Another one of these: what next for my finances?

[stargirl007]

I was about to say.

I think my decision to pay off the 0% credit card, while a bit strange, I think it gives me a piece of mind. Being in sales, my income can fluctuate greatly from month to month. I wanted to pay it off while I had the funds to do so, so I don't have to worry about the 14-15% interest coming in because I paid off all of my student loans with my commission but didn't make enough left over to take care of the 0% card too. I've been prioritizing paying off the student loans in terms of not only higher interest rates, but I've accelerated payments / paid off loans that cannot be put into a forbearance, etc. in case of hardship. It is extremely difficult to forecast commission and income potential more than a month or two out.

I've been trying to gradually increase my 401K by a percentage each month or every couple of months, with the end goal of ending up in the 8-10% ballpark by the end of the year.

I do have taxes withheld from all of my commissions, so no worries there. It is probably a good idea that I maybe further accelerate the 401K contribution since my company actually considers that as part of my income and they do contribute to my 401K against commission contributions (ie: I make $5,000 in commission, $300 goes to my 401K from that, they match $75).

The problem with the 401k too, I'm only receiving around a 5% return. I'm not sure if that is particularly good, 401K is new to me since my company just now started offering it late last year. My outstanding student loans are all over that 5% rate, so my thought and goal was to completely eliminate my student loan debt by the end of the year. I think based on what I've earned the first half of this year, it's a completely reachable goal.

The car is just the one thing I am unwilling to budge on. I look at my budgets each month, and quite frankly, I really don't spend much money on myself on things that I like. The car is one of my splurges and main interests. I enjoy driving a new car. I have no desire to drive a car/clunker to the wheels fall off. I don't like car maintenance, or the worry of being stranded on the side of the road. I am willing to pay and budget for that premium. On the flip side, my fiance is the complete opposite, where he just looks as a car as an A to B, I look at my cars as an interest and hobby.

[aus1ander]

Originally Posted by stargirl007

Wanted to give a month-end update to this thread.

I have had a couple of really good commission months at work. I had 7.5k in commission come through for April and I have 7.5K in coming in may since my boss left off part of my commission in my April check. The way that I handle our budgets, my commissions are basically instant extra savings. It is looking like I will have a very strong June as well as i am in final negotiations on one of the largest deals that my company will have sold so far this year. Budgets and pricing are approved, we are just in the legal contract cycle. I will be making around $20K in commission when all is said and done. It is very likely I will receive additional compensation and bonuses from this deal as well since it will put me well over my quarterly quota ($2K bonus, likely $1K top performer bonus as well).

I paid off the entire $6000 balance on our home improvement card since we had a lot of money left over in the budget from last month and March...

I also paid off two of my student loans, lowering the balance from $25K to $21K with some of my savings. The $100/mo that I am now saving from the differences in my car payments is also going towards accelerating the payment on my largest student loan. I'd like to take a large portion of the commission payment I'm expecting in July to likely split this in half.

My goal is to raise the 401K contribution some more, but I would like to either completely eliminate my student loan burden or get close to it..since it seems that my interest rates are still higher than what the return is on my 401K for now.

Congratulations on getting a handle on your debt. I too believe you should focus on paying off your student loans while trying to increase your 401K contribution to the most you can afford (up to the contribution limit, if thats an option based on your income).

I disagree with some of the comments regarding 0% APR loans. While these are truly cheap loans, you have to consider the impact on free cash flow. Once someone becomes overleveraged, these same loans that you thought were cheap could have lasting impact on future savings (having to reduce retirement contributions, for instance). Of course, being overleveraged is usually linked to overspending. I personally hate debt, even the low interest kind, and would rather preserve cash flow than add monthly fixed expenses.

[Lacerta]

Originally Posted by stargirl007

The problem with the 401k too, I'm only receiving around a 5% return. I'm not sure if that is particularly good, 401K is new to me since my company just now started offering it late last year. My outstanding student loans are all over that 5% rate, so my thought and goal was to completely eliminate my student loan debt by the end of the year. I think based on what I've earned the first half of this year, it's a completely reachable goal.

You aren't just getting a 5% return. You are getting a 25% instant return PLUS a 5% return. Don't forget that instant 25% return. If your investments returned 5% this year, you actually made around 30% on your money for the first year.

Sure, next year, you will only make 5% on this year's money (assuming returns stay about the same for you), but you'll make 30% on next year's investments.