Lost Newcomer...Need Help!

[trying2plan]

Hi everyone...I stumbled across this website while googling info about Clark Howard and how he was able to retire at such an early age.

I am currently 25 yrs of age, graduating cum laude with a BA in English/Minor in Comm. in 2008. I landed my first job ever at a major financial corporation, which I've been at for about 9 months now. This is the problem I face... My salary is about 24k a year and I have student loans in the amount of roughly 60k. My take home pay after taxes/benes is about 1500 month. I love my collegues at work, but I am honestly overworked and underpaid, and even though I don't have much work experience, no one in my dept has a degree, but I am the lowest paid individual. I want to contribute to my 401k and learn the ins/outs of investing, but I don't think I can afford to, I'm basically living paycheck to paycheck. I live at home with my folks, and I am not in any debt whatsoever except for the aforementioned education loan, but it seems impossible to contribute money to savings, 401k, bonds, etc when I have no knowledge. I don't even know where to begin.

Any advice would be appreciated... on just starting a career, investing, retirement, etc....quite frankly, I would like to be retired around 45-50, but the sooner the better.

 

[Purron]

My best advice: live below your means and save as much as possible. Get those loans paid off. Don't buy junk you don't need and, most importantly, keep the faith! You've already realized what took me years to understand. Good for you! I'm hoping you'll become financially independent years before I did.

 

[Coach]

Be in a continuous state of job hunting-- I think changing jobs is the fastest way to grow your income. More income means more opportunity to save.

Coach

 

[Amethyst]

Find ways to save! You are only young once.

That is $18,000 a year, in the clear, with no housing expense. If the loans are your reason for not saving, try to renegotiate them. Hard to believe you are paying $1500 a month for a $60K loan.

Have you totaled up all your expenses? Is there truly nothing left that you could contribute to your 401K? Even $25 or $50 a paycheck is better than nothing! Do you expect a tax refund? Plan, now, for how you are going to invest it (not spend it).
Unless you are in a high-paying field, own your own business, or are in sales, the surest way to make $$ is not to spend $$.

I will stomp my foot about this, since you will never again be so young and therefore in such a position to take advantage of the power of compounding. The rest of us wish we were you. Especially since you do not have any housing expenses

I'm assuming if you can live at home, you can eat there too. Do you buy food or coffee at work? If so, stop, and start bringing food from home. If you drink coffee or tea, buy yourself a portable hot water maker and bring instant coffee powder or tea bags and a cup to work. Vending machines are evil - do not go within 10 feet of one.

That is just one hint - This forum can provide many, many more.

I'll leave the job-related questions to others who know the job market better than I.

Good luck and let us know how you are doing,

Amethyst

Hi everyone...I stumbled across this website while googling info about Clark Howard and how he was able to retire at such an early age.

I am currently 25 yrs of age, graduating cum laude with a BA in English/Minor in Comm. in 2008. I landed my first job ever at a major financial corporation, which I've been at for about 9 months now. This is the problem I face... My salary is about 24k a year and I have student loans in the amount of roughly 60k. My take home pay after taxes/benes is about 1500 month. I love my collegues at work, but I am honestly overworked and underpaid, and even though I don't have much work experience, no one in my dept has a degree, but I am the lowest paid individual. I want to contribute to my 401k and learn the ins/outs of investing, but I don't think I can afford to, I'm basically living paycheck to paycheck. I live at home with my folks, and I am not in any debt whatsoever except for the aforementioned education loan, but it seems impossible to contribute money to savings, 401k, bonds, etc when I have no knowledge. I don't even know where to begin.

Any advice would be appreciated... on just starting a career, investing, retirement, etc....quite frankly, I would like to be retired around 45-50, but the sooner the better.

 

[trying2plan]

Well I pay about 300 a month in interest only payments on those student loans, but I want those paid off asap...about 320 a month in child care...and contribute about 250-300 a month for the household. Everything else seems to go towards groceries, gas, general living costs. I am going to try start investing in my 401k in a month, after I gain more information.


