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what an exciting nite...the girlfriend and I spent two hours going over the next three years budget

vi edit

vi edit

Elite Member
Super Moderator
😕

Sheesh! We spent two hours figuring out what we want to get accomplished over the next three years.

Within three years of graduating college I'll have -
1) paid off close to $16,000 in student loans
2) paid off two cars worth around $22,000 for the two of them
3) put 4k a year into IRA's (2k a piece for each of us)
4) and after 3 years of plunking away at loans we'll have about 15k to put down on a down payment twords a house.

Owing people money IS SUCK!

Still seems pretty good to have all of that paid off by the age of 25 though.
 
Hang on to the student loands. You'll make more money drawing interest if you invest the money than if you pay them off. My mom and dad kept paying theirs for years even though they had the money. Just left it in mutual funds and stuff.

I'm lucky enough that I won't be in debt due to college when I graduate, so I'm not worrying about that. Already have about 2k in an IRA that I use as a tax shelter.
 
perry, if I played the market, yes I could probably make more money if I just banked the money that I have earmarked for the student loans. Unfortunately, at this time in my life, I do owe a great deal of money and can't afford to put it in a risky to semi risky investment.

The money for the student loans will be put into a fairly secure mutual fund collecting around 3%-7% APR. Even at 7%, the interest in the mutual fund is still lower than what the student loans are at (about 7.5%)

I could maybe go for a market index and shoot for 10% if I'm lucky.

It's also just encouraging to know that you don't owe X amount to somebody and it's also one less check that I have to write out each month.
 
Just keep your eyes on the light at the end of that tunnel. I know it is frustrating, I am 27 and hopefully going to finally buy a home in the next year. It is so hard when you are trying to get things paid off, only to have to go out and spend it again on something else.
 
I'm 27 and just bought a house last year. Alone. Can you say "house poor"? I'm just now starting to get enough money to rebuild a computer system. Need a permanent roommate.
 
<<3) put 4k a year into IRA's (2k a piece for each of us)>> Best line of that whole post. Try to pile as much money into that as you can early on. It may seem like a pain, but now is the time for many reasons. Even if you have to slow down on putting money into those later, that money in there now will grow like mad 🙂
 
My wife and I sat down this past weekend and worked out a budget for the next 15 years.

House note = 1.5 payments extra per year, Means a 30 year note will be paid off in 16 years
50 per week into a money market
2K per year per each of us into a ROTH IRA
50 per week into our savings, then when that is substantial, we roll it into the Money market
We each have a 401 K of about 15 thousand each

We pay 50 a week to each of the credit cards just so the intrest is not so much.


We are very cash poor at this time, but in 18 years (if we have kids), then we will be able to send them to college. But in GA, we have the HOPE grant/scholarship.

My plan is to send my child to a tech school for the first 2 years, have them get an industry CERT such as MCSE, cisco etc, then go to a reg 4 year school with some experience under their belt so they are ahead of the game.
 
vi_edit and visgf, you're a damn smart team. Most of the people your age that I know are thinking about buying a new camcorder or other nonessential because &quot;it's only another $5 a month!&quot; and if they miss two days of work because of illness they are panic-stricken about paying their bills. You already recognize that owing people money is suck. How I wish more people knew how important it is to stay out of debt (to the extent possible, of course).

Things may happen in the next three years that require updating your plan, but remember what Jack Welch (GE president) said: Plans are useless, but planning is essential. It's the act of making the plan that gets you to explore options and decide what is important to you. And if you get thrown a curve, you are much better able to react.

I hope others here will go through the process that you two did. Money and the handling of it is probably the biggest cause of divorces.

One closing tip - remember to have some money set aside (3-6 months salary is often recommended, but I think an amount that comes to 3 months of bills is more appropriate in your case) in an emergency fund before having all your spare money in an IRA.

I'm glad you posted this for others to see.
 
Paying loans is suck. I'm cranking hard into mine to get them out of the way but if not for them I could finance a very very nice vehicle.

Vi_edit your plan seems similar to mine. I'm the same age I guess I probabaly owe a similar amount as well and unlike most of my peers I'm trying to pay loans/save for the future instead of living pay check to pay check. When are you getting married though? Seems that if you're making these plans you might as well go and do it!

kranky Thats what credit card is for 🙂 I have a $3k limit, and anything I use it for I pay off each pay check so if I needed money/was out of work visa would back me up for a short while.

Basically I only _need_ about 50% of my take home income to cover rent/bills/all expenses (gf won't be working for another 18 months but then we'll have double the income), and I stick another 30-40% or so into my loans and 10-20% into a retirement/kid's tuition/house downpayment (not that I'll even be having kids for another 5 years) secure Mutual Fund.

Its funny because a year or two ago I was throwing in a good $1000-1500/year into computer upgrades always looking for ways to spend my money and now that I'm making more than the average adult I have little or no desire to buy any toys whatsoever!
 
vi_edit, Sounds like a good plan, I agree with ratkil, I think you would be better off in the long run if you fuly funded your IRA each year, Roth I hope. I'm sure you know this but if you save 2000/year from age 20-30 and then stop you will have more money that someone who invests 2000/year from 30-65. This assumes that all investments earn the same rate of interest. Doing this may put off your house purchase for a fear or to though. Also rember they are talking about raising the maximum IRA investment to 5000/year.
 
