Just moved from a TC of “Afford rent and save a little but focus on upping tc” to “okay bud, time to start thinking about the future. (and keep tryna up the TC).” So Im budgeting things out now. After 1500 monthly contribution to 401k, my monthly take home is going to be $8000 a month after taxes. Current rent, subscriptions, muni, living expenses (not food) and gym is $3000 a month, car is paid off so no car payment. Leaves about $5000 to play with. Right now Im thinking 1000 a month into a 2% interest savings, 2500 in ETFs. Once I have 3 months of income in savings Ill start putting $3000 into ETF’s and $500 in savings. Plus the stocks I get vesting from work = additional 37500 a year. This leaves me 1500 a month for personal spending, and anything I dont use Ill just roll into savings. And when it comes time to buy a house Ill liquify some of my holdings for that. Basically of my 210k income, at the end of the year Ill have maxed 401k, 12,000 to savings and ~70k into stock portfolio. Is this good? should I be saving way more? Should I be doing something else with my money? Would you do anything different? Anything I can do to not get slaughtered by taxes? My biggest concern is it taking forever to save up a downpayment on a house or rental property and getting reamed by taxes. Background to help w understanding my situation: 24, Live in SF, unmarried, no health problems, no kids. YOE: 1.5 TC: 210k
You’re killing it. Congrats and sounds like a good plan. Might could throw some into an IRA to supplement the 401k
You are doing good..
You are saving >100k with a pretax salary of 210k. Good job.
Transfer money to traditional Ira and then I to Roth IRA (backdoor Roth) which right now is 6k/year. Roth IRA allows you to withdraw principal amount any time and growth in that account is tax free
Nice, I’ve heard about backdoor Roth’s but hadn’t really looked into them. I’ll take a peek now. Thanks!
It’s a lot easier than you think. You literally just need to have both Roth IRA and traditional Ira account (I use fidelity) and I first transfer 6k into traditional Ira and don’t invest it in anything, then I transfer it into my Roth IRA after one day.
Enjoy the money while you are young!
Nice TC with only 1.5 YOE