What should I do?

[neatdesign]

Originally Posted by moneymatters

As for tithing, my pastor has always taught me to give at least 10% of my gross income to God (or the church), and that's what I'm doing and will continue to do. My gross income is $2210/month.

Firstly, no offense to your pastor, but his advice to give at least 10% of your gross income -- or ANY of your income, for that matter -- is not exactly objective, is it? Instead, he actually has a vested interest in getting members of his congregation to give as much money as possible to his church.

I'm not suggesting you not donate any money to your church, just to reduce it until you're financially stable enough to donate more. I don't see how any member of the clergy would have a problem with one of their congregants doing that.

Secondly, does your pastor know that you, at the ripe old age of 20, are already $40,000 in debt? Does he know that you're just barely scraping by, living paycheck to paycheck?

I highly suspect that your pastor does not know this. If he did, then he would understand the need for you to cut back on your tithing, would be perfectly ok with it, would not give you a guilt trip about it, and instead support you by finding ways for you to donate your time or other non-monetary contributions to his church instead.

~ Jenney

[project15]

Originally Posted by neatdesign

Firstly, no offense to your pastor, but his advice to give at least 10% of your gross income -- or ANY of your income, for that matter -- is not exactly objective, is it? Instead, he actually has a vested interest in getting members of his congregation to give as much money as possible to his church.

I'm not suggesting you not donate any money to your church, just to reduce it until you're financially stable enough to donate more. I don't see how any member of the clergy would have a problem with one of their congregants doing that.

Secondly, does your pastor know that you, at the ripe old age of 20, are already $40,000 in debt? Does he know that you're just barely scraping by, living paycheck to paycheck?

I highly suspect that your pastor does not know this. If he did, then he would understand the need for you to cut back on your tithing, would be perfectly ok with it, would not give you a guilt trip about it, and instead support you by finding ways for you to donate your time or other non-monetary contributions to his church instead.

~ Jenney

I'm not sure what I think about this, but by the way I'm living right now, my actions would say I do agree with you. I found out recently that my parents give 10% of their NET income rather than gross. Currently, I'm giving like 3% since me and my wife are about $40k in debt with student loans as well. God understands even if the church doesn't.

[moneymatters]

neatdesign,
I understand where you're coming from, and I sincerely appreciate your input on my financial state. However, tithing 10% of my gross income is sort of a commitment I've made to myself and to God/church. It's a little difficult to explain to help you understand, but it's my choice, not a requirement from my church. No, my pastor does not know about my debts, neither do my parents nor my friends for that fact. Giving 10% of I earn is what I WANT/CHOOSE to do, which I will continue to do no matter how much $ I earn.

Once I sell my car and reduce additional expenses, I shouldn't have to worry about living from paycheck to paycheck. I'll me able to save/invest some while paying off my student loans at the same time.

project15,
I know God understands, but it makes me feel much better to tithe 10%, not 5% or 3%. It's good that you are tithing and supporting your church though. Thanks much for your post.

[Scanner]

1. If you aren't using your cell phone as a landline (I would assume your parents have a landline), then go with a tracphone. I have one and I bought 360 minutes for 1 year for $110.00.

Ridiculously cheap but you must only use it for basic communication (I'm picking up milk, what time we meeting?) and not "chatting."

If you happen to get a girlfriend who is chatty, well, then you spring for some more minutes.

2. Sell the car youself. Buy a FOR SALE sign and stick in the window and park it in a conspicuous place where there is traffic. I wouldn't put in the wiggle room for pricing and I'd price right at BLUE BOOK, and maybe take a tad under. As you can see, the dealerships are way undercutting you so you have to be competitive. I"d probably put an asking price of $11,700 on it.

You are actually in a good negotiating position. When they ask why are you selling it, you just say, "I decided it's too much car for a guy my age. But the car is in great shape."

Go to your states DMV website to see how to legally handle the transaction or visit DisneySteve's thread.

3. Generally speaking - retire credit card debt first, student loan money second and real estate third. However, given the fact your real estate isn't a house and there may not be a line item deduction for you, retiring that investment land may be better. Then, if it's possible, lease it back out for a little passive monthly income until you are ready to develop it.

You do get a deduction on your student loans.

I would resist consolidating unless you can keep the same term. Most student loans allow an "alignment" which means you can send in one payment and they disburse it all the little loans you have. This keeps your term the same.

