How am I doing? 24 Years Old...

**bjl584** · 10-01-2012, 09:24 AM

I'm curious about the land that you own. Where is it in relation to where you are? What is its purpose? Do you plan to do anything with it anytime soon?

**Nika** · 10-01-2012, 10:48 AM

You are doing great!

Way ahead of most 24 year olds.

**BuckyBadger** · 10-01-2012, 11:26 AM

Your car costs more than your living expenses. What are the details of the loan? Years, rate?

**Vpxggmr17** · 10-01-2012, 11:51 AM

Responses

In regards to the land I purchased, it is actually just a 1/4th acre plot of a development down in New Mexico. I essentiallly own half of a lot (each lot of the neighborhood development is 1/2 acre). This is not something I would ever seek to build upon, nor acquire the other half of the 1/2 acre. I look at it merely as a growth opportunity as the development continues and when someone who does in fact want to build must buy me out to do so. I am in no rush to do anything with it as it was such a minimal investment 5 years ago and I have no need for the sale of it at this point either. Hope that makes sense.

With my car, I did a lot, A LOT, of dumb things with vehicles in my past. What I mean by that is I would buy, roll it over to buy again, so on and so forth, so my current vehicle had $10,000 negative equity at the time of purchase (ugh). That said, I got my current car for the same amount of sticker (I'm a good negotiator). I pay a half payment every 2 weeks to cut down on the interest build up so it broke down to about 66 months @ 4.59 %. Last I checked, my balance owed was around $33,000, though it may be a tad bit higher. I probably have about 54 months left on the car (2011 Nissan Maxima SV). That said, my choice is as follows:

1. Maintain the car payment because I can afford it and pay it off and save money after I pay off the student loans.
2. Pay the normal car payment through next December and then take what I've saved and pay it off completely, depleting my savings of most, if not the entire year.
3. Sell the car, finance the difference, buy a beater and pay off the debt and then go get something else with cash (my least favorite option)

So all that said, this is a car I actually plan on keeping and using for a long time to come. I only put 500 miles on it a month as opposed to what I used to do before I moved to the DC area when I would put 2500 miles on a car a month. My personal choice is somewhere between pay the normal payment and pay it off next year. The negative equity game was a very very bad habit I learned from my dad but I've seen where it's gotten me 6 years after I started the process (6 vehicles later).

**Jwilliamson22** · 10-01-2012, 11:53 AM

In my opinion you should be able to cut your auto expenses in half... That is $400+ a month you could save..

Great job at 24 years old, I am 24 as well

**97guns** · 10-01-2012, 02:37 PM

you are doing great, when i was 24 i was partying and working nominal jobs, i didn't go to college and barely graduated high school. i finally woke up and took a corporate america job when i was 27. keep saving

**BMEPhDinCO** · 10-02-2012, 09:47 AM

"Housing Costs:
Rent = $750 Great for DC area!
Electric = $0
Water,Sewer,Trash = $0
Internet/tv = $40
Netflix = $8
TOTAL HOUSING COSTS: $798 So let's call this $800 - that's a good amount

Vehicle Costs and Debt:
Auto Loan = $670 Obviously you know this is an issue, and you have addressed it
Car Insurance = $85
Gas Expense = $150 Quite a bit for DC, are you taking full advantage of the metro? You should include those costs in here as well as "Transportation"
TOTAL VEHICLE COSTS AND DEBT = $905

Living Expenses and Entertainment:
Cell Phone = $80
Food and Dining = $350
Entertainment/Other = $50
TOTAL LIVING EXPENSES AND ENTERTAINMENT: $480 Acceptable again, although missing a bit - where are personal needs (ie clothing, hair cuts), gifts, travel, etc...

Total = 2182

My student loan minimums are $50 and $165 but this month will be paying off the first $1700 loan, leaving the second $12,000 loan which I will throw all my extra money at for the next 3 months."

Overall I think you've done a good job. A couple of things in addition to above that struck me. One, you don't have much retirement right now, you need to hit 15% - slow down on the loans just a tad and try and at least max the RothIRA every year, in addition to the 401k contributions. Two, if you work in a restaurant as a waitstaff, make sure you are taking into account additional taxes on tips if your employer isn't, you may have to pay more at tax time. Three, make sure you have an emergency fund, I don't see anything in your budget going to savings right now, you need that safety net with the debt.

