This is my first time posting on Reddit and really needing some perspective. Have been obsessing over my finances lately and Reddit has been my go-to for nearly everything.
I'm 33 and I make about $45k a year after taxes, which adds up to $3,750 per month. My income fluctuates as a contractor and since I work for the school district, since there is a gap in pay during the summer. I tutor and do odd jobs during the summer to make up for the gap.
I'm $107k in student loan debt as a direct result of placing my loans on deferment for a few years. Interest was initially 7.8% on some of the loans and it's now 6.8% on the entire amount after consolidation. All this got me a lovely graduate degree.
No credit card debt, but there are three charge-offs that debt collectors have been after me for a couple of years now. One of which I pay $980 per month toward (only 3 months left), the other two I have completely ignored them until I can actually pay them.
I have $3,000 in my Roth IRA.
I entertained the idea of buying a home with the intention to reduce my monthly expenses by having a low mortgage and renting out a part of the house for extra income. I did the whole pre-qualification thing, lender said my income for the past couple of years was too low as a contractor so he suggested I pay higher taxes for 2016 and 2017 so that I can be ready in 2018 to purchase a home. So I got slapped with a $12,000 tax bill for 2016... I still have not made it part of my budget and expenses. That is another mind-fuck I'm dealing with later. Also, my student loans was the sole cause of me not getting pre-qualified because the total amount would have added about $1,000 onto my expenses, making my debt to income ratio severely disproportioned. So my student loans are killing me, slowly.
My personal monthly expenses amount to about $1,255 which includes:
- Phone: $75 ($60 base, $15 taxes and installment plan for a 2-year old phone);
- Car Insurance: $160
- Car Expenses: $325 (Gas $50 per week, Tolls $100 per month, Service $25 per month; Oh sunny South Florida, where you pay lots for the Sun);
- Work-related software: $35 (planning on cutting this fat out of the expenses);
- Gym: $30
- Free Money: $380 (this is seen more as emergency money)
- Personal loan payback: $250 (0% interest!)
Shared expenses: $1,425: I live with my boyfriend and we each contribute to our shared expenses. He makes less than I do so we divided our shared expenses ($2,165) by our total take-home income ($5,650) to come up with 38%. Each of us needs to contribute 38% of our monthly take-home for a fair contribution to expenses. For me, that means $1,425. For him, $722. Side note: I am constantly trying to help him to get a higher paying job to make both our lives easier, but that's not so easy here... that will be the topic of another post one day. --- The shared expenses includes rent, utilities, groceries, our pet's insurance and care, home products/supplies, internet, and emergency money.
So basically, I'm dishing out $2,680 of my $3,750 income, which is about 71%. So there's a measly $1,070 left per month.
No emergency fund has been established, my loans keep raising about $7,000 per year due to interest, and I'm literally living paycheck to paycheck.
Going back to my question: Should I dump the $1,070 into my student loans each month in attempts to reduce it, or should I build an emergency fund first (if so, what amount)? Honestly, I am a bit weary about focusing on the emergency fund because I'm so afraid of the accruing interest on my student loans.
It just seems like an endless rabbit hole. Reddit, please help.
Edit: I work full-time at the schools, which is the bulk of my income, and work 3 inconsistent side-jobs that help make-up for summer gaps.
Submitted March 12, 2017 at 10:02AM by intot http://ift.tt/2mWLMDP
