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24 y/o just looking for some advice
Old 01-25-2014, 12:50 PM   #1
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24 y/o just looking for some advice

Hey guys. I had a couple questions about the current "road" I am taking and my alternatives.

Currently I work for a union job and if I stay here 30 years I would get a pension of about $2200/month. I am not sure if that increases to keep up with inflation? I am sure it probably does, but I need to find that out. Also I have pretty much free health insurance for me and my family. Very good benefits with Kaiser.

I just started my 401k last year, and have about $4k in it. I put 15% of my weekly check in which comes out to about $120/week, so $6240/year. I would really like to increase it to $200/week.

I am also going to school to become a physical therapist, but that is going to cost around $100,000 total. So I would accumulate more debt but I would also make more. But I would also probably have to pay for health benefits depending on where I worked, so I am not in a rush to do that.

My questions are:

1) Should I count on SS benefits when Im older?

2) My union job is pretty boring, but it looks like I would be set there if I got the pension. The pension is part of the Western Conference of Teamsters and I think it is a 90 billion dollar fund so would it be better to stay there financially because of the pension?

3) My wife and I hardly go out or do things because we are paying debt and saving money, and we have 2 kids and we like to stay home with them. So the only unnecessary expense I want is a new car. Not brand new but it nice so as long as Im still saving in my 401k, my wifes 401k, and my pension, can I justify getting a new car payment?

Thanks guys, I'm excited to learn a lot here and gain wisdom
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Old 01-25-2014, 02:48 PM   #2
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If I could give my 24 year old self a piece of financial advice it would be to save as much as possible in 401K/IRA (but still enjoy life of course). If DH and I would have saved more $ earlier (and saved smarter using index funds) we could relax a little more now as we get closer to retirement. Never underestimate the power of compounding! But you also need to take time to "smell the roses" and enjoy the journey. Hopefully you will have a long and happy marriage! Also avoid expensive vehicles! You are only 24 years old and you should be proud that you are thinking about such important things already. It sounds to me like you are going to do fine no matter what you decide.
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Old 01-25-2014, 03:18 PM   #3
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Welcome! It's great you are starting so early! I agree with don'tworry -max out both 401Ks every year, I suggest going all equity index funds and just let them do their job over time - having such a long time horizon is really stacking the deck in your favor. Put as much of your money to work as you can....but you are only young once so enjoy the present as well as planning for a bright future.
There are many nice late model used cars out there that will br reliable and not create much debt. Enjoy the journey
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Old 01-25-2014, 04:17 PM   #4
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Hi gladx4,

You might want to take a serious look at how long the union job may last. There have been a lot of union jobs that have gone away in the last 20 years. What are the prospects for your job over the next 30? If your job is boring now, it could be excruciating in 30 years. You may want to RE well before the 30 year mark. Lifetime jobs in today's market are few and far between. Other skills are a good thing to have so education is good, but expensive. Spend some time looking around this forum. Lots of good stuff to help you with planning. Good luck with what looks like a bright future!
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Old 01-25-2014, 05:09 PM   #5
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Welcome! It's great you're planning early! I concur that saving in index funds is a great way to start investing. You should also build up an emergency fund of about one year's worth of living expenses over the next few years. Work hard to get it up to three months cash in savings, then split between meeting the one year of expenses goal and investing.
It sounds like you're not really into the union job, so sticking with it for a pension thirty years down the road may not be worth it. I had a union job for a year and couldn't stand it. I left and did better. You can do better if you commit to living below your means and investing. The pension probably does not have a cola unless it's government. Even union pensions and health plans are at risk in today's environment. You've probably heard what was happening in Washington state and Detroit. Social Security will be around in some form, but may not be as generous for your generation. If you plan on saving enough to live without it, any you do get is gravy.
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Old 01-25-2014, 05:23 PM   #6
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You are only 24 years old and you should be proud that you are thinking about such important things already. It sounds to me like you are going to do fine no matter what you decide.
+1 on that!

Way ahead of me at that age.
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Old 01-25-2014, 09:53 PM   #7
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Thx for the responses. I still feel behind though, as in I should have been focused on this 5 years ago!

Anyway, I will continue to put money in my 401k and keep increasing it with the raises. My fiance thankfully gets a 3% match so she will put 7% and get 3% so 10%. For her that will be about 50/week, not much but its something we can increase. She just got promoted to assistant manager so she should be getting a raise.

