Lookin for some advice.

[seekingKNOWLEDGE]

Hey guys and Gals,

This is my first time posting on this sight, but I have been reading and think its a great place to gain some knowledge. I had a few questions about how to put myself in the best possible financial situation. Here's a little about me:

Ill be 25 in April
Earnings: 2K/mo
cost of living: -1.6k/mo
5K savings
1K checking
15K 401K (@10%+4% employee)
car -12K@4.4%
Bike -2.7K@7.49%

I also just opened a brokerage account for 1K, but immediately think its not enough-so that's included in my savings. Some insight here would be appreciated as well.

I am also currently in college. about 12K/year for 5 years (It's an internet college that's just consecutively one class at a time). So payments will be coming for that in about 4 years

Thank you

[seekingKNOWLEDGE]

sorry....

I assume pay off my bike, then car, and max my 401K until school loans come?

[littleroc02us]

I have a different opinion. I would lower your 401k match to 4%, that will give you an extra $40 a month which is $480 a year, that's $1920 after 4 years, put that money towards your debt. Tackle the Bike first with your 5k you have in savings, so that leaves $2300 and put that towards the car which leaves just under 10k. If you put $440 towards your car at 10k it will be paid off in 22 months. Enough time to save $11440 in 26 months putting away $440 a month, that pretty much takes care of most of the school loan. What's not to like about that plan?

[disneysteve]

Ill be 25 in April
Earnings: 2K/mo
cost of living: -1.6k/mo

car -12K@4.4%
Bike -2.7K@7.49%

I also have a different opinion. Stop living beyond your means! You can't afford a 12K car loan on a 24K income. And you certainly don't need a bike on top of that.

Sell the bike.
Sell the car. Replace it with something cheap that you can pay for in cash.
Use your savings to cover any shortfall between what you owe and what you get for the car and bike.

[littleroc02us]

I also have a different opinion. Stop living beyond your means! You can't afford a 12K car loan on a 24K income. And you certainly don't need a bike on top of that.

Sell the bike.
Sell the car. Replace it with something cheap that you can pay for in cash.
Use your savings to cover any shortfall between what you owe and what you get for the car and bike.

I've changed my mind and would also DS's advice due to the fact that your in college. Now that I think about it my advice above would be better for someone who is not going to sell the items no matter what because they are being stubborn.

[feh]

I also have a different opinion. Stop living beyond your means!

This was my first thought also - you've overspent. Sell the car and get something less expensive.

Is the "bike" a motorcycle or bicycle?

[jpg7n16]

I have sort of a combo answer of the advice given above.

You should take some money and pay off the bike today. Then you should consider selling it. Saves you the interest costs in the meantime, and doesn't make you feel like a motivated seller - letting you wait for the best price.

Why do you need both a car and a bike?

How high is your financial risk tolerance? Moderate? Low? Super high? {this will help determine how soon to begin investing}

And how much is the value of your car? I have a rule of thumb that the value of your car (not the loan, the value) should be less than 30% of your annual income before taxes. If you stick to this, most of the other factors will line up (low payment, if any; low percentage of net worth tied up in depreciating assets; etc.)

If your $2000/month is pretax, that means you shouldn't own a car worth more than $7,200. More likely, I'd think $2000/month is after tax, meaning you earn somewhere around $32k/year. So IMO your car should not be worth more than $9600.

If it's over $9600 - you should consider selling it. But if you're upside down, and it's only worth $9k, IMO there's nothing wrong with keeping the car as is, and paying off the 4.4% loan.

I also just opened a brokerage account for 1K, but immediately think its not enough-so that's included in my savings. Some insight here would be appreciated as well.

Brokerage accounts are great -- for people who are in a position to invest disposable income. I don't think you're there yet.

Your school loans don't just magically appear when you leave college, they're out there right now just waiting. So you shouldn't really be investing right now, but should be building up cash to eliminate the school debt once you graduate.

[maat55]

I agree with Steve, sell the car and bike, find a good car you can pay cash for, then just save and get your education.

Use your extra funds to lower your school debt.

[seekingKNOWLEDGE]

I also have a different opinion. Stop living beyond your means! You can't afford a 12K car loan on a 24K income. And you certainly don't need a bike on top of that.

Sell the bike.
Sell the car. Replace it with something cheap that you can pay for in cash.
Use your savings to cover any shortfall between what you owe and what you get for the car and bike.

I make almost 40K a year. The 2K is take home, in this slow season more like 2.3 in busy season. I owe almost exactly what the car is worth, and plan to drive it into the ground. I drive the bike in the summer, and it cost $7-10 to fill up, which gets me 180+ miles.

I mean no disrespect, but I don't think I'm living beyond my means ANYMORE. I do appreciate your time and opinion though. Thank you

[disneysteve]

How much are the payments on the car and bike?

Could you post your complete monthly budget and show how the $1,600/month is getting spent.

[YourLifeSolution]

a. NEVER go without health insurance
b. only invest the money in that brokerage account in modest no-load funds, dont gamble your money on the market
c. 2k a month is ok in this economy at your age, but work to acheive better skills so you can move up

GOOD FOR YOU for having 5k in the bank, rare for your age

[Hector]

I make almost 40K a year. The 2K is take home, in this slow season more like 2.3 in busy season. I owe almost exactly what the car is worth, and plan to drive it into the ground. I drive the bike in the summer, and it cost $7-10 to fill up, which gets me 180+ miles.

I mean no disrespect, but I don't think I'm living beyond my means ANYMORE. I do appreciate your time and opinion though. Thank you

Its sad that people come for advice, but dont want to listen.

[CCCFree]

I agree that-as long as you're not going to be upside down on your loan-sell the bike, or the car.

[seekingKNOWLEDGE]

How much are the payments on the car and bike?

Could you post your complete monthly budget and show how the $1,600/month is getting spent.

No problem:

Rent- 500
Utilities- 130
Car payment- 310
Bike payment- 110
Cell Phone- 50
Auto Ins.- 95
Gas- 160
Food- 150
Misc- 100

=1605

[seekingKNOWLEDGE]

a. NEVER go without health insurance
b. only invest the money in that brokerage account in modest no-load funds, dont gamble your money on the market
c. 2k a month is ok in this economy at your age, but work to acheive better skills so you can move up

GOOD FOR YOU for having 5k in the bank, rare for your age

I do have health insurance. It is taken out pre-tax.

I am also attending college in pursuit of a degree. I have also been offered the outside sales position at my current job; where I am currently a driver.

Thank you for the time.