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Archive for August, 2008

Retirement lessons learned

August 13th, 2008 at 01:33 pm

Last night at dinner DH and I were discussing our finances. For the first time DH expressed that he was worried about our retirement. Honestly, I couldn’t have been more pleased! Now, let me preface all of this by saying DH and I are 25 and we currently have about $17,000 in our Roth IRA. We have maxed out both of our accounts for the past two years and already have 2009’s contribution saved. Maxing out the accounts equates to between 15 and 20% of our gross pay. Even if we only did this for the remaining 40 years of our work life and earned 6%, we’d have over a million dollars. In reality, when I start working (if not before) we’ll open 401(k) accounts and probably even taxable accounts to save even more for retirement.

DH’s main fear stems from the fact that our Roths have been losing money. I try to tell him that eventually the markets will go up and we will make money. So far we have lost about 1300 dollars. I’ll fully admit that part of it is my fault. In January we deposited the entire amount and didn’t dollar-cost average. Before I did it, I was torn as to what was the best way. Looking back, dollar cost averaging would have been the way to go. However, I also heard the advice that by doing it in a lump sum, I would have the entire year for the whole amount to grow tax-free. I showed my naivety and thought the economy would bounce back quicker than it did. Oh well, lesson learned. I have faith that eventually the market will go up and we’ll make money. And you’d better believe we’ll be making monthly or bi-monthly contributions for our 2009 contributions!

It’s about that time of year again…

August 12th, 2008 at 09:39 pm

It’s about that time of year again…student loan time, that is. I am starting my second year in pharmacy school and I’m still pretty new to dealing with student loans. Between my scholarship and parents, I escaped my 5 years of undergraduate work without any student loans. Pharmacy school, however, is a different situation. The estimate for school and living expenses is nearly $27,000. There is no way that DH and I could really swing that.

Going into my first term my financial future was a little shaky. We found out the day of orientation that DH would be moving to Maine…far away from me and school in Florida. Not knowing how that would affect our finances I took the entire amount of loans offered to me: $12,600. Tuition was taken out automatically and the rest, nearly 6k, continues to sit in my savings account untouched. Second semester my in-laws graciously offered to pay tuition. We accepted their money, but also accepted the subsidized loan. Maybe not everyone would agree with this move, but the way we figured is that government was giving us an interest free loan on that money for another 3 years or so. It also enabled us to max out our Roth IRA accounts for the year.

That brings us to this term. DH and I have now spent a year learning to juggle two households. I’m moving in with a roommate so some finances are still up in the air; I predict that my finances will be about the same, and maybe even a little lower than they were last year. So I once again only accepted the subsidized loan of $4250. I don’t know the exact cost of tuition, but I anticipate it will pay for just over half of it for the semester. The remaining 3000 or so will come from that 6000 from first semester last year. Ideally, that 6000 will cover the gap between the subsidized loan and tuition costs for both this semester and next semester, but we’ll have to see.

Assuming DH and I are able to finish up the rest of pharmacy school only taking out the subsidized loan I will have taken out $42,300. I just dug up my last statement on those student loans and it looks like I have been charged $480 in interest during the past year. So add another thousand or so for interest, and I anticipate the loan balance will be about $43,500. It’s a little scary to see that debt load. Even when DH and I had two car loans, we never had more than $25,000.

Here’s the good news. By only taking out subsidized loans we are actually saving A LOT in potential interest charges. Nearly 500 a year in interest is a lot, but it’s a lot better than it would be if we took out the maximum possible. Also, I anticipate that DH and I may have some extra money which can be used to pay off the interest charged, and maybe even pay down the balance some before I graduate. Although, even if we don’t get the money, or chose to do that, my total student loan debt will be less than 1 year’s salary. We plan to continue living off of DH’s salary so my income can go toward student loan debt, house down payment or mortgage, retirement, and whatever else comes our way.

$3028 to rent and counting

August 5th, 2008 at 02:11 pm

What a crazy time! While all of our expenses have been crazy this summer, rent has been the worst, by far. Dh's rent is 690. My rent is 644. So we are used to paying 1334. However this month, when I return to Florida, I will be moving apartments. So I have to pay 644 lease termination fee and 1050 security deposit on the new apartment.

Normally this wouldn't be a problem, but our other expenses have been crazy AND we haven't been able to deposit my checks from work. So today I'll be going over to another bank to see if I can cash checks and get a cashier's check for the deposit.