Financial Checkup/Going Forward

**kquealey** · 06-18-2009, 01:54 PM

btw. i will also be going back to an in state university for my bachelor's in accounting in september 2009. the whole cost for my last two years of school will be about 15K. i will be taking out student loans for this.

**tmvijai** · 06-18-2009, 02:06 PM

"A thousand miles of journey always starts with a single step". - Author Lao Tuz.

First, I like to accolode you for taking the first step to evaluate your financial condition. Not many people like to share their financial information. You have good inflow of money and reasonable outflow, rough budget. You also have your goals set in random way but not actually categorized.

So you have all the ducks but just need to put in place in the right order to get the most out of it. I going to wait for veterans to take a hit first and add my comments from my current CFP course.

**disneysteve** · 06-18-2009, 02:14 PM

Welcome. I think you are off to a good start. I'd like to see you break down that $500/month going to miscellaneous stuff. That's about 12.6% of your income. I'd also like to know what "incidentals" are.

I'll have more to say later. I'm on my way out right now.

**kquealey** · 06-18-2009, 03:07 PM

Welcome. I think you are off to a good start. I'd like to see you break down that $500/month going to miscellaneous stuff. That's about 12.6% of your income. I'd also like to know what "incidentals" are.

the extra $100 was budgeted in for unexpected things. like at our old apt. complex our puppy took awhile to get potty trained so we had to pay 80% of the carpet replacement cost (about $750). this also includes our oil changes/routine maintenance to vehicles. this also covered my wisdom teeth getting pulled. this typically gets swept into savings but is there just in case.

of the $500 this is what that covers ...
$15 (gym)
$19 (netflix)
$25ish (copays - like for birth control refills)
$200 (eating out about 2x per week)
$250 ($125 ea. to spend as we please for clothes, fun, movies, gifts) - i work an average of 210/220 hours/mo so i get coffee most days to get me through the day.

it's kind of high but for our age i have to say we are pretty disciplined. we don't typically waste a TON of money on crap. we spend money on things we enjoy.

**disneysteve** · 06-18-2009, 07:07 PM

I think your budget looks just fine. So you currently have a $1,400/month surplus. Where is that money going? Is it being invested, held in savings or what? Why only $150/month into a Roth? That is less than 4% of income. Do you also have a retirement plan at work or is the Roth all you've got?

**Runaway Finances** · 06-18-2009, 07:37 PM

Keep in mind we have to read between the lines so I may be making some really bad assumptions, but my comments are based on something my father told me when I first got in the business...."Money does strange things to people".

With that said, I would NOT pay off your fiancee's debts until you are actually married. Plus it sounds like you are way better with your money than he is. Maybe he wasn't trained as well as you. Either way, I would focus your money on your schooling. The schooling will help you earn more money and that is a better investment.

You talk about "worst case scenario" he may have to go on unemployment. I realize he works for his father, but if their business is so bad, he might be doing his father a favor by finding another job if business is bad. I would not wait until I lost my job to start looking for a replacement.

You seem pretty organized, but usually when I see round numbers, I assume you are just taking numbers from your head. If that is true, then I encourage you to look back in your bank statements and make sure you haven't missed something. The reason I say that is you say you have about $1400 per month in surplus yet you only have $4000 in the ING account. That translates that you either just started having the surplus or you have expenses that eat up the surplus.

**disneysteve** · 06-18-2009, 07:44 PM

Originally posted by Runaway Finances View Post

The reason I say that is you say you have about $1400 per month in surplus yet you only have $4000 in the ING account. That translates that you either just started having the surplus or you have expenses that eat up the surplus.

OP just paid off her car in April, so I'm sure that has something to do with the monthly surplus suddenly increasing.

Keep in mind, also, that OP is only 21 years old, so only 3 years out of high school, and part of that was probably spent getting an associate's degree since she said she needs 2 more years to get her bachelor's.

I think the priorities should be building an adequate emergency fund and boosting the retirement savings.

