letsdothis
Dryer sheet wannabe
- Joined
- Feb 20, 2020
- Messages
- 15
Thanks in advance!!
25, Single Filing Status, Graduate Student (fellowship income until May 2020), 0 dependents, US Citizen, Living in the Midwest
Would like to reach FI by age 35, but realize it may be later you never know where life will lead. In any case, the FI/RE lifestyle is something I always strive for. Hoping for first 100K by 2021!
I am currently attending graduate school for a masters to PhD in social work. Just finished the masters and early in the PhD process. Estimated graduation would be until May 2024 or May 2025…
As I consider my financial situation over the next few years, I realize as a grad student my income will be limited over the next few years, with it paying off in the future hopefully with good employment opportunities. Given that I hope to reach FI/RE, I also want to take into account whether, limiting my earning potential for various year will be worth it, if this will ultimately be helping me reach FI/RE over the longer term in contrast to leaving Now and earning a regular salary, saving even more, instead of studying all that time.
So those thoughts and considerations are taking place as I assess my situation and next steps. I am really looking to evaluate my current finances and develop my FI plan that I can use regardless of what I end up going with my education and the PhD. Anyways, this exercise may also help me worry less about my finances and feel okay with taking such a large pay cut while I get the PhD.
I am tired of getting vague advice from blogs and podcasts, or people who don’t get FI that do not speak about specific, technical and real strategies I can employ. So, I hope to get specific, tax optimized and useful information that is not something I could look up on any of the many FI blogs out there now. I have read many FI books over the past 2 years, so I feel that I have a good conceptual grasp on many basic FI things but it is when it comes to the small details and real world tasks of implementing FI strategies where I get lost. I really just need specific, practical advice of things I can do now to reach FI, and things I should consider in the near future.
Below I provide a comprehensive summary of my current situation and some future projections to answer many of the questions you may have thought as you read this. Please take a look!
Specific Questions:
Do I have too much saved in cash? If so, what should I consider doing with this money?
Should I be looking at asset allocation in terms of all of the accounts and money I have or just worry about allocation within each investment account?
How to you think about asset allocation between IRA, and brokerage accounts?
Should I invest more into the brokerage account?
And if so how should I allocate this. After some reading I have considered an 80/20 allocation but how could I reach this noting that bonds are not tax efficient enough to put in a taxable brokerage account?
Should I consider investing in other things beyond index funds like ETFs, REITs etc.?
...Have considered buying a rental property but being in a school makes it difficult to really take the time to look into that yet…
What should I consider as I go along my FI journey?!
Knowing what you know now, what would you do if you were in my situation?
My Current Financial Situation:
Gross Salary/Wages: $25,448 for 2019
Stipend
$2193.00/mo. Not-taxed until I file annual taxes
Part-time student position
$ 115.11/mo. Just stared 2 months ago
Other Income
Bank offers: average around $200-300, do not sign up for more than around 3 if they are worth it. Made $1,150 for 2019-2020 tax year, but do not expect to make that much this coming tax year since there will be banks I will not count as a new customer for…
Random favors for friends, dog sitting, or being a paid research participant. Not super significant amounts besides covering some take-out/groceries occasionally.
