What should I focus on?

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I'm having a lot of trouble keeping track of my finances, and I'm not sure what I should be focusing on.

A bit about my financial status:
- I'm engaged, living in NYC w/ my fiance.
- I'm in my mid-to-late 20's
- I have little to no family / friend support (financially)
- I own no valuable assets
- I earn ~$100k/yr salary
- I am the only income for the household
- My income balances with my spending each month (rent + credit cards)
- I essentially have $0 savings
- And I have $125k in student loans

A bit about my goals:
- Have a fairly nice wedding in 1-2 years
- Have kids in ~5 years
- Get a dog sometime soon
- I'd really like to own property at some point, but I could rent forever (NYC)

I'm trying my best to manage everything in Quicken, and though it offers good insight into my spending, I'm having trouble figuring out where to go next. Do I pay off debt as fast as possible? Do I start saving / investing?

Thanks!
- Y

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The dog......

Seriously, you need to cut whatever you can to build up some savings.

It sounds like you're spending too much. Now, I don't live in NYC, but if I did, and I earned $100k, I imagine I'd be able to save at least 10% of it.

  • Move to the outer boroughs (Queens) if you're not there already. Rent a 1 BR in Astoria or something for ~$1600/mo, don't go out much, save.

  • Use credit card for all your spending (and pay down the balance each month) so you can more easily track your expenses in a website like Mint.

Could you outline your expenses? This will help us show you where you might be able to make some cuts.

First order of business is to start your emergency fund. Cash is king, and putting it all into paying off your debts will leave you with lower debts but no emergency cash in case SHTF.

Once you have your emergency fund with enough money in it (6 months minimum) you can start spending money on luxuries (dog, fancy wedding, etc.)

Does your fiance plan to get a job at some point? That would be the single biggest thing you can do to improve your financial situation.

In terms of keeping track of your finances, it can be as simple as a small pocket notebook you write down everything you spend in, or an app on your phone. The important part is to document ALL expenses, so you know where you money is going. That includes having your fiance do the same. Once you know where it goes, start cutting the excess. The usual suspects are cable bill, cell phone, going out to eat, etc. See if a Citi Bike membership could save your money on transportation.

Save your money for a emergency fund for now.

In terms of a wedding, what do you consider nice? Are we talking $10,000 or $50,000? The hard truth is you don't have enough money for either at this point, and really shouldn't spend any when you don't have savings.

Given that you and your fiance are young, no kids, no property, etc., this is about as cheap as life is ever going to be for you. Cut your expenses down significantly, start saving for retirement, build up an emergency fund, work on reducing that huge student loan debt (especially if your interest rate is/will be high), and then start contemplating the (really expensive) things like kids, home, wedding, etc.

What kind of dog?

100k, ~5k take home (grr NYC tax), probably 2k rent + 500 utilities (2 phones) + 600-700 student loan.

Stop going out, let your fiance make you dinners! And drink at home and not at the bars.

Youqianren said:   I'm having a lot of trouble keeping track of my finances, and I'm not sure what I should be focusing on.

A bit about my financial status:
- I'm engaged, living in NYC w/ my fiance.
- I'm in my mid-to-late 20's
- I have little to no family / friend support (financially)
- I own no valuable assets
- I earn ~$100k/yr salary
- I am the only income for the household
- My income balances with my spending each month (rent + credit cards)
- I essentially have $0 savings
- And I have $125k in student loans

A bit about my goals:
- Have a fairly nice wedding in 1-2 years
- Have kids in ~5 years
- Get a dog sometime soon
- I'd really like to own property at some point, but I could rent forever (NYC)

I'm trying my best to manage everything in Quicken, and though it offers good insight into my spending, I'm having trouble figuring out where to go next. Do I pay off debt as fast as possible? Do I start saving / investing?

Thanks!
- Y
focus on your fiance finding a job.

Youqianren said:   - I'm engaged, living in NYC w/ my fiance.
- I'm in my mid-to-late 20's
PICS! (of whichever of you is female)

Use the subway rather than the taxi.

Focus on getting your fiance to find a job. This is the single most important thing for you to do.

Cutting expenses is easy, anyone can do it. All it takes is the ability for rational thought and some discipline. Making more money is more difficult. But in your case, having the fiance contribute to the household income is an easy low hanging fruit. If your current income and expense balance out, that means whatever your fiance makes can be put 100% towards savings - you don't even have to cut any expenses for your finances to magically become better.

