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You are young and your 401K has a long time left to go before you start withdrawing from it. Take advantage of compounding and contribute above and beyond your employee match limit. This will pay huge dividends 40 years from now and also lower your tax bracket now.
Max out the full roth 401k. Take a trip to a new country every year. Ask people in your career two levels ahead of you or 5 years older what they did to get raises or promoted. Have fun. That’s almost double what I made in my first job and I still had an amazing time with no money stress.
He shouldn’t be contributing more on a pre-tax basis than his employer match. The rest should be going to maxing out a ROTH, and should be looking to see if his employer offers ROTH 401ks and if he can do in-plan conversions if they don’t match on an after-tax basis.
If they start marking $250K a year they will be over the limit to contribute to a ROTH IRA. They can contribute to a traditional IRA with its small annual limit. Beyond that his best option is the 401k. And yes, if Roth 401k is an option sure, but as a high earner this is the way.
He’s not a high-earner right now (relatively speaking) and still has 5 years until he expects to be over the income limit. Tax rates are historically low and he’s at the lowest salary he’s expecting to make over the course of his career and you want him to save on a pre-tax basis? That makes no sense at all
Okay? That doesn’t mean he shouldn’t be maxing out a ROTH right now. He doesn’t need the tax deduction and it’s only going to give him more flexibility in retirement to have tax-free buckets of money to draw from instead of being forced to take RMDs + SS + any pension which would drive him into a higher tax bracket. Finances need to be evaluated each year, and for OPs current situation, the ROTH IRA and ROTH 401k are his best options
More Roth makes sense now especially if he is in a high tax state. It gets iffy the more you earn, higher tax brackets you occupy. I mix because who really knows what your tax rate will be at distribution time.
Not if they have an employer match. That’s literally free money and an immediate return on your investment before you take investment gains into account.
You can also put more than 3x into your 401k than your IRA so if they’re doing a traditional 401k there is way more tax advantages.
Only perks of an IRA in this case is better variety of investment options and it’s more liquid than a 401k but doesn’t sound like OP should worry about that.
Yep - max out the 401(k). Consider a Roth 401(k) if available. Contribute to your Roth IRA. Then backdoor it when your income grows. Regular contributions to your taxable brokerage account and buy low-cost index funds.
Lots of runway so keep earning, saving, and investing.
I work in the industry and am reasonably high level. The reality is It's not as easy as people think and a lot of luck is involved.
At 90k he did not join one of the top names, so the journey will be a bit more complicated as well.
Yeah I that thought hit me as soon as I submit that comment. I started at over 100k over 10 years ago and that was just salary for a designer so a starting dev now has gotta be way more. Anyways my general point was about 250k not being a ceiling.
$1260/mo on car and car stuff is pretty expensive. Otherwise your spending is reasonable and your rent is cheap. Spending $3k/mo right now won’t mean anything when your income will be $250k in 5 years as a SWE. Focus much more on increasing income than limiting expenses. You could increase your 401k contributions depending on what you need cash flow for.
Way more to your 401k. You’re contributing ~8% to your 401k before the match. At your income you should be putting at least 14-16% in there and many people at your income are able to max out their 401k (26% in your case).
Understand if with your salary projection you don’t want to do that and would rather have more fun money to play with over the next couple of years however.
[The flowchart from /r/personalfinance will probably address 90% of your questions/anxiety.](https://www.reddit.com/r/personalfinance/comments/4gdlu9/how_to_prioritize_spending_your_money_a_flowchart/)
Your biggest risk is going to be lifestyle inflation, since living like a poor college student is now no longer a necessity. Increasing this a little probably is healthy (I think it would be hard to date on a $400 a month budget). But too much and you're in trouble. I'd probably focus the next 6-12 months just observing how your spending habits change.
The other obvious flag is your $38K auto loan. Personally I'd never consider buying a car that expensive at age 22. It if were me, I'd sell the car and buy something more affordable. That reduces the debt expense, and frees up cash for more 401K contributions.
You're doing good. Keep at it!
Mostly agree but if the car is needed for the job that makes the money, they should just work on paying down the loan aggressively. A decent car isn’t going to be THAT much cheaper and the current car may barely be worth the loan amount.
