- October 7, 2023
- Posted by: legaleseblogger
- Category: Related News
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Title: Seeking Financial Advice for Long-Term Stability and Pursuit of Personal Goals
Introduction
Hello everyone! I hope I’ve come to the right place to seek some guidance. At 27 years old, I have recently landed a new job that pays $150,000. While I’m thrilled about this opportunity, I am also conscious of the financial responsibilities I currently hold. My college loans amount to approximately $42,000, and I have a car loan of $25,000. However, I am lucky to have no credit card debt. Currently, my girlfriend and I live together, with rent costing us each around $1,200.
Financial Aspirations and Goals
As I transition into my 30s and beyond, my aim is to ensure a smooth and comfortable future for myself. Alongside this, I have a passion for travel and an interest in older cars and motorcycles. Eventually, I would love to have a dedicated garage or “man cave” in my future home, where I can work on these vehicles. To make these dreams come true, I understand that making informed financial choices is crucial.
Addressing Existing Debts
One possible strategy that comes to mind is paying off my car loan as soon as possible, considering it carries the highest interest rate. By doing so, I can free up some financial resources to allocate towards my other goals. However, I am aware that there may be other perspectives and strategies to explore.
Exploring Investment and Savings Options
While I recognize the importance of eliminating debt, I would also appreciate any insights or advice on how to invest and save smartly. As a first-generation college graduate, none of my immediate family members possess significant financial means, with the exception of some distant relatives living far away.
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Conclusion
With a newfound job opportunity and a desire to secure my financial future, I come seeking advice on how to best manage my current debts and invest wisely. My ultimate aim is to create a solid foundation for a comfortable life ahead, which aligns with my interests in travel, older vehicles, and a potential future home. Your expertise and suggestions would be sincerely appreciated, as I embark on this exciting yet challenging journey with determination and a commitment to financial success.
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****** just grabbed a
1. Open a HYSA and save at least $20k
2. Max out 401k
3. Open a Roth IRA and max that out
4. Save 20% as a down payment for a home (maybe?)
5. Have fun
Congratulations!
You should look at the r/personalfinance wiki and flowchart. There is a lot of information there, some of which will be useful for your first interactions with the people who will be handling your payroll (401k, withholdings, IRA)
YouÔÇÖre off your a great start. The school loan is like a metastasizing cancer. You must kill it before it kills you. The faster you pay it off completely the better youÔÇÖll be. It hurts but if you have free cash consider paying down the student debt. If not, commit to paying extra above the minimum due. This is how youÔÇÖll get to your goals. So before taking everyoneÔÇÖs advice about maxing out your savings accounts, consider the looming cancer cells in your wallet.
Cheers
IÔÇÖm a professional financial advisor and planner with decades of experience.
Congratulations on the new role and that impressive salary!
Given your situation, I’d say you have a lot of flexibility to accomplish both short-term and long-term goals. Here’s my 2cents:
Immediate Steps:
1. Emergency Fund: Make sure you have 3-6 months of living expenses saved up. This is your safety net.
2. High-Interest Debt: Given that your car & student loans might have high interest, it’s a good idea to tackle that first.
Investing:
401(k) and IRAs: Make full use of your employer’s 401(k) match, if available. Consider a Roth IRA for post-tax contributions that grow tax-free.
Stock Market: Consider low-cost index funds or ETFs as a way to invest in the stock market.
Real Estate: Personally, this is my jam. Since you’re looking to set yourself up for long-term financial stability, you might also consider real estate investing as an option. While it’s a different beast compared to stock or retirement investments, real estate can offer capital appreciation, tax advantages, and an additional income stream. Let me know if I can help at all.
1. Generate emergency fund IN HYSA to cover 3-6 months expenses while paying monthly minimums
2. 401k match if offered- get the minimum.
3. Pay down all debt
4. Max out Roth IRA
5. Max out HSA
6. Invest extra in taxable brokerage account using low cost index funds or continue saving for house or other large expenses
**Live like a college student for one more year.** Take advantage of your high income to nuke your debts. Then…
1. save an emergency fund. How much is up to you. How much would you want to see in your savings if you were to be unemployed tomorrow? That’s probably how much. Each person is different.
2. start your retirement savings. Max your 401(k), Max your Roth, Max your HSA. The power of compounding interest will make you a retirement millionaire many times over by the time you’re ready for retirement. Don’t forget to invest it; don’t let it sit in the 401(k)’s money market fund!
3. Drop anything left over in a brokerage, invest in a broad market fund (SPY? FXAIX? VTSAX?)
The rest is fine print. Lots of good ideas across this thread. Enjoy, absorb, but most importantly… do them.
Build a reasonable emergency fund for 3 frugal months living expenses first, aggressively pay off all debt, bump the savings up to 6 months normal living expenses, max 401k whenever your financial advisor says, save a down payment for a house and buy when youÔÇÖre comfortable. Pay the house off aggressively and throw money in whatever your advisor suggests, I like the idea of a a Roth or real estate preferably both and other ideas too – diversify.
