Sorry about the formatting, long time without account lurker, first time posting. Questions at the end.
I’m 25 and started my first high paying job about a year ago. Unsure how to handle my money and don’t have anyone to talk to. I’ve read the wiki and used that to get to where I am now but I’m not sure how to move forward from here.
My only longish term financial goal (besides retiring) is buying a home sometime in the next 2-10 years. My monthly rent is deposited into an account not held by me with the promise that when I buy property I will LIKELY get it back as a down payment when I purchase.
My 401k is held in a 2065 TDF with an expense ratio of .23%. I think I’d like to keep it that way for the convenience factor. My IRA is funded by cash back on various credit cards (once a quarter I write a check of the sum of cash back received that quarter and deposit it). I use my IRA as an experiment in long term investment management. Its mostly in a bog standard 3 fund portfolio (I forget which funds) but in the future I was planning to buy the occasional individual stock. I am fully aware this is little more than gambling and it’s more for my entertainment than that I’d expect to outperform the market . My gambling would be no more than 5% of the IRA value.
Budgeting is my weakness. I’ve tried and failed several times. I have gotten to a middle ground where I set myself a $1000 “everything but rent” budget and as long as all my expenses are below that, I don’t bother budgeting. Works well for me. I live alone in a home owned by a relative (hence the rent account) so no utilities or major maintenance expenses. Car insurance can’t be lower, I totaled my car a few years back and unfortunately that’s the consequence. The remaining $ is used for larger expenses that don’t fall in a month - vacations etc.
Career outlook: 5.5-9% raise in the next month or so, probably around 7%. All but guaranteed promotion by fall - in my formal performance review, I was told by several levels of my management that unless I completely slack off, I will be getting that promotion. Still, don’t want to count my chickens before they hatch. Promotions come with a minimum raise of 15%, possibly more.
Current assets: $25k in 401k $15k in HYSA $40k in 5% CD until 9/2025 (essentially down payment fund) $1000 in ROTH IRA
2023 sankey: https://ibb.co/W5pGmL9 I blocked off some of the more granular details that I felt weren’t necessary anyways. The $2000 extra is from my second job which is really just a hobby that pays me.
Questions:
- Should I lower my contribution to my 401k and max out my IRA instead?
- What should I be doing with the $26k currently going towards the HYSA? I’d like to bring the HYSA to $20k. Taxable account + 3 fund portfolio? Keep it in cash in the event I end up purchasing property in the next 2-3 years?
- How should I be planning for my probable pay increases if at all?
- IF I get the promotion my goal is to use that money to finish maxing my tax advantaged accounts. Then what?
- Do I need a financial advisor? I don’t think I do but not being able to talk to anyone around me about money (especially if my promotion comes through later this year) is exhausting and weighs on my mind. Is the peace of mind that I’m doing right worth the couple hundred dollars for a few hours with someone?
- Anything else?! I might have read the wiki obsessively but I still feel absolutely clueless about how to handle my money.
Thanks for reading, sorry this is really long. And huge apologies is this comes off as one of those humble brag posts, that is the furthest from my intent.
original posted by FluffMcFluffFace to r/personalfinance on Thu, 29 Feb 2024 19:49:46 GMT.