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 Post subject: Alice's Journey
PostPosted: Wed Jul 06, 2011 7:22 pm 

Joined: Wed Jul 06, 2011 7:10 pm
Posts: 14
I just graduated from college in May, and started a full-time position a week later. I am guaranteed this position through March 2012, but since it is currently funded by a grant-type situation have no idea if I will be employed past March (my bosses want the program I am helping to start to continue and say they want me to keep working, but we won't know funding for a bit).

Debts
$5000 student loan at 4.5% fixed, in grace until November, monthly minimum will be around $52
$12280 (currently at $11,550) car loan at 0% from my parents, if I lose my job/have a health issue/etc. I can take a break, no questions asked, monthly minimum $330

The student loan debt was a deliberate choice so I would have something other than a credit card on my credit history, to improve my score and make me look better for the future. I'm planning on paying more than the minimum each month and paying it off in 6-12 months (happy to use savings to do this, since I would have used savings for college otherwise).

The car loan I can't easily prepay a lot on, for two reasons. One is that I have the bank set up to automatically send a check to my parents -- I can't transfer to their account online, and I'm not going to send them a ton of checks for small amounts the way you might do if you were trying to snowflake a debt payment. The other is that they want me to make sure I use my money to "enjoy" my life and not worry about this, which is why I have it from them. They've given me the car (I have the title and everything) and they don't need the money immediately, but long term don't want to give me all of that money.

Assets
~$1000 in everyday checking (write checks from this account, my debit card is attached to it)
~$25,000 in Fidelity mySmartCash account, kinda savings, kinda checking, my direct deposit goes here
~$24,000 in Roth IRA
~$14,000 in Fidelity Target 2050 fund (retirement fund, but not a tax-advantaged account)
~$3000 in random other account I don't use, but am keeping so I can keep my larger limit/older credit card open

I have one credit card (A) with a $900 limit that I use regularly and pay off in full every month. My older card (B) has a $5000 limit, and I am keeping it (dislike some things to do with it) to buy plane tickets, etc. until my everyday card has its limit raised. I just got card A, so have to wait a bit longer to get a limit raise. No idea of interest rates on these, since I've never carried a balance. (I didn't fully realize it was possible to not pay it off in full every month until a couple of years ago, after a couple of years of reading personal finance sites. The idea literally had never sunk in, since I've grown up with the idea that a credit card is the same as a debit card, only what you use for Internet purchases for safety reasons.)

I get $2833.33/month pre-tax, etc. Not sure what a normal take-home paycheck will look like, since my benefits haven't kicked in yet -- they will in August. I know I have a few hundred out for taxes/Social Security, as well as somewhere in the $100-200 range for health insurance come August. I'm putting 5% of my paycheck into the Roth 403(b) offered by my employer, matched up to 3% starting in August. I'm also going to a gym very close to my work, which costs $64/mo right now on the company plan but once I have benefits will drop down to $32/mo. The only exercise I can make myself do is swimming, so I need year-round pool access, it is the gym most convenient to my life (5 mins from work on the way to work from my house, vs. a 20min one-way trip to other local gyms), and the reduced price makes it cost the same as other gyms. I'm going to guess a little less than $2000/mo as my take-home, say $1800 to be conservative.

Still not sure of my fixed expenses, I've been tracking my money for just over a year but a living in a dorm and going to class is very different from living in a house and going to work. Plus, this past month I had a lot of one-time expenses, like title fees for my car, rental deposit, entirely new wardrobe for the fancy office (jeans and a tshirt won't cut it), etc.

Monthly Fixed Expenses I Know So Far (excluding the things in the paragraph above that come out of my paycheck before I get it)
$415 Roth IRA
$499 rent (for one room in a nice house with 2 roommates -- didn't trust the neighborhoods anywhere cheaper)
~$75 utilities (water/sewer/trash, electric, gas, internet)
~$125 gas (for car)
~$125 groceries
$330 car loan
$55 student loan (rounded) (starting in November, but want to make this more to pay more than minimum)
$10.76 Netflix

Most everything else does go into budgeted categories (save for gifts, clothing, vacation, insurance, etc.), just not big enough ones to go here and ones that can be not contributed to as heavily if need-be).

