31, NYC, Need Advice

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Topic Author
eastsidenyc89
Posts: 12
Joined: Sun Oct 25, 2020 9:35 pm

31, NYC, Need Advice

Post by eastsidenyc89 »

I am 31, living in NYC, and am in need of advice.

I am engaged, my fiancee and I are planning a wedding. I am nervous that she'll retire and have a boatload of retirement savings and I will not be able to retire so I need the Bogle Heads community to help me understand my best options. I have NOT been as financially wise as she has been throughout life but now is the time for action. My lack of financial responsibility is taking a mental toll on me so I am putting in all on the table hoping to course correct now.

Debt - $9000 (credit card)
Income - $120,000/yr (reduced due to COVID; hoping to go back to my normal salary of $150,000/annually soon)
Rent – $1800/month
Liquid Savings - $0. I know. Not good.
Betterment Roth 401k - $9,000
Stocks - $32,000

Goals

- Aggressively pay off the debt over the coming months (I was reduced from $150,000/yr to $55k before getting bumped back to my current $120k - I don't know when I will be at full salary so $120k is where I'm at now)

- Reduce leisure spending on food and beverage as it is my main cost

- Save at least $100k (10%) for a home downpayment. My partner will save another 10%

- Maximize my Betterment Roth IRA 401k

What I'd like to better understand are:

- Annuities – are they worth it? Are they essentially like a pension? I like the idea of paying into something and getting some sort of monthly income later in life.

- Obviously, the path to getting past this hurdle is to save aggressively but the question I have is. Am I screwed? Can I course correct this and save enough over the next 30-35 years to retire? This is really hurting me emotionally and mentally lately and the time to change is now.

Thank you so much for your advice in advance.
blockdoc
Posts: 7
Joined: Wed Oct 21, 2015 12:21 pm

Re: 31, NYC, Need Advice

Post by blockdoc »

Of course you can do this! You are still young and want to save up money for 30-35 years. As is often said, the route to financial independence is simple but not easy. Don't invest in an annuity! Please spend some time educating yourself about personal finance - the wiki here is great. In the meantime, agree totally with reducing your spending and paying off debt. Then build up an emergency fund. While you are doing this, learn more about retirement investing and index funds. Once you are out of debt and have a modest emergency fund, then commit to investing every month for retirement. I would prioritize retirement savings over saving for a house, if you must chose only one goal. It's OK to rent until your finances are stable.
DarkHelmetII
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Joined: Mon Jul 24, 2017 12:25 pm

Re: 31, NYC, Need Advice

Post by DarkHelmetII »

1) Don't overly focus on owning. Renting, even longer term, is fine. Just keep investing.

2) Yes, there will always be people your age with more $$ but really, at 31 you've got a good time horizon still.

3) No annuities. Vanilla low cost tax efficient funds like Vanguard s and p 500.
Mr.Chlorine
Posts: 175
Joined: Fri Sep 13, 2019 9:17 am

Re: 31, NYC, Need Advice

Post by Mr.Chlorine »

How will financials work when married? Sounds like you are planning on keeping them 100% separated.
Mindbender
Posts: 41
Joined: Sat Feb 01, 2020 7:40 pm

Re: 31, NYC, Need Advice

Post by Mindbender »

You're not screwed and still have time on your side. This is where I think the more concrete Dave Ramsey approach is helpful. Why not sell the stocks to pay off your debt and have a great liquid emergency fund? Then start aggressively saving/investing.

When you get married are you planning on combining finances or remaining separate finances? Others may have differing opinions but I think it's helpful to work together on goals. Combining finances makes this a ton easier.

I think if you focus you'll be in great shape. Read, read, read on this site and others about personal finance.
stan1
Posts: 9550
Joined: Mon Oct 08, 2007 4:35 pm

Re: 31, NYC, Need Advice

Post by stan1 »

eastsidenyc89 wrote: Sun Oct 25, 2020 9:45 pm
- Reduce leisure spending on food and beverage as it is my main cost

- Save at least $100k (10%) for a home downpayment. My partner will save another 10%

- Maximize my Betterment Roth IRA 401k

What I'd like to better understand are:

- Annuities – are they worth it? Are they essentially like a pension? I like the idea of paying into something and getting some sort of monthly income later in life.
You don't mention your fiancee's income. Does she make about the same as you, much more, or much less? If one of you makes a lot more than the other 50/50 split probably is not "fair" especially if one of you has stable income and the other has volatile income.

Do you spend most of your leisure time with your future spouse? Is she on board with lowering leisure expenses also?

Is the Betterment account a Roth IRA or a 401K? Does your employer offer a 401K with a matching contribution?

No need to buy annuities now which are going to have high costs. Invest in your retirement accounts. You can buy a low cost single premium immediate annuity when you retire with the proceeds in those accounts.
tashnewbie
Posts: 1163
Joined: Thu Apr 23, 2020 12:44 pm

Re: 31, NYC, Need Advice

Post by tashnewbie »

Welcome!

It's definitely not too late for you. I didn't make my first 401k contribution until 31 (employer had made them in my early 20s, but I didn't make my own contribution until 31). You've still got plenty of time to invest.

When are you planning to get married? I assume your 2020 tax filing status will be single.

I'd probably aim to contribute to a *traditional 401k, not Roth 401k, unless you really think you'll have more income in retirement than you do now. You'll save on taxes now by doing traditional 401k, and the tax savings will go a long way toward filling up a Roth IRA contribution (current max for that for your age is $6k/year).

I might look at selling some of your stocks and paying off the credit card debt ASAP. I assume the CC interest rate is high. See how much capital gains you might incur to sell the stock.

I agree that it'd probably make a lot of sense for you and your fiancée to rent for a while, instead of buying.

