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So i have been working for a year and have made 25k before taxes, which was barely enough for my lifestyle it's better than nothing. I just got another job making around 42k so after taxes and 401k contributions i'll be making about 2300 a month. Here is my budget(i stay at home with parents)
It all equals out to around 1500 a month worth of expenses. I haven't started paying my student loans yet(IBR), but my debt is as follows
32000- student loans
27000-car loan-3% 75 month term
1000 credit card debt @0% for the next 6 months then jumps to 24%.
I have 800 dollars of free cash a month. I plan to save 350 for an emergency fund for when i move out. Spend about 250 on clothes and other entertainment items that I have been missing out on while making 25k. Then the other 200 goes to student loans.
Am i on the right track? This looks like a pretty decent budget to me but I'm open for input Thanks.
1. Where is your health insurance????
2. The long car loan has given you the illusion of affordability - but that does not make it so. Given your high gasoline usage I would assume you are putting a lot of miles on that car which will cause it to lose value more quickly. If you have a car losing a lot of value and a long drawn out loan, you can put yourself upside down and end up trapped. I would suggest saving a small $1000-$2000 emergency fund and then throwing the extra $800/month at the car until you have enough equity to sell it privately for $6000 more than you owe on it. Then you can take the $6k and buy an inexpensive car for cash.
Still high... we have 4 smartphones on a 10gig plan for less. They reimburse you for their portion, right?
The poster above me is correct... you bought WAY too much car for your income. And it sounds like you bought one with less than great MPGs and one that costs more to insure than other models. $2160 a year is insane....
Congrats on the new job, BTW!
He is paying $250 per month to live in their house. Maybe him paying for their cell phones is part of the deal.
So i have been working for a year and have made 25k before taxes, which was barely enough for my lifestyle it's better than nothing. I just got another job making around 42k so after taxes and 401k contributions i'll be making about 2300 a month. Here is my budget(i stay at home with parents)
It all equals out to around 1500 a month worth of expenses. I haven't started paying my student loans yet(IBR), but my debt is as follows
32000- student loans
27000-car loan-3% 75 month term
1000 credit card debt @0% for the next 6 months then jumps to 24%.
I have 800 dollars of free cash a month. I plan to save 350 for an emergency fund for when i move out. Spend about 250 on clothes and other entertainment items that I have been missing out on while making 25k. Then the other 200 goes to student loans.
Am i on the right track? This looks like a pretty decent budget to me but I'm open for input Thanks.
Get your credit card paid off over the next 2 months. In the future, do not carry a balance from month to month.
How much are you putting into your 401k?
Agree with others, that is an awful lot of car for your income, especially given your student loan debt.
2. The long car loan has given you the illusion of affordability - but that does not make it so. Given your high gasoline usage I would assume you are putting a lot of miles on that car which will cause it to lose value more quickly. If you have a car losing a lot of value and a long drawn out loan, you can put yourself upside down and end up trapped. I would suggest saving a small $1000-$2000 emergency fund and then throwing the extra $800/month at the car until you have enough equity to sell it privately for $6000 more than you owe on it. Then you can take the $6k and buy an inexpensive car for cash.
Quote:
Originally Posted by Pitt Chick
Still high... we have 4 smartphones on a 10gig plan for less.
They reimburse you for their portion, right?
The poster above me is correct... you bought WAY too much car for your income. And it sounds like you bought one with less than great MPGs and one that costs more to insure than other models. $2160 a year is insane....
Congrats on the new job, BTW!
Quote:
Originally Posted by Aredhel
JimRom is right: that $800/month extra needs to go first towards paying down your debt, and then toward building up a reasonable emergency fund (which should be a minimum of 3 months living expenses, not a mere $350). I'd pay off that credit card ASAP; you can get that done in two months' time. After that, the "extra" $800 should go toward either the car loan or your student loans (whichever charges the higher interest rate). And I'd plan on staying at Mom and Dad's for a while, if they'll let you, until you get more of that debt paid down.
You desire a champagne lifestyle, but you only have a beer budget. Get used to drinking Budweiser for a while. In the long run, it will be worth it!
I know I bought too much car but it had to be reliable so I had to buy new. The car itself was 20k but add in the 3k warranty and interest it raises total cost to 27k. I'm still on my parents health insurance so I don't pay for that and no they don't reimburse me for the phone it's part of the deal with staying there. My car actually gets 33mpg combined so it's pretty good on gas. Right now I usually put 20 bucks in a week and drive about 800 miles a month.
I plan on staying with my parents for the next two years and by saving 350 a month I'll have 10k a month in my emergency fund and the car will only have 3 years left on the payment when I move out. I contribute 240 a month to my 401k so I think I'm doing well there. The 300 a month spent on clothes and stuff will only be for the next 6 months then after that it can go into savings. I'm not a money hoarder I am going to spend my money on nice things especially when I finally have the cash to afford them. I'm im no rush to pay off the car or student loans but I am paying off the credit card before the 0% expires. Honestly I think I'm doing pretty well saving over 600 dollars a month and having no credit card debt. Yes the drug is MJ haha
Last edited by chancellor14; 08-17-2015 at 06:14 PM..
