21 yrs old and Need a Plan!!!! Help?

**Snave** · 02-27-2008, 12:37 PM

I am assuming the 2K is your monthly net. With that, this isn't anything you haven't already heard or told someone since you mentioned you are a certified financial counselor. First I would begin by socking away a few thousand dollars for an emergency fund. It looks like your expenses are about $1300 a month so a few months of savings would be wise. Then, do you have a 401K at work? If you do, put in at least enough to get the match. If not, what about opening a traditional IRA or Roth IRA. I would go with the roth as you are not in a high tax bracket now and I assume you aspire to be in one when you are older - or you probably wouldn't be asking for advice. You could set it up to have so much money funneled in to your IRA monthly. From what it sounds like, you just see the money sitting there and know you can blow it without getting into any major problems. That's why I would try to make it "automatic" and have your savings taken out as soon as you get your paycheck. That way you won't miss it. By the way, keep some money to blow on your impulse online buys. Your 21 and can't save everything. If that's what you want to blow cash on, then do it - just do it wisely which means AFTER you are saving.

**anonymous_saver** · 02-27-2008, 12:41 PM

(1) Do you particpate up to your employers match in your 401(k)? Start this immediately. No matter what.

(2) Consider getting a roommate. You could decrease your monthly expenses by $410! That would be an additional $4,920/year! Plus less on utilities.

(3) I highly doubt you have $735 extra per month. What about shampoo, toilet paper, medical co-pays, pet bills (if you have any pets), etc.? Try adding up that stuff up as well. This will highly help you with having a plan of action with your money. I would divide this area into "necessities" and "spending money". For myself, I spend approx. $50/month on necessities (including pet stuff) and about $60-$120/month on spending money.

(4) Lets say you end up with $500 extra each month. First build up a one month (worth of expenses) on an emergency fund in a high interest online savings account like EmigrantDirect (3.6% currently). Then decide what your priorites are: down payment, emergency fund, retirement? Perhaps do a combination. Keep putting away $200/month towards an emergency fund until you have at least 3-6 months worth. And maybe $150/month towards retirement (in a Roth IRA) and $150/month towards a down payment (create a subaccount at your online bank for this. I like Vanguard for Roth IRA's. This is just one example of how to divide up your money. Eventually, I personally have a goal of getting an 8 month emergency fund.

(5) Good job on not having any debt, but try hard to stop those online purchases. Over 5 items in one day?!?!?!

(6) Get a credit card to start building credit so you can one day buy a home. Just use it once a month on groceries or something and pay it off in full before the bill is due.

(7) What do you do for transportation? Doesn't that eat up some of your expenses as well?

**jIM_Ohio** · 02-27-2008, 12:44 PM

I would divide the $735 into 3 categories

1) short term savings
2) spending
3) long term savings

You need to decide what is reasonable for each of the 3 amounts.

Maybe:

$135 into short term savings. This becomes emergency fund
$500 into long term savings. This becomes your retirement account (is 6k per year more than 10% of your gross pay)?
$100 into spending

Put the $635 for short and long term savings into a different bank account (direct deposit into a new checking or savings account).
Put the $100 for spending into the same account you pay your bills out of.

**m1kesgurl** · 02-27-2008, 12:47 PM

let me run down my expenses for you.

$2000

$820 rent
$45 phone
$16.50 wkly bus pass....no car
$200 gas & electic
$200 on food (that includes all of the necessities too)
That is really all of my expenses....

$718.50 left over at the end of the month

**anonymous_saver** · 02-27-2008, 12:54 PM

If you have a weekly bus pass at $16.50/week, then you would have approx. $663.51 left over at the end of the month.

$16.50 * 4.33333 weeks/month = $71.50/month on bus passes

So I think a starting point would be:
Take home pay: $2,000/month
Expenses/Bills: $1,336.50/month
Extra: Approx. $663.50/month

I would still first focus on putting up to the match in your 401(k) and starting an emergency fund.

What are your priorities, starting a down payment? Retire earlier? Combination? Other goals?

**m1kesgurl** · 02-27-2008, 01:16 PM

You're right...thank you for the correction.

Well my priorities, is to keep a roof over my head. I am very simple, i have to finish furnishing the apartment. i want to be able to plan future trips with my boyfriend. I do want to eventually get a home and then when 65 comes around i want to be relaxing, ya know. I dont want to regret later on that i spent all of that money like i am doing now.

**jc3900** · 02-27-2008, 01:45 PM

Guess what? I am a certified financial counselor...yeah how bout that?

WOW! I really don't think you should have bothered mentioning that line. It kind of makes people look down just a bit.

Edit: However, you have done an awesome job on avoiding debt.

**Snave** · 02-27-2008, 02:33 PM

Originally posted by jc3900 View Post

WOW! I really don't think you should have bothered mentioning that line. It kind of makes people look down just a bit.

Edit: However, you have done an awesome job on avoiding debt.

Agree about the comment, but the fact that she has no debt is probably better than 99.9% of society. So, at least she has that going for her.

**m1kesgurl** · 02-27-2008, 02:44 PM

yeah. i want you all to know about my situation, so i throw that out there hoping to get some good advice.....

**m1kesgurl** · 02-27-2008, 02:45 PM

i am actually doing better than most of my counselors here, b/c they are actually in our programs....so imagine that, but i understand what you guys mean.

**disneysteve** · 02-27-2008, 03:08 PM

Originally posted by jc3900 View Post

WOW! I really don't think you should have bothered mentioning that line. It kind of makes people look down just a bit.

I don't agree at all. I totally respect the OP for admitting that to us. It is important to realize that it can be very difficult to practice what you preach. MONEY or Kiplinger's did a story on this topic just last month. They interviewed a bunch of financial planners and asked about the investment advice they give their clients and then asked how they invest their own money. Many of them did the very things they regularly advised their clients not to do.

**Snave** · 02-27-2008, 03:11 PM

Originally posted by disneysteve View Post

I don't agree at all. I totally respect the OP for admitting that to us. It is important to realize that it can be very difficult to practice what you preach. MONEY or Kiplinger's did a story on this topic just last month. They interviewed a bunch of financial planners and asked about the investment advice they give their clients and then asked how they invest their own money. Many of them did the very things they regularly advised their clients not to do.

A recent article was just done that was similar in asking finance professors how they invest, etc... Again, they do not practice what they preach. Many thought they would be able to beat the market, they bought and sold more often, etc... and most agreed that it was counter-productive.

**jc3900** · 02-27-2008, 03:34 PM

Yeah, actually the no debt thing is worth more than A LOT of people think. My dad showed me this stat today that of earley retirees, 45 percent of them had fico scores over 800. So, having good credit=extremely good saver.

To m1kesgurl:I guess I was a little harsh with my comment. The thing that got to me was the thread title of needing a financial plan and then stating that you are a financial counselor. But, you are just starting your career and all you are doing is trying to get sound advice. Heck, I would be willing to bet that some of the posters on here would be overqualified to be financial planners. I am sure that because you are rightly worried about your financial situation and are young, you will end up being a great financial planner. Sorry for the lack of respect OP.

**prosper** · 02-27-2008, 05:51 PM

Originally posted by jc3900 View Post

WOW! I really don't think you should have bothered mentioning that line. It kind of makes people look down just a bit.

Edit: However, you have done an awesome job on avoiding debt.

some would consider it odd; but I've seen a dentist with bad teeth, a overwieght trainer at the gym, and a cussing preacher.

21 yrs old and Need a Plan!!!! Help?