Starting Over

[timetosave]

Outgoing Monthly:

Cell Phone 150.00
Cable/Internet 140.00
Braces 144.00
Riding 320.00
OnStar 39.00
Food 200.00

Grand Total of 993.00

Incoming Monthy: 2,770.63

Ok, this is what I have to work with, this is my monthly budget, I've cut quite a bit out of my montly outgoing over the past year, I'm down to this.

No debt beyond this.

Where would you put the rest of the montly income?

thanks

[bjl584]

A few questions:

What is riding?
Also, as long as you have a cell phone, in my opinion Onstar is unnecessary.
Lastly, do you currently have any investments?

[timetosave]

riding is equestrian riding (dd). In our state you can not talk on your phone while driving, OnStar is important to me more for the safety of having a satellite knowing where I am in the even of an emergency than anything else.

My investments are the following (this is all I have but would love advise on more).

TIAACREF:
Equities 51.62%
Real Estate 11.83%
Guaranteed 27.29%
Fixed Income 9.26%
Total 100.00%
My Total Retirement Saving Assets: $18,323.09

Fidelity:
100.00% FID FREEDOM 2030 $1,959.35
100% $1,959.35

Investments by Asset Class

Balance Shares
or Units NAV/AUV Change Per
Share or Unit ($)
Blended Investments*
FID FREEDOM 2030 $1,959.35 140.254 $13.97 +$0.08

[bjl584]

I'd say that first off, you need an emergency fund (6 months worth of living expenses saved up in cash in a high yield savings account.) After that is taken care of, set up a Roth IRA.

[mrpaseo]

Assuming you have a written budget (Not just winging it).

Step 1: Let's start at the beginning, do you have an emergency fund? If not, start with 1000 dollars in a high interest savings/money market.

Step 2: All bills paid? If not snowball them and get rid of them.

Step 3: Now that your out of debt, build up your emergency fund to cover 3-6 months of your bills.

Step 4: Invest 15% of your income for retirement (401k first, then Roth IRA) This also depends on your age and other veriables that will need to be sorted out.

Step 5: If you have any children, start a college fund for them.

Step 6: Pay off y our house, if you don't have one start saving for a down payment because someday you will want one.

Step 7: Build wealth through a diversified mutual fund portfolio based on your want's/needs etc. Again there is a lot of ways to handle this one, we would need to know a lot more about you to properly answer this one.

Then enjoy life.
Ray

[timetosave]

Originally Posted by mrpaseo

Assuming you have a written budget (Not just winging it).

Step 1: Let's start at the beginning, do you have an emergency fund? If not, start with 1000 dollars in a high interest savings/money market.


No emergency fund, I will start this today, I have a little over 3,000.00 in savings right now. I will move 1,000.00 to an ING account today.

Step 2: All bills paid? If not snowball them and get rid of them.


All bills are paid, done, no debt.


Step 3: Now that your out of debt, build up your emergency fund to cover 3-6 months of your bills.


Step 4: Invest 15% of your income for retirement (401k first, then Roth IRA) This also depends on your age and other veriables that will need to be sorted out.

I'm 42...
What I have listed above are the only investment tools my employer offers, It looks as if I should be saving 219.00 bi-weekly, I will get that going from the next paycheck.


Step 5: If you have any children, start a college fund for them.


What is the best way to do this? I do have one daughter she is 13.


Step 6: Pay off y our house, if you don't have one start saving for a down payment because someday you will want one.




Step 7: Build wealth through a diversified mutual fund portfolio based on your want's/needs etc. Again there is a lot of ways to handle this one, we would need to know a lot more about you to properly answer this one.

What info do you need? I am here for help and will be more than willing to provide what you need.

Then enjoy life.
Ray

Thank you for your suggestions, What is listed above is my budget, I've been tracking my spending now for two months.

[atomicrc11]

For the college fund, I like 529 Plans. Each state has at least one, depending on what state you live in you may want to look at some other state's plan. For example, if you are a resident of New York State, you can deduct up to $5000 of your contributions from your state income tax.

However, your state may have a bad plan with high fees, in which case you may want to open a plan with another state. You don't have to live in the state your plan is sponsored by. For me, in the Commonwealth of Massachusetts, there is no income tax deduction for contributing to the Massachusetts sponsored plan, so I can essentially choose which one I put my money in. However, I personally would still go with the MA plan since it is run by Fidelity which is a good company and the fees aren't outrageuous. This way if they ever did start allowing deductions, I wouldn't have to switch plans.

If your state plan isn't good, the ones run by Fidelity in MA or the Vanguard run 529's in New York or Utah are very low cost plans with good investments.

In what state do you reside?

