Hello mustachians. I recently started reading this blog about two months ago and, like many others here, decided to take control of my finances which I thought were already under control. I have a different story than many of you from what I've read, but suffered from the same pitfalls and have found myself in a similar situation.
Short [read: long] history starts here. (skip to the end if you just want the financial breakdown/question):
Job: Self-employed professional poker player since 2006.
Wife's Job: College Graduate, soon-to-be schoolteacher
Age: 25 and 24, and 2 year old daughter
Story:
I began my career in 2005 at 18 with a $400 initial deposit onto an online poker site while going to college in Virginia. By summer of 2006 that $400 had turned into 40,000 or so. Like any smart person with a full FREE ride to college, I decided to drop out of school and pursue online poker full-time. It went well. My wife and I married in 2007, and in 2008 we decided to move to, where else, Las Vegas. Not only was there bigger stakes for my job, but no state income tax was a big draw as well.
About 3 years ago this time I had around $300,000 in cash with 25k in an IRA and had just signed with my wife on a new home with an FHA loan @ 5.5%. That means virtually nothing down on our $280k home; 275k loan paying 2,000 per month including taxes and insurance. We had a brand new 2009 Nissan GT-R MSRP 85k, about 40k financed (lol) and another 25k financed Lexus is350. All this while my wife was going to school with student loans when we could have just been paying for it instead of making purchases. Yes I was one of those Antimustachian fancypants I keep reading about who had just enough money and young person ego to make some dumb decisions. Yearly expenses at this point: about 9k per month.
Like any business-owner, my income stream is unpredictable from month to month. For 2010 I had a marginal year, not making enough to pay all of our expenses. We wised up and sold the GT-R and got a cheaper SUV when we had a baby and have recently (a week ago) become a one-car family as my schedule is flexible. Then in 2011 disaster struck. On April 15th, 2011, known in the industry as
Black Friday (link here for those interested
http://fivethirtyeight.blogs.nytimes.com/2011/04/20/after-black-friday-american-poker-faces-cloudy-future/#), the US government decided to baby the US population and tell them how to spend their money and shut down Online Poker. And although I live in Las Vegas, where poker is plentiful, the majority of my income still came from working online, so last year was a tough adjustment as a huge chunk of my income was cut off; but I believe I am back on track now for 2012 with a new schedule, and my wife will be graduating with her Master's degree soon and a teaching job paying ~35k.
Current financial pictureAssets:
35k cash
40k Roth IRA/SEP IRA
Liabilities:
14k loan balance on 2008 Hyundai Santa Fe @ 5%
265k left on mortgage on a semi-upside down house @ 5.5%
Estimated Yearly salary: 125k this year, then more like 150 next year with my wife's teaching job starting in September.
Expenses so far in 2012 after doing some Mustachian things in my life: ~6k /month
Expense BreakdownHome 2,000
Auto & Transport 1,000 (435 min car payment pay 600 though to pay off more, 90 insurance, ~300 gas)
Health & Fitness 1,150 (400 health insurance, 700 in hospital bills @ 0% will be paid off in a few months, 34 gym membership that I can't get out of)
Food & Dining 600 (trying to get this down to 400-500, that last grocery article should help, Thanks MMM!)
Bills & Utilities 485 (last month's number, it gets pretty high in the summer out here for A/C bills. last month was mild. this number also includes cell phone bill and "GASP!" Cable TV...I know I know, planning to cancel but getting a great deal right now)
Shopping 300 (this was just last month, typically it is lower)
Personal Care 103.00 (membership to Massage Envy, is scheduled to be canceled in May at the end of the lease period)
Education 47.00 (random books and stuff my wife needed for school)
Business Services 35.00
Entertainment 50-100 (usually one dinner out per month and one other thing like golf for me or something similar)
total: 5,770
Question: I want to get my expenses down to around 4500 per month, and I think I'm taking the right steps to do it and wanted some feedback and any tips on what I could cut out/do differently would be much appreciated. For instance, I want to convince the wife to downsize the SUV, but she's still not convinced we can live with just one car, (we sold the other one a few weeks ago). I don't think I want to pay the car loan off or pay cash for another vehicle though. Given that I need cash on hand for my profession, that vehicle loan is leveraged, since I believe I can get much greater than 5% on that 14k.
Anyways, I thought I'd share a scary story on how to turn 300k into 50k over 3 years via reverse mustachianism. We'll call it Face Waxing to enhance the pain imagery.
Also, I don't know if this is Kosher or not but I'll plug my blog if you want to read more about me over @
http://www.thewh00sel.liquidpoker.net. Feel free to take that link off if it's frowned upon, just thought I'd share.
Enjoying all the articles MMM, keep up the good work, and just know that you are turning people like me into useful humans working on reversing the stupidity and retiring early.
-Art