Author Topic: Case Study : Young professional starting out  (Read 8740 times)

YoungInvestor

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Case Study : Young professional starting out
« on: June 23, 2014, 08:15:54 PM »
Hello Mustachians,

Having just finished college, I wanted to find a job in order to get financial independence ASAP to focus on various projects, and recently came across this website while doing my research.

As I'm just starting on a career path quite similar to that of many people here, I'd like your input and advice.

Monthly Income: 3100$

Roughly 60k/year gross. This should be climbing quite fast in the next few years, to get to 100k fairly soon. My net income per month is about 3100$ after putting the maximum contribution in my employer's pension plan.

Current monthly expenses: 2130$

Rent : 900$/month. I don't have a roommate, and, to be honest, it's about the last thing I'd want.
Transportation : 30$/month.  I live close enough to work to walk there in under 15 minutes. Sometimes I'll take public transportation to get elsewhere, though.
Food : 1000$ / month. This is a big one. My bosses go to restaurants (About $15-20/meal) every day or so for lunch, so I feel like I kind of have to follow. I basically eat every meal in a restaurant of some sort, getting some takeout on the way home.
Clothes : 100$/month. I recently had to buy quite a bit of clothing due to losing a lot of weight. As my wardrobe is now pretty decent, I expect this to get down to this level.
Going out : 100$/month. I'll usually go to a bar about twice monthly with friends, costing about 50$ each time.
Electricity (Inc. heating). 30$/month.
Insurance (Dental, medication, etc.). Free (through my job).

Assets: Just about nothing.
Liabilities: Nothing.

First off, I think I'm right in assuming that food is my biggest worry right now. I was wondering how anyone had dealt with not following people to lunch. Right now it feels a bit like an investment in my career. Please talk me out of it.

Of course, the evening takeout is profoundly antimustachean. Somehow, after trying to buy groceries and cook a few times, it doesn't seem to cost me significantly less than the 10$ or so takeout would cost me. Is it possible that cheap takeout may be as worthwhile as cooking for someone living alone?

On the investment front, am I correct in assuming that I should build some sort of an emergency fund? I was thinking on getting about a month's worth of living expenses in a savings account. Everything over this emergency fund's threshold will go in an indexed fund.

Thanks a lot!
« Last Edit: June 23, 2014, 09:26:06 PM by YoungInvestor »

Chrissy

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Re: Case Study : Young professional starting out
« Reply #1 on: June 23, 2014, 08:59:59 PM »
Missing some info... 

Do you have a deductible on your health insurance?  Are you going to see a doctor... ever?  The dentist... ever?

How much is your cellphone?  How much is your internet?  How much is your renter's insurance?  (I just found out you really do need it!  http://forum.mrmoneymustache.com/ask-a-mustachian/do-i-even-need-renters%27-insurance/msg324082/#msg324082)  Do you have cable?

Utilities: gas?  Electric?

You're right to think about the political advantage that comes with eating out with the bosses.  Once you feel you're in good with them, maybe you can cut back.  How long have you had the job?

Emergency funds are 6-12 months of expenses, and, for those that believe in them, they're the first financial priority after destroying debt.  The idea behind them is, if you lost your job, you wouldn't have to liquidate investments during the time you were hunting for employment.  Some people do less than 6 months... just depends on your circumstances and level of comfort.  Yeah, start with one month, and take it from there.
« Last Edit: June 23, 2014, 09:01:35 PM by Chrissy »

Suit

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Re: Case Study : Young professional starting out
« Reply #2 on: June 23, 2014, 09:09:06 PM »
My two cents as another single professional is that it is definitely cheaper to cook meals than to eat out every meal. I usually choose two recipes from this website (http://www.budgetbytes.com) and make them on Sunday and the all my lunches and dinners are done for the week. I also really like the baked oatmeal so I make a variation of it every week too. It usually takes me 2-3 hours total and then I'm set for the week. I spend about $35-$50 a week on groceries.

