How Much Should I Be Saving? And Where?

[Vpxggmr17]

I am 24 years old and currently take home between $4500-$5000/month (after taxes/401k contributions). My monthly expenses are roughly $2000 (plus or minus $100-150) and my student loan monthly I'm paying $500.

Liquid $12,000
Investments $11,000

Owe $10k on my student loan (hoping to pay off by end of June)

Contribute 6% (match maximum) to my Roth 401k and another 300/month to my Roth IRA.

This leaves me (currently) with roughly $1500 left over each month. When the student loan is gone, that will increase to $2000-2500 (decreasing other bills as well).

I feel like I'm doing a decent job, but at the same time I feel like I could be doing more or something better. My goal is to save for a house downpayment but not sure what vehicle to use to store it. Otherwise, what else could I be doing differently?

[Like2Plan]

Vpxggmr17,
Did you decide to take that job overseas?
I was trying to remember your overall situation. I think you also had a car note (but maybe that has already been paid off by now).

[Petunia 100]

Does your employer also offer traditional 401k? If so, you could be contributing to that as well.

[snafu]

What are you holding in your 401K? I suggest exploring contributions to Vanguard's USA Index or preferred low cost, low fee provider if you don't plan to withdraw sums for a minimum of 3 years [according to guru John Bogle] and preferably 5 years. DCA [Dollar Cost Averaging] is simple and efficient. Set up the account via a discount broker whatever form is in your interest. After the initial required contribution, continue with automatic monthly contributions re-investing any dividend. I caution that while we've seen a nice upward tic...it also goes down. 2008 we got a nasty slap but it has more than recovered so we ignore the talking heads and carry out the plan.

[~bs]

That's a decent income and savings for someone in their mid 20s. Personally, I'd work on the debt. After that's done, work on spreading the money out between your Roth 401k, ira, and regular investment account. And depending on whether or not you have big purchases coming up (like a house), it would affect the mix of where your savings will go.

If saving for a downpayment for a house is an immediate goal, I would leave the 401k as-is (to get the match), then max out the roth, then plow everything else into a taxable investment account. Roth contributions can be withdrawn tax free, so if you need that money to help with the downpayment, that's an option. 401k money is harder to get to (probably as it should be), so better to invest in the other vehicles IMO.

[Vpxggmr17]

Vpxggmr17,
Did you decide to take that job overseas?
I was trying to remember your overall situation. I think you also had a car note (but maybe that has already been paid off by now).

That overseas job is still an unknown, and with the drawdowns starting to speed up, the liklihood of it being a possibility is dwindling. That said, I'm happy where I am currently, but this year I will be pursuing my next step up careerwise. Hopefully that will mean I can suppliment my dual incomes with one job that covers what I'm currently earning.

I do have the car still and owe about $29,000. That said, I calculated it out and if I cut a check for it at the end of this year (which is when I would have enough cash to do so) or I just paid the payments until it was paid off, the money saved total isn't much different.

If I pay off the car 12/31/13, it leaves me with $0 saved liquid and drops my monthly expenses to about 1600-1700, a 3000 surplus each month (i.e. -$36k/yr saved). April 2017 when the car is paid off I'd have $120,000 cash saved. If I don't pay it off, I have $110,000 saved by April 2017...

..thinking about it though now, that is $10k...just don't like the idea of leaving myself with no emergency fund

[Vpxggmr17]

That's a decent income and savings for someone in their mid 20s. Personally, I'd work on the debt. After that's done, work on spreading the money out between your Roth 401k, ira, and regular investment account. And depending on whether or not you have big purchases coming up (like a house), it would affect the mix of where your savings will go.

If saving for a downpayment for a house is an immediate goal, I would leave the 401k as-is (to get the match), then max out the roth, then plow everything else into a taxable investment account. Roth contributions can be withdrawn tax free, so if you need that money to help with the downpayment, that's an option. 401k money is harder to get to (probably as it should be), so better to invest in the other vehicles IMO.

Ideally I'd like to keep contributing to both my Roth IRA and Roth 401k at my current rate (and even increase them with upcoming raises, etc) and leave them alone seperate of a account that I would put a house down payment savings total.

Also, I guess second to this discussion I need to seek guidance on what "amount" of house I should be looking for. I've been doing a lot of preliminary research on Zillow for different areas in my market, and prices just seem out of control (Northern Virginia/Metro DC). The trade off seems to be, small townhouse/condo closer to the city, or better house with space 40 miles outside the city. Both of which at my peak....absolutle peak price range of $400k (yes, I do plan on saving $80-95k for a downpayment to eliminate need for PMI).

[~bs]

Ideally I'd like to keep contributing to both my Roth IRA and Roth 401k at my current rate (and even increase them with upcoming raises, etc) and leave them alone seperate of a account that I would put a house down payment savings total.

Also, I guess second to this discussion I need to seek guidance on what "amount" of house I should be looking for. I've been doing a lot of preliminary research on Zillow for different areas in my market, and prices just seem out of control (Northern Virginia/Metro DC). The trade off seems to be, small townhouse/condo closer to the city, or better house with space 40 miles outside the city. Both of which at my peak....absolutle peak price range of $400k (yes, I do plan on saving $80-95k for a downpayment to eliminate need for PMI).

^

Yeah, that's what I meant regarding the 401k.

If you're single, $400k property purchase with 20% downpayment is going to be a bit high for your income level. I'd suggest saving as much as you can now, and when it gets closer to the time to purchase, then evaluate the market. Real estate operates in cycles. If you save now, you can probably catch it on the next downturn/recession.

[BMEPhDinCO]

Honestly, I'd up the RothIRA NOW to the max ($458 per month). You can't get that money back later.

Then I'd pay off the student loan - then the car - you can save and pay it too.

In your area, try going into Vienna, Fairfax, up to Maryland, etc - I KNOW there are slightly less places, just try and find one close enough to the Metro.

As for where to save - You could buy CDs, money market, "safer" bonds... I would probably just park it in the highest interest account I could find though since I'm risk adverse.