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Patrick’s 10 Year Financial Plan

18 February 2010 No Comment

Today, I present an entry in the Financial Plan Writing Contest. Just a reminder that you can win $250 by participating.  Here are the brief guidelines, to read the full description of the contest, click the link above.

  • Answer the question: What is your financial plan for the next 10 years?
  • Be sure to to hit on things such as income, job security, budgeting, expense management, real estate, investing, retirement planning, etc. – the more detailed within specific areas the better!
  • Be sure to discuss how the economy might affect your plan – what if we fall into a double dip recession?  Or worse, a depression?  Or inflation?  What if you lose your job? What are you doing to prepare for any economic scenario?
  • Be specific about certain financial goals you might have
  • Include your age and your age-specific concerns & goals
  • A minimum of 500 words is required – again, more detail improves your chances of winning the contest!
  • Send your contest submission to kevin (at) 20smoney (dot) com with “Writing Contest” in the subject line

Faced with the prospect of emerging from the protective “bubble” of collegiate life, my 10 year (and longer term too!) financial plan is something that I’ve given some thought to. For now, I’m remaining in Academia by heading off to graduate school in Materials Science and Engineering for at least the next 5 years, but a major difference between my graduate and undergraduate educations is going to be not only the lack of tuition but the receipt of a yearly stipend to cover living expenses while I pursue a Ph.D. I’m intending on using this buffer period to shore up my finances and get a handle on my financial future so that I emerge from the bubble on solid footing.

A bit about my situation: I’ve been extremely lucky to pursue a BS in Chemistry at an R1 research university mostly on scholarship with my grandparents covering the small portion not covered by the scholarship. This will enable me to graduate in May with $0 in student loans. From there I’m off to grad school at another top-tier research university where I’ll have a yearly stipend of approximately $27000. Further, for the foreseeable future I’ll be working at internships for the Navy for at least the next 3 summers for 12 weeks at $1000 a week. So on the whole I’m looking to net $39k before taxes, rent, and living expenses.

In addition to this, I’m recently engaged to a the most amazing girl, a dental student who just joined the DDS/PhD program at her school. This program will eliminate her tuition for the next 6 years and pay her an annual stipend of $25k. She’s coming into the relationship with about $40k of student loans, and she’s the only one with a car (which she payed off earlier this year! Great job!).

In the short term, we’re going to be saving up to pay for our own wedding, expecting the final cost to be approximately $10k. While we’ll gladly welcome any amount of support from our parents, we think its a better idea to save enough to cover the entire thing ourselves and stash any money we don’t spend in some Roth IRAs for retirement savings. So over the next 2 semesters (since the wedding is going to take place Summer 2010) we’ll be looking to save $5k each towards the wedding. After that, we won’t be paying separate rents and our combined living expenses will decrease simply because of that. Each semester, we’ll be starting by filling an emergency savings account with $3k to cover any emergencies and at the end of each semester, we’ll move the emergency fund to a 60/40 split of long-term/retirement savings. Further, each year we’ll try to pay at least $6k down on the student loans so that by the end of grad school we’ll hopefully have 14.5k in retirement savings and 21.5 in long term savings, with only about $4-6k of student debt left.

That takes our financial plan to about the six-year point. Looking past that, we’ll hopefully settle down in Tennessee (my home and a state my fiance thinks is super-cute!).  My job prospects put my salary at approx. $60-80k while my finance’s look better with an entry salary of approx. $80-90k. By the end of our first year out of school, the student loans should be eliminated and we can up our savings goals and start looking to put our long-term savings to use as a down payment on a house to start building some equity. From this standpoint, we’re on solid financial footing and the lessons learned in grad school about being frugal and living on a budget should serve us well as we look forward to the future together!

In terms of our job security and the economy, we’re extremely lucky that at least in the short term, we’ll have stable jobs and be (relatively) sheltered from the economic climate. For our retirement planning goals, we’ll be doing our best to max out our Roth IRAs as much as we can early on and be sure to contribute a portion of our income each semester to retirement savings. Long-term savings will be saved in laddered CDs bought in 3 month intervals (so 4 “rungs”). Further, I’ll likely be putting a bit of my discretionary spending money into trading on the Forex market using automated trading systems I’ve been developing for the past two years which have shown themselves to be pretty reliable at garnishing returns. So hopefully those investments will pay off and help supplement our savings as well.

That’s pretty much it! We’re looking forward to a financially healthy life together and we’re excited to start our journey together! I hope that the 20smoney community will not only evaluate my plan but maybe help me perfect it. And if you found this plan inspirational let me know and tell me how you’re managing your money because we can all learn something from each other!

Submitted by Patrick

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  • automated trading said:

    First, thanks for share this contest I think so that it could help a lot of people, and perhaps some wins 😀

    I like your financial plan for the next years; I think that one of the best ways to improve our economy is to start to think about how to generate more money, because sometimes we need the money right now for situations that we don't expect, like an accident, a sickness, etc…

    Personally, I make money on the Internet promoting products on Clickbank, (not too much) but it helps me to pay the medicine of my mother that is sick. So my advice is to learn something new and take advantage of that ability to generate more profits.