What should I work on next

**maat55** · 08-11-2009, 07:45 PM

Either sell the car or pay it down quickly. Also, read a few personal finance books like:

The Total Money Makeover by Dave Ramsey
The Automatic Millionaire by David Bach

After reading a few books, you will get a good handle on how to plan out your financial lifestyle.

**disneysteve** · 08-12-2009, 04:47 AM

Originally posted by fiffer010 View Post

Car debt: $17,000

Originally posted by maat55 View Post

Either sell the car or pay it down quickly.

I agree. That car is killing you. A college student with a $22,000 income should not be driving a car with a $17,000 loan. In hindsight, you should have gotten a decent used car, like $5,000. Lesson learned, hopefully, and a mistake you won't ever repeat.

How much is the car worth on the private market today?

**peterj** · 08-12-2009, 05:54 AM

Man give the guy a break, dude if your able to save 900 a month then go for it i commend you for even saving. You live once have fun while you can. If you came on saying you have no plan to save then different story but enjoy the car, enjoy saving, enjoy your life

**MonkeyMama** · 08-12-2009, 05:55 AM

Literally, if I were you, I would downgrade the car. I'd think a $5k car is too much!

I am also not a fan of saving for an IRA while being a young college student. A ROTH might be the exception - you can always pull money out later if you need it - but if I did the ROTH I may stick to cash.

Personally, I'd keep adding to the emergency fund. Not sure I'd want to throw any more money at a car. I'm assuming you will make more money out of college and can easily fund your ROTH and pay off the car rapidly, at that point.

**crazyliblady** · 08-12-2009, 06:24 AM

Reply - What should I work on next

I would say definitely work on eliminating the car loan. Also, I would beef up the emergency fund a little more. You may not find a job right away after graduating and you will need money for job hunting expenses and maybe even relocation expenses (possibly airfare, resumes, gas money, deposits and first month's rent on apartment). You're doing great. You're still in college. Wow. I have been out of grad school since 1995 and have $1500 in credit card debt, but I am working on it.

**GREENBACK** · 08-12-2009, 06:47 AM

I would also reccomend downgrading on the vehicle. You're young enough to get your dream vehicle when the time is right. Now isn't that time. Since you're looking to enter the public employee sector you will likely have multiple retirement investing options if all goes as planned.

I'm a law enforcement officer and I first invested in my 457 plan. You'll likely have this option as well as a pension. I invested in a Roth a few years later as another option for retirement savings. The Roth wasn't around when I started my career.

I think you have a nice starter emergency fund and you can slowly add to it at this point but that depends on your personal situation i.e. your health, family situation, housing situation and any other variable financial issues you might have. If you feel you need three month's worth then selling the car should easily handle that.

Things don't always go as planned so, yes, I'd consider putting what you can into a Roth. It's pretty much your only retirement savings vehicle at the moment and is a good option.

At 23 it's a prime time to start investing for retirement. Currently the market is marching up and the sooner you can get into it the better.

**fiffer010** · 08-12-2009, 08:32 AM

Thank you for the advice. I should have given more detail about the loan. I lumped two loans into one as I the jeep has 11,000 left and the motorcycle has 7,000 left.

The Jeep trade-in value is 16,000 and the motorcycle trade in value is 6,000. I have learned my lesson about the vehicles but I think I will keep them. When I get into a law enforcement position, I will be able to pay them off in 6 to 9 months.

I guess the general consensus is to keep at the emergency fund?

**anonymous_saver** · 08-12-2009, 12:09 PM

Originally posted by fiffer010 View Post

Hello! I would greatly appreciate some advice on what I should start saving towards next. Here is so info about my financial/career life. After I finish school I plan on getting picked up into the police academy to be a police officer where my salary will more than double and I plan to keep the same life style so to invest the rest.

Monthly salary after taxes: 2250
Amount I can save after living expenses: 700-900 a month
18 months until I finish college
23 years old
Roth IRA: 0
Emergency fund: 2500 (almost 2 months)
Car debt: $17,000

My question is, after I get my 3 months of emergency fund saved up, should I start paying down the car loan or contributing to my Roth? Thank you in advance!

Do you contribute up to your employers match in any retirement accounts they offer? If not, I would start that immediately.

Personally, I would absolutely sell that car. Take public transportation or a cheaper used car. But if you arn't willing to do that, my advice is below.

$800/month would be $9,600 a year. I'm going to make a random guess that let's round this down to $9,000 considering you might spend $600/year on extras like holidays, pet appts. (assuming you have pets), etc.

I would put at least 10% of your income into a Roth IRA immediately. (To be honest, I would put the full $5,000 amount, but my point is that I think you should start it now, especially if you don't have an employers retirement account currently.) So 10% of $2,250 is $225 a month, or $2,700 a year. That would leave you with $6,300. Since you say you want a 3 month emergency fund to start off with, that would decrease down to $5,050. With this I would put it all towards paying off the car more quickly (make sure extra payments go to principal).

Do you have any school loan debt, medical debt, CC debt, etc.?

**maat55** · 08-12-2009, 02:15 PM

Originally posted by peterj View Post

Man give the guy a break, dude if your able to save 900 a month then go for it i commend you for even saving. You live once have fun while you can. If you came on saying you have no plan to save then different story but enjoy the car, enjoy saving, enjoy your life

Pretty much the mentality that will have you broke at 40. If you are not willing to save and pay cash for a 17k car, you should not buy it.

**fiffer010** · 08-12-2009, 04:14 PM

My employer does not have any sort of retirement options so that is why I am considering a ROTH. I would consider selling the motorcycle but I would have to sell it at a loss.

"Do you have any school loan debt, medical debt, CC debt, etc.?"
No debt except for the auto loans.

**maat55** · 08-12-2009, 06:04 PM

Originally posted by fiffer010 View Post

My employer does not have any sort of retirement options so that is why I am considering a ROTH. I would consider selling the motorcycle but I would have to sell it at a loss.

"Do you have any school loan debt, medical debt, CC debt, etc.?"
No debt except for the auto loans.

The loss is already there, the idea is to have less debt. Don't get hungup on selling at a loss to get rid of debt.

**anonymous_saver** · 08-13-2009, 07:37 AM

Since your employer doesn't offer any retirement account, I would definitely say that contributing at least 10% of your income (although I would personally do the full $5,000 amount) is an important thing.

I don't think there is anything wrong with saving for multiple things at one time (emergency fund, retirement, etc.).

What should I work on next