Author Topic: My full financial picture for all to see. (Needing advice)  (Read 9942 times)

Vitai Slade

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My full financial picture for all to see. (Needing advice)
« on: June 05, 2013, 03:34:04 AM »
I'm writing to everyone in hopes of gaining a bit of insight to my personal wealth plan. I've been reading this blog for several months now and would absolutely love to see what you all have to say about my financial picture, along with any tips to bring my saving and investing to the next level. Below I've detailed my entire financial status as best I can. For a young guy like myself, it's full steam ahead to early retirement! Thanks for taking a look!

-Age: 23 (September 18th, 1989)
-Job: I current work in the casino and gaming industry with a variable income (based mainly on tips) that earns me anywhere from $33/hr.-$39/hr. (Gross). With all things considered, I'd say that full time (and a bit of vacation time in there) I should end up with somewhere around $65,000-$70,000/yr. conservatively.

Total Net Worth: $20,014.27
Liquid Funds
-Cash in pocket: ~~~ $91.00
-Checking Account (0.1% interest): ~~~ $56.62
-Savings Account (0.25% interest): ~~~ $70.70 (Savings for guilt-free vacation spending ONLY. Anything not spent goes back into the account for the next vacation. $500/mo. deposited here.)
-Money Market Account (0.26% interest): ~~~ $149.68 (Used to Max Roth IRA and any additional is going to be put into a taxable Vanguard Account, probably VEXAX to balance out 401k. $1,000/mo. deposited here.)

Fixed Assets
-House Value ~~~ $125,000.00
-401k (PLFPX) ~~~ $2,002.58 (Vested Balance) / $2,269.62 (Total with matching) ($0.25 on the dollar matching up to 8% of income, no match after that. I contribute the maximum allowed by my plan: 15%)
-Scottrade Roth IRA ~~~ $9,413.57 (Put in $10,500, but made some bad stock choices. Got this when I was brand new to investing and just wanted to start putting money in the market. 286 Shares of AGNC, 30 Shares KO, 57 Shares NLY, $2.10 cash. I am debating whether to roll this into an index fund at Vanguard or to keep the money there and use it as a sort of 'shot at picking a miracle stock' or at least see if I can make some kind of average gains with it or more. I don't plan to put any more money in the account as of this time.)
-Silver (14 Ounces) ~~~ $314.44 (Put $520 into this at the peak of silver... was my first real 'investment'. Thinking about adding to it now that the price has dropped so low.)
-1998 Ford Explorer ~~~ $1,200 (Anti-mustachian, I know, but it's paid off and running well despite a few cosmetic issues. Insurance is $542.10 every 6 months. I calculate the value of what I think I could realistically sell it for into my net worth.)
-2001 Yamaha R6 ~~~ $3,000 (Paid off, one of my toys that makes my life really nice. Florida doesn't require insurance for motorcycles so I don't have it. I calculate the value of what I think I could realistically sell it for into my net worth.)

Liabilities
-Store Credit Cards ~~~ ($9,240.00) (Haverty's and Home Depot. Interest rate doesn't matter, cards are on 0% interest promotion for 24 and 36 months respectively and are being paid down at a MINIMUM amount that will have them both paid in full before interest ever kicks in.)
-Capital One Mastercard ~~~ ($0) (Emergency card, $500 Limit. My first ever credit card)
-Capital One Visa ~~~ ($134.54) (Daily use card, 1.25 reward points per dollar = 1.25% return on purchases I already make anyway. Paid off every month so interest rate doesn't matter. $3,000 Limit.)
-Mortgage ~~~ ($111,909.78) (15 year at 2.875%. $977.79 for principal, interest, and escrow for taxes and insurance)

Bills each month:
Mortgage: $977.79
Utilities: Approx. $120 (Only one utility company here. Stuck with it unless I invest in a water well, solar panels, and a septic tank. They charge a MINIMUM $36 "availability fee" for EACH water and sewer making my minimum bill with zero useage at $72. I run my electric as efficiently as possible. A/C set to 81 for summer months, haven't used in winter yet.)
Netflix: $17.19 (In place of cable. I'm a big movie-lover.)
Virgin Mobile: $48.15 (I know about Republic Wireless thanks to your blog. Will get around to it probably when they come out with the new phones)
Clear: $34.99 (Internet)
Home Depot C-card: $120 (24 month no interest, $8000 Limit)
Havertys C-card: $200 (36 month no interest, $8000 Limit)
Venture One Card: $Revolving (Daily Expenses Card)
Investment Deposit: $1000 (into Money Market Account)
Vacation Fund: $500 (into savings account)
Food: Averages: $360
Gas: Averages: $130
Entertainment: $50
Also:
Car and Bike Registration Renewal: $150 (Renewed Annually)
Car Insurance: $550 (Policy Renewed Bi-annually)
Xbox Live: $50 (Renewed Annually)
Gym: $50 (Renewed Annually, but paid off until 07/01/15)

