Dear r/personalfinance,
Long time reader, very irregular poster here.
I am 25 and I have been reading this subreddit since I was a freshman in college. The good advice here prompted me to start budgeting young, open a Roth IRA at 19, and take real control of my finances.
It's relevant to the story that my parents and family members have atrocious financial habits. No savings for retirement, living well beyond their means, drowning in credit card debt. For the last 10 years, I've seen them struggle over and over again with the stress of not being able to pay bills or to achieve their goals. None of them budget, and nobody wants to hear my advice. I came from an impoverished household because of the bad decisions of my parents. I got through college on a full ride (in part due to merit, in part due to my parents' terrible financial state), which was a huge boon to my finances.
Fast forward: I'm 25 and a PhD student. I make 60,000 a year between my grad stipend and my side consulting/tutoring work. My post-tax income is maybe 45,000 a year (self employment tax + state taxes take a big bite), and yet I easily maintain a better lifestyle than all of my family because I budget carefully, save, and invest. My liquid net worth is around $50,000.
Recently, I decided to take a big step and take 7 months off grad school to travel. I have always loved to travel and have used a lot of my budgeting to accomplish smaller trips (in the 2 week to 2 month range). The opportunity to put my life on pause and travel presented itself, by timing the academic job market right and with the blessing of my advisors. The catch, of course, is that a trip for two (with my soon-to-be fiancee) is $25,000.
But you know, I can afford to spend $25,000 on this once in a lifetime trip. It will certainly hurt my net worth. But $15,000 in Roth contributions + $10,000 cash when I get back, plus an understanding that my household income will clear 150k in the next few years, means that this is something I can afford. My girlfriend and I have planned to save at least 50k per year from when we get back to when we buy a house in the next 5ish years.
Personal finance is not r/frugal. This subreddit is not about the way to spend the least money, it is about the way to finance your personal life, to leverage good personal financial practice to accomplish your goals. I feel so secure in my current financial position and incredibly grateful for all the advice this subreddit has provided. The freedom it has provided has given me an amazing opportunity to pursue my dreams in ways that would otherwise be entirely impossible.
Thank you all!
Submitted April 26, 2018 at 01:47PM by jetson_x https://ift.tt/2Hy2dxe