I also forgot to mention that I would really like to purchase a home in the near future. I have been looking at a lot of HUD homes in the 25-50k range, and not a penny over! I really want to start living an independent life...away from the nest! lol

Thanks for all the advice!

 

[Amethyst]

OP, your having a child/children to care for wasn't mentioned in your 1st post, so I didn't consider it. That sounds like a challenge. Here is a statement that caught my eye, though:

"Everything else seems to go towards groceries, gas, general living costs."

In your situation, you need to know exactly where that extra $500-$600 per month goes - not seems to go. Only then, can you find the bits and pieces of extra change that can add up over time, whether in a 401K, principal payments on your loans, or toward a house.

Speaking of houses, I respect your desire to leave the nest and have your own place. Give serious thought to the cost of owning your own home - it can be higher than you'd think, or be able to handle. Homes break down and need fixing. Check this forum for discussions on that subject.

My advice would be to set up a simple spreadsheet - on paper, if you don't own a computer - with expense categories (taxes, other deductions, gas, car repairs, car maintenance, groceries, clothing, loan payments, purchased food/beverages,utilities, cell phone, children's items, doctor and dentist visits, SAVINGS, and anything else that causes you to dispense money) down the right side, and months of the year along the top. Track absolutely every dollar against those categories, including "Miscellaneous," and force yourself to track "Miscellaneous," too. Amazing, how much $$ can bleed out through that Misc category.

Have a plan for your tax refund when it comes. It sounds like you should get several thousand dollars back. Do you want that to go into your 401K? Against your loans? (My choice would be 50% 401K, 50% loans but that's just me). Some other goal?

Incidentally: Many start out as overworked and underpaid, but by taking on the "overwork," the "underpaid" part gradually starts to improve...if it doesn't, then look for another job. But don't leave the job you have until you've got another job lined up.

Also, stop worrying about who has a degree in your office. Although I am a great fan of higher education, with 1.75 master's degrees to prove it, nobody else cares who has a degree, unless it's totally applicable to the work at hand. All people care about is whether you can do your job and hopefully, help them do theirs. Take it from a fellow B.A. in Communications

Good luck!

Amethyst

 

[se012101]

I absolutely agree with what the advice of the other posters here. Keeping a log of your expenses should help you identify a few pockets where you can begin to get the ball rolling. You might have seen some recent threads here about the first $100k being the hardest to achieve. It's true, it is, baring some misfortune further down the road. But, I'll go one step further, and say that the first $1k is the hardest to achieve of all! Many people never achieve it, and continue living paycheck to paycheck. By the time you do, you have already begun forming the habit of being conscious of what you are spending, and building the discpline to save. So concentrate on little goals at first, then when those are accomplished, substitute slightly larger ones. It is important to keep glancing at the big picture from time to time, but only to the extent that it doesn't take energy away from your efforts towards your current goals.

Regarding what you said about work - I used to be in a management role for some time until I made a lateral move to a more technical role about a year ago that I enjoy a bit more. I'm 39, been working in my field for 18 years. In my management days, I would quite often find myself talking to employees in their 20's about the exact points that you brought up in your post. One thing I would tell them is that while the money they are making right now is important, the most important thing is building the skills that will earn them more money later. I tried to get them to see that by working hard now and building those skills, they were investing in their future earning potential. I think I once made an analogy that what you earn in your 20's is like a modest dividend paid by a stock that you hold, and sell for a large profit in your 30's.
This wasn't just me blowing mgmt smoke, I strongly believe this. Work on building up your skills and making yourself as marketable as possible, and the payday will come, though you often have to change jobs to get it (that was the bit I couldn't say in my discussions when I was a manager).
Best of luck!

 

[LOL!]

Why the rush to get everything done before you are 40? We didn't even think of buying a house until we were over 35. I was still in school until age 26, then I had a very low paying job overseas "for the experience".

I was married and did not have kids at that age. Our kids came along in our late 30s. Since you didn't mention a spouse but did mention child care, I would suggest finding a spouse who has a well-paying job is an idea to explore.

