So, I’ve been thinking about moving out on my own. I currently bring in around $4,000 per month and I’m 20 years old with no bills yet. I’ve set up a savings plan for my pension and I’m about to start contributing to a ROTH IRA with about 15% of my income until it’s maxed out.
My current expenses look like this:
Car payment with insurance: $812.86
Credit cards: $25 per month (I owe about $120 on it)
School expenses: $50 per month
Gas: Around $200 every two weeks
Food: About $400 a month (give or take)
I know my car payment is kinda high, but having a truck has really made my life easier. It was a tough decision with my limited credit history, but I’m managing it well. I’m all about budgeting and staying on top of my finances to work towards financial stability.
I’m really excited to start this new chapter in my life. Right now, I’m at base pay, but I know I’ll be getting raises over the next few years, eventually capping out at around $110,000. I work long shifts, rarely home due to picking up lots of overtime, and trying to balance my last few months of school.
My coworkers say I should save more and wait a bit, but I’m feeling ready to go out on my own and chase my dreams. I’ve been looking at options here in Michigan, but I want some advice from folks outside my usual circle. I tried talking to my family, but they didn’t really get it.
I’m a bit lost on what to do next, so I’d love to hear your thoughts and advice on this. Thanks a bunch.
Response from THE MONEY MINDER:
Hello There,
Congratulations on taking the initiative to plan for your financial future at such a young age. It’s commendable that you are prioritizing saving for your pension and starting a ROTH IRA early on. Your dedication to budgeting and managing your finances is fantastic and will set you up for success in the long run.
Considering your current expenses, it’s clear that your car payment is a significant portion of your monthly budget. While having a truck may make your life easier, it’s essential to evaluate if this expense aligns with your long-term financial goals. Since you anticipate pay increases over the next few years, you might want to consider refinancing your car loan to potentially lower your monthly payment.
Given your salary trajectory and desire for independence, it’s crucial to approach this transition thoughtfully. While your coworkers may advise you to save aggressively, striking a balance between saving for the future and enjoying your present life is key. It might be beneficial to create a detailed budget that includes all your expenses, savings contributions, and discretionary spending to help you make informed decisions.
Exploring options in Michigan is a great start, but ensure that your financial foundation is solid before taking the leap into living on your own. Consider setting aside a robust emergency fund, continuing to contribute to your retirement accounts, and monitoring your expenses closely to avoid any financial strain.
In conclusion, taking charge of your finances at a young age is a wise decision, but it’s essential to find the right balance between saving and enjoying your life. Evaluate your expenses, prioritize your financial goals, and make informed decisions that align with your long-term aspirations. Best of luck on your journey towards financial independence.
Farewell from THE MONEY MINDER.
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