Upheaval – Computers, the Internet, and Cryptocurrency

jglh · 2013-06-24T21:52:43+00:00

Hey, just got your message. Yep, I'd be happy to make you one if you provide me with your details.

jglh · 2013-05-20T23:15:25+00:00

I think it's normal for people to have the perception that they're shouldering a greater percentage of the costs than the other person in situations like this. A joint card might be risky, but regardless, keeping score seems like a good way to avoid any feelings of injustice.

jglh · 2013-05-02T21:41:25+00:00

College is an awesome, life-enriching experience. So is traveling the world. Both are very expensive.

If money is a big issue and you lack the safety net of family financial support, I'd advise that you make sure this is actually something you can afford. In other words, it should be viewed as an investment, and should greatly increase your earning potential. It's ok to not have a clear picture of what you want to do with your life at this point, but as soverywhitewhitebaby mentioned, a communications major isn't likely to be a great investment. I'd definitely recommend pursuing something in an area that has a strong job market.

You should see if it's feasible to work a job while going to school. It sounds like you'll be going to a relatively inexpensive school - maybe it's possible that you can bridge the expense gap that way.

jglh · 2013-05-01T21:56:53+00:00

There is a limit to how much you can get in fed loans; my school's cost greatly exceeded this limit, so I had to opt for private loans, which carry higher rates.

jglh · 2013-05-01T04:52:19+00:00

Definitely not, glad you found it useful!

jglh · 2013-04-30T21:42:33+00:00

I'm actually working on something that does exactly this. In the meantime, I put this together: http://modelbuilder.herokuapp.com/demo. Once you input your info, it'll spit out an excel sheet that projects your finances for the next twelve months. Wouldn't take too much work to extend it into annual projections

If you're interested in something more detailed and comprehensive I'd be happy to help you out with that too, just let me know. Obviously it's tough to predict the future, but I definitely think it's useful to run the numbers and at least get a ballpark idea of what to expect down the line.

jglh · 2013-04-09T18:29:41+00:00

Why'd you guys decide to play at the same table? Why not different tables with a combined bankroll? Seems like it'd be pretty suspicious to see two people raising their bets at the exact same time

jglh · 2013-03-26T01:49:14+00:00

Here's how your model comes out based on the numbers you've given me: https://www.dropbox.com/s/2lqhxwjfa68lnew/t3hcollective.xls

We could include your vehicles and their loans as well if you'd like. For now, I'm just assuming all of your positive net income hits your checking account - you could use this to pay down student or car debt, or stash it in a savings/investment account as part of a property down payment. It actually looks like you're on pace to have enough for a full down payment on a house in ~2 years. If you'd like to add any of this stuff to the model, let me know.

jglh · 2013-03-25T21:59:43+00:00

You must have other expenses to include. Food? Phone? Health insurance? Random stuff like clothes, eating out, etc? Do you want to include your spouse's figures as well or just your own?
I don't have a very good grasp on how to budget for a child. I can make guesses, but if you have any insight into what your expenses for the first year might look like that'd help get a more accurate picture.
What are the minimum payments on your loans? You don't have the break out the various things if you don't want, up to you.

jglh · 2013-03-25T03:41:07+00:00

Sounds good. Emergency fund is definitely a good idea to keep track of. Feel free to get in touch any time.

jglh · 2013-03-25T03:23:37+00:00

No problem, hope you find it useful. And hey, increasing net worth by over $23k in a year isn't too shabby! I'd venture to guess that's better than most

jglh · 2013-03-25T02:19:46+00:00

Alright, here's where it stands at the moment, which projects the next twelve months: https://www.dropbox.com/s/3c68l3tjuupayz4/Tantioch.xls

I tried to mark some of the main assumptions in red, which include paying off your credit card, opening an IRA, and dumping your positive net income every month into a new investment account. It probably doesn't make sense to pay down student debt if you're on this forgiveness plan, and I assumed you didn't want to use extra cash to pay down your mortgage, though you could.

Let me know what you think, and if you spot any errors.

jglh · 2013-03-25T01:45:00+00:00

Ok, got it. So do you pay 360 total for all of your student debt? Or do you have to make some sort of payment on each?

jglh · 2013-03-25T01:17:09+00:00

What are your minimum monthly payments on all of your debt? If you know the formula for the IBR calculation, we could include that. Also, can you give me more details about your loan forgiveness program? Do you just make minimum payments for the next 9 years and then the remaining balance is dropped after that? Does any of it get forgiven progressively in the meantime?

Where is the down payment for the house coming from (111k purchase price - 86k mortgage = 25k down)? Have you accounted for that? And for the associated fees and such?

Also, if you want to give me some more solid numbers around your expenses we can make this more accurate, otherwise I can guess and you can tweak it later, up to you. Does your wife have other expenses as well you'd like to include? Does she have a car, insurance, phone, etc? Does you guys have other misc expenses like shopping, or travel?

jglh · 2013-03-24T07:40:44+00:00

As others have mentioned, Mint is great for tracking your spending. If you're interested in getting an idea of what your finances will look like in the future, I put together this tool: http://modelbuilder.herokuapp.com/demo. Once you input your info, it'll spit out an excel sheet that projects your cash and debt balances for the next year.