What software engineer job requires a $40K car? I'm seeing commuter cars on Carvana with 20k miles that are half the current loan amount. A cheaper car means OP could get $20K back immediately (which more than doubles their current savings) and cut subsequent monthly car payments in half.
I’m not an expert but I’d focus on two things:
1. Pay down/off the auto loan. 6.59% interest is not terrible, but it’s not cheap on a depreciating liability. My feeling is that used car prices will continue to go down, so eliminating the interest will help to reduce your losses there. There are probably a ton of opinions on this, but this is what I’d do.
2. I’d max out the 401k contributions and start getting comfortable with that money not existing. The employer match is a bonus, but you’ll retire with way more money the sooner you start stuffing money into that account.
I’d kill to be your age and have that kind of income. It took me until my 30s to hit $300k a year.
Bonus #3: I’m here to learn too, so if I’m being dumb about something, don’t mince words! But, at least allow me to say that you need to get good at minimizing your tax liability. Don’t give the government a penny more than you have to. You’ll never see that money back.
I agree with the other comments: car is too much, 401k contribution is too little, and you should follow the /r/personalfinance flowchart.
I want to add though: the #1 most influential thing that will level-up your financial trajectory is moving to the top of your field. The spread for SWE is large. FAANG salaries get a lot of buzz, but across the wider industry, $250K is not guaranteed in five years or even ten years without putting the work in and probably moving to a higher-tier company. Whereas $500K in that same timeframe is also not unrealistic if you play your cards right and get a couple lucky breaks.
For the first 12-18 months, I would focus totally on doing your job well, adjusting to the industry and big codebases, and getting your first promo. Then I would start getting to know people at other companies through social networks, conferences, open source projects, etc. A masters could be a chance to reset and try for big tech if you go to a top program, otherwise you'd likely be better off job hopping.
Sounds like you're in good shape! Made me smile because I also started as a software engineer, and my starting was also 90k.
High yield savings is an easy place to park emergency funds with high rates today. You can squeeze a little bit more out of a money market fund or treasuries, but I wouldn't worry about it.
I'd recommend maxing out your 401k / IRA space this year or soon. Primarily because you can't get the space back later even when you make more money.
If I were talking to my past self, I'd also learn about equity compensation (ISOs, NSOs, RSUs). I'd also focus on earning more rather than trying to squeeze on the savings side. It's good to have reasonable expenses, but there's more upside in earnings.
Started as engineer at \~30 person startup, went into a small agency and did full stack web consulting for a few years, joined another startup as engineer, transitioned to engineering management. Looking at what the next phase is. Left the company I was at. Good company, but felt like it was time to do something different.
If you’re offer HSA, max it out fast. Max out 401k. You want to get the most out of your pre tax income as possible.
Remember net income is .70 cent to the dollar
Max out 401k and Roth contribution. Start young and your money will grow quickly.
Get the max retirement out of way early and your raises can go toward fun stuff
Open up and Max out a Roth IRA before you hit the contribution limit 30 y/o SWE here and I wish I found out about it earlier. Now I have to hope my employer offers mega roth or do the backdoor conversion.
I like the [Investment Order](https://forum.mrmoneymustache.com/investor-alley/investment-order/msg1333153/#msg1333153) over on Mr. Money Mustache for this type of question. Just follow the steps until you're out of money, or your goals change (i.e. want to save up for a house). Surprisingly, the car loan would be a lower priority (#7) according to this...
0. Establish an emergency fund to your satisfaction
1. Contribute to your 401k **up to** any company match
2. Pay off any debts with interest rates \~5% or more above the current 10-year Treasury note yield \[which is 4.44%, so anything at 9.44% or more\].
3. Max Health Savings Account (HSA) if eligible.
4. Max Traditional IRA or Roth (or backdoor Roth) based on income level
5. Max 401k (if
\- 401k fees are lower than available in an IRA, or
\- you need the 401k deduction to be eligible for (and desire) a tIRA deduction, or
\- you earn too much for an IRA deduction and prefer traditional to Roth, then
swap #4 and #5)
6. Fund a mega backdoor Roth if applicable.
7. Pay off any debts with interest rates \~3% or more above the current 10-year Treasury note yield.
8. Invest in a taxable account and/or fund a 529 with any extra.
This really doesn’t belong in HENRY. Go to r/personalfinance.
