What should I do?

[whey2big4u]

a little background:

I am 24 years old and have a job that pays me $30K a year, but I have the opportunity to triple that every year. I just got myself out of $20k credit card debt. It took me two years to do it.

Now I base all my finances on the $30K and everything extra I put away into something.

I currently put some money into long term dividends (DRIP), some small cap stocks also, I play with forex and day trading,I put 3% into my 401k, and I kind of put some money into my IRA and savings. My tax return will be going into my emergency fund since I do not use credit cards.

After all my bills I am only left with $100....sometimes a lot more sometimes a lot less

My question is this given my age what should I put my money into? stocks, bonds, mutual funds, forex, more into my 401k, IRA

How much of my income should I be putting towards my retirement as of now? IRA and 401K.

Should I even attempt to continue investing now? Should I still play with forex? and is there anything else out there that will make my money work for me and grow?

[bjl584]

You should be saving 20% of your income for retirement. Just make sure that you have a fully funded Emergency Fund in place (6 months worth of expenses.)

Take advantage of a company sponsored 401K up to at least the match.

You may want to consider a Roth IRA. You can contribute up to $5000 a year.

You are young, so you can afford to be more risky by investing primarily in stocks.

[whey2big4u]

Ive heard this once before and I may attempt it, but it would leave me with absolutely nothing

I live alone and I have an awesome girlfriend who goes Dutch on everything or even takes me out so entertainment isn't really an expense

Here is a break down Of my finances down to the penny:

I make $30,000 a year not counting making any extra income.
That equates to $1153.60 gross per paycheck
Medical: $66.15
401K @ 3%: $34.61
Metro Card (pretax once a month): $104
Taxes: roughly 20-25%of remainder (I always estimate a %28 tax rate since I usually make more)

Leaving me with a rough net of $1363.60

Then once a month bills:
Food ($50 per paycheck): $100
Car insurance: $101.29 (and continues to lower every six months)
Phone: $67
Internet& TV: $80
Rent: $750 (all utilities included)

this leaves me with about $177 at the end of the month assuming a 28% tax rate based on $30,000 - 401k, metro card, and medical. Now of course it is usually more due to overtime and training, but I always base it on less.

I of course need some of this money to go out on occasions or get that small something I really want and pay for things I NEED (like a new certifications, vet bills, dog food, house hold necessities) not want. I also sometimes use this money to buy things to sell on e-bay to make more.

Based on theses numbers what should or can I put away towards retirement?

I also tend to come into large windfalls of money and would love to know what would be the best thing to put it in...an IRA or stocks or both and what percentage or maybe something else I don't know off.

Sorry for being so particular, but I have played with theses numbers a lot and I am hoping there is someone out there that knows more than me and can see the numbers from an outside view. I am open to any suggestion

[snshijuptr]

Day trading is usually a losing game thanks to the high cost of trading.

1) Setup a 3-6 month expenses emergency fund
2) Get your full employer match in 401k
3) Max out a Roth ($5000)
4) Put more into 401k until 15-20% of gross income
5) Set some savings goals (buy a house, pay cash for a car, pay for a wedding, retire early, etc) and work toward them

Also, I recommend you read up on investing. Most of the advice I have read says put your money into low cost index funds and you will more than likely perform better than any other method. At our age (I"m 24 too) I would look at limiting bond income (I'm at around 10-20%) and investing a good amount in World or International funds (around 20-30%) and small cap funds (around 20%).

[gambler2075]

Day trading is usually a losing game thanks to the high cost of trading.

Actually, daytrading is usually a losing game because most people buy when everyone else is buying and sell when everyone else is selling, thereby buying high and selling low.

Commissions are not the issue.

g

[disneysteve]

I am 24 years old and have a job that pays me $30K a year, but I have the opportunity to triple that every year.

Now I base all my finances on the $30K and everything extra I put away into something.

