How am i (we) doing?

[cougs4bcs]

So last time I checked in was a year or two ago I believe. Just want to see how I'm still doing in the financial aspect of my life! So here goes nothin'...

Age:24
Cash: 9000
Roth: 18500 ($500 left for 2014 contributions)
401k: 6500
Car loan: 8900
Car value: ~13k
Gross income: 55k/yr
Monthly spending: ~2k/mo (fluctuates from 1700 to 2500)

Bought a used car for ~16k this summer and put a little more than 5k down on it, financed it over 60 months and am on pace to pay it off in about 2.5 years. Recently looked at financials with the girlfriend as I've been pushing her to open a Roth IRA, and she has ~28k in her Roth 401k and 10k cash. Looking to buy a ring soon for ~3-4k most likely. Then start saving for a small wedding and then put all savings towards a house purchase. So these are expenses that I've been keeping in mind.

So guys, how am I (we) doing?

[autoxer]

For your age, your net worth vs. income is probably in one of the upper percentiles. You are certainly doing better than I was at that age.

According to 'The Millionaire Next Door' you are an under accumulator of wealth, but his formula is a little skewed at lower ages where people are just starting the journey.

So right now your net worth is about ~$38k. What is it going to be at the end of the year?

[feh]

So last time I checked in was a year or two ago I believe. Just want to see how I'm still doing in the financial aspect of my life! So here goes nothin'...

Age:24
Cash: 9000
Roth: 18500 ($500 left for 2014 contributions)
401k: 6500
Car loan: 8900
Car value: ~13k
Gross income: 55k/yr
Monthly spending: ~2k/mo (fluctuates from 1700 to 2500)

Bought a used car for ~16k this summer and put a little more than 5k down on it, financed it over 60 months and am on pace to pay it off in about 2.5 years. Recently looked at financials with the girlfriend as I've been pushing her to open a Roth IRA, and she has ~28k in her Roth 401k and 10k cash. Looking to buy a ring soon for ~3-4k most likely. Then start saving for a small wedding and then put all savings towards a house purchase. So these are expenses that I've been keeping in mind.

So guys, how am I (we) doing?

At your age I wouldn't worry about absolute numbers. This is what I'd focus on:
- make a budget and stick to it
- save at least 15% of your gross salary

One comment - any car loan over 36 months is generally frowned upon.

[cougs4bcs]

For your age, your net worth vs. income is probably in one of the upper percentiles. You are certainly doing better than I was at that age.

According to 'The Millionaire Next Door' you are an under accumulator of wealth, but his formula is a little skewed at lower ages where people are just starting the journey.

So right now your net worth is about ~$38k. What is it going to be at the end of the year?

Thanks, I started getting into saving when I was laid off only a few months after graduating from college. Completely unexpected but opened my eyes to the realities of not having a steady paycheck. Also, I would expect over 50k by end of 2015 - maxing Roth, put another 5-6k in 401k, plus more cash savings I would hope.

At your age I wouldn't worry about absolute numbers. This is what I'd focus on:
- make a budget and stick to it
- save at least 15% of your gross salary

One comment - any car loan over 36 months is generally frowned upon.

Don't really care about a budget, I save money each paycheck so I don't really mind spending more in certain areas randomly. I know how much my bills are and I put money away before spending it.

Also, why would my term matter if I'm paying it ahead of schedule? It should be paid off 2.5 years after I opened it, so it would effectively be a 30 month loan... I just like having the flexibility of making a minimum payment if I needed to.

[jIM_Ohio]

At your age I wouldn't worry about absolute numbers. This is what I'd focus on:
- make a budget and stick to it
- save at least 15% of your gross salary

One comment - any car loan over 36 months is generally frowned upon.

I second this opinion
I would suggest saving 20-25% is accurate and I would also focus on saving diversification- make sure you have a taxable account of investments in addition to Roth and 401k. You are young and life happens.


