Age 28, new to the forum, suggestions/comments welcome

[jags86]

Hello all,

I am new here and I was hoping to share my financial life and get some suggestions where appropriate.

Age: 28
Location: Northern NJ

Assets:

401k: 141k (invested 100% in s&p 500 fund. it has a .58% expense ratio...all other available funds have expense rations of 1.3%-2% so I do not think they are worth it)

Roth IRA: 36k (invested 30k in VTI and 6k in VFINX (bought before I knew what I was doing...do not want to pay the $50 it would cost me to sell it))

Taxable account: 25k (invested 100% in VTI)

Cash: 3.5k (low because I recently purchased a too expensive engagement ring which I do not regret doing)

Car value approx. 15k

Debts:

Car Loan: 13k at 0.9% interest, 26 payments remaining, $500/month

Income:

Net: $3150/mo
Yearly bonus nets between 5-10k

It is also worth noting that my company covers all of my car expenses as I am a road warrior. So they pay my car payment, insurance, tolls, gas, maintenance, etc. I submit my receipts and they pay direct to the various agencies so I do not incur an income tax on this. Once my car is paid off they will pay me the $500/month as a car allowance.

I try to save currently about $1100/month of my net income into my Roth or Taxable and I attempt to max out my 401k every year (my company matches 5% but there is no "true up" so I need to make sure I contribute every single paycheck for the year in order to get the maximum employer match).

I live with my SO and my portion of the rent/utilities is $950/month.

I am a natural spender and I also didn't really learn about index investing until the last year or so. From 22-24 I was making around 45k/yr and living with my parents paying no rent, yet I saved very little money (going out, buying toys because I "didn't pay rent", leasing cars). It's really only been the last 1.5 to 2 years that I've dedicated myself to try to save at least 50% of my income. I also used to try and pick stocks--for every big hit I had I also had a disaster so I probably broke even for the first few years of investing.

Not really sure if I have any specific questions, but I would just like some feedback--and I can answer any additional questions any of you may have.

Thanks for reading!

 

[rodi]

Welcome to the forum.

You're doing really well compared to where I was at your age. That's a sweet deal on you car... Wish I could get someone to pay for my car and car expenses. LOL.
Maxing the 401k and saving 50% of net is a very good, but aggressive savings plan. Is your fiancee on board with this? If she is then that is awesome! If not, you'll have to figure out a balance between domestic harmony and saving aggressively.

Again, Welcome!

 

[jags86]

Hi!

Thank you for the post. I should point out (and perhaps I wasn't clear) I do not save 50% of my net. I save about $1100/$3150 net.

My monthly expenses are:

Rent: 900 (out of 1500 total rent)
Internet: 50 (we don't split i pay 100%)
Utilities: 35ish (don't split i pay 100%)
Food: aim for $300 but that usually ends up around $350/$400
"whatever I want" money: 150
Gym: 50

I try to put away around $300/month towards a travel account and $150 towards a gift account.

My SO, age 29, does not make as much as me so I try to live as if I made what she makes (she grosses about 38k-40k). I pay more rent and cover our utilities. My real goal would be once we tie the knot to have her just save everything she makes (max out 401k/ira) and then with whatever is left cover the rest of our expenses. She is surprisingly thrifty...she has paid off 40k of student loans and has over 40k saved in various 401ks/iras/savings accounts.

I think it is very important to save into these tax advantaged accounts, however, I am having a hard time decided when to "back off" so I can start saving for a house. I don't even know if I want to buy just yet...but if any of you know the new jersey market you need to spend at least 400k for something decent...and property taxes are crazy (10k/yr+!)....coming up with 80k for a downpayment is no small task even if I were to save $1100/month into a savings account.

 

[Walt34]

So good to read that your fiance is on the same page as you on saving/spending - that is crucial.

You are way ahead of me when I was that age and you will do well.

 

[heeyy_joe]

Keep the car until the wheels fall off. When book value gets below $7k drop collision coverage and invest savings in roth. Also see if roth 401K is available through employer.

You are doing great, stay the course, good health is vital.

 

[eta2020]

You can not go wrong with VTI or S&P 500 though paying 0.58% on S&P 500 is rather high.

Consider VXUS in a future.

So far you are doing better than me at your age......

 

[MooreBonds]

Looks like you have a great handle on things so far! My only observation/concern is about your car:

Car value approx. 15k

Debts:

Car Loan: 13k at 0.9% interest, 26 payments remaining, $500/month
...
It is also worth noting that my company covers all of my car expenses as I am a road warrior. So they pay my car payment, insurance, tolls, gas, maintenance, etc. I submit my receipts and they pay direct to the various agencies so I do not incur an income tax on this. Once my car is paid off they will pay me the $500/month as a car allowance.

