sam1000
Full Member
Cash: $ 21.05
Posts: 95
Joined: 28 Jul 2005
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| financial advice |
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First my profile:
I'm 32 yrs old and single.
I have about $12500 saved up right now in an emergency fund which represents ALL my cash savings. In addition I have $4000 in my 401k and I contribute 6% per paycheck, although the investments YTD have LOST 6.2%  My total monthly outflows at this point including all expenses is $2400. My net monthly income is around $6000.
I also have $8000 outstanding on my truck which is at 4.9% APR and about $4800 on my credit card which is at 0% till March '07 so I'm just paying the minimum on that right now since there is no interest. No other debt/support commitments.
My first question is should I keep putting money in the emergency fund, if so upto what point. I have the cash in ING direct right now giving me 4.35% APY, I feel after inflation/taxes I'm actually losing money.
Second question is, am I doing financially okay for my age? What can I do to gain more financial security? I still rent because homes are insanely expensive over here (South Orange County, CA) and I could never afford one by a long shot.
Sorry for the many questions but any advice will be appreciated 
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Fri Aug 11, 2006 3:56 pm |
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Blue Eyed Cat
Contributing Member
Cash: $ 2.90
Posts: 29
Joined: 12 Jul 2006
Location: Central Florida
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Investments as soon as you have 6 months in emergency fund. The stock market is great but it does take some time to get educated. If you don't want to spend the time, it may or may not be profitable for you.
Real Estate - I understand about high prices as I lived for 30 years in the DC area which is very high.
However there may be some interesting opportunities in a few years. Lots of folks bought homes with ARMs that will start escalating. When this happens, a person with money and good credit is going to be able to pick up something in foreclosure. This stuff even happens in CA. Also a house may not be possible now but how about a small condo. I started that way and after 4 years sold it and bough a townhouse. Just an idea.
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Fri Aug 11, 2006 7:28 pm |
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Kiaser
Senior Member
Cash: $ 43.05
Posts: 209
Joined: 12 Apr 2006
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| Re: financial advice |
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quote:
Originally posted by sam1000
First my profile:
I'm 32 yrs old and single.
I have about $12500 saved up right now in an emergency fund which represents ALL my cash savings. In addition I have $4000 in my 401k and I contribute 6% per paycheck, although the investments YTD have LOST 6.2% My total monthly outflows at this point including all expenses is $2400. My net monthly income is around $6000.
I also have $8000 outstanding on my truck which is at 4.9% APR and about $4800 on my credit card which is at 0% till March '07 so I'm just paying the minimum on that right now since there is no interest. No other debt/support commitments.
My first question is should I keep putting money in the emergency fund, if so upto what point. I have the cash in ING direct right now giving me 4.35% APY, I feel after inflation/taxes I'm actually losing money.
Second question is, am I doing financially okay for my age? What can I do to gain more financial security? I still rent because homes are insanely expensive over here (South Orange County, CA) and I could never afford one by a long shot.
Sorry for the many questions but any advice will be appreciated
Like Coaster said, 6 months of living expenses in the emergency fund should do you just fine (especially since you are single and possibly without kids). Put all that emergency fund into a money market account, it won't gain much but should be enough to deter inflation (which is all you should shoot for with those funds). With $2400 expenses monthly you should put around 15k into this fund (but more if you do what I'm about to suggest).
Pay off the truck, do it now or as soon as possible. It's the only thing currently collecting negative interest on your finances and it's not an equity gaining asset. 4.9% may not seem like much, but it's throwing away money if you as capable of paying it off right now. Consumer debt is useless, and this classifies as that. Plus, every dollar you save on paying it off sooner is a guaranteed return of investment (a dollar saved is a dollar earned in this case) WITHOUT having to pay tax on the savings (compared to earning interest in a savings or investment, where you pay tax on money earned).
Since you have 0% on the credit card you can float the minimum payment, but I wouldn't recommend so. That payment is taking up a percentage of your earnings, and if you just paid it off then you would have to worry about having it paid off by March 07. Also, that money you have allocated to pay the minimum balance on it each month would be freed up to go directly to investments.
Your 401k, only contribute to it if your company is matching a percentage. And don't contribute more than they are matching (never give up free money). If that's less than the 6% you are contributing now per paycheck, then take the extra and dump it into an IRA. Even better, do whatever it takes (raise your contribution levels per paycheck) to max out the IRA's each year.
Now for the big one. You are single and probably without kids (due to you listing no other financial obligations besides the car and credti card). You don't have a lot of reasons that prevent you from getting a roommate or two (or three or four). Buy a house, as wildly outrageous in cost as it is, and rent out as many rooms as possible. With enough people not only are you breaking even or better on the mortgage payment, but they are gaining you equity and a very valuable appreciating asset. Hey, you've GOT to live somewhere and you have to pay for that anyway, so why not make others not only pay for your rooming but also gain you equity in the process? Also, this course of action (renting out rooms) with buying a house opens up a whole slew of different options (such as not putting money down since the renters will pay PMI, etc etc). So if in any way renting out rooms and living with other people may be an option (even if temporary, because you can always turn it into either a full time investment rental property or become financially stable enough to kick everyone out and pay for it yourself), then I highly suggest it because it's free money.
As for financial state at your age, it beats me. But you are on the right track of mind to be interested and concerned about what to do, and that's most of the work right there!
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Sat Aug 12, 2006 4:26 am |
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sam1000
Full Member
Cash: $ 21.05
Posts: 95
Joined: 28 Jul 2005
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thanks a lot guys, appreciate the advice
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Wed Aug 16, 2006 1:46 am |
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