Check out the wiki pages, such as the Getting Started, Investment Policy Statement, Asset Allocation, Investment Priority, and Backdoor Roth IRA (you may need to utilize this method after you're married) ones.
Flashes1
Posts: 1009
Joined: Wed May 07, 2008 7:43 am

Re: 31, NYC, Need Advice

Post by Flashes1 »

Combine finances, ASAP. You become a team when you get married, and it sounds like you eagerly want to adopt your future spouse's financial prowess. That's an important step.

I don't think you're in as bad as shape as you believe you are assuming I read that you only have $9k of debt. Pay that off ASAP - then start contributing ever increasingly more to your 401k and max the ROTH. I appreciate the value of home ownership, but in your case, I would recommend continue renting until your first future baby is 4-5 years old (prior to Kindergarten - then get yourself into a good school district).
stan1
Posts: 9550
Joined: Mon Oct 08, 2007 4:35 pm

Re: 31, NYC, Need Advice

Post by stan1 »

Combining finances is a personal decision between you and your spouse. I won't presume what the right decision is for you and your spouse, but you should look at income and retirement savings vehicles available to help build an approach that is fair.
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gwe67
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Re: 31, NYC, Need Advice

Post by gwe67 »

You are a good candidate for this plan:

https://www.daveramsey.com
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Broken Man 1999
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Joined: Wed Apr 08, 2015 11:31 am
Location: West coast of Florida, inland on high ground!

Re: 31, NYC, Need Advice

Post by Broken Man 1999 »

Perhaps she needs a prenup.

One thing that is positive is at least both of you aren't spendthrifts. So, as a couple, you are halfway there.

Ask for her help. Hopefully you have been honest with her, and it seems she still finds enough good in you to marry.

But, I've often read that finances is a leading cause of divorce, so if you don't change and you backslide, you might find yourself a single again.

Given your financial position, if she were my daughter I would advise her to avoid any joint accounts until you have been proven to change your ways.

You can change, and at age 31 you have plenty of time to get on track.

Best of luck!

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go. " -Mark Twain
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retired@50
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Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: 31, NYC, Need Advice

Post by retired@50 »

eastsidenyc89 wrote: Sun Oct 25, 2020 9:45 pm I am 31, living in NYC, and am in need of advice.
I'd suggest you head to the NYC Public Library. See link.

https://browse.nypl.org/iii/encore/sear ... 9?lang=eng

Regards,
This is one person's opinion. Nothing more.
BrooklynInvest
Posts: 312
Joined: Sun Jul 28, 2013 9:23 am

Re: 31, NYC, Need Advice

Post by BrooklynInvest »

Great questions.

One point - no annuities at this point. An annuity is an insurance product that can provide a steady (or steadier) stream of income at retirement. Social security annuitizes your income - you get X dollars each month regardless of where the stock/bond markets are. Some people get a fixed pension that does the same thing.

As you approach retirement, if you didn't have a pension and social security isn't what it is today then nothing would prevent you from using some funds from your 3-fund portfolio to buy an annuity - at that point. You may well decide that your asset allocation at retirement creates the level of stability you need and annualized stability (and associated expenses) aint warranted.

Good luck!
EnjoyIt
Posts: 5328
Joined: Sun Dec 29, 2013 8:06 pm

Re: 31, NYC, Need Advice

Post by EnjoyIt »

1) you income tax is very high living in NYC and may even go up next year. You need to save as much as possible in a traditional 401k. I would even consider selling some stocks to pay off debt and adding to the 401k for the year to a minimum of your employer match. You are currently paying 34% in income tax on your top dollar. For every $1k you don’t put into a 401k, you have $340 sent to the government. Plus you are missing to our employer matching that amount of any. This is costing you thousands.

You live in NYC which for many means almost no cooking. Begin cooking for yourself and only eat out on Friday or Saturday night. Bring lunch to work. I would say decrease bar visits, but COVID accomplished that for you already.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
knowledge
Posts: 302
Joined: Wed Mar 02, 2011 5:44 pm

Re: 31, NYC, Need Advice

Post by knowledge »

Track your spending, to know where the leaks are. Your pre-tax income and rent seem reasonable, so unclear where you're leaking $. Get rid of the CC debt ASAP, in fact, consider selling $9k of your stocks to do so.

Then align with your fiancee on your financial goals & spending. Money issues are very disruptive to marriages.
muffins14
Posts: 450
Joined: Wed Oct 26, 2016 4:14 am

Re: 31, NYC, Need Advice

Post by muffins14 »

You are 31 and make $150k

You should be more than able to pay off your debt within 6 months and still have left over money to save for retirement, even while at $120k instead of your full $150k

Just make a budget and see where your money goes.

I also disagree with the suggestion to bring your lunch though (at least don’t feel the need to bring it 5 days a week). You’re allowed to have the small pleasure of not eating a brown-bag lunch. you should be able to afford your needs and wants on your salary, if your wants are reasonable. For example you’re in NYC on your salary, you should be able to enjoy going out when you want to, but not to be eating $100 meals 7 days a week and $80 bar tabs weds-Sunday.

Make the budget and track your spending.

Edit- assuming your after-tax salary is about $90k, you should have $5700/month left after paying rent, then you could literally spend $100/day on restaurants and $300 per weekend on bars and _still_ have $1500 left to save. Where is your money going? Say $500/month for travel, $500 for tickets/events of some kind, and $500 for “shopping”?