 

[trying2plan]

Thanks everyone for the wonderful advice thus far. I have found a budgeting spreadsheet online and am looking forward to putting it to great use.

To respond to the post above, (and I should have mentioned before about the childcare fees...320 a month for child, and am receiving no help from ex-spouse) I'm kinda skeptical on dating while my child is at such a young age...even if that person is financially well-off, just not ready for that at the moment, especially while I'm trying to get my own life together. Definitely not the type to marry for money!lol! And I kinda want a home in the near future, I'm living in an area where homes that were previously 150-175k are selling for 37-52k, and I want to take advantage of the market. So I'm really going to focus on saving and contributing to 401k, investing, etc.

Thanks to everyone though...I appreciate it!

 

[Rustic23]

Join the Air Force as an officer. A non flying officer is just about the safest job there is, and there are many jobs open to you. While you are in use their education benefits to get an MBA. You will be paid enough to make a dent in your student loans, and who knows if you like it, you might just stay long enough to collect a pension. If you get out, you will have a degree that is marketable, along with job experience.

 

[easysurfer]

I say remember to pay yourself first. That is, not look at it like if anything is left to try and invest but rather to treat the money that you invest like another bill.


Good luck to you.

 

[aaronc879]

You're in a pretty tough position. I would say don't be in too much of a rush to move out. If your parents are willing to let you live there and you're not doing permanent harm to your relationship with them then stay there. Build up your non-retirement savings so you can get a place of your own when the time comes. Find out what promotion potential you have. If there is none, then find a new job where your degree will mean something. I've seen many people with no work experience and no skills of any kind get good jobs just because of their piece of paper(degree). Look for one of those. Spend as little money as you can and save as much as you can. Track where your spending is going and eliminate anything not needed.

 

[haha]

Join the Air Force as an officer. A non flying officer is just about the safest job there is, and there are many jobs open to you. While you are in use their education benefits to get an MBA. You will be paid enough to make a dent in your student loans, and who knows if you like it, you might just stay long enough to collect a pension. If you get out, you will have a degree that is marketable, along with job experience.

+1 on this. I had a friend, no degree so no officer, but she joined the Air Force and created a life that worked for her and her 2 kids, who were getting kind of unruly. AF life turned them around too.

Realistically, you need some kind of paternal force. If you don't at present want a man, the AF fills in pretty well and you are still free.

Ha

 

[NW-Bound]

Let me tell you about the experience of my own daughter who is 24.

While finishing up her BS degree in Accounting, she worked a full-time job in the accounting department of a major corp to get hand-on experience. When she was about to graduate, she informed them that she would like to move up the ladder once she had her degree and qualified for a higher position.

Well, these bastards stalled her, bullshitting her to wait and wait for that "approval" from higher up that never came. Perhaps what happened was that she was so proficient in her work that they didn't want to find another one to fill her job. Perhaps they thought it would be simpler to hire a new person to fill a higher job that they needed, instead of promoting my daughter AND then having to fill her job too.

She was pissed, looked for another job outside that company, applied for it and was hired. She had a 50% raise, and now doing a job that is less stressful. That is good, because the new employer will pay for her tuition when she applies for admission into a Master degree program, and will need a lighter workload to study. And the new job is one mile from the local state U!

I am telling this story as an example demonstrating that many employers are really dumb. They do not know how to cultivate and retain self-motivated good workers, despite all the lip service. If you feel you are underemployed, it is your duty to yourself to go out looking for another job. But do it quietly, and don't feel too resentful to your present employer. Most often, it's just time to move on. No hard feeling.

 

[ronocnikral]

Well I pay about 300 a month in interest only payments on those student loans, but I want those paid off asap...about 320 a month in child care...and contribute about 250-300 a month for the household. Everything else seems to go towards groceries, gas, general living costs. I am going to try start investing in my 401k in a month, after I gain more information.

i'm not sure what the going rate is on these student loans...but $300/month interest only on $60k is pretty high (what, like 6% per year?). is there a way to consolidate to a smaller interest rate? i would hope there is...

