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URL:  http://boards.fool.com/just-starting-to-save-20780233.aspx

Subject:  Just starting to save Date:  5/17/2004  5:27 PM
Author:  2FoolsInLuv Number:  168998 of 741313

I hope I am not posting an OT post here, but if I am, I apologize. Thanks in advance to anyone who replies.

My wife-to-be and I are moving to Florida at the end of the month, and start new jobs in August. We've just finished graduate school, so this will be the first time we have real incomes, and we will now become a two-income household. I could use some advice on how to allocate the money she and I will have after we pay our monthly expenses. Any help would be appreciated. I'm rounding our expenses because we're not in Florida yet and they may change slightly.

About us: I'm 26, and she's 24.

My income come August: $36,000 (teacher)
Her income come August: $24,000 (athletics event director)
Cash assets come August: $28,000 (ING savings earning 2%)
No IRA or other assets at this time.

My outsanding student loans: $33,000 at 2.85%
Her oustanding student loans $10,000 at 2.65%
Our car payment: $12,000 at 3.85%

Expeted 401k contributions: $3,600 a year (this equals six percent of our salaries so we can max out employer matching as soon as it goes into effect)
Expeted IRA contributions: $583 monthly (so we can max out our limits for the year)
Monthly expenses come August: $2,300 ($27,600 for the year)(This is so low because we will be living in free faculty housing at my school. Whoo-hoo!)

After all these expenses, I estimate that we'll have between $800 and $1000 left at the end of each month. It's this amount that I'm not sure what to do with.

Our savings goals include:
* $30,000 for the downpayment on a home in 3 to 4 years,
* one full year's living expenses in cash or accessible savings
* to start saving for a car for her that we will buy in two years.
* Some sort of individual stock buy-and hold plan like a DRIP plan.
* Also, I want to plan for a best-case scenario of retiring when I am 57, or 30 years from now.


So what should I do with this $800? Should I put it directly towards the car and the down payment? Should we aggresively pay our student loans down, even with our interest rates so low? Should we pay down loans now with our cash savings, and then work to rebuild our cash? Is retirement at age 57 even conceivable at our income levels? I will add that I can probably expect an income of about $40,000 a year when I'm about 55 from other sources not mentioned, but I'd prefer not to factor those into any plans just incase those other sources go to hell.

Thanks again,

R.H.

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