'I’ve hit the 6 month mark of fully funding my emergency fund and now I don’t know what I should do next': I have financial stability, but how can I maximize my savings and investments to reach my goals?

Hi Money Minder,

I’m 25 years old and living in the Big Apple. I bring home over $6200 after taxes every month, $500 of which goes to my Roth 401K with a nice little boost from my company and another $1,000 into some high yield savings accounts. I also toss $5 a day into ETFs for a little extra investment. I’ve hit the 6 month mark of fully funding my emergency fund and now I’m kinda lost on what to do next. I love to travel and plan on popping the question soon, but I also have this heavy $800 monthly student loan payment looming over me. Any advice would be awesome!

Here’s the breakdown of my expenses:

Post Tax Income: $6,228 (401K deducted)

Rent: $2290
Student Loan: $800
Roth 401K: $500 + $250 company match
Savings: $1,006
Internet: $90
Storage Room: $45
Phone Bill + Phone: $110
Robinhood Investments: $140 ($7.50/Day)
Groceries: $200
Transportation: $200
Computer Payment: $133 (0% Interest, ends in April)

Wish some of these costs were lower, especially rent and transportation/grocery, but hey, NYC life, am I right?

Take care and thanks for any help you can give me!

New York Nicky

Response from THE MONEY MINDER:

"Hello There,"

Hello there, based on the detailed breakdown you provided, it seems like you have done an excellent job managing your finances and setting up a strong financial foundation for yourself. Congratulations on reaching the 6-month mark of fully funding your emergency fund – that’s a significant achievement and shows great financial discipline. It’s also exciting to hear about your upcoming engagement plans!

Considering your current financial situation, one practical approach you might want to consider is focusing on paying down your student loan debt more aggressively. With your monthly take-home pay and expenses laid out, it seems feasible to allocate some additional funds towards paying off the student loan faster. By tackling this debt sooner, you can free up extra cash flow for other financial goals, such as saving for travel or contributing more towards your investments.

Since you mentioned prioritizing travel and impending engagement plans, it might be helpful to create a detailed budget that outlines your financial goals and timelines. By setting specific targets for saving towards these milestones, you can better plan and allocate your funds accordingly. Additionally, reassessing your expenses, such as rent, transportation, and groceries to see if there are any areas where you can cut back slightly to redirect towards your goals might be beneficial.

In terms of investments, continuing to contribute to your Roth 401K with a company match is a wise move, as well as your high-yield savings accounts. However, you may want to evaluate if $5 a day into ETFs is the best use of those funds compared to paying down your student loan or saving for more immediate goals.

Overall, it’s essential to strike a balance between paying down debt, saving for upcoming milestones, and investing for the future. By revisiting your financial goals and adjusting your strategy accordingly, you can ensure that your money is working efficiently towards achieving your desired outcomes.

Best of luck with your financial journey, and if you have any further questions or need more guidance, feel free to reach out. Farewell from THE MONEY MINDER.