Author Topic: Clean Shaven Chump  (Read 2815 times)

Stultepro

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Clean Shaven Chump
« on: December 07, 2013, 08:43:22 PM »
Hail Mustachians!
Total & Complete Newb here - love what I have seen so far - looking for advice (and face punches as needed - I know I need quite a few to help me wake up.)

My Wife and I have been typical consumerists.  We love our gadgets and toys - but I have hope we can do better. 

My Dad passed away about 5 weeks ago, he was a great man and a great provider - I am in process of inheriting roughly $650,000 from insurance, stocks, IRA, ETC.  I also inherited his relationship with the fine financial advisers at MSSB - but I haven't met with them yet beyond an introduction a few weeks before my Dad passed of cancer.  The money should be in my account in a month or so - until then I have begun look at finances - a duty my wife has carried for our 18 years together - this is where we are at.

$132K left on home mortgage approx. 30 miles from work for each of us.  60 miles round trip every day. 
We chose our homes location because this area has the best school district in Texas and our youngest has some special needs. 

$500 / month Lease on the wife's Toyota minivan (face punch accepted - the sales guy on our first ever lease lied to us leaving us scrambling into this compromise 6 months ago - haven't looked at what it'll cost to break yet)

My 2008 Chevy Uplander is paid off but at 94K miles is having mechanical difficulties for the 2nd time this quarter - planning to trade it in on a smaller car soon - maybe a Yaris.  In the past both the wife and I had to have large cars due to schedule instability and 2 Large kids and Mother-in-law with physical disabilities.  (my 13 year old is 6'2" and 240 Lbs, the rest of the family is built to similar dimensions and his 8 year old little brother is coming along in a similar way - future linebackers).  I carpool to work with a coworker who lives in the same town.  My job doesn’t suck - I’m a manager in IT Support for a manufacturing company.  I Love supporting my team, coaching them & helping my company. My wife is less thrilled with going to work everyday.

Our oldest boys’ college 529 account is in good shape - should be sufficient for 4 years at a State University; youngest needs a $30K infusion to make the goal in his account.

$43K Student Loan debt
$40K Credit card & Consumer debt
$12K in Home repairs needed in near future (weather/water leak at back porch and bath tub unusable)

My wife and I make about $105K Gross annual salary / approx. net monthly $6,000.00
current budget runs something like this…
$500.00       Gasoline
$1200.00     Groceries / Shopping (includes Medications, Clothes, ETC)
$1200.00     House Payment
$347.00       Car Insurance    (3 cars - Mine, Wifes’ & MIL; recent accident)   
$490.00       Lease payment on minivan #2
$500.00       Entertainment - Date Nights, Family Dining Out, Books, Movies, ETC.
$75.00         Water, Sewer & Garbage
$130.00       Verizon Family Cell Plan
$286.00       Electric Bill (averaged billing to balance out Texas Heat)
$168.00       TV & Internet
$48.00         AHS - Home Warranty
Remainder    Pay on Consumer Debt

The Inherited IRA is roughly half of the inheritance I will receive - I will leave this money alone - taking just the RMD - required minimum distribution annually to preserve this money for retirement.  I am not particularly worried about my retirement - - the men in my family do not live beyond their 6th decade.  My Dad was a MD and ironman triathlete and died at 62, Grandpa and his brothers didn’t make it to 70.  My wife and kids will have use for the money however. Presently,  I plan on using the RMD payment to take a family vacation every year. 

The other $325K I will use to pay off the mortgage and all of our debts, set aside an $30K Emergency fund, make home repairs and pay for a family reunion trip and some non-critical medical procedures I have been putting off.

As much as i like my job - it would be nice to retire in 12-17 years at 50/55 years old and enjoy my last decade.  To this end I am looking at ways to end the consumer cycle and build wealth over those 12 years to retire.  My wife and I have only been discussing this in any detail for the last few weeks - previously she has done all the household finances - a duty I have begun to share in.

This reflects my current thinking & reality.  Any thoughts you have to help me are welcome.
« Last Edit: December 07, 2013, 09:45:15 PM by Stultepro »

engineerjourney

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Re: Clean Shaven Chump
« Reply #1 on: December 07, 2013, 09:29:38 PM »
Well with the inheritance you have a great chance to start over with no debt!! Just make sure you don't build it all back up again!