I doubt having the fiance get a job will fix the problem (although it is good advice). It sounds like the problem is overspending.

Youqianren said:   I'm having a lot of trouble keeping track of my finances, and I'm not sure what I should be focusing on.

- My income balances with my spending each month (rent + credit cards)


I've isolated your problem right there. And until you break down your expenses, that's all we can do.

As another poster once said, "credit cards" really is not an expense category, but is a blanket term for expenses belonging to other categories that you purchased with cards.

Thanks everyone! This is really helpful.

Yes, NYC is super expensive, and I know we spend a fortune on food.. I do actually have my spending broken down in Quicken pretty well, and we're for sure looking for places to save.

I actually don't travel much, but when I do I take the subway.

My student loans are about 7% on average, and I do end up paying off my cards each month. Assuming we adjust our spending so that there's some left over, it sounds like it should go toward a solid emergency fund - yes? Once that's in place, pay down the loans? Then the real question is when to think about saving for other things. Should I pay off all my loans before we get married / think about buying a place somewhere?

Thanks so much!

Youqianren said:   Thanks everyone! This is really helpful.

Yes, NYC is super expensive, and I know we spend a fortune on food.. I do actually have my spending broken down in Quicken pretty well, and we're for sure looking for places to save.

I actually don't travel much, but when I do I take the subway.

My student loans are about 7% on average, and I do end up paying off my cards each month. Assuming we adjust our spending so that there's some left over, it sounds like it should go toward a solid emergency fund - yes? Once that's in place, pay down the loans? Then the real question is when to think about saving for other things. Should I pay off all my loans before we get married / think about buying a place somewhere?

Thanks so much!


Yes.

Youqianren said:   Thanks everyone! This is really helpful.

Yes, NYC is super expensive, and I know we spend a fortune on food.. I do actually have my spending broken down in Quicken pretty well, and we're for sure looking for places to save.

I actually don't travel much, but when I do I take the subway.

My student loans are about 7% on average, and I do end up paying off my cards each month. Assuming we adjust our spending so that there's some left over, it sounds like it should go toward a solid emergency fund - yes? Once that's in place, pay down the loans? Then the real question is when to think about saving for other things. Should I pay off all my loans before we get married / think about buying a place somewhere?

Thanks so much!


Thank YOU for all the additional info as requested!

Youqianren said:   Thanks everyone! This is really helpful.

Yes, NYC is super expensive, and I know we spend a fortune on food.. I do actually have my spending broken down in Quicken pretty well, and we're for sure looking for places to save.


Okay, I give up. What is the best way to tell you that you need to give us the breakdown? Saying it exists in Quicken isn't helpful.

Don't get married.

Living in NYC myself, I'd say you should easily be able to get down to 2k/mo living expenses (other than rent) for 2 young people. That's without really sacrificing much.

If you take home ~5k/mo, your absolute max on rent should be 2.5k; really, more like 2k, which can get a pretty decent 1br in queens/brooklyn, or even manhattan in certain areas (toward 1st ave maybe).

So, 2k rent + 2k expenses + 500-600 student loan payments? Should be able to squeeze in 500+/mo savings without really much sacrifice.

In your situation, however, you probably should make more sacrifices to pay off that loan quickly and still be able to save for the other things you want. I bet you could save a fair amount by moving to nearby NJ or CT, or deeper queens/brooklyn.

I don't think you need to strictly pay off the loan before saving for a wedding/home-buying, but you should be saving at least 1k/mo at this point, preferably 2k.

If the fiance is a keeper then he/she will be willing to forgo the expense of the fancy wedding. You can't really afford it, and it's quite possible to get married on a small budget.

If he/she is the kind that insists on the nice wedding...you will probably find yourself unable to utilize any of the lifestyle tips you might pick up on FW.

OP - For you to do something like propose when you have no financial plan with no financial support - yet taking upon another debt burden (paying for her/him) - that is solid evidence you have no clue what you are doing.

If you want to learn something. If you want to pay off your debt. If you want to retire. If you want kids. If you want to be able to take care of a dog.... - take back your proposal for a time when it is reasonable. Until then you're just a retarded teenager screaming at his parents "I'LL GO TO THE END OF THE WORLD FOR HER!".

1) Layout plans. Your fiance needs plans. And a job. Not having a job is unacceptable with the goals you are trying to spell out.
2) Layout retirement plans.
3) Layout living situation plans.
4) Layout debt payment plans. Quit making minimum payments.
5) Layout plans for acquiring an emergency savings.

