Late 20s new mom :)

[REWahoo]

Immediate changes I've made:
--I upped my pre-tax 401(k) contributions from 10% to 15%. The agency offers a paltry 1% (but it counts!), bringing my total contribution to 16%.
--I am paying down my credit cards weekly. Goal is to be down to $1,000 collectively by the end of November.
--I have increased my IRA contributions to $200 monthly, with plans to increase this as time progresses.
--I have listed my car for sale.

That's huge! (Please mods, this isn't a political comment!!!!)

 

[splitwdw]

Yay, for you!
One other thing, if you celebrate any of the gift giving events (Christmas/Hanukkah) that are coming up. It's not what you spend it's the thought. You don't have to impress anyone. If your child is very small they don't need a lot of toys. My one younger sister buys her kids (2 & 4) tons of toys each year. Why?

 

[Katiek]

early retirement or bust, congrats! You're young and have time on your side. The steps you're taking now will have a big impact down the road. Since your fiance is also a saver, I think you'll be a great support for one another, It's important that you make sure to include some fun in your life and that it isn't all about future goals, but when spouses agree on approach, you'll likely find you can have as much fun with casual nights as more expensive dinners.

 

[Closet_Gamer]

Wow you guys are so insightful and non-judgmental. Thanks!

In hindsight, I should have bought a used version of my car. Luckily, I do have a zero percent interest rate.

My fiancé and I save separately and collectively. He invests way more than I do and also owns several properties. I'm trying now to work to get to where he is.

The reason I'm counting my income separately is that I feel I need to step my game up. And I don't want to rely on him for everything.

Also as far as my son's education: I am also saving to send him to specialized programs and good schools now (even as a toddler). I figure it'll pay off for him when it's time for college. I'd also like to start a very aggressive investment account for him as a baby to help him accumulate money in the long run. I don't feel it makes sense to try to save in a bank account or CD today's dollars for his college. Any suggestions are greatly appreciated here


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IMHO, you're worrying about too many things at the same time. That's both discouraging (you'll feel behind on everything) and self-defeating as you try to accomplish too much.

I'd suggest worrying about things in order:

1). Get out of consumer debt, particularly the credit card. As noted by others, sell the 2nd car is the easy way
2). Ensure the emergency fund is up to snuff...6 mos of cash.

3). While doing 1&2, learn and read about investing. Don't expect a direct financial result, expect to be better prepared to take on the next steps. Ensure you know how much you're saving for college, retirement and target timelines. This will require you to put yourself into the future and work backwards from those needs. It will likely also scare the heck out of you. Don't panic, use your new knowledge to plan and focus your energy on LBYM.

4). Ensure you're in a good school district and jettison any ideas about private education for junior...outrageously expensive and not worth it if your ensure you're in a good district. You, your spouse and the values/discipline you impart will be a much greater determining factor in junior's future success.

5). Open both Roth IRA and 529 college accounts. Save per the plan you developed in #3. Do it religiously, don't blink and every time you see an opportunity to get ahead of the plan, take it.

You can do this. You just need to have goals, a plan and commitment.

Good luck.

 

[MBAustin]

Good for you, OP!

One reason I would consider opening a 529 is that you can ask family to contribute to it rather than giving extravagant gifts and they know it will go to your son's future education. If that's relevant in your family, it could add up over the years.

A strategy for increasing your savings (retirement or otherwise) is to put all of your pay increases towards savings rather than increasing your spending. Tracking your expenses in detail will help with that as well.

Keep us posted and keep asking the good questions - we're cheering you on!

 

[early_retirement_or_bust]

Hi guys! I'm back. Been reading through here and taking in a lot of your sage advice. I have gotten very aggressive and actually see some progress in my tiny portfolio already! I have started telling people "no" and am saving with the idea that helping myself helps my son later on.

