23 y/o with nothing but money on the brain needs help making decisions

[aymekae]

Hi! This week has been a whirlwind of financial education for me, and I just wanted to get some advice while I sort things out. Here’s a bit of background:

Me: 23, graduated in 2007 with a BS in elementary education, but I don’t want to teach, so I got a job as an entry-level bookkeeper last year because my passion is accounting and MS Excel. Just got married in July. Planning on going back to school, at least part-time, to climb up the ranks in the accounting world.
Income: $28,000 per year (gross)
Debt (student loans only): $45,000
Savings: $0 (I had $5,000, but just spent it all on a wedding/honeymoon)

DH: 27, dropped out of college at 20 to run his own business (which he made some money at before quitting), and then he moved into his parent’s house to start a real estate career in 2005. He has not done all that well. In fact, I made more as a full-time student working 20 hours per week, than he did. However, he has decided to stick with it because it’s his passion.
Income: varies, but has been no more than $5,000 per year
Debt: $0
Savings: $60,000

Monthly expenses: $2,500-$3,000 per month (having just gotten married, things are in flux, but are hopefully calming down)

I just became eligible this week to contribute to a 401k at work. After reading everything my employer gave me, and supplementing that with research of my own, I have decided to contribute 5% of my income to the 401k in an aggressive (stock-heavy) lifestyle fund. This is because my employer matches 100% up to 3%, and 50% for 3-5% (so essentially, I put in 5%, and get 4% matching contributions). This will take about $1,400 from my income, and w/ matches of about $1,100, I will slowly begin growing my 401k at $2,500 per year.

I have made some decisions about what to do next, but I’m really curious as to what you would do in my situation. Thanks for any insight.

 

[bd68]

Congratulations on finding this board. Myself excluded...there are many successful (financially and in "life") people here...they represent an amazing sounding board for things that will come up in your life...continue to read, ask questions and learn.
If you like accounting I encourage you to continue pursuing it. I believe there will continue to be good opportunity in the field. Definitely do the 401(k). You didn't say anything specific about your expenses so all I can say is try to avoid getting sucked into the typical consumer pig American lifestyle...most "stuff" does not enhance your life...it just clutters it.
You seem like a really nice young woman...so I will try to be gentle...your DH's passion is currently your biggest obstacle to financial independence. I give him credit for the 60K in savings...but he has had three years to pursue his passion and has not been able to make any serious income...he should get a job...imagine what an additional 20K would do for your savings rate.
Wish you the best.
bd

 

[aymekae]

your DH's passion is currently your biggest obstacle to financial independence. I give him credit for the 60K in savings...but he has had three years to pursue his passion and has not been able to make any serious income...he should get a job...imagine what an additional 20K would do for your savings rate.
bd

Thanks for your kind words. I have my own opinion on THAT, you can be sure. For awhile, I even started bringing up alternative careers, but that didn't make him very happy. Last year, he said if he hadn't made a sale by the end of the year, he'd explore his options. He finally got a sale on a co-listed property, but only made about $3,000 from it. So... yeah... I don't know how much longer he can go on not making money.

As for being a typical consumer, we are definitely not that. Every piece of furniture we have we inherited from a relative or bought at a garage sale. We don't put anything on credit we can't pay off that month (we enjoy the cash/frequent flyer mileage incentives). I hate shopping, and we rarely buy anything we don't need. Spending $10,000 on our backyard wedding and honeymoon was really hard for both of us, but at least it's all paid for. Anyway... thanks for your help.

 

[bbbamI]

Your 401k is great and your option is fine as long as you understand it and the expense ratio as well.

Keep track of your income and expenses on a spreadsheet. When figures are there for you to see, it's easier to keep track of where your money goes. This will give your husband a better idea of where you are. At that point, the two of you can discuss where you want to go and how to get there together.

I assume he is relying on the $60k to help pay the bills during the slow period he is in now. Once he starts to make money at his current job or decides he needs to go elsewhere to make money, you may want to look at your student debt and add extra money to the higher interest rates if you have several loans.

 

[travelover]

Bravo to you for starting saving seriously at your age. An excellent and free way to make a decision on how to invest within your 401(k) is to post your investment options at the Bogleheads Forum. They have a neat little format worked up that really cuts to the quick.

Bogleheads :: View topic - Asking Portfolio Questions

Good luck.