Utilities is an average given to me by my landlady/roommate, so we'll see how that goes. It was a few dollars less than that the first time I paid it, and we're also short a roommate for this month so we'll see. Gas and groceries I think are also often less, but I would rather over-budget than under-budget.

I don't have a phone bill right now, since work is paying for my smartphone; I'll just have some (low percentage) taxable benefits on my W-2.

I make $120+/mo at a part-time job from home. I am also an "on-call" babysitter for a neighbor, and my older cousin has told her coworkers with kids I'm available for petsitting/babysitting. I'm not really up to doing a regular part-time job, since while I only work 8 hours/day right now I'm a) going to have longer and more irregular hours in a couple of months once my project really gets going and b) going to be traveling a bunch for work.

I don't really want to cut out Netflix unless I have to, since it pretty much is my only entertainment other than library books (I have the one-DVD-at-time plan and use that plus a lot of streaming). I very rarely go to the movies, and when I do except for things like the upcoming Harry Potter it's usually the second-run theaters. Much more likely to go to a friends house and chill and contribute half the food for dinner than to go to a restaurant, etc. I don't find usually find shopping fun, and the places I do (Target) I stick to my list without a lot of issues.

Goals by End of 2011
$5000 in Roth IRA by the end of the year (maxed out) -- this plus my 5% into the 403(b) will make almost 20% of my salary in retirement accounts
Stick to a budget, once I figure out what my categories really are each month
Learn more about investing

Goals by March 31, 2012 (end of my current contract)
Save $2000 other money
Have a job, either at my current company or at another company

I'm hopeful I can achieve all of this, since I've never had an issue living below my means. I also didn't really have anything to spend money on before, though, and have never had to budget. I have the You Need a Budget software and am good at recording purchases.

I'd love to get suggestions from everyone! I'm pretty new at all of this.


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 Post subject: Re: Alice's Journey
PostPosted: Sat Jul 09, 2011 10:43 am 

Joined: Wed Jul 06, 2011 7:10 pm
Posts: 14
Both good and bad this week. I brought my bike back from my parents' house after the holiday weekend. I needed a new helmet (old one was at least 10 years old and the plastic has turned a completely different color -- don't trust it will protect me in event of a crash) and a rack to make it useful, and I didn't feel comfortable enough to buy them from Amazon/Walmart/etc. without guidance for fit/sizing. So I checked with a coworker who bikes a lot, and went to the only bike store in my area and bought the items.

That's the bad, the almost $100 I spent there. The good is that I managed to get the bike rack onto the back of the bike by myself, without paying them $20 and making a special trip across town for them to do it. If you know me you'll know this is a really big accomplishment, I'm terrible at that sort of thing. But I did it! Now I can bike on the trail near my house that has a turnoff directly into the grocery store parking lot. I'm planning to take the bike the next time I need something at the store. Also, it will give me another way to exercise, since I dislike stationary bikes at the gym.

I REALLY want a Kindle and have for a while. I know I'll use it (especially with work travel I have coming up in the next few months) but I'm making myself get the rest of my finances sorted out and save up just for it before I buy it.


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 Post subject: Re: Alice's Journey
PostPosted: Mon Jul 11, 2011 5:41 pm 

Joined: Mon Feb 04, 2008 7:35 am
Posts: 1148
Location: Maryland
Hi and welcome!
That's a lot to digest in one sitting, but I think I got it. :)
Congrats on all your saving. It seems to me that you have a savings addiction and don't want to spend. While I think it's good for some, you need to let go a little. Get the kindle. I believe I bought the Wifi one for 109 bucks or so, and LOVE IT. I don't have wifi at home (I'm cheap), so whenever I have access to wifi, I search for free books or read classics (also free). My sister is on the account so when she buys book, I have access to read them. Done and done.