My current goal is to retire before my 40th birthday (09/18/2029) with a portfolio (not total net worth) of $1,000,000 that is able to spit out 4% ($40,000/yr.) for the rest of my life, growing with inflation... and hopefully even more. I am planning on having a paid off house and have dreams of travel several times per year. Currently it is just me living in my place, but I am hoping to rent out one of my bedrooms for $500/mo. + 1/2 the utilities and use the other as a guest room or rent out both for $500 and 1/3rd the utilities if I can find good renters (most likely friends). Right now my main occupation is my only income.

I don't do too much spending beyond what is necessary in bills. Food is approx. $360/mo. ($12/day), gas $130/mo. (6.5 miles is literally the closest I could move to work for the price I got) and I really try to limit my entertainment costs which includes Netflix, at around $50/mo. I have quite a bit of miscellaneous, irregular spending that is throwing off my total averages due to the house and moving and fees, home inspection, appraisal, and everything but I run a REALLY tight ship otherwise... there really isn't too much more than little irregular purchases here and there beyond what I mentioned (a physical, an antennae for my router, etc.). Sadly, it's kinda claustrophobic feeling cause I'm pushing so hard to save. That's why I have my 'guilt-free' vacation fund for trips which takes care of food, travel expenses, board, and anything else. I think that's just about it. Thanks for your time!

gooki

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Re: My full financial picture for all to see. (Needing advice)
« Reply #1 on: June 05, 2013, 04:03:02 AM »
Looks like you've got a good plan laid out, and it sounds like you know what to do to trim expenses (cell phone, car insurance etc).

Get those renters in and watch your savings/investments sky rocket.

Khan

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Re: My full financial picture for all to see. (Needing advice)
« Reply #2 on: June 05, 2013, 04:08:50 AM »
Will spend some more time looking over this later, but you are on the right path. A couple things:

Quote
-Savings Account (0.25% interest): ~~~ $70.70 (Savings for guilt-free vacation spending ONLY. Anything not spent goes back into the account for the next vacation. $500/mo. deposited here.)
Please elaborate on this, written like this it almost sounds like 6000$/yr, at which point I wonder what your vacation consists of(Cruises? You live in Florida, get some snorkel/scuba gear and beach bum it up!)

Silver - I'm not a fan of metals, and neither is Warren Buffet, and silver is a less important commodity IMO. YMMV, but other investments actually produce returns(Bonds, stocks, investing real estate all produce dividend returns, whereas not so for silver beyond the 'market', which is made up of a lot of loonies.

Explorer insurance seems high, do you have an accident on your record or are you paying for too much insurance on a car that doesn't matter?

One thing that did stand out, the R6. No, don't worry, I love motorcycles too, but do you wear your gear? Also, do you have protection in place should you find yourself not keeping the rubber side down, whether it be because of other drivers or not? The bike is a throwaway, and I recognize not having insurance on that(and that's fine), but your medical expenses and liability coverage while riding it -are- covered, right?(I've never heard of not having insurance so I don't know what you mean by that unless it's just -not- the bike.

Besides those things actually, it looks like you're on a good path.

nktokyo

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Re: My full financial picture for all to see. (Needing advice)
« Reply #3 on: June 05, 2013, 04:28:03 AM »
Looks good.

You will have a partner + kids at some point in the next 10years so get as much momentum now as you possibly can. I would look at locking a second property in at low rates while the going is good there - if it's possible.

Vitai Slade

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Re: My full financial picture for all to see. (Needing advice)
« Reply #4 on: June 05, 2013, 04:35:51 AM »
Savings account - My goal is to put away $500/mo. for vacations. That should be enough for a few trips per year to visit friends around the country as well as enough to take a big trip every couple years. To be honest, it will most likely be WAY more than I need, in which case, I'll slim it down some or put a cap on how much I can put in that account (which will double as a quick emergency fund), but for now, it is what it is. (The balance is so low right now because I borrowed from it to make the down payment for my house. I'm charging myself $10 extra per $1000 that I borrow from myself per month as incentive to pay it back. Haha.)

Silver - Makes sense when you put it that way. I'll definitely have to re-think the silver game.

Explorer - Insurance in Florida is crazy high for some reason. I honestly only have the bare minimum allowable by law. $10,000/$20,000 Bodily Injury, $10,000 Property Damage, Non-deductible PIP, and $10,000/$20,000 Uninsured Motorist. I have a perfectly clean driving record, but I'm 23... and I think the insurance companies are in bed with the local law. :/ I don't even have collision and comprehensive...

