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Planning ahead

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  • #1

    Planning ahead

    Hello,

    I am 24 years old and need some general insight on some financial goals for the near term and long term future. I should be done paying off my mammoth student loan payments next month, but I still have 9K outstanding in student loans from my wife (no interest) and I have two outstanding car payments (no interest)... total remaining value on cars = 26K.

    I have not begun investing in any sort of retirement plan. I don't have any investments at all. I plan to go back to school in the future, so I need to save money for that (approx. 40K over 2.5 years)

    Thanks,
    music
    Tags: None
  • #2
    So... what's the question?

    You should absolutely be contributing to retirement. Does your current company offer 401k matching? If not, both of you should look into opening a Roth IRA.

    When do you plan to return to school? How much are you saving each month now? What's your budget look like? What specifically are you wanting help with answering -- how much to save? What order to save? Where to find the money to save? -- you haven't given us enough detail to offer you much.

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    • #3
      We are going to need more info as river said. What is your question? What do you want to accomplish?
      Brian

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      • #4
        Company does not have 401K match. I plan on returning to school in Fall 2011. I have not yet begun to save for it. I will need approx. 4K by then. I currently am not saving anything every month. Everything that is over my specified "4 months emergency" savings account has gone directly to student loans for close to 2 years now. I'm basically asking what I should be doing with that excess money I will now have each month. I don't NEED to currently pay off the other student loans at 9K, although I'd like to make a small payment.

        As for what I want to accomplish? I suppose to save for retirement, go back to school, keep paying off loans, have some savings on the side. okkkkkkkkkkkkkkkkkk

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        • #5
          Originally posted by musicrocks0304 View Post
          Company does not have 401K match. I plan on returning to school in Fall 2011. I have not yet begun to save for it. I will need approx. 4K by then. I currently am not saving anything every month. Everything that is over my specified "4 months emergency" savings account has gone directly to student loans for close to 2 years now. I'm basically asking what I should be doing with that excess money I will now have each month. I don't NEED to currently pay off the other student loans at 9K, although I'd like to make a small payment.

          As for what I want to accomplish? I suppose to save for retirement, go back to school, keep paying off loans, have some savings on the side. okkkkkkkkkkkkkkkkkk
          How much do you have left over each month? Is saving $1000/month for school feasible? (I assume you meant fall 2012 is when you will return to school? ) Will you continue to work FT while you're in school so you can save for subsequent semesters?

          Given the goals you've outlined, here's what I would suggest.
          1) Start tracking your spending if you aren't already. Note where every penny goes and use that to create a budget.
          2) Open a Roth IRA and you and your wife start contribuing 10% of your GROSS income ASAP. DO NOT put this off until after you're done with school. You will regret it.
          3) Get an EF in place. Its even more critical if your work situation will change while you are in school.
          4) Make a financial plan for your schooling. Will you use loans? How much can you reasonably afford to put away each month? How will this impact spending in other areas of your budget (ie can you scale back in order to save more?)

          We're good with budgets here. Feel free to post yours if you need more ideas on how to make it work while you return to school.

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          • #6
            Didn't realized I used the angry emoticon earlier. Sorry.

            I can probably spare $1300 a month. I will continue to work FT. What is an EF?

            I would like to pay for school as I go and not take out any loans. They've been such a burden. When you say my GROSS income for the Roth IRA, what do you mean? Pre-tax? Could you give me an example?

            I actually have created a budget already and things are run pretty tightly already. I'm not sure we could cut back in any other areas. We basically have an extra 1300-1500 a month to play with. How do you suggest I use it?

            Thanks,

            Comment

            • #7
              Originally posted by musicrocks0304 View Post
              Didn't realized I used the angry emoticon earlier. Sorry.

              I can probably spare $1300 a month. I will continue to work FT. What is an EF?

              I would like to pay for school as I go and not take out any loans. They've been such a burden. When you say my GROSS income for the Roth IRA, what do you mean? Pre-tax? Could you give me an example?

              I actually have created a budget already and things are run pretty tightly already. I'm not sure we could cut back in any other areas. We basically have an extra 1300-1500 a month to play with. How do you suggest I use it?

              Thanks,
              EF=emergency fund. Gross meaning before tax. If the two of you combined gross $60k, you should be contributing $300/mo to each of your Roth accounts. If you gross more than that, you'll need another form of retirement savings becuase you can only contrubute $5k/year to a Roth IRA. Try to work up to 15% eventually, but 10% is a good starting place, especially while you're in school.

              You have a good amount to work with. Since you only have about 4 months till classes start, I'd start saving the $1k/mo for that right away. With the extra $300-500 I guess it depends on your income and how much is leftover once you start contributing to retirement.

              Will you need approximately $4k each semester you're in school? If so, once you get your initial payment sorted out, you should be able to start setting aside $700/mo and do that throughout the year so it isn't such a huge chunk of your budget. Then you will have $600-800 left to sort between retirement, knocking out those other loans if you want or other savings goals. Paying for school as you go is tough but its a good choice. You likely won't have a lot of extra cash flow to set aside for other things (car, house, etc) during that time so be prepared for that and just keep the end goal in mind. Sounds to me like you're doing pretty well.

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