 

[jIMOh]

Hi everyone...I stumbled across this website while googling info about Clark Howard and how he was able to retire at such an early age.

I am currently 25 yrs of age, graduating cum laude with a BA in English/Minor in Comm. in 2008. I landed my first job ever at a major financial corporation, which I've been at for about 9 months now. This is the problem I face... My salary is about 24k a year and I have student loans in the amount of roughly 60k. My take home pay after taxes/benes is about 1500 month. I love my collegues at work, but I am honestly overworked and underpaid, and even though I don't have much work experience, no one in my dept has a degree, but I am the lowest paid individual. I want to contribute to my 401k and learn the ins/outs of investing, but I don't think I can afford to, I'm basically living paycheck to paycheck. I live at home with my folks, and I am not in any debt whatsoever except for the aforementioned education loan, but it seems impossible to contribute money to savings, 401k, bonds, etc when I have no knowledge. I don't even know where to begin.

Any advice would be appreciated... on just starting a career, investing, retirement, etc....quite frankly, I would like to be retired around 45-50, but the sooner the better.

I mean this will all due respect...

with an attitude like that you will work until the day you die. Unless you take specific action, you will not control your own destiny.

My advice:
save SOMETHING by paying yourself first. Every pay period, set aside a fixed percentage of gross (try 5% for starters).

Most on this board save between 15-30% for retirement (or did if they are retired now). I started at 6% and increased this to 15% within a few years. then once wife came into picture and some debts got paid off was able to kick it up to 25%. While early retirement cannot be planned (yet) I believe saving 25% of my gross should get me there before age 58. I am 37 now and have been saving for about 14 years.

Solve all your problems by programming yourself that you have only 95% or 80% of gross to spend (the other percentage is saved and is untouchable).

Live on less than you earn.
Most jobs start low, and you should get raises to double your salary within 5 years.

 

[jIMOh]

Let me tell you about the experience of my own daughter who is 24.

While finishing up her BS degree in Accounting, she worked a full-time job in the accounting department of a major corp to get hand-on experience. When she was about to graduate, she informed them that she would like to move up the ladder once she had her degree and qualified for a higher position.

Well, these bastards stalled her, bullshitting her to wait and wait for that "approval" from higher up that never came. Perhaps what happened was that she was so proficient in her work that they didn't want to find another one to fill her job. Perhaps they thought it would be simpler to hire a new person to fill a higher job that they needed, instead of promoting my daughter AND then having to fill her job too.

She was pissed, looked for another job outside that company, applied for it and was hired. She had a 50% raise, and now doing a job that is less stressful. That is good, because the new employer will pay for her tuition when she applies for admission into a Master degree program, and will need a lighter workload to study. And the new job is one mile from the local state U!

I am telling this story as an example demonstrating that many employers are really dumb. They do not know how to cultivate and retain self-motivated good workers, despite all the lip service. If you feel you are underemployed, it is your duty to yourself to go out looking for another job. But do it quietly, and don't feel too resentful to your present employer. Most often, it's just time to move on. No hard feeling.

good advice as well

 

[jIMOh]

You're in a pretty tough position. I would say don't be in too much of a rush to move out. If your parents are willing to let you live there and you're not doing permanent harm to your relationship with them then stay there. Build up your non-retirement savings so you can get a place of your own when the time comes. Find out what promotion potential you have. If there is none, then find a new job where your degree will mean something. I've seen many people with no work experience and no skills of any kind get good jobs just because of their piece of paper(degree). Look for one of those. Spend as little money as you can and save as much as you can. Track where your spending is going and eliminate anything not needed.

I will second this

I have a 4 year engineering degree from a top 5 school
I am doing reasonably well IMO

My wife has a 4 year BS as well, and is doing quite well IMO

My BIL has no degree and he makes more than wife and I combined before his bonuses kick in.

If you like people, can you do sales, or store management? Stores like Sams club, Home depot or other chains could promote you to store management within 18 months and probably be a store manager within 5 years.