Our plan is in three years to be able to apply for a mortgage and when the financial officer says - &quot;What is your monthly debt?&quot;

We can cooly look him in the face and say &quot;What's that?&quot; 😉

I know that there are always things that cannot be figured into the equation such as serious illness, kids, natural disasters, ect., but it's a start anyway.

We also never planned on a salary increase either. This is assuming that the both of us make the same amount of money over the course of the three years.

Also, if some of the morons over in D.C. would pull their heads out of thier rears, and give me back even 5% of the $$ that I pay into social security, that would be almost another $400 a year that I could plunk down into the IRA.

After saving all that back, we still have about $600 each month that will drop into the &quot;general fund&quot; to be distributed as we feel 🙂

All of this, and it doesn't take into acount that visgf's salary will nearly triple in five years :Q

Within five years time she will go from being a pharmacy tech to a Dr. of Pharmacy. Can I hear a KA-CHING? 😀
 

Hey, money is suck. I hate managing it (especially when I could be playing CS), but sometimes you have to.

I graduated college 7 years ago. I finished with 22k in college debt, and another 8.5k in accumulated credit card debt.

Today, I have no debt. When you pay off debt, ESPECIALLY credit cards, you will be surprised how fast money builds back up into your bank account. Bite the bullet and get rid of as much debt as you can and you will know true freedom.
 
Also, No telling where your salary will go in the tech industry.

One piece of advice on purchasing a house. Buy a home that is almost near the limit of you approval. WHY? Because then it will appreciate faster, plus, more money will be going into an investment rather than into things that depreciate such as cars, home eletronics, etc. Also when making a house payment, pay an extra 25 or 50 per month. This reduces the priciple, and reduces the amount of interest you pay. You won't see any big deal the first few years, but after a while, it pays off.
 
And Skoorb, I hear ya man! 12 months ago I was probably dropping $100 a month in computer stuff. At the time I had an income about 1/4th of what it is now. In three months time, I've only spent about $200 on something that was only semi-computer related. And I consider my digital camera one of my more useful computer purchases.

I think a lot of it is the fact that with my new job I get to play with all sort of gadgets and gizmos and it sort of satifies that desire to play with the latest and greatest, or, I may have just gained some maturity and realized what a waste a $300 video card was 😕....or maybe it's a little of both.

One other thing that has Really really really helped put us in the situation that we are now is this - CUTTING UP THE CREDIT CARDS!

At one point I had about $3000 racked up on three different credit cards. Well, all credit cards have since been cut up and melted, and I have about $500 left to pay off on them.

Now, my philosophy on it is pretty much - If I need a credit card to buy it, I couldn't afford it in the first place.

Instead, we use a check card that automatically takes it out of the checking account. Cutting up the CC's has single handidly eliminated my computer spending. I just wish that I was smart enough to do that 2 years ago. 🙁 Oh well, lessons hard learned are lessons hard forgotten.
 
ulfwald

When we go to purchase our next home, we are definitely going for the 15 year plan. When we looked at it, the difference between a 15 year and a 30 year mortgage was like $350 a month. If we can afford it, I really see no reason in not going for the 15 year. The interest we save would be enourmous.

A year ago I made a very stupid car purchase. I love the car, and the payments are fairly affordable, but I didn't know what I was doing at the the time and went by how much I could afford a month instead of how much I could just flat out afford.

I will never in my life take out a 5 year lone on a vehicle. Hell, I have no intentions of ever taking out more than a three year loan on a vehicle. The interest that they suck up off of you is crazy!

I've just made some very stupid decisions in the past and hope that some of the things discussed in this thread will at least help somebody around my age and in my situation to realize what they can accomplish when they plan things out.
 
vi_edit Thats for damn sure about the CC. When I got out of school I had my CC maxed (mainly on computer items like you), once I finally managed to get it down to zero (came upon some money and did it in one chunk because all previous efforts to pay it were not going so well), and my gf's was also down to zero we both put them in a block of ice in the freezer!

We had to melt them out to order supper one night, and I like them as back up in case we need money due to unemployment, but I now have hidden my gf's card somewhere in the apartment and she has hidden mine, so other than montly bills for gym/cable that go onto it as far as I'm concerned I don't have a credit card. Not being in debt for it is [tony tiger]greeeat[/tony tiger].

Our plan is that once she is working in 1.5 years pay off loans a bit more, then a year or two later get a nice house. Early and responsible planning (more so than income in many many cases) is the difference between being 26 and paying on a nice house with decent cars and being 36 and barely scraping by.

Almost anybody can accumulate a million in wealth (alone even, let alone the amount if your wife is helping) over their life if they truly want to and put in a disciplined effort towards that.
 
You might also consider taking a 30-year mortgage and paying it off as if it were a 15-year. You'd then have the ability to drop your payment back to the smaller one if you ever have a need to (illness, disability, need to help support parents, whatever). As long as your mortgage doesn't have any prepayment penalty (and most do not) you can pay as much extra as you want.

The tradeoff is a slightly higher interest rate - but you can do the math when the time comes to see if it's worth it to you.

Your point on the 5-year car loan is another good one. There's nothing more crazy than driving a $15K car on which you owe $19K, something that can happen with those long vehicle loans. Someone comes along and totals (or steals) your car and you are screwed.
 
kranky

True...in some cases though if you can get a low financing rate (for instance, the toyota one around here does 0.9 financing), then the interest over that period is quite negligible - in those cases its better to pay over a 5 year, because the money you save as opposed to, say, a 2 year is money that can go into interest-accumulating investments for yourself!

I'm not sure what most dealerships give as a financing rate...
 
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