‘I’d like to put aside 500 a month for gas + whatever fun I want’: How should I prioritize paying off student loans, investing, and managing my finances to achieve my goals?

Hi Money Minder,

I’m currently 22 years old and I need help managing my money better. Here’s where I’m at:

– Income: 70k annually + about $500 a month from my part-time gig
– Take home pay after 401k is $3600 from my full-time job

Debt:
– Car loan: $550/month (3.7% interest) with around $23k left to pay off (not my smartest decision but here we are)
– Student Loans: $55k with roughly 7% interest total
– Living situation: I live at home with my parents and I only pay for internet ($110 a month)
– Savings: $900 in savings, working on increasing this
– Investments: $4k invested, just sitting there
– Budget: Hoping to set aside $500 a month for gas and fun money

My main goal is to get rid of my student loans, and eventually, I want to buy a house. What should I do in my situation? Any other ways to invest my money like an HSA, IRA, life insurance, or something else?

-Seeking Financial Wisdom

Response from THE MONEY MINDER:

Hello There,

Hey there,

It’s great that you’re taking the initiative to seek advice on managing your finances at such a young age. You’re definitely on the right track by evaluating your financial situation and setting goals for yourself. Firstly, I want to acknowledge that you’re in a good position living at home with your parents, which allows you to save money on living expenses. However, it’s also commendable that you’re focused on paying off your debts and saving for the future.

Given your income, debt, and current financial standing, a practical approach would be to prioritize paying off your student loans with the higher interest rates. By tackling this debt first, you’ll be able to free up more money for savings and investments in the long run. It’s also important to continue building up your emergency savings to cover any unexpected expenses that may come up.

As for investments, it’s great that you have some money invested already. Depending on your financial goals, you may want to consider diversifying your investments or exploring other options like an HSA or IRA for retirement savings. These can help you grow your wealth over time and provide financial security in the future.

In terms of your budget, setting aside $500 a month for gas and leisure activities is a reasonable amount. Just make sure to track your spending and adjust your budget as needed to reach your savings goals. Remember, consistency is key when it comes to managing your finances effectively.

Ultimately, by focusing on paying off your debts, growing your savings, and making informed investment decisions, you’re setting yourself up for financial success. Keep up the good work, and all the best from THE MONEY MINDER! Keep striving towards your goals and stay committed to your financial journey.