Looking for assistance in budgeting/finances, trying to maximize my $$
 

Hi all, first, I've been reading the finance forum for awhile, a lot of great advice (for the most part ;) ) in here, appreciate all of it....

Here's my situation:

Mid 20's, single, no debt - no car payment, live with parents for now.

I recently got a new job (2 months), job is good, make ok $$ (about 45K in an entry-level IT support role which I guess is fine for now, we'll see what the future brings)..

I try to maximize my paycheck as much as I can- am contributing to 403B (employer matches first $500 in contributions 100%, then a 50% match for up to 3% of income).... Currently I'm contributing 10% of my paycheck there. Also am utilizing a Flexible Spending Account for a little bit of further savings...

For now I'm just saving my $$ in a checking acct, but will be moving it to an interest-earning account (like Ally or something like that) in the near-future...

My finances are recovering from an extended period of unemployment where I burned through most of my previous savings, but luckily did not incur debt (but had to move back home w/ parents, and things like that).

I have returned to school (self-financing that) to finish up my Bachelor’s degree (i know, i know... mistakes made earlier in life, don't own a time machine, just have to make the most of it now) to improve my prospects down the line...

Besides continuing to contribute 10% to my 403B, I’m planning on maxing out my Roth contributions this year (5K of my post-tax income, as I understand it)…

So again, a recap of my finances:

Roughly $1100 take-home pay per pay period (every 2 weeks, after taxes/benefits/FSA/10% 403B contrib) – at 26 pay-periods a year, that is 28.6K/yr.
My biggest current reoccurring expenses are tuition (expecting around $13K/YR expenses for that, about 1.5yrs left to go) and gasoline (drive roughly 350miles/week, avg ~27.5mpg, gas averages around 3.50/gal, so ~$45 a week goes towards gas x 52 weeks a year = another 2340 gone. The rest: Cell Phone bill, @80/month = 1K/yr. I’ve tried to minimize the rest of other my expenses, but I enjoy socializing with friends/coworkers, plus keeping up with the professional workplace (clothes, shoes, food for occasional group lunches, etc) is about $150/month (thanks to slickdeals I save as much as I can on these costs but still it adds up)

So lets look at the numbers again:
28.6K/yr take-home pay
-13K/yr Tuition
-5K/yr Roth Contribution, which I will try my best to max-out yearly
-2.4K/yr Gas
-1K/yr Cell (Between my sisters and I we pay for our own and cover our parents’ phone bill)
-1.8K/yr “other” expenses (Groceries, Food, clothes, a movie or baseball game here or there)

So my actual yearly savings will probably end up being a measly $5400/year.

Also I haven’t even gotten to gifts and other expenses like that, and I’d like to splurge on myself a little and perhaps get myself some new toys (rebuild my own computer within the next year) and perhaps an Ipod of some sort (we can listen to music while working, and it would help the day to by a little faster)…

At the same time, down the line, at some point in the next couple of years or so, I’d like save enough $$ for a nice down-payment for a condo (obviously at this rate it wouldn’t be wise, but I’m hoping for decent enough bump in the future where I could comfortably afford it, especially once I’m done with school).

So my question for the community is this:

Given my situation, what would be the best way to make the most of that $5000/yr “savings” ? Just throw it in an ally-type account? Am I contributing too much to retirement? Would that $$ be better off elsewhere?

Additionally, between work+school, I don’t have a ton of free time/energy, but do you guys know of any good (legal, legit) opportunities to earn some extra spending $$ (besides the obvious of finding another, better paying job)? I’ve been looking around locally but there doesn’t seem to be much out there for a small commitment (5-10hrs/week) .. Other problem with finding a “traditional” part-time job is that for my current job, I will have periods of mandatory overtime and will be “on-call” on a rotating basis, so when I’m on-call (for a week, every 2 months or so), I probably would not be able to do much else (unpredictable + will need to be at home to use my work computer for the on-call issues)… I'm not expecting much there, but even a few bucks here/there can add up.

Just looking for some ideas/advice about getting the most out of what I have… I know I’ll be eligible for tuition reimbursement in a few months (only will help out for 1.5K, but that’s still 1.5K more than $0).. Also hoping for some good news on financial aid (grants, etc) but as of now don’t have that.. Of course I try my best to slickdeal things and try to maximize my savings/cc Rewards, but I don't consider that a huge factor in things...

