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August 12, 2011


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Your attitude will make your life a lot better. If you can get used to living as a poor grad student even once you are making real money then you will do very well financially. I know because I was a poor grad student too once. One caution- you will need to strive for some balance in your life too. Spending can improve the quality of your life, so plan to save a good % then spend the rest with no reservations. You need to be able to enjoy the here and now as well as the future.

-Rick Francis

Way to go girl! I love your attitude. When you do start to work, make sure that you have an emergency stash of at least 3 months of living expenses, fund your retirement accounts to the max if you can. If you start at 15 percent, you're off to a good start. I agree with Rick, you have to have fun and it sounds like you want to travel, so give yourself that pleasure. I also strongly endorse buying a place to live. Just as I was finishing paying off my college loans, I bought a three-room apt. It will be paid off before I retire. Please buy only enough space you will need; don't get anything too large. The carrying costs will scuttle your savings plans. Good luck and keep it up!

Dear Child,
You are a hero and I'm passing your story on to my 2 daughters, ages 33 & 27. Whatever obstacles life may present to you will be easily overcome with your belief system. (I mean you're a grad student who is tithing.) TRULY IMPRESSIVE! I don't have anymore advice because I know that with your ability to do this at such a young age, you will know what your next moves should be. Congratulations to you, your parents and God bless you.

Sounds like you have a good head on your shoulders and your doing everything right. You said you wanted to save more cash to eventually buy a home. You should be aware that you are allowed to pull up to $10,000 out of a Roth without penalty for a first time home purchase. I copied this from another site.

"The IRS allows a first-time home buyer to draw up to $10,000 from his Roth IRA to buy a house. This is a one-time allowance that can be applied to one Roth IRA account only. After the $10,000 has been withdrawn for this purpose, there is not a second chance."

Something to keep in mind for when that time comes.
Again...great job!

Thanks everyone for the encouragement! I do think most of the praise should go to my parents though, since they instilled and modeled the financial principles that I try to follow, particularly things like tithing even when dirt poor (I don't classify myself as poor, but my parents definitely were back when my dad was in school full-time while also supporting a wife and two small children).

Thanks also for the advice. Keeping balance is definitely important, and I have $50 earmarked in my monthly budget that's for whatever I feel like. I've contemplated reducing/removing it, but I always end up deciding that I need some amount of money to spend on myself just to keep my sanity :) Being able to budget for personal spending is of those small luxuries that reminds me I'm not truly poor... some people my age are struggling to put food on the table for their children! I also didn't know about the Roth IRA-first-time home buying allowance, and that's definitely useful information to have.

SS, you are definitely on a very good path. You're setting yourself up for flexibility and freedom in terms of careers or possibly retiring early. I did a version of the starving student lifestyle until I was 35. I had roommates up until that point. When I had a 100K net worth, I upgraded to a studio apartment. Most people don't want to wait for things until they can truly afford them, which is why they're always broke and stressed out. Don't be like those people! I also live in high cost California, so I know where you're coming from.

I am just confused about making bread with a microwave or toaster oven! (I have neither but do have a full kitchen with oven and use that for my bread.)

I'll bet she has a plug in bread machine.

I bake my bread in the toaster oven :) It also works for muffins, cookies, pie, lasagna, baked chicken, pizza, etc. When I bought it I made sure it was big enough for that sort of thing (though it still isn't that big- I can bake one loaf of bread, six muffins, or ~8-10 cookies at a time...) It also has a rounded back so that I can fit in a small round casserole dish. Things don't cook quite as evenly as in a full size oven, and my muffins don't rise as nicely as I would like them to, but it's functional for my needs!

Very good job! Your story reminds me of myself when I was your age (I'm 32 now). Thanks to a frugal lifestyle right out of college (no buying fancy gadgets, driving a "beat-up" car that my spendthrift friends and coworkers ridicule me about sometimes), renting, contributing to my 401k and roth each year to the max, making smart investments, I've now stashed up ~350K liquid in bank accounts/investment accounts, ~100K in my 401K, and ~50K in my Roth. Zero debt. My goal is to quit my job in 2-3 years and do what I am truly passionate about - run my own business (without ever worrying about money).
I think I need to sway a bit (though not by a lot) in the other direction though - and spend more. I have no regrets about the way I've lived my life so far.

Great job! Sounds a bit like myself 25 years ago when I was a grad student living on a $10,000/yr stipend. Don't make the mistake that I did though--I married a guy who, although dirt poor like me, had expectations that we should spend and live like rich yuppies.

And I totally agree with what you're doing in paying off your loans before worrying too much about retirement.

The comment about the ROTH should be modified to say that you can take $10,000 of gains tax free for a first time home purchase. Your after tax contributions to a ROTH IRA can be withdrawn at any time for any reason; you just lose the ability to keep them growing tax free.

I have to second what KH said. Do NOT get involved with someone who is a spendthrift and/or bad at saving money. Such a relationship ultimately ends up being stressful and less likely to succeed in the long run. I (and it sounds like KH also) have had personal experience with this.

This sounds inspiring, and that was a great bargain for rental in California! WOW!

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