My one weakness is that I suck at doing a budget/tracking my expenses. Now, I do have automatic deposits taken out pre- and post-tax for savings. But I need help establishing a set budget every month. For context, my monthly expenses are
1) Car note
2) Cell phone
3) Groceries
4) Stuff for baby
5) Misc (food at work, gas, etc.)
6) Medical (for baby and I--don't like my fiance's medical plan)

Again, I'm grossing a little over $50k annually, if that helps. I really want to do a solid budget so I can trim more fat and pay down the CCs faster and also save more once they're paid in full. Thanks!

 

[Katiek]

I think it's easier to budget if you track what you're actually spending for at least a few months. You may see some categories that surprise you and are easily identified as areas that you can cut back without really impacting your lifestyle.

 

[early_retirement_or_bust]

I think it's easier to budget if you track what you're actually spending for at least a few months. You may see some categories that surprise you and are easily identified as areas that you can cut back without really impacting your lifestyle.

True. I was using Mint...it's okay but I want to do budget planning a little differently.


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[hnzw_rui]

True. I was using Mint...it's okay but I want to do budget planning a little differently.

You could try using YNAB (You Need A Budget). You have to input expenditures manually which does, I find, make you more aware of where your money is going.

 

[Ronstar]

Congrats, OP! You're doing fine. Great advice from the posters and your plan sounds great to me. Just keep tracking expenses, develop a budget, and follow through on keeping spending as low as possible. And maximize 401k. I found that saving for ER was not a set it and forget it thing. All saving and spending plans need to change through life because stuff happens along the way. Good luck, and keep us posted on your progress!

 

[retiredinnyc]

I'm going to take the oposing view

I don't know your relationship with your man , but you have Zero net assets. He dumps you and where is your emergency fund? You bought a 24,000 car for your sons safety, where is his safety if Murphy's law strikes? If my daughter was relying on her man for everything else I would not sleep well at night. I don't want to sound harsh but baby Mamas get dumped all the time, I would think an emergency fund is the first order of business

 

[early_retirement_or_bust]

I don't know your relationship with your man , but you have Zero net assets. He dumps you and where is your emergency fund? You bought a 24,000 car for your sons safety, where is his safety if Murphy's law strikes? If my daughter was relying on her man for everything else I would not sleep well at night. I don't want to sound harsh but baby Mamas get dumped all the time, I would think an emergency fund is the first order of business

Hmm, well good for your daughter. I spent my 20s bailing people (including family) out, so I had to use my savings

I am here learning how to rebuild my savings/beef up my retirement. I bought an income property cash that I'm renting next month. I'm in an in-demand field. I think I'm doing ok for a "baby mama," but thanks. If you don't have anything constructive to say, then don't comment. But I do agree about the emergency fund.

 

[retiredinnyc]

I would sell the rental property too, with 2,000 in emergency fund how do you plan on fixing the boiler/roof/sewer line when they break. When the tenant tells you they saw mice ,the wires in the wall are shorting out, they tripped on the what ever that they will claim was your fault and they won't pay till you remedy the issue. Then they call the local building department to report violations wether real or imagined. They call the I.r.s on you because they think you not reporting the rent. Being a landlord can be a nightmare. As far as not being good making a written budget , you will get better with time. The first few are guesses, after a few months you will be real close

 

[Rickt]

Early_Retirement_or_bust, kudos to you for wanting to start saving for retirement at such a young age---you have a head start compared to other young people your age.

Lots of good advice from many members here. I too think you need to first focus on building stability in your personal life, build up an emergency fund, then pay off the debts one at a time and lastly increase your retirement savings in tax deferred/tax exempt accounts. In the meantime, stick around, read and learn about investing for the long term.

Good Luck.

 

[Standard Staples]

Hi guys! I'm back. Been reading through here and taking in a lot of your sage advice. I have gotten very aggressive and actually see some progress in my tiny portfolio already! I have started telling people "no" and am saving with the idea that helping myself helps my son later on.