Also, don't put too much in. If you don't use it all for college tuition and fees, the rest can only be used for another child or relative's child to get the tax free gains. Otherwise you'll have to pay income tax plus a 10% penalty.

[mrpaseo]

Do you have access to excel? If so I can send you a budget that you can manipulate to work with your life. I have been using it for about 10 years now and I have given it to over 300 people that all use it. Let me know I can e-mail it to you.

Your daughter is 13, mine just turned 12, they grow so fast dont they? I have a few 529 accounts and an education IRA account. This late in the game were not hoping to pay all the college bills but hopefully we can curb them. I clearly started to late in the game so I am with you on this. I set up my accounts through Vanguard, I like this family because they have some of the lowest/no load funds (Meaning they do not charge much for the fund, and they take out the fees before they give dividents). Vanguard is only a number of MANY good funds, I also hold funds in Fidelity (I really enjoy their view all function that they have to track all your funds and bank accounts on one page), and I also hold Janus. Any one of these families or the countless others have 529 and education IRAs. Hopefully someone else can chime in with some suggestions, until then, read up on 529s and education IRAs. Chose a dollar amount, say 100-200 per month and invest that towards the education, like I said it will not cover all, it will probably only dent the first year, but it will get her in the door and if she does well (Maybe with dads help) she can obtain scholarships and grants.



As for building wealth, we basically need to figure out what you are saving for. Will you need the money in less than five years or more than five years. I always have my students write up short and long term goals. We then go from there by backwards planning. For instance, if you want to buy a house in 6 years you need to figure out how much you want to spend on a house, let's say 100,000 for simplicity sake, you then need (Or should) put at least 10% down, 20% is better but 10% will show the commitment and that you can afford the payment. You see you need 10,000 for the downpayment, now divide that by six years and you need to save 1,666.67 per year or 138.89 per month to meet that goal. Of course we would then decide where to put this money to halp it grow (Right now I would suggest ING Direct or one of the on line banks that offer the higher yield).

So, figure out what your goals are and let's tlk about them... though, I do need to sign off for the night (I am in Iraq right now). I will check back in the morning.

You can e-mail me or post here, either way is fine with me but keep in mind you will get more opinions if you post in the open forum here.

Ray

[Aleta]

You can put away money from your income even though you're investing with your job. I don't know if you are putting away the maximum but if you're not, you can invest in Roth IRA's as well.

I would also reccommend the 529 plan for your daughter as well. Vanguard has low fees.

Although it's great that you're taking care of your daughter's future; you need to think of yours as well. Your daughter can always get a student loan. As the wise Suze Orman tells parents - "there are no loans for retirees". Taking care of yourself is taking care of your daughter.

[mrpaseo]

See, that's a good point, the 529s must be used for college of some sort (Let's say higher education) an alternative is to open a mutual fund portfolio and tell yourself it's the college fund, you will not receive any tax benifits but if she receives grants and does not need the money, then we have to figure out where to spend this money without penalty.

Since we are so close to her going to college, you could consider EE SAvings bonds, you do not pay any Federal taxes when you purchase them and if you use them for higher education you do not pay the fed tax at all, if you don't use them for higher education, then you only pay the taxes (After one year, if you cash them before one year you give up three months worth of interest). If you had to wait longer than five years I would not suggest EE Bonds as they are offering about what you can get at ING right now, but the kicker is the taxes you will save, though small every cent counts.

Ray

[mrpaseo]

Originally Posted by Aleta

You can put away money from your income even though you're investing with your job. I don't know if you are putting away the maximum but if you're not, you can invest in Roth IRA's as well.

I would also reccommend the 529 plan for your daughter as well. Vanguard has low fees.

Although it's great that you're taking care of your daughter's future; you need to think of yours as well. Your daughter can always get a student loan. As the wise Suze Orman tells parents - "there are no loans for retirees". Taking care of yourself is taking care of your daughter.

This is an excellent point, and this is why I suggested you chose a set amount and put that away, you will need the rest to secure your future, not only retirement, but the years inbetween the "Retirement" years and the year you would like to stop working. Meaning, if you want to stop working when you are 50 (Assuming you have the funds or pention to do so) then you will need divident income annually to assist your living until you can tap into your retirement funds at (What is it now 70 1/2 or is it still 67?)

Ray

[mrpaseo]

Okay, one more point and I am off for the night, with your calculations above you said you had about $1,775 remaining after bills. We are going to put say 150 into the college fund per month (1626 remaining) and 15% (About 416 per month) into your Retirement (BTW do you have a 401k?), that leaves about 1210 left. You can decide if you want to play catch up with your Retirement acconts, but you will use some of this to build up or establish your pre-retirement portfolio.

