Hello! New to the forums, long time MMM lurker and fan. I borrowed the Case Study template to ask you all here for some advice!
Life Situation: I am single, no dependents, mid 20s. Hope to get married in next couple years. ND resident, active duty military. Gross Salary/Wages: $6700/mo.
Pre-tax deductions, Other Ordinary Income, Qualified Dividends & Long Term Capital Gains, Rental Income & Depreciation: None.
Adjusted Gross Income: Same as above, 6700 monthly.
Taxes: $1200 a month for Federal, state/local, and FICA. Take home pay $5500.
Trends in monthly expenses: This is how I *was* living until recent Mustachian conversion in California.
$1200 Rent for splitting 2BR apartment near the ocean + Utilities / Upkeep
$70 Gas (often lower, I bicycle commute nearly every day 15 miles one way, only driving to San Diego or LA to see friends or explore as a weekend guilty pleasure)
$100 Phone (luxury AT&T plan, I need to learn from MMM and adopt a low cost provider)
$500 Groceries, Restaurants, Bars (Good at groceries, bad at restaurants / going out)
$120 Sports Massage Membership (Luxury, but supporting friend's small business)
$300 Shopping (Bicycle gear / race entries are a trend / delightful weakness.)
$100 Cash for miscellaneous (weekly military haircut, random etc.)
$500 Tithe to Church
$500 Travel (long distance relationship, try to fly out to see her once a month)
$3390 in expenses monthly! The remainder ($2200) goes into maxing my Roth IRA and Wealthfront taxable index fund investment account.
Now,
enter the beginnings of Mustachianism. What have I done, and what am I still planning to do?
Done: 1. Downsized from a shiny pickup into a cheaper fuel efficient hatchback, pocketed the difference, paid off all debts, and put it in a Wealthfront taxable index account. Gas bill has dropped tremendously for the limited driving that I do.
2. Moved out of apartment, downsized stuff and sold furniture, now living rent-free in spare room of old retired church couple's huge house up in the hills, my rent is paid through ~5 hours / week of odd jobs and manual labor (using exquisite tools for enhanced DIY training in carpentry, cleaning/restoration, plumbing, home repair...priceless!).
3. Dropped the monthly massage membership, which I feel guilty about because of my friendship with the owners. Also, massages feel great so I miss those.
What I still need to do:1. Slim the food/restaurant/bar budget. I have simple tastes. My groceries are Costco and reflect that simplicity - but I am terrible when it comes to restaurants and going out with friends. My best strategy has been to convert friends into fun and nearly free activities, like park picnics with sports, or board games, or hiking and biking.
2. Move my Roth IRA out of Edward Jones to Wealthfront to save $ on fees. EJ is where I got my start when I was younger. I have been putting $50 a month in since I was in high school, before I started maximizing my contribution when I entered the full time working world. Fees are silly high and wasteful.
3. Need to get my iPhone 6 out of my $100 AT&T monthly contract and into a low cost plan - need to learn some more about carriers like Consumer Cellular / H20 / etc.
4. Would like to get married / end the long distance with my SO and attending costs.
End result in expenses / savings ratio? Minimum 60% savings rate going forward.
Assets: $20,000 Roth IRA with Edward Jones. $30,000 in Wealthfront taxable account (rapidly increasing as most of my monthly savings go here). Typically $1000-2000 cushion in checking account. $5000 in American Express High Yield Savings account (.90% APY). My vehicle is worth $15,000 and owned outright.
Liabilities: No debt. In my early 20s I was a foolish sillypants consumer zombie with a vehicle payment and motorcycle payment and student loan payments etc. etc. and I soon realized how insanely foolish that was. Paid the price and got out of the Debt Emergency as quickly as I possibly could. Life is simpler and better now. I don't want to ever go into debt again, unless it is to produce an investment income.
Specific Question(s):My dream is to "retire" in my late-30s, FIRE in order to pursue meaningful and high-impact work without having to worry about making ends meet. I want time to raise a big family, live simply, and have the freedom that is possible with a materially simple life. MMM has been very inspirational in this regard.
Near term, I am considering leaving the military for graduate school (law or business) and trying to pursue a very high-income job to accelerate the FIRE goal and open up more diverse "retirement" career options. For the sake of this case study, assume that I leave the military, get married to my SO who continues working for a similar salary as me, and we move to a high-COL-Anti-Mustachian city (will miss living rent-free in sunny California!) to pursue a fancy pants degree for a post-degree fancy pants job while evangelizing everyone about the virtues of a simpler way of life. Work like crazy for a few years, have children, and "retire".
(Note: my SO isn't as Mustachian as me. She has little savings, but we're growing together in a Mustachian direction.)I believe the Mr Money Mustache model of blending real estate with rewarding side gigs would be most ideal for me based on my skill set and disposition. I'm a handy, DIY kind of guy. I'm a huge people-person, and feel like I could be a good landlord that enjoyed the work and solving problems for people. I love having roommates and community, and could see myself renting out bedrooms in a future home with my family/DW.
So, before TL;DR --->
how should I be allocating my savings to successfully reach my short and long term goals? I'm saving ferociously and I don't plan on that changing soon. Going to graduate school would temporarily slow the savings rate, but I would not debt-finance a graduate degree due to working / GI Bill scholarship.
I anticipate living in anti-Mustachian cities like Boston, NYC, Washington DC, coastal California for a fancy pants job...does it even make sense to consider the MMM real estate investment model? Or should I reconsider ever owning a home with such exorbitant costs, and just plan on renting simple apartments to live in and investing all of my savings as I have been doing? If I go this home-less route, am I making any mistakes by continuing to max my Roth IRA and plowing the rest into Wealthfront?
If I could convince my SO / future DW to look at the low cost of living gems of the American West (I absolutely love cities like Bend, Albuquerque, Missoula, Boise, Tucson) I feel like it would make more sense to look at buying real estate and renting as an investment as we FIRE in that specific area. If I anticipated making a move like this in 5-10 years, should those funds be set aside now in a low-risk savings account? Or should I invest the funds now in a taxable Wealthfront account with the attendant volatility until I need them? What if plans change and we accelerated the "homeownership" timeline, and planned to take on a mortgage in a year or two...is it prudent to assemble a future down payment in a safe high yield savings account versus an index fund?
Thank you for your advice on getting from here to there - especially from those navigating the opportunities and perils of anti-Mustachian cities and weighing the seeming default of homeownership against what is actually best for family and financial stability.
Shortlist of inspiration for me:
http://www.mrmoneymustache.com/2011/12/28/prospering-in-an-anti-mustachian-city/http://www.mrmoneymustache.com/2013/11/11/get-rich-with-the-position-of-strength/http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-convert-your-so-to-mmm-in-50-awesome-steps/