YoungInvestor

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Re: Case Study : Young professional starting out
« Reply #3 on: June 23, 2014, 09:24:40 PM »
Missing some info... 

Do you have a deductible on your health insurance?  Are you going to see a doctor... ever?  The dentist... ever?

How much is your cellphone?  How much is your internet?  How much is your renter's insurance?  (I just found out you really do need it!  http://forum.mrmoneymustache.com/ask-a-mustachian/do-i-even-need-renters%27-insurance/msg324082/#msg324082)  Do you have cable?

Utilities: gas?  Electric?

You're right to think about the political advantage that comes with eating out with the bosses.  Once you feel you're in good with them, maybe you can cut back.  How long have you had the job?

No gas, electric heating + other electricity is about 30$/month. I had included the internet (fairly cheap/decent connection), cellphone (basic service) and insurance with the rent. No cable. Being Canadian, seeing a doctor is free and I have insurance through my job for any medication or dental services I might need with little or no deductible.

Also, I've had this job for less than a month. Perhaps I could cut back a day every week to start with and see how it goes.

(First post updated with the electricity).
« Last Edit: June 23, 2014, 09:29:59 PM by YoungInvestor »

YoungInvestor

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Re: Case Study : Young professional starting out
« Reply #4 on: June 23, 2014, 09:28:54 PM »
My two cents as another single professional is that it is definitely cheaper to cook meals than to eat out every meal. I usually choose two recipes from this website (http://www.budgetbytes.com) and make them on Sunday and the all my lunches and dinners are done for the week. I also really like the baked oatmeal so I make a variation of it every week too. It usually takes me 2-3 hours total and then I'm set for the week. I spend about $35-$50 a week on groceries.

Thanks for the link, it really should help with my weekend lunches/dinners all week along. The costs seem a bit low for my area, but I'm sure I'll be able to save quite a bit from this.

Suit

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Re: Case Study : Young professional starting out
« Reply #5 on: June 23, 2014, 09:46:39 PM »
You'd be surprised how low you can get it once you've got the basics in your pantry! Treat it as a challenge! Another recommendation since the networking lunches seem very important is to order on the low end of wherever you go and get tap water to drink ($15 per meal would be $300ish per month), then make sure to cook your own breakfasts and dinners ($100ish per month). Then boom, you've cut your food by more than half!

mxt0133

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Re: Case Study : Young professional starting out
« Reply #6 on: June 23, 2014, 09:55:23 PM »
I can relate to you on the food issue.  When I was single and living alone at the time it didn't make sense to cook.  The effort to shop, cook, wash dishes and clean up seemed to make it not worth it to cook vs eating out.  My rational at the time was I was making X dollars an hour and it take me W + Z + Y to shop, cook, and clean up which was about the same as the cost of just buying my meals.

The flaw in my logic at the time was I could not actually work additional hours to make up the cost of buying all my meals so doing a cost benefit analysis based on my hourly rate was wrong.  Second I did not take into account that if I kept doing it I would get better at shopping, cooking, and cleaning lowering the cost of buying groceries and the time it took to cook and clean. 

One other factor that will not be so evident now for you is that at a young age you can pretty much eat crap and get away with it because the side effects will not be noticeable until much later.  As I got older I noticed that my energy level was highly correlated to what kind of foods I was eating.  All that "cheap" takeout is loaded with salt, sugar, and preservatives that are just not good for you.  They are added to make the meal tastier and last longer not healthier.

As for the eating out at lunch as an investment in your career, that one I don't actually believe in with marginal benefit if any.  If you are worth you salt as an employee/coworker then you don't need to suck up or be part of the "club" to get ahead.  Sure people like to work with other that they have a lot in common with.  But i'm sure you don't have to eat out every time, maybe just Fridays, special occasions, or when your team reaches a big milestone.  If they start commenting on you not joining them tell them you want to take a short lunches to get some work done, ect.

My recommendation is to experiment with a few basic meals that you can get good at preparing and start out small.  You don't have to cook every meal, start with breakfast, a few time a week then work up to lunch, and then dinner.  Every meal does not have to be a banquet to celebrate something, it's just a meal for energy.

