friends. However, this is a big part of my social life and entertainment, I don't do a whole lot of it. At the end of the month I intend to fully intend to add up all of my expenses for the month of March and really see where my money is going. I'm doing well, but I feel the need to really buckle down and do better.


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PostPosted: Mon Mar 24, 2008 7:08 am 

Joined: Sun Mar 16, 2008 6:53 pm
Posts: 76
Man, where were you when I graduated college?

I graduated in '06 in a similar situation- started working at a good job in July. Unfortunately, I took right to spending, and am only now realizing what could have been. Looking at the numbers in your accounts is definitely a motivating factor for me to clean it up!


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PostPosted: Wed Apr 23, 2008 11:05 pm 

Joined: Fri Feb 15, 2008 4:11 pm
Posts: 71
Got paid yesterday so it's snapshot time!

Had to put on new brakes and a new distributor this month in the car... unexpected costs of about $400 all told. My dad and I did the work ourselves so that somewhat helps, but it definitely hindered my ability to save as much as I would have liked. On my own car insurance plan now... in fact they offered a 10% discount to get Renter's insurance as well, which I've been meaning to do. All told it comes to 900$/12 months, which is more than I have been paying but it's not a total back breaker. Hoping to get another year out of my current car, then I think I and my credit will be ready get another one.

Just like last month, I still managed to put away 1500$ to ING. Been busy working and playing hard, eating far too many meals out instead of cooking at home, but that's just how life has been lately.

Balances:

Checking: $814
Savings: $10,874

Roth IRA: $5,008
401(k): $2,049

Bring on my Economic Stimulus package and Extended Benefits reimbursement next month.


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PostPosted: Sun Jun 01, 2008 8:46 pm 

Joined: Fri Feb 15, 2008 4:11 pm
Posts: 71
I'm looking back and updating this as it helps put things into perspective as I look at my finances to frequently it feels like they are going nowhere. This helps me look back to just a month ago and see what's been done since then.

A few notes:
- I moved my Economic Stimulus package over to my Roth IRA, so that's looking really good. Also the Market has been looking better lately and I can't complain with that either. I have now contributed $1,800 out of $5,000 into it for 2008.
- Extended benefits reimbursement of about ~500 comes on my next paycheck. I'm going to be buying a Playstation 3 with it in a few weeks. I've been wanting one for a while and this seemed like a good time to splurge as that "extra income" comes in.
- Applied for a new credit card, my 2nd one, to build more credit and there is a 100$ credit offered on a purchase of over 299$ (hello, Playstation 3) offered by sonystyle.com. I've been meaning to get a 2nd card for a while anyway, so it made sense to jump at this opportunity. I don't foresee ever getting more than the two cards.
- 401(k) match starts next month.
- Got a really positive review at work and they are starting their annual review process right now. It's very possible that I could be looking at another promotion and raise within a few months. That would come at a good time, as it is about when I move into my own place and my expenses will go up a bit.

Balances:

Checking: $649
Savings: $12,327
Roth IRA: $6,453
401(k): $2,312


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PostPosted: Sun Jun 01, 2008 8:57 pm 

Joined: Fri Feb 15, 2008 4:11 pm
Posts: 71
Updating the Budget:

Current Budget (June, 2008):
Rent: $450
Utilities: $50 (seeing these come to about this per month)
Cell Phone: Corporate plan for minutes, additional fees of data plan and unlimited text messaging ($45 monthly) deducted from paycheck.
Food: ~$200 (Includes groceries and dining out. I've found this as been higher lately depending on what gets spent on alcohol)
Gas: ~$90. I fill up about 3 times a month at around 30$ a time.
Insurance: $76.16 (Car and Renter's Insurance)
Roth IRA Contributions: $400

Total, bare minimum, includes Roth IRA contribution, no other purchases: ~$1,266


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PostPosted: Mon Jun 02, 2008 10:51 am 

Joined: Mon Jun 02, 2008 10:12 am
Posts: 2
Great work! I'm envious of how smart you're being with your money. Wish I'd been so. Building your savings now and avoiding debt will pay off in so many ways!

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