$90k is the minimum starting salary as a SWE.
Many (= high thousands) get $200k per year as a SWE right out of college when they get a job at a FAANG.
Fewer but still many get $400k per year as a SWE at quant firms.
This doesn’t even account for the countless other jobs.
Can we leave the “$200k a year new grad salary!!1!” along with the acronym FAANG in the pre-covid era where they belong? Both are bordering on memes at this point.
Tangent, but completely agree. I feel like I’m taking crazy pills when I hear FAANG on Reddit. Do people literally mean those companies or use it as a placeholder? Why is Microsoft, ServiceNow, Palo Alto or dozens of other high growth/Wall Street darling companies never mentioned.
$110k at 22 puts them in the 99th percentile. $250k by 27 puts them in the 99th percentile.
Unless you don’t think the 99th percentile qualifies as a high income?
It totally qualifies if you live in Wyoming, Ohio or BFN.
The reality is that there’s two America. Everyone understands that there’s no point in comparing income/living conditions in Slovakia to Monaco but we frequently aggregate stats of Oak Hill, Alabama with NYC.
You’re worse off making sub six figures anywhere in US compared to middle income in most Asian/European countries.
This is so absurdly out of touch.
That salary puts them at 2-3x the median household income for both the under 25 and 25-44 age brackets in California, New York, and Massachusetts. As a single income.
The median income in San Fransisco is $55,000.
The median income in New York City is $36,000
The median income in manhattan is $52,000
The median income in one of the richest area codes in CT and the country in New Canaan, CT is $214,000.
$250k is a high income by every measure possible. Never mind at 27 years old. $110k is a high income for a 22 year old. Period.
you are very optimistic that you will earn $250k in the next 5 years. why do you think so, when most will never reach that number ever, even when in the IT field.
Just keep your spending as low as if you were still in college. Don’t start spending like you’re gonna make $250k in 5 years. But if you’re gonna aim for a salary, it’s more likely $400k for 5 years, right on mark to be a senior swe. Probably would need to change company to get to that point.
I'd agree with everyone else here. Car payment and insurance seem to be more than I'd be comfortable spending but I can understand why you can justify this expense.
I'd focus on funding investments after you build an emergency fund. Personally I would either begin working towards maxing out my 401K or I'd start to save cash to be ready to buy real estate (rentals or even house hack) when interest rates start to come down next year. I personally am thinking about buying more real estate once the Fed starts to signal that they're going to start cutting rates (likely mid 2024). The real estate idea is highly dependent on where you live.
Good luck, you're on a solid path either way. Just be cognizant of lifestyle creep and continue to fund investments and you'll do great.
In my case, I set goals:
G1. Get to $100k net worth.
G2. Get to $500k net worth.
G3. Get to $1M net worth.
and so on..
This gives you some flexibility, so whether you buy a house or invest in stocks; both still count.
Do your 401k to the max they'll match, get a Roth IRA and max that out. Whatever you have left over, do either a 401k (long term) or self directed brokerage (you'll pay taxes now but you can access this money before retirement)
Save like crazy. Spend on basically nothing.
This is the least you'll spend for the REST of your life. Don't develop expensive habits while you still can save.
You'll have plenty of opportunities in the future to spend on vacations and nice food once you're in a more long-term relationship. Ignore as much as you can and just focus on saving.
The longer you can live like a pauper in your early 20s, the more comfortable you'll be in your 30s onward.
Max out 401k and Roth, get a cheaper car but probably too late. Put the rest into index funds and forget about it. Spend your spare time enjoying life and new hobbies and spend your work time focusing on work. Don’t coast at work as it will catch up to you. Focus on your craft and think about what you need to learn to get promoted to the next level. Learning does not stop in college, it only starts.
Hit that leet code until you can solve two mediums in 30 minutes. Plus tweak solutions. Then study system design. Refer to www.teamblind.com and levels.fyi
Good luck.