I have found that by preparing most of your meals then going out to eat is actually a treat and feels special.




Seņora Savings

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Re: Case Study : Young professional starting out
« Reply #7 on: June 24, 2014, 08:40:18 AM »
Try getting one cocktail when you go out, was it less fun?  Try buying no new clothes for a month, can you still find appropriate outfits? Does your boss say anything when you stay behind from lunch?  You may find your status spending doesn't actually help your status.  You need to stretch those frugality muscles before people start talking to you about golf clubs, weekends in Vegas and sending your laundry out.

Also, what projects do you want to work on when you retire?  More importantly, what are you doing now that is similar?

neo von retorch

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Re: Case Study : Young professional starting out
« Reply #8 on: June 24, 2014, 08:53:43 AM »
MMM math to motivate you.

Ignoring future raises/inflation/etc you're currently able to save $970/month. And at your expense level, to reach FIRE, you need $639,000 (25 times annual expenses.) This will take you just under 55 years... so you can retire comfortably at a young 76 years old!

Let's say you cut your food expense in half, and cut down on clothes and nights out, saving you $600/month. Now you're saving $1570/month and you only need $459,000 to FIRE... which will take you 24 years. (Wow, you're 45 and retired!)

Is 31 years of your life worth eating out, drinking a few extra beers and wearing shiny shoes?

(Obviously these numbers can greatly improve if you do increase your salary a good amount while holding your expenses in check. Maybe you could reach FIRE by 35...)
« Last Edit: June 24, 2014, 08:57:30 AM by neogodless »

shotgunwilly

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Re: Case Study : Young professional starting out
« Reply #9 on: June 24, 2014, 09:13:14 AM »
$1000 on food dude?! My god, cut that shit in half.  Even if you need to explain to your bosses why you're going to eat lunch in the office.  And eat some easy meals at home for dinner also.  You're wasting so much money on what should be seen as fuel to get you through your day.

boarder42

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Re: Case Study : Young professional starting out
« Reply #10 on: June 24, 2014, 09:14:28 AM »
man you spend more on clothes than my wife does

greenmimama

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Re: Case Study : Young professional starting out
« Reply #11 on: June 24, 2014, 09:14:46 AM »
MMM math to motivate you.

Ignoring future raises/inflation/etc you're currently able to save $970/month. And at your expense level, to reach FIRE, you need $639,000 (25 times annual expenses.) This will take you just under 55 years... so you can retire comfortably at a young 76 years old!

Let's say you cut your food expense in half, and cut down on clothes and nights out, saving you $600/month. Now you're saving $1570/month and you only need $459,000 to FIRE... which will take you 24 years. (Wow, you're 45 and retired!)

Is 31 years of your life worth eating out, drinking a few extra beers and wearing shiny shoes?

(Obviously these numbers can greatly improve if you do increase your salary a good amount while holding your expenses in check. Maybe you could reach FIRE by 35...)

Great motivation!!

so.mpls

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Re: Case Study : Young professional starting out
« Reply #12 on: June 24, 2014, 09:36:54 AM »
You need to stop eating out w/ your bosses every day.  At most, cut it down to once per week.  Explain that you're just out of college and need to be saving for housing, student loan payments, etc.  If they hold a grudge against you for that, they're not the type of people you want to be associating with anyways, even professionally.  If you make a solid effort to minimize food spending, you can save an extra $700/month, which as others have shown, will save you years of extra work.

Chrissy

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Re: Case Study : Young professional starting out
« Reply #13 on: June 24, 2014, 09:42:10 AM »
Are you in a one-bedroom or a studio?

MidwestGal

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Re: Case Study : Young professional starting out
« Reply #14 on: June 24, 2014, 09:46:19 AM »
Yeah, food's a big one.  You mentioned buying clothes due to losing weight?  The savings could be twofold here if you choose to decline eating out, or at minimum doing it less.  Unless you're picking the HEALTHIEST and calorically moderate things on the menu every single time, you may gain the weight back, which would mean potentially purchasing more clothes.  So save money on food and clothes, do your body a favor and keep to your new trim figure by preparing your own meals.