This is a leaky bucket
Last edited by muffins14 on Mon Oct 26, 2020 10:43 am, edited 1 time in total.
Big Dog
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Re: 31, NYC, Need Advice

Post by Big Dog »

- Reduce leisure spending on food and beverage as it is my main cost
No, eliminate leisure spending until the credit cards are paid off.
EnjoyIt
Posts: 5328
Joined: Sun Dec 29, 2013 8:06 pm

Re: 31, NYC, Need Advice

Post by EnjoyIt »

muffins14 wrote: Mon Oct 26, 2020 10:31 am .....
I also disagree with the suggestion to bring your lunch though (at least don’t feel the need to bring it 5 days a week). You’re allowed to have the small pleasure of not eating a brown-bag lunch. you should be able to afford your needs and wants on your salary, if your wants are reasonable. For example you’re in NYC on your salary, you should be able to enjoy going out when you want to, but not to be eating $100 meals 7 days a week and $80 bar tabs weds-Sunday.
......
I would agree with this sentiment after the credit card debt is paid off and OP is saving a sensible amount for retirement/goals. Until then OP expenses are too high compared to income. This is proven by the credit card debt that is used to finance those lunches if they even exist.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
niagara_guy
Posts: 45
Joined: Tue Feb 11, 2020 8:32 am

Re: 31, NYC, Need Advice

Post by niagara_guy »

I made lots of mistakes (financial and otherwise) early in life.
I started saving at about 40 (way too late!) but saved aggressively and am now
financially secure and retired.
I am impressed with your honesty and determination to do better.

I think the advice you will get on Bogleheads is very good;
it will help you avoid the sharks that want to steal your money.
Good luck.
Outer Marker
Posts: 1303
Joined: Sun Mar 08, 2009 8:01 am

Re: 31, NYC, Need Advice

Post by Outer Marker »

You've got plenty of time left for a course correction and successful, even early, retirement. You've identified all the right things to do.

What is the interest rate on your credit card debt? Consider opening a new account with a zero interest promo rate while you pay it off. There is a small balance transfer fee, but trivial in comparison to the 25% interest rates some cards charge on outstanding balances.
hightower
Posts: 860
Joined: Mon Dec 12, 2016 2:28 am

Re: 31, NYC, Need Advice

Post by hightower »

eastsidenyc89 wrote: Sun Oct 25, 2020 9:45 pm I am 31, living in NYC, and am in need of advice.

I am engaged, my fiancee and I are planning a wedding. I am nervous that she'll retire and have a boatload of retirement savings and I will not be able to retire so I need the Bogle Heads community to help me understand my best options. I have NOT been as financially wise as she has been throughout life but now is the time for action. My lack of financial responsibility is taking a mental toll on me so I am putting in all on the table hoping to course correct now.

Debt - $9000 (credit card)
Income - $120,000/yr (reduced due to COVID; hoping to go back to my normal salary of $150,000/annually soon)
Rent – $1800/month
Liquid Savings - $0. I know. Not good.
Betterment Roth 401k - $9,000
Stocks - $32,000

Goals

- Aggressively pay off the debt over the coming months (I was reduced from $150,000/yr to $55k before getting bumped back to my current $120k - I don't know when I will be at full salary so $120k is where I'm at now)

- Reduce leisure spending on food and beverage as it is my main cost

- Save at least $100k (10%) for a home downpayment. My partner will save another 10%

- Maximize my Betterment Roth IRA 401k

What I'd like to better understand are:

- Annuities – are they worth it? Are they essentially like a pension? I like the idea of paying into something and getting some sort of monthly income later in life.

- Obviously, the path to getting past this hurdle is to save aggressively but the question I have is. Am I screwed? Can I course correct this and save enough over the next 30-35 years to retire? This is really hurting me emotionally and mentally lately and the time to change is now.

Thank you so much for your advice in advance.
So, let me get this straight...you make 120k/yr, that's at least 10k/month before taxes. Your rent is 1800 and you have a 9k credit card? So, after taxes and after subtracting your rent, you should still easily have 5k or more a month to spend, right? What are you spending 5k/month on??? You should be able to pay off a credit card of 9k in less than 2 months. I suspect that your number one problem is completely out of control, frivolous spending.

Let us help you by posting what your spending looks like here...Go through your spending on an average month, categorize each thing and add them all up...for example
Transportation (subway cards, taxi's, ubers, etc):
Clothing:
Dining:
Bars:
Entertainment:
Hobbies:
Pets:
Etc, etc...


Also, forget annuities. They are generally terrible. What you need is money in your retirement accounts, 401k, Roth, taxable brokerage. Then you invest that money wisely, let it grow, and that will be your "pension" when it's big enough to sustain you. The general rule of thumb is you need at least 25X your annual spending in investable assets. In order to calculate that, you need to be very acutely aware of where your money goes each month (which I can tell you're not currently aware of this). Then, you can safely withdraw 4% a year from these accounts and that will be your income and should cover your spending in retirement. That's the general idea. So you don't need a pension or annuities, you need savings and investments. You will also have some social security to rely on as well.
humblecoder
Posts: 275
Joined: Thu Aug 06, 2020 8:46 am

Re: 31, NYC, Need Advice

Post by humblecoder »

eastsidenyc89 wrote: Sun Oct 25, 2020 9:45 pm
Goals

- Aggressively pay off the debt over the coming months (I was reduced from $150,000/yr to $55k before getting bumped back to my current $120k - I don't know when I will be at full salary so $120k is where I'm at now)

- Reduce leisure spending on food and beverage as it is my main cost

- Save at least $100k (10%) for a home downpayment. My partner will save another 10%

- Maximize my Betterment Roth IRA 401k
Not screwed. Realizing that you have a "problem" is the first step on the path to recovery!

I don't know if your goals are in order, but if so, I would reorder them somewhat

1. Reduce spending! With your salary and rent, you are leaking a lot of money.
2. Pay off your debt ASAP
3. Accumulate an emergency fund of liquid savings. This is NOT for home down payment. It is for emergencies (layoff, medical emergency)
4. Max out your 401k. I would consider using a Traditional rather than Roth, but don't let analysis paralysis get to you on that topic. Better to save something than not save.
5. Then and only then, save money for your down payment. Even if you have to rent longer, it is not the end of the world. However, not having retirement savings or emergency savings will be the end of the world.
Topic Author
eastsidenyc89
Posts: 12
Joined: Sun Oct 25, 2020 9:35 pm

Re: 31, NYC, Need Advice

Post by eastsidenyc89 »

Thank you, all. I truly appreciate the boost in my own morals and the well-being of this community. I totally own all financial mistakes and I am glad that I can course correct here. I will course correct.

