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Archive for the ‘Joe Graduate’ Category

Joe Graduate Entry #2 (March)

Wednesday, April 18th, 2007

<—Joe Graduate #1

No, I haven’t forgotten about Joe. One month was plenty of time to give him to settle into his new job. First lets take a look at those debts and savings.

Since Joe has a nasty high percentage rate on his car loan (10.37 percent) he payed:
Car Prinicpal: $179.04
Car Interest: $120.96
He now has $13820.96 remaining on his car loan.
On his credit card he had a $5000.00 balance at 20% interest rate. His minimum payment was $125.00 however, he decided to pay $200 this month toward his card so it came out to be:
Credit Card Principal: $116.67
Credit Card Interest: $83.34
He now has $4883.34 remaining on his credit card.

Luckily he is only 2 months out of school so he still doesn’t have to pay on his school loan (6 month grace period) which is a good thing because he didn’t budget his expenses all that well this month, as we will look at below in a minute.

Now for the good news.

Joe’s contributions to his 401(k) were $200.00 per paycheck including company match ($125 + $75) for a total of $400 for the month.

After debts and savings this month, Joe had $1980.00. However that extra $200 he put toward his credit card dropped him down to $1780.00

Starting money $1780.00

Gas for the month: $180.00
Camera Radar speeding ticket: $60.00
New jeans and shoes: $126.00
Groceries: $382.00
Restaurants/Eating out: $869.00
Entertainment: $150.00

Total: $1767.00

$1780.00-$1767.00 = $13.00

Here is a graph of how it looked for the month:

Joe Finance March

Not a TON of movement on the bars, but its a progressive thing. On the flip side, notice the nice blue blip of retirement savings after only 1 month. I really can’t repeat enough…if you haven’t started a 401k, do it TODAY. And read my article on 401ks. And then read more.

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Joe Graduate Entry #1

Thursday, March 22nd, 2007

I decided to make a series about a fictional character (though he is based on a conglomeration of people that I know). The idea is that he is the typical guy coming out of college with some various debts and a shiny new job. I think this reflects a majority of college grads at this point. I will set his starting salary a little higher than average (roughly 5k a year over average) for the simple reason that I will be using my own spending habits which due to job related duties and the fact that I don’t mind spending extra money to eat healthy at home might be higher than average. This is scalable as well. For instance you might make 45k a year but only have student loans and no credit card debt. The idea is more to take “theory” and make it into “reality”….something I haven’t seen done anywhere, except with people using their own situations. The blogs I have seen of this have tended to be poorly kept and irregularly updated. My goal is to be consistent so as to get a good picture of just how quickly your finances can change.

Joe Graduate

Age: 23
Weight: 180 lbs
Height: 6’0

Student Loans: $18,000.00
Credit Card Debt: $5,000.00
Car Loan: $14,000.00
Monthly Set expenses:
Rent: $600.00
Car Payment: $300.00
Utility Payment/Cable: $300.00
Cell Phone: $40.00
Car Insurance: $80.00
Total: $1420.00

Retirement: 0
Investments: 0
Savings: 0
Assets: $20,000.00

Joe estimates that his assets total about 20k. His car is worth 16k, and he has a laptop that he bought with student loan money. He also has a nice guitar and some other odds and ends that add up to about 4k.

Joe is starting his first job. He got lucky, he landed a job with IBM doing java software development. His salary will be $60,000 a year. For the sake of making things easy we will say he received his first paycheck March 1.

Joe’s company does a standard 401k match, where they match every percent up to 3%. Joe decides to put 5% of his salary toward his 401k. He also enrolls in their health insurance plan, which costs him $100 per month and is automatically deducted from his paycheck.
His per paycheck donation is $125.00 to 401k. His per paycheck total taxes are $623.00 (based upon Fed + Colorado withholding). This leaves him with $1752. Take out the health insurance and it becomes $1702. We will round this to $1700 for the sake of my (fairly small) rounding errors in tax calculation.

So here is where we start: on march first, Joe has received his first paycheck, and paid half his monthly fixed bills. He will pay the other half mid month (as I generally do). This leaves Joe at $990 on March first in his bank account.

Here is how his financial situation looks like right before his first paycheck (February 28):

Current Networth:

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