Every job has its political nuances, only you know how important it really is to take part in those lunches.  If they comment on your absence, you can use the line that you're trying to eat cleaner/healthier for health reasons or muscle gains or whatever, or take part in only some of the lunches (while sticking to the good menu items).  Just be prepared for a potential ribbing if they don't see any obvious improvements!

And for evening takeout, there's no really good excuses. 

boarder42

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Re: Case Study : Young professional starting out
« Reply #15 on: June 24, 2014, 09:56:07 AM »
yeah man.  i make a pot of chili once a week for lunch everyday.  cost is sub $1 per meal.  so i guess if you can live on a 99c mcdouble you would only be spending 6% more than me(depending on tax) on a daily basis. and eating at the great processed food capital of america. 

eating the same food gets boring so i mix up my chili's smoked pork chili ... chicken chili ... green chili... white chili... etc. 

YoungInvestor

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Re: Case Study : Young professional starting out
« Reply #16 on: June 24, 2014, 01:59:33 PM »
Quote from: mxt0133
I can relate to you on the food issue.  When I was single and living alone at the time it didn't make sense to cook.  The effort to shop, cook, wash dishes and clean up seemed to make it not worth it to cook vs eating out.  My rational at the time was I was making X dollars an hour and it take me W + Z + Y to shop, cook, and clean up which was about the same as the cost of just buying my meals.

I'm definitely guilty of this one.

MMM math to motivate you.

Ignoring future raises/inflation/etc you're currently able to save $970/month. And at your expense level, to reach FIRE, you need $639,000 (25 times annual expenses.) This will take you just under 55 years... so you can retire comfortably at a young 76 years old!

Let's say you cut your food expense in half, and cut down on clothes and nights out, saving you $600/month. Now you're saving $1570/month and you only need $459,000 to FIRE... which will take you 24 years. (Wow, you're 45 and retired!)

Thanks for the great post. You forgot to add any return on my investments to your figures (I get about 30 years without changes and 18 years with 500$ savings overall using a 5% (5% more than inflation) ROI figure), but it is still a very interesting way to visualize the situation.

Are you in a one-bedroom or a studio?

One-bedroom.

Quote from: so.mpls
You need to stop eating out w/ your bosses every day.  At most, cut it down to once per week.  Explain that you're just out of college and need to be saving for housing, student loan payments, etc.  If they hold a grudge against you for that, they're not the type of people you want to be associating with anyways, even professionally.  If you make a solid effort to minimize food spending, you can save an extra $700/month, which as others have shown, will save you years of extra work.

I'm sure I wouldn't get any flak for this... It simply seemed to be a good way to get into the social circle at my job. I'll definitely be cutting back. It's still quite enjoyable so I'm sure I'll still join them on fridays or other occasions.

Frugal Father

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Re: Case Study : Young professional starting out
« Reply #17 on: June 24, 2014, 02:47:12 PM »
My two cents as another single professional is that it is definitely cheaper to cook meals than to eat out every meal. I usually choose two recipes from this website (http://www.budgetbytes.com) and make them on Sunday and the all my lunches and dinners are done for the week. I also really like the baked oatmeal so I make a variation of it every week too. It usually takes me 2-3 hours total and then I'm set for the week. I spend about $35-$50 a week on groceries.
This is what my wife and I do, too, cook meals on the weekend, and then pack it during the week.

If you've already been eating out with them for a while, I would definitely cut back to about once a week. Eating out with them definitely has its advantages, but I imagine you're dealing with diminishing returns on that investment. I doubt eating out 5 times a week adds much more value than once or twice a week. In addition, $1,000 seems REALLY high even if you are eating out each day. Perhaps when you do eat with them, you could try and be more selective from the menu (unless you're already doing this and they just like fancy restaurants)?