I do wear gear occasionally but I NEVER ride without a helmet and I always try to ride safe. I have medical insurance through my work and I was informed that it will cover anything that happens to me whether I fall from a ladder or get in an accident. When the insurance companies play their game, the car insurance coverage comes first and medical covers the rest, but I'm still covered. I just have to pay the deductible.

Also, nktokyo, as much as I'd love to buy a second property, I literally /just/ bought my first house, there is no way they are going to let me in on another mortgage.

Khan

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Re: My full financial picture for all to see. (Needing advice)
« Reply #5 on: June 05, 2013, 04:49:39 AM »
Back to motorcycles, me, I ride to and from work everyday, and I don't wear proper boots or proper pants(jeans instead of riding pants, so protection for the first 1/4 second of a slide on the highway), but I always wear gloves + jacket. I accept the risk that I am taking for my legs and feet every time I step onto the bike.. I highly recommend you seriously think of the consequences you'll have to deal with when you have a fall without wearing more safety gear. Kudos to you for making the right decision on the helmet, but ask yourself, am I prepared to lose an arm or whatever the damage would be to your hands from a fall? Every time you step onto that bike, you accept the dangers of riding, combined with the mitigating safety gear you wear. I also recommend taking an advanced motorcycle riding course from MSF if you haven't, you -will- learn some things, like proper foot placement. If you need further convincing, head over to /o/ on 4chan(believe it or not, a good source) and check out a motorcycle thread.

For the savings account, I merely wanted to make sure that those figures were correct and that you weren't of the opinion that you had money saved up so therefore you should blow it because it was saved for that purpose.

smalllife

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Re: My full financial picture for all to see. (Needing advice)
« Reply #6 on: June 05, 2013, 05:28:13 AM »
You will have a partner + kids at some point in the next 10years so get as much momentum now as you possibly can. I would look at locking a second property in at low rates while the going is good there - if it's possible.

Kids are not a requirement for adult life, nor are they inevitable.  Some people do not like or want kids.  The momentum from compounding is important, but please do not assume that the OP will throw that momentum away with "partner+kids".  The partner might be even more Mustachian and science figured how to prevent the kids decades ago   :-)

/soapbox

My only question would be about the food and if you have that broken down by groceries, social restaurants, and lazy didn't-want-to-cook spending.  Everyone's situation is different but I find that breakdown immensely helpful to myself.  That is the only number that seems out of whack.  If you want to nit pick you might be able to get your movie fix for cheaper via Redbox and the occasionaly iTunes purchase, but I don't know what quantity of movies = "movie lover".

On_a_slow_boat

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Re: My full financial picture for all to see. (Needing advice)
« Reply #7 on: June 05, 2013, 05:47:39 AM »
Firstly, i'd like to say that I really liked how you laid out your whole situation very clearly. You situation reminds me a lot of where i was in my early 20's and I think you are off to a great start.

Reading your post two things came to mind.

1) Cohabitation - Start looking for someone (preferrably a girlfriend) to move in with you. Every bill cut and half will go straight to your goal of FI

2) Education - You are still very young so have a long way to go. I think of two areas you may want to focus on first:
 - continue to educate yourself on investments and use that knowledge to grow your stache.
 - educate yourself on your career, you said you are in the gaming business now. If you want to stay with that for a while, figure out how to work smarter and where the opportunities for advancement are. Maybe management, maybe its a completely different direction. Usually at all companies there is a way to get on the right track for you, but it takes effort by you to make that happen.

keep it going.

aj_yooper

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Re: My full financial picture for all to see. (Needing advice)
« Reply #8 on: June 05, 2013, 06:26:22 AM »
Congratulations!  You are a young guy focusing on an early retirement future.  Keep your dream alive, don't let life distract you from it.  The really good thing is, if you can get enough invested quickly, compound interest will be your very good friend, but you have to get the maximum you possible can into your accounts quickly to really get the benefits.  Quit the silver bug shit, the magic stock, and the my guy at Scottrade thing and get into seriously building your financial nut.  Use low cost investment vehicles like Vanguard index funds and push forward and your company 401k.

Specifics:

If you have been working at your current job for a couple years, your gross asset savings rate (20/130) is 15%, but your 401k shows only $2something.  Did you just start this job?  Or, did you not contribute to the 401k?  Keep working on the tax advantaged 401k.  Tax savings are very helpful.

I would move your Roth IRA to Vanguard as V is a lower cost provider.  If you decide to do that, call Vanguard and they will help you transfer the money;don't have Scottrade do it for you. 