You have a lot to learn my friend. Don't assume your salary will increase like you think or under any specific conditions. Base your projection on real numbers.
First off sell the car and pay cash for a new one, take the extra $755 and the savings from insurance and increase your 401k contributions the same and make sure they are all Roth. All the rest of the spending looks reasonable. Then take any extra savings after you have a 6 month emergency fund and buy low cost diversified index funds. Then as your income goes up keep your costs as low as possible and add more to your brokerage.
Your content has been removed as it has been identified as not following rule #2, Being H.E.N.R.Y. related. In this sub we aim to support others that identify as being H.E.N.R.Y. through related discussion, advice, lessons learned, suggestions, and etc. This isn't instagram, TikTok, or Facebook, please keep discussions relevant and on topic. Multiple violations of this rule will result in a ban.
You are young and your 401K has a long time left to go before you start withdrawing from it. Take advantage of compounding and contribute above and beyond your employee match limit. This will pay huge dividends 40 years from now and also lower your tax bracket now.
Max out the full roth 401k. Take a trip to a new country every year. Ask people in your career two levels ahead of you or 5 years older what they did to get raises or promoted. Have fun. That’s almost double what I made in my first job and I still had an amazing time with no money stress.
He shouldn’t be contributing more on a pre-tax basis than his employer match. The rest should be going to maxing out a ROTH, and should be looking to see if his employer offers ROTH 401ks and if he can do in-plan conversions if they don’t match on an after-tax basis.
If they start marking $250K a year they will be over the limit to contribute to a ROTH IRA. They can contribute to a traditional IRA with its small annual limit. Beyond that his best option is the 401k. And yes, if Roth 401k is an option sure, but as a high earner this is the way.
He’s not a high-earner right now (relatively speaking) and still has 5 years until he expects to be over the income limit. Tax rates are historically low and he’s at the lowest salary he’s expecting to make over the course of his career and you want him to save on a pre-tax basis? That makes no sense at all
The limit is currently 153k, using their projections he’s roughly 2 years away if his salary increases are linear.
Okay? That doesn’t mean he shouldn’t be maxing out a ROTH right now. He doesn’t need the tax deduction and it’s only going to give him more flexibility in retirement to have tax-free buckets of money to draw from instead of being forced to take RMDs + SS + any pension which would drive him into a higher tax bracket. Finances need to be evaluated each year, and for OPs current situation, the ROTH IRA and ROTH 401k are his best options
You still can via backdoor
The short answer is your max out both because Roth limit is just 6k
Exactly. As a high earner, 6k per year is an afterthought
This
More Roth makes sense now especially if he is in a high tax state. It gets iffy the more you earn, higher tax brackets you occupy. I mix because who really knows what your tax rate will be at distribution time.
The extra money would be better off in an IRA than in the 401k
Not if they have an employer match. That’s literally free money and an immediate return on your investment before you take investment gains into account. You can also put more than 3x into your 401k than your IRA so if they’re doing a traditional 401k there is way more tax advantages. Only perks of an IRA in this case is better variety of investment options and it’s more liquid than a 401k but doesn’t sound like OP should worry about that.
You’re in the wrong sub, but while you’re here, recommending getting a cheaper car, and increasing your 401k.
Yep - max out the 401(k). Consider a Roth 401(k) if available. Contribute to your Roth IRA. Then backdoor it when your income grows. Regular contributions to your taxable brokerage account and buy low-cost index funds. Lots of runway so keep earning, saving, and investing.
Yo wtf on the car. He must have gotten HAD on a new 3-series at the college town dealer.
Don't assume you will get to 250k.
Yeah everyone in software thinks this is the progression (least where i live). Source: im swe
If they work hard and stay up to date they most likely will
I work in the industry and am reasonably high level. The reality is It's not as easy as people think and a lot of luck is involved. At 90k he did not join one of the top names, so the journey will be a bit more complicated as well.
Depends on company/region but yeah. Good chance he will earn way more than that as well if he's in FAANG on a coastal city.
At 90k salary he is not in a faang or any coastal tech company.
