Financial Strategy for Non-Profiteers

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I'm a non-profit administrator and will likely be one for the near to long term future. It's an industry I love and feel connected too. I have accepted the trade-offs. I do however need some advice.

This life choice has resulted in two clear financial realities: 1. My yearly income will likely be lower than that in the private sector, and 2. I will most likely not have access to a matching 401k plan or something similar. (There do exist non-profits with such programs but they are more the exception than the rules.)

Thus, I must make do with less. To do so, I need a sound strategy and come to you guys for help.

Here's my situation:

33 y/o
single
Renting with a roommate in Cambridge, Mass (with no desire to leave at present)

Income: $48,500
Savings: $49K in a Fidelity Target 2045 IRA to which I contribute $5K/yr
$5700 in a TROWE Spectrum Income Fund (a bond fund) to which I contribute $100/mo (for possible near-term expenses like a dream vacation, new car fund, etc)
$8K in an ING savings account to which I contribute $50/mo
$1K-$3K in a checking account (varies by paycheck, bills timing)
Between my savings and checking accounts, I have 5 months of bare-bones expenses covered.

Debt:
$16,500 in student loan debt at 3% (paid at $300/mo)
no CC debt, no car payments

Expenses:
Fixed costs (rent, insurance, utilities, etc) = $1,000 + $300 in student loan payment = $1,300
Discretionary (food, gas, entertainment, personal exp, etc) = average of $800/mo, which allows me to have an enjoyable quality of life.

Questions for you guys:
1. At 14% of my gross, am I saving enough? I know 20% is a guide, and I've read here that one should save 15% of gross just for retirement. But given the numbers above, what do you think?
2. Is my money going to the right places? Specifically:
-Am I being overly conservative by contributing $100 a month to a bond fund? Should I stop contributing to that and begin building a stock portfolio, paying down student loans, etc?
-Could that $50/mo that's going to a savings account go somewhere else that's more productive like stocks, a vacation fund, or to pay down the student loan debt?
3. Do I just need to make more money?

Thanks guys!

[jpg7n16]

I'm a non-profit administrator and will likely be one for the near to long term future. It's an industry I love and feel connected too. I have accepted the trade-offs. I do however need some advice.

This life choice has resulted in two clear financial realities: 1. My yearly income will likely be lower than that in the private sector, and 2. I will most likely not have access to a matching 401k plan or something similar. (There do exist non-profits with such programs but they are more the exception than the rules.)

1. Is likely true, but that doesn't mean you can never make a good living in a non-profit. I say this to say that you can likely find a higher position in the same non-profit field and earn more without giving up what you love. Though money isn't everything

2. Maybe not at your specific firm, but 403b's are becoming more common. They're like the non-profit 401k. So if not available today, that may be an option sometime in the future.

Thus, I must make do with less. To do so, I need a sound strategy and come to you guys for help.

Here's my situation:

33 y/o
single
Renting with a roommate in Cambridge, Mass (with no desire to leave at present)

Income: $48,500
Savings: $49K in a Fidelity Target 2045 IRA to which I contribute $5K/yr
$5700 in a TROWE Spectrum Income Fund (a bond fund) to which I contribute $100/mo (for possible near-term expenses like a dream vacation, new car fund, etc)
$8K in an ING savings account to which I contribute $50/mo
$1K-$3K in a checking account (varies by paycheck, bills timing)
Between my savings and checking accounts, I have 5 months of bare-bones expenses covered.

Debt:
$16,500 in student loan debt at 3% (paid at $300/mo)
no CC debt, no car payments

Expenses:
Fixed costs (rent, insurance, utilities, etc) = $1,000 + $300 in student loan payment = $1,300
Discretionary (food, gas, entertainment, personal exp, etc) = average of $800/mo, which allows me to have an enjoyable quality of life.

Well let's check some numbers:

Housing should be under 28%. 48,500 might be around $42k after taxes. That's around $3500/month. And your housing + utilities + insurance is right at 28.5% so you're close enough. No need to move

You might be able to cut back some in the discretionary, just as general good financial practice. But you didn't really give any specifics, so we couldn't offer guidance there. I know the popular thought is, 'if I quit eating out so much, my quality of life will suffer.' But that's not completely true. Cutting out completely causes quality of life to go down, cutting back a little doesn't change much.

And savings - I know here is a sec you quote 14% savings. But what all are you counting? If you're like most people, you're forgetting that paying down debts is considered savings as well.

417 (IRA) + 100 (bonds) + 50 (EF) + 300 (student loans) = $867 = 21.44% of gross (24.7% net)

Questions for you guys:
1. At 14% of my gross, am I saving enough? I know 20% is a guide, and I've read here that one should save 15% of gross just for retirement. But given the numbers above, what do you think?

See above. When you include the debt repayment into the calculation, your savings rate looks much better.

And 20% is more of a goal, than a guide. It's something to work towards, not something to beat yourself up because you're not able to do today. (I'm likely the main one talking about the 15-20% for retirement alone)

2. Is my money going to the right places? Specifically:
-Am I being overly conservative by contributing $100 a month to a bond fund? Should I stop contributing to that and begin building a stock portfolio, paying down student loans, etc?

Well I disagree with it, but not for risk tolerance reasons. Nor in favor of debt paydown reasons either.

Since your retirement savings options are maxed out and you need both an IRA and a brokerage account to save enough, I would rather see you have the bond holdings in an IRA, and a growth stock fund held outside the retirement account. The reason being that you're getting taxed on the bond fund's income every year, where you wouldn't be in the IRA. And the growth stock fund would typically pay little to no dividends, and would thus keep growing without much taxation.

-Could that $50/mo that's going to a savings account go somewhere else that's more productive like stocks, a vacation fund, or to pay down the student loan debt?

This is really a question about your goals. Your post seems that saving for retirement is a large concern for you. And a 3% tax deductible loan is a small concern for me (I'm intentionally not paying extra on my student loans at similar rates in order to invest the money. I could pay them off today, but it'd lose me money to do it.)

I think $8k is a good amount for your EF, so I would contribute the $50 to something else. I'd personally do towards retirement. Or a vacation fund if that's something you really want. That's really up to you

3. Do I just need to make more money?

Here is what I have seen to be good and fitting: to eat, to drink and enjoy oneself in all one’s labor in which he toils under the sun during the few years of his life which God has given him; for this is his reward. Furthermore, as for every man to whom God has given riches and wealth, He has also empowered him to eat from them and to receive his reward and rejoice in his labor; this is the gift of God. For he will not often consider the years of his life, because God keeps him occupied with the gladness of his heart.
-Ecclesiastes 5:18-20

There's more to life than money. Sure, try to make more if you can - but if you have to give up what you love just for some more money, that's a poor trade.

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JPG,

Thanks so much for the sound advice. I'm going to devote some serious thought to what you wrote, specifically, what to do with my bond fund and the $50/mo going to my EF.

And I did not know that paying down debt was calculated in savings. Interesting.

Yes, there is certainly more to life than money and I guess that's why I'm sticking in the non-profit sector. I just may take a look at what else is out there within my field.

Thanks again!