I live alone

I make $30,000 a year not counting making any extra income.

net of $1363.60

Rent: $750

I think this is your biggest problem. Your rent is 55% of your income (assuming 30K/year). Rule of thumb is for housing to be no more than 28% of income so you are way over the limit. I think you are paying a really steep price to live alone. I would suggest you reconsider that and look into getting a roommate or two to share costs.

However, I'm not clear on how much you truly earn. From what you've said, it sounds like the 30K is your base pay but that you routinely earn more than that. What was your actual gross for 2010?

[whey2big4u]

Okay so I guess day trading is out of the question.....But I do agree with warren buffet, "be fearful when others are greedy and greedy when others are fearful"

Disneysteve.....I have read your other posts and I highly value your opinion...along with everyone elses

For 2010 I cleared $36,000 gross. I do know that rent is my biggest expense but I live in NYC and things can be expensive. So $750 a month with ALL utilities included is somewhat unheard of around here. The typical rent here is $1200 for a single bedroom or even to share an apartment and that doesn't even include utilities

also to mention in 2010 I was still living at home and paying off all my credit cards.....my whole family lives in another state now they all moved and my job is in manhattan

I came across this recommended percentage chart:


Housing 33%
Food 14%
Auto 14%
Insurance 5%
Debts and Savings 9%
Entertainment 5%
Clothing 5%
Medical 5%
Contributions and Misc. 10%


now based off this (which is close the 28% fr housing) I do spend more on housing than needed but A LOT less in other categories.....so is it acceptable then since it is just a shift in percentages? If I followed this chart exactly I would be saving roughly $60 a month....a savings yes but is it worth looking changing something?

[moneyclass]

if you can max out any or all retirement accounts. your at a young age now if you start maxing them out now then later down the road you wont have to put much in but if you start to max them out now id stick with it forever. compound interest is BIG at a young age.

i would investing in all stocks at your age. better returns i believe. i like bonds and mutual funds more towards retirement becuase there a safer investment and at that time you dont have the time to lose that money.

[krantcents]

a little background:

I am 24 years old and have a job that pays me $30K a year, but I have the opportunity to triple that every year. I just got myself out of $20k credit card debt. It took me two years to do it.

Now I base all my finances on the $30K and everything extra I put away into something.

I currently put some money into long term dividends (DRIP), some small cap stocks also, I play with forex and day trading,I put 3% into my 401k, and I kind of put some money into my IRA and savings. My tax return will be going into my emergency fund since I do not use credit cards.

After all my bills I am only left with $100....sometimes a lot more sometimes a lot less

My question is this given my age what should I put my money into? stocks, bonds, mutual funds, forex, more into my 401k, IRA

How much of my income should I be putting towards my retirement as of now? IRA and 401K.

Should I even attempt to continue investing now? Should I still play with forex? and is there anything else out there that will make my money work for me and grow?

Put as much money as you can into your 401k. You have youth on your side and putting the money to work for you is important. After maxing your 401k, I would consider a Roth IRA because you can use that money for house someday and you are saving tax free.

[TrunkMonkey]

a little background:

I am 24 years old and have a job that pays me $30K a year, but I have the opportunity to triple that every year. I just got myself out of $20k credit card debt. It took me two years to do it.

Now I base all my finances on the $30K and everything extra I put away into something.

I currently put some money into long term dividends (DRIP), some small cap stocks also, I play with forex and day trading,I put 3% into my 401k, and I kind of put some money into my IRA and savings. My tax return will be going into my emergency fund since I do not use credit cards.

After all my bills I am only left with $100....sometimes a lot more sometimes a lot less

My question is this given my age what should I put my money into? stocks, bonds, mutual funds, forex, more into my 401k, IRA

How much of my income should I be putting towards my retirement as of now? IRA and 401K.

Should I even attempt to continue investing now? Should I still play with forex? and is there anything else out there that will make my money work for me and grow?

How can you turn 30K into 90K? What do you do for a living.