4. To take a bus or to buy a used car? Hmmmm. Tough one. I assume you are young, like 23, and having transportation keeps you more marketable in the workplace. I would probably elect for a good used car u7unless you are a true urbanite.

To let you know, our family brought in 6 figures last year and I bought a 1999 Ford Taurus with 57,000 miles on it 2 years ago for $4600 + tax/tags = $5000.00. Very dependable (could be a little better on gas though).

Point is you can get a good used car for under $5000.

[moneymatters]

Thanks so much for the tips, Scanner.

Just wanted to correct you on age and gender though. I'm a 20 yr old female, not male. No hard feelings though!

Thanks again!

[Cassandra]

Originally Posted by Scanner

2. Sell the car youself. Buy a FOR SALE sign and stick in the window and park it in a conspicuous place where there is traffic.

One thing you should be aware of is that in some states it is illegal to park a car that is for sale on the street (obviously if you're running errands/visiting a friend, etc, that is different but it may be illegal for you to leave it parked somewhere). If it is illegal, you may get a ticket or the car may be towed.

Cassandra

[neatdesign]

Originally Posted by moneymatters

neatdesign,
I understand where you're coming from, and I sincerely appreciate your input on my financial state. However, tithing 10% of my gross income is sort of a commitment I've made to myself and to God/church. It's a little difficult to explain to help you understand, but it's my choice, not a requirement from my church. No, my pastor does not know about my debts, neither do my parents nor my friends for that fact. Giving 10% of I earn is what I WANT/CHOOSE to do, which I will continue to do no matter how much $ I earn.

I understand that tithing is a personal choice. It just seems to me that you have a history/habit of overspending and that this is one of many areas where you have chosen to do that. Just my opinion. Ultimately it's up to you, I was just making a suggestion.

~ Jenney

[moneymatters]

No problem, Jenney. I really appreciate all of your comments and suggestions.

[moneymatters]

Originally Posted by moneymatters

Hi all,

I'm a 20 year old college student and need some serious financial
advice on how I can completely pay off my debt within the next
year or two, if possible.

Also, please understand upfront that I'm not a big money spender of material things. I mostly buy what I need instead of what I want.

Anywho, my current overall debt is approximately $40,000 (What the heck was I thinking!??), and I'm really struggling to pay it off (living from paycheck to paycheck to be more blunt).

I work full-time and earn a net-income about $1800/month, but as I went over my finances, I discovered that my monthly expenses exceed my monthly income (so not good!).

Here is what my monthly expenses look like:

Mortgage = $0 (live with parents)
Car payment = $473
Church Tithing (a must for me) = $221
Car Insurance = $200
Auto Gas = $200
Credit Cards = $172
Student Loan = $160
Property/Land = $130
Cell Phone = $130
Health/Dental/Vision Insurance = $70
Food/Entertainment = $100
Internet = $15

My student loans are my biggest debt (approx. $21,000), my car loan balance is $10,500, property/land is $,7500, and my credit card debt is about $1450.

Now, as I went through my expense list, I found a few expenses I could reduce or elimimate, such as cell phone and food/entertainment. However, reducing these costs will not make a major difference.

I am seriously thinking of selling my car as it is my largest montly expense (almost $900!). I could be saving that money to buy a house! Only thing is I don't know if I should sell the car and save to pay cash for a used car, or just trade it in for another used car (maybe $12,000 or $14,000) to reduce the monthly payments.

If I sell the car, I'd like to save up and completely payoff my credit cards and student loans, then save to buy a house or condo.

In any case, getting completely out of debt as soon as possible is my #1 priority. I know I've made some pretty stupid financial decisions in the past, but I've honestly learned my lession. I just don't want to keep making the same financial mistakes my parents and a lot of my friends are making.

Please help!

Thanks in advance for your post

Hi all!
I know it's been awhile since my last post but I'm back and in a better financial picture than ever (I think)! For the past six months, I've been working extremely hard on paying off credit cards and selling my $10,000 car.

The good news is:

1. No more car payments! The Lexus has been sold and paid off completely! One of my coworkers sold me their used cars for $1k.
2. I got a raise (not a big one) but my net income has increased to $2100/month.
3. I paid of all of my credit cards under my debt management program in less than 3 months!!! Hooray!