**Vpxggmr17** · 10-02-2012, 10:08 AM

Thank you BMEPhDinCo and others for the feedback.

Let me for a moment address the items you have highlighted in red.

First, rent was a big aim of mine. I actually split it between myself and one other person so that helped me cut down on the original $1400 rent cost.

Next, with the car payment, again, not much I can do there except pay down with time which is the plan. But in terms of fuel, I actually don't do much driving outside of work commuting. My day job is all freeway, 8 miles away and my restaurant job is 2 miles away street driving. So most days I have about a 20-25 mile commute if you factor in traffic, etc. That $150 is actually probably my peak spending unless I have something extra on the weekend which isn't super common. I think last month I spent $110 on fuel (It has been close to $4 right around where I live) and my vehicle gets about 25-28 highway and 19-21 street.

The "extras" I didn't mention were really due to the fact that they aren't consistent expenses. I haven't traveled much but if I amertized it out over the course of the year it would be about $80/month since flights to AZ aren't that cheap. But if I had to break it down it'd look like this:

Travel: $80
Gifts: $0
Haircuts: $18
Clothing: $0 (I have, from my free spending days, more than I even need)
Cell Phone: $70

About the rest of the points you made:
I only started the retirement savings when I started this job, which was in January. I had absolutely been on the fence about whether to focus solely on removing debt, adding savings, or a combination of the two. I hadn't yet figured out a balance of the two. A second piece to that is that my employer plan with Merryl Lynch I have a Roth 401k contribution that is matched from my paycheck but not an IRA. Any feedback/advice on what I should do for the retirement aspect is welcome. I actually don't receive any form of paycheck from the restaurant as it completely goes to taxes. that said, I am sure I will owe additional taxes from that job prior to any and all deductions. Lastly, the first thing I did when I got started on this entire package back in January was to take my first $1000 and throw it into a savings account external of my regular bank as a means of keeping it out of touch for an emergency. That said, I recognize that it isn't nearly enough so what I have been doing lately is pooling what I can so that I can pay off the student loans with a lump sum in the coming months as opposed to constanly throwing money at it and leaving myself exposed to a financial threat.

Hope all this helps and again, all of this feedback is welcome. Like I said, I only really grasped my financial picture and started to change things for the better at the start of this year. I have a long way to go but I've noticed progress with what I've been able to do. That said, other perspectives and advice are gladly welcome.

**bjl584** · 10-02-2012, 10:29 AM

Originally posted by Vpxggmr17 View Post

In regards to the land I purchased, it is actually just a 1/4th acre plot of a development down in New Mexico. I essentiallly own half of a lot (each lot of the neighborhood development is 1/2 acre). This is not something I would ever seek to build upon, nor acquire the other half of the 1/2 acre. I look at it merely as a growth opportunity as the development continues and when someone who does in fact want to build must buy me out to do so. I am in no rush to do anything with it as it was such a minimal investment 5 years ago and I have no need for the sale of it at this point either. Hope that makes sense.

With my car, I did a lot, A LOT, of dumb things with vehicles in my past. What I mean by that is I would buy, roll it over to buy again, so on and so forth, so my current vehicle had $10,000 negative equity at the time of purchase (ugh). That said, I got my current car for the same amount of sticker (I'm a good negotiator). I pay a half payment every 2 weeks to cut down on the interest build up so it broke down to about 66 months @ 4.59 %. Last I checked, my balance owed was around $33,000, though it may be a tad bit higher. I probably have about 54 months left on the car (2011 Nissan Maxima SV). That said, my choice is as follows:

1. Maintain the car payment because I can afford it and pay it off and save money after I pay off the student loans.
2. Pay the normal car payment through next December and then take what I've saved and pay it off completely, depleting my savings of most, if not the entire year.
3. Sell the car, finance the difference, buy a beater and pay off the debt and then go get something else with cash (my least favorite option)

So all that said, this is a car I actually plan on keeping and using for a long time to come. I only put 500 miles on it a month as opposed to what I used to do before I moved to the DC area when I would put 2500 miles on a car a month. My personal choice is somewhere between pay the normal payment and pay it off next year. The negative equity game was a very very bad habit I learned from my dad but I've seen where it's gotten me 6 years after I started the process (6 vehicles later).

