Recent College Grad Question

[ClemTiger0408]

As the topic indicates, I recently graduated from college and have my first job. I actually majored in Finance which makes asking this question a little embarrassing. I graduate with a little credit card debt, nothing like some of the scary stories you read about. I graduated with plenty of college loans, in the 20k range, which I've already began paying off.

My question is, how much of my TAKE HOME salary each month should be not tied up in bills, rent, etc.

I calculated that with all of my bills (this includes rent, utilities, cell phone, tv/internet, insurance, groceries, anything that I can count on being paid on a monthly basis, etc) I have around 31% of my monthly take-home salary not tied up in anything.

Obviously, my first priority is to pay off my credit cards (again, we aren't talking about a crazy high number and I currently have enough cash to pay it off now but don't want to deplete my cash reserves). I'm investing each month into a 401k, that amount is already taken out when I say "take home salary".

I just do not know what is normal. 31% seems like a good number to me, but I don't know if that is critically low and I should desperately find ways to increase it.

What do you all think?

Also, IRA and other investing will begin when my credit cards are paid.

[am_vanquish]

As the topic indicates, I recently graduated from college and have my first job. I actually majored in Finance which makes asking this question a little embarrassing. I graduate with a little credit card debt, nothing like some of the scary stories you read about. I graduated with plenty of college loans, in the 20k range, which I've already began paying off.

My question is, how much of my TAKE HOME salary each month should be not tied up in bills, rent, etc.

I calculated that with all of my bills (this includes rent, utilities, cell phone, tv/internet, insurance, groceries, anything that I can count on being paid on a monthly basis, etc) I have around 31% of my monthly take-home salary not tied up in anything.

Obviously, my first priority is to pay off my credit cards (again, we aren't talking about a crazy high number and I currently have enough cash to pay it off now but don't want to deplete my cash reserves). I'm investing each month into a 401k, that amount is already taken out when I say "take home salary".
I just do not know what is normal. 31% seems like a good number to me, but I don't know if that is critically low and I should desperately find ways to increase it.

What do you all think?

Also, IRA and other investing will begin when my credit cards are paid.

31% is decent ... as long as you're using it responsibly. For a better answer, please provide more details on your 401k contributions. What percentage of gross salary are you contributing and what are the details of the employer match (when are you eligible, what is the matched amount)?

Finally, what other savings do you have? Any Emergency Fund at all? Anything for retirement other than the small amount in the 401k?

[ClemTiger0408]

31% is decent ... as long as you're using it responsibly. For a better answer, please provide more details on your 401k contributions. What percentage of gross salary are you contributing and what are the details of the employer match (when are you eligible, what is the matched amount)?

Finally, what other savings do you have? Any Emergency Fund at all? Anything for retirement other than the small amount in the 401k?

Right now all I'm doing for the 401k is making the minimum to get full matching. That is 6% from me and 3% from my employer. This will go up. I only have about a $1000 emergency fund but I keep a minimum $2000 cash in my checking.

That's it for savings. My priorities are: credit card debt, emergency fund, begin IRA, increase 401k contributions in that order.

[I.T.Guy]

I only have about a $1000 emergency fund but I keep a minimum $2000 cash in my checking.

That's it for savings. My priorities are: credit card debt, emergency fund, begin IRA, increase 401k contributions in that order.

I think your priorities line up quite well. Some will suggest building an EF first, then tackle the CC debt, but I think you're fine.

Out of curiosity, why the minimum $2000 in checking? You say you have the money to pay off the CC Debt but don't want to deplete your reserves. To clarify, would the $1000 EF be the reserves you're talking about? Or are you referring to the money in checking?

To me, it appears that the money in checking is your true EF and the $1000 is just some other amount. If you're keeping this in checking at all times just in case something happens, then I'd suggest taking at least half of it and putting it in the EF since an EF is in place for surprise/unexpected expenses whereas a checking account is more for paying regular expenses.

[sammythesm]

How much CC debt do you have and at what %? And how much cash do you have on hand?

It seems like if you are renting and have a good enough income to be saving so much, you can afford to pay off the Credit Cards even if it does deplete your cash reserves.

I would especially do this if you are paying high interest (high interest to me would be anything above 0-5% )

You can build up an Emergency Fund faster if you're not wasting money on paying some credit card company interest.