Thoughts on how I manage my finances? - The Finance Forums: Financial planning, debt help, loans, mortgages, retirement and 401k, investment, and general finance discussion forums

foofoodar · #1 (**permalink**) 05-16-2008, 03:40 PM

Hi,

I was just randomly browsing the web, reading about finances, ways to save money, etc...and I stumbled across this site.

I will be 26 in a week, I have a full time job making around $38,400 annually, I've been with the company 8 months.

I still live with my parents, which I find nothing wrong with that because I'd rather save some money than pay rent, so I can buy my own place, right now I am trying to save for a condo.

The only debt I have is right around $18,500 in student loans at 4.5%, monthly payment on this is right around $205.00 a month, and I tend to give them $250.00 a month.

Other then that I have no debt, no car loans, just the normal bills, cell phone, car insurance, etc...

I recently started a budget, just to see where my money goes, and I am amazed to see how much goes to eating out, going out, etc...

The reason I started this budget, was to see how I could handle a $1,000 a month mortgage, so I've been putting
$1,000 a month into my savings, and I only tend to keep $500-$1000 in my checking because I know if I keep more in there I will spend it on stupid stuff. (Of course this is just for the mortgage, now I have to think of all the other stuff I would be paying for if I owned it, either way, at least I've saving a grand a month right now!)

My 401k will be starting in a few months, right now I have a Roth IRA that I put $225.00 a month in, and I really have no idea at my age how much I should be dividing between the 401k and Roth IRA, any thoughts?

I have a credit card through my bank with a $15,000 dollar limit, it has no balance on it, and a 7.9% fixed interest rate.

My credit scores are all in the 780's-790's.

I don't think I'm doing so bad for my age and how much I make, I'm just wondering if I should be doing anything a little different?

Thoughts? Suggestions?

Thanks!

maat55 · #2 (**permalink**) 05-16-2008, 09:55 PM

Quote:

Originally Posted by foofoodar

Hi,

I was just randomly browsing the web, reading about finances, ways to save money, etc...and I stumbled across this site.

I will be 26 in a week, I have a full time job making around $38,400 annually, I've been with the company 8 months.

I still live with my parents, which I find nothing wrong with that because I'd rather save some money than pay rent, so I can buy my own place, right now I am trying to save for a condo.

The only debt I have is right around $18,500 in student loans at 4.5%, monthly payment on this is right around $205.00 a month, and I tend to give them $250.00 a month.

Other then that I have no debt, no car loans, just the normal bills, cell phone, car insurance, etc...

I recently started a budget, just to see where my money goes, and I am amazed to see how much goes to eating out, going out, etc...

The reason I started this budget, was to see how I could handle a $1,000 a month mortgage, so I've been putting
$1,000 a month into my savings, and I only tend to keep $500-$1000 in my checking because I know if I keep more in there I will spend it on stupid stuff. (Of course this is just for the mortgage, now I have to think of all the other stuff I would be paying for if I owned it, either way, at least I've saving a grand a month right now!)

My 401k will be starting in a few months, right now I have a Roth IRA that I put $225.00 a month in, and I really have no idea at my age how much I should be dividing between the 401k and Roth IRA, any thoughts?

I have a credit card through my bank with a $15,000 dollar limit, it has no balance on it, and a 7.9% fixed interest rate.

My credit scores are all in the 780's-790's.

I don't think I'm doing so bad for my age and how much I make, I'm just wondering if I should be doing anything a little different?

Thoughts? Suggestions?

Thanks!

Your doing fine, What you need is a plan. Now is a good time for you to read personal finance books.

The Total Money Makeover by Dave Ramsey is a good book to learn how to get debt free and stay debt free, then build wealth.

Rich Dad Poor Dad is a good book to learn how to build wealth. It is an interesting view on how money works.

The Millionaire Next Door is a good is a good overall book on how many people live to consume and throw away their potential.

You will win with money, when you learn to build it and have it work for you. Good luck.

AllThingsPersonalFinance · #3 (**permalink**) 05-18-2008, 06:04 AM

Quote:

Originally Posted by foofoodar

Hi,

I was just randomly browsing the web, reading about finances, ways to save money, etc...and I stumbled across this site.

I will be 26 in a week, I have a full time job making around $38,400 annually, I've been with the company 8 months.

I still live with my parents, which I find nothing wrong with that because I'd rather save some money than pay rent, so I can buy my own place, right now I am trying to save for a condo.

The only debt I have is right around $18,500 in student loans at 4.5%, monthly payment on this is right around $205.00 a month, and I tend to give them $250.00 a month.

Other then that I have no debt, no car loans, just the normal bills, cell phone, car insurance, etc...

I recently started a budget, just to see where my money goes, and I am amazed to see how much goes to eating out, going out, etc...