**kquealey** · 06-19-2009, 07:54 AM

Originally posted by disneysteve View Post

I think your budget looks just fine. So you currently have a $1,400/month surplus. Where is that money going? Is it being invested, held in savings or what? Why only $150/month into a Roth? That is less than 4% of income. Do you also have a retirement plan at work or is the Roth all you've got?

the $1400 has been going into savings, i will have about $4200 at the end of the month in savings. i want to divert that to paying off the fiance's car. it has been held in an ING account. one of the reasons for only $150/mo into a Roth is for one of the dumbest reasons ever ... when i opened my Roth w/T. Rowe i was able to open 3 mutual funds w/$50 auto withdrawn from my bank account each month to each mutual fund. i can't figure out how to add more mutual funds that take $50/$100 per mo! it seems to want 1K at a time which i don't want to do right now. i know i need to call them but with my workload that has seemed impossible right now. i also have been under the impression that because i am investing something that at my age it would be better to pay down debt than shovel even more into a Roth. but i also know that stocks are at historic lows. it's a catch-22. no retirement plan offered at work right now (only 5 employees so they aren't required to offer that; we would rather get health insurance first). so that is why one of my plans beginning in january 2011 is to invest the max into both our Roths before continuing to save for the year.

sorry for the long-winded posts! and thanks for the responses.

**kquealey** · 06-19-2009, 08:06 AM

Originally posted by Runaway Finances View Post

Keep in mind we have to read between the lines so I may be making some really bad assumptions, but my comments are based on something my father told me when I first got in the business...."Money does strange things to people".

With that said, I would NOT pay off your fiancee's debts until you are actually married. Plus it sounds like you are way better with your money than he is. Maybe he wasn't trained as well as you. Either way, I would focus your money on your schooling. The schooling will help you earn more money and that is a better investment.

You talk about "worst case scenario" he may have to go on unemployment. I realize he works for his father, but if their business is so bad, he might be doing his father a favor by finding another job if business is bad. I would not wait until I lost my job to start looking for a replacement.

You seem pretty organized, but usually when I see round numbers, I assume you are just taking numbers from your head. If that is true, then I encourage you to look back in your bank statements and make sure you haven't missed something. The reason I say that is you say you have about $1400 per month in surplus yet you only have $4000 in the ING account. That translates that you either just started having the surplus or you have expenses that eat up the surplus.

i definitely appreciate your views and thank you for sharing them. i guess i have a different view than most people because i think my money and his money is our money at this point. we also do have an agreement in place that if we decide to split that he will repay what i have advanced to pay down his car.

i'll be the first to say that he used to suck with money. he used to spend $900/mo on fast food before we started dating but he became a convert and has been very quick to learn. he loves to budget with me and see things projected out - when we can pay off his car, when we can max out retirement, how much we could save in a year with no debt. he has come a long way and i am very proud of him; he is great with money now, he just has some debt.

he is currently on unemployment and we have an agreement that if he is on unemployment for more than a month straight that he needs to SERIOUSLY seek employment elsewhere. his father is aware of this. they have gone through cycles of two weeks on unemployment and then three weeks of full-time work for a couple of months now.

i round my numbers up by $10 or so, so that i am typically always ahead of the curve. that's why the majority of my numbers are rounded.

disneysteve would be correct, i only have 4K right now because i saved up 6K and then paid off the balance on my car in april. so i would have had 10K by now.

**disneysteve** · 06-19-2009, 10:02 AM

Originally posted by kquealey View Post

the $1400 has been going into savings, i will have about $4200 at the end of the month in savings. i want to divert that to paying off the fiance's car.

I would vote against this. You need to keep money in savings and build up that ING account to at least 3 months worth of expenses. Considering the employment status of your partner, I think a good EF is even more important.

That doesn't mean you can't split things up a bit. If you have $1,400/month surplus, you could put $1,000/month into the EF and $400/month toward accelerated payments on debt, or something like that.

