Newb's financial goals

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newb
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Newb's financial goals

Postby newb » Wed Jun 03, 2015 7:14 am

I have been meaning to start a journal for a while now, but keep getting side-tracked. Anyway I decided that today will be the day that I start.

I'm 29 years old, and will be turning 30 this year. I joined the workforce about 5 years ago after grad school but had a few set-backs because I got divorced the year I started working, and had to pay my ex alimony for two years so money was pretty tight. I'm proud to say that I've finished paying him, and can now focus on my financial goals, and hopefully catch up on some missed opportunities for retirement savings.

Yearly Salary: 90K
Emergency Fund: $10,000
Short term savings: $10,500
Roth IRA: $14,000
401K: $6,000
Student Loan: $10,500 at 6.5%
No credit card debt
Just purchased starter home at auction for cash with boyfriend (value ~120k). The house is in great shape. Estimated cost of repairs ($8,000-10,000)
Currently contributing 10% of salary to 401k and maxing out Roth IRA

My 2015 financial goals:
1) Pay off half of student loan this year
2) Contribute to cost of fixing home ~$8,000. My boyfriend is doing all of the labor.
3)Save an extra 10K in EF

I have some really ambitious goals this year. I just got a new job in consulting which provided a 20K salary increase, but its intense travel. I'm hoping to be able to stay at it for 2 years, but because its sort of unstable I feel the need to really boost my EF just in case. I really would like to be able to pay off half of my student loans also by the end of the year, and pay the other half next year. My BF and I also have a destination wedding this month (*sigh) that I really don't want to go to but we already committed to that will cost us about $2500 each in travel. Its his best friend, and he is in the wedding.

Overall, I wish I had more in retirement savings and hope to be able to boost my contributions next year. My BF and I have also been having marriage conversations etc., so there is a possibility that may happen within the next year or two as well - so there is a lot that can change from a financial standpoint. My BF has a lot more debt than I do but a lot of assets (properties) as well. I'm hoping to be able to have some very candid conversations about finances with him in the months to come, and hoping to help him come up with a plan to pay off some of his debt.

jrb3
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Good so far, and a few tidbits to possibly consider

Postby jrb3 » Sat Jul 04, 2015 6:57 am

Greetings! You seem to have a solid grasp of your situation. Congrats!!

Some tidbits to consider, no need to answer online. FYI, I'm twenty years ahead of you, soon to hit twentieth wedding anniversary, and have handled the household finances the entire time so far.

How many months of expenses does that $10k of emergency fund cover? Does that suffice? Once you merge finances, how does that change?

Should that $10k go instead into short-term savings? Travel plus house-repair zeroes out your short-term savings as it stands right now. You have a potential marriage to plan for (which has more expenses than just a wedding, as you already know).

One item I know that's eased my mind greatly is having a specific "reserve" for my house. Is that part of your "short term savings" right now? I chose 6% of house value as my funding target, and have made good use of it over the years. For a while, we had that $20k in a separate account as a "sinking fund", but later combined several of those into one account for ease of handling.

How much of that $20k salary boost are you diverting into tax-deferred accounts? Did you raise percentage too? How much must you let flow through to take-home? Perhaps half that overflow to debts and half to emergency fund?

newb
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Re: Good so far, and a few tidbits to possibly consider

Postby newb » Thu Jul 09, 2015 12:01 pm

jrb3 wrote:Greetings! You seem to have a solid grasp of your situation. Congrats!!

Some tidbits to consider, no need to answer online. FYI, I'm twenty years ahead of you, soon to hit twentieth wedding anniversary, and have handled the household finances the entire time so far.

How many months of expenses does that $10k of emergency fund cover? Does that suffice? Once you merge finances, how does that change?

Should that $10k go instead into short-term savings? Travel plus house-repair zeroes out your short-term savings as it stands right now. You have a potential marriage to plan for (which has more expenses than just a wedding, as you already know).

One item I know that's eased my mind greatly is having a specific "reserve" for my house. Is that part of your "short term savings" right now? I chose 6% of house value as my funding target, and have made good use of it over the years. For a while, we had that $20k in a separate account as a "sinking fund", but later combined several of those into one account for ease of handling.

How much of that $20k salary boost are you diverting into tax-deferred accounts? Did you raise percentage too? How much must you let flow through to take-home? Perhaps half that overflow to debts and half to emergency fund?


Hi jrb3,

Thanks so much for the food for thought. In short I don't have answers to most. I have two separate accounts with 10k each one for house repairs, and 10k in a different bank for an emergency fund. I have very little expenses, so 10k could technically get me by i'm assuming for about 6 months in an emergency. I hope never to find out!