Of course, the evening takeout is profoundly antimustachean. Somehow, after trying to buy groceries and cook a few times, it doesn't seem to cost me significantly less than the 10$ or so takeout would cost me. Is it possible that cheap takeout may be as worthwhile as cooking for someone living alone?
Are you cooking enough for a single meal, or multiple meals? It's a little bit unexciting, but my wife and I will cook a few meals over the weekend, and then one meal goes towards lunches all week long while the other goes towards dinner. I think the major savings come through the mass production.
« Last Edit: June 24, 2014, 02:51:29 PM by Frugal Father »

BrianT

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Re: Case Study : Young professional starting out
« Reply #18 on: June 24, 2014, 03:33:35 PM »
I do have one suggestion about take out for dinner. If it's a habit you can't give up that fast, have you tried the supermarket deli? If you aren't too picky that's a short term way to cut expenses until you get used to cooking for yourself. For instance I used to drop by Trader Joe's or Von's to pick up something priced $5 or below.

Chrissy

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Re: Case Study : Young professional starting out
« Reply #19 on: June 24, 2014, 03:46:50 PM »
I know you don't want a roommate, but maybe you could downsize to a studio?  In my large U.S. city, the difference between a cheap one-bedroom and a mid-range studio is ~$200/mo.

I did studio living for four years and really liked it.  In fact, I'm considering going back!  It helped me save a ton of money, cleaning was done in a snap, and I hardly spent any money to furnish it.  I also painted the walls... there were only three of them!

rmendpara

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Re: Case Study : Young professional starting out
« Reply #20 on: June 24, 2014, 04:38:09 PM »
Hello Mustachians,

Having just finished college, I wanted to find a job in order to get financial independence ASAP to focus on various projects, and recently came across this website while doing my research.

As I'm just starting on a career path quite similar to that of many people here, I'd like your input and advice.

Monthly Income: 3100$

Roughly 60k/year gross. This should be climbing quite fast in the next few years, to get to 100k fairly soon. My net income per month is about 3100$ after putting the maximum contribution in my employer's pension plan.

Current monthly expenses: 2130$

Rent : 900$/month. I don't have a roommate, and, to be honest, it's about the last thing I'd want.
Transportation : 30$/month.  I live close enough to work to walk there in under 15 minutes. Sometimes I'll take public transportation to get elsewhere, though.
Food : 1000$ / month. This is a big one. My bosses go to restaurants (About $15-20/meal) every day or so for lunch, so I feel like I kind of have to follow. I basically eat every meal in a restaurant of some sort, getting some takeout on the way home.
Clothes : 100$/month. I recently had to buy quite a bit of clothing due to losing a lot of weight. As my wardrobe is now pretty decent, I expect this to get down to this level.
Going out : 100$/month. I'll usually go to a bar about twice monthly with friends, costing about 50$ each time.
Electricity (Inc. heating). 30$/month.
Insurance (Dental, medication, etc.). Free (through my job).

Assets: Just about nothing.
Liabilities: Nothing.

First off, I think I'm right in assuming that food is my biggest worry right now. I was wondering how anyone had dealt with not following people to lunch. Right now it feels a bit like an investment in my career. Please talk me out of it.

Of course, the evening takeout is profoundly antimustachean. Somehow, after trying to buy groceries and cook a few times, it doesn't seem to cost me significantly less than the 10$ or so takeout would cost me. Is it possible that cheap takeout may be as worthwhile as cooking for someone living alone?

On the investment front, am I correct in assuming that I should build some sort of an emergency fund? I was thinking on getting about a month's worth of living expenses in a savings account. Everything over this emergency fund's threshold will go in an indexed fund.

Thanks a lot!

As a fellow young professional (3 years out of undergrad), I can relate to your issues as I went through my own adjustment period in the first 1-2 years of work.

My issue was that I traveled so much, that I constantly had to readjust to being home each time I got off a project or had a gap in between out of town projects.

Anyway, Housing + Food = 90% of your total monthly expenses, so any changes you make that don't include one or both of these categories will not work.

