Budgeting and Strategy Advice Request

[gdub2]

I'm trying to look ahead to 2020 and would like to discuss my financial strategy, if anyone would be willing to do so. I'm likely going to be moving across the country in early 2021. I realize my rent is high, but I live in a HCOL area and am able to walk to work, so I will be staying in my current place.



Right now my thinking is that I want to finish paying off the credit card, then simultaneously build my emergency and medical/car/guinea pig/moving funds to 5000 by placing 500/month in each account. I would do that while contributing 5% to my 401(k) (should I increase it to 6%?) and while maxing out my HSA. Medical expenses are usually taken care of by the HSA, but I totally drain it every month and I have a root canal coming up, which will be ~$1000. So I do think I need more of a buffer there, for myself and my guinea pig (who also has health issues). But I obviously have a massive student loan as well, and am trying to decide if I want to ride it out for 15 more years until it gets written off (and I pay income tax on the remaining amount).



Recurring Monthly Expenses

• Rent: 1400
• Student Loan Minimum: 574.40 - Balance 259,000
• Electric: 63.72
• Car Insurance: 57.45
• AT&T Phone (3GB Data): 56.19
• Credit Card: 30 - Balance 3,100
• Shooting Range Membership: 35
• Gas (Car): 26
• Gas (Apartment): 18.23
• Renter's Insurance: 17
• Annual Car Tax/Fees/Inspections (Divided by 12): 11
• Amazon Prime: 9.92
• Netflix: 8.99
• Hulu: 5.99

Total: 2,282.90

• Gross Yearly Income: 94,800 (~2% annual increase; does not include 500 insurance incentive)
• Gross Biweekly (26 paychecks/year): 3,646.15
• Net Biweekly: 2,265
• HSA Contribution: 141.50 ($650/year from employer)
• Annual Employer Payroll Contribution (Insurance Incentive): 500
• 401(k) Contribution: 182.34 (5%, matched 1-2%/100% and 3-5%/50%, would match 50% up to 6%)
• All Insurances: 135.69

Assets

• 401(k): 6,000
• Car Value: 2,500
• Checking: 1346
• Emergency Fund: 1500
• Medical/Car Repair/Guinea Pig Vet Savings Account: 1000

 

[origamimaster81]

@gdub2 Just throwing a few things out there:

1. Considering your proximity to work, have you considered just selling the car and cutting your car insurance and gas expenses completely? I am not sure what your situation is for like groceries and whatnot, so I can understand if you don't want to. Someone talked to me about that today and I wasn't really into the idea of getting rid of my car.
2. I think you might also benefit from just allocating money into singular goals rather than spreading it out, but others may disagree. what I mean is, nail down that credit card debt asap, $500 a month should (if that is all you are putting on it) should be able to knock it down fairly quick. Then just focus the amount into one account at at time until it hits the point your are comfortable with, then move on. Basically building blocks until you make a castle.
3. I know you said you are moving too, so some of #2's advice might be fairly moot because of the time crunch.

 

[gdub2]

@origamimaster81 Hey, thanks for your reply. Getting rid of the car isn't an option for me because I'm not close to stores, church, or my doctors. I've done some back-of-the-napkin math before and don't think it's worth it based on how much I use the car. I would very quickly eat up all of its maintenance costs in Uber and public transit (where available) fees.



I've found that in the past, if I paid off my credit card too quickly it left me with no money for expenses that I knew were coming up, so that is a big point where I'm struggling to make a firm decision. I currently say that I plan to put $500/month in each account every month, but first that would be $1,000/month on the credit card, which means it would be paid off by February. I would then have $5,000 in my emergency fund and $5,000 in my moving/medical/car fund by December.



I know that I need to crack down more on my smaller spending. I have about $2,187 that's not accounted for in this list every month. So that would be $1,187 if I go with my $1,000/month plan. I could aim to save $1,500/month but that would only leave me with $687/month for everything from food to toiletries and clothes, which makes me a bit nervous.

 

[origamimaster81]

@gdub2 Yeah I hear you, especially on the car thing. I am in a similar position in which I can theoretically sell my car, but I honestly do not want to based on distances to places, I already have the car so whats the point of getting rid of it other than to save, well, relatively little money. My car is valued almost the same as yours, also I like having a personal vehicle so if there is ever some "shit hits the fan scenario" I can leave my area. That and I love cars and driving, it is very relaxing to me.

Yeah, you do not have a lot of CC debt comparatively to your ability to pay. You could let the balance float for now if need be in preparation for that upcoming move I don't think it would be a big deal, maybe just increase the minimum payments a bit.

And for the last point, I understand. The only thing I can say to that point is the whole "eat cheaper, bring coffee to work don't buy, eat out less" etc etc.

 

[celestialangel18]

@gdub2 Yes, first thing up your 401k contribution to 6% to take full advantage of that matching. You are throwing money away not getting at least the full match.

Next focus down on the credit card assuming it isn't in a 0% promo period and you are paying typical credit card interest rates on that money. Presumably in most emergencies you can use the credit card if you really have to and in the meantime you'd at least be saving on interest. So I'd leave your current emergency fund alone for now and get the credit card paid off before growing your savings more.

Expense wise have you shopping for contact lenses from online vendors? Even the fanciest brands don't typical cost $60 for a month worth. Should be able to slice that in half or so with smart shopping or buying ~3-6 supplies ahead of time.

Same thing for cell phone service. Check the big chart on /r/nocontract for the cheapest plans for your usage and network preference. You should be able to slice that in half and stay on AT&T network with just as much data for $25-30 a month if you want. If other networks also have good coverage in your area their are other cheaper choices; I use Mint Mobile for $15 a month per line for a 3 GB data plan with unlimited talk/text which runs on T-Mobiles network.

I pay income tax on the remaining amount

Finally I doubt that will ultimately happen. Congress is probably going to wait around on fixing that until the first big batch of IBR loan forgiveness is due to happen in ~2027 or so. At that point their will be a huge amount of panicked lobbying efforts; plus nearly every Congressman in both parties is likely to have at least 1 or 2 high level staffers looking at huge tax bills too.