How I doing and what can I improve as I enter my 30s? I'm 29y.o. and finished graduate school last year, where I was responsible for a small tuition payment and high taxes on tuition remission benefits from work, so I don't have as much saved as I'd like. I've been saving a bit more aggressively since then.
- Employed full-time, salary $92K. Earning history: $40-45K 4-8 years ago, $67-72K 1-3 years ago, $92K as of 10 month ago.
- Debt: $10K subsidized student loans at interest rates 3.5-4% (started at $29K). At current payment rate, will be paid off in 3.5 years
- Cash savings: $17K (6 months' expenses) in HYSA. Interest rate 3.1% compounded monthly.
- Retirement account (401k): $40K
- Credit 811
- No car payment
- No significant recurring medical expenses
- Rent an apartment $1300/mo. Hoping to purchase a home in a fairly HCOL area with partner in 5 years
How am I doing/what can I improve? 29 years old
byu/Forward-Ad-873 inpersonalfinance
Posted by Forward-Ad-873
3 Comments
Fellow 29 year old here. We’re neck and neck! You’ve paid off a bit more of your student loans, I’m at 18k. Your emergency fund is 6k more than mine, but I have a bit more invested.
Overall you seem to be in a good, safe spot! They say you should have your yearly salary saved by 30, so try to get and max a Roth by the end of the year because you have a little catch-up to do, but I don’t think you’ll struggle to based on what I’ve read. Good luck 🙂
On the surface your finances looks impressive for a 29 year old. A few things to consider …
1 – increase your retirement contribution to 15%. Higher up to 30% if you can.
2 – invest your retirement assets in index funds. They beat actively managed funds 80-90% of the time & are low in fees.
3 – if you plan to buy a house with an unmarried partner, please have an agreement on how things will be split up in case one of you wants out. I read a financial planner & a lawyer said that one of the biggest mistakes made by people is buying a house with a partner, friend or sibling (non spouse).
4 – if you can afford it, open a Roth IRA and fund it to the max every year.
Congrats on finishing school. It looks like you are in great shape.
Fidelity recommends saving and investing 15% of your income for retirement. I would have a good idea of how you would be balanced between taxable, traditional, and Roth accounts, with taxable being higher for the down payment, traditional for early retirement which defers tax payments, and Roth for later retirement and for your beneficiaries, if any.
I also recommend, after topping up your emergency fund (my approach is 3 months of living expenses per person in the household), to create a car fund such that whenever you need another car, use half the fund to buy it in cash–don’t pay interest on a rapidly depreciating asset.
Saving for a house down payment was challenging for me, but I was able to keep lifestyle creep contained as my compensation increased into my 30s, and put 25% down in addition to closing costs. Still, housing inflation has outpaced wage growth in recent decades. It will be interesting to see how real estate shifts as the boomer generation passes away.
Were I to do so again, I might invest 60%+ of down payment funds into money market and short duration bonds, with the less than 40% balance in higher volatility assets. Right before looking to buy, I would be reallocated such that less than 10% of down payment funds were in equities.
Check out the resources in the wiki here, as they will help you make these trade off decisions. Best wishes!