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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.
seems like you can aggressively add to your retirement plan. does your job offer a 401K match at all? perhaps buying a condo would be a good real estate investment.
1) What's done is done and today is today. You still have a good 25+ years of working years left before traditional retirement so we can be ok but you are behind.
2) By my rough calculations, you make $5k/month from your salary before taxes. That's roughly $3200/month after taxes assuming no retirement savings. Your expenses are roughly $2500/mo so you have a surplus of $700. Depending on how stable your job is, I'd start putting $700/mo away into an emergency fund until you can build up your savings from $9k up to around $15k.
3) You should take your freelancing money and put all of it away into your IRA. You should invest in a Roth IRA up to the max. You should invest in your company's 401k to the max. At the very minimum, you should be investing in your company's 401k if they match (up to the match). If you don't have a 401k, you can set up a personal IRA as well as taxable savings account on Vanguard to invest your money.
4) You should take all of your roth IRA and invest it in Vanguard. You can put it all into a target retirement fund for your age or if you want to be more aggressive just put all of it into the Total Stock Market fund. It's aggressive though so you may want to do more of a 80%/20% allocation of Total Stock Market and Total Bond Market (both US only).
5) To be financially independent, it's just math. You need enough money saved up to get a draw of around $3k/mo (and this number will go up with inflation since your rent and expenses will go up). Without doing any of the math, I would say that you may not have enough to retire at 62 (taking 3-4% of your savings/year + social security at 62) but by 70 (if you wait that long) you should be fine since your social security payments will be higher. But run the numbers, etc.
6) Don't hire a financial advisor. Just do it yourself. If you insist on hiring a financial advisor, hire a fee based one.
7) Don't buy anything like variable life insurance, etc. I don't even think you need term life insurance since you're single.
You've outlined sme pretty basic expenses, yet your savings is very low.
Where's it all gone in the past?
IMO, this isn't relative to anything in this thread. The OP asked for assistant and she outlined her situation and her goals. People's attitudes and goals change throughout their lives just as the circumstances of their lives constantly change. What's pertinent is where she is now and where she wants to be at some point in the future.
During all the years of holding mutual funds or other things, I always reinvested any profits. It has added a lot to what I have. I'm not sure the exact date when I began investing, but it was my early 40s. Every time I accumulated a few thousand, I added it or bought into a new fund.
IMO, this isn't relative to anything in this thread. The OP asked for assistant and she outlined her situation and her goals. People's attitudes and goals change throughout their lives just as the circumstances of their lives constantly change. What's pertinent is where she is now and where she wants to be at some point in the future.
IMO......it can make a difference.
Past behavior is the best predictor of the future.
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.
Get married right away to a rich guy is the easiest answer.
Join blink, planet fitness or NY Health club (the new 15 buck a month membership) would save you 85 to 90 a month.
Trouble is you cant really invest much in stocks, bonds or real estate as you dont have much of a cash cushion. You need 3-6 months liquid money at all times in case of emergency. But maybe do something like ALLY Bank to get a higher yield on money while still FDIC insurance and liquid
1) What's done is done and today is today. You still have a good 25+ years of working years left before traditional retirement so we can be ok but you are behind.
2) By my rough calculations, you make $5k/month from your salary before taxes. That's roughly $3200/month after taxes assuming no retirement savings. Your expenses are roughly $2500/mo so you have a surplus of $700. Depending on how stable your job is, I'd start putting $700/mo away into an emergency fund until you can build up your savings from $9k up to around $15k.
3) You should take your freelancing money and put all of it away into your IRA. You should invest in a Roth IRA up to the max. You should invest in your company's 401k to the max. At the very minimum, you should be investing in your company's 401k if they match (up to the match). If you don't have a 401k, you can set up a personal IRA as well as taxable savings account on Vanguard to invest your money.
4) You should take all of your roth IRA and invest it in Vanguard. You can put it all into a target retirement fund for your age or if you want to be more aggressive just put all of it into the Total Stock Market fund. It's aggressive though so you may want to do more of a 80%/20% allocation of Total Stock Market and Total Bond Market (both US only).
5) To be financially independent, it's just math. You need enough money saved up to get a draw of around $3k/mo (and this number will go up with inflation since your rent and expenses will go up). Without doing any of the math, I would say that you may not have enough to retire at 62 (taking 3-4% of your savings/year + social security at 62) but by 70 (if you wait that long) you should be fine since your social security payments will be higher. But run the numbers, etc.
6) Don't hire a financial advisor. Just do it yourself. If you insist on hiring a financial advisor, hire a fee based one.
7) Don't buy anything like variable life insurance, etc. I don't even think you need term life insurance since you're single.
good luck.
RVD.
This is excellent advice. I hope the OP tunes out the clutter and pays attention to this.
You are not a big spender, it's just that NYC is way too expensive for middle class. You are paying 40% of your salary to rent. Can you cut it down? maybe get a roommate?
The gross salary is a lie. NYC has the highest tax rate, you need to think about net salary and how much can you really afford.
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