So youÔÇÖre in an awkward spot to max out Roth IRA because of new salary but since the income limit is based off Modified AGI you can offset it with 401(k) and other tax advantages funds. definitely talk to your financial advisor, if you donÔÇÖt have one, most 401(k) trustee have built in advisory service to help you plan without anymore out of pocket. It really depend on a lot of other factor like your time horizon and your expectations so one blanket advice probably not the best here.
Just pay your debts then worry about the investing. It took me less than 2 years to pay $42,000 in credit card debt and I was making less than you.
And what do you do fpr a living for 150 a year
Apart from the investment side, the best way you track your income/savings is simply to track it daily and this is something you will have to talk about with your partner. They can either make or break your plans!
My best advice would be to minimize daily transactions as much as possible, if you look at your monthly bank statement; you should be able to recognize every single transaction. If you donÔÇÖt then itÔÇÖs bad tracking/spending habits!
Here are the figures for gross income
a.) 150k annually
b.) $2,884 weekly
c.) $12,500 give or take monthly.
It just depends on your payment model/structure.
Net income is totally going to depend on what comes out of your paycheck outside of taxes such as insurance plans, 401k etc. etc.
Your first paycheck possibly might not be the full amount youÔÇÖre set to earn but always divide NET income by GROSS and that will be your % you take home.
If you net letÔÇÖs say 68% every paycheck, then you should be able to take home $1,961 out of a $2,884 weekly check.
Just an example donÔÇÖt take it too literal.
You should be debt free by this time next year. ThatÔÇÖs step 1 IMO. If you have the scratch to max out a Roth retirement account for 2023, do that, then start paying debt down like a madman for the rest of the year, and start contributing normally (max match from work first, then Roth IRA) and pay off your smallest student loans first and your car last, since you can always sell the car, but you canÔÇÖt sell your degree.
Generate emergency fund as a first
401k match if offered- get the maximum
Max out Roth IRA
Max out HSA
Invest extra in taxable brokerage account using low cost index funds or look into investing in real state?
Personally, my first step would be to put 15% into the 401k. That should max it. You paid your first self first and got rid a big chunk of money being taxed at 24% bracket (which is a 2% earnings right off the bat since most of your other incomes is at 22%). Also, this will allow you to learn how to live off a still fat take home paycheck while paying your future self without much thinking.
Next, I’d do two things: 1) Allocate a chunk of money for an emergency fund (~20k for 3 months, 40k for 6 months, do what you are comfortable with). 2) Pay off the highest interest rate loan you have. After you pay that off, turn that money towards the other one (car or loan). Get rid of those loans. You can easily do it in two years.
After all that, you will still have money to live a good life. You may want to put money towards a house downpayment, if that is your goal (a house is a life-style choice first, a (good) investment second. I own a million animals, no one will rent to me).
HSA max is nice as well (if available)
What I wouldn’t do: Buy any expensive items like fancy furniture or electronics. Not worth it. However, do travel. At 43 years old, I remember my travel. Life without experiences is not worth living.
Edit: Oh! No one mentioned this, but I will. Buy a decent wardrobe that matches the office. Don’t look like a schlub. Look like everyone else (or slightly nicer, if possible). You don’t have to go over the top, but a boss doesn’t want to give you the side eye for being poorly dressed for the job.
[The flowchart from personalfinance](https://www.reddit.com/r/personalfinance/wiki/commontopics/#wiki_the_flowchart) is really the best advice I’ve seen.
Congrats! Here is how I would go about things, in order of my priorities. I mention this below, but i’m not a financial advisor so recommend that you meet with one as well.
1. Create a rainy day fund – 6 months of expenses to cover you in case you lose your job
2. Pay down student loan debt in 3-5 years – don’t want to crush your ability to save so do this slow and steady. You want to still be able to do the below
3. Max out 401k (particularly any company match)
4. Backdoor Roth IRA – talk to a financial advisor, but you basically save into a traditional IRA and then can convert it to Roth so the future growth isn’t taxed. Limit is like $6k a year, but year useful
5. Invest some amount in a mix of stock and bond index funds (if you’re young, should be more weighted to equity funds)
6. **Lastly, have some fun / enjoy a bit of the money. If you’re always planning for the future, it’s really hard to enjoy the present**
Do six figure salaried positions require something more than 40 hours a week? Congratulations on landing the role! I’d focus on paying off the car and then the student debt.
Congratulations on your new opportunity!
I personally think that rent seems a little steep even for the money youÔÇÖre making. You could own property for that monthly price
Due to inflation this is good money but not great money anymore. Pay off debt and keep a good budget. When I first hit $100k I went a bit overboard thinking I had made it. I now make about $150k and save a lot more.
1st off! CONGRATS!! Now down to businessThose things you want later will take some time to get. Be ready to sacrifice a few trips and events. Be a bit more picky and make them worth wild buy you wont regret not having the money later. The advice posted sums up a lot of what you should do so I wont add to that. Just mentally prepare to save more and maybe travel a bit less for a year to really get those accounts off to a good start!
Live below your means and when I say that I mean well below. 150k is a great salary for a 27 year old. If you can live off $50k for the next 5-10 years and invest the rest you have set yourself up for success.
