I'm a single 38 yo female that need financial advice

[money7]

Thank you in advance.

I admit to having been negligent with personal finance over the years and I hope it's not too late.

The below are some facts about me:

1. Single, 38 yo female.
2. Live in Manhattan, $1500/month rent including utilities.
3. Make 60K/year + 15-20K freelancing.
4. 9K in savings.
5. 20K on IRA.
6. 4K credit card debt which i can easily pay in 3 months. I just opened a balance transfer so I'm not paying any interest in 16 more months.
7. The 4K credit card debt is mostly for an online business venture which will be operational in a few weeks.
8. Monthly maintenance: Food ($250), Gym ($100), Health Insurance ($310), Miscellaneous ($400)
9. No other obligations.

How do I become financially independent one day? Also, do I invest in stock all of my 20K IRA contributions? All 20K is with Chase bank.

Appreciate your help.

[HappySaver]

Options are obviously going to be limited in Manhattan, but your rent is very high given your income. Do you have roommates? Can you get some?

[feh]

Click on the link in my signature. Really; it's not spam.

[money7]

Options are obviously going to be limited in Manhattan, but your rent is very high given your income. Do you have roommates? Can you get some?

This is current roommate rate. I am a roommate.

[MonkeyMama]

The housing costs don't strike me as a problem, living in California myself. BUT, because of the high housing costs, most everything else has had to give. So I shrug at that, but I have also reduce my other expenses accordingly. Of course, from what you said, you have done the same? Not a lot of expenses mentioned.

How much money can you save right now? Monthly? You probably have room to be more tax efficient. If you can contribute to a 401k and/or a Traditional IRA you would reduce your taxes accordingly. (Or even a SEP IRA, with the freelance income). I think this is probably where you will want to start.

Otherwise, you are only less than half of your income, according to your numbers. Where is the rest going? I do get that you pay a LOT of taxes in your situation. Which is why tax efficiency comes to mind immediately.

[autoxer]

How do I become financially independent one day?

• Live below your means and invest the rest. The further you live below your means, the quicker you will reach financial independence.
  
• Avoid debt. Learn to embrace delayed gratification.
  
• Track your cash flow to see what your savings rate is. Make efforts to increase earning and decrease spending.
  
• Track your net worth to monitor your progress.

You listed $30,720/year in expenses. Where is the rest of your money going?

[money7]

The housing costs don't strike me as a problem, living in California myself. BUT, because of the high housing costs, most everything else has had to give. So I shrug at that, but I have also reduce my other expenses accordingly. Of course, from what you said, you have done the same? Not a lot of expenses mentioned.

How much money can you save right now? Monthly? You probably have room to be more tax efficient. If you can contribute to a 401k and/or a Traditional IRA you would reduce your taxes accordingly. (Or even a SEP IRA, with the freelance income). I think this is probably where you will want to start.

Otherwise, you are only less than half of your income, according to your numbers. Where is the rest going? I do get that you pay a LOT of taxes in your situation. Which is why tax efficiency comes to mind immediately.

I had unnecessary expenses before including traveling. I am definitely cutting back on all of that, and now, the expenses above will be my target from here on out. I currently have a traditional IRA (the 20K), and a roth that i forgot to mention, which is $600. My company do not offer 401K, can i open this on my own?

[money7]

• Live below your means and invest the rest. The further you live below your means, the quicker you will reach financial independence.
  
• Avoid debt. Learn to embrace delayed gratification.
  
• Track your cash flow to see what your savings rate is. Make efforts to increase earning and decrease spending.
  
• Track your net worth to monitor your progress.

You listed $30,720/year in expenses. Where is the rest of your money going?

From my limited knowledge with personal finance, I was hoping to become financially independent, able to draw out money without scare at a certain age before retirement...is this possible? I work in an industry where age makes a whole lot of difference and I'm not sure how many more years I can be deemed useful.

I had unnecessary expenses before including traveling. I am definitely cutting back on all of that, and now, the expenses above will be my target from here on out.

[autoxer]

From my limited knowledge with personal finance, I was hoping to become financially independent, able to draw out money without scare at a certain age before retirement...is this possible?

Certainly, once you can live off the interest from your investments, then you no longer need to work for money. Start by paying yourself first, set up an automatic investment, that happens with each paycheck, so as soon as you get paid, a portion of it gets transferred to the IRA. Make it automatic, so that it doesn't require any extra effort. Making it automatic makes sure it doesn't get delayed or forgotten.

My company do not offer 401K, can i open this on my own?

No, a 401k needs to be administered by the company. Let the company know that you wish they had a 401k, they aren't that difficult for the company to set up.

[money7]

Certainly, once you can live off the interest from your investments, then you no longer need to work for money. Start by paying yourself first, set up an automatic investment, that happens with each paycheck, so as soon as you get paid, a portion of it gets transferred to the IRA. Make it automatic, so that it doesn't require any extra effort. Making it automatic makes sure it doesn't get delayed or forgotten.


No, a 401k needs to be administered by the company. Let the company know that you wish they had a 401k, they aren't that difficult for the company to set up.

I thought i can only enjoy IRA benefits when i reach retirement?

[autoxer]

I thought i can only enjoy IRA benefits when i reach retirement?

Sort of. There are certain penalties if you take withdrawals before you turn 59 1/2, but there are also ways to avoid the penalties depending on your strategy. ROTH accounts also have different rules, that allow you to withdrawal the contributions early, but not the earnings, as long as the contributions have been in the account for a minimum of five years.

My strategy is to max out the tax advantaged accounts and also contribute to a taxable brokerage account. The taxable brokerage account will bridge the gap between retiring early and the age when I can withdrawal from the IRA/401k type accounts.