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Started By
Message
Financial guidance for a friend of mine
Posted on 12/16/17 at 6:34 pm
Posted on 12/16/17 at 6:34 pm
My lady friend wants to improve her situation for the future. Currently:
-she makes about $65k/yr
-4% goes into 401k with company match
-has owned a dsld home for 3 years
-$5k in student loans
-$5k in credit card bills
-2016 Camry that she is upside down on by about $8-$9k
Where would you start if you were her?
-she makes about $65k/yr
-4% goes into 401k with company match
-has owned a dsld home for 3 years
-$5k in student loans
-$5k in credit card bills
-2016 Camry that she is upside down on by about $8-$9k
Where would you start if you were her?
8
Posted on 12/16/17 at 6:46 pm to indytiger
The credit card bills?
What seems to be issue here though?
It looks like she may just have a spending problem and need to tighten her belt a bit?
What seems to be issue here though?
It looks like she may just have a spending problem and need to tighten her belt a bit?
Posted on 12/16/17 at 6:47 pm to indytiger
see Dave Ramsey
Posted on 12/16/17 at 6:50 pm to southernelite
Her ultimate goal is 0 debt and a good retirement. Obviously she needs to pay off everything and save for that to happen, but the question is where to begin? And what to do with her car situation?
I read a topic on here the other day where a fella was about 40, asking for advice, and there were some very clear plans laid out for him.
I read a topic on here the other day where a fella was about 40, asking for advice, and there were some very clear plans laid out for him.
Posted on 12/16/17 at 7:05 pm to indytiger
1. Pay off the credit card
2. Keep making payments on the student loans and the car. Being upside down on a car doesn't really matter if she keeps it. It's theoritical worth is irrelevant as long as she's not trying to sell it. 3. As more cash flow becomes available as the debts are paid off increase the retirement contributions. That can be through 401k, regular IRA, or Roth. That's a bridge she can cross when she gets there.
All in all she's not really in a terrible spot. Only real bad mark, imo, is the credit cards. Get that taken care of and she should be fine.
2. Keep making payments on the student loans and the car. Being upside down on a car doesn't really matter if she keeps it. It's theoritical worth is irrelevant as long as she's not trying to sell it. 3. As more cash flow becomes available as the debts are paid off increase the retirement contributions. That can be through 401k, regular IRA, or Roth. That's a bridge she can cross when she gets there.
All in all she's not really in a terrible spot. Only real bad mark, imo, is the credit cards. Get that taken care of and she should be fine.
Posted on 12/16/17 at 7:10 pm to indytiger
When you say “has owned” her house, is she paying a mortgage or does she own outright?
What is her age?
Not a much she can do with the Camry except drive it to 250k miles and start sending a little extra to try and get back on the right side of the loan.
Start contributing to a Roth if possible.
Assuming credit cards have higher interest rates, pay towards those first.
Learn to live lean for a few years, cut the cord on cable, eat at home, pack leftovers to work. Identify where the majority of the money is going and see what can be cut back on.
What is her age?
Not a much she can do with the Camry except drive it to 250k miles and start sending a little extra to try and get back on the right side of the loan.
Start contributing to a Roth if possible.
Assuming credit cards have higher interest rates, pay towards those first.
Learn to live lean for a few years, cut the cord on cable, eat at home, pack leftovers to work. Identify where the majority of the money is going and see what can be cut back on.
Posted on 12/16/17 at 7:22 pm to indytiger
Step 1 for anyone is pay off debt.
Start with the smallest and work your way up.
The debt snowball is awesome
Start with the smallest and work your way up.
The debt snowball is awesome
Posted on 12/16/17 at 7:46 pm to indytiger
If that’s what she’s looking for.
Pay off the CC.
Pay off the Student Loans.
Then raise her contribution percentages to retirement.
Even with a mortgage and a car note on the Camry, she should be able to extinguish that debt pretty quickly.
Pay off the CC.
Pay off the Student Loans.
Then raise her contribution percentages to retirement.
Even with a mortgage and a car note on the Camry, she should be able to extinguish that debt pretty quickly.
Posted on 12/16/17 at 7:49 pm to indytiger
quote:
Where would you start if you were her?
She needs the debt snowball - Dave Ramsey.
Posted on 12/17/17 at 8:04 pm to indytiger
Does she live in San Francisco or something? 65K a year without kids should be plenty to avoid credit card debt.
Posted on 12/17/17 at 8:07 pm to indytiger
She is saving 8% per year (4 + 4).
Needs to add 7% more savings to get to 15%. If she is a bit cautious, buy Vanguard Wellington (65% stock, 35% bond).
Wellington YTD return is 14.5, 3 year is 9.2, 5 year is 11.
Needs to add 7% more savings to get to 15%. If she is a bit cautious, buy Vanguard Wellington (65% stock, 35% bond).
Wellington YTD return is 14.5, 3 year is 9.2, 5 year is 11.
Posted on 12/17/17 at 9:07 pm to southernelite
This situation is pretty cut and dry with little that gives me much concern.
Keep finding the 401k match
Pay the CC off ASAP
Make the student loan payments
Build an emergency fund
After that a couple good options are Max HSA and/or contribute to Roth IRA.
Importantly, she should rebuild a monthly budget. I think she may need to reassess some of her spending if she ran up a little CC debt.
Keep finding the 401k match
Pay the CC off ASAP
Make the student loan payments
Build an emergency fund
After that a couple good options are Max HSA and/or contribute to Roth IRA.
Importantly, she should rebuild a monthly budget. I think she may need to reassess some of her spending if she ran up a little CC debt.
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