Think about what other expenses you might have in the future such as a new (Used) car to replace what you have now, vacations... actually you need to get all this into the budget because you didn't say anything about birthdays or Christmas... I save monthly for these and other events and you should to, this way when the end of the year comes around your not looking for money to buy presents for you rlittle one (She's getting into tech stuff now right, mine has like three video games and her own cell phone (That she has had since she was 10 years old)).

Ray

[timetosave]

Ray thank you so much, your input is much appreciated. I just signed up for the 15% into retirement, I am looking into Vanguard to put the 150.00 monthly into the college fund (will also look into saving money in a 529).

I do not have a 401k...I thought you could only have one if your job offered it? Can I open one on my own? Can I also open a Roth outside of my employer?

Thank you all for your help, it feels good to be focusing on saving and not spend, spend, spend.

[Joan.of.the.Arch]

If I remember correctly, you have at least one other child and a spouse to think of, but things may have changed since your previous posts here. Even your disabled son does have a future, and you might want to help provide for that. If part of what you list as income is from his disability payments, you need to remember to plan for future years as if that money were gone by the time he is an adult. You might not have mingled accounts once he is an adult and possibly living elsewhere. Likewise, your disabled husband may need extra provision as he grows older. His needs might become more intense and more basic. Also, if he were to die, would you need to replace that income?

I do not see house payments or utilities on your list, so I'm guessing that you still have separate finances and that your spouse pays for those things. If he dies, is there life insurance that will kick in, or do you need now to reassess what your possible future basic living needs would be? You might need to kick in more in the future than you do now.

I remember, too, that you had problems with car payments, so try to set aside money for car repairs and future car purchases.

[jIM_Ohio]

What are your financial goals? You have a high amount of disposable income, but did not list what you want out of money or out of life.

In general- save 20% of gross pay
put 15% of gross pay towards retirement (in 401ks and IRAs)
put 5% in a taxable account for mid term expenses (new car, new house, new horse).

[djabloel]

Do not forget to make a will (especially if own some property). After the basic things like saving for a down payment for a house, life insurance, 401K matching, invest some of your "mad money" in stocks or mutual funds.

[timetosave]

Originally Posted by Joan.of.the.Arch

If I remember correctly, you have at least one other child and a spouse to think of, but things may have changed since your previous posts here. Even your disabled son does have a future, and you might want to help provide for that. If part of what you list as income is from his disability payments, you need to remember to plan for future years as if that money were gone by the time he is an adult. You might not have mingled accounts once he is an adult and possibly living elsewhere. Likewise, your disabled husband may need extra provision as he grows older. His needs might become more intense and more basic. Also, if he were to die, would you need to replace that income?

I do not see house payments or utilities on your list, so I'm guessing that you still have separate finances and that your spouse pays for those things. If he dies, is there life insurance that will kick in, or do you need now to reassess what your possible future basic living needs would be? You might need to kick in more in the future than you do now.

I remember, too, that you had problems with car payments, so try to set aside money for car repairs and future car purchases.

Hello, the monies listed are not mingled with my ds monies. His money goes into a savings account and is only used for his needs. House payments and utilities are indeed paid for by dh, and we have a very generous (taking into account that we have a daughter who wants to attend college) life insurance policy on both of us. I no longer have a car, in the event of dh's death the life insurance policy will pay off his car (not much left on that) which will serve us well, I no longer pay a car payment, I take public transportation instead

[timetosave]

Originally Posted by jIM_Ohio

What are your financial goals? You have a high amount of disposable income, but did not list what you want out of money or out of life.

In general- save 20% of gross pay
put 15% of gross pay towards retirement (in 401ks and IRAs)
put 5% in a taxable account for mid term expenses (new car, new house, new horse).

Lol...new horse.

Honestly I don't have a financial goal...the more I think about it the less I realize I know..right now I'm either saving for retirement or college...nothing else, this is why I am having such a difficult time figuring out what to do with the rest of the money...I have no idea what I want.

[timetosave]

Originally Posted by djabloel

Do not forget to make a will (especially if own some property). After the basic things like saving for a down payment for a house, life insurance, 401K matching, invest some of your "mad money" in stocks or mutual funds.

I know I want to do this, (stocks/mutual funds) but there is so much informtion out there...I simply have no idea where to start, I'm reading everthing I can get my hands on...but it is very confusing for a new comer.

[jIM_Ohio]

Originally Posted by timetosave

Lol...new horse.

Honestly I don't have a financial goal...the more I think about it the less I realize I know..right now I'm either saving for retirement or college...nothing else, this is why I am having such a difficult time figuring out what to do with the rest of the money...I have no idea what I want.

I would follow my general guidelines posted earlier (save 20%, 15% to retirement and 5% to short and mid term savings) until you decide what you want. The good thing about general guidelines is sometimes they can provide direction when you do not know what you want or do not know what to do next.