When your student loan comes due, I would pay it off. That's $5000 out of your mychecking account and you don't pay a dime in interest. Why pay interest when you have the money? As much as you're saving, you will probably have an additional 5000 in that account my November. :)

The car bill, I would set up like a regular car payment, and send the parents 330 a month or whatever you feel comfortable with right off the top. Since you're not paying interest on that, if you run into a pinch, you can tell them that you can't pay that month. No biggie, but you're making a dent. After November, send them 385, which would include your proposed SL bill that you don't have to pay since you paid it off. I really think 25000 is a bit high considering you have your 3000 safety/emergency fund. After you pay your SL, you will have 20,000 and that's good for an emergency fund, and continue working with your 1000 in checking and your 3000 safety money.

You're doing fine, chica. Keep up the good work, and promise to treat yourself with your part time money once a month to something you want. You can afford it!


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 Post subject: Re: Alice's Journey
PostPosted: Tue Jul 12, 2011 12:21 pm 

Joined: Fri May 04, 2007 8:14 pm
Posts: 1975
Peachy gives pretty good advice and I think I'd tell you pretty much the same.

Curious about your Fidelity retirement account. Since it's not tax-deferred, why a Freedom Fund? 11% of your money there will be in bonds (and more over the years), which means that the interest from those bonds would be fully exposed to taxes. What fund is your Roth IRA invested in?

Also, get a good understanding of your 403(b) and post that here (i.e. the funds offered and the expenses). 403(b) accounts can have very high fees and some offer very poor choices in funds.

Also, you need to look at all of your savings in totality to make sound decisions about what funds would best be held in tax-deferred account and which funds would be best help outside of your tax-deferred accounts.


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 Post subject: Re: Alice's Journey
PostPosted: Tue Jul 12, 2011 8:35 pm 
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Joined: Wed Sep 23, 2009 9:01 am
Posts: 5399
I agree that you're doing well and with most of what peachy and Vintek said.

Buy yourself the Kindle. You deserve it and obviously have your act together far better that a lot of people your age.


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 Post subject: Re: Alice's Journey
PostPosted: Tue Jul 12, 2011 9:23 pm 

Joined: Fri May 09, 2008 12:00 am
Posts: 132
Seems like you're on the right track and the Kindle won't be an impulse buy. If you do buy it, check out feedbooks.com and project gutenberg - both have the classics online. I just download it on my laptop and then click and drag it on to my kindle (which is hooked up to the laptop).


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 Post subject: Re: Alice's Journey
PostPosted: Mon Aug 01, 2011 3:13 am 

Joined: Wed Jul 06, 2011 7:10 pm
Posts: 14
Thanks for all the comments!

Well, I bought a Kindle! Really loving it and it was fantastic on a 3-day business trip. More business trips upcoming, so expect it will get used a lot. And I'm carrying it around with me a lot too, for reading while waiting at the doctor/salon/etc. -- love having the selection! I went ahead and got the kind without ads, since I don't want ads with my books. Also got a case for it, since I don't trust myself around electronics without cases. Mostly have free books on it, although I bought a couple of $0.99 books with Amazon credit I had.

Housesat last week for a friend on a couple's weekend. Between this and my business trip this month, expect the utility bills will be down some (although I still need to talk to my roommate about not keeping the house at arctic temperatures in the summer -- I think the AC is too strong).

My grocery expenses for this month are LOW (less than $100, without me trying with tons of coupons or anything), since while I was on my business trip I ate on the company's dime (well, I paid, but I already got the check) and I've had several day trips lately (and more to come) with meals paid for on the company card. My gas expenses are lower as well, which is odd since I had a 400-mile round-trip visit to my family for the 4th. I've signed up for some programs so I can transfer coupons directly to my grocery store loyalty card, which is nice since I tend to forget coupons.

