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Thread: What to do first?

  1. #1
    Veteran Member Artemis's Avatar
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    Default What to do first?

    I need advice on where to start with my money. I just got divorced, I'm on housing and food stamps since I have yet to do my taxes (just got back into dancing), read The Automatic Millionare and started saving $500/month this month ($250 twice a month automatically into a savings), and I want to invest and buy a home as soon as possible.

    My ideas were:

    1. Get off housing and foodstamps
    2. Find roommate so I don't have so much rent and can save more quickly
    3. Start my taxes (having trouble here)
    4. Get my savings up to 6 months stability in case of job loss or emergency
    5. Start retirement fund
    6. Buy house (clueless!)

    All I have right now is $2000. I have my student loan $3000, and my breast loan $2000 left to pay. Besides those, I have only the basic monthly expenses. I live pretty simply but I do have a daughter and I pay for her private school and other activities. My monthly income will average around $3000.

    I just get so confused by all the millions of things I have to learn to accomplish this stuff! I have to pay someone to do the tax stuff, so there goes some money, need to take classes to learn how to invest and how to buy a home, and I think I'm nuts, so I should probably get a psychologist (or whatever). How do people live!!!!! Ok, so where would you guys start and how do I do it? I already read most all the tax threads and am re-reading them today. I want to do them myself, so any extra info on what classes I should take would be excellent. Thanks everybody!!
    Artemis

  2. #2
    God/dess Zofia's Avatar
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    Default Re: What to do first?

    Quote Originally Posted by Artemis
    ...My ideas were:

    1. Get off housing and foodstamps
    2. Find roommate so I don't have so much rent and can save more quickly
    3. Start my taxes (having trouble here)
    4. Get my savings up to 6 months stability in case of job loss or emergency
    5. Start retirement fund
    6. Buy house (clueless!)

    All I have right now is $2000. I have my student loan $3000, and my breast loan $2000 left to pay. Besides those, I have only the basic monthly expenses. I live pretty simply but I do have a daughter and I pay for her private school and other activities. My monthly income will average around $3000....
    Great set of goals in a very good priority. Do them in the order you have them listed. Keep this in mind, how is whatever I'm doing advancing my goals? If you cannot answer that question, stop what you are doing and do something else.

    Your breast loan and studen loan are what I like to call good debts. They will produce income for you. Those are the kinds of debts that are good to take on. Lifestyle debts should be avoided. So, put the department store credit cards away. Forget about them for a long while. Buy what you need, but don't borrow money to do it. Make your payments on the student loan and breast loan on time, or early every month. The best way to do this is set up your checking account to automatically make the payment on these two bills every month. Otherwise, pay off your credit cards every month. If you do that, get one of the reward cards, and never ever use your debit card, except to get a little cash from the ATM.

    Getting a roommate is a good idea. But screen them carefully.

    Don't worry too much about the taxes. The IRS has a publication, called Publication 17, I think, that spells out things pretty clearly. Buy MS Money [disclosure, I own Microsoft Stock, about 120 shares] or Quicken. They are cheap and will help you with the mechanics of bookkeeping, budgeting and doing your taxes. Your federal income taxes will be very low. You will owe self-employment tax and your state taxes though.

    Don't worry too much about investing and investing strategies at the moment. That is something you have some time to learn. Work right now on your numbers 1, 2 and 3 immediately.

    Good luck,
    Z

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    God/dess VADEN's Avatar
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    Default Re: What to do first?

    Great advice Zofia....



  4. #4
    Veteran Member Artemis's Avatar
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    Default Re: What to do first?

    Thanks. I don't do debt, so no worries about credit cards. I am doing ok so far I guess. I already have Microsoft Money, so I'm good there too. I do need to learn to balance my checking account though. I never write checks, but I use my debit card or cash.
    Artemis

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    God/dess Zofia's Avatar
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    Default Re: What to do first?

    Quote Originally Posted by Artemis
    Thanks. I don't do debt, so no worries about credit cards. I am doing ok so far I guess. I already have Microsoft Money, so I'm good there too. I do need to learn to balance my checking account though. I never write checks, but I use my debit card or cash.
    First, thank you for buying MS Money. (Fair disclosure, I do own the stock, about 120 shares. That's why I thank you, I do really appreciate when someone buys the products.)

    Balancing your checkbook is a good practice to get into. Banks can and do make errors. With MS Money you will stand a much better chance of catching them when they happen, but it never hurts to do the balancing at the end of the month.

    You never write checks? How do you pay your rent? How about the utility bills? Most utility company's do have an online bill pay feature. I definitely recommend you utilize this. There might even be a little discount for doing so. Also, you will need to pay the rent. Checks are good proof of payment. When I rented, I had my rent set up as an automatic item on my checking account. The Credit Union cut the check every month automatically. This is a good way to keep the landlord happy.

    A few words about debit cards. They are not credit cards and do not offer the same protections. Credit cards do allow you to challenge charges for a number of reasons. CCs do give you some protection against unscrupulous merchants. CCs protect you from airlines going bankrupt. If you buy a plane ticket for use within sixty days, and the airline fails to honor it for any reason, the CC company will refund your money. Most CCs offer car rental insurance, so you can decline all the rip-off "coverages" that the car rental places offer. The best and worst thing about CCs is they report your payment monthly to the credit bureaus. If you make the payment on time, every month, this will raise your credit score faster than any other thing you can do! If you can manage your money well, I'd get a no fee card, charge the stuff you are using your debit card for now and make one monthly payment. This will raise your credit score and it will, with the right card, get you perks.

    HTH
    Z

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    Featured Member susan's Avatar
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    Default Re: What to do first?

    Quote Originally Posted by Artemis

    My ideas were:

    1. Get off housing and foodstamps
    2. Find roommate so I don't have so much rent and can save more quickly
    3. Start my taxes (having trouble here)
    4. Get my savings up to 6 months stability in case of job loss or emergency
    5. Start retirement fund
    6. Buy house (clueless!)

    Well, be careful on the roommate, but if your daughter is young, you need someone to "watch your back" while you're dancing, ya know? That would be first on my list.

    Well, first and foremost after that, get an accountant! Dancers with cash income will have nasty tax problems at the end of the year. A good tax/financial advisor won't cost you that much in the long run, and will probably save you a fortune on taxes, etc.

    Getting off housing and foodstamps is kinda automatic when you file your taxes. I'd stay on as long as I could.

    Savings up to 6 months -- or MORE -- is a must. You can be doing this while you're doing the other stuff. Plus, you're going to need some cash savings for the next step.....

    Buy the house next. Depending on where you live and how handy you are with paint, etc., you can often find a great fixer-upper for a fraction of the actual worth. Take your time house-shopping, but let a couple of realtors know you're looking for a fixer-upper.

    Start the retirement fund ASAP after buying a house.

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