23yo...My financial outlook..how does this look? + some 401k help...
 

Hey,

I've been thinking alot about my finances lately and have gone through and put together a plan. I was hoping you guys could offer any suggestions or advice.

My situation:
-23yo
-Renting a 1 br apartment
-Working at my first job after college (sales for software company)
-base salary of 40k although I should make anywhere from 75k to 100k with commission
-40k a year from poker

Finances:

Monthly Expenses: ~2.2k a month

checking (for misc. expenses) - $2k

5% savings account - 20k
----4 to 6 months livings expenses as well as money set aside to pay taxes on poker winnings

6mo., 1 yr, 2 yr CD's - 22k
----I just purchased a new car. I took out a loan on the car to build up better credit but I have the money set aside to pay the car off early in rolling CD's

Brokerage Account - 25k
----Value investing by holding 6-10 individual stocks priced at least 30% discount to intrinsic value

Roth IRA -5k
----Invested in Vanguard Target Retirement 2050 Fund. Will stay in here until I have ~20-25k to diversify myself

401k - 1k
----Just became eligible to contribute this month...not the best options but currently set to 50% RERCX, 25% RGACX, and 25% RWICX..

Goals:

--Max out Roth IRA each year (5k from now till the future)

--Max out 401k each year (15.5k each year is current limit)

--35k additional - 1/2 goes into brokerage account to continue building value portfolio..other half into index funds


So what do you guys think? especially with the 401k plan??

I think I need the most help with my 401k asset allocation. It does not seem like my company has the best selection of choices (and they dont match contributions, yet) so I could definitely use some advice there..

Here are the funds we have available:

American Funds EuroPacific Growth Fund (RERCX)
American Bond Fund of America (RBFCX)
American US Government Sec (RGVCX)
American Growth Fund of America (RGACX)
American Funds Amcap R (RAFCX)
American Investment Co. Of America (RICCX)
American Funds Balanced (RLBCX)
American US Treasury (RUCXX)
American Capital Income Builder R (RIRCX)
American Capital World Growth Bond (RCWCX)
American Capital World Growth & Income (RWICX)
American Fundamental Investors (RFNCX)
American High Income Trust (RITCX)
American New Economy (RNGCX)
American SmallCap World (RSLCX)
American Funds The Bond Fund of America (RBFCX)
American Funds The Growth Fund of America (RGACX)
American Funds The Investment Company of America (RICCX)
American Funds US Treasury Money Fund of AmericaR3 (RUCXX)

Any other comments or suggestions would be appreciated.

Re: 23yo...My financial outlook..how does this look? + some 401k help...
 

I would switch the G&I with New Economy and SmallCap World but that's just me.

Plus be careful about your Roth goal, $95k income a year starts to reduce the benefits off a Roth IRA. $110k is the complete cut-off.

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

These income limits for the roth...are they before or after deductions??

Obviously this would seriously hurt poker players if I am understanding the tax laws correctly? Since you have to add up all the winning days as gross income before you deduct out the losing days?

Thanks for the suggestion on the 401k...do the percentages look alright?

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

[ QUOTE ]
I would switch the G&I with New Economy and SmallCap World but that's just me.

[/ QUOTE ]

Agreed.

OP,

Good to see you are starting early. The fact that you have a plan and are committed to saving/investing is really 90% of what matters; a lot of the questions you have are just details. Don't sweat them too much.

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

From a 42 year old Dont change a thing. You are so far ahead of the typical 23 year old. Have some fun spend a bit.

Full Time job and poker What amount of time is spent on poker? Take more risk at such a young age is all I would suggest

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

I spend maybe 10-15 hours a week on poker. I don't do anything at all on weeknights because of work in the morning so usually play from 8-11.

Play a good chunk on sunday. I'm out partying every Friday/Saturday night.

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

75k to 100k...i need to switch into selling this stuff.

Re: 23yo...My financial outlook..how does this look? + some 401k help...
 

[ QUOTE ]

----I just purchased a new car. I took out a loan on the car to build up better credit but I have the money set aside to pay the car off early in rolling CD's

[/ QUOTE ]

Just pay the thing off. Buying a car and staying in debt to "build credit" is insane, imo. Especially when you are earning 115-140K per year at age 23. Who needs credit!? lol.

You know what combats having a limited "credit" history? Being 23 and earning 100K+ per year and saving much of it.
What is your rate at on your car?