My wife and I make about $105K Gross annual salary / approx. net monthly $6,000.00
current budget runs something like this…
$500.00      Gasoline
$1200.00    Groceries / Shopping
$1200.00    Housepayment
$375.00      Car Insurance    (3 cars - Mine, Wifes’ & MIL; recent accident)   
$500.00      Lease payment on minivan #2
$500.00      Entertainment - Date Nights, Family Dining Out, Books, Movies, ETC.
$750.00      Utilities & Bills (Water, Power, Cell phones, TV, Internet)
Remainder    Pay on Consumer Debt

- Paying off your mortgage knocks off $1200 and you won't have any more consumer debt so thats a start. 
-Get rid of that lease ASAP, you could even sell the other car and get two nicely used cars that won't set you back as much as your current set up.  Since your commute is so long and you are spending $500 on gas a month you better get some good MPG cars to bring that down. 
- Your grocery bill is crazy.  I am guessing your kids eat a lot since you say they are growing large but you do not need to be spending that much on food (hoping the other shopping included in that is minimal).
- Your utilities seem high but without them broken out I don't know how bad it really is.
- Your car insurance is crazy.  Getting two older cars should lower it and now that you have a huge backup fund you should contemplate dropping the collision coverage when you get the other cars. 

Do you have any other savings not from inheritance?  401Ks, Roths?

This is a great time to start over, if you guys cut your overspending you could easily retire early!  (Or at least your wife can since it sounds like you really enjoy your job for now). 
Also, look into where the bulk of the inheritance is going to end up.  You don't want adviser fees or administrative fees cutting into your profit. 
Good luck and don't be scared to ask more questions!

Stultepro

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Re: Clean Shaven Chump
« Reply #2 on: December 07, 2013, 09:51:43 PM »
Thanks -
updated the above with clearer breakdown of bills/utilities and corrected mileage on car.

The internet is required for my job and the TV is really paid for by my Mother-in-law so i can't cut it.

The cellphones are my wifes' territory - and where that love of gadgets comes into play.  I have a company cellphone.

At what point do you give up on a car - fix vs replace? 

Frankies Girl

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Re: Clean Shaven Chump
« Reply #3 on: December 07, 2013, 10:52:46 PM »
I agree with the other posters' suggestions... and do please read the MMM blog from the start and see if you can adjust your mindset to see your crazy spending/consumer habits so you can get your lifestyle lean and mean (and more awesomer - and I'm going to stand by that being a real word, cause it should be)

Also, so sorry for your loss.

Wanted to chime in on the inheritance issues. (I inherited this past year a large amount in various accounts when my father passed)

I would say that first off, there's no harm in letting the accounts run as set up until you hash out your plan going forward. But do try to educate yourself on how investing works, and try to get any accounts over to self-managed when you feel comfortable taking over.  You don't have to go crazy - passive investing is pretty much a set it and forget it for most of the time. Bogleheads is great, but I love JLCollins' take myself and used his setup as my blueprint.
http://jlcollinsnh.com/stock-series/
^great series
(wasn't clear if you knew all this already, so apologize if it's stuff you already knew, but I came into investing with no knowledge whatsoever and it was pretty scary for me to suddenly have so much money and I'm not sure if you're in the same boat or not...)


I really hope you're wrong about your chances of living past your 60s - that's so sad that you're expecting to die so early. There's a chance you got lucky in the gene roulette and I do hope you don't let the propensity for hereditary issues prevent you from seeking regular checkups and medical testing to catch anything that might happen early enough to live a long happy life with your family. Don't be that stoic guy that just accepts it's going to happen and never go to the doctor again until you're too sick to do anything. I know of at least two like that that stopped going to the doc for checkups or routine testing and died from survivable cancers (when caught early - and are usually easy to diagnose early).
« Last Edit: December 08, 2013, 02:59:25 AM by Frankies Girl »

Cooperd0g

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Re: Clean Shaven Chump
« Reply #4 on: December 08, 2013, 06:38:49 AM »
I am sorry for your loss. You have an opportunity to wipe out your debt, but that would also free up a lot of cash each month. That could easily be wasted if you are not careful to trim back the spending.

You could consider moving closer to work, but I know you mentioned the special needs. Perhaps with this windfall you could afford for one of you to retire - then only one of you commutes and maybe there is less of a need for a school to address the special needs if you or your spouse can handle it. It certainly looks like you could make some vehicle changes and trim some fat on phone/cable and maybe utilities. For books I'm a big fan of the library - mine even has digital lending of ebooks and audiobooks. Movies - I will say that I rarely go to the movies anymore. We have a very nice TV and I can pause and get snacks all I want without missing anything or having to sneak stuff in or pay through the nose. You just have to be okay with waiting 4-6 months for it to hit the rental market like RedBox, iTunes, or Amazon.

As far as where to put the remaining money and/or the IRA money I prefer to keep things simple and stick with either the 3 fund portfolio or Vanguard Target Retirement funds (which are essentially an automatic 3 fund). You may be surprised that super simple investing is actually the most advantageous. For more info on that I will link the Bogleheads Wiki on investing philosophy, the 3 fund portfolio, and Target Retirement funds:

http://www.bogleheads.org/wiki/Bogleheads_Investment_Philosophy
http://www.bogleheads.org/wiki/Three_fund_portfolio
http://www.bogleheads.org/wiki/Target_date_retirement_funds
« Last Edit: December 08, 2013, 06:40:22 AM by Cooperd0g »