The way you can make more money in investing is to reduce your costs in investing.  Through the miracle of compound interest, investing expense savings are golden and strongly affect your stash at the finish line.  Get 'miracle stock' and trendy ideas out of your head for now; you need to put in regular money, preferably tax-advantaged money in inexpensive (expense ratios) index mutual funds towards your future.  Start with the total market index and later you can get more complex.  Read some books on investing; start out with The Only Investment Guide You Need by Tobias.  Fill your 401k and your Roth; that should be about $23k.  Now you are at 23/65 or 35% gross savings.  You will eventually need to ramp that up closer to 50-60% to really get it going.  At work, if they have a health savings account, fill that; it will save you taxes.

I think your 15 year mortgage is very good.  Kudos!  Now get a room mate.  Put that rent money to fill your Roth. Get a deposit.  Be strict on the rent money; consider having them pay you electronically.  I would have your renter pay the utilities; no halves.   You are frugal with the AC and such; they might not be.  That will help you and the roommate save on expenses.

If you budgeted $500/month for those years, your travels/fun money expense is $12K, or 60% of your net worth.  That is going to seriously affect your ER goal.  I would seriously look at these expenses.  I also question 2 vehicles for one person as good strategy.  I think motorcycling could kill or maim you for life, so I would sell it.  Sell the bike.   Your Explorer is not an economical vehicle; sell it and buy a used small car.  If any money is left, put it in your Vanguard Roth.  Your food expense is too high.  Learn to cook in batches for the week.  You need to fix that.  Talk to your family or friends on how to fix that.

You have two many accounts for a single guy.  Do you use budget software? I like YNAB.The budgeting tool or a spread sheet can organize the categories better than separate bank/mm accounts. 

Are you buying furniture (Havertys) new for your house?  Florida is the place to buy good furniture in consignment stores.  That is where you now furniture shop.

On the claustrophobic thing about your budget:  make it fun.  Post your budget, savings targets, and net worth on the fridge.  Put some inspiring words for you there.  Make it a game.  A marathon, not a sprint.  You are not doing a 5k run, but a 1,000,000 k adventure.  Find more non-spendy ways to enjoy yourself.  Bike riding, hiking, outdoors stuff, sports.  Find some like minded people who share your budding MMM vibe.  Build a community to support your goals.  Do your family or friends encourage you?  Great if they do!  If not, back to the build a support group.  Spend some time hanging out here.

Best wishes.



madage

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Re: My full financial picture for all to see. (Needing advice)
« Reply #9 on: June 05, 2013, 06:34:53 AM »
Virgin Mobile: $48.15 (I know about Republic Wireless thanks to your blog. Will get around to it probably when they come out with the new phones)


Look before you leap.

Khan

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Re: My full financial picture for all to see. (Needing advice)
« Reply #10 on: June 05, 2013, 06:46:51 AM »
Quote
I also question 2 vehicles for one person as good strategy.  I think motorcycling could kill or maim you for life, so I would sell it.  Sell the bike.   

Aj, not everything in life is about complete risk avoidance and trying to get to financial independence. Not only that, but on top of being over the top fun for bargain basement prices(as sports bikes are compared to equivalent or -any- vehicle that someone would call 'fun'), motorcycles can also get ridiculously high mpg.

Let me put it this way, say there's someone that rock climbs or skydives and loves it. There is a huge inherent danger in these activities, would you tell them to just cut it off because they're expensive and dangerous?

Vitai Slade

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Re: My full financial picture for all to see. (Needing advice)
« Reply #11 on: June 05, 2013, 07:10:31 AM »
smalllife: I was actually going to say something about that, but I decided to just ignore it to avoid the whole 'You don't want kids? Oh, you'll change your mind' argument because fact is, ironic that you mention it, I don't want kids. I really can't stand them and I highly doubt anything is going to ever change that. It's like me saying to you, 'You don't like spending lots of money on a brand new car, fancy clothes, and a mansion-sized house in Manhattan? Oh, you'll change your mind.' I've always been an animal guy though. I love animals and my 'kids' will be a little furry family of dogs. Probably just one or two, but that'll be it... and only when I'm good and ready. I really dislike societies expectations for everyone to have kids. On the other note, yes, the person I would be most attracted to would have themselves well put-together. This means having their finances in order, understand who they are, among other things. If you can't handle your money, how am I supposed to think you handle other responsibilities? Being responsible, now THAT is part of adult life.

As for food, yeah, I really don't know how to cook much more than pasta. I really need to invest some time into learning how to cook nice meals... it's just that the motivation is not there. Canned foods and fast food (though cutting down on fast food) among quick-fix sandwiches and snacks, the occasional Stouffers meals that you just throw in the oven, and microwaveable meals are among my top quick and easy picks for food. Cooking for one can be just as expensive as cooking for two, sadly. Leftovers are one thing, but I'm not generally a fan of eating the same thing for a week.

