Help me be better in 2016!

[TallCash]

Howdy everyone. I seen this forum and thought I'd give it a chance. I'm pretty new to personal finance and what I mean by that is I am finally growing up and starting to prepare myself for the future. I'm 30 years old and have been horrible with money all my life. I got in over my head in gambling, eating out, shopping, etc. for about 4-5 years after graduating college. For the past year or so I've gotten alot better with finances and this year, 2016, I plan to take on my money problems with everything I got.

I am engaged, working full time and currently just moved in with my parents (was living in a townhouse for all of 2015) to save money for a future wedding, general savings, debt repayment, house and future.

Let's get to it. I spent the last week developing a spreadsheet with a budget, future goals, monthly bill outline, etc. that took me some time but I have everything lined up for 3 months out. I use Google Docs to track every single penny and I think it's a great idea to hold myself accountable.

Here is my situation:

I make about $900 per paycheck, every two weeks.
I get a quarterly bonus of about $500, which is every 4 months.

Current Bills:
` $350/month is minimum payment for a personal loan with 10.99% interest rate (I'm paying this for a family member who cannot afford to pay it/long story but I took this on)
` $90/month for my Verizon phone bill
` $90/month for full coverage on my vehicle
Total = $530

Monthly Budget:
` Emergency Fund - $30, not much at all but I wanted to start something?
` Church Offering - $20, giving $5 per week
` Gas - $180, travel 40 miles to work daily and every other weekend go out of state to significant others
` Groceries & Care - $60, will be living with parents and they will take care of most food
` Entertainment - $100, this money is for going out to eat, etc.; my 'fun' money
Total = $390

Whatever money I have leftover I am dividing between savings and that personal loan.
` Savings - $500 per month seems reachable
` Loan - an additional payment per month is my goal, so another $350 (350+350=$700/per month) - is that enough/too much?

Current Savings:
` $1,040 cash
This savings came in about 3-4 months last year. I was putting away all of my extra money - keep in mind I was living in a townhouse with $600 rent/everything. When the personal loan came up I needed to fork additional money to get current as the loan wasn't paid for 3-4 months. I put in about $500-600/month for 4 months to get current.

Current 401k:
` About $7,500 in there
` Have a $1,500 loan I took out when money was bad in 2014. Paying $50/month on it only - 3.25% interest rate.
Not happy about this - losing a lot of money with that loan in there. I'm currently contributing 2% of each paycheck to my 401k. Company matches it 100% up to 4%. I just haven't up'd it cause I had no extra money when living on my own. Now that I am moving into my parents for awhile I have options, right?

Current Stock (company gives us stock)
` About $2,500 in there
Cannot do anything with this though.

I currently have a 2007 year vehicle with around 120,000 miles. It's running pretty good. I put about $2,500 into it last year - got fresh tires, breaks, etc. But...at any minute it COULD break down so I always worry about that. So when I say I have $900 per paycheck that is after taxes, after 401k loan payment, etc. $900 is what I work with besides the bonuses. All of my bonuses I plan to use for wedding savings, personal loan paydown, general savings and a medical bill I owe ($250).

I am committed to never letting money take over my life again. Thank you so much for taking the time to read and I thank you if you take the time to help me out. I am seeking help to improve myself. Please let me know if you need anymore information! I am looking for advice...should I invest...what should my priorities be...is my new budget/idea good?...what can I do better?...help me!

[Jluke]

Good to see that you are forming a plan. You need to start thinking in bigger dollar terms; not minimum payments.

I would pay off the 401k loan first just to be rid of it. For example, 3 payments of $500. DONE.

Pay off the medical bill now with your savings. DONE

what is the balance and loan term for the personal loan?

How long do you plan on living with your parents?

Can you drop verizon and go to Virgin Mobile, Boost Mobile, Cricket, etc for $35/month or so??

[TallCash]

Good to see that you are forming a plan. You need to start thinking in bigger dollar terms; not minimum payments.

I would pay off the 401k loan first just to be rid of it. For example, 3 payments of $500. DONE.

Pay off the medical bill now with your savings. DONE

what is the balance and loan term for the personal loan?

How long do you plan on living with your parents?

Can you drop verizon and go to Virgin Mobile, Boost Mobile, Cricket, etc for $35/month or so??

The total loan amount is $10,000'ish. Pretty sure it's 3 years. I feel like this loan should be my priority right now...is $700/month enough?

I plan on living with parents for 2 years MAX. We are looking for a house - target date would be fall of 2017.

Thanks for the input!

[Jluke]

The total loan amount is $10,000'ish. Pretty sure it's 3 years. I feel like this loan should be my priority right now...is $700/month enough?

I plan on living with parents for 2 years MAX. We are looking for a house - target date would be fall of 2017.

You have a lot going on to save up for and to payback (loans, wedding, future home, etc).

I consider the medical bill and the 401k loan amounts to be low hanging fruit that you can easily be rid of immediately (medical) and then in 3 months (401k). After they are paid off, you will feel a sense of relief too.

I see you doing the above as a move towards changing your mindset about debt. $250 medical bill is not a lot of money and shouldn't be paid in installments.

Then move on to focusing on savings and extra payments on the personal loan. AND don't forget to increase your current 401k to at least 4%.

As far as $700/month being enough - that should be your minimum payment; it is a healthy amount, but when you are in debt any amount above and beyond is excellent use of your money.

[TallCash]

You have a lot going on to save up for and to payback (loans, wedding, future home, etc).

I consider the medical bill and the 401k loan amounts to be low hanging fruit that you can easily be rid of immediately (medical) and then in 3 months (401k). After they are paid off, you will feel a sense of relief too.

