Lost..

[panda_bear3]

I feel pretty proud of myself for being one paycheck away from paying off my car next week... but now I'm not sure how to precede with anything after that as far as money/debt/savings.... help!

24, living with parents (rent free, yay!)
Income ~$2300 monthly (working 32 hours per week... am trying to make an effort to pick up extra shifts when available to increase income)

Expenses:
Car loan: $350 - basically irrelevant considering I am mailing a final payment next week and it will be gone.
*After next week: Car $50/mo to savings - to use for upkeep/tires/etc.
Insurance: $100/mo to savings - I pay upfront for the year, so this will go towards next year's policy
School: $250/mo: three sub loans totalling $13,xxx (already paid off one sub loan and approx 6k total this year)
Cell phone: $40/mo for my portion of data/service
Misc expenses $360/mo - to include gas for car, dining out, entertainment, shopping, toiletries etc.
Rent: $0 .. live at home. Also, no utilities/grocery/etc.
Health insurance covered through my parents' plan $0
FSA starting this year through work maybe $250 for the year .. I have very few medical/dental expenses on average
Dental insurance through work roughly $20/mo pre-tax
401k Contribution 5% (I believe it is 50% employer match up to 5 maybe 6%)

Savings:
EF: $4000, working to build to 10,000

What I have been doing: using my 1st check of the month to set aside for upcoming month's bills, 2nd check of the month has basically been going 100% to pay down my car.

My initial plan: Continue this strategy, using $800 of 1st check (typically $1150 total) for next month's expenses; remainder + second check all to build up Emergency fund until it hits 10k.
Then, continue same savings plan, and build house down payment.

Here's where I really get lost.. my boyfriend and I would like to EVENTUALLY move in together just a matter of figuring out the finances/how to make it all work. His expenses/debt are a total nightmare, and we also are not really sure what approach to take whether it be apartment/condo/single family house.

(Insight on his situation: 108,000 in student debt to the tune of $1100/mo... looking to purchase a car soon as current vehicle is completely non-reliable and junk, so that would be adding in a car payment which he currently does not have, likely increasing insurance rates as well. Lives with parents for minimal rent ~150-200/mo, cell phone, gas, misc expenses). We are working on cutting down his spending of non-essential items and sticking to a budget, and maximizing savings to go towards a car. At last check he had roughly $3,000 total in savings.

We are in MA.. home prices are outrageous here... unfortunately we are sort of "stuck" in this area due to his job... there are some less expensive towns, but overall, a 2-3 bedroom single family would be a minimum of 200k+ and would likely need at least SOME repairs/updating .. upgraded homes looking closer to 300k.

I don't even know where to begin...
Does my savings plan seem reasonable? I also feel like given his astronomical student debt and pending car debt, I will be saving for the majority of the future living arrangement situation... which is depressing considering how long it would take to save even 10% let alone 20% for a down payment. I would prefer to save and put money down on a purchase while I am able to pocket the money rent-free at home rather than move out to an apartment then try saving for a home later .. Condos??? On one hand, cheaper than a single family, however also considering monthly fees, maybe not? Less upkeep, but less space/closer neighbors, potentially pet restrictions... also does not seem something we'd likely be able to keep long-term as far as space/starting a family

And finally, I feel like I know NOTHING about 401k/retirement/investing plans... totally 100% clueless. I've only been at my job since June, and started contributing the 5% in July when I became eligible. Is what I'm doing enough? Not even close?
Help!

[humandraydel]

There are a lot of potentially hidden questions in your post, so I'll just try to offer some general advice.

Saving $1k+ per month is excellent - but a lot of it is due to living rent free, so keep that in mind. I'd live with parents as long as you can.

Your plan is perfect - pay off all debt, build EF, build down payment fund. Saving $1k per month it will take you about 4-5 years to save up enough for a 20% down payment and closing costs. That is completely reasonable - a lot of people don't buy until they are in their late 20s or even early 30s. The hard part will be that you won't want to live at home for the next 4-5 years.

Which means you may decide to work more (or earn more) or even get a second job to boost savings - a consistent $1500 per month would take 3 years to save enough.

5% in your 401k is okay, but the usual recommendation is to save at least 10% (preferably 15%). Are you at least contributing enough to get the full company match?