The other element I didn't mention was that I *had* savings and used that to pay for an engagement ring. I also am planning a wedding and paid 1/2 of the venue deposit on one of my credit cards (which I've paid off and now am left with that $9k balance as it was prior to putting the wedding expense on the card). Overall, the leaky bucket is indeed leaky because I haven't really saved for specific 'goals' which is part of my problem here.

I think I have a firm grasp of what I need to do.

- Pay off debt. I am considering selling about $10k worth of stock to liquidate my debt as it is all high interest or possibly getting a no APR credit card balance transfer (not sure if I quality because my credit score is about 620 so I would be open to suggestions here. This will leave me with about $20k in stock + my $9000 already in my Roth and a blank canvas.

- Regarding employer 401k, I do not have an employer 401k 'pretax' or any contributions which is a huge downside so I would be saving on my own. I need to maximize retirement savings. I am setting a goal of $2k month going directly into 401k which is $24k/yr or 20% of my income. I will put the max ($6k) into a Traditional IRA. Any other advantageous situations for tax purposes that would be worth exploring once I've maxed

- Set up a savings fund. I will put $2k into a savings fund to come up with emergency liquid living expenses until I have 6-12 months of living expenses worth saved.

Simulation of how I am thinking this will go, once the debt is paid off via selling of stock:

*My post-tax income monthly is $6700 (at my current reduced rate of $120k)
-$1800 rent expense per month
- $500 Traditional IRA max to total $6k/yr per month
- $1500 in QQQ, S&P, or Vanguard Target Retirement Date Fund per month. $350 a week will be automated to get deducted from my account and go straight into this taxable brokerage.
- $2000 goes toward emergency fund savings to reach the goal of living expenses in case life goes south per month
- $900 leftover will be divided up (Approx $205/week) and used for day-to-day living expenses such as food, etc. $30 bucks a day. I need to make this work.

I need to stick to this. Critique me. Thank you all for helping and inspiring me to carry on, course correct, and not lose hope.
megabad
Posts: 3317
Joined: Fri Jun 01, 2018 4:00 pm

Re: 31, NYC, Need Advice

Post by megabad »

Pretty good income.
You are young.
Very cheap rent.
Plan to pay off debt.
Thinking about and discussing finances before marriage with spouse.

Seems like you are already on the right path. Don’t worry so much about relative comparisons between you and spouse and “mistakes” in the past. Just move forward together and keep to your plan. The fact that you have laid this out now tells me you stand a good chance of being better off in retirement than most.

Keep it simple. Don’t worry about annuities until later.

Edit: not sure if you have 401k or not? But definitely max that.
Last edited by megabad on Mon Oct 26, 2020 7:25 pm, edited 1 time in total.
Grt2bOutdoors
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Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: 31, NYC, Need Advice

Post by Grt2bOutdoors »

You’re overthinking this. Save 15 percent in your retirement account. Fund a traditional IRA. Save some in a taxable account but first pay off ALL of your credit card debts. When you get married, open a joint savings account, a joint checking account, put your paycheck in that account and use it to pay all of your bills, use it to save for you as a couple in the taxable account. You and spouse should be on the same financial habits wavelength now. If you aren’t, then fix it so you are. Go in with the same expectations and goals. Communication is key otherwise two paddles go in opposite directions leave you with a floundering boat. Everything in moderation. Your goals should be 25x retirement expenses less Social Security. You don’t need 12 times your salary unless you continue spending every dime you make and then some.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Outer Marker
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Re: 31, NYC, Need Advice

Post by Outer Marker »

eastsidenyc89 wrote: Mon Oct 26, 2020 4:55 pm I totally own all financial mistakes and I am glad that I can course correct here. I will course correct.

The other element I didn't mention was that I *had* savings and used that to pay for an engagement ring. I also am planning a wedding and paid 1/2 of the venue deposit on one of my credit cards (which I've paid off and now am left with that $9k balance as it was prior to putting the wedding expense on the card). Overall, the leaky bucket is indeed leaky because I haven't really saved for specific 'goals' which is part of my problem here.
Don't beat yourself up too much. You only live once and bogleheads as a crowd tend to be very thrifty, perhaps too much so. That said, take a second look at your wedding expenses and how much is really necessary. You can have a wonderful wedding by renting out an elegant venue for a couple of hours in the afternoon, serving gourmet stand-up hor'devours instead of a sit down dinner, and have a great day for under $5,000. The wedding industry is borderline corrupt and robs young people of money they need to start their future. A friend who is a hairdresser says the same $125 "up-do" is $250 if its a "bridal". Go figure.

Look for the zero interest card and try to avoid selling stock and taking a tax hit if you have capital gains.
tashnewbie
Posts: 1163
Joined: Thu Apr 23, 2020 12:44 pm

Re: 31, NYC, Need Advice

Post by tashnewbie »

If you have a workplace 401k and contribute to it (max is $19.5k/year at your age), then you won’t be able to deduct a traditional IRA (TIRA) contribution. Therefore, it’s highly unlikely that it’d be worth contributing to a TIRA. Do a Roth IRA contribution instead.

You can google “IRS traditional IRA deduction limit” to look at more information about income limits for deducting a TIRA contribution.

Definitely read the wiki to start getting an education on personal finance and investing.
muffins14
Posts: 450
Joined: Wed Oct 26, 2016 4:14 am

Re: 31, NYC, Need Advice

Post by muffins14 »

eastsidenyc89 wrote: Mon Oct 26, 2020 4:55 pm Thank you, all. I truly appreciate the boost in my own morals and the well-being of this community. I totally own all financial mistakes and I am glad that I can course correct here. I will course correct.