2. The long car loan has given you the illusion of affordability - but that does not make it so. Given your high gasoline usage I would assume you are putting a lot of miles on that car which will cause it to lose value more quickly. If you have a car losing a lot of value and a long drawn out loan, you can put yourself upside down and end up trapped. I would suggest saving a small $1000-$2000 emergency fund and then throwing the extra $800/month at the car until you have enough equity to sell it privately for $6000 more than you owe on it. Then you can take the $6k and buy an inexpensive car for cash.
Yes - but he needs to watch out for the credit card bill too - with 24% interest if he doesn't get it paid off in 6 months...
Get your credit card paid off over the next 2 months. In the future, do not carry a balance from month to month.
How much are you putting into your 401k?
Agree with others, that is an awful lot of car for your income, especially given your student loan debt.
260/month in 401k and job puts in extra 80/month. I know about the credit card but I had to do it to pay fory car tags. The student loans don't scare me I'm fine with paying those for the next 10 plus years.
FYI I made about $25k my second year out of college. I made $12k my first year. This was around a decade ago, so maybe a little bit more with inflation but not much. That first year I saved around $4k (w/ $12k in income) and that second year I saved around $10k. That is living on my own, not in my parents house (with a roommate however).
I look at that budget and cringe. You could be doing so much more, you've been given a gift to keep your cost of living down so much by living with your parents. You should be saving ~$16k a year paying for insurance + essentials and student loans.
Between the car payment, expensive car insurance (not liability only), the MJ and gym you're spending $8,000 a year.
What got me going was making a spreadsheet up and putting $5,000 annually in (Roth IRA contribution limits back then) and using a 7% growth rate. By the time I was 30 I was going to have ~$50k in that alone. Same with 401k. The time when you are young is the time to be investing fully, the payoff amount difference down the road is so substantial it's not even funny. I wish I had invested when I was a paperboy in 5th grade!
In two years of living there you could've set yourself up amazingly well. Had you purchased a good used car instead you'd own your car outright and assuming you do the required mx on it, it should last a very long time. You'd have a sizeable emergency fund (around $30k) and could foreseeably move out on your own. Some things guys I have known have done, even at our low level of income starting out, is purchase a duplex and have roommates. They purchase a duplex and live in one side, rent out the other and have a roommate in the side they are living in. Rent free + building equity. It's a good start to a nice long successful financial foundation.
FYI I made about $25k my second year out of college. I made $12k my first year. This was around a decade ago, so maybe a little bit more with inflation but not much. That first year I saved around $4k (w/ $12k in income) and that second year I saved around $10k. That is living on my own, not in my parents house (with a roommate however).
I look at that budget and cringe. You could be doing so much more, you've been given a gift to keep your cost of living down so much by living with your parents. You should be saving ~$16k a year paying for insurance + essentials and student loans.
Between the car payment, expensive car insurance (not liability only), the MJ and gym you're spending $8,000 a year.
What got me going was making a spreadsheet up and putting $5,000 annually in (Roth IRA contribution limits back then) and using a 7% growth rate. By the time I was 30 I was going to have ~$50k in that alone. Same with 401k. The time when you are young is the time to be investing fully, the payoff amount difference down the road is so substantial it's not even funny. I wish I had invested when I was a paperboy in 5th grade!
In two years of living there you could've set yourself up amazingly well. Had you purchased a good used car instead you'd own your car outright and assuming you do the required mx on it, it should last a very long time. You'd have a sizeable emergency fund (around $30k) and could foreseeably move out on your own. Some things guys I have known have done, even at our low level of income starting out, is purchase a duplex and have roommates. They purchase a duplex and live in one side, rent out the other and have a roommate in the side they are living in. Rent free + building equity. It's a good start to a nice long successful financial foundation.
I appreciate the feedback. I know I paid too much for a car but when I bought i was banking on making more money in a few months it took a little longer but here I am. I won't sell the car I just plan on keeping it for 10+ years(maybe trade it in for something better if my income increases substantially). Insurance should go down especially when I turn 25 in a year. I do like to spend my money for my entertainment but I call that living life. A few purchases I plan on making:
Beats headphones(200)
A few upgrades to my car(300)
Wardrobe upgrade(800)
A chair(200)
Watches(300)
Maybe a xbox one(400)
Total=2200
That's all spread out over a year so about 180/month on stuff I appreciate...doesn't sound bad to me. I will put my tax refunds in savings too so that's even more money. Buying a house is not in my plans in the near future. I'm saving up until I have 6 months of living expenses saved up and that's counting the rent I will pay in the future. I will def open up an IRA.
08-17-2015, 11:42 PM
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Your spending level is completely disconnected from your income. It seems like you're spending money to try to look wealthy when you're actually broke.
Your car is way too expensive (and no, you didn't need to spend that much to get something reliable). Your "entertainment" budget is absurd.
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