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It is currently Wed Nov 25, 2015 11:57 pm

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 Post subject: Finally “adulting” at 29...
PostPosted: Fri Sep 18, 2015 4:40 pm 

Joined: Mon Jul 25, 2011 12:52 pm
Posts: 26
Wow. It’s been six years since I graduated from college and I think I’m finally ready to “adult.” Yes, us young folk now use that word as a verb. (Example: Ugh, I do not want to adult today.) I’ve spent the last five years working on my Master’s degree part-time (finally DONE!) and working seasonal jobs and internships to get by, so I haven’t really been free to do all those crazy twenty-something things I hear about. Then again my twenties are quickly drawing to a close. :D

I’m happy to announce after all those crappy tourist trap jobs I’ve gotten a job with a start-up in my field! Yay for science! It’s a small company (<10 employees) but they’ve received some fantastic grants for multi-year projects and have a great vision for ramping up over the next 2-3 years. Plus it means I can stay living where I grew up and be close to family. I honestly never thought that would happen.

While my salary is low (<$30k) it’s still more money than I’ve ever made before, and I plan to keep on living frugally and nearly debt free. Cost of living can be low here in rural New England if you budget well for winter heating and take advantage of local food and entertainment options. Plus I’ve heard talk of a raise after 6 months...

Short-Term Goals:
--> Get my own place - after three years with the parents the walls are closing in! However the rental market around here is tricky because so many people rent seasonally to tourists.
--> Come up with a more detailed budget to better account for large annual or one-time expenses.
--> Open a Roth IRA for 2015 and try to max it out by tax time next year.
--> Start planning a solo trip for next year – maybe Seattle or New Orleans...

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 Post subject: Re: Finally “adulting” at 29...
PostPosted: Fri Sep 18, 2015 4:49 pm 

Joined: Mon Jul 25, 2011 12:52 pm
Posts: 26
Here's my financial picture right now. With transitioning to the new job and trying to move out I expect my expenses will be kind of in flux for a bit. Here's hoping this journal will keep me on task and looking forward.

Car loan - $2,300 @ 4%, Payoff date Sept 2016 (one year early!)
One credit card that I pay off every month, usually $100-200 for gas and online purchases.

Checking Account $2,500
Emergency Fund $5,000
Short-term Savings $3,000 (used for larger expense like car insurance, snow tires, gifts, etc.)
Remaining Cash on Hand $4,000 (Future Roth seed money and apartment deposit)

Current Monthly Expenses:
$200 – Car payment (only 12 more to go!)
$60 - Car insurance
$100 – Health insurance premium
$50 – Cell phone
$100 – Short-term savings
$150 – Groceries and dining out (these will become separate categories once I am back out on my own)
$100 – Gas (will increase some as my commute is going from 5 minutes to 20 minutes, but hopefully go back down once I find a place closer to work)
TOTAL: $760

Ouch. To me that seems like a lot considering it doesn’t include rent or utilities yet. Then again I'm mostly a super saver that doesn't like paying full price, but allows herself small impulse purchases from time to time.

Expected Monthly Income: $2,100

I think I’ll be okay for a bit. I’d like to be out of my parent’s place within the next six months but year-round rentals are hard to come by around here, and near impossible if you have pets. Ideally I’d like my Needs to be 50% or less of my new budget, with 20% to Wants, 20% to Savings and 10% to Retirement.

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 Post subject: Re: Finally “adulting” at 29...
PostPosted: Sat Oct 03, 2015 11:24 am 

Joined: Mon Jul 25, 2011 12:52 pm
Posts: 26
I'll post a financial update at the end of October. I'm shuffling some money around and I want to make a more detailed budget once my shiny new paychecks arrive...

Other tidbits:
- I started my Roth IRA with Vanguard yesterday!!! Only $2,000 for now but it's better than nothing. I know very little about investing so I feel that one of the Target Retirement Funds is a good choice for now. I'm pretty risk averse though, so I'm going to have to stop myself from checking it too much and getting anxious about fluctuations. One thing I have to investigate is whether it is better to transfer larger sums a few times a year or if I can set up an smaller monthly payment that won't get eaten up by fees.

- My new job is at the end of a long dirt road that I know from past experience turns into a skating rink in the winter, so I've been pricing out studded snow tires. Looks like $500-550 installed. Also at my inspection this month they said my regular tires would make it a few more months but that's it. That means new tires this spring but at least now I know to save up for them.