After the first few months, start bringing your own lunch, or picking up a sub or something for <$10 twice a week. Networking is immensely important early in your career, but that doesn't mean you have to go broke doing it. If you really think that eating lunch out with colleagues 4-5x/week is important to advance your career, than cut back on food in other areas (weekends and breakfast/dinner) to help bring down costs.

Rent probably is a good deal, since you live in close walking distance to work, but if at all possible try and find an acceptable roommate once your lease is up (since you seem picky about living with someone, then just be sure you do the "roommate shopping" early so you don't get stuck with someone random from Craigslist).

The remainder of expense items aren't completely unreasonable.

An alternative to cutting back significantly on your expenses immediately is to give yourself a hard limit on increasing expenses as you get raises; however, this only works if  you commit to it, and it's easy to get caught in the trap of lifestyle inflation this way.

Even at your current level of expenses, you are saving ~$900/mo (29% of aftertax income)... which is GREAT! Set a higher target for yourself as your you get raises and you'll do just fine.

Priorities early in career:
1) Save up an emergency fund (3 months expenses) and savings account (planned expenses, i.e. travel, gifts, necessary shopping, etc)
2) Start investing in 401k/Roth/Trad. IRA
3) Once you max out both #1 and #2, then start putting some money into a taxable account
4) There are only 3 rules. In the words of the hip hop community, f*** b******, get money!

anisotropy

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Re: Case Study : Young professional starting out
« Reply #21 on: June 24, 2014, 04:40:15 PM »
sounds like when i first started out !

you are saving 970 a month, or 31% of after tax income. You mentioned you are maxing your pension contribution. With 60k/year your gross is about 5k/month. Since your net is 3100, 1900 of it goes to taxes and pension contribution.

With 60k/gross your tax is about 1k a month, so the amount going to the pension is prob around 700 to 900 a month.

From my estimation you are currently putting away 1700 (970 + about 800) or 55% of your after-tax income for retirement, which is pretty good.

Also you said it's pension instead of rrsp, does that mean you'd have to work for a minimum x amount of year to qualify?

If you keep this up you can prob be FI in 15 to 20 years. And that's not even considering your future raises and investment gains.

But ya if you want to make some cuts I'd go after the eating out part, dont need to be major, even a 100 cut adds up. I used to eat out alot, now I eat out maybe half as often and it sure saves a lot of money.

YoungInvestor

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Re: Case Study : Young professional starting out
« Reply #22 on: June 24, 2014, 05:48:07 PM »

If you've already been eating out with them for a while, I would definitely cut back to about once a week. Eating out with them definitely has its advantages, but I imagine you're dealing with diminishing returns on that investment. I doubt eating out 5 times a week adds much more value than once or twice a week. In addition, $1,000 seems REALLY high even if you are eating out each day. Perhaps when you do eat with them, you could try and be more selective from the menu (unless you're already doing this and they just like fancy restaurants)?

Does it seem that high? I was going on 15$ (Lunch) + 10$ (Dinner) + 5$ (Average buffer - fancier meals, dates, breakfast)

Are you cooking enough for a single meal, or multiple meals? It's a little bit unexciting, but my wife and I will cook a few meals over the weekend, and then one meal goes towards lunches all week long while the other goes towards dinner. I think the major savings come through the mass production.

Only for one meal. I'll try to go to the grocery this weekend and cook about 2 meals (* 5 servings per meal) for the following week. I'll see how this goes. If I could get that done for less than 50$, the improvement would be massive.

I know you don't want a roommate, but maybe you could downsize to a studio?  In my large U.S. city, the difference between a cheap one-bedroom and a mid-range studio is ~$200/mo.

I did studio living for four years and really liked it.  In fact, I'm considering going back!  It helped me save a ton of money, cleaning was done in a snap, and I hardly spent any money to furnish it.  I also painted the walls... there were only three of them!

I lived in a studio through university, and the lack of a separate bedroom/living room was always a bit annoying to me. This, along with the fact that studios in this part of town are geared towards students and are generally older, got me to find a one-bedroom. I'm basically paying 250$ more for something 50% larger and 30 years newer.

