Author Topic: My first case study.... Newbie looking to be a future Mustachian  (Read 2072 times)

gsd802

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Hi all,

I have recently started reading MMM and am looking for some further advice.  There is so much information on his blog it is a little overwhelming for me.  I still don't quite understand all the terminology but here is what I do know. A year ago in October I invested in Edward Jones and maxed out my ROTH for 2014, and have done the same for 2015.  In the spring of 2015 my employer started matching 3% into a 401k so I also have a simple IRA with Edward Jones and my employer.

Life Situation: 26 years old, single, with a girlfriend that will be future wife.

Goal:
-To save, retire from full time work in next 10 years so that I can afford to work just a few days a week doing hands work with skills that I have.
-Possibly start a family in next 3 years. (2 kids)  I am a workaholic and I love to work. I work 7 days a week on a dairy farm but salary pay and minimal free time makes it hard to make extra cash. 
-Benefits of working on a farm is housing and being able to raise a family as you work. 

Gross Salary/Wages: $46,800 annually, $900/week

I have a 401k, work puts in 3%.
Roth IRA: $10,400 -  Max it at $5,500 each year ($458.33/month)
Simple IRA: $4,300 -  I believe $454 a month goes into that from my pay check.
Savings in bank: $11,500

Taxes that come out of check: After taxes and SIMPLE IRA check goes from $900 to $559.33 

Current expenses: Monthly:

Health Insurance - 230 (Cheapest I could find, $7,000 deductible.)
Auto Insurance - 67 (paid in full, broke down to 12 months)
Dog Food - 50
Internet -25
Electric - 80
Cell Phone - 60
Gas - ~160
Eating out - 200
Misc - No more than 200

Total - $1072
No rent or mortgage.  Employer gives us housing.

No debt - Just recently paid off college loans.

Material Assets: $31,350
A mixture of 3 older trucks (work truck, pleasure truck, and sentimental truck), dirtbike, 4 wheeler, car trailer, enclosed trailer, guns and ammo, tools, furniture and appliance.  I have alot of "stuff" but it is all kept in good condition.  I have a hard time selling anything once I have it.  Have always lived by the motto, "If I cant pay for it cash, I cant afford it"  Only debt I have ever had was college loans.

Specific Question(s):
1. How much money should I set for a budget to be saving 75% of my pay?
    -What confuses me is the pre-tax money like my 401K
2. Are there any other investments I could be making with the cash that I have in hand?
    -I'm assuming I should keep enough cash for my heath insurance deductible at all times?
3. I recently read that Edward Jones is not a good move. I did this because my grandparents recommended it because they had good success doing it in the past years.  My guy seems pretty trustworthy, but who knows?
4. Any other advice?

Thank you!!
« Last Edit: December 21, 2015, 06:31:12 AM by gsd802 »

matchewed

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Re: My first case study.... Newbie looking to be a future Mustachian
« Reply #1 on: December 21, 2015, 06:04:33 AM »
1) .75* your pay=the amount of money you need to set aside. It really doesn't matter too much. Craft a budget and save the surplus. Trying to hit an X savings rate is a fine goal but you're putting the cart before the horse.

2) You actually don't need to hold onto the 7k deductible at all times. If something were to happen and you were on the hook for that you can negotiate a payment plan with the hospital. You're just still responsible for that 7k payment eventually. So up to you really. As for what you would do with the savings; if you don't need it, invest it.

3) Stay away from Edward Jones. Try Vanguard, or Fidelity, or Charles Schwab. They have low cost index fund investing. Read this - http://jlcollinsnh.com/stock-series/

4) What are your goals again? And I don't mean the nebulous thing you wrote, what does "living comfortably" mean? How big a family? Where will you live? Will you own a home? Will you be working 7 days a week while trying to raise a family (each to their own but a father who ain't around...)? These are questions you need to ask yourself. Then you craft the life using your savings and money as a resource to do so.

gsd802

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Re: My first case study.... Newbie looking to be a future Mustachian
« Reply #2 on: December 21, 2015, 07:02:26 AM »
Thank you, I edited my goals some.  I see no need to own a home at this time since housing is provided in my job.  I think that it is allowing me to save and invest more, but maybe I am wrong.  Living comfortably is having food on the table and normally for fun we just hike with our dog and visit friends and family.  She is pretty good with her money.

little_brown_dog

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Re: My first case study.... Newbie looking to be a future Mustachian
« Reply #3 on: December 21, 2015, 07:29:33 AM »
What dog food do you buy? We get a 50lb of diamond naturals dog food from tractor supply for $35 and our dogs have done very well with it. Diamond naturals has a 4 star rating on dogfoodadvisor, so it's a solid brand even though it is less expensive than many others.

gsd802

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Re: My first case study.... Newbie looking to be a future Mustachian
« Reply #4 on: December 21, 2015, 02:04:49 PM »
I feed him taste of the wild.  He also gets raw meat from scraps when we butcher a cow or pig.  $50 may be a little on the high side, but I always like to say it costs more and then find out I have a little left over. 

boarder42

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Re: My first case study.... Newbie looking to be a future Mustachian
« Reply #5 on: December 21, 2015, 02:10:06 PM »
I feed him taste of the wild.  He also gets raw meat from scraps when we butcher a cow or pig.  $50 may be a little on the high side, but I always like to say it costs more and then find out I have a little left over.

set an alert for Taste of the Wild and TOTW on slickdeals.net.  these bags of food can be routinely found around 30-35 shipped to your door.  every now and then you can get it for sub 30 bucks shipped to your door.