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What should the next step be...

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    What should the next step be...

    Well, it's been 2 months since i've joined this forum and I can say that all the feedback has been extremely valuable. I figured I would start a new thread with my current financial numbers and get everyone's take on what my next steps should be heading into the new year.

    Checking Account: $10,892.76
    Savings Account #1: $1,000.31 (my initial keep out of reach emergency fund)
    Savings Account #2: $360.26 (Keep the change account that doesn't hold much weight)

    Credit Card debt: $0 (Finally got rid of everything)

    Student Loan #1: $11,762.84 (7.9% interest)
    Student Loan #2: $1,395.95 (4.5% interest)

    Car Loan: Aprox. $30,000 (4.59% interest; pay bi-monthly)

    Roth 401k: $2,9636.44 (Contribute 6% with 3% company match; Started 3/1/12)
    Etrade Account: $1,290.37 (500 Shares of Zynga @ $4.80 FML)
    Roth IRA: $416.02 (Contribute $100 every two weeks; obviously recently started)
    Remnants of a Fidelity College fund: $978.68 (hammered from 2008 and never really recovered)

    My income hovers right around $5000/mo, sometimes a few hundred more or less and my expenses, excluding student loan payments are about $2,100/mo. The breakdown is as follows:

    Housing: $750
    Utilities: $0
    Cable/Internet: $40
    Car Payment: $670 (this has been discussed on other threads)
    Car Insurance: $85
    Renter's Insurance: $11
    Gas: $130
    Food: $250-$300 (feeding two people)
    Netflix: $8
    Restaurants: $40
    Shopping: $40

    Some months the resaurant budget may be up but the groceries one would be down. Same thing goes for shopping versus gasoline, etc which puts my monthly expenses always between $2000-$2200 over a now 10 month period.

    I pay $300/mo on the large student loan and $100/mo on the small one while trying to stockpile cash for an emergency fund in the chance that my job is lost due to the upcoming fiscal cliff. Also aiming for a new job by the end of the month that would protect from this as it would be on the public side rather than the private contracting side. Fingers crossed. No idea what that would do to my income however though I feel if I get it (interview on the 13th) my day job income would go up and I could cut my restuarant job down to Sat/Sun while maintaining roughly the same total income.

    What I'm looking for is overall feedback and then obviously what the direction I should be taking next should be heading into next year. Thanks everyone for the continued advice and support!

    How much is the car worth? I'd be looking to get rid of that if at all possible. That loan is much too high given your income. Car payment shouldn't exceed 10% of your income for no more than 3 years.

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.


      You said you pay bi-weekly on the car payment. Is that required, or are you doubling up on the payments?


        I think I advised you to pay the car off and keep it in your other thread.


          So is there a reason you keep so much cash in your checking account? I realize that interest rates are crappy, but why not put much more of that into an online savings account? You may only get like 0.9%, but anything is better than nothing to just try and counteract a small portion of inflation.

          I wouldn't bother with selling the car. Maybe if you were in a worse financial position, but you make much more than your monthly expenses. And if you're already getting interviews, then even if your job is at risk, it sounds like you've got enough skills and experience that you can find work. And honestly, even with the fiscal cliff, the government is never that fast at slashing jobs. I doubt the day after we potentially hit the cliff you'll suddenly find yourself in the unemployment line. But if it's a serious concern and not just paranoia, keep saving up a higher EF. Though that second student loan is so tiny it looks really tempting to pay it off and just get it off the books, so I'd maybe do that too, if I were in your shoes.


            @disneysteve: The car is worth probably $22,000-25,000 private sale/trade-in. That said, I still owe over that $30,000 mark which puts me somewhere between $6,000-$9,000 upside down.

            @bjl584: Above is why it was recommened that I keep and pay off the car which is my current plan. But to answer the specific question, I split the payment and pay each half every 2 weeks. Set it up when I purchased the vehicle to shave 6 months off the loan through interest savings.

            @breathemusic: I think I just keep it in the checking account because I wasn't sure what to do with it and I already feel like I've got +/- money all over the place. I know that's not really an excuse and I had been researching Ally bank recently.

            I'm getting interviews in order to stay ahead of the fiscal cliff fiasco. I work for a defense contractor and do anticipate possible job loss if this doesn't get resolved. This is why I'm aiming for the public side, either in Defense or with State. The interview I have next week is with the State Department but I have no clue what will come of that. It's an opportunity my DoD director from my last summer internship at the Pentagon called in. Really hoping networking and an endorsement will work in my favor. All of this considered, not sure what a new job is going to do to my income. My current job provides me the flexibility to get out of the office and get to the restaurant at night and on weekends, doubling my current take home. What I anticipate, is if I can get this job at State, my day job income should rise by (hopefully) 25% and at worst stay the same (highly doubt). However, it should eliminate that weeknight availability to work which would cut me to just Sat/Sun restaurant work. Again, hopefully that keeps me at or above my current take home.

            I agree however that the small loan is extremely tempting and I think at the end of this month I'm just going to eliminate it and stop letting it just hover around.


              You are in a pretty good place, job aside, but here are my thoughts.

              1. Pay off the small SL ASAP.
              2. Put 3 months into the EF ($7,200) (you have to include loan payments here!)
              3. Keep $2,100 in the checking account for January expenses, then your Jan paychecks will go to Feb expenses, etc and ta-da, you are a month ahead PLUS you have 3 months in the EF. The remaining amount should be $500 checking account buffer, the rest to accounts below (see 2b).

              Your next steps will then be:
              1. Pay $400+ a month on the remaining SL (since the other is now gone)
              2. Build up EF to 6-9 months ($20k max)
              2b. Start new accounts for your next car, housing costs, tech costs, job search costs, etc.
              3. Pay extra on the car if possible

              You still will have almost $42k in debt after the end of this month so you do need to work on tackling that as well as building up the EF - I think you can do this easily with a bit of dedication (ie, if you are bringing in $750 extra somewhere, you can get the EF to 6 months in 10 months and then reduce that to $300 a month to EF, $$ to other accounts, $$ to your debt).


                Originally posted by disneysteve View Post
                How much is the car worth? I'd be looking to get rid of that if at all possible. That loan is much too high given your income. Car payment shouldn't exceed 10% of your income for no more than 3 years.
                Agreed. That car payment is way too high, got to go if you want to make progress.