The reason I started this budget, was to see how I could handle a $1,000 a month mortgage, so I've been putting
$1,000 a month into my savings, and I only tend to keep $500-$1000 in my checking because I know if I keep more in there I will spend it on stupid stuff. (Of course this is just for the mortgage, now I have to think of all the other stuff I would be paying for if I owned it, either way, at least I've saving a grand a month right now!)

My 401k will be starting in a few months, right now I have a Roth IRA that I put $225.00 a month in, and I really have no idea at my age how much I should be dividing between the 401k and Roth IRA, any thoughts?

I have a credit card through my bank with a $15,000 dollar limit, it has no balance on it, and a 7.9% fixed interest rate.

My credit scores are all in the 780's-790's.

I don't think I'm doing so bad for my age and how much I make, I'm just wondering if I should be doing anything a little different?

Thoughts? Suggestions?

Thanks!

Pay off your student loan before you do anything else. That is your first priority. Pay as much as you can toward it each month. When it is cleared, then you can look to everything else.

Not a fun or sexy plan, but good ones seldom are.

snigster · #4 (**permalink**) 05-19-2008, 02:32 AM

If you put your $1000 a month into a savings account with a higher interest rate than your student loan, I would say you are doing grand! If you are receiving lower interest than you're paying on the loan however, I would agree with the above poster and agree you should get your student loan paid off.

Your credit score is pretty good and you seem to have your head screwed on. Either way, you sound like you are doing pretty well

foofoodar · #5 (**permalink**) 05-19-2008, 06:05 PM

I agree with you in some ways on paying off the student loan debt, because it is not a fun thing to have right now, but I do not want to be living with my parents when I turn 30!

The 1,000 dollars a month is going into a savings account that used to be 4.5%, but because of all the recent interest rate drops it is down to 3.0%, I'm currently with ING Direct.

It just seems to me like I need a better plan, or maybe I just need to find a way to make more money. Otherwise I will never be able to do much.

I think its easy for people like my father to say I should live without having payments on cars, homes, etc, because he has paid cash for everything his whole life, times have changed though and I don't know very many people that can pay cash for items like that. Its scary to think that people in there 30's, 40's, 50's and so on are in worse shape than I am by far.

Why is personal finance so depressing?

maat55 · #6 (**permalink**) 05-20-2008, 02:53 AM

Quote:

Originally Posted by foofoodar

I agree with you in some ways on paying off the student loan debt, because it is not a fun thing to have right now, but I do not want to be living with my parents when I turn 30!

The 1,000 dollars a month is going into a savings account that used to be 4.5%, but because of all the recent interest rate drops it is down to 3.0%, I'm currently with ING Direct.

It just seems to me like I need a better plan, or maybe I just need to find a way to make more money. Otherwise I will never be able to do much.

I think its easy for people like my father to say I should live without having payments on cars, homes, etc, because he has paid cash for everything his whole life, times have changed though and I don't know very many people that can pay cash for items like that. Its scary to think that people in there 30's, 40's, 50's and so on are in worse shape than I am by far.

Why is personal finance so depressing?

Your just young and impatient to be a consumer. Your father is smart that he pays cash for cars and everything else. Investing 10% of your earnings along with good management of the other 90% will have rich early in life. Be patient and read books now, it will payoff sooner than you think.

Remember, most people go through life buying junk instead of building wealth. Trust me, they are not happy because living paycheck to paycheck is miserable, I know, I did it for many years. Now, I'm debtfree with money in the bank and investing heavily. I've never been happier, but I regret that I didn't start earlier. You have to make it a normal part of your life to invest, don't blow it.

foofoodar · #7 (**permalink**) 05-20-2008, 03:33 AM

Well I guess I'm doing pretty good right now by living at home considering that I figure I am saving 60% of my after tax income annually right now.

I think everybody who is young is impatient these days...I love it when I meet people my age who are so in debt that I don't know what I would do...but I will say one thing it is very hard to meet a woman when you are 26 and living in your parents basement LOL.

So being I haven't read any of these personal finance books, which one would be a good one for me to start out with?

maat55 · #8 (**permalink**) 05-20-2008, 05:02 AM

Quote:

Originally Posted by foofoodar

Well I guess I'm doing pretty good right now by living at home considering that I figure I am saving 60% of my after tax income annually right now.

I think everybody who is young is impatient these days...I love it when I meet people my age who are so in debt that I don't know what I would do...but I will say one thing it is very hard to meet a woman when you are 26 and living in your parents basement LOL.

So being I haven't read any of these personal finance books, which one would be a good one for me to start out with?

The Total Money Makeover by Dave Ramsey
The Millionaire Next door
The Wealthy Barber
Rich Dad Poor Dad

In this order would be good.

rachael24 · #9 (**permalink**) 07-18-2008, 01:55 PM

I only read the Millionaire Next Door and Rich Dad Poor Dad...thought both were fantastic reads.

Jerrydill · #10 (**permalink**) 07-18-2008, 05:58 PM

I would focus on paying off your student loans first as well. When you find a house or condo, I would suggest looking for one that is fairly small considering you live by yourself. Don't go beyond your means.