The other element I didn't mention was that I *had* savings and used that to pay for an engagement ring. I also am planning a wedding and paid 1/2 of the venue deposit on one of my credit cards (which I've paid off and now am left with that $9k balance as it was prior to putting the wedding expense on the card). Overall, the leaky bucket is indeed leaky because I haven't really saved for specific 'goals' which is part of my problem here.

I think I have a firm grasp of what I need to do.

- Pay off debt. I am considering selling about $10k worth of stock to liquidate my debt as it is all high interest or possibly getting a no APR credit card balance transfer (not sure if I quality because my credit score is about 620 so I would be open to suggestions here. This will leave me with about $20k in stock + my $9000 already in my Roth and a blank canvas.

- Regarding employer 401k, I do not have an employer 401k 'pretax' or any contributions which is a huge downside so I would be saving on my own. I need to maximize retirement savings. I am setting a goal of $2k month going directly into 401k which is $24k/yr or 20% of my income. I will put the max ($6k) into a Traditional IRA. Any other advantageous situations for tax purposes that would be worth exploring once I've maxed

- Set up a savings fund. I will put $2k into a savings fund to come up with emergency liquid living expenses until I have 6-12 months of living expenses worth saved.

Simulation of how I am thinking this will go, once the debt is paid off via selling of stock:

*My post-tax income monthly is $6700 (at my current reduced rate of $120k)
-$1800 rent expense per month
- $500 Traditional IRA max to total $6k/yr per month
- $1500 in QQQ, S&P, or Vanguard Target Retirement Date Fund per month. $350 a week will be automated to get deducted from my account and go straight into this taxable brokerage.
- $2000 goes toward emergency fund savings to reach the goal of living expenses in case life goes south per month
- $900 leftover will be divided up (Approx $205/week) and used for day-to-day living expenses such as food, etc. $30 bucks a day. I need to make this work.

I need to stick to this. Critique me. Thank you all for helping and inspiring me to carry on, course correct, and not lose hope.
This is generally not a bad plan, but if it were me, I would

1) Not sell stock to pay off the debt and also not change it to a new card via balance transfer
a) You should be able to pay it off in a couple months of savings
b) If you get a new card, you're just going to keep overspending as per your current evidence

2) I would personally change your savings like this:

Ignoring your $1800 rent and $500 IRA, I would take the remaining $4400 and do this:
Increase your monthly budget for day-to-day things to $1500-$1600 rather than $900, because fun is good and healthy

Take the remaining $2800-$2900 and for the first 4 months just put it into an emergency fund so you have ~$10k saved. This is about 3-4 months of expenses

Then, start taking the $2800-$2900 and allocate it for your portfolio. Also realize that after covid you'll probably want to take $400/month or so for travel expenses, so instead you'll save ~$2400-$2500 after tax per month
Topic Author
eastsidenyc89
Posts: 12
Joined: Sun Oct 25, 2020 9:35 pm

Re: 31, NYC, Need Advice

Post by eastsidenyc89 »

Thank you very much again. I can't tell you guys enough how much of a relief this is to hear from Bogle Head folks. I was really beating myself up and getting down on myself quite a bit. I do really wish I had an employer who contributed to my retirement as well but since that is not the case, I think I will be just fine following the guidelines here.

In regards to marriage, my fiancee and I are discussing this which is why the reality set in and really started bating at my mind. I am sharing this information with her because her main concern is her being able to retire and travel while I still travel. Our rent, all in, is $1800 x 2 so $3600 for NYC. She makes $180k pre-tax.

Once we are married, are there any JOINT retirement accounts we can gain advantageous tax benefits from?

Also, folks, if you have ADHD, such as I do, realize that this condition DOES make it more difficult to save and while I am not using it as an excuse, it makes it very easy to forget about the future because you tend to be more caught up in the 'shiny new object' and the now instead of the future. The brain constantly seeks stimulation so it is important to understand that framework and how it impacts finances!
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teen persuasion
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Re: 31, NYC, Need Advice

Post by teen persuasion »

eastsidenyc89 wrote: Mon Oct 26, 2020 4:55 pm Thank you, all. I truly appreciate the boost in my own morals and the well-being of this community. I totally own all financial mistakes and I am glad that I can course correct here. I will course correct.

The other element I didn't mention was that I *had* savings and used that to pay for an engagement ring. I also am planning a wedding and paid 1/2 of the venue deposit on one of my credit cards (which I've paid off and now am left with that $9k balance as it was prior to putting the wedding expense on the card). Overall, the leaky bucket is indeed leaky because I haven't really saved for specific 'goals' which is part of my problem here.

I think I have a firm grasp of what I need to do.

- Pay off debt. I am considering selling about $10k worth of stock to liquidate my debt as it is all high interest or possibly getting a no APR credit card balance transfer (not sure if I quality because my credit score is about 620 so I would be open to suggestions here. This will leave me with about $20k in stock + my $9000 already in my Roth and a blank canvas.
Look for stock/funds with losses or low gains to sell to keep the tax cost down.

- Regarding employer 401k, I do not have an employer 401k 'pretax' or any contributions which is a huge downside so I would be saving on my own. I need to maximize retirement savings. I am setting a goal of $2k month going directly into 401k which is $24k/yr or 20% of my income. I will put the max ($6k) into a Traditional Roth IRA. Any other advantageous situations for tax purposes that would be worth exploring once I've maxed
I'm confused - do you not have any 401k offered at your employer, or did you just not contribute up to this point? Is there a match (free retirement money)?
Don't contribute to taxable, fill up your 401k ($19,500) and capture any matching funds.
Then contribute to a Roth IRA (not traditional).


- Set up a savings fund. I will put $2k into a savings fund to come up with emergency liquid living expenses until I have 6-12 months of living expenses worth saved.

