Making money, what to do with it?

[Paul Kim]

Hello, I'm 24 years old and finally landed a full time job in my career field. I am currently working 2 jobs but I just gave 2 weeks notice at my part time job because I feel the time I will gain is worth a lot more, especially to my health/mental health than the money I would be making.

Now to the finances.

After taxes I am taking home about $1000 a week.
I am having $100 a week set aside into the credit union here to build up an emergency $ fund.
I have $12,000 in the bank.
I have car payment of $429 per month.
Car insurance $150 per month.
Transportation cost $500 per month.
Phone bill $80 per month.

Total expenditures right now is about $1300 and I'll estimate $200 month on food, total $1500. You will notice no housing cost because I am lucky enough to be living with parents right now at no cost. I know many will probably tell me to get a cheaper car but it's my only real indulgence as I don't go out much, don't go on fancy vacations or anything so let's just ignore it because I'm not going to change it.

My goal right now is to save enough $ to purchase a place to live near my work place so I can reduce my transportation cost because right now my commute is 16 miles each way and I have to pay toll, parking, and gas which equates to about $25 a day. With a home near work I can eliminate the toll ($13 a day) and might even be able to walk to work. A 1 bedroom condo would run anywhere 100,000 to 300,000 depending on the neighborhood.

My work contributes 11% of salary per year to pension but I am not able to contribute to it and they don't offer any type of matched retirement savings. They also have no co pay doctor visits and free generic prescriptions, so I'm covered for health care free of charge.

[bjl584]

I would start a Roth IRA since you have no company sponsored plan. Start contributing the maximum amount ($5000 a year in your case.)

Based on your income you shouldn't purchase a home that costs more than $150-$175 thousand. For that, you will want 20% down. You wil also want a 6 month EF in place before buying.

Your auto loan isn't that outrageous for your income so long as you didn't finance it for 5 or more years. You aren't willing to budge on this anyway.

Other than setting up a Roth, I would just start saving cash. You will need a lot of it if you are planning to buy a home.

[riverwed070707]

Agree with BJ. Was going to say the same about funding the Roth since you can't contribute to a company plan. Also, how much do you owe on the car? You don't necessarily have to sell a car just because you have a large payment since you're obviously affording it fine, but if a house is on the horizon, I would seriously consider ramping up payments to get it paid off more quickly. One less thing and an extra $500 in cash flow will really help manage expenses once you do have a house payment/utilities/internet/etc.

Good job getting off on the right foot. Keep it up!

[Bades]

Isn't 12k in the bank plenty for a 6 month EF?

Sounds like you can take that extra $400 a month you are putting away towards the EF and start paying that car off quicker.

[Bades]

$500 a month for transportation?!

Can you not purchase monthly or quarterly parking passes? or something like an EZ Pass for the tolls to save some money?

[SnapDuck]

I agree with Bades. It sounds like you have an 8 month or so emergency fund already. I would start paying off the car loan quicker and get a Roth IRA started.

[Max G]

Isn't 12k in the bank plenty for a 6 month EF?

Sounds like you can take that extra $400 a month you are putting away towards the EF and start paying that car off quicker.

I was thinking the same thing. You live with your parents and pay no rent. Even in a worst case scenario, if you lose your job, I'm sure your parents will be willing to help with food since they are willing to provide shelter for free. Plus you will be getting unemployment insurance. So 12k emergency fund is enough. Start paying off a car, or if interest on a car is low, start saving for your future home.

[Paul Kim]

I was saving the money in the bank because the sooner I move out the sooner I will save a lot on transport. My daily cost (5 work days a week) are $13 toll $7 parking (the discount rate already) and ~1 gallon fuel ($5). So approximately 125 a week.

If I move close to work I eliminate the toll and potentially the parking if I get within 2 miles.

[woodie96]

You may cut the auto and parking expenses, but maintaing a place of residence isn't cheap either.
If it were me I would work on paying off the car loan since you have a pretty decent emergency fund.

[97guns]

if you want to eventually buy a house with the funds do not put it in an ira unless you plan to buy the house in 35 years

[snafu]

If you want to get out on your own, that's ok but understand paying $25. daily in transportation, toll & parking is a lot cheaper and less work than paying rent, utilities, food, furnishing, cooking and the thousands of details of daily life.

If you want an investment idea that's full of risk but also full of potential, I think you should look at an Exchange Traded Fund {ETF} or Mutual Fund [MF} for S. Korea. That tiger and the Singapore stats look good. It's not a buy and hold forever...it needs to be monitored and if conditions change, you sell and invest elsewhere. There are taxes to be paid on Capital Gains if this is a non retirement protfolio

[FinancialFreedom]

This is completely your decision. However, I would draw a line in between your savings and "fun" money. This way, you can feel confident in where you place your money and enjoy. Oh, and congrats on the job!

[blastincome]

Learn to make money work for you

you are in a perfect position giving your age-somewhat like i was at 24 and am 29 now.

first take action learn how to make money work for you, protect your credit and start investing short term (your young enough to make mistakes) you can purchase foreclosure homes and flip them. still a good time prices are still low. theirs a really good audio book called "Rich Dad poor Dad" check in out it will open your eyes somewhat.

just take action educate yourself on how to make money work for you cause theirs so many ways to put yourself in a good financial position.

[Paul Kim]

Decided to stay living at home for a bit.

I put 5,000 into a roth IRA at Vanguard under the target retirement fund.

I am looking to put more money aside per year for additional retirement savings. I was thinking to put another 5,000 a year into something but not sure what. Was looking at other vanguard funds but don't know what to do really. I can make the 401k, general savings, or some other options. Was looking at the inflation protected securities fund for this.

Can anyone offer some advice?