Home     Forum     401k     401k Rollovers
    Register   Login   Members   Search   FAQs     Recent Posts    




Critique my Budget Plan / Debt Pay-off Schedule?

Reply to topic
Money Talk > Credit & Loans

Author Thread
biddybantum
New Poster


Cash: $ 0.45

Posts: 2
Joined: 02 Dec 2017
Location: GA
Critique my Budget Plan / Debt Pay-off Schedule?  Reply with quote  

As 2018 nears, I'm starting to look over my budget and finance goals over the next 12-24 months. Any advice and critiques for the following would be much appreciated!

My salary is $33K pre-tax, so about $2,000 every month.
I have about $18,000 in student and car loans.
$5,300 (student) at 4.29%
$8,200 (student) at 5%
$6,500 (car) at 5.64%

I live with my parents for now, so rent is $200/mo. I keep my other expenses to about $1,200 every month:

$500 for bills (Rent, Storage, Car Insurance, Phone, Gym, Spotify, and two other misc. bills).
$100 for gas.
$300 for groceries.
$300 for miscellaneous (going out, trips, car maintenance, clothes, etc).
I have about over $2,000 in savings.

So I'm driving about $800 monthly into into my loans, until June - that's when I plan to move out. By then, I can decrease my debt by about $5,000, perhaps more if I can decrease my expenses a bit. I'll use my tax refund for the rent deposit, so not to take away my savings nest.

At that point, I'm looking at probably an extra $600 in rent + utilities, perhaps more in gas for a longer commute. I'll be looking for a second part-time job at that point (I can't do that until June, for personal reasons). Hypothetically, I can cover the additional expenses with part-time work, ($12 x 80 hours = ~$700 post-tax) - so I can still drive ~ $800 into loans every month.

Some factors could change - maybe I leave for a better-paying job. Or maybe the economy tanks and I'm fired. But otherwise, I'm looking at fully paying off my debt by the fall of 2019, or about two years from now.

Anything else I should consider? One regret I have is buying this car over the summer, for $8,000. It's a Kia Soul and runs great, but perhaps I should plan to downsize over the next year for a cheaper commuter?
Post Sat Dec 02, 2017 10:20 pm
 View user's profile Send private message
oldguy
Senior Member


Cash: $ 736.65

Posts: 3582
Joined: 21 May 2006
Location: arizona
 Reply with quote  

quote:
Some factors could change - maybe I leave for a better-paying job. Or maybe the economy tanks and I'm fired. But otherwise, I'm looking at fully paying off my debt by the fall of 2019


What is your degree? Right now, there are more open jobs than there have been in 16 years. That is probably the exact opposite of what you have experienced since school. Eg, the Defense industry is hiring 1000's of new workers, they have been advertising heavily since the election - in your area Lockheed is one of the majors.

As for prepaying your debt in 2 years - that may not be a good plan. Eg, we have a new $32k car, we paid nothing down and took a 5 yr loan. And we kept our own $32k in a stock fund that has grown about 25% in the last year - so it was well worth it to pay 2% on the loan to make 25% on the car cost.

In fact, if you get a new job that pays a little better (and I think you will, the demand for workers is way up and going higher) I would avoid spending your excess on prepaying loans, instead invest it in a 401k as soon as you are eligible. (The $800/m that you are spending on loans would be about $1,200,000 in 25 years (using the US historical 11%/y return).