$100k in NYC? What is that, a step past hot dog stand income? Joking aside, you have way more of a burden than you realize. I'm in my mid 20's and am preparing for a wedding myself, it's not fun and it's not easy - and it's not something you can EVER go all out on. We are struggling drastically to find a place that will get us a net cost under $12k.

Unless you plan to have a wedding of 20 people, prepare for $25k+ depending on what your fiance is willing to sacrifice.

Youqianren said:   Thanks everyone! This is really helpful.

Yes, NYC is super expensive, and I know we spend a fortune on food.. I do actually have my spending broken down in Quicken pretty well, and we're for sure looking for places to save.

I actually don't travel much, but when I do I take the subway.

My student loans are about 7% on average, and I do end up paying off my cards each month. Assuming we adjust our spending so that there's some left over, it sounds like it should go toward a solid emergency fund - yes? Once that's in place, pay down the loans? Then the real question is when to think about saving for other things. Should I pay off all my loans before we get married / think about buying a place somewhere?

Thanks so much!
Do you have a credit card? If so, why the hell would you need an emergency fund? I never understood the fixation of FWF on budgets and emergency funds. At best it gives you the warm and fuzzies, but both are an incredible waste of your time and focus. If you have a 7% loan, pay that off before you do anything else with your money.

I also noticed complete lack of mentioning anything about the fiance getting a job. Does she not plan on working at all? Yes, I understand women like this exist. They are more traditional and focus on making a good home for their husbands rather than chase after a career. If this is the case, it'd be helpful to mention it so that people can stop recommending it to you.

FoxOne said:   Youqianren said:   Thanks everyone! This is really helpful.

Yes, NYC is super expensive, and I know we spend a fortune on food.. I do actually have my spending broken down in Quicken pretty well, and we're for sure looking for places to save.

I actually don't travel much, but when I do I take the subway.

My student loans are about 7% on average, and I do end up paying off my cards each month. Assuming we adjust our spending so that there's some left over, it sounds like it should go toward a solid emergency fund - yes? Once that's in place, pay down the loans? Then the real question is when to think about saving for other things. Should I pay off all my loans before we get married / think about buying a place somewhere?

Thanks so much!
Do you have a credit card? If so, why the hell would you need an emergency fund? I never understood the fixation of FWF on budgets and emergency funds. At best it gives you the warm and fuzzies, but both are an incredible waste of your time and focus. If you have a 7% loan, pay that off before you do anything else with your money.

I also noticed complete lack of mentioning anything about the fiance getting a job. Does she not plan on working at all? Yes, I understand women like this exist. They are more traditional and focus on making a good home for their husbands rather than chase after a career. If this is the case, it'd be helpful to mention it so that people can stop recommending it to you.



Remind me again, what is your course of action when you lose your job just after your car breaks down? Please elaborate in good detail so we can laugh extra long.

[Q=FoxOne;17833689 ] Do you have a credit card? If so, w]hy the hell would you need an emergency fund?


For when you get the notice that your being laid off.

FoxOne said:   Do you have a credit card? If so, why the hell would you need an emergency fund? 

Not everyone has 6 months (or more) of expenses in credit limits available to them. And I'd imagine anyone with no emergency fund has a relatively low credit limit. Plus, you don't want to run up your credit cards and ruin your credit score due to high utilization.

Not to mention that credit can be rescinded at any moment. And is more likely to be taken away just when you most need it.

Youqianren said:   Then the real question is when to think about saving for other things. Should I pay off all my loans before we get married / think about buying a place somewhere?Once you have a plan in place, and can say "I am saving this much a month, it will take me this long to pay off the student loans, and I am comfortable with that", then you can look at adding another expense into your budget like a mortgage and see if it works financially. But get your life in order first before you begin looking at adding anything new.

In terms of getting married, remember you do not have to have a wedding to get married. $100 at the courthouse is all it takes.

justignoredem said:   Remind me again, what is your course of action when you lose your job just after your car breaks down? Please elaborate in good detail so we can laugh extra long.

If you are asking about me in particular:
I wouldn't worry about my car breaking down. We have full factory warranty on all three of the cars in the family. Both my BMW and my wife's MB will get loaners provided by the dealer if extensive warranty service is needed. If the family van breaks down, we can just "make do" by driving both sedans if needed.