On_a_slow_boat: Thanks for the compliments! I'm really hoping to set a solid foundation for myself. I watch all my co-workers going out and blowing all their cash and going nowhere and I just don't want that kind of life. I was having a conversation with a couple co-workers about year-end income and all they wanted to tell me was "Oh, I don't even want to think about that... about where all the money went." Stagnation would be the death of me. Why toil for naught?

On Cohabitation: I agree with this! Though I don't have a girlfriend, I AM currently searching out roommates to fill the two empty rooms in the house. If I were to fill one, it'd be an extra $500 in my pocket along with the company of that friend (and extra security of someone usually being home) as well as about a third of my utility bill gone. I say a third because the bill will increase with the increased usage, but split 50% for the entire bill. If I get TWO roommates by renting out my guest bedroom as well, I'd be living practically mortgage free. $977.79 - $500 - $500 = +$22.21 + half of utility bill gone. All that money going into the house and the rest to investments. I am really hoping for this.

Education: One of the reasons I posted here was so that I might gain insight to where I may have missed something in my plan. So far, it has been a great help finding at minimum one thing ($6,000/yr. for a vacation fund IS a bit excessive. I never actually USED that much when I went on vacation, but the funds could definitely be more efficient allocated elsewhere. But on this, I definitely agree. You can always learn something new when it comes to personal finance. You can always trim your finances to work more efficiently. I love learning about this stuff. Money is a fascinating thing. The math behind it is fascinating. By just varying your spending by as little as 3% can change EVERYTHING in the right circumstances. (spending 1% more than your income to saving 1% of your income)

As for my job, sadly, there really isn't too far to go. I wouldn't call it dead-end because the pay is really good (at least compared to most of the jobs I could be doing without $200,000 in college debt.) and more importantly, it is something that I really enjoy... and that's worth quite a bit of money there. I could move up to floor manager, but unfortunately, I'd have to take a pay cut (yeah, technically I make more than my bosses... with more perks.... like easier to get days off, less responsibility, and the ability to leave early if desired or necessary... it's kinda ass-backwards.... start at the top and work your way down). If I WERE to move up, I'd take the pay cut and work until someone above me quit, died, or was fired and who knows how long that would take... then fight for the ONE spot with all of the floor managers in hopes of getting it and maybe, just maybe I might get it and make /slightly/ more than I did until someone else above even that position quit, got fired, or died and maybe THEN it would start to pay off. However, because of the super low turnover, I'd more likely be retired by that point or just about ready for it. All and all, I'm happy with my spot. Moving up is a necessity in the corporate world, but this business is a bit different. I'm sure I could find a job that would make more money... it would take years of schooling for the bachelors (minimum) preferably masters degree, along with a huge hit to my finances for the cost, and many many many hours of my otherwise free time. Frankly, I just see it as a bit counterproductive. And that's assuming I even GET the position I want.

But enough of that. Hahaha. Thank you very much for the advice. I really hope I get some more. I'm #soakingitallin. ;)

Also, it seems I got a few more replies while I was typing these. Will reply to those now! :D

nktokyo

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Re: My full financial picture for all to see. (Needing advice)
« Reply #12 on: June 05, 2013, 07:14:19 AM »
Also, nktokyo, as much as I'd love to buy a second property, I literally /just/ bought my first house, there is no way they are going to let me in on another mortgage.

What would be the criteria for another property?

If it's 20% down and houses are in the 100-150K range this is a 6 month project for you.

It might not be what you want to do right now, my point is that nothing is impossible and nothing persuades a bank faster than a big fat deposit.

aj_yooper

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Re: My full financial picture for all to see. (Needing advice)
« Reply #13 on: June 05, 2013, 07:36:35 AM »
Quote
I also question 2 vehicles for one person as good strategy.  I think motorcycling could kill or maim you for life, so I would sell it.  Sell the bike.   

Aj, not everything in life is about complete risk avoidance and trying to get to financial independence. Not only that, but on top of being over the top fun for bargain basement prices(as sports bikes are compared to equivalent or -any- vehicle that someone would call 'fun'), motorcycles can also get ridiculously high mpg.

Let me put it this way, say there's someone that rock climbs or skydives and loves it. There is a huge inherent danger in these activities, would you tell them to just cut it off because they're expensive and dangerous?

Many doctors refer to motorcyclists as donors.  My brother-in-law was president of the Midwest Skydiving Club; he has had both knees replaced, at great cost, and now hobbles around.  He doesn't think it was such a good choice for him.  But everyman for himself.  I was giving my take.  And your talk about rock climbing gets my vertigo going.   :)  I am also someone who does not like to make left turns in traffic; go figure.

