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I have currently 10k in savings acc, rent an apartment for 1k/month, I don't have a 401(k) (I will start at the beginning of 2016). I'd love to buy a house or apartment next year and start a family in the next 2-5 years.

What's the best way to handle my savings and money?

JoeTaxpayer
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P.P.
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  • Start maxing out your 401(k). You're in your 30s, time to get serious about retirement.
  • At that price I would just keep renting until you actually need something bigger.
  • Make a budget and start working on that savings. In your situation, including the 401k contributions, a 50% savings rate of your take-home should not be a stretch. If its hard for you to save, figure out a monthly savings amount and set up an automatic deposit into your savings account. Then when you do buy a house you can put enough down to avoid PMI.
  • Avoid fancy cars, expensive cell phone plans, and basically anything that is a monthly payment that is not necessary.
JoeTaxpayer
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SoulsOpenSource
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The best thing to do right now is track your spending.

You know you're saving 1k a month, and you know you're spending 1k a month on rent. That's 24k so far. I presume you'll have some income tax taken out, let's assume it's another 6k to round us neatly up to 30k.

Since you earn 80k and you've spent 30k so far, you have another 50k unaccounted for. If you're in the USA I'd recommend using mint.com or a similar service to automatically track your transactions, or even just a spreadsheet if you don't like handing out your bank details (and you shouldn't).

After that, I agree with SoulsOpenSource's answer. Write a budget and try to figure out where the fat can be trimmed. When I started tracking I saw I was spending almost a hundred bucks every week on fast food, due to poor planning and laziness. I decided to cook more and plan better and now I'm spending less than half that - in the last year I've saved almost three thousand dollars!

If you want to save up for your future (and good on you if you do!) then there'll be some choices to make ahead. If you're spending a few hundred bucks on going out drinking every weekend, or you grab two coffees every day, or you buy fifty blurays a month (do people still buy blurays?), you'll have to ask yourself: Will I be happier spending money here than saving for my future?

A. Sim
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You are young so you have time on your side. This allows you to invest in more aggressive investments. I would do the following

1) Contribute at least what your company is willing to match on your 401k, if your company offers a Roth 401k use that instead of the normal 401k (When this becomes available to you)

2) Open a Roth IRA Contribute the maximum to this account ~$5500/year

3) Live below your means, setup a budget and try and save/invest a minimum of 50% of your salary, do not get used to spending more money. With each bonus or salary increase a minimum of 75% of it should go toward your savings/investment. This will keep you from rapidly increasing your spending budget.

3) Invest in real estate (this could be its own post). Being young and not too far out of college you have probably been moving every year and have not accumulated so much stuff that it makes moving difficult. I would utilize your FHA loan slot to buy a multifamily property (2-4 Units) for your first property using only 3.5% down payment (you can put more down if you like). Learn how to analyze properties first and find a great Realtor/Mentor. Then I would continue as a NOMAD investor. Where you move every year into a new owner occupied property and turn the previous into a rental. This allows you to put 3-5% down payment of properties that you would otherwise have to put 20-25% and since you are young you can afford the risk. You should check out this article/website as it is very informative and can show you the returns that you could earn. Young Professional Nomad

Good luck I am in a very similar situation

Royce Quintana
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