And the most important advice: do not buy a house with your BF. Either of you could buy one, with the other person living there and "paying rent", but don't put both names on the mortgage and don't buy a house that you can only afford with both incomes.

[jpham540]

Congrats on trying to get an early start on your finances when you are young. Might be helpful if you can post your employer 401k funds. Depends on your 401k option I would recommend index fund which is low cost and more diversified, but will vary with your employer. As for as houses goes I have heard of a program called homepath, the website is homepath.com this is backed by fannie mae, which allow a homeowner to put a down payment of 5% without the PMI. I have not personally try it out yet but will later on.

[Petunia 100]

Here's where I really get lost.. my boyfriend and I would like to EVENTUALLY move in together just a matter of figuring out the finances/how to make it all work. His expenses/debt are a total nightmare, and we also are not really sure what approach to take whether it be apartment/condo/single family house.

(Insight on his situation: 108,000 in student debt to the tune of $1100/mo... looking to purchase a car soon as current vehicle is completely non-reliable and junk, so that would be adding in a car payment which he currently does not have, likely increasing insurance rates as well. Lives with parents for minimal rent ~150-200/mo, cell phone, gas, misc expenses). We are working on cutting down his spending of non-essential items and sticking to a budget, and maximizing savings to go towards a car. At last check he had roughly $3,000 total in savings.

This raises some red flags to me. Your BF is in some bad financial shape. What are HIS plans to improve his situation? When you say "we are working on cutting down...", what does that mean? Has he recognized he is in a pickle and wants to take steps to correct, and has asked for your ideas? Or does it mean that you have recognized he is in a pickle, and have informed him he needs to change his ways, and he is merely giving lip service ("yes, you are right", "yes, I need to follow a budget") in an effort to please you?

Unless HE wants to change his financial picture and is committed to making it happen, you are setting yourself up for a lot of frustration.

Just speaking from my own life experience. Best of luck to you.

[btctony]

What kind of degree did your boyfriend get for the 108K? Also, what kind of money does he make? Yes that is a large amount of student loan debt, but if it was worth it, and he is making 100K a year, it's manageable.

[panda_bear3]

It was a bachelors degree in criminal justice.. No fin aid and no parental assistance, 100% private loans for 4.5 years including some room/board expenses. He does realize how stupid it was but when you're mostly done with school it's not like you can stop at that point.. Not like a car you could sell and get some of that back. He is salary with a police dept currently at 55k a year, soon to be starting "on the streets" so opportunities for OT and details will come up. He is eager to wipe out as much debt as possible thus the move back home to try and save money. The car is unfortunately a necessity as his current car will not make it another year. He is on board with budgeting, but it's new for him (parents are no help, obviously, they signed for thousands and thousands of dollars for their 18 year old to go to private college...oy).. But he is open to reducing expenses, killing the debt.. It's just going to take a loooong time (current estimated pay off is 2025 according to mint). Once his income bumps up a bit he would like to start snowballing on some of these loans to get them paid down quicker.

[panda_bear3]

Also in regards to the 401k.. I think I need to do out the packet I got at my employee orientation.. I know it is through fidelity freedom 2055 something or other? Like I said I know absolutely squat about these things..

[snafu]

1st congratulations on paying off your car loan, 1st of four student loans and having created $ 4K EF. Good on you! Given your income you're doing the smart thing by living at home [hopefully contributing time and effort for your generous parents who are supplying housing, utilities and food]. With the economy strengthening, I'm puzzled that your income remains low. Are you working in your career area? What opportunities are you exploring to ramp up earnings? Brilliant to join your employer's retirement plan for the matching free money. If you post those choices, knowledgeable posters can explain why one choice is better than others. While you're reviewing the information, please note any fees and the Management Expense Ratio [MER] as that seriously affects your retirement value long term. My suggestion is to increase the sum paid toSL #2 highest interest + add to EF.

Boyfriend: Ouch, perhaps he didn't realized the ramifications of borrowing $ 108,000 [what interest rate?] in SLs for a job with the police force starting at $ 55K. While the police force likes new constables to have a two year college diploma his colleagues rarely have a degree from an expensive private university. Realistically, if his car gives out he'll need to stay with an affordable 'beater' car until he has made serious progress on existing debt. He has taken an important step forward in acknowledging debt and moving back home to keep basic expense to $ 200. for accommodation and food. I hope he's willing to brown bag it and cheap out on entertainment for the short term while he focusses on career and debt.

