Monday, February 1, 2016

Money Thoughts

via r/personalfinance wiki. A very general set of steps for how US-based individuals could handle their money. By no means comprehensive or universal, but it's reasonably sound advice in my admittedly limited experience.

I'm excited to share that I recently participated in Save, Spend, Splurge's "Style Bloggers Love Budgeting" series. You can see my entry here! As someone who really likes to read about how others approach both shopping and personal finance, I find it fascinating to learn about how different bloggers handle their shopping budgets. Here's Mattie from Northwest Native's entry, and here's Sherry of Save Spend Splurge's entry.

Here are some other assorted thoughts I've recently had about things to do with money in no particular order:

I still don't understand the Roth IRA vs. traditional IRA vs. 401K decision.  This is embarrassing because I've tried to do my research many times, and I've even taken a tax class that touched on this question. I likely made a mistake in 2015 by saving for retirement with a 401K (with no employer match) rather than a Roth IRA, but I can't even figure out the math.

I'm not yet where I originally wanted to be with my monthly student loan payments. I always talked about wanting to pay my loans down aggressively, within seven years (a roughly $3000/month payment), but I'm not quite there yet. I'm only barely at my 10 year repayment plan level ($2100/month, and I have flexibility because of income-based repayment). It isn't that much of a surprise: I set that vague goal without actually knowing my exact take-home pay. If I cut down seriously on saving for my emergency fund and, to a lesser extent, cut down on my 401K contributions, I could be on track for the seven-year plan right now, but those other things remain important to me, even if prioritizing them goes against conventional financial wisdom.

I wonder if six months of living expenses is too much of an emergency fund for me. I should get there by late April, mostly thanks to a generous tax refund. (My job started in late September, but each paycheck got taxed as if I worked the whole year. My employer strongly discourages changing our withholding allowances to get around this.) Although saving that much is a relatively uncontroversial choice (see illustration above), I'm not sure if it makes sense for me given that the alternative is throwing extra money into the highest interest slice of my student loans (7.9%!). It's a function of the young NYC-dweller's lifestyle: I don't have a car that could break down, the landlord is responsible for apartment repairs, and so on so forth.

I'm intrigued by The Financial Diet blog, but when it's bad, it makes me cringe pretty hard.  They've done quite a few good posts recently, posts I can relate to. (This one rings true to me and this person's approach to tracking finances is cool though probably not for me, for example.) Still, some of the things they publish are really very silly, like this piece about someone who "won't date a guy who makes less than six figures." I'm so, so lucky to have a job that puts me in the income range in question, but, well, let me just say, that alone doesn't always go very far in NYC, especially if student loans are a factor.

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