Assist in evaluating my financial situation

Microsoft
mentalwave

Microsoft

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May 24 32 Comments

New Grad hire- I am currently making $90,600 annually in a low Cost of Living city on the East Coast. Please see below my current expenses. Please let me know if I am on the right path or what I should improve

Annual Income Pretax- 90,600
Income Post Tax and deduction-60,348

Current deductions
401k Contribution- 6% Roth 401K
ESPP- 2%

Expenses per month
Rent- 1450
Car-305
Electricity- 50
Student Loan- 200- family- 0% interest rate
Telephone - 100
Groceries, Misc and Shopping- 350
Internet- 50
Total monthly expenses- 2505

Monthly pay after tax and deduction- 5,029

Total Emergency fund Savings- 20,600

Current 401K Balance- 16K
ESPP- 7K

I currently save about 2,500 every month. This was how I built emergency savings. Hence my low 401k deduction. Now that I have that emergency fund cushion. Please what should I be looking at next to do with my monthly savings of 2,500

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TOP 32 Comments
  • Microsoft Vbsm66
    Your rent seems incredibly expensive for a low COL city. I pay about half that amount in a high COL city (Seattle), and I make more than 2x more than you.
    May 24 5
    • Adobe OpenRoad19
      Growing up back East (and living in the ‘burbs of Seattle), I can vouch that while his rent is high for a low COL East Coast city, places like Albany, NY, for example, charge $900+ on up for total sh!t holes because of all the colleges in the area - and they get away with it. I’ve seen a lot of companies come in and refurb old warehouses, slap some HW floors, granite, and stainless steel and then charge what is a mortgage payment back there.
      May 24
    • CVS Health zzwJ42
      How do you pay 725 per month rent in Seattle?
      May 24
    • Microsoft Vbsm66
      @cvs have a roommate in a 2br. I pay 790.
      May 24
    • Amazon GoGoJ
      You sure it's Seattle, not some Bellevue outskirt?
      May 24
    • Microsoft Vbsm66
      It's a Bellevue outskirt. Regardless, Bellevue is still a high COL city.
      May 24
  • Charter / IT xlyq06
    I hope you spend the money with a financial planner instead of a bunch of shills on a website

    Being presumably young these are the best years to be maxing your 401k contributions into the more aggressive accounts. The economy is going to go through the normal booms and busts and the 500k TC guys will struggle just like the 100k TC folks - if your invested your setup to be able to keep your head well above water for the 5-15 years it lasts and comfortably retire young on a large nest egg.

    Worrying about $25 or $200 MRC here or there - that's silly. Dont worry yourself about the needless junk. Life can be pretty long and everyone on blind is probably going to die one day and not get to take their money with them. Quality of life high, retirement secure, low stress so you can enjoy it.
    May 24 11
    • Microsoft Vbsm66
      Yes, I'm invested in preventing people from giving bad advice. A cheaper $50 phone bill, buying a nice reliable used car, saving hundreds on rent, all add up to help you maintain a massive savings rate. Pair that with easy 10-15% returns means it's rather easy to quickly obtain some useful net worth.
      May 24
    • Charter / IT xlyq06
      Oh 10-15% returns easy- yea no kidding. He should sell everything he has and take out as much credit as possible too because with unreal easy returns he can't go wrong. I'd take the cardboard box for that any day, give my 2 cents back I'm investing in your program.
      May 24
    • Oscar 🐨koala
      Every dollar saved is a fucking dollar.
      May 24
    • Microsoft Vbsm66
      Check out the SNP500 returns since the 2009 crash. If you invested in index funds during that time, then yes the 10-15% came quite easily.
      May 24
    • Microsoft Vbsm66
      Yeah @koala I'm not sure why this person is so upset. I didn't think saying "saving an additional few hundred dollars a month is worth the effort" would be so controversial 😂
      May 24
  • Microsoft Vbsm66
    Your telephone payment also seems incredibly high. You can pay less than 50/mo pretty easily with any number of plans (t mobile, project fi, etc)
    May 24 3
    • Microsoft
      mentalwave

      Microsoft

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      Google
      mentalwavemore
      OP
      I got my phone on a contract. Paying for both phone, voice and data.
      May 24
    • Microsoft Vbsm66
      That doesn't seem smart. Pay $350 for a refurbished Google Pixel 2 or equivalent, then pay $50/mo for a voice/data plan.
      May 24
    • They actually changed the name to Google Fi from Project Fi recently FYI. This is what I have and I rarely pay over $35/month. Important caveat: I have a work provided cell phone that I use for streaming music and car navigation so I never go over 1gb per month my personal. Google Fi is also great for international travel as the data rates are exactly the same. Only thing is calls are 10 cents a minute depending on country.
      May 24
  • Cloudera ಠ╭╮ಠ
    You should be saving 15% minimum for retirement and maxing out the ESPP if the terms are good
    May 24 1
    • Microsoft
      mentalwave

      Microsoft

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      Google
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      OP
      I also plan on saving and buying a house. Does the 15% include the company match
      May 24
  • New / Other
    DuQvV7y

    New Other

    BIO
    Did stuff. Hustled hard. Retired
    DuQvV7ymore
    This is just scraping at the margins. It will help you get to retire, but not build wealth.
    May 25 4
    • Microsoft
      mentalwave

      Microsoft

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      Google
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      OP
      Please how can I build wealth. Thats my goal
      May 25
    • New / Other
      DuQvV7y

      New Other

      BIO
      Did stuff. Hustled hard. Retired
      DuQvV7ymore
      Oops, this isht turned into a novel real quick…

      I’m no expert since I’m basing all this on n==1, but FWIW here’s my take:

      There are 4(+1) main variables to adjust for

      Reduce Bottom Line: This is how you save money. Figure out what you can cut. Cut it. Then cut some more. Gamify it. Create a budget, figure out how to undercut it every month. In a capitalist system, you need capital to fund any growth or projects. It is the lifeblood of everything else that follows. Many of us are not lucky enough to have someone that could fund us, so building this stash early matter a lot.