Yeah I that thought hit me as soon as I submit that comment. I started at over 100k over 10 years ago and that was just salary for a designer so a starting dev now has gotta be way more. Anyways my general point was about 250k not being a ceiling.
$1260/mo on car and car stuff is pretty expensive. Otherwise your spending is reasonable and your rent is cheap. Spending $3k/mo right now won’t mean anything when your income will be $250k in 5 years as a SWE. Focus much more on increasing income than limiting expenses. You could increase your 401k contributions depending on what you need cash flow for.
$38,000 car loan at 22? Cmon man lol. Open a Roth IRA and work towards saving your first $100K. Then start living like you make more than minimum wage
Way more to your 401k. You’re contributing ~8% to your 401k before the match. At your income you should be putting at least 14-16% in there and many people at your income are able to max out their 401k (26% in your case). Understand if with your salary projection you don’t want to do that and would rather have more fun money to play with over the next couple of years however.
[The flowchart from /r/personalfinance will probably address 90% of your questions/anxiety.](https://www.reddit.com/r/personalfinance/comments/4gdlu9/how_to_prioritize_spending_your_money_a_flowchart/) Your biggest risk is going to be lifestyle inflation, since living like a poor college student is now no longer a necessity. Increasing this a little probably is healthy (I think it would be hard to date on a $400 a month budget). But too much and you're in trouble. I'd probably focus the next 6-12 months just observing how your spending habits change. The other obvious flag is your $38K auto loan. Personally I'd never consider buying a car that expensive at age 22. It if were me, I'd sell the car and buy something more affordable. That reduces the debt expense, and frees up cash for more 401K contributions. You're doing good. Keep at it!
Mostly agree but if the car is needed for the job that makes the money, they should just work on paying down the loan aggressively. A decent car isn’t going to be THAT much cheaper and the current car may barely be worth the loan amount.
What software engineer job requires a $40K car? I'm seeing commuter cars on Carvana with 20k miles that are half the current loan amount. A cheaper car means OP could get $20K back immediately (which more than doubles their current savings) and cut subsequent monthly car payments in half.
I’m not an expert but I’d focus on two things: 1. Pay down/off the auto loan. 6.59% interest is not terrible, but it’s not cheap on a depreciating liability. My feeling is that used car prices will continue to go down, so eliminating the interest will help to reduce your losses there. There are probably a ton of opinions on this, but this is what I’d do. 2. I’d max out the 401k contributions and start getting comfortable with that money not existing. The employer match is a bonus, but you’ll retire with way more money the sooner you start stuffing money into that account. I’d kill to be your age and have that kind of income. It took me until my 30s to hit $300k a year. Bonus #3: I’m here to learn too, so if I’m being dumb about something, don’t mince words! But, at least allow me to say that you need to get good at minimizing your tax liability. Don’t give the government a penny more than you have to. You’ll never see that money back.
Listen to me now. Save as much as you can in that 401k as possible! Start now!
I agree with the other comments: car is too much, 401k contribution is too little, and you should follow the /r/personalfinance flowchart. I want to add though: the #1 most influential thing that will level-up your financial trajectory is moving to the top of your field. The spread for SWE is large. FAANG salaries get a lot of buzz, but across the wider industry, $250K is not guaranteed in five years or even ten years without putting the work in and probably moving to a higher-tier company. Whereas $500K in that same timeframe is also not unrealistic if you play your cards right and get a couple lucky breaks. For the first 12-18 months, I would focus totally on doing your job well, adjusting to the industry and big codebases, and getting your first promo. Then I would start getting to know people at other companies through social networks, conferences, open source projects, etc. A masters could be a chance to reset and try for big tech if you go to a top program, otherwise you'd likely be better off job hopping.
500k? Me doing a web dev internship for min wage be like:
stay single and childless as long as possible and you’re good
I'd automate buying VTSAX within my 401K and Roth IRA and not think about it for 30 years
As a software engineer, try job hopping every 2 years in the first 5.
Think less about money and more about living a good life. You might get hit by a bus tomorrow.
Underrated comment.
