Personal Fiance Assessment - HELP

Saving & investing, frugality & simple living. They're all part of the wealth equation.
Here's the place to discuss getting (and keeping!) your money.

Moderator: lvergon

management
Posts: 5
Joined: Wed Mar 13, 2013 10:27 am
Contact:

Personal Fiance Assessment - HELP

Postby management » Wed Mar 13, 2013 10:42 am

First time posting and hope I can get some critical advice on how I am doing financially and how I can do better. I'll lay out where I am and please let me know if I can on the right track but not only that how well have I done since entering the work force in early 2009.

28 turning 29 years old

College Loan Debt: ~$86k
Credit Card Debt: ~$18k

Rental Property Mortgage (2 family): ~$260k
Last Appraisal: ~$275k in 2011

Combined Rental Income: ~$2.2k
Principal on house is reduced approx. $360 per month during 2013

Regular Monthly Net Income: ~$4k

401k @ 8%: ~$30k
Match up to 4%

So I have a lot of student loan debt & credit card debt but recently paid off my car. So no more auto loan.

A few questions:

Where do I go from here with regards to retirement? I'm thinking obviously head toward getting rid of credit card debt. But have I done a good job so far in terms of investment levels for retirement? I know the debt is really holding me back.

The other question I have is do I have to save more than the rate at with I cam going now for retirement or should I be contributing more?

Candid assessments are welcome. Thanks!

Bichon Frise
Posts: 1106
Joined: Fri May 04, 2012 2:23 pm
Contact:

Re: Personal Fiance Assessment - HELP

Postby Bichon Frise » Wed Mar 13, 2013 12:33 pm

Just as a number, back when I was that age, and adjusted for inflation, my networth (assets - liabilities) would have been around $500k-$600k. With about 2/3rds of that in investable assets.

But, you shouldn't compare yourself to others. A) most americans probably don't save enough and b) others have different goals compared to what you may have. One thing is clear, you can't carry the credit card debt forever and make significant headway. Some may be more prone to paying off the student loan debt, others look at it more like a "life tax." Either way, a reduction in debt is in order.

I'd lower your 401k contribution to max out your match and throw everything you have the credit card and student loans. If you don't have an e-fund, I'd build that as well.
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."

avocado wrote:Good to see you back, I was starting to miss your incisive commentary!

peachy
Posts: 1148
Joined: Mon Feb 04, 2008 7:35 am
Location: Maryland
Contact:

Re: Personal Fiance Assessment - HELP

Postby peachy » Wed Mar 13, 2013 1:38 pm

I agree with Bichon Frise about reducing your 401k to the match, and getting rid of your debts. You're doing well so far, as far as I can tell, so keep up the good work.

Considering you have rental property, emergency money is good to have on hand in case something breaks and you have to fix it. You don't want to have to take out more debt when you are making progress.

LeRainDrop
Posts: 353
Joined: Tue Jun 30, 2009 9:44 pm
Location: Atlanta, Georgia
Contact:

Re: Personal Fiance Assessment - HELP

Postby LeRainDrop » Wed Mar 13, 2013 8:12 pm

For ballparking a comparison, see the results of this retirement savings survey. Only women were participants, and some of the ranges are pretty wide, so it's not good for pinpointing your place, but like I said, ballparking. http://www.dailyfinance.com/2012/11/14/ ... u-compare/

management
Posts: 5
Joined: Wed Mar 13, 2013 10:27 am
Contact:

Re: Personal Fiance Assessment - HELP

Postby management » Thu Mar 14, 2013 11:38 am

Bichon Frise wrote:Just as a number, back when I was that age, and adjusted for inflation, my networth (assets - liabilities) would have been around $500k-$600k. With about 2/3rds of that in investable assets.

But, you shouldn't compare yourself to others. A) most americans probably don't save enough and b) others have different goals compared to what you may have. One thing is clear, you can't carry the credit card debt forever and make significant headway. Some may be more prone to paying off the student loan debt, others look at it more like a "life tax." Either way, a reduction in debt is in order.

I'd lower your 401k contribution to max out your match and throw everything you have the credit card and student loans. If you don't have an e-fund, I'd build that as well.


Wow $500-$600k! Man I can really do better ha-ha.

I forgot to mention an important thing with regard to the matching. The company matches 50% of what I put in up to 4%. So to get the biggest match I have to put in 8%. So I'm already there.

I'm on of those people that put consider student loans to be a "life tax". I wouldn't be making the kid of money or be at the point of my career without it. I could have the same but I think it provided me opportunities that would have been hard to get (I think) without it.