The one thing I do need to work on is an emergency savings. We will be moving into a new house in a week, its a 30 yr fixed, 4.75%. But we don't really have an emergency fund which scares me a little. Thankfully the house is newer (built in 94) and doesn't need any repairs but it is still scary. I will definitely be saving money for 3 months expenses.

Should I drop my 401k for 6 months and save as much as I can into an emergency savings, then start the 401k again?

Also, about a new car. I know it would be financially stupid to get a 300, 400, 500 dollar car payment, BUT it would be the only bill we have that actually goes for something we dont really need. I want a new car so bad, I have driven trash cars all my life and I try to justify me getting one, but at the same time I know all that extra money could go to my retirement. I guess I need to find a balance because like someone said I would like to "smell the roses" on my journey to retvirement. If I can still save 15% of my check to retirement, plus my pension and SS benefits, I think getting a car payment wouldnt be so bad. Anyone agree?
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Old 01-25-2014, 10:05 PM   #8
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Oh and my union job is pretty boring, but I could stick with it if I had to. I am going to school because if I dont have to stay there 30 years I wont, but I am not able to go to school full time with a full time job and 2 young children. So I am ok with the job since it is union, and it has a pension.

Plus, my older brother might buy a plant where he buys his seeds from (he has an online alternative health business), so if he bought it I would basically be a manager there and he would pay me more than I make now, but I would probably have no benefits or pension. So we will see
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Old 01-25-2014, 10:41 PM   #9
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Welcome gladx. Glad you are starting early. A couple of things to think about with the new car.

1) A car is a "depreciating asset". Meaning it goes down in value each year. New or old, it doesn't matter. Yes it is a better financial decision to buy a good used car.

2) If you do buy a car, don't forget to factor in the increases in property taxes and car insurance to the "overall" cost of owning it. If it is a much nicer car than the one you have been driving, those buckets will increase.

$300 to $500 dollars a month may not sound like a lot but it is best to look at it's cost over 5 years. That is $18,000 to $30,000 just in payments, not including possible increases in property tax and insurance.

You decide. Would you rather have your money in car that at the end of 5 years may not be worth much more than $6,000 to $8,000 or would you rather put it towards your savings and/or 401K (perhaps buying a good used car with a much lower payment).

All of that said, if you intend to keep the car 6 years, 10 years or more, the cost per year goes down. But no one can predict how good a car will be or how much money you will have to sink into it going forward.

I know it's tough. We preach to our kids all the time. One just bought a new car and the other two just bought good used ones at a much cheaper price with only about 20,000 miles on them.


Good luck with your decision!
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Old 01-26-2014, 12:13 AM   #10
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Yea I would get a used car with low miles, not a new one. But if it was a newer one I would probably get a hybrid. I know that would save gas which would make my overall cost lower. But if I got what I loved it would be a charger SRT8

I am going to keep thinking about it. Like I said I want to smell the roses on my journey to retirement and its the only expense I would have that is not smart financially. I feel maybe its OK to be 90% financially smart
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Old 01-26-2014, 03:12 AM   #11
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Just for laughs I will tell you what I drive. You must remember that I am a mom of 3 and spend much time being a taxi driver to kids activities . I drive a 2005 (or is it 2006?) Dodge minivan with 106000 miles. I haven't been in the back (3 rd) seat for awhile but I can bet I'd find some pretty old mcdonalds French fries back there. We are at the point now where we tell my oldest (12) that he gets the van in 4 years, then mom will get a new (used) vehicle. It's something I like to tell his friends ha ha their buddy will be driving a minivan. I will say that when I was your age I cared a little more about what I drove, now don't care as long as it gets us safely from point A to point B and can fit kids, dogs, husband, and all their "stuff" .
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Old 01-26-2014, 07:52 AM   #12
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$100k for a physical therapy degree sounds like a poor investment.
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Old 01-26-2014, 08:21 AM   #13
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Originally Posted by gladx4 View Post
My questions are:

1) Should I count on SS benefits when Im older?

2) My union job is pretty boring, but it looks like I would be set there if I got the pension. The pension is part of the Western Conference of Teamsters and I think it is a 90 billion dollar fund so would it be better to stay there financially because of the pension?

