carlyjo14
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My boyfriend and I live together in a duplex my dad owns. We don't pay rent and both our vehicles are paid off. We pay the basic utilities for the apartment like electric and water plus cable/internet. I don't work during the school year, but I have a summer job for 6 weeks where I make about $1000. My boyfriend makes about $2000/month.
We have no money in savings! We used to have around $2000, but after my boyfriend got laid off this winter, the savings were depleted. We want to be more financially prepared as well as start saving for buying a house and a wedding, but we both are a little lost as to what we need to do. But I feel like we should have money piling up since we don't have to pay expenses most people do!
I hear people talk about IRAs and investmesnts and bonds, but I don't even know where to begin with anything...any advice would be appreciated!
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Sun Jun 12, 2011 5:10 am |
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coaster
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I'm sorry to say this, but $2000 a month doesn't go very far these days. Before you can realize any of your dreams, you need to have more income. Quite a bit more. If you need more education/training to reach that goal, that's what your next step should be.
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Sun Jun 12, 2011 5:58 am |
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ghstyler
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| Support coaster |
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Support coaster this view.
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Sun Jun 12, 2011 6:22 am |
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oldguy
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quote:
But I feel like we should have money piling up since we don't have to pay expenses most people do!
I hear people talk about IRAs and investmesnts and bonds,
I agree, the low income is the problem. The average US salary is $48,000 - that averages in everyone, min wage earners, and so on. And the average household income is $68,000. The point is - the $24,000 won't support a house, children (they take you out of the work force for awhile), and so forth.
Your best bet is to finish your education - then get a job where you are earning >$40,000. That way the family will be earning $64,000. Waht's your major - are you in one of the applied skilss fields such as accounting, nursing, engineering, teaching? Or in a softer major such as history, comm skills, pysch? It makes quite a difference to your pay.
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Sun Jun 12, 2011 6:25 pm |
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carlyjo14
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Our monthly expenses now total about $500. So we still have $1500 left a month to do something with. My major is English. Which I will be finished with in 1 year. I just want us to be prepared for life after I get out of school. I want to know what to do with our money. I understand our income is not through the roof by any means, but I just want some guidance for what direction we need to be headed in.
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Sun Jun 12, 2011 8:05 pm |
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carlyjo14
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Also we have absolutely no debt, no kids, no mortgage, no rent, no car payments. We literally just pay to keep the lights water and cable on. Instead of spending money on stupid stuff, I want to put it in savings which is the plan. But I don't know what specific money goals we should be working towards...like a house down payment, retirement, emergency fund...etc! I don't know how much should we put away for stuff like that. I guess maybe that was more my question...what should we be putting money towards?
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Sun Jun 12, 2011 8:11 pm |
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oldguy
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quote:
But I don't know what specific money goals we should be working towards...like a house down payment, retirement, emergency fund...etc! I don't know how much should we put away for stuff like that. I guess maybe that was more my question...what should we be putting money towards?
The big goal, longterm, is your familly wealth - ie, your Net Worth. Whether you keep that wealth in house equity, retirement accounts, kid's college fund, is not as important, but it is good to diversify among all of them. Using your $1500/m as an example - if you invest that in a normal market index fund that grows at about 11%/yr, you should have $335,000 in 10 yrs, $1,300,000 in 20 yrs, and $4,000,000 in 30 yrs. And that's what it takes - slow and steady discipline for years. You are already controlling the big problem that ruins family financing - late model cars. 
Let's look at 20 yrs - the $1.3M, You could have $250,000 in a house, $10,000 in an EF, $300,000 in a taxable account, $400,000 in your 401k accounts, $300,000 in your Roth accounts, and so on. The three account types have different tax features - the 401k has tax deferral and you pay full tax at retirement when you sell. The Roths are taxed now, but the money is tax-free when you retire. And the taxable account is for your pre-age 59 1/2 business such as houses, cars, rentals, college costs, early retirement, etc.
'English' is a softer major, not as marketable as the applied skills degrees - so you probably can't get a $40k job right out of school, it will take some time to find a job and grow into a niche that you excel at - are you planning to teach or work in industry?