Kia - No, I would not downsize the car, that's a great car, it will provide 200,000 miles of trouble-free service - and get nearly 30 mpg, it's a keeper. The wear items - tires, brakes, batteries, wiper blades - is about all it will need.

quote:
I'll use my tax refund for the rent deposit


You should think about fixing this, you should not be over-paying your taxes all year just so that the
IRS refunds money back to you in April, you may as well be getting that money right now, in your monthly paychecks.
Post Sat Dec 02, 2017 11:21 pm
 View user's profile Send private message
biddybantum
New Poster


Cash: $ 0.45

Posts: 2
Joined: 02 Dec 2017
Location: GA
 Reply with quote  

Thanks so much for applying! I'll try to answer some of the questions.
quote:
What is your degree?
I have a degree in journalism, but I'm currently working in B2B public relations. So obviously, not the greatest earning potential at the entry level. My plan is to leave this agency within the next 12-18 months, looking for a 10-20% increase to my salary - praying the job market still holds up. I wish I was smart enough to do defense or engineering work though Smile
quote:
As for prepaying your debt in 2 years - that may not be a good plan.
This is interesting what you said about waiting to pay down the debt. My agency is actually opening a 401(K) benefit program, starting January 1st. The fee is covered, and then they match contributions up to 4% of our annual salary. Tbh, I know next to nothing about 401Ks, so it would take a lot of research on my end to figure out if any market return rates could beat out my loan interest rates.
quote:
No, I would not downsize the car, that's a great car
That's great to hear this vote of confidence! I'm more than happy to drive it for many more miles, it's a solid vehicle.
quote:
You should not be over-paying your taxes all year
Agreed. I just graduated and this is my first salary, so I'm still figuring out how to correctly adjust my w-2. Based on the federal/state tax schedules, there is way too much being withheld right now.

Thanks again - this gives me some thoughts to chew on.
Post Sun Dec 03, 2017 12:39 am
 View user's profile Send private message
oldguy
Senior Member


Cash: $ 736.65

Posts: 3582
Joined: 21 May 2006
Location: arizona
 Reply with quote  

quote:
I have a degree in journalism, but I'm currently working in B2B public relations. So obviously, not the greatest earning potential at the entry level. My plan is to leave this agency within the next 12-18 months, looking for a 10-20% increase to my salary - praying the job market still holds up.


Journalism - I was an engineer in the Space & Defense Industry for 35 years, worked on the Manned Space projects in the 1960s & 70s. Then missiles, etc - I worked for a Fortune 500 Company. There were many openings for journalists. When we received an RFQ (request for quote) we gave the RFQ to several engineers to determine if the Defense Dept's requirement was something that we had experience with, history, etc. Then, if it fit our corp skill set, we put together a team of engineers that had the right backgrounds. We invented, conceptualized, designed a product that met the RFQ requirements. We formed a group of technical writers, assigned Book Bosses for each category - mechanical design, electrical design, system design, cost, available personnel, equipment - we met in a War Room - proper clearance, no phones, locked doors - and 'story boarded' the drafts on the walls around the room. Tech writers took the drafts - fixed the person, the tense, standardized the syntax, so that the final books read like a single author. Columnized the content into magazine style, placed the illustrations to break up the text - yada. The whole process usually took 3 or 4 weeks, then we make multiple copies and a sent a person to the government to present it. The Tech Writers made around $75k, editors made close to $100k - and this was in 1998 when I retired.

Don't worry so much about the job market. Your adult life has been in an anti-business environment - few jobs, few raises, jobs sent offshore. Now, finally, we have a strong pro-business administration - ie, someone who understands how to get work organized & accomplished. In just a couple years, there will be help-wanted listings like we have never seen (especially in Defense, where the military has been allowed to deteriorate drastically).


quote:
and then they match contributions up to 4% of our annual salary. Tbh, I know next to nothing about 401Ks, so it would take a lot of research on my end to figure out if any market return rates could beat out my loan interest rates.


If you invest $500/m for 30 years (a typical career) and invest at the longterm US Average of 11%/yr, you'll have $1,300,000. It's not as hard as people try make it - you just have to make that $500/m your priority - you can't skip a month and buy a new couch, you can't make extra car payments to get it paid-off early "just because".
Post Sun Dec 03, 2017 3:11 am
 View user's profile Send private message

Reply to topic
Forum Jump:
Jump to:  
  Display posts from previous:      





Money Talk © 2003-2016