Thanks again for reading all this, I know it’s long but I figure throwing everything out there would help explain my situation fully.

Thanks SD Community!

I see one thing you can save $500 from your estimates... your phone bill, get straighttalk/tmobile prepaid for much cheaper, around $30-45 depending on your usage.

Ok, some questions and some answers-

1. Why are you contributing post-tax money for retirement? Pre-tax money means you put more money in, which means it can grow more over time. Hopefully when you retire, you'll be in a lower tax bracket (because you won't have a real income), so taking it out will be cheaper.

2. What to do with all of your savings? This depends a lot on your risk tolerance, and when you plan to take the money out. Here are some options-

High-yield checking/savings accounts - These generally require either a certain amount of transactions per month, direct deposit, and/or other random requirements. If you can find one that you're ok with, you can get up to 3 or 4% (if you're extremely lucky, although it would probably be closer to 1.5 or 2%).

Regular/online savings account - Ally's a good option, but there are a few other decent options to get about 1%.

CD - You can get up to around 1.5%, just make sure to find one with a low early-withdrawal penalty if you think there's any chance you might need that money early (or if you can get a good rate on a 5-year cd, and plan to withdraw the money early).

Mutual funds (specifically, I'd recommend Index funds as the best/safest option based on past performance over time) - Index funds essentially track the market, so you do about as well as the overall market (US or foreign, depending on what the fund is trying to track). If you're planning to leave your money in for 3+ years, this is probably a good idea. You have some risk of losing money, but on average if you leave your money in until you need it, you'll do better than any savings account or CD.


3. Since you work in tech support, you can do that part time as well (although not quite as steady). Post a flyer advertising what you think people need (virus removal, speed up their computer, get their wireless fixed or set up, set up home entertainment systems, etc). Charge a set fee per hour with no guarantees. Use proper grammar and spell check, and make it look professional. If you find clients, you can supplement your income a bit, at least for a christmas-present fund and/or small vacations.

Hope that helps.

There are different schools of thought on this. Some people are of the opinion that you should 1) Put in enough in your 401k/403b to get the max employer contribution (free money) 2) Max out a Roth-IRA 3) Max out 403b. This gives you a mix of taxable and non-taxable income in retirement. I bet the OP's effective tax rate right now is pretty low.

How much are you contributing to your FSA? And I assume you expect to use it up by the end of the year? Being young, hopefully you are healthy and shouldn't need a lot here.

Well, I thought about that, but the savings wouldn't even pay for the ETF/Device fees for straight talk...

Lets say those are are ~38.month avg.. My sisters and I got together to get phones for my parents, and our total bill is about $220 for 5 lines @ Sprint...

220/3 = ~73/MO (I just rounded up to 80 when including the costs of the devices)...

While if you say the straight talk is 30-45 (so lets say 38avg) - 38*5 divided by the 3 of us= 64 (so savings of $10/MO), BUT I'd also be splitting the costs for Sprint ETF's and new straighttalk/tmobile devices....

But you're right, it does seem like a lot and I've though about switching it around but when adding it all up I'm just not sold I'd save all that much.

I am planning on contributing the max for the Roth this year because, as I understand it, it's post-tax $$ that gets to grow for "free" - I wouldn't pay tax on any $$ gained.... So since I have such a low income this year (only 6.5 months of income this year compared to hopefully 12months in future years) I thought that my tax rate would be at its lowest point this year so it would be a good idea to take that "hit" now...

It's just an idea though - so if I'm not understanding that correctly no harm, I can still change my strategy (I can wait until the end of the year to contribute that to the Roth as I understand it, so I have some time to think that decision out).

whoa, I lot to digest/figure out here, appreciate the info... I definitely eventually want to get into the Index funds and stuff, but I figured for now (until I build up more $$ and learn more about what I'm doing) I'm just looking at safe, steady earnings- so a CD/Money Market/Interest-Earning acct seems like a good idea for now- is bankrate the best place to go to compare the various options for these?

