Entering into "the world", seeking initial financi

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Entering into "the world", seeking initial financi

Postby peripatew » Sun Apr 29, 2007 9:02 pm

My family has been in a somewhat odd place financially. Long story short: My wife and I will both be finishing school in December with less than $10,000 in student loans, and little to no money other than that. We've been living with much help from family during school, so I'm wanting to prepare ourselves for life on our own.

I've been browsing GRS and Getting Finances Done for a while, and I've got a few books on my list. But I'm searching for some initial advice is starting life. We want to live simply, and for a few years it will likely be just me working. The line of work I have chosen will likely pay the same as a teacher with similar education and experience. I've come across several spreadsheet budget planners that have helped me get an idea of areas to plan for. But, I'm somewhat uneducated with it comes to the best way to save and invest money. We won't have a lot of money to do this with, so figuring out our options seems like a good place to start.

We've considered seeing a financial planner to help us get accustomed to the financial nomenclature. It's somewhat hard to ask questions, since we are in fiscal infancy, so what advice would you give to someone in our shoes? Someone in a place where our dept is relatively small (for two people finishing college I think $10k is great!), and our doors are relatively open. A job with good benefits is on the top of our list of important things to-do since health insurance is so expensive. We are both in our early twenties with a charming 2 year old (names Titus!).

We appreciate any advice and recommended resources!


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Postby JerichoHill » Mon Apr 30, 2007 6:31 am

I would say to live below your means, think towards the future, and every now and then, splurge on a babysitter and a nice nite out.
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Postby plonkee » Mon Apr 30, 2007 11:18 am

I would start with a guesstimate budget.

Work out what your student loan repayments are going to be, and your fixed expenses, and stuff like food and fun.

Invest a healthy amount of money in your retirement, save a healthy amount of money in a high interest account towards a house downpayment if you plan to buy at some point.

Then start living it and tweaking it.

One suggestion (that I like) is to invest your retirement money in index funds. I would also put budget categories like vacations and education in. Vacation money could be saved up all year round in a high interest account and then spent on the vacation of choice. Education money could either be to upgrade your own qualifications or college savings for your kid, or both. Neither of these require a lot of money in now, but could improve your quality of life.
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Postby tinyhands » Mon Apr 30, 2007 12:42 pm

Sounds to me like you're in pretty good shape. I second the recommendation for budgeting and as a corollary to that, tracking your income & expenditures. I've used Quicken for about 10 years now. I spend about an hour a month updating my accounts and can easily see where it all goes.
Read my 'fiscal fitness' financial disclosures <a href="http://www.getrichslowly.org/forum/viewtopic.php?t=176">here</a>.

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Postby Dylan » Mon Apr 30, 2007 1:37 pm

Start out living well below your means until you can build up your financial knowledge. I think it is easier to step up your lifestyle once you know you are able than it is to dial it down once you realize you have to.

If you’re considering seeing a financial planner, talk to several before actually hiring one. The most important question you can ask is, “what can you do for us?” Also, I suggest visiting the Financial Planning Association’s consumer site at http://www.fpanet.org/public/ for articles, free tools, and other good information.

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Postby jdroth » Mon Apr 30, 2007 3:58 pm

I'm actually going to be speaking on this subject to a group of college seniors later in the month. Along with the advice to live below your means, I'd add the following three suggestions:

1. <b>Establish an emergency fund.</b> Start with $1000. Increase it later when you've taken care of the other steps.
2. <b>Avoid consumer debt.</b> If you have debt already, pay it off using a method that works for you. This is where "living below your means" comes into play: don't buy on credit. Stay debt-free.
3. <b>Save for retirement.</b> Too many people put this off. But by starting <i>now</i>, you can be way ahead of the game. Put as much as you can away in a tax-adantaged account (like a 401k or a Roth IRA), investing in index funds.

It sounds like you're off to a good start, though. Keep at it!

(Also, try reading <i>Your Money or Your Life</i>. I think this is a great book for people starting out.)

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