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    Just in Need of Advice

    Whats up, I need some advice concerning my financial situation and future goals. I want to buy a house next May (May '09). I graduated (I'm 24) with my degree in computer engineering in Dec' 07, and have a great job with great benefits.

    I have about $9.5K (5 credit accounts, one in C/O but being paid down) in credit card debt with interest rates betwen 9.9% and 29.9%. I am diligently paying those down and hopefully they'll be zero balances by November by paying minimums on all, and then paying one off with all (or most ) extra money after I'm paid. I have school loan payments that kick-in in July.

    I also just started to put (& not touching it) away $250 every two weeks into my ING account (so far $750). I also am contributing up to the company match (5%, company throws in 7.5%) for my 401K and have been since my second paycheck.

    Only other bills (monthly)
    $460 - rent
    $100 - cable/internet
    $60 - cell phone
    $100 - water/electricity
    $40 - car insurance
    $200 - gas
    $150 - food


    My question is, should I continue to put $250 into my savings account indefinately or take most of that away (keep whats in there in there) and start throwing that at credit card debt? Just need some decent advice.

    Thanks.

    #2
    $250/month is 3k per year. If you want a house in 10 months, I'd expect to see credit card debt at zero and around 10-20% saved for down payment (20k). Have you set a realistic goal?

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      #3
      Yes, keep adding the $250 savings - at least until you get a decent little emergency fund set up, then start knocking that debt down!

      Comment


        #4
        Thats the plan. Once I pay off my credit cards, I am going to throw all of my remaining money (& spring bonus) towards the savings for the downpayment and other associated costs.

        Comment


          #5
          $250 every two weeks...not $250 a month!

          Comment


            #6
            I agree with Jim that your goal of home ownership in May 09 doesn't sound realistic. You should save up a 20% downpayment and have a fully-funded emergency fund of 3-6 months of living expenses. Keep in mind that when you buy a home, there will be a slew of new expenses that crop up - higher utilities, taxes, maintenance, furniture, window treatments, etc.

            Also, why are you putting $250 every two weeks into ING at 3% while carrying credit card debt at 10-30% interest. I'd say that once that ING account is at $1,000 (after your next paycheck), stop and direct all additional money toward getting out of debt. That $1,000 EF should cover most common things that crop up and prevent you from having to reach for the CC.
            Steve

            * 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.

            Comment


              #7
              Originally posted by disneysteve View Post
              I agree with Jim that your goal of home ownership in May 09 doesn't sound realistic. You should save up a 20% downpayment and have a fully-funded emergency fund of 3-6 months of living expenses. Keep in mind that when you buy a home, there will be a slew of new expenses that crop up - higher utilities, taxes, maintenance, furniture, window treatments, etc.

              Also, why are you putting $250 every two weeks into ING at 3% while carrying credit card debt at 10-30% interest. I'd say that once that ING account is at $1,000 (after your next paycheck), stop and direct all additional money toward getting out of debt. That $1,000 EF should cover most common things that crop up and prevent you from having to reach for the CC.
              This echos my thoughts. No reason to save for house earning 3% interest when debt is costing you 30%.

              Pay off the debt then save for the house. I would remove the timeline from the house purchase until you are debt free. You mentioned a date to purchase house, but not a date to be debt free. I think those priorities are backwards.

              Comment


                #8
                Originally posted by disneysteve View Post
                I agree with Jim that your goal of home ownership in May 09 doesn't sound realistic. You should save up a 20% downpayment and have a fully-funded emergency fund of 3-6 months of living expenses. Keep in mind that when you buy a home, there will be a slew of new expenses that crop up - higher utilities, taxes, maintenance, furniture, window treatments, etc.

                Also, why are you putting $250 every two weeks into ING at 3% while carrying credit card debt at 10-30% interest. I'd say that once that ING account is at $1,000 (after your next paycheck), stop and direct all additional money toward getting out of debt. That $1,000 EF should cover most common things that crop up and prevent you from having to reach for the CC.
                Thanks (everyone), type of advice I was looking for!

                Originally posted by jIM_Ohio View Post
                This echos my thoughts. No reason to save for house earning 3% interest when debt is costing you 30%.

                Pay off the debt then save for the house. I would remove the timeline from the house purchase until you are debt free. You mentioned a date to purchase house, but not a date to be debt free. I think those priorities are backwards.

                Thanks, I did mention having my credit card completely paid off by November. I even have a pretty good budget worksheet that takes that into account. Now I don't have a specific goal for my only remaining debt at that time, school loan. I have a general idea of when I want to be done with that (5 years) however.

                Comment


                  #9
                  You've gotten some great advice so I just wanted to wish you luck in your endeavor. Just stay committed and you'll get there.

                  Comment


                    #10
                    Originally posted by emuneee View Post
                    Thanks (everyone), type of advice I was looking for!




                    Thanks, I did mention having my credit card completely paid off by November. I even have a pretty good budget worksheet that takes that into account. Now I don't have a specific goal for my only remaining debt at that time, school loan. I have a general idea of when I want to be done with that (5 years) however.
                    Keep in mind that your plans and budget should allow for 10% to be invested longterm. In other words, only live on 90% of your income. You need this to be a lifetime habit. Good luck.

                    Comment


                      #11
                      Just wanted to update. I was laid off from my software engineering job at Sony Ericsson in October. Luckily I found another job and started 10 days later with the same pay. Also, since SE laid off 400 workers they paid us all 9 weeks of pay + accrued vacation (3 weeks for me) + 1 month severence + bonus + COBRA pay. I used all that money and paid off ALL my credit card debt over the course of the past couple months . I took the pay from my new job and paid my bills and saved a bunch of money up for house later next year or emergency fund. Thanks.

                      Merry Christmas/Happy Holidays

                      Comment


                        #12
                        That's a great update! Thanks for posting. So often we hear the problem but never hear the outcome.
                        Steve

                        * 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.

                        Comment


                          #13
                          Wow. That's awesome.

                          You got lucky that you found another job after you got laid off.

                          I've heard of too many people that need some time to calm down after they got laid off but you just went ahead and got a new job. Great work!

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