How am i doing for a 27 year old?

**Nutria** · 08-19-2017, 04:01 PM

Originally posted by wsucoug View Post

Just pulled 7k out of my savings to put a decent sized down payment on a slightly used car.

A few will, but you saved that money for a purpose.

Checking: 3k
Savings: 12k
CC Debt: 0
Auto Loan: 18,800 (NADA value ~23k)
Roth: 42.5k (2017 is maxed)
401k: 27k

Monthly takehome: ~4.2k
Quarterly bonus: ~3500 after tax
Rent: 900

Notes:
I live in a very HCOL area. I know my cash savings are low and am currently working to build that up now that my Roth is maxed for the year and car is purchased. I am single and am not looking at making any major life changes anytime soon. Planning on starting to save to purchase a house someday, but will probably need/want ~100k as a downpayment.

Tell me your thoughts!

How much do you save?
How much are your expenses?
How many of those expenses could be eliminated or trimmed without materially affecting your lifestyle?
How easily can you find a new job in your city?
$100K should buy you a $500K house (due to 20% DP). That's not much in a HCOL area.
Do you save each month for semiannual auto ins premium? (Paid monthly, my insurance premium is 25% higher than if paid up front. What about yours?)

**wsucoug** · 08-19-2017, 04:18 PM

Originally posted by Nutria View Post

A few will, but you saved that money for a purpose.

How much do you save?
How much are your expenses?
How many of those expenses could be eliminated or trimmed without materially affecting your lifestyle?
How easily can you find a new job in your city?
$100K should buy you a $500K house (due to 20% DP). That's not much in a HCOL area.
Do you save each month for semiannual auto ins premium? (Paid monthly, my insurance premium is 25% higher than if paid up front. What about yours?)

i legitimately don't keep track of how much I save. Just throw money at roth and savings when I have a bit in my checking. I estimate approximately 2500-2700/mo in spending. Not a lot of expenses could be trimmed and not change lifestyle. I try not to mindlessly throw money around at stupid things. Most of my expenses other than rent and now car are for food, but I live in the city and am within walking distance of many many restaurants and bars and that's why I moved there in the first place. I could probably find a new job pretty quickly if I happened to lose my job. Your average home in my area is getting sold for 600-700k. I'm in absolutely no hurry to buy, it is just something I want down the road and I'd prefer to continue living in the city. Auto insurance doesnt change at all for monthly or semiannual for me. It is a pretty fair rate.

**Nutria** · 08-19-2017, 04:40 PM

Originally posted by wsucoug View Post

i legitimately don't keep track of how much I save.

It would probably be a good idea to make a budget, not for spending cuts but for tracking. Super-detailed not necessary either. (We have an Other category where everything from clothes to DVD purchases go.)

Just throw money at roth and savings when I have a bit in my checking. I estimate approximately 2500-2700/mo in spending.

That $12K in savings is a good Emergency Fund. I'd move it to a separate account at an online bank like Ally, so it's less convenient to get to, and then start saving from scratch.

I'd also define a set amount of savings money every month, and give it multiple "purposes": open savings accounts, and transfer some to a Vacation account, some to an Auto Repair account, a Christmas/Birthday Club account, etc, etc. (Without that, we'd spend too much on vacation, then go into debt on auto repairs, for example.)

It's hard to justify to a young, single person, but getting in the habit now is better than waiting until your life circumstances change and one day you wonder how you went from debt-free to drowning.

**disneysteve** · 08-19-2017, 05:48 PM

Originally posted by wsucoug View Post

i legitimately don't keep track of how much I save. Just throw money at roth and savings when I have a bit in my checking.

Most of my expenses other than rent and now car are for food, but I live in the city and am within walking distance of many many restaurants and bars

Your average home in my area is getting sold for 600-700k.

What % of income is going into the 401k? Is there a company match and, if so, are you contributing enough to get the full match?

I think the single most important item to budget is your savings. If you set your savings in place and make sure that is taken care of first, how the rest of the money gets spent really doesn't matter all that much.