I would tread very carefully with significant other and finances. If she does not have the same goals, I don't care how good the sex is and how well you get along, you will diverge eventually if the goals are not the same financially- how you see money, how you spend money, how you make decisions about jobs, money, debt and financial growth.

Divorce #1 for me happened over money, so be very careful.
I now make it very clear to anyone I date they are more likely to share my house than my bank account.

[MKKShah]

Amazing. You are doing great for the following reasons:
- Your savings compared to your income is good
- (most important) you are participating and asking the right question in this forum.

[dczech09]

You are doing great! Excellent job!

A couple of items...

Don't really care about a budget, I save money each paycheck so I don't really mind spending more in certain areas randomly. I know how much my bills are and I put money away before spending it.

I highly recommend that you reconsider this. A budget is not a matter of limiting your spending or restricting spending.

A budget is simply a written plan. And it is a "breathing document" meaning that it can be changed at anytime.

You already put money away before spending it and you have a good handle of your bills. All a budget would do is put that "on paper."

For example, I am debt-free and have very few expenses. However I use a budget to keep track of everything, and plan my savings.

Something to think about!

Also, why would my term matter if I'm paying it ahead of schedule? It should be paid off 2.5 years after I opened it, so it would effectively be a 30 month loan... I just like having the flexibility of making a minimum payment if I needed to.

Generally speaking, longer term loans carry higher rates.

At any rate, you don't have too high of a loan. Pay it off as quickly as possible and be done with it! Then you will have some more cash flow to put towards a ring and/or the wedding!

You are in good shape, man! Keep it up!

[cougs4bcs]

I second this opinion
I would suggest saving 20-25% is accurate and I would also focus on saving diversification- make sure you have a taxable account of investments in addition to Roth and 401k. You are young and life happens.


I would tread very carefully with significant other and finances. If she does not have the same goals, I don't care how good the sex is and how well you get along, you will diverge eventually if the goals are not the same financially- how you see money, how you spend money, how you make decisions about jobs, money, debt and financial growth.

Divorce #1 for me happened over money, so be very careful.
I now make it very clear to anyone I date they are more likely to share my house than my bank account.

So don't max out the Roth? If life did happen wouldn't I just tap into my emergency fund then if at all necessary use Roth money instead? And I've treaded carefully...? We've been together for over 4 years and met in college when I had less than $10 to my name. I'm not concerned that she's after my money, just my awesome good looks

You are doing great! Excellent job!


Generally speaking, longer term loans carry higher rates.

At any rate, you don't have too high of a loan. Pay it off as quickly as possible and be done with it! Then you will have some more cash flow to put towards a ring and/or the wedding!

You are in good shape, man! Keep it up!

Thank you! Glad it seems like I'm on the right path... Just need to let compounding do its work i suppose. Addressing your other concern, my rate is just over 2%. Not too concerned with it. Just want to get that thing paid off so I'm not tied to the payment anymore! Minimum payment is 195 and I've been throwing ~300/mo or more on it since I bought the car.

[TBH]

I think you're doing great!

Suggestion: When you finish paying off your car, keep making that $195 payment every month into a savings account so when it's time to replace the car you'll have the money in cash. I am not a fan of financing depreciating assets like cars, although I agree that you're going about it in a responsible way.

Best of luck!

[ua_guy]

You are doing well.

Don't sweat the car loan; You're paying it ahead of schedule; the goal is to pay it off in 36 months or less, even if the loan term is longer. There usually isn't much of a span in interest rates between 36, 48, and 60 months, so you are doing yourself a favor by taking a longer term at the same rate. If you're making extra principal payments, you can make the difference in interest negligible. The "36 month rule" for car loans is good advice, but needs to always be put in context.

The only thing I'd recommend, and maybe it's just the way you worded it, but make sure you're saving for retirement even while you're saving for a house and/or small wedding. These are your compounding years, and while a house purchase is a "big event" and so is paying for a wedding reception however large or small, you should only do so under the constraint that you are saving for retirement in your 401k type plans while all of that is going on.