Harold Shelton III, a sports journalist and researcher at the Big Ten Network in Chicago, has big plans and only an average income.
Shelton, 31, has a list of immediate financial goals — paying for a wedding next year while still paying down years of credit card debt — and long-range plans — saving up a down payment for a new home and building a retirement account balance. He’s a little nervous, but he knows that with time on his side, he can slowly but surely put money in all these buckets. Below, he explains how he’s plotting his financial future.
First step: paying down my debt
I’m proud to say that I just paid off my student loans. Now I’ve got a lot of other things to save for, but I’ve also got more money available to do it.
Student loans weren’t that much — a little over $10,000 — but it was hard. Right around the time the loans starting coming due, I was battling with other types of debt as well, with a total of around $8,000. I had applied for a few credit cards after college graduation, and I used them when I moved to the Northeast to pay for moving expenses and a higher cost of living. That weighed down my credit score, which made my interest rates higher — and added more debt to the pile. So on top of paying off student loans, I was underwater a bit.
I made a plan to get things under control. I consolidated a lot of credit card debt into one lump sum, and then let the lender have one automatic payment every two weeks. Because the payment was lower, and I had a lower interest rate, I could focus more money on paying off student loans. I even paid a little extra over that time to get the balance cleared faster.
I’m happy that’s over with, and I’ve vowed not to let credit card debt overwhelm me again.
Second step: making a list of financial goals
Now, I’m moving on to making plans for the future and how to pay for it. Here’s the list, from short-term to long-term goals:
- My wedding — I’m getting married in July, and it’s challenging. Total costs for the venue, photography, music, food, and other expenses are roughly $30,000.
- A new home — As soon as we’re done paying off the wedding, we’re focused on putting together the down payment for a home. The question is, will it be a condo or a house? We definitely want to stop renting; it’s just a matter of where to live and what type of residence we’ll buy. Any wedding money from family and friends we’ll put away for that home down payment.
- Building up short-term savings — I actually started challenging myself to save more a couple years ago. I saw something online for a 52-week savings strategy and decided to do it because it looked simple. I saved $1 the first week, $2 the second week, $3 the third week, and so on. I ended up with $1,375 for the first year. In 2014, I doubled the challenge — $2 for the first week, $4 for the second, $6 for the third, etc. At the end of that year, I had $4,000.
- Protecting ourselves with insurance — We’ve talked about things we’ll need to do once we’re married, but we haven’t gone into detail yet. But when we talked insurance plans, we did decide to look at our jobs’ health benefits to see who had the better plan, and whether it was best for me to join her plan or her to join my plan as a spouse. We also decided to get additional life insurance outside of our work just in case one of us has to leave our job.
- Retirement savings — When I left my previous job, I rolled over my 401(k) into an IRA account. Now I have a new 401(k) plan through my current employer, which matches the first 6% of my salary I put in. I started at 10%, but lowered it to 6% due to wedding payments. But once that’s over, I will push it to 12% to catch back up.
I’ve vowed not to let credit card debt overwhelm me again.Tweet
Third step: making some money adjustments
To pay for the wedding and any other short-term goals in the future, I’m doing three big things:
- Making a budget — I don’t use any fancy tools, just a spreadsheet to track what I’m usually spending in a month. I set a maximum number, and I typically just reach it or I’m a little below. If I am a little above, it’s fine. The goal is that I know how much I’ll spend on my cell phone, car payment, and other monthly expenses, and I can plan my savings and other spending needs around that number.
- Cutting the frivolous spending — When I was in my early twenties, I used my money to buy shoes, a videogame system, speakers, insert any frivolous object here. I could have put that money aside into a savings or investment account, and I regret that I didn’t. Now, we have a warehouse club membership and shop there once a month in bulk. We don’t eat out much. I pack lunches instead of going to the cafeteria, and I take the bus instead of driving to save on gas. Little things like that add up, and I can use the money I save for the wedding or apply it to my credit card debt.
Fourth step: seeking advice to feel more secure
I feel pretty good right now, but I’m not feeling totally secure. A lot of things will take care of themselves when the wedding is over, and my fiancé and I can pool our resources and make a more long-term financial plan. That’s where financial education comes in. One thing I definitely want to do soon is meet with a financial advisor to learn how to make better financial decisions. That know-how will let my fiancé and me put our heads together and feel more comfortable going forward.
Even small steps can add up. Our easy-to-use Savings Calculator allows you to see what small changes can do for your future. Wells Fargo customers can use My Retirement Plan to track their progress toward their goals.
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