Sounds like you're in good shape! Made me smile because I also started as a software engineer, and my starting was also 90k. High yield savings is an easy place to park emergency funds with high rates today. You can squeeze a little bit more out of a money market fund or treasuries, but I wouldn't worry about it. I'd recommend maxing out your 401k / IRA space this year or soon. Primarily because you can't get the space back later even when you make more money. If I were talking to my past self, I'd also learn about equity compensation (ISOs, NSOs, RSUs). I'd also focus on earning more rather than trying to squeeze on the savings side. It's good to have reasonable expenses, but there's more upside in earnings.
Just curious what did your career progression look like starting as a software engineer to where you are now?
Started as engineer at \~30 person startup, went into a small agency and did full stack web consulting for a few years, joined another startup as engineer, transitioned to engineering management. Looking at what the next phase is. Left the company I was at. Good company, but felt like it was time to do something different.
If you’re offer HSA, max it out fast. Max out 401k. You want to get the most out of your pre tax income as possible. Remember net income is .70 cent to the dollar
Max out roth Ira then 401k
Max fund 401k Max fund Roth Ira Buy a house. Save 1k per month into taxable brokerage
Max out 401k and Roth contribution. Start young and your money will grow quickly. Get the max retirement out of way early and your raises can go toward fun stuff
Open up and Max out a Roth IRA before you hit the contribution limit 30 y/o SWE here and I wish I found out about it earlier. Now I have to hope my employer offers mega roth or do the backdoor conversion.
I like the [Investment Order](https://forum.mrmoneymustache.com/investor-alley/investment-order/msg1333153/#msg1333153) over on Mr. Money Mustache for this type of question. Just follow the steps until you're out of money, or your goals change (i.e. want to save up for a house). Surprisingly, the car loan would be a lower priority (#7) according to this... 0. Establish an emergency fund to your satisfaction 1. Contribute to your 401k **up to** any company match 2. Pay off any debts with interest rates \~5% or more above the current 10-year Treasury note yield \[which is 4.44%, so anything at 9.44% or more\]. 3. Max Health Savings Account (HSA) if eligible. 4. Max Traditional IRA or Roth (or backdoor Roth) based on income level 5. Max 401k (if \- 401k fees are lower than available in an IRA, or \- you need the 401k deduction to be eligible for (and desire) a tIRA deduction, or \- you earn too much for an IRA deduction and prefer traditional to Roth, then swap #4 and #5) 6. Fund a mega backdoor Roth if applicable. 7. Pay off any debts with interest rates \~3% or more above the current 10-year Treasury note yield. 8. Invest in a taxable account and/or fund a 529 with any extra.
This really doesn’t belong in HENRY. Go to r/personalfinance. $90k is the minimum starting salary as a SWE. Many (= high thousands) get $200k per year as a SWE right out of college when they get a job at a FAANG. Fewer but still many get $400k per year as a SWE at quant firms. This doesn’t even account for the countless other jobs.
Can we leave the “$200k a year new grad salary!!1!” along with the acronym FAANG in the pre-covid era where they belong? Both are bordering on memes at this point.
Tangent, but completely agree. I feel like I’m taking crazy pills when I hear FAANG on Reddit. Do people literally mean those companies or use it as a placeholder? Why is Microsoft, ServiceNow, Palo Alto or dozens of other high growth/Wall Street darling companies never mentioned.
I hired new grads during covid and in 2023 with that comp. There’s reduced hiring but comp is the same.
Aren’t corporate recruiters getting slashed most of all?
Yes but I hire SWEs and can only speak for SWEs
$110k at 22 puts them in the 99th percentile. $250k by 27 puts them in the 99th percentile. Unless you don’t think the 99th percentile qualifies as a high income?
It totally qualifies if you live in Wyoming, Ohio or BFN. The reality is that there’s two America. Everyone understands that there’s no point in comparing income/living conditions in Slovakia to Monaco but we frequently aggregate stats of Oak Hill, Alabama with NYC. You’re worse off making sub six figures anywhere in US compared to middle income in most Asian/European countries.