Savings:
Cash: $65,483.58
High Yield Savings Account $59,760.89
Checking Account(s) $5,772.69
Investments
Taxable brokerage account (Schwab): $15,175.10
Total Stock Index (SWTSX): $11,315.90
Total Int’l Stock Index (SWISX): $ 3,541.88
Dividends from 2019 $ 317.32
*Currently dividends are not automatically reinvested, I don’t know if I should do that or not. Should I automatically reinvest dividends?*
*Will not count for capital gains until around April 2020, have not held any funds for a year or more.*
Total Liquid Assets: $80,658.68
Roth IRA: $6,986.59
Total Stock Index (SWTSX): $ 5,418.56
Total Int’l Stock Index (SWISX): $ 398.05
US Bond Index Fund (SWAGX): $ 1,169.91
*Dividends reinvested automatically
Total Net worth: $87,645.24
*Was unable to contribute in 2019 because I was receiving fellowship income that does not qualify as “earned income”. Since SECURE act now allows students to invest fellowship income that did not qualify previously I plan to make full lump-sum contribution of $6000 this year from portion of money in savings account, unless persuaded that dollar cost averaging would be better…Will use as an opportunity to re-allocate based on the plan I will develop based on advice from this forum…*
State Pension Plan: was made available after starting part time position
$32.24 (only contribute enough to get match)
Adjusted Gross Income
$29,727 for Jan2019-Dec2019
Debts/Liabilities
$0
Fellowship covers tuition, Graduate Research Assistant/Teaching position in future years will cover tuition for remainder of PhD. Do not have any debt from previous undergraduate degree
Taxes:
Will owe about $1, 500 for tax not with-held from stipend payments. Not eligible for many deductions or credits.
Current Expenses: Really just the basics, and travel to visit family twice a year…
Rent (apartment): $310/mo. $3720/yr, Utilities 521/yr, Groceries 560, Eating out 282, Going out 215, Misc 1734,
I do not own a car and use public transportation covered by my student fees which reduces expenses!
2019 Expenses totaled about $11,363
Was able to save about 62% of my income last year! $18,363
Future Income:
Projected salary after graduation with PhD
Avg. professor salary starting$65,000- 70K, Tenure positions/ Leadership positions as dean or
provost (after many years (like 10yrs) of experience can go up to around 80-100K)
*As of now I see myself working as a professor or in administrative role in higher education.
Projected salary if I leave PhD program with masters only
Around 40 to 50K rough estimates
Assuming I stay in PhD program I would have a Graduate Research Position starting August 2020:
About 1930/mo. (Before taxes) $23,160/yr before taxes…
Future Expenses possibly:
Car: maybe not until I graduate, and find a job. Would buy used, and spend only enough to buy a decent car maybe around 7-12K
House: If I decided to use it as a rental property; average house in my area is around 200K for a decent place would put down 15-20% to lower interest rates.
25, Single Filing Status, Graduate Student (fellowship income until May 2020), 0 dependents, US Citizen, Living in the Midwest
Would like to reach FI by age 35, but realize it may be later you never know where life will lead. In any case, the FI/RE lifestyle is something I always strive for. Hoping for first 100K by 2021!
I am currently attending graduate school for a masters to PhD in social work. Just finished the masters and early in the PhD process. Estimated graduation would be until May 2024 or May 2025…
As I consider my financial situation over the next few years, I realize as a grad student my income will be limited over the next few years, with it paying off in the future hopefully with good employment opportunities. Given that I hope to reach FI/RE, I also want to take into account whether, limiting my earning potential for various year will be worth it, if this will ultimately be helping me reach FI/RE over the longer term in contrast to leaving Now and earning a regular salary, saving even more, instead of studying all that time.
So those thoughts and considerations are taking place as I assess my situation and next steps. I am really looking to evaluate my current finances and develop my FI plan that I can use regardless of what I end up going with my education and the PhD. Anyways, this exercise may also help me worry less about my finances and feel okay with taking such a large pay cut while I get the PhD.
I am tired of getting vague advice from blogs and podcasts, or people who don’t get FI that do not speak about specific, technical and real strategies I can employ. So, I hope to get specific, tax optimized and useful information that is not something I could look up on any of the many FI blogs out there now. I have read many FI books over the past 2 years, so I feel that I have a good conceptual grasp on many basic FI things but it is when it comes to the small details and real world tasks of implementing FI strategies where I get lost. I really just need specific, practical advice of things I can do now to reach FI, and things I should consider in the near future.
Below I provide a comprehensive summary of my current situation and some future projections to answer many of the questions you may have thought as you read this. Please take a look!
Specific Questions:
Do I have too much saved in cash? If so, what should I consider doing with this money?
Should I be looking at asset allocation in terms of all of the accounts and money I have or just worry about allocation within each investment account?