Also I wouldn't day trade that will never work. Why don't you just make a budget, I mean just write down how much you spend. That way you can model your expenses for the year and estimate how much money you can save. That way you can just save up for whatever goals you have in mind.

I wouldn't listen to people who say, "you need to save 20% of your income". Its total hogwash. Just make a simple budget.

[disneysteve]

I wouldn't listen to people who say, "you need to save 20% of your income". Its total hogwash.

Care to expand on that? Why do you think saving 20% is "hogwash" and how much do you think people ought to be saving?

[disneysteve]

Housing 33%
Food 14%
Auto 14%
Insurance 5%
Debts and Savings 9%
Entertainment 5%
Clothing 5%
Medical 5%
Contributions and Misc. 10%


now based off this (which is close the 28% fr housing) I do spend more on housing than needed but A LOT less in other categories.....so is it acceptable then since it is just a shift in percentages?

One thing to keep in mind is discretionary vs. non-discretionary expenses as well as fixed vs. variable expenses. Ideally, you want to keep your fixed and non-discretionary expenses lower. That way, if something happens: your income decreases, an emergency arises, you can cover costs by trimming the discretionary and variable expenses.

If you build yourself a lifestyle that includes high fixed expenses like rent, car payments, etc., it is harder to adapt if your situation changes. You'll often see us recommend a 50/30/20 budget here. That is 50% for needs, 30% for wants and 20% for savings. If you follow that plan, even if your income drops in half, you will still have enough to cover all of your needs.

I know that living in NYC is very pricey, but I also know many people who work in NYC but don't live there. I have friends and relatives who live as far as 90 miles away from the city. The commute sucks but that's what they have to do to keep the good job in the city and still be able to have affordable living costs. I have neighbors here in southern NJ who work in NYC. I have a cousin in Woodbridge, CT who works in NYC. And I know many others who commute from all around the region. Perhaps you could find something a reasonable distance from Manhattan that would be more affordable, especially if you could share a place with one or more other people.

The other problem with the above breakdown is 9% isn't enough for savings.

[jpg7n16]

I am 24 years old and have a job that pays me $30K a year, but I have the opportunity to triple that every year. I just got myself out of $20k credit card debt. It took me two years to do it.

After all my bills I am only left with $100....sometimes a lot more sometimes a lot less

I would focus on trying to make the triple income. $90k vs $30k is talking about $60k. $100/month is $1200 a year.

It would take you 50 years of saving just to equal what you'd make in 1 year of the high salary.

I saw TM asked about it, but no answer. What's the deal with the huge variance in income??


But unlike TM said, 20% is a good goal. Not a requirement, but something to shoot for over time. (somewhere 15-20%)

[whey2big4u]

I work in corporate fitness and my base salary is 30K if I tack in over time which is time and a quarter and personal training sessions which becomes $47 an hour (on shift or off shift) plus I also do personal clients my income can become 90K.

The thing is the way I am currently living I have cut a lot out of my budget and broken it down into things I need. this year I took a $6000 pay cut (either that or lose my job) That money really helped. I have already had to adjust to make my income work for me. I already live outside Manhattan because I know the cost of living their is ridiculous. I know if things do not work out I can always cut my car insurance and move in with my mother in jersey and cut my cell phone since my contract is almost up. But these are things I do not want to do


I agree with jpg that I should focus on making that extra income. But since I am always on the side of pessimism I think of the least amount.

From what I gather here people think that it is best to focus on with what limited savings I can muster up I should focus more on my 401K and IRA, an emergency fund and long term dividend stocks. And of course what ever extra I come across put into savings.

[LiveTradingZone]

Everyone knocks on daytrading. It is the hardest way to make the easiest money! Day trading is all psychology. If you follow a given set of rules and do not break them you will make money, and sometimes a lot of money! The problem is that 90% of the people in this world can not do that when it comes to trading real live money.

I think you can do it, but maybe you need some guidance or help in following some rules.