Hello, friends, and thanks for stopping by. I'll do my best to make sure your stay is as comfortable and entertaining as possible.
So, long story short, grew up poor-ish, hard-wired as a saver, spent most of my adult life in school/grad school (so no stranger to being broke and instant ramen), did some industry work for a few years with highly volatile spurts of income, and just landed an actual job (in academia, if you nosy bastards must know) this past summer. I realize I'm in a much better place than most (and have the war-scars of decades of sacrifice to show for it) but have honestly just never sat down and considered what my money was doing collecting dust in my insultingly awful returns savings account.
I'd like to turn that around, have never done anything like this before, and am asking for your help, reddit.
While pretty ignorant on most money things, I have been doing my research over the years (mostly here - took an in-depth look through the wiki and related articles, tons of Dave Ramsey podcasts and other suggested youtube videos, etc.) so I feel like I have a vague structure of a plan in mind, but am very clueless as to how to take the steps to implement it.
Here's some background numbers:
Monthly Net Income
Job 1: $3,834.30
Job 2: $1,161.64
Job 3: $354.48
Total: $5,350.42
Job 1 is my main M-F 9-5 (well, almost always like 9-past midnight and weekends...) which has a 401k (or a 403b? 401a? whichever one applies) attached to it where if I put in 9% they put in 3.5%. Forgive me if I don't know the correct terms, just reading things off their pamphlet. Annual gross is $56k.
The current number does not account for retirement withholding, but is otherwise post-tax and all other mandatory deductions.
Jobs 2/3 are side gigs with relatively steady income as listed, but no benefits attached. Gross pays are, respectively, $18k and $5k annually.
Monthly Expenses
Rent: $750
Insurance: $80
Phone: $60
Internet: $55
Water: $50
Electric: $35
Misc: $20
Food: $200
Gas: $50
Total: $1,300
This is obviously pretty bare bones, and does not account for savings, investing, or any discretionary/fun spending as of yet. I suppose I could shop around and cut $20 or so off the phone bill, but the other utilities/insurance are pretty set in my area. Just trying to get the baseline out on paper here.
I've tried various times to really dig into a fancy budget spreadsheet (and have found this one from here the most friendly/helpful but also complex and confusing) but generally give up when faced with the confusion of deferments and contributions and tax withholdings and all these other things I don't understand. I hardly need one to keep spending in check, as the only thing I'll ever likely splurge on is a $2 slice of pie at the grocery store now and again. Again, I'm a hard-wired saver and basically deathly allergic to spending money on nice things.
Savings
That all being said, and accounting for a mostly ignorant "you might not have a job next month, better save everything in case the apocalypse comes like tomorrow" mentality and living like a peasant for decades, I have a bit over $140k in savings. I know, I know... but wanted to mention that as well as it surely plays a part in my next steps.
Other stuff
I have no debt whatsoever, a credit card with a ~730 credit score according to my bank, own my car, rent my apartment, and am in no rush to buy a home anytime soon. I'm single, have maxed the past two years in a Roth IRA ($11k), have no other retirement accounts/investments, and am in my early 30s. I have a HDHP through my employer (which I'm under the understanding allows for an HSA) but am the healthiest person you've ever met and haven't been to the doctor in decades.
Goals
Honestly, this is the hard part, and new to even think about. I'm not much of a traveler, don't have any terribly expensive hobbies, and, again, genuinely do not like spending money on "things". One day, I'd like to be able to plan for a family and a house, but am in no rush towards either of those. Other than that, for at least the short term, I'd like to catch up on my retirement planning as I've all but ignored it through my 20s.
This may be the opposite of a goal, but I'd also like to "force" myself to spend some money now that it's more-or-less stable for the first time in my life, as I don't want to be the crotchety old man sitting on a million bucks yelling at the kids playing in his yard because those tulips cost 40 cents each. So a small "goal" I have is to build a healthy and controlled relationship with spending money on things that actually improve quality of life and not feel sick to my stomach guilty about it anymore.
Regarding budgeting and the saying to "give every dollar a job", can you recommend a vague layout of where my income should be going? Do you have personal "rules" about discretionary spending, savings goals, a certain % of each paycheck going into stocks, anything like that? I'm simply not used to this much coming in steadily and reliably, and have no idea what to do with it past buying groceries.
The plan
Thanks to the wiki/prime directive and all of the wonderful posts and comments here, I have a fuzzy sense of a plan, but also have a lot of questions about specifics.
I'd like to keep $10k in an emergency fund, likely in a high-yield savings account (reddit seems to have nothing but wonderful things to say about Ally). Is this the correct place for a true EF - aka is that liquid enough in case something happens (car repair, medical issue) or should it be more directly available (checking account etc.)?
Retirement is the big one that I still find confusing. I plan to contribute the max to my IRA every year, and contribute the max amount from my main job to take advantage of full employer matching. According to the budget spreadsheet I linked above (which does calculations for such things) that looks like just over $5k annually into that. However, the flowchart/people who know what they're talking about says the max contribution is $18k total, regardless of % of gross pay.
Here's my thought process: job 1 is the one with the benefits. But the annual max for 401k contributions ($18k) and IRA contributions ($5.5k) almost exactly match my gross pay for jobs 2 and 3. So, essentially, if I contribute the max allowed amounts into my 401k and IRA from job 1's salary, and use jobs 2/3 to "replenish" that almost evenly, it's like I barely miss the money and the effective full force of job 1 goes into my bank account. Did that make any sense to anyone else?
Also, HSA looks to have a $3,450 max.
I'd like to hit these three fronts hard and early - is there any reason to not completely max them all out these first few years barring some emergency or dramatic change in expenses that I can't see happening? Also, when/how do I do that? I'm sure I can call HR, but would love to wrap my head around how the process works and if there's like a yearly deadline that you just write a giant check for whatever your 9% doesn't account for. Should I tell them to put in 9% immediately no matter what?
Last but not least, I definitely want to start investing, but know next to nothing about it (and if we're being honest, really just don't care about the stock market and the finance magazines and the ins and outs of trading - I just want my money to magically make more money!) I understand the value/safety of diversification, compound interest, and playing the "long" game - not pulling out at the first sign of a dip. Also, I'm a huge DIY-er and dislike the idea of hiring an advisor/planner. With the amount of savings I currently have collecting cobwebs, any advice on how much should go into the market, and where? If a house down payment is in the cards in the next 5 years, should that money go in the market as well or stay accessible (HYSA or CD)?
The end?
A cookie for making it this far - that got much longer than I intended, and basically included everything but the kitchen sink.
I would be immensely appreciative of any comments, advice, links, resources, or otherwise discussion as to any part of this - even if it's to say I'm doing things completely wrong or in an amazing place - I have no idea! I'd just like to educate myself more on all of this, wrap my mind around a few complicated and confusing things, and gain some assurance that I'm doing my best to plan for the future.
Thank you SO much for your time!
Submitted October 20, 2018 at 08:15PM by slackademic40 https://ift.tt/2q4vgS6