With 60k/gross your tax is about 1k a month, so the amount going to the pension is prob around 700 to 900 a month.

From my estimation you are currently putting away 1700 (970 + about 800) or 55% of your after-tax income for retirement, which is pretty good.

Also you said it's pension instead of rrsp, does that mean you'd have to work for a minimum x amount of year to qualify?

There are many social programs in my province in addition to taxes, which means that about 30% of my gross goes straight out of pocket.

This pension plan is mine, but must be transferred into a retirement income fund if I leave the company (So it is less flexible than an RRSP).

snshijuptr

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Re: Case Study : Young professional starting out
« Reply #23 on: June 24, 2014, 05:55:58 PM »
One idea if you are going out to lunch everyday and cooking dinner isn't your thing is to take half of lunch back to the office and finish it for dinner that night.

sleepyguy

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Re: Case Study : Young professional starting out
« Reply #24 on: June 24, 2014, 06:39:37 PM »
$1000 on food is redic for a single dude making 60k. 

I think we hover at $350-500/mth for a family of 4.  2 adults (I eat a lot too) and 2 youngins.

I don't think it's much to cut that budget at least in half... to break it down... :)

$500 savings per month... 20 yrs @ 7% compound

BOOM! $263,191.06

That's like a quarter of a lot of MMM FIRE amount :)


It's costing you a shit load of dough... $12k per friggin year which is like $16k pretax for your bracket I assume, craziness.  So you are really working for about $44k per yr pretax.


« Last Edit: June 24, 2014, 06:41:54 PM by sleepyguy »

Frugal Father

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Re: Case Study : Young professional starting out
« Reply #25 on: June 25, 2014, 11:47:54 AM »

If you've already been eating out with them for a while, I would definitely cut back to about once a week. Eating out with them definitely has its advantages, but I imagine you're dealing with diminishing returns on that investment. I doubt eating out 5 times a week adds much more value than once or twice a week. In addition, $1,000 seems REALLY high even if you are eating out each day. Perhaps when you do eat with them, you could try and be more selective from the menu (unless you're already doing this and they just like fancy restaurants)?

Does it seem that high? I was going on 15$ (Lunch) + 10$ (Dinner) + 5$ (Average buffer - fancier meals, dates, breakfast)

Are you cooking enough for a single meal, or multiple meals? It's a little bit unexciting, but my wife and I will cook a few meals over the weekend, and then one meal goes towards lunches all week long while the other goes towards dinner. I think the major savings come through the mass production.

Only for one meal. I'll try to go to the grocery this weekend and cook about 2 meals (* 5 servings per meal) for the following week. I'll see how this goes. If I could get that done for less than 50$, the improvement would be massive.
Oops. I was only taking into account eating out for lunch and not for dinner. So remove REALLY from my previous comment. And let us know how your cooking experiment goes. I know it has saved us a ton (not to mention time since we cook it all in one sitting).

Frugal Father

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Re: Case Study : Young professional starting out
« Reply #26 on: June 25, 2014, 11:52:49 AM »
One other quick thought I just had. What are your long term career goals? Do you enjoy your work so far? Will you still work there even if you reach FIRE? Because the other thing to take into account is that while not eating out every day gives you less time to socialize with your boss, saving and extra 700-800 of that $1,000 food budget would skyrocket you to FIRE as you'd be saving close to twice as much as you are currently. So you might not be as in with your boss, but if you don't see it as a long-term career anyways, then there's not really a big need to try and suck up to move up the ladder faster. Just a random thought I had.

YoungInvestor

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Re: Case Study : Young professional starting out
« Reply #27 on: June 25, 2014, 06:28:35 PM »
One other quick thought I just had. What are your long term career goals? Do you enjoy your work so far? Will you still work there even if you reach FIRE? Because the other thing to take into account is that while not eating out every day gives you less time to socialize with your boss, saving and extra 700-800 of that $1,000 food budget would skyrocket you to FIRE as you'd be saving close to twice as much as you are currently. So you might not be as in with your boss, but if you don't see it as a long-term career anyways, then there's not really a big need to try and suck up to move up the ladder faster. Just a random thought I had.

