Prefacing this by saying that I grew up in an unstable and low-income household with extremely bad financial habits. Unfortunately those bad habits rubbed off on me and I made some pretty bad financial decisions (which I also accept fault for not recognizing at the time) at the start of adulthood and am now playing catch up.
I'm nearing the light at the end of the tunnel in terms of paying off debt. I also went from making very little money at a close to minimum wage job to more money than I thought possible in a pretty short amount of time. Now I'm facing a situation where i'll have some money but am pretty financially illiterate beyond this point. I've only ever known crushing debt and a balance of 0 in my account, a savings or investment strategy is a foreign concept to me and I'm not sure where best to start. I don't really have any family that I can ask for help (or that I'd care to disclose my income to for obvious reasons).
My current situation:
- Dependents: Fiancé (who is pretty frugal and a stay-at-home mom), 1 yr old daughter
- Income: $8k/mo take home after taxes ($5k from salary, $3k at least from side business)
- Savings: $600 (been dumping pretty much everything on my high interest debts)
- Mortgage: $1850 (including homeowners insurance, PMI, etc)
- Cars: $510/mo (2 vehicles, $14.6k total remaining balance) - will drive them until they die and no plans on buying new ever again
- Student Loans: $270/mo ($5.7k Sallie Mae remaining, $3k govt remaining)
- Credit Cards: NONE - F#$% YEAH just paid off $10k and proud of it (sorry for humble brag)
Total monthly expenses including groceries, gas, insurance, misc etc comes out to about $4k, leaving me with $4k+ left over monthly
My Proposed Strategy:
- Focus on paying off vehicle we don't drive and also drop insurance - then leave in garage as a backup or sell. Savings w/insurance: $330/mo
- Pay off student loans (about the same 10% interest rate as car) Savings: $270/mo
- Focus everything at that point towards a goal of $50k in high yield savings (~6 months net income) and then $1k monthly after
- Pay an extra $1.5k/mo on mortgage and get rid of PMI ($196/mo which will also then be rerouted to principle) and pay off hopefully in 1/2 the time
- Invest the remaining ~$2k+/mo? Company doesn't offer 401k, not sure where I should start on my own TBH
This is really all just based on what in my head seems like a good course of action, but this might all sound like a terrible strategy and I don't purport to have the knowledge or experience to defend it... One thing I'm actively trying to avoid is ruining a good thing, especially where I'm so out of my element and have a history of bad financial decisions. Any criticism/advice is more than welcome.
Note: I am no longer a lavish spender and overspending isn't an issue anymore, lessons have been learned in that respect. Now just looking towards the future and hoping someone can help!
Submitted August 18, 2020 at 07:56PM by spider_web_developer https://ift.tt/2Q7nrI6