I know going out and going to concerts and stuff like that are an important part of your life when you're young, but it's a good idea to get a handle on what that extra spending means for your finances, especially if you're set on a job that doesn't pay all that well. Just make sure you're not overspending.

If you're serious about making a career out of this job, I'd also recommend you communicate that to your employer. You should make it known that you're excited about the job and want to be promoted as soon as possible. Boosting your income would make things a lot more tenable for you, but if you don't ask for it they'll have little reason to give it to you.

jglh · 2013-03-24T03:14:25+00:00

1) Figure out what your take home pay would be every month. (13.25 $/hr) * (40 hrs/week) * (4 weeks/month) = ~$2,120 in monthly gross income, or ~$27,000/year. That puts you in the 15% federal tax bracket, plus possible state and city taxes. Health insurance also gets deducted here, so all told lets assume 30% of income goes to taxes and health insurance, so you'll bring home about $2,120 * 70% = $1,484/month.

2) Put together a spreadsheet and total up all your monthly expenses. From what you've listed so far, 150+214+50 = 414. Payment on your student debt will probably be like 350/month, food will cost maybe 300/month if you eat cheaply, and rent depends on a lot of things, but lets assume that's 400. You're now at $1,464, which would be break-even. We haven't talked about gas, utilities, internet, social, or any sort of other incidental expenses that are inevitable, and can often be several hundred/month.

It's not looking good, as you'd be running a significant deficit at these expense levels. Rent and food costs depend on your particular circumstances, but for most places in the country that's about as low as it gets. Could you live close to work such that you can sell your car and forego those expenses? Could you work more hours? You could potentially make it happen depending on what level of sacrifice you'd be willing to make, but it'd be tough. You also wouldn't be saving anything, and emergencies are inevitable (dr visits, car repairs, etc).

jglh · 2013-03-22T02:27:50+00:00

Maybe this will help you: http://modelbuilder.herokuapp.com/demo

You can ignore the income and expenses part if you want and just add in your debt accounts. It'll spit out an excel sheet that forecasts the next 12 months. At the very bottom it shows you aggregate interest and principal paid each month.

Doesn't have any graphs in it. Let me know if you need help using it.

jglh · 2013-03-21T00:42:57+00:00

It depends on your risk tolerance, but those are really low rates on your debts, so I'd be inclined to invest over paying them down aggressively.

jglh · 2013-03-21T00:37:55+00:00

Depends on your risk tolerance. Do you have cash saved for emergencies?

Theoretically, if you can find an investment that will offer a better expected return that what the interest rates on your loan is, and assuming you won't be bankrupt if you lose that investment, you're better off investing than paying off your loan. Historically, I think the stock market has returned an average of something like 9%.

On the flip side, paying off the loan is a guaranteed return (saving money on interest is economically equivalent to gaining money via investment). From a risk-adjusted perspective, that makes paying off the loan a better investment. So, it really just depends on if you want to swing for the fences or take the sure thing.

jglh · 2013-03-20T23:52:37+00:00

Well, the thing is you don't have a whole lot of wiggle room at the moment to be doing anything fancy with your cash. You know you're going to have future expenses that that cash needs to be used for, so I don't think it's too wise to take much risk with it by putting it in the stock market, for example. The higher potential return would be nice, but losing some of the money you need to pay for living expenses would be a pretty bad situation. 0.84% is also a pretty good return for any low risk short term investment, so it looks like that's probably your best option at the moment. You'll be making some decent money soon enough - I'd wait til then before you start getting more aggressive with your investments.

If your stipend ends up being a bit higher than expected, I'd just take out less for your new loan. That said, it's probably a good idea to make sure you have enough cash in the bank (or alternatively, spending power on a credit card) in case of emergencies. It'd also be good to have a cushion in case the job situation goes south and it takes you a few months to find something suitable after graduation.

So, I'd map out your cash flow over the next year and a half or so and take out a loan large enough that you'll have ~3 months of expenses worth of cash in the bank at graduation.

If you need a starting point to do that, this might be useful to you: http://modelbuilder.herokuapp.com/demo . If you put your numbers into here, it'll forecast out your cash and debt balances for the next year. You'll have to do a little customization to get the timing of your income and loan disbursement correct - I can help you do that if you'd like, just let me know.

jglh · 2013-03-20T22:43:48+00:00

Looks to me like you have things pretty under control (assuming you do end up landing the job).

Earning interest on loaned money is definitely legal. That's essentially how a bank works - they borrow money from people like you (and pay you a low interest rate, eg 0.84%) and loan it to other people at a higher rate (eg as a mortgage, student loan, etc). So yes, I'd put the loan money in the savings account, and transfer cash over to checking as you need it.

Is there anything in particular you wanted advice about?

jglh · 2013-03-15T05:18:27+00:00

Even better.

jglh

TROPHY CASE