I see you doing the above as a move towards changing your mindset about debt. $250 medical bill is not a lot of money and shouldn't be paid in installments.

Then move on to focusing on savings and extra payments on the personal loan. AND don't forget to increase your current 401k to at least 4%.

As far as $700/month being enough - that should be your minimum payment; it is a healthy amount, but when you are in debt any amount above and beyond is excellent use of your money.

Thank you for the replies and knowledge. I'll knock those 2 things out ASAP.

I think that's pretty interesting about $700 month being my minimum payment. I get it.

[snafu]

Good on you for making the decision to get control of your money. It's really better to manage your money instead of the money managing your choices.

You've already had good suggestions and I hope you'll carry out your plan. I'd like you to review your car insurance to make sure you're paying the best possible rate for the value of the vehicle and your community. The point is to get the most value for every dollar spent. First you need to know the Kelly Blue Book value [sometimes called Black Book] of your brand, model, mileage and deductible.

Understand, if you have a claim, the insurer only pays the KBB value, [if you have a strong argument]. They don't care what you need or why! Since you have an Emergency Fund [EF] you need to know the cost difference of having a higher deductible. You need to know if there is a difference in cost [$ 1,080.]if you pay annually, every 6 months, every 4 months or your current monthly payment.

Some insurance agents puts your need to 'bid' for the cheapest rate. If family uses COSTCO, compare their rate, GIECO, General or discount insurer popular in your community for your same insurance.

In my view, it's not smart money management to ignore free money. I suggest you increase your contribution to capture the entire 4% offered by your employer. You get a larger tax deduction to offset the change. Long term, the difference it makes is astounding as retirement funds need a great many years of compounding. Please check with HR to find out what you can choose for investment and associated fees, costs [whatever they call it] for buying/operating that program. If you share those details here there are brilliant, knowledgeable participants to get you the best of what's available.

Hope you start an envelop to begin assembling all needed tax information. If you discover you have a rebate, plan for best use of those recaptured funds.

[snafu]

I don't want to overwhelm you but want to make a few points that might make things easier for you in the realm of money management. Knowing where dollars go is critical. It sounds ghastly but if you write down every dollar spent, for one month, it's shocking. There is so much leakage just from buying coffee or lunch out! I wish I'd started using one of the easier cash flow trackers like Mint.com [free] or MYOB [buy] which lots of SA folk use.

Do you know your FICO/credit score? You are entitled to one free report from each of the four major credit reporters. This is critical because credit grantors use that figure as a base point for interest they charge you. A score in 800 range should give you the lowest possible rates. I wonder if the loan @ 10.99% can be negotiated to a lower rate since savings accounts mostly pay less than 1%.

Brilliant to check with [$ 1,080.] Verizon to determine contract terms and conditions [cancel] and discount carriers like Virgin, Cricket etc. for usage, GB, text, coverage, compatibility etc.

I hope you appreciate your parents welcoming you back without suggesting you contribute financially to household expenses. It's stretching I know, but as a parent of much loved, adult sons, I'd expect them to contribute in a major way to daily, weekly operations of the household tasks and buying some groceries regularly without being asked. Terrific if you see it as sweat equity to value of rent, food, laundry for example.

[cypher1]

I currently have a 2007 year vehicle with around 120,000 miles. It's running pretty good. I put about $2,500 into it last year - got fresh tires, breaks, etc. But...at any minute it COULD break down so I always worry about that. So when I say I have $900 per paycheck that is after taxes, after 401k loan payment, etc. $900 is what I work with besides the bonuses. All of my bonuses I plan to use for wedding savings, personal loan paydown, general savings and a medical bill I owe ($250).

Whatever money I have leftover I am dividing between savings and that personal loan.
` Savings - $500 per month seems reachable
` Loan - an additional payment per month is my goal, so another $350 (350+350=$700/per month) - is that enough/too much?

! I am looking for advice...should I invest...what should my priorities be...is my new budget/idea good?...what can I do better?...help me!

Unless you have currently ongoing mechanical issues on your 9yr old car, I wouldn't worry about it. Otherwise having 120K for mileage is nothing, as long as you take care of your car.

Debt:
350 min for personal loan 10,000 at 10.99%
50 min for 401K 1500 loan at 3.25% (but already deducted from check)
? Min for medical at 250

Current Bills:
180 Gas
90 Verizon bill (this could be knocked down to half minimum $45 with diff provider)
90 Auto insurance (price around quotes, look at higher deductible?)
60 Groceries/Care
20 Church
100 Entertainment (Wants)
Total = $540

I broke your situation down a little differently, and apologize if I missed any details. Without factoring in bonuses, I'd suggest a different approach by continuing to pay the bare minimum on personal loan (350), and 401K loan (50), but wipe out the medical bill (250) right away.

From there, focus on building up EF to 5-6 months expenses for more cash flow and peace of mind. IMO I'd sleep better having S4500-5400 in savings vs smaller personal loan balance. But that's just me.

Let's say your total monthly net income is 1800 (including the min $50 401K loan payment already subtracted from each paycheck), and you just paid off the 250 medical. You keep paying the 350 loan + 540 bills= 890 minimum monthly needs (round up 900).

That still leaves you with 900 left to either pay more aggressive on loans, or split with EF Savings. You can either pay the 1500 off within 3 months per 500, and put the other 400 into savings at the same time. Once 401K is out, then you can focus on knocking out that personal loan, along with including bonuses to help pay off.

I'd also advise increasing 401K contribution to 4% from 2. To simplify, if your gross paycheck was around 1000, another $20 (or 40 total) would be taken out before being taxed. Overall you have a lot of options to work with given your simple living situation. You just have to find the ones your most comfortable with.