Advice on my current situation...

[Memo10]

Hello all,

No real purpose on why I am posting this aside from receiving feedback on my current financial situation. So please feel free to provide any and all types of feedback.

I am 23 years old, turning 24 in May. I will graudate with my Bachelors Degree in Business Finance in May as well. Currently working retail, as this is my last semester in school I am working part-time instead of full-time as I usually do. Made roughly 40k last year, will estimate making 25k or so this year due to working part-time for half the year. I will have a substantial amount of debt once I do graduate. Roughly 29k in student loans, currently have two installment accounts totalling 25k. The two installment accounts could have been prevented if my spending habits were a bit different. 17k is for a vehicle and 7k is for a personal loan I aquired to consolidate my credit card debt. I have roughly 5k in a savings account and another 2k in my checking account for my current expenses. I also have 2 CC's with balances totalling 1.5k. Also have roughly 1.7k invested in my employers 401k. I have fairly good credit, all FICO scores around the 770-775 range. Gardening at the moment and placed a credit freeze on my credit to prevent any new apps. I estimate in roughly 1 year or so for my credit to break the 800 threshold. I still live at home with my parents, which helps with my expenses.

Short Term Goals:

• FIND A JOB! Of course in my field of study. 
• Move out but find it a little difficult to budget this accordingly
• Pay off all if not most of my debt

Long Term Goals:

• Purchase a home within 10 years or so
• Establish a healthy balance for my retirement

[Appleman]

Memo10, you are already a step ahead because you are thinking about the future, a long way into the future.

As long as the situation is working I would recommend staying at home and getting aggressive with that debt.

Your credit is better than fairly good, keep the positive payment trend going.

Find some type of budgeting system. I personally like YNAB (you need a budget) as it is now web based and works well on my phone. It takes a little time to get your budget just so, but it will be well worth it long term. I suggest you start budgeting money every month as if you were on your own, setting aside money for rent, utilities, cable. When it is time to move you should a nice amount to pay the initial deposits and such.

Having a budget will also help keep you from creating new debt. I also recommend undebt.it as a free tool to help pay off debt. It will show you how long it will take you to be debt free (snowball versus avalanche). To be debt free in your 20s would open so many opportunities.

Good luck on finding the job you want.

[Anonymous]

I'd say get rid of the car note first and foremost.  While it's nice to have a newer car, it sucks worrying about it while in school.  Get something a few years old that you can either pay cash for or at least get a significantly lower payment.  It will also cost less to insure and have cheaper maintenance than something newer.  Then you can focus on chucking away at the personal loan, which I assume has a not-so-great APR attached to it.  Then attack the credit card and then the student loan.

You're still young, and you won't be retiring for a long time, but it looks like you're already thinking ahead with the 401k.  Great job there and on the savings!  Once you get your "career job" always remember to PAY YOURSELF FIRST but don't overdo it when you still have outstanding debts, especially credit cards and personal loans.  Starting out, if your employer does a 401k match, that's basically free money so have at LEAST that deducted from your salary. (You can always raise it up once you start paying off stuff).  And of course continue to stash a portion of your paycheck away in savings.  When it comes time to buy that house, you'll have decent savings and you'll be able to borrow against your 401k for a down payment.  You're shooting for a 20% downpayment there so you don't waste money on PMI.  

Finally, I'd say "avoid frivolous spending" but it sounds like you're already done that and learned from it so I'll refrain

[Appleman]

The only statement I personally do not agree with is that maintenance will be cheaper on an older car? Cheqper insurance and cheaper car tags, yes and yes.

[Memo10]

I appreciate your response Appleman, 

I do currently use Mint as my budgeting tool. Definitely helps prevent unnecessary expenses. I will begin to incorporate a budget for those fictitious accounts you mentioned and hopefully it can stimulate a bit more savings on my part. I also have an excel spreadsheet set up with both installment accounts I currently owe and if I pay according to what I have set up using the "snowball" method I should be able to pay off both installment accounts in 2 years or so. 

[Anonymous]

Congrats on having a solid plan. That is the first step to get where you want.

[Kevin86475391]

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@Memo10 wrote:

Short Term Goals:

• FIND A JOB! Of course in my field of study. 
• Move out but find it a little difficult to budget this accordingly
• Pay off all if not most of my debt

Long Term Goals:

• Purchase a home within 10 years or so
• Establish a healthy balance for my retirement

---

What's the time frame on your short-term goals? The long-term goals seem to have a time frame of about "In the next 10 years." So is "short-term" something like 5 or fewer years? Of course I assume it also varies by item. Obviously you'll want to find a job and move out first, whereas paying off your debt might take longer. Indeed, the reason I ask is because your goal of being debt free in the short term seems very ambitious. Of course it'll all depend on your income with the new job and your ability to save and budget.

Regarding budgeting for moving out, I wholeheartedly agree with Appleman: estimate your expenses now and start setting that money aside so that you can see what if feels like in terms of lifestyle and cashflow and adjust accordingly. Of course the big bonus is that by doing so you'll have extra money you can apply to debt, moving expenses, and deposits, etc.

[Memo10]

Short-term goals are ideally at 2 years. I have a plan already to get rid of the 17k, 7k, and 1.5k for the auto loan, personal loan, and cc debt respectively. That would then leave me with only my student loan debt of roughly 29k. I am also planning on requesting deffered payments to my student loans if necessary. I estimate payments of 300/month once I am required to make those payments. Of course that is a payoff of approximately 10 years.

As far as what Appleman suggested, I do feel it is a great idea. I'm unable to do this as long as I am working part-time. At the moment I am only making enough to pay my monthly expenses without being able to set any funds aside. In fact, I anticipate my checking account balance to decrease a bit since my expenses may exceed my income.