The bad news is:
1. I got a new cc in Dec with a $750 limit but it's already almost maxed out. I know. I know. Shame on me!!! However, it was Christmas and I had alot of gifts to buy for family and friends. Also, I don't have to pay any interest on the balance until the end of March 2008. I am going to pay down the full balance next week.
2. My student loan balance is still at $21,000.

With that being said, here is what my financial picture is looking like now:

Net Income:
$2100/month

Monthly Expenses:
Rent = $200 (live with parents). Planning to buy a condo within 24 months.
Tithing = $221
Car Insurance = $108
Auto Gas = $50
Student Loan = $155
Property/Land = $130
Cell Phone = $160
Health/Dental/Vision Insurance = $70
Food/Entertainment = $40
Internet = $15

OK. Now, I have approx. $900/month left to do whatever I want with. One of my goals is to save up at least $10k within the next year. My income tax rebate is a little over $2k.

My questions are:
Should I open a Roth IRA now and max it out by 2009?
Should I use all of my leftover income to pay of student loans sooner?
Invest in stocks or bonds?

What would you recommend?

[jIM_Ohio]

Originally Posted by moneymatters

Hi all!
I know it's been awhile since my last post but I'm back and in a better financial picture than ever (I think)! For the past six months, I've been working extremely hard on paying off credit cards and selling my $10,000 car.

The good news is:

1. No more car payments! The Lexus has been sold and paid off completely! One of my coworkers sold me their used cars for $1k.
2. I got a raise (not a big one) but my net income has increased to $2100/month.
3. I paid of all of my credit cards under my debt management program in less than 3 months!!! Hooray!

The bad news is:
1. I got a new cc in Dec with a $750 limit but it's already almost maxed out. I know. I know. Shame on me!!! However, it was Christmas and I had alot of gifts to buy for family and friends. Also, I don't have to pay any interest on the balance until the end of March 2008. I am going to pay down the full balance next week.
2. My student loan balance is still at $21,000.

With that being said, here is what my financial picture is looking like now:

Net Income:
$2100/month

Monthly Expenses:
Rent = $200 (live with parents). Planning to buy a condo within 24 months.
Tithing = $221
Car Insurance = $108
Auto Gas = $50
Student Loan = $155
Property/Land = $130
Cell Phone = $160
Health/Dental/Vision Insurance = $70
Food/Entertainment = $40
Internet = $15

OK. Now, I have approx. $900/month left to do whatever I want with. One of my goals is to save up at least $10k within the next year. My income tax rebate is a little over $2k.

My questions are:
Should I open a Roth IRA now and max it out by 2009?
Should I use all of my leftover income to pay of student loans sooner?
Invest in stocks or bonds?

What would you recommend?

$900/month is a good amount to do some work with. For Feb-March-April I would put this all in a 2007 Roth IRA ($2700, short of 4k max). For May-Nov I would put it in a 2008 Roth IRA ($5000 max, so last $ $400 cannot go in).

Use the $400 in November and $900 in December for xmas gifts.

For 2009 I would put $500/month in starting in January, then use $400/month to start saving for a down payment on a condo. IRA maxes are 4k for 2007 and 5k for 2008 in your case.

I would look to open Roth IRA using an equity based mutual fund. You should read up and learn what funds are best for your situation. With $7700 going in in next 10 months, I would suggest first 5k go into a core fund and next 2700 go into a complimentary fund. If I had to pick two and only 2 funds which I own, PRFDX and TRIGX would be a good starting point.

[disneysteve]

Originally Posted by jIM_Ohio

$900/month is a good amount to do some work with. For Feb-March-April I would put this all in a 2007 Roth IRA ($2700, short of 4k max). For May-Nov I would put it in a 2008 Roth IRA ($5000 max, so last $ $400 cannot go in).

Use the $400 in November and $900 in December for xmas gifts.

For 2009 I would put $500/month in starting in January, then use $400/month to start saving for a down payment on a condo.

Do you have an adequate emergency fund? If you do, then I would follow Jim's advice and start funding the Roth. If not, I'd want to see you do that first, or at least at the same time. I don't believe in depending on a Roth as an EF.

I have to disagree with Jim on the Nov. and Dec. advice, though. I think $1,300 is an insane amount to be allotting for gifts. Stick to the people most important to you like parents and siblings and budget a reasonable amount - perhaps $50/person tops. I would think that would come in well under $1,300 but I don't know who is on your list.

[moneymatters]

Originally Posted by disneysteve

Do you have an adequate emergency fund? If you do, then I would follow Jim's advice and start funding the Roth. If not, I'd want to see you do that first, or at least at the same time. I don't believe in depending on a Roth as an EF.

