I found MMM about 2 or maybe 3 years ago, and I've really enjoyed this site. I've learned a lot, and I'm really committed to this low-expense lifestyle. As a side note, I really like my job, so I'm not really looking to retire early - but I just like the idea of saving a lot more.
I now find myself in a situation where I'd like to get an informal poll of the folks on this website about what I should do about TWO main issues:
- Dining out expenses given my situation, and
- Maintaining debt vs saving for unexpected issues.
Dining OutI am single, mid 30s, and I live in a a city with what I would call a moderate but increasing cost of living. I'm the kind of person that has several close friends and tend to do generally low cost activities. I want to have friends and a social life. Part of social life in my city is the many amazing craft breweries.
What I'd like to know is this: what do other single men in their 30s in a medium to large metro budget for dining out and/or fun money (alcohol, dating, etc.)?
Maintaining debt vs saving for unexpected issuesFirst, a little background:
Last year, I paid off all of my debt except for my mortgage, and it was a glorious month being debt free. Then I found out that my bathroom needed to be renovated, and for reasons that are beyond infuriating to me, I couldn't just repair the one thing that needed to be fixed. It was water damage that insurance wouldn't cover (because NC laws suck), and I had to take out a HELOC to pay for it. I then started budgeting a significant portion of money each month to pay it down. I did this because it was my strategy for paying of my credit cards and it worked.
The issue is that I did not add money into savings, and I was not prepared for some unplanned expenses, and thus my HELOC is going to be restructured to accommodate the expenses.
I've realized the error of my ways, and I'm obviously going to start saving a lot more money rather than fanatically paying down debt. With my current plan I figure I can probably save about 25-30% of my take home pay and still pay off my HELOC within 5 years. However, I could definitely pay off the loan much faster, and, there will be a point sometime next year where I could just use all of my savings to pay down the entire loan... but that would again leave me with no savings, albeit a much improved cashflow.
So these are my questions:
- When saving money, assuming a start from basically nothing, at what point do you start diverting a larger % of income towards paying down debt as opposed to keeping cash savings for emergencies and investing the rest?
- How much do you keep on hand in cash for emergencies OR what % do you allocate towards cash savings if you haven't reached the amount you want to keep on hand for emergencies?
Thanks in advance for your time and feedback!