About the "saving addiction": You're probably right. I've always been this way, since I was little. I'm not sure why, since my parents/relatives never worried about money (at least in front of my brother and me). One thing I'm doing right now is using my ability to (mostly) control my spending to control my health. I gave myself a "good groceries" budget and a "bad groceries" budget. The good groceries are things like fruit, vegetables, quinoa, beans, bread, jelly, etc. The bad groceries are things like chocolate and chips and ice cream. I'm trying to make myself eat healthier, so if I'm only allowed to buy a few "bad grocery" items a month, that's fewer empty calories. I'm regularly going to the gym since I have to pay for it. I also bought some yoga stuff, and besides going to class when I can (the class times aren't the best for my schedule) I've been using the mat as an exercise mat for things like crunches and leg lifts, as well as doing some yoga from a video. I spent the money on it, so I'm going to get my use out of it.

Paying my parents for the car: Yes, I have it set up as an automatic bill. My account sends them a check for $330 every month (I couldn't get it set up so it auto-deposits into their account).

I just got more paperwork from the people handling the 403(b) at work so soon (probably this coming weekend) I'm going to look at all of my investments and figure out what I'm going to do with them. My Roth IRA is in a T. Rowe Price retirement fund, but I add money to it through Fidelity to make things easier. The random money is in the Fidelity Target 2050 based off of some Fidelity guy who recommended it to me/my parents several months ago. I was in school and overwhelmed with work at the time, so I just went along but now I have a chance to re-evaluate.

Did I miss any questions?

Everything is pretty much the same as it was before, with payments to my Roth IRA and my parents for the car coming out this week. I have a better idea of my paycheck once all the health insurance/FSA/taxes/403(b) contributions are taken out, and I expect it to be around $1900/mo. I'm pulling $1000 into a separate account and going to try to not go over that amount in my spending, with the car/student loan/IRA money coming out of my main account. We'll see how it works.

Question:

I know that prepaying on federal student loans doesn't get you any penalties, but does prepaying before grace is up make the grace go away? So mine are automatically in grace until November since I'm a new graduate, but if I send a payment now does that mean that grace is up and I have to start paying every month? I'm having difficulty finding information.


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 Post subject: Re: Alice's Journey
PostPosted: Mon Aug 01, 2011 5:51 am 

Joined: Sun Jan 17, 2010 2:32 pm
Posts: 6
Nope, prepaying on loans doesn't make your grace expire. I'm doing this too. (Also, I'm glad you're digging the Kindle! I think that's a great "investment", although that's a term I always hesitate to apply to consumer electronics.)

I'm really impressed by how good your financial situation is, especially considering that you're a recent graduate. You must have really controlled your spending while you were in school, to have been able to save so well. Well done!


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 Post subject: Re: Alice's Journey
PostPosted: Mon Aug 01, 2011 9:59 am 

Joined: Wed Jul 06, 2011 7:10 pm
Posts: 14
Yay! I'll go ahead and put some money to my student loan then.

Thank you for the compliment but I don't deserve that much credit. My grandfather was a successful businessman who invested well when he sold his business, and my college was paid for from money he left my parents that they set aside for me. My savings are mostly leftover college money from getting some scholarships, reduced tuition when my brother started college, etc.


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 Post subject: Re: Alice's Journey
PostPosted: Tue Aug 23, 2011 5:44 pm 

Joined: Wed Jul 06, 2011 7:10 pm
Posts: 14
Not sure how I'm doing, but suspect I'm not doing great in discretionary spending this month. I'll add it up next week when I get my paycheck and double-check next month's budget. This will be my first "regular" paycheck with all of the monthly deductions (FSA, health insurance, gym, 403(b), taxes) taken out of it, so I'm excited to see what it looks like. Also I paid early to my student loan twice this month when I meant to only do it once, so....

Two pieces of good news and one of OK news. The OK news is that I finally have a competent doctor (and my health insurance through work is pretty good) who is addressing a chronic issue I have. The downside of this is that I have to go in for some tests and start taking some supplements that I'm low on due to medicine affecting my body. At least I can pay for it all (so far at least) out of my FSA, but I may not buy myself new glasses next spring...