How to you think about asset allocation between IRA, and brokerage accounts?
Should I invest more into the brokerage account?
And if so how should I allocate this. After some reading I have considered an 80/20 allocation but how could I reach this noting that bonds are not tax efficient enough to put in a taxable brokerage account?
Should I consider investing in other things beyond index funds like ETFs, REITs etc.?
...Have considered buying a rental property but being in a school makes it difficult to really take the time to look into that yet…
What should I consider as I go along my FI journey?!
Knowing what you know now, what would you do if you were in my situation?
My Current Financial Situation:
Gross Salary/Wages: $25,448 for 2019
Stipend
$2193.00/mo. Not-taxed until I file annual taxes
Part-time student position
$ 115.11/mo. Just stared 2 months ago
Other Income
Bank offers: average around $200-300, do not sign up for more than around 3 if they are worth it. Made $1,150 for 2019-2020 tax year, but do not expect to make that much this coming tax year since there will be banks I will not count as a new customer for…
Random favors for friends, dog sitting, or being a paid research participant. Not super significant amounts besides covering some take-out/groceries occasionally.
Savings:
Cash: $65,483.58
High Yield Savings Account $59,760.89
Checking Account(s) $5,772.69
Investments
Taxable brokerage account (Schwab): $15,175.10
Total Stock Index (SWTSX): $11,315.90
Total Int’l Stock Index (SWISX): $ 3,541.88
Dividends from 2019 $ 317.32
*Currently dividends are not automatically reinvested, I don’t know if I should do that or not. Should I automatically reinvest dividends?*
*Will not count for capital gains until around April 2020, have not held any funds for a year or more.*
Total Liquid Assets: $80,658.68
Roth IRA: $6,986.59
Total Stock Index (SWTSX): $ 5,418.56
Total Int’l Stock Index (SWISX): $ 398.05
US Bond Index Fund (SWAGX): $ 1,169.91
*Dividends reinvested automatically
Total Net worth: $87,645.24
*Was unable to contribute in 2019 because I was receiving fellowship income that does not qualify as “earned income”. Since SECURE act now allows students to invest fellowship income that did not qualify previously I plan to make full lump-sum contribution of $6000 this year from portion of money in savings account, unless persuaded that dollar cost averaging would be better…Will use as an opportunity to re-allocate based on the plan I will develop based on advice from this forum…*
State Pension Plan: was made available after starting part time position
$32.24 (only contribute enough to get match)
Adjusted Gross Income
$29,727 for Jan2019-Dec2019
Debts/Liabilities
$0
Fellowship covers tuition, Graduate Research Assistant/Teaching position in future years will cover tuition for remainder of PhD. Do not have any debt from previous undergraduate degree
Taxes:
Will owe about $1, 500 for tax not with-held from stipend payments. Not eligible for many deductions or credits.
Current Expenses: Really just the basics, and travel to visit family twice a year…
Rent (apartment): $310/mo. $3720/yr, Utilities 521/yr, Groceries 560, Eating out 282, Going out 215, Misc 1734,
I do not own a car and use public transportation covered by my student fees which reduces expenses!
2019 Expenses totaled about $11,363
Was able to save about 62% of my income last year! $18,363
Future Income:
Projected salary after graduation with PhD
Avg. professor salary starting$65,000- 70K, Tenure positions/ Leadership positions as dean or
provost (after many years (like 10yrs) of experience can go up to around 80-100K)
*As of now I see myself working as a professor or in administrative role in higher education.
Projected salary if I leave PhD program with masters only
Around 40 to 50K rough estimates
Assuming I stay in PhD program I would have a Graduate Research Position starting August 2020:
About 1930/mo. (Before taxes) $23,160/yr before taxes…
Future Expenses possibly:
Car: maybe not until I graduate, and find a job. Would buy used, and spend only enough to buy a decent car maybe around 7-12K
House: If I decided to use it as a rental property; average house in my area is around 200K for a decent place would put down 15-20% to lower interest rates.