**Runaway Finances** · 06-21-2009, 03:39 PM

Totally agree with Steve. I'm glad you have converted your fiance. You sound like you have a great head on your shoulders from a financial point of view. I urge you to be cautious though as so many marital problems are over financial issues. Make sure your fiancee has truly changed and is improving before you get married. In my opinion, marriage is for life. Relationships take a lot of work and finances can be a huge wedge. I'm old school so it concerns me about the two weeks on and two weeks off. But, I don't know all the details so you obviously will need to sort through this "advice" to determine if any of it is worth applying in your situation.

**swanson719** · 06-21-2009, 07:00 PM

I disagree with Steve here. DW and I are 25 and 22 respectively, and we helped each other pay off everything we could after we got engaged. It was never a "I paid off this, you paid off that" attitude, because we took both of our paychecks and did Dave Ramsey's snowball with it. We had no problems, and have been married since Feb '08. So it worked out well for us.

I do agree that you need to seriously boost your retirement savings. Pay off the car, then start maxing out the Roths now, before saving for a house. Compound interest takes time, and the sooner you start the longer you have. Find a good investment calculator and run the numbers of maxing it out now vs. after you have a house. You'll see the point.

I get wanting to get out of your Dad's place. Not a fun gig. But you can get an apt. in most parts of the country for $600 a month. Maybe not great, but better than crashing with the parents.

Look into combining car ins. into a plan to cover both of you. It can be done w/o being married. Put it on a 6/mo at a time note. It would give you a multi-car discount, lowering the rates, plus the 6/mo discount. Pay yourself into a money market mutual fund w/ check writing privileges. Then every six months, write a check, and you keep the interest. Saves you money w. the car ins. while making you money on the interest.

Regarding student loans for the bachelors degree, unless you're going to get a substantial pay raise with the degree, do it over time and with cash IMO. Having a better degree and getting paid roughly the same doesn't make sense, and in this economy, it wouldn't surprise me if that's exactly what happens.

I say all that to say this: You don't want to buy a house if you have any other debt. A mortgage is a huge financial burden. My pre-requisites to buying a house are this: No debt, 20% down, 6 months emergency fund, 20% going into retirement, and the mortgage being no more than 25% of your net on a 15 yr note. That makes a house a home, not a financial burden. It makes you financially secure, and it makes you live well within your means.

It's not how we did it, but I wish we had. We're almost there now, almost a year later. Had we waited that extra year and rented or kept on living with DW's parents, we would have been there 6 months ago. But we were eager to get our own house, and while we haven't suffered because of it, we would be better off had we waited.

**disneysteve** · 06-21-2009, 07:13 PM

Originally posted by swanson719 View Post

I disagree with Steve here. DW and I are 25 and 22 respectively, and we helped each other pay off everything we could after we got engaged. It was never a "I paid off this, you paid off that" attitude, because we took both of our paychecks and did Dave Ramsey's snowball with it. We had no problems, and have been married since Feb '08. So it worked out well for us.

I just want to be clear. I have no problem with an engaged couple combining their finances. We combined ours when we got engaged, too. The reason I don't think you should pay off the car is because I think you need that money as an EF.

That's why I suggested putting some money each month toward extra debt payments.

**tmvijai** · 06-22-2009, 06:27 AM

I guess many taken their hit and you might already some pretty good idea on what you should do. Let me confuse you little more.

I like steve's suggestion of not paying of Car payment because EF is very important and saves you on financial burden. If you end up losing your job, this is the one place you can find shelter. As I said, Emergency fund needs to be atleast 3-6 months of your gross earnings to help you out.

Also combining things to pay off before marriage might work well, but you also need to think of worst case situations. If you split, there is no legal formalities which helps out on spiliting your asset like it does after marriage. Things might look gloomy and green during good times but when things happen you don't want to go thru the worst condition in the world. It is the first thing you want to avoid. If you are married, there is whole legal formalities which back you up but not before marriage. I would take caution in combining the assets.

I know steve and others gave important to retirement to have ROTH funded fully, its good but since you are too young to worry about retirement. The priority should

Financial Checkup/Going Forward