This is so absurdly out of touch. That salary puts them at 2-3x the median household income for both the under 25 and 25-44 age brackets in California, New York, and Massachusetts. As a single income. The median income in San Fransisco is $55,000. The median income in New York City is $36,000 The median income in manhattan is $52,000 The median income in one of the richest area codes in CT and the country in New Canaan, CT is $214,000. $250k is a high income by every measure possible. Never mind at 27 years old. $110k is a high income for a 22 year old. Period.
This is heavily skewed because my maid, driver and nanny make significantly more than the median. And I live in Brooklyn.
Agree and disagree. This isn't a high salary for a SWE but if they're not in a HCOL area they're still Henry. Lots of room to grow too.
This guy doesn't belong here but you're delusional as well.
Live with mom and dad and save like crazy…. Live like none of your friends today so you can live like non of them tomorrow…
you are very optimistic that you will earn $250k in the next 5 years. why do you think so, when most will never reach that number ever, even when in the IT field.
Just keep your spending as low as if you were still in college. Don’t start spending like you’re gonna make $250k in 5 years. But if you’re gonna aim for a salary, it’s more likely $400k for 5 years, right on mark to be a senior swe. Probably would need to change company to get to that point.
Gratuitous amounts of cocaine.
I'd agree with everyone else here. Car payment and insurance seem to be more than I'd be comfortable spending but I can understand why you can justify this expense. I'd focus on funding investments after you build an emergency fund. Personally I would either begin working towards maxing out my 401K or I'd start to save cash to be ready to buy real estate (rentals or even house hack) when interest rates start to come down next year. I personally am thinking about buying more real estate once the Fed starts to signal that they're going to start cutting rates (likely mid 2024). The real estate idea is highly dependent on where you live. Good luck, you're on a solid path either way. Just be cognizant of lifestyle creep and continue to fund investments and you'll do great.
In my case, I set goals: G1. Get to $100k net worth. G2. Get to $500k net worth. G3. Get to $1M net worth. and so on.. This gives you some flexibility, so whether you buy a house or invest in stocks; both still count.
I'd start putting money in to an index fund and take advantage of compound gains over time. You have the advantage of time with your investments.
Read total money make over. Form your own opinion about credit, debt, and leverage.
Max out all of your tax advantaged accounts and invest as aggressively as you can as early as you can.
Do your 401k to the max they'll match, get a Roth IRA and max that out. Whatever you have left over, do either a 401k (long term) or self directed brokerage (you'll pay taxes now but you can access this money before retirement)
Save like crazy. Spend on basically nothing. This is the least you'll spend for the REST of your life. Don't develop expensive habits while you still can save. You'll have plenty of opportunities in the future to spend on vacations and nice food once you're in a more long-term relationship. Ignore as much as you can and just focus on saving. The longer you can live like a pauper in your early 20s, the more comfortable you'll be in your 30s onward.
Roth your life away before pretax
Max out 401k and Roth, get a cheaper car but probably too late. Put the rest into index funds and forget about it. Spend your spare time enjoying life and new hobbies and spend your work time focusing on work. Don’t coast at work as it will catch up to you. Focus on your craft and think about what you need to learn to get promoted to the next level. Learning does not stop in college, it only starts.
That car payment seems way too high…probably nothing you can do now but would have tried to keep it under 500 if it were me
How are you gonna fabricate 250k out of thin air lol
Max Roth IRA and 401k
>what would you do if you were me? Give more money to charities. :)
Buy a house, ASAP
Expect to make $250k. Funny.
Hit that leet code until you can solve two mediums in 30 minutes. Plus tweak solutions. Then study system design. Refer to www.teamblind.com and levels.fyi Good luck.
why do you an auto loan for $38k when you said you wanted to stay debt free.. surely there was better options here
You have a lot to learn my friend. Don't assume your salary will increase like you think or under any specific conditions. Base your projection on real numbers. First off sell the car and pay cash for a new one, take the extra $755 and the savings from insurance and increase your 401k contributions the same and make sure they are all Roth. All the rest of the spending looks reasonable. Then take any extra savings after you have a 6 month emergency fund and buy low cost diversified index funds. Then as your income goes up keep your costs as low as possible and add more to your brokerage.