3) My wife and I hardly go out or do things because we are paying debt and saving money, and we have 2 kids and we like to stay home with them. So the only unnecessary expense I want is a new car. Not brand new but it nice so as long as Im still saving in my 401k, my wifes 401k, and my pension, can I justify getting a new car payment?
1) SS will be there, but the payments could be lower than expected, and you will probably wait for older age than now to collect. It will provide some gravy, but not an entire meal!

2) Take a good look at your wages now, and try to compare to what you'd make as a PT in the future. I think that is the real comparison you want to make, rather than is it worth staying for a pension.

3) Your immediate family is now the most important thing. So it's wise to prioritize the payments you're making (mortgage, etc.), and decide if the emergency fund is more important, or is a newer car? There are things that happen, even in a newer house...
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Old 01-26-2014, 08:59 AM   #14
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Should I drop my 401k for 6 months and save as much as I can into an emergency savings, then start?

If you get a match in your 401k Contribution from your employer I suggest you take full advantage of that, then cut back on anything over the match to build up an emergency fund.
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Old 01-30-2014, 10:08 PM   #15
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Originally Posted by dontworry View Post
Just for laughs I will tell you what I drive. You must remember that I am a mom of 3 and spend much time being a taxi driver to kids activities . I drive a 2005 (or is it 2006?) Dodge minivan with 106000 miles. I haven't been in the back (3 rd) seat for awhile but I can bet I'd find some pretty old mcdonalds French fries back there. We are at the point now where we tell my oldest (12) that he gets the van in 4 years, then mom will get a new (used) vehicle. It's something I like to tell his friends ha ha their buddy will be driving a minivan. I will say that when I was your age I cared a little more about what I drove, now don't care as long as it gets us safely from point A to point B and can fit kids, dogs, husband, and all their "stuff" .
HAHA that is funny. I can see myself like that because I really dont care right now, but if there was one thing I would want it would be a nice car.

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Originally Posted by soupcxan View Post
$100k for a physical therapy degree sounds like a poor investment.
Yea that is why I am not in a rush. After paying off the debt, paying for my own health benefits, and having to put more in a 401k because of no pension, I dont know if it would really be worth it. People at my work say we really max out at 35/hr because of what they put in for our pension and health benefits. And thats what I would be making as a PT but then I would have all that debt, so I am definitely not in a rush.

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Originally Posted by target2019 View Post
1) SS will be there, but the payments could be lower than expected, and you will probably wait for older age than now to collect. It will provide some gravy, but not an entire meal!

2) Take a good look at your wages now, and try to compare to what you'd make as a PT in the future. I think that is the real comparison you want to make, rather than is it worth staying for a pension.

3) Your immediate family is now the most important thing. So it's wise to prioritize the payments you're making (mortgage, etc.), and decide if the emergency fund is more important, or is a newer car? There are things that happen, even in a newer house...
Yea I do not want to even consider SS, anything from that will just be a bonus in my eyes. I think the union job is pretty good for me for now, but I want to pursue my education instead of not do anything just to open more possibilities. The car will still be another year from now, we are under water with our current one so I would like to get out of it as soon as possible, but it will take a year at least.
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Old 01-30-2014, 10:09 PM   #16
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If you get a match in your 401k Contribution from your employer I suggest you take full advantage of that, then cut back on anything over the match to build up an emergency fund.
Hey I dont get a match which sucks, but I am going to start another thread about an emergency fund right now because its a little complicated
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Old 01-30-2014, 10:11 PM   #17
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Glad- I'm probably the only one that will say this, but I think you should get the car, just make sure you get a good deal. My worst "investment" was probably my car (luxury brand). But it that is because it isn't an investment and I didn't think it was. It was also my favorite purchase and provided a lot of enjoyment. If you stay committed to your plan, I think it could be a good reward for yourself. Maybe you'll get it out of your system while your young and not have a need to get another "expensive" car.


BUT, try living with the estimated car costs now so you know what it feels like. Take the monthly payment plus the extra gas cost plus maintenance plus extra insurance out of your checks. Feel how it is to live with that, if it is difficult, then you know what the best thing to do is, don't get the car. Try that for 3-6 months and see if you still think you want it.


Keep up the good work!
Thanks! I think our plan is to use next years tax returns (not this years) because then we would have more cash for a down payment. All our debt should be paid off by then besides my student loans and house. Plus we have 2 kids so we always get a good chunk of change back.

BUt I like your response because I agree that I want to enjoy life a little and I know this isnt financially a smart thing but I think if I am 90% doing the right thing then I will still go forward
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