My priority though is my credit cards but that has to start next month since I've just finished up saving for my wedding. I plan on using the snowball method for the credit cards. I can a dent in half of it by the end of the year but the rest will be a little slower due to other responsibilities after getting married, i.e. living expenses, etc.

But you think that I'm not in bad shape for where I am right now?

management
Posts: 5
Joined: Wed Mar 13, 2013 10:27 am
Contact:

Re: Personal Fiance Assessment - HELP

Postby management » Thu Mar 14, 2013 11:40 am

peachy wrote:I agree with Bichon Frise about reducing your 401k to the match, and getting rid of your debts. You're doing well so far, as far as I can tell, so keep up the good work.

Considering you have rental property, emergency money is good to have on hand in case something breaks and you have to fix it. You don't want to have to take out more debt when you are making progress.


I referenced the 401k match above.

You are right. I don't have a substantial emergency fund for the rental property. I have been fixing stuff though when they come up but I see what your saying.

management
Posts: 5
Joined: Wed Mar 13, 2013 10:27 am
Contact:

Re: Personal Fiance Assessment - HELP

Postby management » Thu Mar 14, 2013 11:41 am

LeRainDrop wrote:For ballparking a comparison, see the results of this retirement savings survey. Only women were participants, and some of the ranges are pretty wide, so it's not good for pinpointing your place, but like I said, ballparking. http://www.dailyfinance.com/2012/11/14/ ... u-compare/


Seems like I'm not in too bad a shape with regards to that survey.

Should I be saving for a particular dollar amount or should I just try to maximize what I can save every month?

I would really like to retire at 45-50 but not sure how I can do that. I was thinking real estate. The debt isn't helping though.

Ranger
Posts: 178
Joined: Sun Mar 10, 2013 12:10 pm
Contact:

Re: Personal Fiance Assessment - HELP

Postby Ranger » Thu Mar 14, 2013 9:23 pm

Management - Just a few thoughts humbly submitted from the peanut gallery.

Firstly, the fact you're here at 29-ish years old suggests to me that you're going to be long-term successful with money.

management wrote:Seems like I'm not in too bad a shape with regards to that survey.


See Bichon Frise's comment 'a' regarding comparisons to others.

Bichon's advice is particularly applicable given...

management wrote:I would really like to retire at 45-50....


In this day and age I understand why you'd consider college debt a "life tax". But regardless of nomenclature the end result is you're carrying $100K of unsecured debt into your 30s, and that is a huge obstacle in the way of early retirement.

Please know, friend, I'm not trying to beat you up over your loan and CC debt. In the first place, I'm in no position to preach to you because at 29 I'd just bought a new house and car with essentially zero money down and had a net worth of negative $150k. My only point is to highlight the challenge ahead of you: Parlaying your current income and net worth into early retirement will require immense diligence.

I'll leave you be. Just follow the advice you've received above and pay down those debts. As they say on the farm, you'll be positioned to really make some financial hay once you cut yourself loose of the CC and student loan shackles!

management
Posts: 5
Joined: Wed Mar 13, 2013 10:27 am
Contact:

Re: Personal Fiance Assessment - HELP

Postby management » Fri Mar 15, 2013 3:51 am

Ranger wrote:Management - Just a few thoughts humbly submitted from the peanut gallery.

Firstly, the fact you're here at 29-ish years old suggests to me that you're going to be long-term successful with money.

management wrote:Seems like I'm not in too bad a shape with regards to that survey.


See Bichon Frise's comment 'a' regarding comparisons to others.

Bichon's advice is particularly applicable given...

management wrote:I would really like to retire at 45-50....


In this day and age I understand why you'd consider college debt a "life tax". But regardless of nomenclature the end result is you're carrying $100K of unsecured debt into your 30s, and that is a huge obstacle in the way of early retirement.

Please know, friend, I'm not trying to beat you up over your loan and CC debt. In the first place, I'm in no position to preach to you because at 29 I'd just bought a new house and car with essentially zero money down and had a net worth of negative $150k. My only point is to highlight the challenge ahead of you: Parlaying your current income and net worth into early retirement will require immense diligence.

I'll leave you be. Just follow the advice you've received above and pay down those debts. As they say on the farm, you'll be positioned to really make some financial hay once you cut yourself loose of the CC and student loan shackles!


I may have to re-evaluate that 45-50 retirement age if things don't go as well but definitely appreciate your advice as well as everyone else's. I don't take it personal and can appreciate candid and constructive advice. People should be more open to it.