You need to find and create your opportunities. Sales is sink or swim... if you do well promotions come fast, if you do not do well, find another occupation.

 

[Amethyst]

am receiving no help from ex-spouse

I hope you are pursuing the deadbeat. If you don't have enough $$ for a lawyer, I hope you are exhausting all public service avenues.
It burns my butt that any parent can get away without helping to support his or her kids. Judges usually don't like it, either.

Amethyst

 

[Ed_The_Gypsy]

Join the Air Force as an officer. A non flying officer is just about the safest job there is, and there are many jobs open to you. While you are in use their education benefits to get an MBA. You will be paid enough to make a dent in your student loans, and who knows if you like it, you might just stay long enough to collect a pension. If you get out, you will have a degree that is marketable, along with job experience.

+2. The military is a great deal for those who find it acceptable. I wish I could get my boy interested.

You are making about $12/hr right now (if you work 5x8, but it sounds as if they are working you harder than that). Time to look for something better.

 

[Bestwifeever]

am receiving no help from ex-spouse

I hope you are pursuing the deadbeat. If you don't have enough $$ for a lawyer, I hope you are exhausting all public service avenues.
It burns my butt that any parent can get away without helping to support his or her kids. Judges usually don't like it, either.

Amethyst

Yes, this.

 

[usafLT]

Trying2plan,

I have a different take than most on this forum about setting up for FIRE. I know a few on here are critics of Rich Dad Poor Dad, but honestly that book made me look at money completely different. Throughout our entire lives we are told to live below our means and save. The problem with this is that it takes 10 times as long to become FIRE using your own capital. If you simply put money into a bank account or even stocks, your are trying to get rich off of yourself.

You need to try and harness the power of other people's money. My plan involves using real estate (rental properties). Here you leverage your money at least 10:1. You put down 10% (in some cases less or none) and have someone else pay the mortgage and expenses. Eventually you will own these properties outright and you truly never had to put much of your own money into them. If you truly want to retire young (meaning in your 40's or younger) this is the way to do it in my opinion.

Living your whole life below your means so you can put a couple extra dollars in a completely unpredictable stock market is not my idea of living. I know it goes against the grain so take it for what it's worth. Working harder and spending less will not necessarily make you wealthier.

 

[Nords]

You need to try and harness the power of other people's money. My plan involves using real estate (rental properties). Here you leverage your money at least 10:1. You put down 10% (in some cases less or none) and have someone else pay the mortgage and expenses. Eventually you will own these properties outright and you truly never had to put much of your own money into them. If you truly want to retire young (meaning in your 40's or younger) this is the way to do it in my opinion.

There are so many better books on rental real estate than Kiyosaki... here's two for starters:
Investing in Real Estate, 4th edition or later, by Andrew McLean & Gary W. Eldred (who's taken over the new editions) and
Landlording by Leigh Robinson (7th edition or later).

 

[usafLT]

There are so many better books on rental real estate than Kiyosaki... here's two for starters:
Investing in Real Estate, 4th edition or later, by Andrew McLean & Gary W. Eldred (who's taken over the new editions) and
Landlording by Leigh Robinson (7th edition or later).

I completely agree. RDPD is very vague on the mechanics of actually doing it. However this book made me look at money differently in the big overall picture. It makes you see why just working hard in a job, living below your means, and saving is one of the worst ways to build wealth.

For the actual "how-to", his books are horrible.

 

[Nords]

I completely agree. RDPD is very vague on the mechanics of actually doing it. However this book made me look at money differently in the big overall picture. It makes you see why just working hard in a job, living below your means, and saving is one of the worst ways to build wealth.
For the actual "how-to", his books are horrible.

He's pretty vague in the areas of "ethics" and "truth", too.

My point is that while LBYM may be one of the "worst" ("least efficient?") ways to build FI, it's also one of the most common. LBYM may not be as fast or as productive as landlording but not everyone can handle that occupation, let alone invest like Buffett or Soros.

There are many roads to ER.