Unfortunately, not yet. I still have a $750 cc debt and a $1,200 student loan @ 18% interest that I need to pay off asap. As soon as I get my tax return, these will be the first to go, and whatever I have left over for Feb, Mar, and April will go towards my EF.

Originally Posted by jIM_Ohio

Use the $400 in November and $900 in December for xmas gifts.

I will try not to spend as much this Christmas because I'd like to mainly focus on paying off my student loans. After I graduate in June, my monthly student loan payment may increase. I have a total of 4 student loans, 3 private and 1 government totaling to approx. $22,000.

Private Loan 1 = $12,500 @ 18% (currently deferred)
Private Loan 2 = $3,500 @ 6.25% (currently deferred)
Private Loan 3 = $1,200 @ 18% (paying $155/month while in school)
Government Loan = $4,500 @ 6% (currently deferred)

Should I pay off the student loans first then fund a Roth IRA, or do both at the same time?

Also, my income may increase right after I graduate as a friend of my brother's already has a job lined up for me. My salary will go from $30k to $45k/year, so the extra $1200 monthly increase would help out alot.

[disneysteve]

Originally Posted by moneymatters

Should I pay off the student loans first then fund a Roth IRA, or do both at the same time?

I'd certainly want to pay off an 18% loan ASAP.

[moneymatters]

Originally Posted by disneysteve

I'd certainly want to pay off an 18% loan ASAP.

Thought so, disneysteve. That's exactly what I'll pay off first then. Do you think I can consolidate the $12,500 loan and get a lower rate? If not, oh well. I'll just have to do what I have to to pay it off asap!

[disneysteve]

Originally Posted by moneymatters

Do you think I can consolidate the $12,500 loan and get a lower rate?

I don't know but I'd certainly suggest finding out.

[jIM_Ohio]

While I don't think anyone should spend $1300 on xmas gifts, OP did spend $750 last year, so budgeting for that with cash is better than charging it and figuring out how to pay if off later.

I would make the Roth the priority over the EF. The money invested now is more important than cash now. If an emergency comes up, the OP could skip a $900 roth contribution for a month or two, but if no emergency happened, the roths come close to getting fully funded.

$400/month in January 2009 will go a long way towards any short and mid term goals (emergency fund, condo).

[Scanner]

You are 23 years old.

It's fine to approach friends and family and say, "Can we just exchange cards this year?"

Don't feel obligated to give gifts. Or do a polyanna w/friends. Your close family should understand if they got approached and you confided, "Listen, I have some debt. . .do you mind if we don't exchange this year?"

Christmas gifts are for children, not adults.

Signed,
Ebeenezer Scanner

[disneysteve]

Originally Posted by jIM_Ohio

I would make the Roth the priority over the EF. The money invested now is more important than cash now. If an emergency comes up, the OP could skip a $900 roth contribution for a month or two, but if no emergency happened, the roths come close to getting fully funded.

Good point. I was going back and forth on this. I like the idea of getting the 2007 contribution in while there is still time. And since there is that $900/month of free cash flow, you are right that should the need arise, the Roth contribution could be skipped for a month or two.

[anonymous_saver]

Originally Posted by moneymatters

Unfortunately, not yet. I still have a $750 cc debt and a $1,200 student loan @ 18% interest that I need to pay off asap. As soon as I get my tax return, these will be the first to go, and whatever I have left over for Feb, Mar, and April will go towards my EF.

I will try not to spend as much this Christmas because I'd like to mainly focus on paying off my student loans. After I graduate in June, my monthly student loan payment may increase. I have a total of 4 student loans, 3 private and 1 government totaling to approx. $22,000.

Private Loan 1 = $12,500 @ 18% (currently deferred)
Private Loan 2 = $3,500 @ 6.25% (currently deferred)
Private Loan 3 = $1,200 @ 18% (paying $155/month while in school)
Government Loan = $4,500 @ 6% (currently deferred)

Should I pay off the student loans first then fund a Roth IRA, or do both at the same time?

Also, my income may increase right after I graduate as a friend of my brother's already has a job lined up for me. My salary will go from $30k to $45k/year, so the extra $1200 monthly increase would help out alot.

Are you putting up to your employers match in a 401(k)? I would make this a priority.

Yes, you should look into consolidating whatever school loans