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re: What to do with new money
Posted on 5/10/18 at 10:05 am to NewBootGoofin
Posted on 5/10/18 at 10:05 am to NewBootGoofin
Buy your first rental property.
1
Posted on 5/10/18 at 10:17 am to NewBootGoofin
I suggest the following:
- Put $3K toward student loans.
- Invest $6K in Roth IRA (aggressive funds only).
- Deposit $5K in savings (even at ultra-low rates).
- Put $3K toward student loans.
- Invest $6K in Roth IRA (aggressive funds only).
- Deposit $5K in savings (even at ultra-low rates).
Posted on 5/10/18 at 10:21 pm to Sev09
quote:
Buy your first rental property.
I would go 1 of 2 directions.
Either buy your first home (small, starter home that flips to an investment property as soon as you are ready to purchase nicer).
Or throw it all in a retirement plan. The best retirement plan is to get ahead as early as possible. Dump about 3k per month in a retirement portfolio for cost averaging.
Posted on 5/11/18 at 3:49 am to NewBootGoofin
quote:
Interest rate is 4.3%. And that's the whole trouble is that I know I need to have 2-3 months in savings but the idea of paying interest just irks me
Well, I suppose you could use the money to pay off your debt with no emergency fund. Then, if something major happens, you could have credit card debt at 18% (if you are lucky) all because not having an emergency fund in the sake of having that 4.3% interest "irking you". If i were you, id pay as much as I could after having an ER of 2-3 months and if there is something left, use it for retirement savings.
This post was edited on 5/11/18 at 3:51 am
Posted on 5/11/18 at 6:32 am to NewBootGoofin
I am very debt averse, but I also take great comfort in having a decent chunk of liquid savings.
I'd keep at least 5K in cash (you can get 1.65% on it in a Cap One money market account and access at any time) to handle emergencies. Maybe 10K, especially if you own or plan to buy a house or condo. Pay extra on your loans, which aren't that much and have a fairly low interest rate, as budget allows.
If you need a new set of tires, your transmission fails, hot water heater goes out, roof needs replacing, you need three new suits for a job, or you just want a new set of golf clubs, a mountain bike, or a down payment on a car, you can handle it without having to resort to credit cards or other consumer debt that has % higher than the student loans. You could also get fired or be laid off.
It took me a long time to start from zero and get a nest egg like that while simultaneously paying down loans and starting adult life with its various unexpected expenses. It would be awfully nice for peace of mind, depending on your personality, to get that nest egg up front.
I would be worried shitless if I had only $1K in cash on hand. Been there before. People who advocate voluntarily putting yourself in that situation must assume you could ask for help from parents or family if something happened. I never made that assumption.
I'd keep at least 5K in cash (you can get 1.65% on it in a Cap One money market account and access at any time) to handle emergencies. Maybe 10K, especially if you own or plan to buy a house or condo. Pay extra on your loans, which aren't that much and have a fairly low interest rate, as budget allows.
If you need a new set of tires, your transmission fails, hot water heater goes out, roof needs replacing, you need three new suits for a job, or you just want a new set of golf clubs, a mountain bike, or a down payment on a car, you can handle it without having to resort to credit cards or other consumer debt that has % higher than the student loans. You could also get fired or be laid off.
It took me a long time to start from zero and get a nest egg like that while simultaneously paying down loans and starting adult life with its various unexpected expenses. It would be awfully nice for peace of mind, depending on your personality, to get that nest egg up front.
I would be worried shitless if I had only $1K in cash on hand. Been there before. People who advocate voluntarily putting yourself in that situation must assume you could ask for help from parents or family if something happened. I never made that assumption.
Posted on 5/11/18 at 8:28 am to NewBootGoofin
Assuming $12K.....put $10K on the student loans, $2K in savings. Max your 401K, or if not eligible, see if you can do a supplemental pre-tax retirement contribution thru employer (though you may have to wait 6 mos, depending on your employer’s rules about retirement). Next, make a budget: how much goes to rent, food, insurance, transportation, fun, savings? See how far your “regular” paycheck goes—allocate as much as you can to paying off the remainder of the loan & savings. You can get that stuloan paid off in a year or less, plus build up a nest egg.
The budget is key.....don’t move forward without one.
The budget is key.....don’t move forward without one.
Posted on 5/11/18 at 9:39 am to PhiTiger1764
Can anyone explain what the credit impact is of paying them all off at once vs. paying them off over the course of a couple years? I graduated last year and only have about $5k left. I could easily pay it all off today without impacting my emergency fund, but then I'd have no loans left to build up my credit aside from a couple credit cards I build up and pay off monthly. I don't have a car note or anything else to pay off, so this is my longest outstanding loan and I'm getting close to the age where I want to quit paying rent and look at buying a house.
I've been paying them monthly believing that this helps my credit score, but is it really any better than just knocking them out with one payment and being done with it?
I've been paying them monthly believing that this helps my credit score, but is it really any better than just knocking them out with one payment and being done with it?
Posted on 5/11/18 at 11:05 am to NewBootGoofin
quote:
What to do with new money
Eat it
Posted on 5/11/18 at 12:16 pm to NewBootGoofin
quote:
My first check will give me ~12-15k to play with after all initial purchases necessary.
that after taxes?
I would take a third out for an emergency fund. Take out $1000 for fun. And then use the rest to pay down the debt.
Posted on 5/11/18 at 3:49 pm to Yeti_Chaser
quote:
so this is my longest outstanding loan and I'm getting close to the age where I want to quit paying rent and look at buying a house.
Have you had the loan longer than you have had the credit cards? If your loan is your oldest account, you average age of accounts will likely drop a good bit once you pay it off, lowering your score.
If you are looking at buying a house soon, it may be worth it to just keep making on time payments.
Posted on 5/12/18 at 10:15 pm to NewBootGoofin
$4K in a Roth IRA (max is $5.5K a year-try to fund this fully every year for the rest of your working life), $3K in savings, spend $500-$1000 on yourself, and put the rest towards your loans.
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