My Personal Financing Goals and Questions

[Benjamin_G]

I'll try to make this question very short sweet and to the point. I'm a 20 (almost 21) year old. I'm currently in the process of trying to build the sub-frame to my future. I work full time and a little bit of overtime. I've always been a hard worker, who was always good with my money. I'm currently working full time and don't really have much money to myself anymore. A lot of the reasons are because my father recently passed away and I had to front 5200$ to pay for expenses. I got lucky and got a 4000$ loan from my bank and credit union. And the rest I maxed out both of my credit cards to cover the rest. As of recent I have paid the 1200$ for the most part I believe the balance is 180$ish and its been since June. Now for the 4000$ loan over 3 years is current about 3.700 left. I recently canceled one of the credit cards I paid off. And still have 1 card with them still. I also have an American Express card that I use frequently but always pay off. Anywho, I have a few financial problems, I want a "newer" car, and a place to move out to start my young adult life. I want to have money, I want to invest, and put money away. Anywhere someone can lead to start. Its all overwhelming. I appreciate any responses this thread may receive.

[jIM_Ohio]

Step 1 is make sure you spend less than you earn.

If you earn X, make it a point to start savings y% of X.

A good saver will save 20% of what they make
when you start, its OK to start at 5% or 10%.

I would get rid of the debt
I would KEEP all credit cards, even if they have zero balance- you never know when you need the credit.

[disneysteve]

Welcome. I would start by listing your current monthly net income and your current monthly expenses. You can't really do anything until you know how much is coming in and where it is all going. I would not count overtime pay in the income figure - just base income - since OT isn't guaranteed or consistent.

Once you've done that, look at what Jim said. If you are spending all that you earn (or more), you need to cut expenses to allow yourself to start saving some percentage of your income on a regular ongoing basis.

Next, you need to come up with a good estimate of what your future expenses might look like if you move to your own place and bought a newer car. How much are rents in your area? Utilities? Would your commute be longer resulting in higher gas costs? As for the car, would you be paying cash or taking a loan? If taking a loan, be sure not to borrow more than you can comfortably repay in 36 months. How much is your current car worth? And why does it need to be replaced right now? Could you keep that car until you have the other debts repaid?

[Benjamin_G]

Okay well here is the numeric details.


Hourly Rate: 10$ / Hour (40 hour work week)

Bills: 90$ (Insurance)
80$ (Phone)
485$ (Dental) 80$ per month taken from Checking Account
3,700 (loan) which is $142.75 a month.
50$ (Gas)


Right now i don't pay rent moving out in january for 200$ a month.


I need to get this damn loan paid off so i can start saving for a new car. I don't currently have a car payment but I do have a car thank god. But i start college in january and I will be moving out in January as well. I would like to finance my money better so I can afford a newer car and make sure I have money just incase something happens. AND I would like to learn to invest or put 200$ away each month into a high interest savings account so the money will acccumulate some kind of interest

[disneysteve]

Will you continue to work a 40 hour week when you start school?
How are you paying for school?
I'm confused by the $485 dental and $80/month from checking. Can you clarify that.

What is your actual take-home pay? The $10/hr is your gross, not your net.

Are you currently putting anything in savings or a retirement plan?

Where else are you spending money because the things you listed don't add up to anything close to your income? If you earn $400/wk that is just over $1,700/month. After taxes, perhaps $1,200 or so. The things you listed add up to a fair amount less than that.

[maat55]

I suggest you read a couple of books:

The Automatic Millionaire by David Bach & The Total Money Makeover by Dave Ramsey. These books will give you a good idea of how to plan your finances.

[disneysteve]

I suggest you read a couple of books:

The Automatic Millionaire by David Bach & The Total Money Makeover by Dave Ramsey. These books will give you a good idea of how to plan your finances.

Other good books include The Wealthy Barber by David Chilton; Young, Fabulous and Broke by Suze Orman (or any of her books); All Your Worth by Elizabeth Warren.

[Benjamin_G]

Well I have a dental health bill that I owe to the dentist. And they take 80 dollers from my checking every month cause I'm on a payment plan. I get paid every 2 weeks and I bring home close to 700 every 2 weeks, steady.

[disneysteve]

Well I have a dental health bill that I owe to the dentist. And they take 80 dollers from my checking every month cause I'm on a payment plan.

Gotcha. Makes sense now. So at $80/month, that will be paid off in 6-7 months giving you an extra $80 to put toward savings.

So $350/week is about $1,500/month (350x52/12). You've listed expenses that total $443. Subtract the $80 since that will be repaid soon and that leaves $363. Where is the other $1,100/month going currently?

[Benjamin_G]

Well sadly, every paycheck I have made has really only went to paying my 2 credit cards off, that are now paid off. I always have a 200$ credit card bill at the end of the month, I use my bank card sometimes, then I put something on my AMEX to balance it out while getting use out of my card.

[disneysteve]

Well sadly, every paycheck I have made has really only went to paying my 2 credit cards off, that are now paid off. I always have a 200$ credit card bill at the end of the month, I use my bank card sometimes, then I put something on my AMEX to balance it out while getting use out of my card.

Your first post suggested that your credit card debt had been $1,200. Was that the total or was that just the amount attributable to expenses after your father passed?

I'm still not seeing where about $1,000/month is going. That would take care of the $1,200 CC debt in just over a month and the $4,000 bank loan in another 4 months.

Are you currently putting any money in savings? Do you contribute to an employer-sponsored retirement plan and or a Roth IRA?

[btacay]

Money Saving Tips

One saving tip that you can implement in your daily life is to cut unnecessary spending from your budget. If your goal is to buy a home, you have to eliminate needless spending—such as excessive entertainment or shopping sprees—and put that money toward your future home

[yugugelizer]

What about things like food and gas? Your monthly expenses are missing at least a couple items.

[maddog21]

Hey Ben,

I know a lot of people who are in your same situation as you and my advice is to setup your goals properly. To use the words of Jim Collins beware of the "BHAGS" big hairy audacious goals. What this means is that a goal of "I want to have money" is really not an attainable goal. The thing to do is quantify all of your short and long term goals and put a hard date on when you would like to achieve them. Then take those goals and break them up into short term (1 week, 1 month) goals that are digestible and attainable.

I built a new site called theGoalSaver.com that is totally free and it helps you track your goals. It also calculates what you need to save in the short term to be successful.

Hope it helps

Marc