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

75-100+K for selling software is pretty sick

you make more money than the people with years of experience that design and build the software

nh op

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

lol I thought it was a given that salespeople in pretty much all industries make more than researchers/designers of the product. lol.

My brother sells firetrucks part-time and earns close to $100K for doing so.

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

[ QUOTE ]
75-100+K for selling software is pretty sick

you make more money than the people with years of experience that design and build the software

nh op

[/ QUOTE ]

Top CS grads in major metro areas make that range upon graduation.

J

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

[ QUOTE ]
[ QUOTE ]
75-100+K for selling software is pretty sick

you make more money than the people with years of experience that design and build the software

nh op

[/ QUOTE ]


Top CS grads in major metro areas make that range upon graduation.

J

[/ QUOTE ]

no, they really don't

Top top top grads at google make about 80, but google really only hires the best people at the best schools, and that is in california most expensive place to live.

Top grads at big companies in other parts of the country pull 45-65

I don't know of anybody that makes 100K as a 23 yr old programmer unless they started their own business

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
75-100+K for selling software is pretty sick

you make more money than the people with years of experience that design and build the software

nh op

[/ QUOTE ]


Top CS grads in major metro areas make that range upon graduation.

J

[/ QUOTE ]

no, they really don't

Top top top grads at google make about 80, but google really only hires the best people at the best schools, and that is in california most expensive place to live.

Top grads at big companies in other parts of the country pull 45-65

I don't know of anybody that makes 100K as a 23 yr old programmer unless they started their own business

[/ QUOTE ]

I have friends who pull in 100k+ at 23 in software. 80k starting at Google is w/o a Master's degree. Add another 10+ for the degree and another 10+ for a year or two of experience.

Also, other companies (Amazon, financial companies, etc) pay better.

I'm just surprised you can get a sales position making that kind of money.

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

I am curious what limits you are playing to earn that amount with that amount of time. I would also look at some of the income trusts in Canada as good plays. Steady income and good returns. Let me know if you want soem names.

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

[ QUOTE ]
[ QUOTE ]
75-100+K for selling software is pretty sick

you make more money than the people with years of experience that design and build the software

nh op

[/ QUOTE ]

Top CS grads in major metro areas make that range upon graduation.

J

[/ QUOTE ]

J is completely correct on this subject. 100k+ isn't unheard of straight out of undergrad. Friend who is not in Cali makes ~75k working ~35 hours a week. Shipz.

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

The EuroPacific growth fund has been doing quite well.

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

wow i need a financial basic outline like this one. will create one soon i guess.

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

yea i have a friend just graduated carnegie mellen comp sci making $110k/yr for microsoft right out.

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

[ QUOTE ]
yea i have a friend just graduated carnegie mellen comp sci making $110k/yr for microsoft right out.

[/ QUOTE ]

Unless he has more than a BS/BA, has tons of experience, or had a concentration in something very hot right now, he's pulling your leg.

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

[ QUOTE ]
[ QUOTE ]
yea i have a friend just graduated carnegie mellen comp sci making $110k/yr for microsoft right out.

[/ QUOTE ]

Unless he has more than a BS/BA, has tons of experience, or had a concentration in something very hot right now, he's pulling your leg.

[/ QUOTE ]

I have a friend wou just graduated from CMU comp sci as well and he's definitely not making that much. In fact, I know quite a few people that came out of CMU that aren't making that much.

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

Thanks for the input guys.

100k is on the high end but very possible. I should hopefully fall within the 80k-90k range. However, it is sales so you have to be good and it definitely isnt guaranteed. My base pay is only 40k.

Our top 2-3 salespeople are pulling in close to 150k and the oldest is 26.

I appreciate the suggestions so far. I took out the car loan because I was under the impression that it was a different type of loan (a major installment loan) and would count more towards my credit score.

I have only had 1 credit card but have paid the balance in full every single month. I was disappointed that I couldn't qualify for a better interest rate (~9%) but it was explained to me that having just a credit card wasnt enough. In order to have the highest score possible, a mortgage/car loan was needed (or at least a history of that).

Is this not correct?

Also, I will think about switching the allocations for my 401k especially now since I don't think i will be able to contribute to the Roth.

Any other suggestions to do with the extra money? Especially if I can't contribute to the Roth, I will likely have 30-40k to invest each year. i was planning on continuing to invest in the stock market by buying individual stocks.

Re: 23yo...My financial outlook..how does this look? + some 401k help.
 

With those kind of figures in salary / investments you have nothing at all to worry about. like the other guy said you're WAY ahead of the curve.