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I am new around on here. I have been actively scrolling through Finance forums daily.
Today i have gave up sports betting, I have lost a total of $2,500.
My financial situation is set out below:
- 27 years old
- salary $46,000
-Cash in the bank around $74,000
- overdraft $2,000
-student loan $13,000
-I owe my girl friend $5,500
- Credit Card debt of $6,500
-Investment (stocks) $65,000
Today i have been in just a sad mood because of sports betting, it burnt me really bad losing $2,500.
Goals:
To buy a house before 30 years old.
Start saving up for a retirement fund when i hit 30 years old.
Whats your thoughts on my financial situation on above?
you have 75k in the bank? Pay off your student loan and your girlfriend and your CC? Why would you owe her 5k?
Goal of buying a house at 30 is a not a money smart goal. Buy a house when you are married, have life insurance, and have found a place you want to live for 10 years, unless you KNOW you can flip it and still win out over renting in a shorter time frame.
Otherwise if you are 27 and have $100k to your name, you're doing great.
Congrats and smart move on giving up the sports betting. I'm not anti-betting (love black jack, etc) but for too many people, they get in too deep and can't get out.
As Joe said, you have $75K in cash? Pay the student loan, girl friend, credit cards. You'll still have $50K without any debts hanging over your head. If you exercise some financial discipline, you'll be back at $75K in no time
By the way, $75K in the bank is way too much in a non-interest earning acct. Get a good finanical advisor (we use Edelman but choose whoever you like) to help you invest/budget that money.
You are doing well. I'd use your savings to pay off all debt and then continue saving. Read a book entitled The Millionaire Next Door and follow the advice it contains. Buying a house before you're 30 is definitely doable just make sure you're ready for the responsibilities of home ownership - maintenance usually consumes more time and money than people anticipate. Consider buying a bank owned or short sale house because there are are some great deals to be had there. Also get pre-approved for a mortgage loan before you begin house shopping. Best wishes.
I have read Millionaire Next Door. I drive a $3,000 car, i haven't bought clothes in years. 4 business shirts and 2 black pants is all i need. I have hair cuts once every 3-4 months.
As a guy who just turned 28 this week, I'll provide some input:
Close that pointless $2000 loan. You're throwing away $2 a month and you just don't need the loan at all. No reason to have that open. Pay off the student loans and the debt to the gf as well. You have too much cash sitting around to be accruing and paying interest on any of those small loans.
Far and away the biggest problem I see you having right now is this statement: "Start saving up for a retirement fund when i hit 30 years old." EEK. You should start saving NOW, ESPECIALLY if you work for someone who matches 401k contributions. I've been maxing my 401k and a Roth IRA since year 1 out of school (6 years ago). You have $65,000 in taxable investments, and $74,000 in cash that came through the income tax filter and are just sitting around not doing anything for you. You are very unbalanced on taxable vs tax-sheltered investments/savings: You're not taking advantage of the tax-sheltering our current tax system allows which is costing you a lot of money long term.
It's clear based on your salary that you do a great job of living below/within your means which is a very important first step; however, you just don't seem to have a good plan for making all that unspent money work for you.
After paying off your debts, this is what I would look into doing next:
1) Does your company do matching 401k contributions? (IE something like 1:1 up to 5%, or .5:1 up to 6% etc.). If so, immediately contribute to that account at least up to the amount that will allow your company to match your contributions.
2) Open a Roth IRA and maximize it every year ($5000/yr currently allowed). Your money grows tax free and the principal can be pulled out at any time. You should be maxing this every year before even considering buying stocks in taxable accounts.
3) At this point, I would recommend bumping your 401k to at least 10%. I max mine all the way out ($17,000 for 2012) but that's a personal decision and I make more.
I would get all that set up before I invested anything further in taxable stocks or funds or built up the cash reserve.
I wouldn't pay off the student debt if it's really 0%.
I would pay back the GF and the CC. I don't understand how it's "not due until next month" unless you just paid a $6500 purchase this month. The $2000 interest free loan for $2/month sounds weird. Get rid of that too.
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