"Hi Help Me Retire,"
Hey there, call me Science Nerd. I’ve been a student for what feels like forever – 10 years to be exact. Got my BSc in Chemistry in 4 years, then spent another 5.5 years grinding for my PhD. After that, a quick post-doc gig until I landed a decent job. Now, I’m finally making some good money, and it’s a bit overwhelming!
For the past 6 years, I’ve been living on a tight budget of around 22-24k/year. But now, I’ve got some extra cash – about $1,700 – $2,300 extra each month after all the bills (car, rent, food, loans) are paid. I’m planning to stash away $15,000 – $20,000 in a high yield savings account for emergencies, but then I’m lost.
My buddy from high school is a financial advisor, and we’ve talked a bit. He’s keen to help me out once I’ve got a nice little fund built up. But I’ve heard mixed things about when to get financial advice – some say wait till you’ve got 50-100k saved up. I’ve also got loans to think about, like my car loan at 6% and student loans under 4.6%.
I’ve started a small retirement fund from my post-doc days, but my new job only kicks in the retirement plan after a year. On the bright side, the job treats me well – good pay, perks, and benefits.
So, here are my burning questions: Should I crush that car loan before seeking financial advice? What retirement options should I be looking at? Should I speed up paying off my student loans or focus on other investments? And when should I even start thinking about financial advice?
I’m the first in my family to break the cycle of living paycheck to paycheck, so I want to make smart financial moves. Any tips or advice would be awesome!
Feel free to ask for more details if needed. Cheers!
Response from HELP ME RETIRE:
Hello there,
Congratulations on your achievements and the newfound financial stability you are experiencing! It’s understandable to feel overwhelmed by the sudden influx of cash after years of living on a tight budget. It’s commendable that you are already thinking about your financial future and looking for guidance on how to manage your finances wisely.
Given your current financial situation, it’s prudent to prioritize building up your emergency fund first, as having a safety net in place is crucial. Saving $15,000 – $20,000 in a High-Yield Savings Account (HYSA) for emergencies is a wise decision.
Regarding your debts, paying off high-interest loans should be a priority. Your car loan at 5.99% is higher than the interest rates you can earn in most savings accounts, so focusing on paying it off early makes financial sense. By doing so, you can save on interest payments in the long run, which can then be directed towards other financial goals.
When it comes to retirement planning, it’s great that you have a small retirement fund from your postdoctoral fellowship. Once you have paid off high-interest debts and have established your emergency fund, you can start exploring retirement options. Look into your company’s retirement plan when you become eligible, as employer-sponsored plans often come with matching contributions, which can boost your retirement savings significantly.
As for student loans, since the interest rates are relatively low at less than 4.6%, you can continue making regular payments while focusing on building your emergency fund and paying off higher-interest debts. Depending on your risk tolerance, you may also consider investing in stocks or other assets for long-term wealth accumulation.
In terms of seeking financial advice, it’s never too early to start planning for your financial future. Your high school friend who is a financial advisor can provide valuable insights and guidance tailored to your specific situation. Having a professional review your financial goals and help you create a personalized financial plan can set you on the right path towards long-term financial security.
Overall, by prioritizing building your emergency fund, paying off high-interest debts, and seeking advice from a financial advisor, you are taking proactive steps towards securing your financial future. Your dedication to financial responsibility is commendable, and with a thoughtful plan in place, you are well on your way to achieving your financial goals.
Best wishes on your financial journey ahead!
Warm regards,
HELP ME RETIRE
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