- There's no doubt about it. The rental market sucks around here. What's the use of moving out if I'm going to spend over a third of my salary on a 1BR five minutes from my parent's house? I'm probably just being overly picky. But I moved pretty much every year between college and when I moved home and I want somewhere I can be for a while. I've started looking into buying a small house and talked with a person from the USDA about their direct loan programs for low income people (<$35k). I'd like to keep my budget under $100k but that's going to be a struggle both for this area and/or for something that isn't falling down.

Onward and upward, as the saying goes.

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 Post subject: Re: Finally “adulting” at 29...
PostPosted: Sun Oct 04, 2015 12:57 am 

Joined: Sat Sep 26, 2015 6:11 am
Posts: 21
Best of luck! I also am adulting now since I started saving more consistent last month :rock:

Moving out or not is a tough one. I did when I was 18 and had great times for sure. On the other hand it easily could have saved me 20k if I didnt. So yeah no advice here but def understand how u feel about it.

Maybe just find a rich man and live with him? :rofl:

About your phone. It seems u have a plan which includes a phone? Like I use the same phone for a long time now and had a plan of $5 a month. If u want to be frugal that seems like an easy start. Not sure if thats possible where u live but in the EU its standard.

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 Post subject: Re: Finally “adulting” at 29...
PostPosted: Tue Nov 10, 2015 8:49 am 

Joined: Mon Jul 25, 2011 12:52 pm
Posts: 26
Update time!

- The new job is going well. It can be hard, dirty work at times but I'm where I want to be and it's loads better than retail. Plus I'm learning a lot and putting myself in a good position for the next few years. Not having benefits is rough but I did find out I get $1000/year towards healthcare costs, which means I might be able to upgrade my Marketplace insurance. Going from a bronze to a silver plan would decrease my deductible from $5,500 to $2,200 and only raise my premium by $60/month.

- I'm waiting to hear back from the USDA about how much of a mortgage I qualify for. Then I'll decide whether to buy now or to build a small cabin-type house next spring. It would mean another 6-9 months with the parents but it would give me time to pre-buy house materials/appliances, etc. during holiday sales and get the exact design I want. I've always wanted a small house of my own (<1000 sq ft), but building from scratch can get extremely complicated.

- My Roth IRA has made $50 in less than 2 months! I know that's peanuts but it's what I usually make in interest over a whole year in my online savings account. I've set up a $100/month automatic transfer for now, and I'll make another lump sum transfer before tax time next year. I doubt I'll be able to max it out, but I'm okay with that until things settle down.

Monthly Income: $1,800

Car loan - $1,937 @ 4%
*I may end up paying this down or off completely to qualify for a larger mortgage

Checking $2,337
Short-Term Savings $5,467
Emergency Fund $7,547
Roth IRA $2051

Net Worth: $15,465

This month's goals are to figure out the mortgage situation, get snow tires, draw up a better budget and estimate expenses for living on my own. Once I have regular expenses I'd like to keep a smaller buffer in my checking account ($500 instead of $1-2k) and maybe lock up some of my savings in a CD ladder.

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 Post subject: Re: Finally “adulting” at 29...
PostPosted: Wed Nov 11, 2015 4:26 am 
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Joined: Fri Mar 14, 2014 4:10 am
Posts: 330
Congrats on having a job that you love and that represents your career path! That is a feat for most 20-somethings right out of college. I'm glad that once you made the decision to buy property you opted to stay living with your parents and not rent while saving. As someone who lived with family for several years to save for a house, I can say that was the main factor as to how I could buy a house young, and not earning much (was taking home 22k when I bought and now I take home nearly twice that...same mortgage payment). I'd definitely stay as long as your parents let you, or until you earn more. Your expenses are too close to your earnings and when you purchase property, your ability to save is greatly challenged for at least the first few years. The sweet spot will be when you can afford a mortgage and all that comes with owning a property AND have healthy wiggle room each month.

Paying off the car loan is good, just so you don't have to pay the interest...but not in order to have access to a larger mortgage. You will not be able to afford whatever the bank approves. They base that number on the assumption that you will forego any wants and several needs, in order to make the mortgage payment. You shouldn't worry about eeking out the highest approved amount because successful homeowners don't even hit anywhere near that amount. I borrowed less than 1/2 what the bank offered. People, lenders, and the previous economy, will have you believe that it's normal for a mortgage to be a gargantuan piece of your monthly expenses (well it might be normal, but it's definitely not necessary); my mortgage is usually my 2nd or 3rd largest bill, after food and transportation (gas/car insurance).

