This year, I decided to stop being a mooch. I read other people’s content all the time: Yelp reviews, blogs, comments on New York Times articles, etc. After I graduated from my masters program in May 2013 without a job offer, I realized just how much debt I’d have to start paying down soon. I started to pay more attention to personal finance, which involved reading lots of articles written by people who were in similar situations as me. I realized that I learn a lot from other people and I think people could learn from me as well. I’ve tried many of the common financial tips you read on the Internet and have found those that work for me and those that never will. I think I need to start sharing my experience.
I’m 27 and while I have 10 years to pay off my student loans, I don’t want to make my last payment when I’m 37. There are other things I want to spend on my money on. I could really buckle down and allocate every last penny to my debt, but I’m young and I live in New York City. I don’t want to look back on these years and regret not having taken advantage of everything the city has to offer because I didn’t want to spend the money. I realized that to live, you have to spend — but you don’t have to spend everything. It’s all about the daily tradeoffs: when it’s raining, do I take a cab or suck it up and take the subway? If I’m going out for dinner, do I have to buy lunch earlier in the day?
While I still consider myself young, I am closer to 30 than to 20 and like my skin, I need to start taking action now to avoid trouble in the future. Here is what I plan to do in 2014:
- Have a proper emergency fund: Everyone says you need at least 6 months’ worth of living expenses saved for emergencies. I have $2,000 right now. Depending on where you fall on NYC’s income ladder, that’s either a handbag or a fraction of your rent. I need at least $8,000 to be safe.
- Contribute to my retirement: After I quit my job to attend grad school, I rolled over my company 401(k) into a Roth IRA. I haven’t contributed a single cent in almost three years. You know that saying “A dollar today is more valuable than a dollar tomorrow”? I cringe thinking about how different my balance could look if I had contributed even $100 over those years. I can contribute a maximum of $5,500 annually and my goal is to contribute close to that by the end of the year.
- Pay more than my minimum student loan monthly payments: This will be tough, as my monthly payment now is already shy of $1,000 per month. While I don’t want to stretch repayment out 10 years, realistically, I’ll need at least 5-7 years to do it so that I can still live comfortably and contribute to my savings and IRA. But even an extra $25 per month towards my loans will make a difference.
I know there is a way to get everything I want (how American is that?) — I just have to have a game plan. Stay tuned.