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Questions and Concerns - Need Advice & Reassurance

February 28th, 2009 at 09:03 pm

Ugh, so many things on my mind. This will be quite a regurgitation of thoughts.

BF has very little work right now (he works as a contractor) so we are quite tight every month. He would get about $1400 unemployment every month while I make about $2400 every month. This easily covers our bills. We have 6K in savings. I am feeling very anxious and need some reassurance that we are doing okay.

In June we will have lived at our apartment complex for a year and have tentatively decided on moving in with my father for awhile. If both BF and I are working full time, we would be able to save about 1.5-2K every month. We will, of course, pay rent and utilities to my father but it will be very reduced because we will basically just have my room as living space.

My car loan is currently at 7K. I have managed to pay off 13K of it over the last year and a half. I love this car and plan on driving it into the ground. I was wondering what your thoughts are on the following ... By the time we move out to my dad's we will have roughly 9-10K in savings granted we don't have to pull from it between now and then. I was wondering if it makes sense to to pull out what will be the remainder of my car loan from savings (car loan will probably be around $4800 if I continue to pay the $650 p/mo. that I am paying now) because we will be in a much better position to pay our obligations once we move in with my dad. And my savings is at 1.85% while my car loan is at 4.99%. This will also free up $650 p/mo. which I could throw toward my Roth which is currently getting $150 p/mo.

Also, my company does not currently offer a 401K so can I get a 401K? Or are my only options for retirement individual stocks/Roth IRA/Traditional IRA? I'm more comfortable not managing individual stocks, I like mutual funds because they don't have to be monitored so closely.

And one more question ... I am looking in to Bachelor programs online through WSU (Washington State University). I currently have my AA. My BA will likely cost between 12K-15K. I am wondering if I should take out a student loan and just continue to sock away 1.5K+ p/mo. (considering I have paid off my car 1K if I haven't) towards a future home purchase, hopefully to be bought in the next couple of years. Or should I pay for school out of savings and have no student loans but no savings? Moving in with my dad should enable BF to pay off most of his car and minimal credit line so when we get married we should basically have no debt. Would it be acceptable then to take on that student loan since we will have no debt when deferment ends? IDK!!! Ahhh!!!

Took Bella to the vet today, $80. Finally paid her pet deposit for the apartment, $200. And she is getting spayed in a couple of weeks, another $140 estimated. I'm having so much anxiety over money because I try to consider that 6K as untouchable.

That feels much better. Let me know your thoughts!


6 Responses to “Questions and Concerns - Need Advice & Reassurance”

  1. fern Says:

    Well, first, you sound very "together" and on top of things for a 200-year-old, so congrats....

    I won't pretend to have all the right answers for you, but i could give you my opinions.

    I'm not sure what to tell you about whether or not you should take money out of savings to pay off the car loan. If you were not going to live with your dad, i would say no, don't do it, cus in an economic slump like the one we're in, "cash is king," meaning, it's best to hold onto whatever liquid monies you have in case something unforeseen should happen, like getting laid off from your job. Then you'd really need that money.

    However, you're in a somewhat different situation and could possibly take advantage of living cheaply with dad.

    On the school thing, before deciding whether or not to take out student loans i would definitely pursue all other avenues of funding your school education, meaning, look into whatever grants or scholarships might be available. If it's a good school, chances are they'll have money available for that. Did you know that many of the Ivy League schools, if you can get accepted there and don't have the means, they will pay 100% of your tuition? Yes, they really do.

    After you've exhausted all avenues for possible free money you don't have to repay, make sure you go with a federal student loan, not a private loan. The former will have lower rates and more lenient payback terms.

    You must work for a very small employer becus i think (not positive) by law, employers of a certain size have to offer a 401k plan to their employees. If you don't have that, yeah, all you can from a tax-deferred point of view is an IRA, either Roth or traditional (I'd go with a Roth IRA, since it seems quite clear that taxes will go up in future years, so paying taxes now rather than later would probably save you money.) I'd also go with a good low cost index stock fund at one of the better known, no load investment firms like T. Rowe Price or Vanguard.

    Good luck!

  2. NJDebbie Says:

    I know how you feel about keeping your savings. Last summer my husband and I paid off a $12,000 car loan and I'm glad we did, even though I was so distraught about depleting some our savings. Take advantage of your father's generosity and pay off the car and get your degree without taking any loans. You're still young and you can buy a house later on. Just my two cents! Good luck.

  3. baselle Says:

    I know I didn't have 6K when I was 20, so congrats about that. As fern said, cash is king, and I think you have at least one too many future goals - car, college, and house. I would maximize your dad's generosity, save what I can for college and pay off what is comfortable for the car loan. Concentrate on the savings, college, and car. Defer the house for a couple of years. I'm not saying no, I'm saying defer. WA state houses will be cheaper in the next few years anyway.

    I would also try to limit the student loans. Its the cynic in me to remind you that car loans can be discharged in bankruptcy, student loans can not. While student loans are considered 'good debt' if you overdo them you will be a world of hurt.

    I've heard of individual 401K's but I don't know whether you qualify for them. I think the Roth is your best choice.

    Final thing is that you want to make sure that your savings is earning the most interest it can, then use the interest on your car loan.

  4. Nala Says:

    Pay off your car from savings when you feel more secure about BF's job situation.

    No, do not borrow 15K for a BA degree. Look for your in state public college and pay instate rates and go to that school. They probably have some Distance Ed courses, too. There are no Ivy League schools in Seattle but U of W is a good school! Very good!

    You might also qualfy for Federal aid; fill out the FAFSA or look for an EFC calculator. (Google "EFC Calculator")

  5. nance Says:

    Regarding spaying your pet: look for a low cost program. Call the Humane Society to ask what is available in your area. I had my dog spayed at "Every Creature Counts" for $25.00 a couple years ago. They also have a low cost immunization program. There are no income requirements for these programs.
    Regarding the car loan: I'd pay it off!

  6. homebody Says:

    I agree with staying out of debt as much as possible. Perhaps approach your employer about a SIMPLE IRA. 401K are more expensive to administer.

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