I really like my job but I want to start my own business at some point. I want FI to be able to create this venture without worrying about day-to-day expenses.

I'll still probably work part-time at that point, but knowing I wouldn't have to would be nice.

YoungInvestor

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Re: Case Study : Young professional starting out
« Reply #28 on: July 17, 2014, 09:46:31 PM »
Time for an update, I think.

Over the last weeks, my habits have changed a bit.

Since food got me a few facepunches, I'll start with that: I think eating out at work 3/5 times a week is a decent estimate. In the evening, I mostly eat dinner at home (4/5), same for lunches and dinners in the weekend (3/4). Breakfast is about 2.5$ on average (5/7days).

At 12$ / meal going out and 7$/meal eating at home/a lunch, I get :

Monthly food budget : 1000$ 600$

This bumps my savings ratio to 44.2% of net income. The addition of my job's retirement plan bumps this to roughly 55%.

Adjusting for salary increases, I think I may reach FI by the time I'm 35.

Dollarbill49

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Re: Case Study : Young professional starting out
« Reply #29 on: July 18, 2014, 08:54:44 AM »
My two cents as another single professional is that it is definitely cheaper to cook meals than to eat out every meal. I usually choose two recipes from this website (http://www.budgetbytes.com) and make them on Sunday and the all my lunches and dinners are done for the week. I also really like the baked oatmeal so I make a variation of it every week too. It usually takes me 2-3 hours total and then I'm set for the week. I spend about $35-$50 a week on groceries.

Suit:  that looks like a great site for recipes.  I'm going to look through and make some for next week.  Thanks!

rmendpara

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Re: Case Study : Young professional starting out
« Reply #30 on: July 18, 2014, 11:42:10 AM »
One other quick thought I just had. What are your long term career goals? Do you enjoy your work so far? Will you still work there even if you reach FIRE? Because the other thing to take into account is that while not eating out every day gives you less time to socialize with your boss, saving and extra 700-800 of that $1,000 food budget would skyrocket you to FIRE as you'd be saving close to twice as much as you are currently. So you might not be as in with your boss, but if you don't see it as a long-term career anyways, then there's not really a big need to try and suck up to move up the ladder faster. Just a random thought I had.

I really like my job but I want to start my own business at some point. I want FI to be able to create this venture without worrying about day-to-day expenses.

I'll still probably work part-time at that point, but knowing I wouldn't have to would be nice.

Excellent changes. Remember that in personal finance, always attack the low-hanging fruit first.

Cut out excessive things, but no need to cut to the bone. Just be sure you are getting good value/happiness out of everything you do/buy.

The easiest way for me was to stop going to bars in West Village when I visit NYC, and instead try and find more casual places in  LES, or Hells Kitchen. Easy way to go from $15 drinks to $6-10. Again, it's not about foregoing things that you enjoy or things that make you happy, but just to be reasonable about everything.

You're on a great path. Good luck!

Frugal Father

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Re: Case Study : Young professional starting out
« Reply #31 on: July 19, 2014, 10:39:46 PM »
Time for an update, I think.

Over the last weeks, my habits have changed a bit.

Since food got me a few facepunches, I'll start with that: I think eating out at work 3/5 times a week is a decent estimate. In the evening, I mostly eat dinner at home (4/5), same for lunches and dinners in the weekend (3/4). Breakfast is about 2.5$ on average (5/7days).

At 12$ / meal going out and 7$/meal eating at home/a lunch, I get :

Monthly food budget : 1000$ 600$

This bumps my savings ratio to 44.2% of net income. The addition of my job's retirement plan bumps this to roughly 55%.

Adjusting for salary increases, I think I may reach FI by the time I'm 35.
That's so good to hear. Nice work! $400/month additional savings will go a very long way to reaching FIRE.