Simulation of how I am thinking this will go, once the debt is paid off via selling of stock:

*My post-tax income monthly is $6700 (at my current reduced rate of $120k)
-$1800 rent expense per month
- $500 Traditional Roth IRA max to total $6k/yr per month
- $1500 in QQQ, S&P, or Vanguard Target Retirement Date Fund per month. $350 a week will be automated to get deducted from my account paycheck and go straight into this taxable brokerage 401k.
Remember that traditional 401k contributions are pre-tax, so this will cost you less than the nominal amount.

- $2000 goes toward emergency fund savings to reach the goal of living expenses in case life goes south per month
- $900 leftover will be divided up (Approx $205/week) and used for day-to-day living expenses such as food, etc. $30 bucks a day. I need to make this work.

I need to stick to this. Critique me. Thank you all for helping and inspiring me to carry on, course correct, and not lose hope.
yules
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Re: 31, NYC, Need Advice

Post by yules »

eastsidenyc89 wrote: Mon Oct 26, 2020 4:55 pm I am setting a goal of $2k month going directly into 401k which is $24k/yr or 20% of my income.
As a few other have said, you can’t contribute this much into a 401k, unless you maybe own your own business or something. The max for 2020 is $19500. In 2021 it may increase, but probably only to around $20000.

Just wanted you to be clear on that.

Yules
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eastsidenyc89
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Re: 31, NYC, Need Advice

Post by eastsidenyc89 »

Sorry, to clarify, there is no employer-sponsored 401k so I don't think the $19500 or whatever max it is per year applies to me. I should not have referred to it as a 401k because it is not. Again, no employer account or contribution matching

I think I am only eligible for a Roth or Traditional with a max of $6k as of this year so about $500 a month.

Once I hit my $6k, I would need to put whatever else into a taxable brokerage I believe, correct?
yules
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Re: 31, NYC, Need Advice

Post by yules »

eastsidenyc89 wrote: Mon Oct 26, 2020 6:40 pm
Also, folks, if you have ADHD, such as I do, realize that this condition DOES make it more difficult to save and while I am not using it as an excuse, it makes it very easy to forget about the future because you tend to be more caught up in the 'shiny new object' and the now instead of the future. The brain constantly seeks stimulation so it is important to understand that framework and how it impacts finances!
Not sure if you are sharing a legit medical diagnosis or not, but in any case the way to get around behavioral roadblocks is to, as they say, pay yourself first and automate these payments so they never touch your hands and you never get a chance to spend it.

Automated investing into your 401k, where the money is deducted from your paycheck and sent to the company, is one way. (They money doesn’t go to you, you don’t write a check.)

You also can set up a 2nd direct deposit account for your investing and automate that. Let’s say you want to invest $6000 into an IRA next year. Have your company diRect deposit $500/month (or $250 twice a month, or however often you get paid), and have the IRA company automatically withdraw that amount a day or two later. (Just make sure your dates are right so you don’t overdraw the account.) Again, this money goes almost directly to the IRA without you haven’t the opportunity to spend it.

Whatever money is for your bills/discretionary goes into your primary direct deposit account and that’s what you can spend. It won’t work great if your income fluctuates from $150000 to $55000, but if your income is steady, paying yourself first by automating some transactions is they way to get around behaviors or temptations to spend it all.

Good luck, and enjoy the wedding, if you get to have it with COVID and all.
Yules
yules
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Re: 31, NYC, Need Advice

Post by yules »

eastsidenyc89 wrote: Mon Oct 26, 2020 7:44 pm Sorry, to clarify, there is no employer-sponsored 401k so I don't think the $19500 or whatever max it is per year applies to me. I should not have referred to it as a 401k because it is not. Again, no employer account or contribution matching

I think I am only eligible for a Roth or Traditional with a max of $6k as of this year so about $500 a month.

Once I hit my $6k, I would need to put whatever else into a taxable brokerage I believe, correct?
Oof, no 401k. Then, yeah, after the IRA you probably would do some taxable brokerage investing.

Do some quick back of the envelope math on your MAGI. Your income has really bounced around and you should be okay, but see if you actually can contribute $6K or if you are limited to a lower amount. It depends on MAGI, tax filing status (when is the wedding?).

Here’s info on the Roth IRA limit: https://www.irs.gov/retirement-plans/pl ... e-for-2020

Here’s the info on a Traditional IRA if you do not have a retirement plan at work: https://www.irs.gov/retirement-plans/pl ... an-at-work

Good luck, it’s not easy, but it’s also not complicated if you set your mind to it.
Yules
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cchrissyy
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Re: 31, NYC, Need Advice

Post by cchrissyy »

eastsidenyc89 wrote: Mon Oct 26, 2020 7:44 pm Sorry, to clarify, there is no employer-sponsored 401k

Are you self employed? or do you get a normal W2 paycheck from an employer who just doesn't offer a 401k plan?

Asking because if you are a 1099 contractor or running a sole proprietor business or whatever, there are solo 401k plans to consider
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eastsidenyc89
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Re: 31, NYC, Need Advice

Post by eastsidenyc89 »

yules wrote: Mon Oct 26, 2020 8:01 pm
eastsidenyc89 wrote: Mon Oct 26, 2020 7:44 pm Sorry, to clarify, there is no employer-sponsored 401k so I don't think the $19500 or whatever max it is per year applies to me. I should not have referred to it as a 401k because it is not. Again, no employer account or contribution matching

I think I am only eligible for a Roth or Traditional with a max of $6k as of this year so about $500 a month.

Once I hit my $6k, I would need to put whatever else into a taxable brokerage I believe, correct?
Oof, no 401k. Then, yeah, after the IRA you probably would do some taxable brokerage investing.

Do some quick back of the envelope math on your MAGI. Your income has really bounced around and you should be okay, but see if you actually can contribute $6K or if you are limited to a lower amount. It depends on MAGI, tax filing status (when is the wedding?).