Thanks, I was actually thinking about this, but wasn't sure what the best way to go about doing this is- I have plenty of family/friends that I help out with (from fixing their computers to helping my neighbor get books for her e-reader for the library, things like that), but wouldn't even now where to begin with figuring out how much to charge or what's the best way to advertise (Craigslist? but then I'm kind of wary of scammers or things like that on CL)

it really does, thanks

the minimum - $10/pay period, I believe that amounted to $130 for the year (my benefits kicked in 7/1) - I take a nasal spray for allergies ($10/month copay) and then I then I'll be getting a pair of eyeglasses.. I'm sure I'll be seeing the Dr at least one more time before the end of the year (just usually get sick once in the fall once it starts getting cold, $20/office visit copay) I think that would get my reasonably close to using up my FSA contribution.

Another option, if you have an HDHP available to you through your employer, I would take that. You can open an HSA and it's tax free in and tax free out for qualified medical expenses. Once you get a certain amount in it, you can invest it. Try not to use it for medical expenses now, save it for retirement.

Glad to help.

You're probably right about the ROTH, but I'm no expert on retirement accounts so I'll let others give you better advice there :).

As for how much to charge for tech support, it's up to you, but pick a number and see if you get customers. If you get enough customers, up your prices a bit. If you get no customers, lower your prices a bit (don't expect a ton of customers either way though). Start at $25 or $30/hour and see how that goes. You could also have set prices for certain things, but charging per hour is easier.

As for Craigslist, it's generally the sellers that are scamming, so don't worry too much about scammers if you're selling tech support. Tell the customer that they pay at the beginning of each hour, and that you don't guarantee anything. Tell them you work full-time in tech support so they know you're not just gonna take their money and leave.

For your current savings, there are plenty of sites for comparing rates. Try a couple, and see what options you can find. Also make sure to check reviews of whatever you choose to go with, just in case.

CD/Money Market/Interest-Earning acct seems like a good idea for now

If you invest, you may lose money. If you keep your money in an FDIC-insured account you WILL lose money as real inflation is much higher than the 0-2% APR the market is offering right now. Sometimes the greatest risk is not taking one. My 401k has been doing well on a mix of blue chips & PIMCO mutual funds. I just wish I had put all my savings into AAPL when it was at 216.

If you pay for parking or transportation, you should be able to deduct that from your taxes (up to $240/mo) if your employer doesn't provide a tax-free transportation spending account.

Craigslist arbitrage is a pretty easy way to make a few bucks if you know how much things cost. Buy low, sell high.

Your budget is incomplete.

Where is housing?

That wipes a lot of your expected 5,400 in savings.

You are an adult. Move out. You are single with no debt. You can live on your own. Staying at home when you are able to support yourself does nothing but hurt you in the long run.

Atleast pay rent so you will know what it feels like when you hvae to.

Not quite sure how saving money on housing hurts you in the long run...

I moved out the minute I got a job, but if I could stand living with my parents, and if they lived closer to my job, and if they allowed me to, I'd probably live with them for a bit. Especially when you don't have an emergency fund, which this guy doesn't have yet.

Rather than judging people, I think it's more important to look at things from their perspective (and maybe read the whole post? He's only had this job a couple months). Why should he pay rent to his parents? They obviously don't need the money (they probably have their house paid off anyway), and this way he can save up an emergency fund and some spending money for a bit. Some parents even *gasp* LIKE to have their kids around.

He is not taking a girl factor on his budget.

That alone will eat away his savings in no time... :D

A couple notes,
Does your employer offer any type of tuition reimbursement?
Make sure your degree is worth the 13K/yr.
ASAP get out of that phone contract and move to a lower plan in the $30/month range.

....................

You will never learn how to deal with hard times with a safety net. Your character growth is stunted when you never have to deal with busted water heaters, insurance adjusters, shitty neighbors, leaky gutters etc....

If you can support yourself, then do it.

If you are living at home and not paying rent, you are a burden. All your expenses, extra electricity, extra water, food are being passed to your parents who have already done their job supporting you.

If you are blinded to these things in name of "saving for emergency fund" you are already lost and should not have kids.

no offense, but no shit...

like I already stated:

I lived on my own for years before I had to swallow my pride and move back home... Didn't make sense to keep spending ~1K/month from previous savings to live near my old job, lol.

and again, as I already stated, when it makes financial sense, I've love to move out again. Like when I'm done with school and hope to be able to put a nice down-payment down....