He might get all the excitement he needs from a significant other!

Villanelle

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Re: My full financial picture for all to see. (Needing advice)
« Reply #14 on: June 05, 2013, 08:05:14 AM »
I wouldn't own any kind of vehicle without insurance that covers me in the event that I injure or kill someone else.  I trend toward conservative (life wise, not politically), but that just seems reckless (no pun...) to me. 

Vitai Slade

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Re: My full financial picture for all to see. (Needing advice)
« Reply #15 on: June 05, 2013, 08:38:49 AM »
Aj: I've already been re-thinking the silver idea. I may throw a tiny chunk of money at it, but definitely not a huge amount - just for a tiny bit of diversification. The magic stock is silly, yes... so I think I will end up transferring those funds to a Vanguard Roth - and good idea mentioning to have Vanguard do it for me. I will be waiting for a bit, however as most of my funds are currently in AGNC. It's been highly volatile as of late, spiraling downwards, but it's starting to rally back and I'd hate to be the guy selling at the 3 year low after buying at the high. Not a fan of locking in my losses just yet. Not when there is potential for it to turn into a decent gain.... or at LEAST even money. After it comes back up significantly and I'm satisfied, I'll sell it off and transfer the funds.

For the 401k, yes, I started my job early spring 2012 and after a year became eligible to start contributing. I began at 15% as soon as I became eligible and plan to keep it there. Nothing more I can do than that.

For my Roth and additional investments in taxable accounts, I agree with the index funds idea and all the MMM has to say about compounding. It will be my primary investment vehicle. The silver bug and miracle stock were ideas from my very early investing days when I had no money to really invest (but wanted to) and knew nothing at all about investing. All of my future assets (and Roth funds once AGNC bounces back) will be allocated to Vanguard Index's. I disagree on the Total Market index, however. While it's a great index for a core holding in your portfolio, it is not quite such a good holding when you already have an S&P 500 fund as a core holding (and I can't change that... it's one of the only good index funds they have and the lowest cost index fund for my 401k. I want S&P in my portfolio anyway and all the other options sucked so I have to deal with that and build around it) and this is why I am going to most likely go with VEXAX. It is a great index fund by Vanguard built specifically FOR situations like this where you are stuck with an S&P fund and really want the total market fund. It essentially IS the total market fund minus the S&P 500. A great complimenting index that won't unbalance my portfolio.

I've already maxed my Roth (this year and last year) and have opted to contribute the max 15% to my 401k, along with buying a house. Next step is taxable accounts and as I said, I've planned on that already. I'm pumping money into my accounts as fast as I get it. Many are broke on payday or shortly after from partying, I'm broke on payday because I've already allocated the money to an investment or bill.

As for renter, yes, another thing that was planned once I find a suitable tennant. I'd love to charge them the full utility bill, but the city in which I live, I'm lucky just to get the $500 plus half the utilities. I'd love to charge $1,000/mo. for use of the coat closet. That would ramp up my savings too! Unfortunately, if you can't find anyone who wants to pay that, at the end of the day, it's still $0 in your account. I WILL, however, charge them more if they use more than their fair share.

As for the 'fun money' savings, if you look, it shows the account at just under $71. Not nearly 60% of my net worth. I borrowed nearly all of it from the account (to be paid back) for the down payment to my house. I really only spend $2,000-$3,000 for all of last year in that category - a cruise and a few trips too. Obviously this allocation is a bit on the high end and needs to be adjusted. I originally picked that number because I wanted a goal and $500 was a nice even number. Now that I've had a little while to test it out, I can see that it is a bit on the high side and needs adjustment. Easy fix. Keep saving the $500, just put all of the savings beyond a certain number, or cap, into investments instead. Say $5,000 is the max I should ever have in the account. If my monthly deposit comes up and I'm at $5,000... save the $500 but put it into my taxable account instead. That $5,000 vacation fund also doubles as a soft padded emergency fund and thirds as my cash portion of my portfolio. Efficient.

Motorcycle - Selling it aint gonna happen, to be frank. Yes, it is two vehicles for one person, but they are paid off and one is more of an enjoyment factor for me. Just as Khanjar mentioned, riding is an enjoyment factor for me. I could be killed or maimed doing many things... I'm not going to live life in fear of that. To me, that's simply existing, not living. The bike is also very good on mpg. It is my main transport during the spring-summer-fall while my truck is my transport during winter and when it is raining. It also has its use for road trips (which I take a few times a year) and any time I need to transport large cargo. I am not financing a brand new F250 for $30,000.00. It's a 1998 Ford Explorer worth less than the TV (connected to my computer) that I'm typing to you on in my living room. To sell it and buy a car would be MORE expensive for less benefit. My daily commute is already efficient on gas with my paid off bike, which I'll mention is also technically worth less that most of those small cars even combined with my truck. I've also kept up with the maintenance on both and are in great condition for their age and mileage. I don't know how much more money I'll have to put into another vehicle of equal (or even greater initial cost). Sorry, I just can't agree with you at all on this one. Most cases, you would be right, but this one, not so much.