If I lose my job, no worries, I'll simply switch companies and get another job in the wonderful world of consulting. I would in fact see it as a chance to get a bump in salary as I've been too lazy to do it in the past couple of years. There are currently 3 companies I am reasonably confident that would hire me with the same if not higher salary and benefits. My wife's salary alone is enough to sustain our lifestyle indefinitely, but I would still get a new job ASAP.

If you are asking about a hypothetical case for the average guy:
Pay for repairing the car with a credit card. If the car can't be repaired, get cash from credit card a purchase a reliable beater. Spend the next 30 days to find the best paying job possible, even if this means a significant pay cut. If it becomes obvious that finding a similar paying job would be difficult - which should be evident within 2 weeks - this is no longer an emergency but a change in lifestyle. Start dialing back all expenses and prepare for the reduced quality of life.

Anyone should be able to find a job in 30 days, even if it means working at McDonalds. There is no excuse for no income. Within 30 days, if the emergency has evolved into a change in life style, there is plenty of time to make necessary changes such as moving for lower cost of living, cancelling/reducing services, selling off excess personal property, etc.

FoxOne said:   justignoredem said:   Remind me again, what is your course of action when you lose your job just after your car breaks down? Please elaborate in good detail so we can laugh extra long.

If you are asking about a hypothetical case for the average guy:
Pay for repairing the car with a credit card. If the car can't be repaired, get cash from credit card a purchase a reliable beater. Spend the next 30 days to find the best paying job possible, even if this means a significant pay cut. If it becomes obvious that finding a similar paying job would be difficult - which should be evident within 2 weeks - this is no longer an emergency but a change in lifestyle. Start dialing back all expenses and prepare for the reduced quality of life.

Anyone should be able to find a job in 30 days, even if it means working at McDonalds. There is no excuse for no income. Within 30 days, if the emergency has evolved into a change in life style, there is plenty of time to make necessary changes such as moving for lower cost of living, cancelling/reducing services, selling off excess personal property, etc.


Do you own a home with a mortgage?

woowoo2 said:   For when you get the notice that your being laid off.
It would take an incredibly lazy person to not find another source of income in 30 days.

meph said:   Not everyone has 6 months (or more) of expenses in credit limits available to them. And I'd imagine anyone with no emergency fund has a relatively low credit limit. Plus, you don't want to run up your credit cards and ruin your credit score due to high utilization.Provide the reasoning why something that lasts for 6 months is an emergency? Would you realistically wake up for 180 days in a row surprised that you no longer have a source of income?

Google search shows average US credit card limit is $19k - I don't know whether this is accurate. Lets reduce this down to about 1/4th - $5k. That's enough for any average family to live on for 30 days. Beyond 30 days - again there is no excuse for no income after 30 days.

GodelianKnot said:   Not to mention that credit can be rescinded at any moment. And is more likely to be taken away just when you most need it.True, but credit card companies don't get an alert when you lose your job. Most don't care until they notice consistent erratic behavior in terms of credit usage. The keyword being "consistent". Has there been anyone on FWF that got their credit card cancelled within 30 days of losing a job?

I also googled average unemployment for US and it's coming in at close to 40 weeks.. that 6 months emergency fund doesn't sound so bad now huh?

tchen811 said:   Do you own a home with a mortgage?
If you are asking about me specifically:
Yes I have mortgages to pay. I am thankful that my wife's income alone is enough to sustain everything. Of course here again, I can find another job in 30 days, no problem.

If you are asking about a hypothetical case for the average guy:
The OP doesn't have a home/mortgage, so I recommended credit card. For those with a home/mortgage, I recommend an untapped HELOC. Such HELOCs are excellent sources for "emergency" funds. I use mine all the time for short term demands for cash that can't be met with my cashflow. For those that are not in a position to have such a HELOC due to lack of equity, there are two possible cases:

1. The income loss can be restored in 30 days, and therefore no problem.
2. The income loss can't be restored in 30 days, or can't be restored to the same level - this is a change in quality of life, so sell the house, a short sale if necessary. Whether you are having to do this in 30 days or 6 months doesn't change the fact that you are worth a lot less than you thought and your previous lifestyle was not sustainable so you have no choice but to change your life style to adjust. In fact, acting faster rather than 6 months makes it easier for you to find lower cost housing while your credit is still good. There are examples of people doing this described in threads on FWF.

tchen811 said:   I also googled average unemployment for US and it's coming in at close to 40 weeks.. that 6 months emergency fund doesn't sound so bad now huh?
I still don't see how this qualifies as an "emergency". Can you elaborate on the reasoning behind that?

