Josh asks: I’m 28, make $129k per year, save $1,800 a month, own a property that I rent, $37k saved, and $82k in student loans. No credit card debt. How am I doing for my age? Could I spend more? Save more? What do you think?
Hey Josh, I’d say you’re doing pretty damned good for your age—definitely ahead of the curve. A few more steps and you’ll really be crushing it.
Your salary is great. You’re saving more than 25 percent of your take home pay. You already have an investment property that you say you rent for just $50 less than the mortgage, and in today’s market, at least you aren’t underwater on. And it sounds like you’ve started investing. All good.
You do have that whopper of a student loan tab (although with your salary, sounds like it was well worth it). I don’t necessarily blame you for not paying those loans down faster if you’re investing and beating the interest rates. This is a personal call—a savvy investor can definitely make more by investing money rather than paying down low-interest student loans ahead of schedule; it just means you’ll be in debt longer. Some people just want to be out of debt as quickly as possible.
As far as your savings and investing goes, make sure you’re maxing out a 401(k) if your employer has one. Take advantage of any match they offer and the tax-free contributions. (Unfortunately, as you probably know, your income is too high to make traditional or Roth IRA contributions).
Next up: How much of your savings is invested in stocks and funds and how much is in cash? If your monthly expenses are $4,760 (which I just assumed by deducting your savings from your take-home), you’ll want about $28,500 (six month’s living expenses) earmarked as an emergency fund. That doesn’t mean you need to keep all of that liquid, but you should have a plan for tapping at least that much if, God forbid, you lose your income.
Other than that, I say figure out what your next goal is and just pound away at it!
Good Luck!
David @MoneyUnder30
Good Salary and disposable income. Although You didn’t mention what kind of interest rate your student debt is, and whether or not the portions were subsidized or not. I definatley would try to aggressively pay off the the higher rates off first followed by the other portions. You probally want to have a plan to pay it off within somewhere between 3-5 years. deferring an unneeded expense (such as a luxury car) would be a wise move.