My food cost is a bit higher than it could be and that is an area where I could grow as an individual as well. Learning to cook. As mentioned in a previous post though, I greatly dislike eating the same thing for an entire week. It's worth the extra cost if it means variety. It's not THAT much over budget.

I'm not quite sure what you mean by having 'too many accounts'. These accounts are things that all people living in the US have, I just have it organized and detailed. I split up my checking, savings, and money market into different accounts so that not all the money would be in the same 'pot' yes, so that I could tell at a glance what money belonged where, but they are all with the same Credit Union and all just as easy to access as one account. House? 401k? Roth? I'd hope you have at least a couple of those if you are on these forums. I also have two dormant accounts that are used rarely and then paid of immediately to help credit availability, longevity, etc. and two new accounts that helped purchase my furniture and washer/dryer at zero interest. These too will become dormant accounts used rarely when they are paid off. They are also at 0% interest. The last is a daily use credit card paid off every month. I can see how you may think the two store accounts (Haverty's and Home Depot) are in excess, but this money was going to be spent either way for things I needed... furniture and washer/dryer, I just chose to build my credit along with it and allocate the extra money into investment accounts while I pay them down... for free. The accounts are also very well organized. Just as it is posted here, it is in even more detail, more organized on a spreadsheet I customized for myself and my accounts. Graphs, numbers, automatic calculations, I built the spreadsheet from the ground up. Better than any budget software, it is perfectly tailored so that everything is easily viewable. I've not once missed or even been late on a payment for any of my accounts in my entire life.

Haverty's was a bit of a splurge, I'll give you that. However, I bought two and a half full rooms of stuff for under $7,000 with the $1,000 discount I was given for the anniversary sale purchase. I got a great deal on a ton of furniture that will last a long time because it is good quality. It was a splurge, but I'm very happy with my decision still. With that said, I don't need another furniture shop. I don't need more furniture. This furniture will last me a really, really long time.

The claustrophobia isn't because saving isn't fun... I gain much pleasure from saving... my reward is in my updates of my Net Worth every Monday, Wednesday, Friday and seeing my graphs move. The claustrophobia comes from the extreme saving for a long period of time. I work my ass off and save every chunk I can. I'm trying to learn new, cheap hobbies, but it's not quite as easy as I'd like it to be. I'm sprinting that 1,000,000 adventure... and it can be quite tiring. That's probably where I need the most advice.

While your advice in the above topics was well-intended, and I do appreciate the effort and time you put into it, a lot of it I just couldn't quite stand behind. Stock answers are not always right in different situations. While they may be good ideas for most, it's not quite the best idea for all.

Madage: I haven't gotten around to looking at those links yet, but I'm on it soon enough! Thank you for your input!

nktokyo: Well first I'd be allocating WAY too much of my portfolio to real estate. While I am keen on rental properties/second properties, I don't want to put all of my eggs into housing. I am still new to housing in general with my first one that I'm living in now (that I bought just a couple months ago!) and I've yet to rent out the two ROOMS I have. I don't want to buy a house and let that sit empty as well while pumping more money into maintenance while it sits there. I like the stock market and the compounding it offers and I'd just rather put a chunk of money there instead. If I had unlimited funds, I'd do both, but I need to make my funds work as efficiently as possible, especially this early in the game. I don't want to over-extend myself either. With little start-up, that could end disasterously. Something happens to my job, I can fall back on selling off small portions of stock as needed and only as much as needed. I lose my job with two houses, I lose both houses if I can't miraculously sell one overnight, go bankrupt, and lose everything. I have zero buffer... no to mention the additional mortgage payment for however many years...

AJ: If it comes to it, I'm happy to be a donor. I've got it on my drivers license should anything happen to me. It's obviously not a situation I would choose to take if given the option, but I am not going to tiptoe through life only to arrive safely at death.

Villanelle: The thing about motorcycles is... if you're in an accident, the likelyhood of you getting killed is MUCH greater than killing someone else. You run a car into a bike or a bike into a car... generally doesn't matter... car wins. People inside it are fine, bike is done. I don't hear too many stories that the headline reads 'motorcyclist kills three in collision'. Motorcyclist fine, those in the car, all dead. Just saying...