I'd sell the property. Vacant land is more often than not a bad investment. There are a few exceptions like around where I live. Huge deposits of natural gas are being tapped around here making millionares out of landowners that own significant property. But, in your case I doubt you will ever recoup costs by holding it.

As far as the car, I'd probably try to get it paid off ASAP and then drive it for at least 10 to 15 years. I would wait until you have enough cash saved so that you can pay off the car and still have a few months worth of expenses on hand. If that takes a little longer than next December, then that's okay.

**Vpxggmr17** · 10-02-2012, 10:41 AM

Originally posted by bjl584 View Post

I'd sell the property. Vacant land is more often than not a bad investment. There are a few exceptions like around where I live. Huge deposits of natural gas are being tapped around here making millionares out of landowners that own significant property. But, in your case I doubt you will ever recoup costs by holding it.

My costs are only $12 a year in county taxes. I want to give it another 5-10 year window consiering the first houses are going up, the medical center, high school and elementary schools were recently completed. Considering my upfront $400 purchase and $60 of 5 years of taxes I'm not entirely sure that my cost v. growth is that bad based off of the roughly 500-800% gain I've had thus far. I'm not saying that this small plot will be worth my retirement, but I can see it reaching the $6000-10000 mark within the next decade, well worth sitting on in my mind.

**bjl584** · 10-02-2012, 10:51 AM

Originally posted by Vpxggmr17 View Post

My costs are only $12 a year in county taxes. I want to give it another 5-10 year window consiering the first houses are going up, the medical center, high school and elementary schools were recently completed. Considering my upfront $400 purchase and $60 of 5 years of taxes I'm not entirely sure that my cost v. growth is that bad based off of the roughly 500-800% gain I've had thus far. I'm not saying that this small plot will be worth my retirement, but I can see it reaching the $6000-10000 mark within the next decade, well worth sitting on in my mind.

$12 a year is virtually nothing, so it doesn't cost you anything to hold it. But, be careful trying to estimate future values of real estate. 5 to 10 years from now, who knows what will happen with the economy. Also, real estate is really only worth what someone will pay you for it not what it is appraised at. You don't realize any gain until you actually sell it. Everything up to that point is hypothetical.

**Vpxggmr17** · 10-02-2012, 10:59 AM

Originally posted by bjl584 View Post

$12 a year is virtually nothing, so it doesn't cost you anything to hold it. But, be careful trying to estimate future values of real estate. 5 to 10 years from now, who knows what will happen with the economy. Also, real estate is really only worth what someone will pay you for it not what it is appraised at. You don't realize any gain until you actually sell it. Everything up to that point is hypothetical.

I completely agree. If someone isn't willing to pay, it's worthless.

**bjl584** · 10-02-2012, 11:04 AM

Originally posted by Vpxggmr17 View Post

I completely agree. If someone isn't willing to pay, it's worthless.

Not trying to discourage you in any way, there's just a lot to consider when holding land. I know someone that owned a parcel of land for a long period of time. When they went to sell it, they discovered that some zoning law had changed. The land was now worthless as a residential development site. If you have made a 500% plus gain and are able to find a buyer in today's market, then it may be prudent to sell it now and take your gains.

**Vpxggmr17** · 10-02-2012, 11:11 AM

Originally posted by bjl584 View Post

Not trying to discourage you in any way, there's just a lot to consider when holding land. I know someone that owned a parcel of land for a long period of time. When they went to sell it, they discovered that some zoning law had changed. The land was now worthless as a residential development site. If you have made a 500% plus gain and are able to find a buyer in today's market, then it may be prudent to sell it now and take your gains.

I have one of these lots discountlandforsale.com/index.php?action=listingview&listingID=1591. Mind you this listing is for one sold later on in the development phase. Just for you to get an idea of what I am talking about. Again, completely agree with everything you've said thus far though and I appreciate the insight.

How am I doing? 24 Years Old...