The good news is that my dorm fridge finally sold, so that's an extra $40 and something out of my parents' house. And also my newer credit card raised my limit to $5000! This means in the next couple of months I can cancel my older credit card, which also has $5000. I know you're supposed to keep older ones open, but it has a $150 annual fee and horrible website, and the new one has no annual fee and a decent website. I couldn't cancel the older one until the new one went up from a $900 limit, since if I have to pay for something unexpected like plane tickets to visit an ailing grandmother I need to have the credit card. (Not to carry a balance on, but just to pay since it takes time to transfer money from bank accounts.)

I've also decided that all my "extra" income (my side job, things selling, babysitting/housesitting money/etc.) will go to my Roth IRA right now to help bring it up to the limit for 2011. I'm also kinda snowflaking my student loan debt (even though it's not due for repayment to start until Nov) by putting money I save using coupons towards it. I don't count the "you saved $xx.xx" on the receipt, since I think without store cards you're getting ripped off, but rather savings direct from coupons. Don't know how well this will work, since most coupons are for multiples of things that I don't have room to store or for processed food (and I mostly buy fruits/veggies/basics like bread) or brand names that are still more expensive than generic even with the coupon. But I can try!


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 Post subject: Re: Alice's Journey
PostPosted: Tue Aug 23, 2011 6:35 pm 

Joined: Fri May 04, 2007 8:14 pm
Posts: 1975
Alice11 wrote:
Not sure how I'm doing, but suspect I'm not doing great in discretionary spending this month. I'll add it up next week when I get my paycheck and double-check next month's budget. This will be my first "regular" paycheck with all of the monthly deductions (FSA, health insurance, gym, 403(b), taxes) taken out of it, so I'm excited to see what it looks like. Also I paid early to my student loan twice this month when I meant to only do it once, so....

Alice, in these very early days of entering the personal finance world, you need to track your spending as you spend it. You can let up later when you've gotten a good feel for where your money goes but for now, you don't want to figure that out only 12 times a year. You need to know in real time where it's all going.


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 Post subject: Re: Alice's Journey
PostPosted: Wed Aug 24, 2011 7:29 pm 

Joined: Wed Jul 06, 2011 7:10 pm
Posts: 14
Forgot to mention above that another reason I need the higher limit credit card is that my bank is changing terms on my account. The $500 minimum in the account doesn't bother me because I like buffers, but I'm going to stop using my debit card for anything other than the ATM since I'll start getting charged $5/month for it. I'd consider getting an online bank, except that checks from my side business go to my parents' house because my roommate/landlady is worried about HOA rules here and my dad goes by a branch of my bank daily for work so he can deposit them plus other random money. Plus I've used some in-bank services (some sort of bank stamp thingy and free notary) at the branch in the next office complex over several times.

VinTek, thanks for the comment! I appreciate your feedback. I track every single thing I buy, looking at my records versus the banks' regularly and reconciling every statement. I'm just getting the hang of how much to budget for each category for each month (other than the obvious things that don't change like rent, or some predictable bills like insurance I can put $x to each month and know I'll have the correct amount by the end) since I didn't have to budget in school. So I need to look thru and see stuff in the under-budgeted categories and see if the purchases were legit (ibuprofen) or unnecessary (eyeshadow). It's the mix of both necessary and unnecessary purchases in those categories that can be confusing. (For example, with made-up numbers because I'm tired and don't want to pull up more software, I might know that I spent $25 on clothes but only budgeted $20, and need to look more carefully to see that $15 was on necessary pants and $10 was on an unnecessary shirt.)


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 Post subject: Re: Alice's Journey
PostPosted: Tue Sep 06, 2011 8:10 pm 

Joined: Wed Jul 06, 2011 7:10 pm
Posts: 14
Doing pretty well. Need to post to this forum when I'm not tired, but don't want to forget and have a busy few weeks ahead of me. It includes a medical test ordered by my doctor that I hope my insurance pays most of. I'm happy to have the test -- I finally have a doctor who I feel is competent and listening to me, and is working with me to figure out some things about a chronic condition I have had for years that may have been misdiagnosed -- but it involves my mother coming down during a busy time for her (don't have anyone else to be a responsible party) and missing an afternoon of work. Insurance stuff is so complicated I can't figure out what they're going to pay. Anyone have suggestions? (Yes I've read the member benefit guide, but am still confused.) The deductible is $1000, does that mean I won't have to pay more than that for this plan year? (Excluding prescriptions?)

