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Sup Goons, I'm a 30 year-old freelancer, single with no kids, and I'm trying to take a more active role in planning my financial future and making myself better able to support a family assuming I ever have sex. I'm pretty ignorant when it comes to investing and personal finance, so I'm now making an effort to read from the list in the newbie thread. I'm also aware I have some bad financial habits that are likely going to be more of a problem going forward, and I'd like to find a way to start addressing them now. My biggest issue, as I see it, is that I'm very much a hoarder when it comes to money. I work in film and documentary production and started my career doing freelance in a foreign country hopping from shady visa to shady visa. As a result, I was always worried I'd be out of work and worried about losing assets I invested, so I banked as much as possible and ended up living with an apartment full of bundles of cash while I tried to eat on a budget of $2 a day. Now, after living back in the US for a while, I've advanced enough to keep my money in a bank. However, I still have the habit of taking my extra cash, throw it in a savings account, and not touching it. I would like to start taking advantage of what I've saved, as well as save smarter, but I'm concerned about wasting it when I start spending/investing it. I used to live with a fair amount of uncertainty about work, sometimes working 7 days a week, other times free for weeks. Now I'm professionally advanced a bit, I'm earning a higher income at a more stable rate. However, I'm still looking to maintain a healthy liquid surplus so I can take breaks from paid work to do pro-bono stuff for my portfolio as well as deal with any gaps in work that could still come up. My Assets Are: Checking account: 2,000 Savings Account: 43,530 IRA (not invested in anything, just sitting in the brokerage account) 11,560 Mutual Fund account I started when I was 16, put money in once, and haven't touched since: 2,900 My Debts: Student Loans: $2,900 Credit Card: (I always pay this off monthly, mostly use this for a few large purchases to "build credit") $560 My income isn't very consistent, as week to week, I can be doing different jobs with different pay. My take home before taxes this past year was 94,000, the year before it was 56,000. My expenses are fairly low for where I am (NYC): Rent: 620 Util: 95 Food: 500 Office: 290 Phone: 80 Subway: 132 My major goals are to be able to save enough money so I have a disposable 7-10K annually that I can spend on spec projects of my own all while investing so I could afford to buy a house/apartment by the time I'm in my late 30s and still save for a retirement (not looking to retire early). I basically would like to find some strategies to better use the money that I've banked and not just keep it in a lockbox. I'm a total newbie, so any personal experience to share would be super helpful, even if it's some kindergarten-level common sense. Last Buffalo fucked around with this message at 20:59 on Feb 19, 2018 |
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Feb 19, 2018 19:30
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all the strategies in the world are meaningless until you develop goals the only goal i see in your post is "have a liquid surplus so I can work pro-bono for indefinite amounts of time" what are your goals (in life, not specifically with money)
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Feb 19, 2018 20:22
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You don't have enough money to be considered a hoarder. You just seem like you've got slightly too large of an Emergency Fund. Where's your Roth IRA held? Like Kyoon said, you have no plan at all so there is no strategy to be formed here. Do you want to buy a house in the next 5 years? Retire at 50? Retire at 65? Will your income ever be more consistent than "$56k to $94k"? I'm guessing you've historically made closer to $56k and the recent $94k is either an anomaly or a new normal. If you've been making almost $100k a year for any significant amount of time, it's strange that you have a net worth of $50,000 with monthly expenses under $2,000
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Feb 19, 2018 20:28
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Sorry, I probably should have made that clear, and I'll edit it into the OP. My major goals are to be able to save enough money so I have a disposable 7-10K annually that I can spend on spec projects of my own all while investing so I could afford to buy a house/apartment by the time I'm in my late 30s and still save for a retirement (not looking to retire early). My IRA is held at Wells Fargo in a Cash and Cash Alternatives position. I'm likely going to be in the 95-120k range this year, given my clients, but I still value a good emergency fund, since I don't have a salary and things could change. The whole 6-12 months emergency fund should be calculated based on expenses, not income, right? Last Buffalo fucked around with this message at 21:01 on Feb 19, 2018 |
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Feb 19, 2018 20:58
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Correct, calculate on expenses. Step one, retirement - get your IRA in to a better vehicle and probably over to Vanguard or Fidelity. Look at the long term investing thread - a three fund or target date is good. You should contribute your full $5,500 every year since you have no other source of retirement money other than SS. You should also look in to alternative retirement vehicles for people who are self-employed. I am not knowledgeable about these other than the fact they exist. Step two, project investment income - you need a budget. You should accrue monthly for this fund and set a minimum and maximum value to it based on what you want to do. You should pay in to this after you pay for your bills and your retirement. Step three, efund - you have one already. Just figure out what 12 months of expenses is and keep that on hand. I think you want a big efund since you have highly variable employment, but I could listen to less. Step four, house/apartment - everything you have left over from your budget post expenses, post e-fund replenishment (if applicable), post IRA, post project investment, post discretionary, can go to your house/apartment fund. Depending on your time horizon you may want to keep this fairly liquid (high yield savings account) or in low-risk vehicles like a CD ladder.
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Feb 19, 2018 21:39
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