Actions speak volumes and we've seen you do the smart things taking big steps forward by creating an EF, paying off car and now joining a retirement plan whose years of compounding will give astonishing results. I hope you'll share success with BF but not muddle your finances as has been explained by others.

[Dsquared513]

Congratulations on being smart about your debt. I am certainly no expert as I have just begun my debt elimination journey but here are my opinions. As far as the 401k goes, 5% is better than nothing and as long as you are at least putting in enough to reach the employer match maximum then that's ok, but shoot for 10% as soon as possible (you can set it to automatically increase 1% every year). The 2055 is a target date for your retirement, this means that since you are still a long way from retirement they are investing your money in riskier equities (stocks) since you still have time to make up the money if the market takes another hit. As you get closer to retirement they will automatically move your investments to lower risk items like bonds and money market accounts. These types of plans are fine, but fees can be high. I would suggest changing your allocations to an index fund that you can pick from what your company offers, something broad like a total market index with fees around .3%, it will make you more hands-on with your retirement savings which is always good and it is a good and simple intro to investing and can give you practice for when you are ready to start a roth IRA (it's good to hedge against higher taxes). The EF is a necessity and you have done great so far, keep contributing to it as much as possible. As far as your boyfriend's situation, that is delicate. I don't want to tell you to nag him about his spending and saving, but you can't really expect a man to do something just because it makes sense, we do what we want to do and lip service always abounds. I agree with another poster that it is risky to go in on a mortgage with someone you aren't married to (heck, it's risky to do it with someone you are married to) so just be extremely cautious. The fannie mae program someone brought up is only good if you are buying one of their foreclosures I believe, so that might limit your options. There are tons of programs in every state so since your boyfriend is in law enforcement you should look into mortgage assistance programs for officers or check to see if his credit union has any low down payment programs. Also, although I advise against it, you could do an ARM so you can have low initial payments while you work to pay off his student loans, then after 5 or 7 years you can try to sell or refinance. This is just an option though, please research everything and always plan for the worst case scenario. I don't know anything about the dynamic of your relationship, but since he is in such a high stress line of work I would see if he's open to the idea of you taking care of all the finances if and when you do move in together, so it is just less stress and worry for him. This may or may not be possible, but if you are the better saver then it makes sense especially if he has questionable spending habits. All in all though, as long as you both are making a sincere effort to get out of debt then you are doing better than 90% of the rest of the country. Keep up the good work.

[panda_bear3]

Thank you for the replies! Yes, I am working in my field, although it is considered full time, like I said, it's only a 32 hour position (I would love 36 or better yet 40!) this is my second job since graduating college, and I actually took a pay cut when accepting it (roughly $2.50-3 an hour) but my current job is 1) a better opportunity career wise 2) closer to home 3) more well-known and well-respected facility than previous and 4) overall run better as far as management/support/coworkers and is less stressful on the whole.
I should amend my 1st post, I my income does average to $2300 a month but I am paid bi-weekly so $1150 (with potential for more with extra hours/holiday pay/shift differential here and there) . This is after my 5% 401k contribution, dental insurance, FSA and taxes.
I expect to have the opportunity to pick up extra shifts starting in March to increase income.. I am also keeping my ears open for any 40 hour positions opening in my facility (though not likely, they seem to favor hiring @32 hours for full time rarely 40). I'd like to try and avoid a second part time/per diem job, as it makes my life just a smidgen easier to work more hours at one job than try to juggle two schedules, but if by summer time I do not have luck moving to a 40 hr position or regularly picking up hours it is something I'll look in to.

Thanks for the info on 401k I will look into those factors.
Finally, I do have the 3 small student loans and make one $250 payment; the smallest balance/highest interest gets $109 of that $250 payment, the other two are similar in terms of remaining balance, interest rate and the remaining $140 is split between those two.

[btctony]

Wow. How or why in the world did he spend 108K on a criminal justice degree. He probably could have got the same degree for under half the cost by going somewhere else to school. While 55K coming right out of college isn't a bad salary, that student loan debt is going to hurt for awhile.