You didn't have to. You choose to. I was working full time raising my younger brother at 17 with no parental help. Those times made me a man. It's sad that people prefer living with their parents to avoid a commute over building character. Please, don't have kids.

wait, what? who's living with their parents to avoid a commute?

Saladdin is just bitter because he didn't have parents to fall back on, and is taking it out on you. Live with your parents, save up, and get yourself a nice place when you can. Ignore the haters, because as we all know.. Haters gon' hate.

I'm bitter because everyone seems to think it is a great idea for an adult who can support himself to be a burden on his parents. I feel sorry for the woman you marry who thinks she is getting a man of character.

A few points here - First, OP can't support himself yet, because he burned through most of his savings while jobless, so he's trying to save up to get a condo and move out.

Second, not everyone that lives with their parents is a 'burden'. Like I said before, some parents actually *like* to have their kids live with them. Some parents aren't financially burdened by their kids living at home because they don't need the extra money that their kid is costing them (which honestly isn't that much, especially if the parents already own their home). Also, it may be worth it for the parents because they can have the kid run errands, do housework/yardwork, help out with younger children, etc.

Third, living at home doesn't automatically 'remove' all of your character. You could still help out around the house, work hard to make enough money to move out soon, etc. Maybe you give the money that you're saving to charities, so people that really need it can have food. That sounds like something that someone with character would do, doesn't it?

And attacking my character? I moved out right after college (during college I lived on campus) so you can't even use that one against me. I get that you're bitter that you didn't have the luxury of living at home to save money, but that doesn't mean that everyone who does is a terrible person.

Not necessarily agreeing with saladdin or disagreeing with you, but OP is in his mid-20's, and DEBT FREE. The only reason he can't live on his own is because he refused to take out studen loans. Anybody should be able to survive on 45k/yr, especially if you put that 13k/yr towards cost of living.

That being said, everybody's situation is different, but I would move out as soon as I was comfortable (which, IMO, would be now). I do believe it builds character to survive on your own, and have seen it in all of my siblings, and friends.

If you are home, debt free and asking help on what to do to maximize savings you have a character issue.

If you are not paying rent, food, electricity, water, garbage, sewage... yes, you are a burden because you are not paying your own way. That is a character issue.

Instead of working through the hard times when unemployed, you wilted and ran home to mom and dad. That is a character issue. That is the sign that you are not a man that can support a family emotionally through difficult times.

You are "saving" money off of the backs of those that supported you with the idea that you would become a self sufficient adult.

You will pass this sense of entitlement to your kids and the cycle will continue. Please, don't have kids.

Ok, this is gonna be my last response here because this is completely off topic at this point.

1. You are not necessarily a 'burden' if you live with your parents. The additional bills for them don't really add up to much, and you don't know their current financial situation. Maybe they're millionaires, and they couldn't care less about the extra expense. Maybe they have an extra wing in their house that was unused before, and now OP moved in.

2. If OP had stayed unemployed, and moved in with his parents when he had no more money, is that a character issue? Being unemployed doesn't mean that you're lazy, it means that the job market sucks, and it's difficult to find decent employment.

3. You keep going back to the fact that your parents hate the thought of you being at home. Not everyone's parents are like that. This is very much a cultural issue as well - many families in other cultures live with their extended family (including parents, siblings, cousins, etc) because culturally that's the norm. It also saves money, and gives you a larger support system.

Just because you personally don't want to live with your parents, doesn't mean it's a 'character' issue if someone else does. Character refers to morals, integrity, honesty, etc. There's nothing dishonest or morally wrong with living with your parents. What if you lived with your parents because you saw kids starving, and thought that maybe you should do everything you can to help them, including donating money that you could save by living at home?

I'm not saying that every person should bleed their parents dry so that they can have more money to buy a fancy car, I'm just saying that in some situations, it's not always so terrible that someone asks their parents for some help. If your parents asked you if they could move in with you (maybe they had some financial hardship that forced them to leave their home), would you say that they had a character issue?

You do have a character issue more frequently than OP does. Just because you made it through the difficult time with your own does not make you a better man than any other folks around here. Cut the BS and try to give OP the real advice.