Advice on my Master Plan

[wolfrage]

OK, so I'm a 30 year old single guy that has crap credit (college and being in the Army was fun but expensive), about $4k of stuff showing on his credit report (none with interest), and $12k in a student loan still being paid off. I get paid 1575 every 2 weeks and get $501 every month on the first from my VA disability pay. I put 7% into my 401k, which my company matches to 4%.

So, my monthly expenses (rounded up or slightly exaggerated) are:

825 rent
50 TV
22 game rental membership
30 Vonage
65 Electricity
45 fios internet
30 for sites
13 Tivo
20 renters insurance
------
1100

I am not putting my student loan in that as that money will be kept separate

Yearly, my expected expenses are:

1k car insurance
150 car expenses
50 XBL membership
400 Random expenses
-------
1600 yearly. Figure 150 monthly (rounded up, just in case).

Added together, I have to put away 1250 a month, so that's 625 a paycheck to cover everything I've been able to think or EXCEPT food and gas.

All my monthly expenses (except my rent) are put on a $500 limit CC.

After my 401k cash, taxes and all that good stuff come out of my check, I also have $350/month going into my ING savings account. I plan on doing that until it hits $10k or so and then I'll drop that to $100-150 and the rest I'll put into an index fund, etc.

So, with $350 a month going into savings already, I get $1001 to pay my bills and everything else. So, I opened a money market fund and am going to place $650 a paycheck (The 625 rounded up to be safe in case of rate changes, etc) into it using direct deposit. I am setting up a reoccurring payment through the CC company to pull payment from the MM on the 20th of each month to automatically pay off all balances since last statement. That means all my regular expenses except rent are paid magically without me needing to see the money. My Rent will be paid using one of the 3 check withdraws the MM allows.

That leaves me $350/paycheck. Minus $50 for my student loan (my min payment is $78) and I have $300/paycheck left. That 600 a month and my disability pay gives me 1100. Putting 100 into my quick access savings (not my ING) and figuring 200 a month for "special" funds, that leaves me 200 a week for gas (I don't go much and it's 30 miles a day to work in my Civic) and food and randomness.

So, what should I do with that 200 in "special funds"? I can use it to pay the small debts off quicker, put it towards my student loan payment, send it to sharebuilder or some combo of the above.

My MM and ING savings will NOT be linked to my normal checking and quick-access savings. My goal is to have every bill paid for automatically before I see the money so that it'd be very hard for me to screw up my finances (especially since I'm an impulse buyer). I'm even thinking of using a pre-paid CCs for food shopping and gas.

Any comments or suggestions on what to watch out for or improvements, etc?

[Broken Arrow]

Welcome to the forums, Wolfrage.

For some reason, your numbers are swimming across my eyes. I guess that's what I get for trying to read this on a Saturday night.

Ok, let me try this again... mmm... fios.

Anyways, it sounds like you've got a game plan. How much is your take home again?

Also, it doesn't sound like you're planning to go on a financial diet, are you? You just want your ship to float on by, right? Or do you have any particular goals in mind? Because, if so, you can really gain a lot of speed in your cashflow by trimming out a bunch of stuff. You can then take all that extra money, invest it or pay down your student loans.

At least that's what I'm trying to do myself.

[wolfrage]

Originally Posted by Broken Arrow

Welcome to the forums, Wolfrage.

For some reason, your numbers are swimming across my eyes. I guess that's what I get for trying to read this on a Saturday night.

Ok, let me try this again... mmm... fios.

Anyways, it sounds like you've got a game plan. How much is your take home again?

After my 401k, $350 to savings and taxes, I take home $1001 every 2 weeks. My rent is $825.

Also, it doesn't sound like you're planning to go on a financial diet, are you? You just want your ship to float on by, right? Or do you have any particular goals in mind? Because, if so, you can really gain a lot of speed in your cashflow by trimming out a bunch of stuff. You can then take all that extra money, invest it or pay down your student loans.

At least that's what I'm trying to do myself.

Yeah, I'm not trying to reduce my spending so much as handling it better and letting my excess grow. I figure that as long as I keep $350 a month going to savings, 7% of my salary (matched to 4%) into the 401k and 200-300 into other investments, and every bill is automatically paid before I can even see the money, I should be able to start building wealth for mid to long term. I'm not trying to become a millionaire, but it'd be nice

Just wish I knew what to put that 200-300 a month into for investments. Maybe straight into the same savings account I put my $350 a month into? Or maybe my MM since it makes more interest. Or my student loan. I don't use credit anymore and i'm not planning on buying a house or condo (hell, I pray every night that I won't be living in NH long enough to make either worth while ) so my credit rating isn't a priority (though I do of course want to not owe anyone anything).

[humandraydel]

You seem to have a pretty good plan. As for any extra money you have for investing, I'd open a Roth IRA. The max per year is $4,000. If you have any extra after that, then you could open a taxable account. If you don't have time or aren't interested in doing much research into mutual funds and/or stocks, just stick the money in index fund(s). I definitely wouldn't just put the money into a savings account, even if it's a high yield one like ING.

You don't mention what your student loan interest rate is. I assume it's low, so I wouldn't be in a hurry to pay it off. If it's 7-8+%, however, it may be worth paying it off early.

[Broken Arrow]

Originally Posted by wolfrage

Just wish I knew what to put that 200-300 a month into for investments. Maybe straight into the same savings account I put my $350 a month into? Or maybe my MM since it makes more interest. Or my student loan. I don't use credit anymore and i'm not planning on buying a house or condo (hell, I pray every night that I won't be living in NH long enough to make either worth while ) so my credit rating isn't a priority (though I do of course want to not owe anyone anything).

I see. Well, I think you answered yourself with that last part about not wanting to owe anyone anything. Frankly, I don't either, and that's why I'm paying way above minimum to get rid of my student loans. So, that's what I would do with the extra money: Use it to beat down the student loans. As an added bonus, it'll also improve your credit rating.

[wolfrage]

Originally Posted by Broken Arrow

I see. Well, I think you answered yourself with that last part about not wanting to owe anyone anything. Frankly, I don't either, and that's why I'm paying way above minimum to get rid of my student loans. So, that's what I would do with the extra money: Use it to beat down the student loans. As an added bonus, it'll also improve your credit rating.

Yeah, I don't have the percentages off-hand but it makes sense to pay them off quicker so I guess I'll do that with at least part of the excess. Maybe half for that and half into an index fund at the least.

[humandraydel]

Originally Posted by wolfrage

Maybe half for that and half into an index fund at the least.

...in a Roth, right?

[wolfrage]

Originally Posted by humandraydel

...in a Roth, right?

Heh Yes, I promise

[Budgeteer]

If you have some extra money and are investing only 7% of your pay in a 401k currently, I'd probably bump up the 401k contribution as a first step. 10% is a fairly normalish baseline recommendation, with 15% being a really good goal.

[Fern]

I was just going to say that 7% going into a 401k for a guy in his 30s is really not a lot of money, but i see budgeteer beat me to it. If you've got extra money for investing, definitely put it in a tax-deferred vehicle, like more going into your 401k or else an IRA, before you put it into a taxable investment. That way, you'll get more bang for the buck.