Here’s info on the Roth IRA limit: https://www.irs.gov/retirement-plans/pl ... e-for-2020

Here’s the info on a Traditional IRA if you do not have a retirement plan at work: https://www.irs.gov/retirement-plans/pl ... an-at-work

Good luck, it’s not easy, but it’s also not complicated if you set your mind to it.
Yules
Great, thank you. Yeah, it sucks there is no pre-tax investing via a workplace 401k!
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eastsidenyc89
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Re: 31, NYC, Need Advice

Post by eastsidenyc89 »

cchrissyy wrote: Mon Oct 26, 2020 8:25 pm
eastsidenyc89 wrote: Mon Oct 26, 2020 7:44 pm Sorry, to clarify, there is no employer-sponsored 401k

Are you self employed? or do you get a normal W2 paycheck from an employer who just doesn't offer a 401k plan?

Asking because if you are a 1099 contractor or running a sole proprietor business or whatever, there are solo 401k plans to consider
I get a paycheck from a W2 – I am not self employed.
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cchrissyy
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Re: 31, NYC, Need Advice

Post by cchrissyy »

ok then i want to say something encouraging - you have a positive net worth and you have youth on your side. You can definitely make wise financial choices moving forward and build a comfortable retirement.
Small Savanna
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Re: 31, NYC, Need Advice

Post by Small Savanna »

I'd advise you not to worry too much. I didn't have a positive net worth until I was in my 30s. I'm 60 now, still working, but realistically can retire any time the work stops being fun. Our retirement nest egg has quadrupled in the last 12 years; you have 30 years and that is plenty of time to reach your financial goals.
kimura king
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Re: 31, NYC, Need Advice

Post by kimura king »

Stop worrying about money, especially at 31. Just put an intense focus on consistent work, debt payoff, savings, and investing (in that order). You could find a way to up your income and your savings rate both over a short period of time.
finite_difference
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Re: 31, NYC, Need Advice

Post by finite_difference »

Are you sure there’s no 401k? It seems strange for a W2 salary above $100k to not have a 401k plan?

But if that is the case, I’d do:

-Roth IRA $6k. Sell your stocks to fund it on January 1st each year. 100% VTSAX.
-Save 10% automatically from each pay check to taxable. 100% VTSAX. Increase % as you get pay raises, and try to hit 15%-20%.
-Pay off debt aggressively and always pay off your CC each month.
-Can save additional money in taxable for a house. Could put it in VTSAX as well, but keep it mentally separate from your retirement funds.

I’m married and I think of family as a team. It’s not about who earns more or whatever. We just combine everything. That works really well for us and I have a whole philosophy on why I think that’s the best way to go. But others are perfectly content to keep their finances and debts separate. That’s crazy to me, but those on the other side of that argument probably think I’m crazy — the world would be a very boring place if one size fit all.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh
muffins14
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Re: 31, NYC, Need Advice

Post by muffins14 »

finite_difference wrote: Mon Oct 26, 2020 10:54 pm Are you sure there’s no 401k? It seems strange for a W2 salary above $100k to not have a 401k plan?

But if that is the case, I’d do:

-Roth IRA $6k. Sell your stocks to fund it on January 1st each year. 100% VTSAX.
-Save 10% automatically from each pay check to taxable. 100% VTSAX. Increase % as you get pay raises, and try to hit 15%-20%.
-Pay off debt aggressively and always pay off your CC each month.
-Can save additional money in taxable for a house. Could put it in VTSAX as well, but keep it mentally separate from your retirement funds.

I’m married and I think of family as a team. It’s not about who earns more or whatever. We just combine everything. That works really well for us and I have a whole philosophy on why I think that’s the best way to go. But others are perfectly content to keep their finances and debts separate. That’s crazy to me, but those on the other side of that argument probably think I’m crazy — the world would be a very boring place if one size fit all.
Why sell stocks and potentially incur taxes to fund the IRA rather than using new money?
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retired@50
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Re: 31, NYC, Need Advice

Post by retired@50 »

eastsidenyc89 wrote: Mon Oct 26, 2020 4:55 pm
*My post-tax income monthly is $6700 (at my current reduced rate of $120k)
-$1800 rent expense per month
- $500 Traditional IRA max to total $6k/yr per month
- $1500 in QQQ, S&P, or Vanguard Target Retirement Date Fund per month. $350 a week will be automated to get deducted from my account and go straight into this taxable brokerage.
- $2000 goes toward emergency fund savings to reach the goal of living expenses in case life goes south per month
- $900 leftover will be divided up (Approx $205/week) and used for day-to-day living expenses such as food, etc. $30 bucks a day. I need to make this work.

I need to stick to this. Critique me. Thank you all for helping and inspiring me to carry on, course correct, and not lose hope.
I'd skip the QQQ fund, even though it's been hot lately, you need a strategy you can stick with for 50 years. Use a total stock market fund or the S&P 500 fund. VTI or VOO if you're using Vanguard. Target date funds contain bonds so they can be sub-optimal in a taxable account (especially for New Yorkers). You could use a target date fund in your traditional IRA if you want, but you'll need to figure out what percent you want in bonds, then find a fund that fits your needs. Don't just use the date in the title of the fund. Look under the hood.

Regards,
This is one person's opinion. Nothing more.
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eastsidenyc89
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Re: 31, NYC, Need Advice

Post by eastsidenyc89 »

finite_difference wrote: Mon Oct 26, 2020 10:54 pm Are you sure there’s no 401k? It seems strange for a W2 salary above $100k to not have a 401k plan?

But if that is the case, I’d do:

-Roth IRA $6k. Sell your stocks to fund it on January 1st each year. 100% VTSAX.
-Save 10% automatically from each pay check to taxable. 100% VTSAX. Increase % as you get pay raises, and try to hit 15%-20%.
-Pay off debt aggressively and always pay off your CC each month.
-Can save additional money in taxable for a house. Could put it in VTSAX as well, but keep it mentally separate from your retirement funds.

