A Young Professional’s Financial Blueprint

A few posts back, I wrote about what I consider to be some low hanging fruit for young professionals. As I read through responses, I came across a ton of questions that required more than a quick response. I decided the best way to help was to take that post to another level. This time I created an example with actual numbers to break down the ‘low hanging fruit’ even more. Hopefully this example will be applicable and can help bring more clarity to your own situation.

This is not a recommendation, but of one potential way to build a plan for a fictitious individual.

Sarah is a young professional with the following situation:

• Income: $60,000
• Estimated Taxes: ≈ 21%
• Debt
• Student Loans
• $10,000 @ 5% (minimum payment $225)
• $3,000 @ 7% (minimum payment $75)
• $20,000 @ 4% (minimum payment $300)
• Credit Card Debt
• $2,000 @ 22% (minimum payment $150)
• 401(k)
• Company matches 100% up to 6% of income
• Monthly Expenses
• Rent and utilities: $800
• Groceries and food: $400
• Entertainment and going out: $300
• Other: $100
• Total Minimum debt payments $750
• Total monthly expenses ($2,350)

Following the steps in the infographic below, here is what I would do if I was Sarah.

Note: It’s broken down in two phases. First is until the credit card debt is gone, and the second is until the emergency fund is built.