To me, an emergency is an unforeseen reduction in income or increase in expense that cannot be addressed in the short term by converting other assets due to lack of liquidity.

I don't see how something that lasts 6 months can qualify as an emergency, therefore I don't see any rationality in maintaining 6 months of funds pretending that you are going to be continuously surprised by this event for such a duration while making no adjustments to your lifestyle.

FoxOne, while I am glad you are comfortable without an emergency fund, not everyone is (and in reality your emergency fund is your wife).

And the emergency funds don't have to be cash sitting in a checking account. As long as it is relatively liquid, as you suggest you can cover with a credit card, and then liquidate to pay. The point is to have funds saved up so you don't have to go to extreme measures like a short sale or changing you lifestyle. It is basically insurance for you life. Sure you can get away without having car insurance, but life sure is easier after a wreck when you have insurance to take car of things.

FoxOne said:   Anyone should be able to find a job in 30 days, even if it means working at McDonalds. There is no excuse for no income. Within 30 days, if the emergency has evolved into a change in life style, there is plenty of time to make necessary changes such as moving for lower cost of living, cancelling/reducing services, selling off excess personal property, etc.

So, your plan (for a guy making 100k in nyc with no savings) for getting laid off is (potentially, depending on the job market and how hard it is to find a similar job) to go work at mcdonalds and move (breaking your lease or mortgage?) to a MUCH worse neighborhood and spend all your time working a minimum-wage job and commuting (and moving and selling possessions, etc.).

INSTEAD of paying down your 7% loan a little more slowly to accumulate an emergency fund, such that if you do lose your job, you can focus your time and energy on finding another 100k job, even if it takes a few months.

As someone who recently spent multiple months unemployed, I can tell you having the money to continue my normal expenses while unemployed allowed me to get a far far better job than I could have if I had put myself in the position where I had to find whatever job I possibly could in less than 30 days and then spend a lot of time unnecessarily "adjusting my lifestyle" based on that job.

You have a warped perception of what is realistic and reasonable, my friend.

FoxOne said:   

meph said:   Not everyone has 6 months (or more) of expenses in credit limits available to them. And I'd imagine anyone with no emergency fund has a relatively low credit limit. Plus, you don't want to run up your credit cards and ruin your credit score due to high utilization.Provide the reasoning why something that lasts for 6 months is an emergency? Would you realistically wake up for 180 days in a row surprised that you no longer have a source of income?


Any number of things can constitute an emergency - for me, an emergency is any unforseen event that can put you in a bad place for a length of time.

You could get run over. Or your significant other suddenly dies. Or you hit a tree while skiing and are put in a coma. Or hurt on the job.

Now, clearly insurance will cover most of these things above, but how long does it take for them to pay out? Will they ever?

But how about the recent super storm Sandy that came through, wiping away so many peoples houses - some of whom will never get paid by insurance. With access to an emergency fund, you can cover living expenses, etc. until everything gets sorted out. I've had credit cards suddenly lower my limits when utilization on other cards gets too high and I'm seen as too much risk. Do you really want to have to worry about that during an emergency?

Yes, credit cards can help buffer your emergency funds, but to rely solely on them is probably a mistake.

GodelianKnot said:   
INSTEAD of paying down your 7% loan a little more slowly to accumulate an emergency fund, such that if you do lose your job, you can focus your time and energy on finding another 100k job, even if it takes a few months.


Exactly this. If OP gets laid off, I would imagine he quickly gets suckered into a lower paying job "chasing the money". Because he needs the money, he works more hours, but is unable to land a better job (at or above his old pay) because he has no time to be interviewing or actively searching for better work.

With an emergency fund, he has some breathing room. He can hold down another job (like McDonalds) in the mean time, but with the flexibility to put his full resources into finding the right job.

Skipping 35 Messages...
I got married in NYC for 2k.

My now-wife found a service that arranged everything-
They reserved and roped off a really nice area in Central Park.
They got a non-denominational official.
They got a very good photographer who was trying to increase his portfolio (took hundreds of pics and gave us the cd)
They gave everyone umbrellas because it rained!

We then paid an extra $100 to rent a rickshaw to go around Central Park and the photographer took more pictures.

We paid for the whole thing with PayPal.


My dad then paid for a lunch at a neighboring restaurant for the 30 or so family members we invited (probably around $600-700 or so.)


It was a good time, right in the middle of NYC. Why would you need more than that?



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