So depressing to reconcile investment statements each month and have the balances go down. At least I don't need this money for 40+ years, God willing and the creek don't rise.

Started the process of closing my old credit card. I've redeemed my rewards points for a gas gift card for a gas station I use a lot already. And it's gas, not Target, so I won't be spending the "extra" money on something frivolous. So waiting on that to come, then will call and close the card, then transfer the money out of the account and close the account.

Finally discussed investments with my father this weekend and we agreed I'd call my representative at the investment firm. I'm kinda waiting until the other card stuff finishes first, so I'm not juggling as many balls in the air at once.

Feeling guilty since I called off participating in a mentoring program right before they paired us with students, but I don't have the time/energy commitment. I'm going to have to do more craft stuff so I know the "world" I'm working in for my side job, and it has an opportunity to expand if my proposal to a company gets accepted. No clue on that timeline.

I'm snowflaking student loan payments from grocery, etc. savings and putting all other "extra" money to my Roth IRA. Next year, assuming steady employment, the IRA will fund itself since I have $415/mo going into it automatically. I'll then use that money, and the money from my student loan in 6 months or a year once I've finished with it, to pay the car loan to my parents.

Paid
Car Loan: $1,390/$12,280, 0% to my parents
Student Loan: $287.39/$5000, 4.5% but in grace until Nov., want to pay on it 6-12 months to help with credit history
Roth IRA: $2,493/$5000

I'll put another $1,245 into the IRA just by my regular contributions this year, so really need to get on getting other money to put into it. Although I am willing to take some of my cash savings to max out the IRA.

I apologize for the rambling -- I get this way when I'm tired (don't worry I don't do actual anything with money when I'm tired, other than sending it to student loan/Roth IRA and that can only be good) -- and look forward to reading your thoughts!


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 Post subject: Re: Alice's Journey
PostPosted: Fri Sep 16, 2011 8:35 pm 

Joined: Wed Jul 06, 2011 7:10 pm
Posts: 14
Now that I'm responsible for all my own bills, I can definitely see how medical issues can cause people massive financial issues. Thank goodness I have savings -- everything is going on my card since they don't take checks for large amounts/half the stuff I'm paying online, but I won't be carrying a balance. Had a $650 copay for a procedure I had earlier this week -- OK, it involved sedation, time off work, my mother coming down to take care of me, etc. But I also just got my explanation of benefits from insurance for an abdominal ultrasound I had a few weeks ago, and checked the online billing for the doctor. Yep, it's costing me $365 (out of a total of $820). The ultrasound was done by a tech and took 30 minutes first thing in the morning. The doctor there and my doctor reviewed the results (normal) and had a message to me by the end of the day. It CAN'T be that difficult/cost that much.

Definitely going to hit my insurance deductible (set by work, I can't adjust it) soon at this rate. Hopefully the doctor can find out what's wrong with me when I see her next week or at least have some leads...this condition isn't life-threatening, but it massively impacts my quality of life and limits some of my activities. And then hopefully once it's diagnosed it will be the end of tests and I can go back to my yearly checkups.

So while I'm still putting money into my retirement savings, my total savings are going down for now to pay for all of these medical bills.


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 Post subject: Re: Alice's Journey
PostPosted: Wed Sep 21, 2011 8:41 pm 

Joined: Fri May 04, 2007 8:14 pm
Posts: 1975
Alice,

Sorry about your health issue. I hope you're feeling better soon.

The situation does underscore why it's important to have an emergency fund. I know that you're paying for this out of savings and that's great but there's a good reason to have an EF separate from savings. You really want to see steady improvement in your savings balance. Watching it fluctuate up and down every time you have an emergency is not only disturbing but it really distorts the picture if you're trying to track actual progress in the savings area. Just a thought.


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