I do have a lot to consider regarding marriage etc., but I've decided not to focus so much on that since he has not popped the question. I do appreciate the advice about the house fund. Also, I'm currently saving about 15% in retirement. I'm doing 10% straight to my employment retirement fund, and then maxing out my Roth. I'm technically contribution about 4% more towards retirement than I was last year. The rest of my salary increase I'm saving since I'm a bit worried about the stability of my current job. If by December things look good, I plan to use $5,000 of my savings to pay off half my student loans.
Last edited by newb on Thu Jul 09, 2015 12:19 pm, edited 1 time in total.

newb
Posts: 53
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Re: Newb's financial goals

Postby newb » Thu Jul 09, 2015 12:18 pm

I wanted to post an update to my journal. I do have a financial update, but more so a discovery about myself that I need to work on :worried:

Financial:
I have upped my short term savings from 10,500 to 11,500. Not that significant but it would have been more, if I hadn't taken a trip to Jamaica. I have also broken the 10,000 barrier on my student loan! I know owe about $9,800 at 6.5% and hope that by the end of the year I can pay it off. I'm currently saving about $1400 a month, outside of my 401K and Roth contributions. Mostly because I'm nervous about my new job in the private sector, the salary is great, but I'm not sure how stable it is. I should have a better sense for whether it will last by the end of the year, at which point I will pay down half of my student loans, and then increase the monthly contributions towards them.

Discovery:
Anyway, I discovered something about myself financially that I don't really like and I hope to fix. I am a helper/giver :( I'm constantly helping or giving to others when I should be focusing on myself. I knew this before, I just hit a low point coming off of my vacation. I took $700 with me spending money on my trip to Jamaica. I bought a $100 ring, and then can't say where the other $600 went. I know my boyfriend asked me if I had some tens because he only had big bills and I gave him all the tens I had, not really thinking about it, plus he pays for most of the activities we do when we go out. However, I should have traded 10's for 100's as I would at the store, because we didn't do that much $ worth of activities. Then I helped buy groceries for his grandmother and before I knew it, I came home with 0$. This is usually the reason why I don't travel with cash. I usually buy everything I need with my credit/debit card, and never run into any problems with over-spending. I KNOW I need to fix this. I need to stop worrying about other people and worry about myself. Yes, we are in a relationship and it is give and take, and technically I would have spent some money on activities etc., but it wouldn't have been that much. This is not the first time, I've done this. I'm always helping my friends etc., and I don't shop unnecessarily, I don't accumulate debt etc., but I do feel like this is my financial bad habit. My goal for the rest of the year is to focus on me financially, no more helping others (unless its an extreme situation). I do think this is a matter of my upbringing. I'm a constant giver/overachiever because nothing I ever did was good enough at home. I've been working on it, and for the most part am much better now - except financially, which is becoming a big problem.

Any advice on how to keep my pockets to myself is strongly welcomed.

Apples
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Re: Newb's financial goals

Postby Apples » Fri Jul 10, 2015 11:38 am

Put a line item in your budget for how much you're willing to "give" each month. My husband and I don't have one right now while we finish off student loans, but when that's done it will be $50/month and increase yearly. This includes giving to charity, supporting podcasts we like, donating money towards a sick relative's medical care, and for us would include giving grandma money towards groceries. If some extreme situation came up, of course we would increase the amount, but at that point we would be readjusting our priorities to accommodate whatever the new situation is. This way, you definitely know how much you can give to others, while only opening your pockets a certain amount.

Otherwise, I guess you know already not to travel with cash.

newb
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Re: Newb's financial goals

Postby newb » Mon Jul 13, 2015 12:46 pm

Apples wrote:Put a line item in your budget for how much you're willing to "give" each month. My husband and I don't have one right now while we finish off student loans, but when that's done it will be $50/month and increase yearly. This includes giving to charity, supporting podcasts we like, donating money towards a sick relative's medical care, and for us would include giving grandma money towards groceries. If some extreme situation came up, of course we would increase the amount, but at that point we would be readjusting our priorities to accommodate whatever the new situation is. This way, you definitely know how much you can give to others, while only opening your pockets a certain amount.

Otherwise, I guess you know already not to travel with cash.


Thanks apples, I didn't think about making a line item for that. But I will! That will definitely help, and yes I will no longer be traveling with cash.

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Eagle
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Re: Newb's financial goals

Postby Eagle » Tue Jul 14, 2015 9:14 am

Apples wrote:Put a line item in your budget for how much you're willing to "give" each month. My husband and I don't have one right now while we finish off student loans, but when that's done it will be $50/month and increase yearly. This includes giving to charity, supporting podcasts we like, donating money towards a sick relative's medical care, and for us would include giving grandma money towards groceries. If some extreme situation came up, of course we would increase the amount, but at that point we would be readjusting our priorities to accommodate whatever the new situation is. This way, you definitely know how much you can give to others, while only opening your pockets a certain amount.

Otherwise, I guess you know already not to travel with cash.


Great idea apples! :)
~ Eagle
www.eaglesoaringhigher.com


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