Help me

[Anonymous]

I make $100K. My boss thinks I am overpaid, but there is no way I think that.

I am having a baby in August. Free childcare (Mom & Aunts)

My rent is $925 because I live in the hood!

I have a one bedroom.

I put 5% in a 401K, my employer matches 4% (so I am not maxing out my 401K)

I will have $20K in savings at the end of the year.

I am cutting my cable bill, but have a $350 car payment (I pay $500) and a $150 student loan (Still owe $8K).

I have no debt other than the car and student loan.

I want to know what do I do? How do I spend my money?

I need to buy something eventually, but really want out of the hood...something closer to Bethesda so if there ever was a chance of my child going to Holton Arms with scholarships and financial aid she would be able to go.

Where is my Suzi Orman?

I am 36, have a BS in Business Admin and 10 years experience in my industry.

What should be my 5 year, 10 year, 15 year and 20 year plan

[Anonymous]

Check out your 401k plan for loan terms. If they are such that the balance of the loan is not due if you leave employment (ie, you can continue making monthly payments) you are a good candidate for saving part of your down payment in your 401k.

Anytime you are in a situation where you are not maxing out your 401k because you have other savings obligations, and loan terms are favourable, the tax savings make doing this a no brainer. As long as it's truly money you would not otherwise have saved for retirement, and you invest that portion conservatively (short term bonds/stable value) you will come out ahead in the end.

[Anonymous]

Call your bank and ask them what the qualifications are for getting a mortgage under the First Time Homebuyers Program.

[Anonymous]

Step 1: Pay off your student loans. All 8k of it. Just get rid of it in one fell swoop. I guarantee you are paying more in interest on the loans than your 20k is making you in savings.

Then focus on rebuilding your savings from the amount you used to pay in student loans.

[Anonymous]

Pay off your student loans. Pay off your car.Save emergency fund. Max your 401k and Roth. save for house.

[Anonymous]

Congrats on the baby and on taking the time to plan.

I would NOT pay off the student loan in one fell swoop, as the 20K can be tapped for emergencies and likely provides some emotional security as well. Are you happy enough in your job and feel like you have enough job security to stay for a bit? Will you have to take any unpaid leave when the baby comes?

I would focus on looking for a new home now, before the baby arrives, if that is possible. Try first-time buyer programs, not sure if 100% loans are still available, but look into the financing. Buy the smallest home you can afford in a location you like, and make sure you are happy enough if you had to stay there a long time - sometimes life happens this way.

Once the baby arrives, make a will. Start to build a college fund, even if it's just $25 a month at first.

FWIW, looking at the long term since you mention private school, please know that it will not be easy financially as a single parent (or any parent) having financial aid from school. They may give you a significant award but you will also have to contribute until it hurts. (And no, they won't make you take money out of the college fund.) BTDT.

Good luck!

[Anonymous]

I would buy a place before interest rates go up. Get an FHA no PMI loan in NoVA - for a 300K place, you'd save $300/month and your mortgage would be like $1650/month approx.

http://www.villagebankmortgage.com/new-program-3-down-and-no-mi/

[Anonymous]

Anonymous wrote:I would buy a place before interest rates go up. Get an FHA no PMI loan in NoVA - for a 300K place, you'd save $300/month and your mortgage would be like $1650/month approx.

http://www.villagebankmortgage.com/new-program-3-down-and-no-mi/

I meant VHDA no PMI (not FHA)

[Anonymous]

Oh for god's sake calm down (hormones?) and enjoy the pregnancy. It's going to be okay. You are doing great.

[Anonymous]

That's funny OP...You stated you live in the hood!! LOL.

Gotta correct ya though.

It's "Da Hood" out here in Cali.

[Anonymous]

I am not going to pay $1600 for a mortgage. I just can't do it. That is just too much for me. I like the $1000 range. I will just keep saving. I might just have to move out of the area. My apartment can only go up to $963 in September, so that is another year of saving! I am just gonna save save save...I will try to bump up my 401K by 3%, but since they are taking $120 more a month in Social Security that was gonna be my savings.

[Anonymous]

Anonymous wrote:I am not going to pay $1600 for a mortgage. I just can't do it. That is just too much for me. I like the $1000 range. I will just keep saving. I might just have to move out of the area. My apartment can only go up to $963 in September, so that is another year of saving! I am just gonna save save save...I will try to bump up my 401K by 3%, but since they are taking $120 more a month in Social Security that was gonna be my savings.

Prudence is very wise. But remember at 100k you are probably in the 20% tax bracket, so your mortgage payment would be effectively reduced by that amount, at least for the first several years. You'll also be able to "write off" the baby which will increase your effective take home pay a bit. Babies don't care what their neighborhood is like or how big their house is, so you've plenty of time to make a decision. Congratulations!

[Anonymous]

Saving is good, but getting rid of debt is better. (And if it makes you feel better, it is also a form of saving, since you are getting rid of the interest payments!)

I know it feels good to watch your savings account grow, but the financially smart thing to do is to pay off your car and student loans as quickly as you can. I kept a car payment way longer than I should have, just because the payments were reasonable (I could afford them) and I wanted the peace of mind of building up my savings. Definitely something I look back on and kick myself about now.

Keep a savings buffer, if you want to, but focus on getting debt-free! It will be an amazing way to start off life with a new baby.

[Anonymous]

There are also some associations (NACA & MANNY locally) that can help you budget plus assist w/a down payment provided you meet certiain eligibility requirements..it's simply a matter of scale, think about this someone making $100K in Manhattan is consider low-income....yes I realize it's NYC but WDC is not that much different....also, is there anyway you can (or would like to?) relocate to another location w/a low cost of living....I'm originally form Tejas so my 1st thoughts are maybe somewhere like Austin/San Antonio...thriving cities, low costs, where someone w/your income would be considered upper middle income....just a thought. Good luck.

[Anonymous]

There are also some associations (NACA & MANNA locally) that can help you budget plus assist w/a down payment provided you meet certiain eligibility requirements..it's simply a matter of scale, think about this someone making $100K in Manhattan is consider low-income....yes I realize it's NYC but WDC is not that much different....also, is there anyway you can (or would like to?) relocate to another location w/a low cost of living....I'm originally form Tejas so my 1st thoughts are maybe somewhere like Austin/San Antonio...thriving cities, low costs, where someone w/your income would be considered upper middle income....just a thought. Good luck.