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What cushion? 20k for a Italian car (better save for repairs), 10k+ for a vacation, another 40k for a downpayment. You think you suddenly will stop living paycheck to paycheck? Not at that spend level.
$20,000 for a car, yes, maybe. Maybe $13,000 for a car. But Not $10,000 for a vacation. I'll be staying with my friend over there, so $5k at the very most. $30K towards a downpayment on a house, but no plans to buy in the immediate future. That would be put into savings FOR a downpayment in the future. That still leaves me with $23,000 savings to split between start of a retirement savings and to have a little cushion. Hey, it's better than nothing! It's a start. And then hopefully I can continue to make this kind of money in the future too to continue to build.
Thanks, but this post isn't really about "What car should I get?". I have lots of time to think about that (9 months). I won't be living paycheck-to-paycheck after this job I'm about to do because it'll give me a great financial cushion underneath me.
Ok, but it's related since the Mini and the Fiat are among the two least reliable cars you can get. Whatever repair $ you'll be spending on the car will be less $ you'll have to save.
I'd make the money first before I spent it on new cars and vacations. Matter of fact I'd banks as much as I could and waited until I found other work, fully accounted for my tax liabilities for the increased income and then moved forward on possible spending
After this job, I want to buy a new car and take a trip to Australia and New Zealand at the end of the year. The rest I would like to save for an eventual down-payment on house…
If you want to buy a house you will need established credit. Buy the car through a bank or credit union and make your payments on time.
Looking for a little financial advice. I am about to start a job where I'll be making significantly more money than I ever have. I usually live pretty paycheck-to-paycheck for the most part but on this next job I'll be able to really save a lot. I work in film production so this job is temporary because I'm freelance (9 months long). I will save about $78,000 after taxes and after my costs of living are taken of.
After this job, I want to buy a new car and take a trip to Australia and New Zealand at the end of the year. The rest I would like to save for an eventual down-payment on house, and to have an emergency fund for myself to dip into in times when I'm not working. I'm 30 years old so I also figure I should start saving some for retirement too.
Should I buy my car in cash, or is it better to have a monthly payment, even if it's a small one? I plan to get a used Mini Countryman or a Fiat 500X. Both are around $20,000.
Should I put some money I save into an IRA as well, or just into a savings account?
Thanks for the insight!
First, background:
Years of self employment, and have worked in the movie industry (props and consultant on military tactics)
Couple rules:
ALWAYS put a % back for retirement
ALWAYS save money for the "breaks in employment" (they happen, longer than you think occasionally)
AVOID "payments" when self employed. They make it MUCH easier to survive
Oh yea, and stick around for 2nd lunch and always grab snacks from the table (I swear, I'd put on 5 pounds...)
Looking for a little financial advice. I am about to start a job where I'll be making significantly more money than I ever have. I usually live pretty paycheck-to-paycheck for the most part but on this next job I'll be able to really save a lot. I work in film production so this job is temporary because I'm freelance (9 months long). I will save about $78,000 after taxes and after my costs of living are taken of.
After this job, I want to buy a new car and take a trip to Australia and New Zealand at the end of the year. The rest I would like to save for an eventual down-payment on house, and to have an emergency fund for myself to dip into in times when I'm not working. I'm 30 years old so I also figure I should start saving some for retirement too.
Should I buy my car in cash, or is it better to have a monthly payment, even if it's a small one? I plan to get a used Mini Countryman or a Fiat 500X. Both are around $20,000.
Should I put some money I save into an IRA as well, or just into a savings account?
Thanks for the insight!
If you want to stop living paycheck-to-paycheck, keep your lifestyle costs like they are now and bank the excess from your pay increases.
You also need an emergency fund immediately. It seems like you're one broken leg away from financial ruin. Since you do freelance, it should be a minimum of 6 months (which is $8400 if I read your expenses right). 1 year should be easy with your temporary savings rate (so make that $16,800).
And if I can pick on something you said after:
Quote:
Originally Posted by TheKiwi
I'm 30. I'm a believer in that tomorrow isn't promised... So if I have an opportunity and I can do it, I go for it. I think I'll be able to save AND treat myself a little too with $78,000. I do agree though that I need a little more balance (emergency fund AND enjoying myself too, as opposed to just enjoying myself all the time and not saving).
This style of thinking will keep you paycheck-to-paycheck. If your car purchase is $20k and your vacation is $5k, you've already figured out a way to spend a third of your savings before your job has even started. It won't be that hard to blow through the rest (usually through a bunch of micro transactions like nights out drinking), and you'll be wondering where it all went.
Figure out why you're paycheck-to-paycheck (plug the leaks in your spending), and that'll be worth many times more than this $78,000 savings windfall. If you don't, the $78,000 will be gone before you know it.
Others have already posted some pretty good advice. The main problem I see is that your first focus is on the spending on the car and vacation. I would switch the focus such that you are looking at investments and savings first, and then seeing what you have left over for a car and vacation. First thing I would do is follow Petunia 100's advice of maxing out your 2015 Roth until April's tax season deadline, then max for 2016 throughout the rest of the year. Second get a realistic idea of your expenses and save up six months. The usual advice is 3-6 months, but given the temporary nature of your employment I would go a minimum of six months. Frankly then I would look at what you have left for taxable investing into a low expense index fund. If you need a car I would significantly lower your target price, despite the low interest rates right now, there is still a huge opportunity cost in buying a car, you are giving up a ton of future growth buying that car.
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I do agree though that I need a little more balance (emergency fund AND enjoying myself too, as opposed to just enjoying myself all the time and not saving).
