Advice on budget
Recommendations
1. Prioritize Emergency Fund Expansion
- Goal: Build your emergency fund to $13,500–$15,000 (3–4 months of expenses).
- Current level is inadequate for HCOL living and owning a car.
- Reallocate contributions:
- Pause new brokerage contributions temporarily (~$8,000/year).
- Divert this amount to the emergency fund and aim to reach at least $10,000 within 12 months.
2. Maximize Roth IRA Contributions
- Roth IRA ($7,000/year): Continue maxing this out. With no 401k for a year, it’s essential to prioritize tax-advantaged savings.
3. Evaluate Housing Plans
- With plans to buy a house in 2 years, increase your cash savings to reduce reliance on loans.
- Brokerage account can supplement your down payment later, but aim to save an additional $20,000–$30,000 in cash over 2 years.
4. Accelerate Car Loan Payoff
- With only $8,000 left, consider paying off the car loan faster using part of your discretionary funds or bonus. This will free up ~$625/month (car-related costs).
5. Adjust Savings Allocation
- Post-emergency fund buildup: Split future savings (~$20k/year) as follows:
- 50%: Down payment savings (high-yield savings account).
- 30%: Roth IRA (continue maxing out).
- 20%: Brokerage account for long-term growth.
6. Consider Tax-Advantaged Accounts Later
- When 401k becomes available in a year, aim to contribute enough to get the full employer match. Then rebalance brokerage contributions as necessary.
Other Suggestions
Car Maintenance Fund:
- After paying off the loan, allocate ~$100–$150/month for future car repairs/maintenance.
Cut Back on Discretionary Spending:
- Review “fun” expenses (e.g., golf, travel) to free up additional cash for your short-term priorities.
Monitor Brokerage Growth:
- Given market volatility, avoid relying heavily on the brokerage account for near-term goals like a home purchase.