Having a tiny mortgage has afforded me many more luxuries in life than what a higher mortgage could ever get me in a property. I don't stress about money at the same level as many of my peers.I was able to take time off work for 6 months and still make the payment, and because it was so low I was able to rent it out and have extra cash left after paying the mortgage. Also, since my "major" fixed expense was not so major, my ideal Efund total is greatly reduced, allowing me to make more cash work towards other goals instead of sitting in an Efund. The freedom I've felt for the past 6 years is indescribable.

Love the idea of collecting materials if you have the space. I did this myself and bought tile on sale, even doorknobs. It's challenging since you don't know how much you need, but it was close enough to the time I was intending to buy, that I was confident if I needed more of something, it would be available. I was in the market for a fixer upper and so I knew I would be replacing things. Anyhow, you are doing great and it looks like you have a lot to look forward to in the near future.

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 Post subject: Re: Finally “adulting” at 29...
PostPosted: Wed Nov 11, 2015 11:15 am 

Joined: Mon Jul 25, 2011 12:52 pm
Posts: 26
Thanks for all your good wishes. I should have said "to qualify for a larger mortgage if needed." I really want to keep my costs low but would like to have as much wiggle room as possible. I am hoping to be able to build for $90-100k but with all the site work, well/septic, etc that comes with raw land I wouldn't mind qualifying for $120k just in case there are sudden or unforeseen costs. My worst nightmare would be getting stuck and having to ask my parents to bail me out - kind of defeats the purpose of being independent.

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 Post subject: Re: Finally “adulting” at 29...
PostPosted: Tue Nov 24, 2015 7:37 am 

Joined: Mon Jul 25, 2011 12:52 pm
Posts: 26
I've been approved for my USDA loan! Wonder of wonders, I've been approved for $175k! I'd never dream of borrowing that much, but it's nice to know I have scads of wiggle room. The approval assumes a maximum of $1800/year for property taxes and $600/year for insurance. Still going to try to keep my budget around $100-120k.

My father is worried I'll buy a money pit and regret it when all these extra issues pop up. But I've had my eye on an older home close to work that's been empty and on the market for over a year. I found the contractor who built the addition on the house a ways back and did some updates for the elderly owners. If I didn't have him in my corner knowing exactly what's been done to the house the last ten years I wouldn't even chance it. We are doing a walk-through next week to assess the possibilities.

After talking to the USDA officer this is what the sequence of events would look like for my Direct Loan:
1. Agree on an "as is" purchase price with the current owners
2. House inspection that results in a list of necessary repairs
3. My contractor and I make our own list of updates and changes we would make
4. Both lists are given to an appraiser who values the home as if all items on both lists were completed
5. USDA loans me money for the purchase price PLUS the repairs and updates up to but not more than the total final appraised value
6. My contractor completes the work on the home (60% disbursed during work, remaining 40% paid upon completion)
7. There is a final inspection to make sure all items are completed as listed
8. Mortgage closing occurs and I start making payments and move in!

Sounds pretty good to me! The only issue is winter is coming so I may come to an agreement with the owners but have to wait for the renovation until spring. I think that I can get the purchase price down such that I can do a moderate renovation (bathroom redo, minor kitchen updates, flooring, some insulation work and a few windows replaced) for $30-35k and still stay well under my $120k max budget.

It's exciting and scary and I might be obsessing over it a little bit but what the hell. Carpe diem! Within reason :-D

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 Post subject: Re: Finally “adulting” at 29...
PostPosted: Tue Nov 24, 2015 9:00 pm 

Joined: Mon Aug 08, 2011 9:13 pm
Posts: 203
Location: Brisbane, Australia
That sounds like a good solid plan, I hope it works out for you.

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 Post subject: Re: Finally “adulting” at 29...
PostPosted: Wed Nov 25, 2015 5:01 am 
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Joined: Fri Mar 14, 2014 4:10 am
Posts: 330
Obsess away! You've earned it. You are taking all of the right steps and precautions like working with a contractor before hand. And tracking down the contractor who did the addition?.....wow, color me impressed. Yeah, I don't think you will have any problem getting through this. You seem to have more knowledge and made smarter moves than I did....I just got lucky multiple times lol.

I'll keep my fingers crossed that you get it, or something you like even more. Fixing up a house is challenging, but it's one of the most satisfying things I've ever done. As someone who likes things just how I like them, I don't think I could ever be happy just walking into a house and putting my things away (no matter how nice it looked). You'll have a blast.

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