My one weakness is that I suck at doing a budget/tracking my expenses. Now, I do have automatic deposits taken out pre- and post-tax for savings. But I need help establishing a set budget every month. For context, my monthly expenses are
1) Car note
2) Cell phone
3) Groceries
4) Stuff for baby
5) Misc (food at work, gas, etc.)
6) Medical (for baby and I--don't like my fiance's medical plan)

Again, I'm grossing a little over $50k annually, if that helps. I really want to do a solid budget so I can trim more fat and pay down the CCs faster and also save more once they're paid in full. Thanks!

This actually opens up a good topic: don't let the $50K number dictate your budget. Too many people get stuck on the concept of "I have $X, I allocate/spend $X and I'll be okay," which leads to lifestyle creep. As your income goes up, so does your spending. Go ahead and find your rock bottom budget numbers over the course of a few months, adjust as needed and lock it in.

For me, Mint has always been the best/easiest way to budget and track. You have constant and real time access to all of your transactions in one place, and you get alerts if you go over budget on anything. It may be worth giving it one more shot.

 

[early_retirement_or_bust]

I would sell the rental property too, with 2,000 in emergency fund how do you plan on fixing the boiler/roof/sewer line when they break. When the tenant tells you they saw mice ,the wires in the wall are shorting out, they tripped on the what ever that they will claim was your fault and they won't pay till you remedy the issue. Then they call the local building department to report violations wether real or imagined. They call the I.r.s on you because they think you not reporting the rent. Being a landlord can be a nightmare. As far as not being good making a written budget , you will get better with time. The first few are guesses, after a few months you will be real close

Considering nothing was wrong with the place except carpet and painting, I'm keeping it. Just because I'm starting with $2,000 doesn't mean I am not actively saving way more now. Plus, I paid $7k; the house is projected to be worth $50k+ next year and is already valued at $30k. So I'm going to hold out and if worse comes to worse, then I'll sell as you suggested.


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[retiredinnyc]

I didn't mean to be a downer on you, for that I apologize,. I wS pointing out that things happen , I was pointing out what happens to landlords and it would be prudent to have a larger reserve when buying investment property. I wanted to give you an opposing view, everyone was telling you it was all roses, and I saw a potential downside and if it happened to you I wanted you to be alert the the very real possibility of problems, so that your not blind sided.

 

[early_retirement_or_bust]

I didn't mean to be a downer on you, for that I apologize,. I wS pointing out that things happen , I was pointing out what happens to landlords and it would be prudent to have a larger reserve when buying investment property. I wanted to give you an opposing view, everyone was telling you it was all roses, and I saw a potential downside and if it happened to you I wanted you to be alert the the very real possibility of problems, so that your not blind sided.

No I got a bit defensive because of the BM comment--I apologize as well. Truth hurts, I guess lol. I really joined to hear the cold, hard truth, so I need to hear all sides. You are right. I'm probably better off flipping the property for savings sake. That $ is what I need to build my nest egg.


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[Walt34]

Too many people get stuck on the concept of "I have $X, I allocate/spend $X and I'll be okay," which leads to lifestyle creep. As your income goes up, so does your spending.

Another way is to use percentages or fractions of your income as it rises so you can have at least a little lifestyle creep. Ten years from now you're going to want to splurge a little once in a while and that's okay, you have to live a life too.

The important thing is to spend less that your income.

 

[hnzw_rui]

Another way is to use percentages or fractions of your income as it rises so you can have at least a little lifestyle creep. Ten years from now you're going to want to splurge a little once in a while and that's okay, you have to live a life too.

The important thing is to spend less that your income.

+1. Just don't let lifestyle creep up too much.

Alas, I'm guilty of splurging too much and just all around wasteful spending in my late 20s. Regular wages were flat and sometimes even declined but for a couple of years, we got a lot of overtime due to personnel attrition. The overtime wasn't part of my normal budget and I pretty much just spent it all.

Thankfully, woke up after a 2-year spending spree.