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23 Year Old Seeking Advice

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    #16
    I like the advice given so far, let me add my two cents.

    A few years ago (before I went back for my PhD), I was in a similar situation to you... $31k in SL and a similar salary. No car loan though. I paid off $20k of those loans before going back to school. The rate on the last one is 3.25% and thus not worth it.

    My first piece of advice, put $5k into a RothIRA from your savings account. Open it with Vanguard and choose a target fund. You can take that back out if you need, but that will help with getting you up to 15% for retirement, which is too low right now (6%). You need to be saving $9,000 per year for retirement, at least. Start now, then when something changes, at least you'll have moved forward one square.

    My second piece of advice, reduce the food costs - you have $700 for food and entertainment each month, that's way too much. For one person, you should be spending no more than $50 a week on groceries (and that's generous) = $200 + $40 a week on fun = $160 + $20 a week on "other stuff" = $80 + $40 a month on personal needs (TP, shampoo, soap, etc) = $480 - I'll even let you round it up to $500. The other $200 goes to the Roth starting in Jan, in the meantime, add it to the SL payments.

    If you make a goal to pay off 1 student loan every 18 months, you'll be done in 4.5 years! It is hard, but doable, just make it a choice to be done.

    As for the car, honestly, it's up to you - If it's a good, safe, reliable, long lasting car, just keep it. If you think it was a mistake, get rid of it now, while it's worth something.


    ------------
    The short:
    1. Create and fully fund a RothIRA
    2. Reduce expenses, send extra money to SL, figure out exactly how much would be needed for a 6 month EF and build to that at the same time.
    3. Car is up to you - get one that's safe, reliable, and will last 10 more years.

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      #17
      I suggest DCA because it's very difficult to 'time' the market and too easy to procrastinate or get busy and forget or miss an important target. Automatic payments will have you buying more units when the market is down, less units when costs are higher. You can always buy extra units with the click of a mouse/phone call if you believe a market surge is imminent and have money at hand. The whole point is to take advantage of compounding over the long term. As circumstances change, you can also make adjustments to your portfolio.

      It helps to write out a brief, five year plan with goals and ideas to achieve those goals. For example, make a plan for any bonus/award offered by employer. What percentage would you use for investment/loan reduction/reward? You will get salary increases...how will you allocate new income? Will you be married? How will you allocate current car payments once the vehicle is paid off?

      Really brilliant to manage your money right from the beginning.

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        #18
        I see things differently.

        I am happy you keep you cards clean, however the car might have other uses. You can find a leasing company that will place you car in the pool to earn you money. Or you simply get rid of it. After you might have settled you student loan. You might start thinking about marriage, mortgages. etc. Keeping the car will only defer this actions if you are not turning it into a money making opportunity.

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          #19
          I like these ideas. I really appreciate the advice so far.

          Nuppy, you're right about the car. It's something I think about. If I didn't have the payment and had something more fuel efficient, I would be able to save on gas, interest, and chunk away at student loan debt.

          I'm in a pretty serious relationship, which brings me to my next topic. Rings....I'd like to purchase within the next 3-4 years or so. A big part of me is scared to let go of the cash I have in fear that I won't ever see it again. Is that a normal fear?

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            #20
            Originally posted by snafu View Post
            I suggest DCA because it's very difficult to 'time' the market and too easy to procrastinate or get busy and forget or miss an important target. Automatic payments will have you buying more units when the market is down, less units when costs are higher. You can always buy extra units with the click of a mouse/phone call if you believe a market surge is imminent and have money at hand. The whole point is to take advantage of compounding over the long term. As circumstances change, you can also make adjustments to your portfolio.

            It helps to write out a brief, five year plan with goals and ideas to achieve those goals. For example, make a plan for any bonus/award offered by employer. What percentage would you use for investment/loan reduction/reward? You will get salary increases...how will you allocate new income? Will you be married? How will you allocate current car payments once the vehicle is paid off?

            Really brilliant to manage your money right from the beginning.
            This is really a great idea. It helps take the daily monitoring out of it. DCA will help hedge me somewhat. Is this something I can just set up on Vanguard's website in my 401(k)?

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              #21
              23 Year Old Seeking Advice

              Your food does seem really high, as does your transportation costs. Do you dine out a lot or eat a of microwave meals? Both can really do damage to your budget. Microwave meals are not healthy, either. I would say to make some small changes: 1) consider eat out less and cooking at home more, 2) taking lunch to work more often, 3) driving less or getting a less expensive car (or getting an alternate transportation method). If you don't know how to cook, it's not hard. You can find lots of recipes free at <http://www.allrecipes.com>. Your gas usage is really high. How far do you live from work? If you have business related expenses (such as mileage, meals), do you get reimbursed? If so, bank the reimbursements and use them to pay off your debt.

              As for the student loans, make payments on all of them, but put extra money towards the one with the highest rate. If you come into extra money (rebates, tax refund, lottery, etc.), put it towards the debt. Soon, you will be able to allocate all that "extra" money towards something else! Good luck.

              Originally posted by KevinSaves View Post
              Housing Costs:
              Rent = $550
              Electric = $60
              Water,Sewer,Trash = $25
              Internet = $15
              Netflix = $8
              Renters Insurance = $10
              TOTAL HOUSING COSTS: $668

              Student Loan Debt:
              Federal Loans (8) = $320
              State Loans (2) = $58
              TOTAL STUDENT LOAN DEBT = $378

              Vehicle Costs and Debt:
              Auto Loan = $331
              Car Insurance = $55
              Gas Expense = $350
              TOTAL VEHICLE COSTS AND DEBT = $736

              Living Expenses and Entertainment:
              Cell Phone = $83
              Gym = $35
              Food and Dining = $575
              Cleaning/Household = $10
              Grooming/Health = $30
              Entertainment/Other = $130
              TOTAL LIVING EXPENSES AND ENTERTAINMENT: $863

              Savings:
              What is left over. Sometimes my living expenses and gas will vary a little bit.

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