You appear to own the car in your name, while the company reimburses you for your auto expenses. A few concerns:

1) Insurance: Does your employer's insurance policy cover you 24/7, or ONLY for when you're driving to and from work, and while you're on the clock on your workday?

Also, what specific insurance policy coverage levels are your employer giving you for work? Is it the state minimum? Do you have their general liability umbrella also covering you?

2) Depreciation: You say your employer is paying your gas/tolls/insurance/tires/etc., but what about depreciation of the vehicle? If you put 50,000 miles on that car for work, it's worth at least hundreds of dollars (possibly a thousand or two) less than what it would be worth if you only put personal miles on it. Do you get paid a flat $/mile for depreciation from the company?

 

[jags86]

Looks like you have a great handle on things so far! My only observation/concern is about your car:



You appear to own the car in your name, while the company reimburses you for your auto expenses. A few concerns:

1) Insurance: Does your employer's insurance policy cover you 24/7, or ONLY for when you're driving to and from work, and while you're on the clock on your workday?

Also, what specific insurance policy coverage levels are your employer giving you for work? Is it the state minimum? Do you have their general liability umbrella also covering you?

2) Depreciation: You say your employer is paying your gas/tolls/insurance/tires/etc., but what about depreciation of the vehicle? If you put 50,000 miles on that car for work, it's worth at least hundreds of dollars (possibly a thousand or two) less than what it would be worth if you only put personal miles on it. Do you get paid a flat $/mile for depreciation from the company?

Hi Moore,

1) so I have a personal policy which I simply charge on a corporate Amex. They just pay for it. It's great because I have silly amounts of coverage (300k/500k) and ultra low deductibles (to the tune of like $100). At minimum if I were paying out of pocket I would raise my deductibles.

2) yes the car is taking severe depreciation--I've put 60k miles on it in a little over 2 years. What I would say is that they give me an option of taking a $550/mo car allowance (added to pay roll and taxed) or they pay $550/mo directly to my loan. Now I don't know how kosher that is on the business side, but I get $550 every month lumped off my loan and I do not pay income taxes on that. Since the money never comes into my possession I don't really think I have anything to worry about God forbid I'm audited. I take depreciation on my income taxes--so I'm essentially double dipping...I don't really know other companies stances on this type of thing but it seems to be working out well for me as far as I can tell. And since the car is worth more than I owe I could always get rid of it if I lose my job.

 

[MooreBonds]

1) so I have a personal policy which I simply charge on a corporate Amex. They just pay for it. It's great because I have silly amounts of coverage (300k/500k) and ultra low deductibles (to the tune of like $100). At minimum if I were paying out of pocket I would raise my deductibles.

Two things wrong with this picture:

1) Does your personal insurance carrier know you drive this car for work? An insurance company has a HUGE increase in risk exposure if you drive your car for work vs just for personal use, in the event that you cause an accident for business activity.

2) Does your insurance carrier know how many miles you drive each year? With more miles driven comes a directly higher chance of you getting in an accident -which is why they charge you less if you hardly drive your car, and (conversely) charge you lots more for your insurance premiums if you drive lots more.

2) yes the car is taking severe depreciation--I've put 60k miles on it in a little over 2 years. What I would say is that they give me an option of taking a $550/mo car allowance (added to pay roll and taxed) or they pay $550/mo directly to my loan.

Damn - I sure hope you have an inexpensive car to be getting that kind of monthly 'stipend' from your employer! I'd just simply buy something that wouldn't set me back more than $15,000 brand new, and have it paid off by the company in just a few years!

 

[pixelville]

2) yes the car is taking severe depreciation--I've put 60k miles on it in a little over 2 years. What I would say is that they give me an option of taking a $550/mo car allowance (added to pay roll and taxed) or they pay $550/mo directly to my loan. Now I don't know how kosher that is on the business side, but I get $550 every month lumped off my loan and I do not pay income taxes on that. Since the money never comes into my possession I don't really think I have anything to worry about God forbid I'm audited. I take depreciation on my income taxes--so I'm essentially double dipping...I don't really know other companies stances on this type of thing but it seems to be working out well for me as far as I can tell. And since the car is worth more than I owe I could always get rid of it if I lose my job.

Welcome to the forum! You are on the right track and better than most your age. It is great that your SO shares your financial values. Very important.
Buying a house at a young age takes away from career flexibility, so you need not feel rushed into it. Home ownership is a lifestyle decision more than a financial decision.

Would your employer reimburse non-commuting business miles at the IRS standard mileage rate (56cents/mile)? Might work out better for you financially?

On the car depreciation, you should double-check the validity of taking it on your income taxes. My understanding is that it needs to be unreimbursed employee business expense or you need to be self-employed. Someone more knowledgeable can clarify. IRS can come after you anytime and go far back in back-taxes, if fraud is suspected.