- Upon starting my actual job (should be a little more than a year from now, scary!) I will contribute the maximum to my 401(k). I mix my 401(k) with a U.S. market index fund and an international index fund. Since I am young, I am going to push my risk threshold and also include a growth fund.
- Furthermore I am going to have a portion of each paycheck automatically deposited into a short term savings vehicle like a money market fund. Why?
- Within 30 months of starting my job, I want to own my house. The automatic savings will be for my down payment.
- Although I want to get out from under my student loans, I am not going to stress about them: just make the minimum payments, maybe more. The thing is educational debt usually has the lowest interest rate going, so while I don't want to get behind, I don't have an urgent need to pay it off ASAP.
- Then presto chango, 30-40 years later I want to be financially secure. By this I mean able to retire and maintain my standard of living. It would be nice to be Bill Gates, but I'll be content just being comfortable. Maybe.
The bad news: My student loans comprise the entirety of my credit history. Speaking of student loans, I have a lot of them. I'm actually afraid to know how much. I have never balanced a checkbook (though to my credit, I have never overdrawn!). Though I living like a student means I live fairly cheaply, it also means I rent and have no assets other than consumer goods.
I think my most ambitious goal is number 3. Thinking about it, I realized I need to improve my credit rating now. I figured the way to do that is to build a positive credit history, so I opened a Banana Republic Card (do you want to save 15% of your purchase today?). I made some purchases and am paying them off in a timely manner (which to me means before the crushing interest rate kicks in). I like Banana, so I'll probably make a few more purchases. Then in a few months, I'll trade up to an actual, can-use-everywhere card. This is scary to me. I grew up listening to Dave Ramsey in the car on the way back from school, so for years I feared credit cards, and only use debit type CheckCards. Or rather I feared how easy it is to abuse credit and create a financial nightmare. Nonetheless, it'll be tough to reach goals 3 and 5 without building a more positive credit history. I'm pretty sure that I can be disciplined enough to use my cards wisely, but they make me nervous nonetheless