I calculated how much more I would have if I didn't have CC and student loan debt. Is is crazy how much it is, approximately $1500 per month.

showtime
Posts: 11
Joined: Fri Aug 17, 2012 7:07 am
Contact:

Re: Personal Fiance Assessment - HELP

Postby showtime » Mon Mar 18, 2013 9:26 am

I forgot to mention an important thing with regard to the matching. The company matches 50% of what I put in up to 4%. So to get the biggest match I have to put in 8%. So I'm already there.



I don't think that's right - have you checked your company matches? For me, my company matches 25% for every dollar up to 5% of my salary and if I put in more my company match isn't more. So if you're putting in 8% you're going to get the same match as if you were putting in 4. Maybe your set up is different but that's not how mine works.

RayinPenn
Posts: 988
Joined: Sat Dec 10, 2011 7:25 am
Contact:

Re: Personal Fiance Assessment - HELP

Postby RayinPenn » Tue Mar 19, 2013 3:13 am

I'll keep it simple.
1. Build an emergency fund at least what it cost to pay all your bills for 2 months.
2. Cut up all credit cards but one and take that one out of your wallet and put it in a drawer.
3. Pay down he credit card first.
4. When you pay down the credit card treat yourself to a modest dinner out
5. Then attack the student loan
6. When the student Loan is paid off treat yourself to a really nice dinner out.
7. Attack the mortgage
8. When you paid off the mortgage treat yourself.....

If you really want to retire by 50 a couple of other things
No $4 cups of coffee
No new toys
Brown bag it
Coupons yes
Pizza yes, dinner at a nice restaurant No
Cable with all the extra channels No
Limited thoughtful spending on all else..you know what I mean like what you used the credit card on in the past...develop a budget and stick to it.
RayinPenn

“If you tell the truth, you don't have to remember anything.”
― Mark Twain

Bichon Frise
Posts: 1106
Joined: Fri May 04, 2012 2:23 pm
Contact:

Re: Personal Fiance Assessment - HELP

Postby Bichon Frise » Tue Mar 19, 2013 8:07 am

RayinPenn wrote:If you really want to retire by 50 a couple of other things
No $4 cups of coffee
No new toys
Brown bag it
Coupons yes
Pizza yes, dinner at a nice restaurant No
Cable with all the extra channels No
Limited thoughtful spending on all else..you know what I mean like what you used the credit card on in the past...develop a budget and stick to it.


It would be interesting if the town doctor prescribed the same medication to the entire town.
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."

avocado wrote:Good to see you back, I was starting to miss your incisive commentary!

emoore
Posts: 167
Joined: Fri Jul 11, 2008 3:29 pm
Contact:

Re: Personal Fiance Assessment - HELP

Postby emoore » Tue Mar 19, 2013 2:48 pm

showtime wrote:
I forgot to mention an important thing with regard to the matching. The company matches 50% of what I put in up to 4%. So to get the biggest match I have to put in 8%. So I'm already there.



I don't think that's right - have you checked your company matches? For me, my company matches 25% for every dollar up to 5% of my salary and if I put in more my company match isn't more. So if you're putting in 8% you're going to get the same match as if you were putting in 4. Maybe your set up is different but that's not how mine works.


Sounds similar to mine. I get 50% up to 4%. So if I put in 8% then I get 4% match. If I put in 4% I only get 2% match. If I put in more than 8% I still only get 4%.

jaiko
Posts: 117
Joined: Sat Jun 16, 2012 8:06 am
Contact:

Re: Personal Finance Assessment - HELP

Postby jaiko » Wed Mar 20, 2013 3:10 pm

Gotta agree with the others: get rid of that debt, live frugally (not barebones, just avoid being careless with those 'extra' expenditures that suck $$ away every month) and SAVE MORE.

Ask almost any retired person and their biggest regret is usually not saving enough. In our case we did our financial planning in our mid-40's which gave us a huge leg up. It also helped that my DH gritted his teeth and stuck it out at a lousy work environment (how lousy? It probably was 90% of the reason he had a major stroke at age 50) that had good benefits.

When he hit 50 we used the 'catch-up' provision to save more than we'd done before. This was helpful for a reason we didn't immediately think of: it got us accustomed to living on a salary 12% less than he normally would have netted. As a result, we actually retired with more net income rather than less.

You're very wise at age 29 to be thinking of a financial assessment. Remember to always do one at every life-changing event: birth, death, marriage, divorce, and change of employment. As your life changes, so do your goals. Get your legal docs in order, too, and keep them updated.


Return to “Personal Finance”

Who is online

Users browsing this forum: No registered users