Live like you only make 50K and go from there.
Thanks so much for the advice everyone! It seems the general consensus is:
Max out Roth IRA
Get my company 401k Match
Utilize a HSA
Pay off all debt
Build up an emergency fund
^ This is no particular order on my part, just reciting. Thanks a bunch again
Just donÔÇÖt get a girlfriend that you need to support and you will be in good financial shape in no time!
Keep living like you are only making 36k for a couple years. Use that extra cash to invest in cash flowing real estate. Then keep doing it while you still live like youÔÇÖre poor. Buy 1-3 properties a year and then after 5-10 years, never work again. Ski instead.
1. Pay off all your debt (no gf debt until married).
2. Max fund your 401k, HSA, and a Roth if you qualify.
3. Create a brokerage account and start saving for future home. Budget a specific amount based on expected future need.
4. DonÔÇÖt finance ANYTHING outside of a house. Car loans keep people poor.
5. After you have 6-12 months emergency fund (the old ideal was one month for every $10k in salary your earn) then you can spend on toys.
If you don’t know what to do now since you’re made, you can send me 50K and set yourself a goal to make it back to 150K (200K). Pretty much a win/win to me.
Live on $50k. Drop the rest into dividend stocks. DonÔÇÖt play with the portfolio. Retire in 15 years.
Set up multiple accounts and direct deposit these amounts in each. Put 15% of your money in your company matched 401k. They should be matching 3-7% of that 15%. Putting your at 18-22% retirement savings. Putting the money away while you are young makes ALL the difference for how much money you have when you retire. Saving from 25 to 40 will net more money in retirement than starting to save age 40 to retirement.
Put 5-10% of your money in a fun money account you can use to buy whatever you want. No strings. This is guilt free spending money.
Put 5-10% in a money trading account and learn to invest. Learn it slow. DonÔÇÖt throw a huge amount in at once. Diversify some, but stick with the sectors you know best!
Give 10% away to charity or church. This is important, perhaps most important. DonÔÇÖt skip it.
Drop the rest in a checking account for bills and living expenses. Plan to pay off ANY house you buy in a 10 year or at most 15 year loan. This is how you have zero debt by age 40 and several hundred thousand in savings and are going to be living comfortably without any financial worries.
yup I have experience with this.
1. pay off the car. car debt is aaf.
2. allocate 20% net to travel.
3. allocate 40% net to basic living.
4. allocate 15% net to long term saving.
5. allocate 10% net to emergency savings that becomes other things later.
6. the remaining 5% net is random in case things get odd or want to do something nice.
7. bonus funds are then bonus funds. invest in you, her, both of you, additional long term stuff, paying off life insurance, student debt, etc.
anything else… ask.
This post just reminds me of the financial benefits of being in a relationship.
I make a similar salary and have similar debt- but canÔÇÖt imagine doing all that you are right now. Rent alone is crushing.
Look up the FIRE community on youtube. It’s all about getting financially independent as young as possible and being able to spend your life only doing things that interest you.
Then youtube Dave ramsey and his baby steps. Itll walk you through the process of getting out of debt and budgeting and building your investments & net worth.
That’s the best route and the one I’m currently on. First I got the big income. Then I followed Dave to get out of debt. Now I’m stacking my stock portfolio so I can be financially independent.
Buy yourself a house, even a small one. Stop wasting your money on rent. Once you own your house, pay off the car and keep it for a long time.
Yea your screwed, you’ll get married in 3 years have kids in another 2.
Your 150k salary will keep you comfortably broke while you raise your family.
Then you’ll need bigger house, SUV 7 seater car, a few overseas holidays, kids will get their licences you’ll need to buy them new cars, help with their education costs.
Then finally at 55 you’ll be free still broke, but able to do what you enjoy.
Until grand kids arrive. .
Dude your life is already over you just haven’t realised it yet.
What are your monthly expenses like?
I think you should make a sure investment plan for yourself so that your life goals can be better realized.
Start here: https://reddit.com/r/personalfinance/s/2rxot1J4vE
If there is a match on 401k check the vesting schedule ie: if you leave the company prior to x years of service the match vapors
Maybe we can communicate with each other.
we’re not telling…na na na-na na
take it easy for a few years. pay that debt and car off
Out of curiosity, what job path got you to 150k at 27? IÔÇÖm 25 with a degree and am making a third of that
Buy a book from Dave Ramsey. It will prioritize your finances, get you out of debt, and build the wealth you’re looking for. 7 baby steps is a great one!
I find it is easier to give advice on otherÔÇÖs money as I never have to consider risk.
r/personalfinance has a wonderful flowchart guide in their wiki that you can follow.
I havenÔÇÖt seen it mentioned but key details missing from your post.
– interest rate on college loans
– interest rate on car loans
– does new job do 401k match
depending on the interest rate and/or if they arenÔÇÖt fixed rate you want to pay those off faster. and as mentioned, build an emergency fund in a HYSA and start contributing to 401k.
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Get a financial advisor
A good one will set you up for a good income in retirement