I’m married and I think of family as a team. It’s not about who earns more or whatever. We just combine everything. That works really well for us and I have a whole philosophy on why I think that’s the best way to go. But others are perfectly content to keep their finances and debts separate. That’s crazy to me, but those on the other side of that argument probably think I’m crazy — the world would be a very boring place if one size fit all.
Yes, it is indeed very weird that there is no 401k plan from my employer.

Are you suggesting that I sell my balance in my Betterment Roth to pay of debt? Just want to be sure I am understanding.
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eastsidenyc89
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Re: 31, NYC, Need Advice

Post by eastsidenyc89 »

retired@50 wrote: Tue Oct 27, 2020 12:03 am
eastsidenyc89 wrote: Mon Oct 26, 2020 4:55 pm
*My post-tax income monthly is $6700 (at my current reduced rate of $120k)
-$1800 rent expense per month
- $500 Traditional IRA max to total $6k/yr per month
- $1500 in QQQ, S&P, or Vanguard Target Retirement Date Fund per month. $350 a week will be automated to get deducted from my account and go straight into this taxable brokerage.
- $2000 goes toward emergency fund savings to reach the goal of living expenses in case life goes south per month
- $900 leftover will be divided up (Approx $205/week) and used for day-to-day living expenses such as food, etc. $30 bucks a day. I need to make this work.

I need to stick to this. Critique me. Thank you all for helping and inspiring me to carry on, course correct, and not lose hope.
I'd skip the QQQ fund, even though it's been hot lately, you need a strategy you can stick with for 50 years. Use a total stock market fund or the S&P 500 fund. VTI or VOO if you're using Vanguard. Target date funds contain bonds so they can be sub-optimal in a taxable account (especially for New Yorkers). You could use a target date fund in your traditional IRA if you want, but you'll need to figure out what percent you want in bonds, then find a fund that fits your needs. Don't just use the date in the title of the fund. Look under the hood.

Regards,
Thank you.
Topic Author
eastsidenyc89
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Re: 31, NYC, Need Advice

Post by eastsidenyc89 »

One question, while I work aggressively to pay off debt, it would be easier to pay one creditor. Would it make sense to go with say a PayOff loan at 17% vs the higher rates with a card and just pay them directly? CK says I have great approval odds for $20k, I would simply take 11k they deposit into my account and pay it off, and then make the remaining $9k payments monthly. Does this make sense or should I just stick to paying each card using the DR method of listing smallest to largest?
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retired@50
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Re: 31, NYC, Need Advice

Post by retired@50 »

eastsidenyc89 wrote: Tue Oct 27, 2020 9:23 am One question, while I work aggressively to pay off debt, it would be easier to pay one creditor. Would it make sense to go with say a PayOff loan at 17% vs the higher rates with a card and just pay them directly? CK says I have great approval odds for $20k, I would simply take 11k they deposit into my account and pay it off, and then make the remaining $9k payments monthly. Does this make sense or should I just stick to paying each card using the DR method of listing smallest to largest?
What happened to this plan?
- Pay off debt. I am considering selling about $10k worth of stock to liquidate my debt as it is all high interest or possibly getting a no APR credit card balance transfer (not sure if I quality because my credit score is about 620 so I would be open to suggestions here. This will leave me with about $20k in stock + my $9000 already in my Roth and a blank canvas.
I like the idea of paying off the debt immediately. You've already given enough money to the credit card company. End it soon.

Regards,
This is one person's opinion. Nothing more.
tashnewbie
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Re: 31, NYC, Need Advice

Post by tashnewbie »

retired@50 wrote: Tue Oct 27, 2020 10:06 am
eastsidenyc89 wrote: Tue Oct 27, 2020 9:23 am One question, while I work aggressively to pay off debt, it would be easier to pay one creditor. Would it make sense to go with say a PayOff loan at 17% vs the higher rates with a card and just pay them directly? CK says I have great approval odds for $20k, I would simply take 11k they deposit into my account and pay it off, and then make the remaining $9k payments monthly. Does this make sense or should I just stick to paying each card using the DR method of listing smallest to largest?
What happened to this plan?
- Pay off debt. I am considering selling about $10k worth of stock to liquidate my debt as it is all high interest or possibly getting a no APR credit card balance transfer (not sure if I quality because my credit score is about 620 so I would be open to suggestions here. This will leave me with about $20k in stock + my $9000 already in my Roth and a blank canvas.
I like the idea of paying off the debt immediately. You've already given enough money to the credit card company. End it soon.

Regards,
+1. I wouldn't have any CC debt by November 1, if I were you. I can't imagine you're going to have more than probably $5k capital gains (on a sale of $10k), and combined with your lower income year, you won't owe much taxes.

I wouldn't complicate this debt payoff. Don't get "cute" with it.
muffins14
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Re: 31, NYC, Need Advice

Post by muffins14 »

You have enough cash flow to pay this off in a few months if you actually try. Stop trying to take on more debt.
massmike7
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Re: 31, NYC, Need Advice

Post by massmike7 »

Hey as you mentioned you seem to be spending excessively in your dining out/entertainment categories. You have pretty high income and should be able to bounce back quickly.

I saw above you mentioned ADHD spending is tough. Pay attention to this right here, as someone who has ADHD I can tell you that the best tool in my belt are two things.
1.) Employer withdrawals - take the urge out of you, if you have an option for an employer to remove $XXX a week and put it right in your retirement account do it. Then base your budget off your new take home.
2.) Check out 'You Need a Budget' or YNAB for short. ynab.com this tool is awesome and it helps me see my dollars and track how much i've been spending in each category I set. The mobile app is pretty crappy (just good for syncing transactions) but the full desktop website is where its at. Go signup, watch the tutorials, link your accounts, set your budgets and see how well it helps the ADHD mind see money, plan it, and save it!
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