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Sun Jun 12, 2011 8:40 pm |
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coaster
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quote:
Originally posted by carlyjo14
Our monthly expenses now total about $500......Also we have absolutely no debt, no kids, no mortgage, no rent, no car payments.
BUT .... it's not going to stay that way. So I think that you're jumping way too far ahead in your line of questions. If you take things one step at a time, the next step is generating more income. There's no point in planning what to do with excess money if there won't be any. For right now, put the excess money in something safe, because you'll be needing it. Money market fund, certificate of deposit, savings account. The rule of thumb is any funds you'll need in the next five years should be in non-variable price assets. Some may be comfortable with a shorter time frame, with the understanding that they may have to take a loss if they need the money when the market is down. Most people don't want to take that risk, however.
For the longer-term, pay attention to the numbers in oldguy's post to see what kind of wealth can be created over decades of saving and investing. But.......you're not going to have excess cash flow until you take step #1 and that's to generate enough income to pay the bills and have money left over. $2000/month won't. You're not going to be in that rent-free duplex the rest of your life, now, are you? 
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Sun Jun 12, 2011 8:52 pm |
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carlyjo14
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I am hoping to teach at some point, but I will have to finish my Masters before that is a possibility, and eventually a Ph.D to teach at a university level. But probably more in an editing position is what I am hoping for. But...I am going to be realistic and know those types of jobs are not in abudance.
My boyfriend is in a position where he has potential for advancement within the nest year. He works for a Right of Way clearing company where a foreman job would include him getting a truck and not having to pay for gas. So we would be able to eliminate his vehicle now as well as the insurance for it.
I feel like right now is the time when we should be saving since we have the ability. I guess I just want to make sure we are on the right track
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Sun Jun 12, 2011 8:57 pm |
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oldguy
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quote:
a foreman job would include him getting a truck and not having to pay for gas. So we would be able to eliminate his vehicle now as well as the insurance for it.
Well, every little bit helps - but his insurance is probably $1000, gas is $3000, maintenance/ownership $3000, so that saves $7000/yr. What he really needs is a plan to get his income from $24,000/yr to $40,000 or $50,000.
As for an editing job - in Industry we had a Technical Writing Dept. Engineers wrote design proposals for a new product design. We would prepare a Company Book, Design Description Book, Cost/Schedule Book. 3 or 4 engineers contributed to each book. The Tech Dept assigned a Book Boss to each book, story-boarded the layouts on the walls of the 'war room', organized the work, rewrote sections, edited, put into magazine format, spotted illustrations that broke up excess text, etc.
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Sun Jun 12, 2011 9:39 pm |
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carlyjo14
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Obviously, more income would be ideal but right now its just not possible until I am out of school. He is 21 and I'm 23 and he has only been working with that company for going on 3 years, he hasn't really had a chance yet to get into that salary range.
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Sun Jun 12, 2011 9:53 pm |
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oldguy
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The Tech Writing jobs that I described above were paying $50k to $70k when I retired from engineering 12 yrs ago. The major Defense and Space contractors have a continuous flow of Design Proposals in process, the proposals can be company-to-company as a big co hires several small companies perform specialized portions of a design (eg, the optics in a missile) - or they can be company-to-agency, ie the pentagon, NASA, DOE, etc.
Industry is performance-driven rather than credential-driven. Ie, Industry is interested in what you can do and bases your pay on how you perform. Conversely academia is mostly concerned with credentials - MA, PhD, no. of post-grad credite, tenure, etc, and pay is based on that. So, if you decide to do editing, try to market your BA before you invest more in postgrad work.
http://en.wikipedia.org/wiki/List_of_United_States_defense_contractors
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Sun Jun 12, 2011 11:26 pm |
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carlyjo14
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Thank you for the career advice. Those options sound like a good thing to look into! I really appreciate it!
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Mon Jun 13, 2011 12:33 am |
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stechweb
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I don't have an idea about the living cost in your country. But, the main thing is we have to think about how to reduce our expenses to archive our targets. We are trying to earn more. But we don't have limitations about our expenses.
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Sun Jun 19, 2011 1:50 pm |
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robmejia
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Why not invest your money in Long Term Care plan? This way you get to protect your asset and avoid depleting your savings when the time comes that you will need daily living assistance.
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Tue Nov 15, 2011 8:42 am |
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