I have found myself in the position of starting over both in life and financially at age 34. Obviously, I need to catch up. Between a divorce and another legal matter, my savings and retirement have been nearly completely wiped out. These events have taken the better part of 3 years to resolve but are now finally nearing a close. With all of that behind me I know I need to get back on track. I'm well aware of the guidance as to what I should have saved at this age, and that I'm nowhere near it.
That said, I've started a new job fairly recently that gave me a bump in salary and also provides a pension. I've never had a pension so this is brand new to me, and I'm not really sure how they work. It was explained that my company contributes 5% of my salary into an account and I can go in and look at the cash value.
I am single, with no kids, which I suppose is a positive when it comes to financial planning/saving at this point in my life. I have a few pointed questions, but I wanted to lay everything out to answer anticipated questions up front.
I've re-focused / updated my use of YNAB for the past 4-5 months and have automated all of my savings with the exception of what I describe below in asking for advice.
Here is my financial picture:
Accounts:
- Checking Account - $6,000 (used to manage my budget / bills / etc)
- Savings Account - $14,000 (emergency fund)
- 401k - $4,500 (Contributed since September, drained prior to this)
- Pension - 5 % of annual salary contributed by company - Website estimates $4,564 monthly benefit but I have no clue how they arrived at this figure. I'm not factoring this in to be safe as, again, I'm not sure how they got to this figure nor if pensions will even be a thing when I retire.
- HSA - $2,000***
Compensation*:*
- Base Salary - $129,000 annually (24 paychecks per year = $5,375 gross per pay period)
- Bonus - $21,000 (Just announced/confirmed, but is very close to guaranteed; Bonus = 16% of annual salary unless I really screw up (less) or the company has a really good year (more) - Pays out in March 2019 - Negotiated to receive full bonus in my first year instead of pro-rating for the portion of the year I was at this company)
Debt
- Car Loan - $19,000 remaining balance (35 months remaining) at 0% interest
Monthly In-flow (Take-home)
- $6,200 combined (Paid on 15th and 30th) - After 401k and HSA contributions
Monthly Out-flow (Budget / Expenses)
- Rent - $1,694 (11 months on lease remaining) - Obviously high for the Midwest but this is the only property management that accepts my breed of dog. I also really enjoy the area. *Note - I'm not getting rid of the dog.
- Car Payment - $550 (35 months remaining) - Financed at 0% - Current low end KBB value of car is $35,000 (~$19,000 remaining on loan)
- Car Insurance - $140 ($1,680 annually but I set aside this amount per month and pay it in January) - Speeding tickets :(
- Gas (Car) - $150
- Groceries - $300
- Medical / Dental / Health - $300
- Pet Food / Supplies / Vet - $150
- Electricity - $100
- Dining Out / Work Lunches - $200
- Cell Phone Service - $90
- Internet - $70
- Subscription Services - $25 (Netflix / Amazon Music)
- Miscellaneous - $500 (Random stuff that I budget for sporadically e.g. Christmas gifts, unexpected vet visit, car trouble, etc.) - I almost never use anywhere near this amount and I just transfer it to savings.
Total Expenses - $4,269
Current Savings Plan
- 401k - $791 per paycheck (Max I can contribute to arrive at $19,000 next year) - Company matches 3.5% of salary
- HSA - $145 per paycheck (Max I can contribute to arrive at $3,500 next year)
- Pension - $269 per paycheck (Contributed on my behalf, I don't / can't contribute to this)
- IRA - $0 per paycheck (Currently) - See request for advice below...
What Next?
After my expenses / bills and 401k / HSA contributions, I am left with an average of $2,100 per month. Looking for thoughts on where this should go:
- Emergency Fund - I know I'm low here and realistically will pad this before I do something like saving for a house
- House Savings - Townhouses around the area I would love to live are in the $280k range so I have a lot of saving to do before this would become a reality.
- IRA / Roth IRA - I am pretty clueless on this one but I know some guidance on this sub says it makes sense to contribute to an IRA beyond my company match. I'm not sure if my income level complicates this so I haven't messed with it in the past. Advice would be appreciated. This would be maxed out pretty quick either way I think.
- Car Payoff - I know $500+ car payments are not a big hit on here so maybe it makes sense to pay it off? It's at 0% interest and realistically I could sell it almost immediately if I needed to in an emergency due to the considerable equity in the car at this point.
- Other ideas? Am I completely missing an objective?
Questions
- Right now, I am paying out of pocket for my roughly $250 worth of medical expenses each month despite having money in my HSA. I was planning on treating my HSA like another retirement account that could also be used in the event I get really sick at some point over the next 30 years)...Is this wise? Or should I pay my medical expenses with my HSA funds?
- I receive my bonus of $21,000 (minus taxes) in March. Thoughts on where to put this?
- I am honestly not in a major hurry to buy a house. I'm not sure where my personal life is going to take me and if I bought anything in the next couple of years it would be a townhouse / condo downtown. I have no idea if that will fit my lifestyle 5 - 10 years from now so I'm hesitant to make that commitment. Is renting for the foreseeable future a terrible idea? Is there a point where I just need to make a decision and commit/buy?
Again, I acknowledge that I am way behind where I should based on commonly accepted PF theory. Hopefully we can keep this constructive as I've beaten myself up a lot after winding up back at square one. If not, maybe some tough love is what I need.
Submitted November 29, 2018 at 04:23PM by StartingOverAt34 https://ift.tt/2DTdppn