      Grow Top Line: Savings won’t make you rich. It will help you retire but you need to figure out how to bring in more revenue. Side gigs? Do ‘em. What’s your skill how can you market it. See below for a list of my side hustle attempts over the years. Be imaginative. Maximize every opportunity to increase your top line.

      Risk/Invest: Capitalism rewards risk. The bigger the risk, the bigger the payday. It’s of course easier to do this when you’re younger and can reset to zero easier. I bought my first condo at 21 because… fcuk it. Whats the worst that could happen. Now this doesn’t mean go to Vegas and put it all on green. Nah, research research research and figure out how to Make That Dolla (tm). Things like RE etc fall under this umbrella for me. Anything that involves leveraged investments creates risks. Leverage wisely.

      Time: I’m a proponent of growth over time. If you call me with a scheme to double my money by December I’ll hang up on you. Set milestones. Pan it out, track yourself against those milestones. Get to love Microsoft Excel (or Google Sheets). Obsess over your timelines, income stream, growth curve, projections. I retired after 22 YOE. I’m sure many here think they can do it in half. That works for them. Define your own timeline and make steady progress.

      Luck: There’s nothing you can do here. I built a small nest egg pre 2008 and watch it crumble as the world economy collapsed. Had to pick the reins back up and went all in on risk. My take, don’t obsess on this one. Roll with it, and consider it a chaos-monkey-IRL.

      Edit: Fcuk Dave Ramsey. Leverage ([good] debt) is the one true god.

      [20 YEARS OF SIDE HUSTLES]

      Here's 20 years of hustle (in no particular order)

      * Bought used computer pallets at local auction and sold for parts on eBay. China killed that idea with cheaper manufacturing. $1-$2k/ month
      * Flipped large dollar gift cards on CL till startups like Raise killed the idea. Met Some sketchy individuals but pulled in $2k/month with very little work. 
      * Instructor at local college. Satisfying, awful pay though. 
      * Passive investor in a currency trading partnership. I know nothing about currency trading. Lost $10k. #neverAgain #investInYourself
      * Started a small IT staffing shop with 3 others. Profitable. Left in 2013 when I couldn't find time for this. $10k/year. Mostly passive. 
      * Equity partner at startup in different state. Wrote a shit load of code. It fizzled. Got NOTHING for 2 years work. Anyone need a fully working Patient Management System? #neverAgain
      * Crypto currency. Only $3k invested. Cashed out at $5k total profit. Who knew BTC would ever breach $1k. 
      * Learnt to trade leveraged VIX ETFs. 30% returns in 2015 & 2016 (that trade died last December. VIX has been dormant)
      * Wrote 3 tech books. Financially bad idea and MASSIVE time sink (total royalty was $8k) but was awesome for career
      * Created transport company to profit off Uber Black. Had 2 cars. Travis fucked me on this when UberX came to town. Lost $5k. 
      * Created property flipping company. Best income vehicle. That shit eats 40+ hrs a week though. It’s a side gig that eats all your spare time 
      * Became a tech conference speaker. No cash but they paid travel and lodging. Also fully approved and supported by my employer. Career booster. Gave it up after 2 years. I love cash. 
      * Spent (almost) every single vacation day in the last 5 years doing contract IT training. ~$1k/day, FL, AZ, WA & CA (I'm IN/OH) Honestly wouldn't mind doing this more. Need to automate your QA? PM me 
      * Write code for fellow IT folks at different firms. Login via VPN/Webex screen share. Crush code. Pocket $50k/yr.
      * Built web sites. Lots of it. Early 2000s. Built web presence for local businesses and hosted it. About 12k/yr at peak. Until Wix & SquareSpace made the space fully DIY
      * Plumbing. Genuinely love it. Plumb many colleagues houses in return for dinner. I like to eat. 
      * Had a (mildly) interesting idea, built the software, stumped on the hardware (I'm a software guy). Sold it for 50k (split with partner).

      final notes
      * Every penny of side hustles went into buying rental property. Best passive income vehicle. 
      * Turned down Google offer in 2003 because I didn't want to move to PA. So I'm not very smart.
      May 25
    • Facebook NOT Zuck
      thanks for sharing DuQvV7y! awesome read.
      May 26
    • New / Eng |l|l||l|l|
      If you're a workaholic and is single-minded in earning money in expense of everything else, sure.
      May 26
  • LinkedIn NoNoNoNoNa
    First of all, the best place to ask investment portfolio evaluation questions is Bogleheads forum: https://www.bogleheads.org/forum/index.php . People in that forum give very educated and high-quality suggestions. Please do this first.

    Next, track your expenses and investment portfolio using PersonalCapital ( https://share.personalcapital.com/x/dAZF5R ), add your accounts there, and it will analyze your asset allocation.

    Finally, in summary, you should diversify your investments. Use low-cost diversified 3-fund portfolio with small-cap value fund tilt. Read more about investing basics here: www.firetobiz.com/investing-basics .
    Jun 1 0
  • Amazon
    menthos

    Amazon

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    Microsoft, Oracle
    menthosmore
    Your rent, phone bills are high. Roth 402k isn’t a good option as it is post tax money, but go for Roth IRA as you qualify.
    May 26 0
  • Microsoft Vbsm66
    Overall, good job on the 20K rainy day fund. Hold the 20K constant, and all future cash should be going in investment accounts. I recommend something safe like a roboadvisor. Feel free to message me for more details about that.
    May 24 0

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