I bet you would be shocked to see how much you are spending on food and drink. How do you typically pay - cash, debit, or credit? If you pay with a card, pull out your last couple of statements and add up how much you've spent over the 2-month period and multiply that by 6 for an annual figure and tell us what it is.

You can't buy a 600K home on an 85K income. You home should cost no more than 2.5-3 times income. If you make 85K, that puts you in the market to spend no more than about 255K. I realize you may need to stretch that in a HCOLA but 600K would be just over 7 times your new income. There's no way that can work.

**wsucoug** · 08-19-2017, 06:40 PM

Originally posted by disneysteve View Post

What % of income is going into the 401k? Is there a company match and, if so, are you contributing enough to get the full match?

I think the single most important item to budget is your savings. If you set your savings in place and make sure that is taken care of first, how the rest of the money gets spent really doesn't matter all that much.

I bet you would be shocked to see how much you are spending on food and drink. How do you typically pay - cash, debit, or credit? If you pay with a card, pull out your last couple of statements and add up how much you've spent over the 2-month period and multiply that by 6 for an annual figure and tell us what it is.

You can't buy a 600K home on an 85K income. You home should cost no more than 2.5-3 times income. If you make 85K, that puts you in the market to spend no more than about 255K. I realize you may need to stretch that in a HCOLA but 600K would be just over 7 times your new income. There's no way that can work.

Only 6% is going into 401k. I get 50% match up to 6% so I am doing the bare minimum to get the full match. I could easily up that amount with absolutely no stress. I have found with my new higher income, I just throw the remainder into savings. Now that the roth is maxed though, I can either increase my 401k or add more and more into savings. I've made sure to max out my roth every year since I was 22 and my budget was much much tighter at that point in my life.

I do have Mint and have all my expenses tracked there. In the past 12 months I have spent 2600 on restaurants/bars/alcohol. I don't really see that as too big of a concern really.

Like I said, I am in no hurry to buy a house whatsoever. I am happy where I am at, but eventually my income may increase and I want to have a down payment there when the time comes. 1 bedroom condos are going for ~300k in my area, but again, I am in no hurry at all. Just want to start funding a specific down payment account for when the time comes. At worst, I'll have more than 20% if I decide to leave the city.

**disneysteve** · 08-20-2017, 05:02 AM

Originally posted by wsucoug View Post

Only 6% is going into 401k. I get 50% match up to 6% so I am doing the bare minimum to get the full match.

Good for you. That's always a great first step.

I could easily up that amount with absolutely no stress. I have found with my new higher income, I just throw the remainder into savings. Now that the roth is maxed though, I can either increase my 401k or add more and more into savings. I've made sure to max out my roth every year since I was 22 and my budget was much much tighter at that point in my life.

That's great. You recognized the value of investing for your future early on. That will pay off big time down the line.

What should you do now? Aim to invest at least 15% of your gross annual income for retirement. If you earn 85K, 15% is $12,750. If you're maxing a Roth at $5,500, you need to get $7,250 into the 401k to be at 15%. That's about 8.5%, so make it 9 (or 10 if you can) and you'll be doing very well.

In the past 12 months I have spent 2600 on restaurants/bars/alcohol. I don't really see that as too big of a concern really.

Agreed. From what you wrote earlier, I expected that number to be a lot higher.

1 bedroom condos are going for ~300k in my area, but again, I am in no hurry at all. Just want to start funding a specific down payment account for when the time comes. At worst, I'll have more than 20% if I decide to leave the city.

That sounds like a good plan to me.

**scfr** · 08-20-2017, 10:23 AM

Originally posted by wsucoug View Post

Just want to start funding a specific down payment account for when the time comes.

I know you said you are in no hurry and just want to buy down the road, but do you have a rough idea about the number of years? Are we talking more like 3 or 5 or 10 years? What do you usually do with the quarterly bonuses? How would you feel about making those your down payment fund, putting them in CDs that would mature some time before you think you might want to buy a house?

How am i doing for a 27 year old?