SunshineGirl

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Re: My full financial picture for all to see. (Needing advice)
« Reply #16 on: June 05, 2013, 09:38:57 AM »
I think you're doing great. I'd find those roommates and see what sort of dent you can make in the mortgage for the next couple years, then maybe repeat the process -- but wait a couple years.

If you aren't already, I suggest adding $100+ per month additional to go directly toward principal, even though your rate is low (and YAY on the 15-year-mortgage - best decision!) Anyway, an amount little enough that you won't miss it, but it will absolutely take time off the back end.

Also, I think you SHOULD keep up a nice travel fund and take great trips and not feel guilty. Doing so will help you avoid burnout, and airfare to some places can get expensive. However, if you want to throw more into investments, you could always shift what you're saving/investing for -- i.e. if you have your next trip planned and know what it's going to cost, throw extra money into investing. Then, after you take your trip and choose your next one, divert more money back to your travel fund. 

Presumably, you could also eventually go down to PT work once you've met some/all of your financial goals, right?

You've made some really good decisions at a young age. Keep on figuring out what you value, act on it consistently, stay balanced, and enjoy life.

Vitai Slade

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Re: My full financial picture for all to see. (Needing advice)
« Reply #17 on: June 05, 2013, 09:51:27 AM »
Thanks for the compliments! I always liked the idea of paying off my mortgage early, but you add in other investment options and it gets tricky. That extra $100 I'm putting into my mortgage could be going into investments instead. I've thought about this a lot and researched it and the math is the same regardless of $100 extra a month or $1000 or $10,000. I'd be guaranteeing a 2.875% return on my investment of an extra $100/mo. but I'd be losing out on the investment opportunity of that $100 and the average of much greater than 2.875%.

There really is no WRONG answer. Either option is great. Every $100 you put in either is going to pay off down the road... it's just a matter of which one is more at that point. AGNC is a company I invested in.... and it makes its money in a really interesting sort of way... By borrowing money at one rate and loaning it out to others at a higher rate. Their profit is the spread. By taking that $100 and putting it in investments instead of the mortgage, I'm essentially borrowing at 2.875% and lending it to the investment for greater returns, give me the spread as well.

The mortgage is safer, low risk, low reward. The Market is high risk, high reward.

huadpe

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Re: My full financial picture for all to see. (Needing advice)
« Reply #18 on: June 05, 2013, 10:05:49 AM »
Thanks for the compliments! I always liked the idea of paying off my mortgage early, but you add in other investment options and it gets tricky. That extra $100 I'm putting into my mortgage could be going into investments instead. I've thought about this a lot and researched it and the math is the same regardless of $100 extra a month or $1000 or $10,000. I'd be guaranteeing a 2.875% return on my investment of an extra $100/mo. but I'd be losing out on the investment opportunity of that $100 and the average of much greater than 2.875%.

There really is no WRONG answer. Either option is great. Every $100 you put in either is going to pay off down the road... it's just a matter of which one is more at that point. AGNC is a company I invested in.... and it makes its money in a really interesting sort of way... By borrowing money at one rate and loaning it out to others at a higher rate. Their profit is the spread. By taking that $100 and putting it in investments instead of the mortgage, I'm essentially borrowing at 2.875% and lending it to the investment for greater returns, give me the spread as well.

The mortgage is safer, low risk, low reward. The Market is high risk, high reward.

I would treat mortgage payoff as if you were investing in T-bills at 2.875%.  Since you owe the debt, you're gonna have to pay it one way or another, so it's a guaranteed return when you pay it off.  If you are going with a 0% bond portfolio, then early payoff may not be your best bet (but that is a very aggressive portfolio if you plan to retire by 40).  Mortgage payoff for you is going to beat just about any bond you can buy on the open market though.

aj_yooper

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Re: My full financial picture for all to see. (Needing advice)
« Reply #19 on: June 05, 2013, 11:42:51 AM »
I would treat mortgage payoff as if you were investing in T-bills at 2.875%.  Since you owe the debt, you're gonna have to pay it one way or another, so it's a guaranteed return when you pay it off.  If you are going with a 0% bond portfolio, then early payoff may not be your best bet (but that is a very aggressive portfolio if you plan to retire by 40).  Mortgage payoff for you is going to beat just about any bond you can buy on the open market though.

+1 Huadpe  on the AA points and the current bond options available.  MMM makes the same point.  I can see OP's wish to build up his stash and willingness to take on more risks, but I am not a fan of individual stocks at all.  I'd rather do REITs with that money, if I were more aggressive.

A paid off house is a pre-paid expense that keeps on giving.

matchewed

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Re: My full financial picture for all to see. (Needing advice)
« Reply #20 on: June 05, 2013, 11:52:52 AM »
A paid off house is a pre-paid expense that keeps on giving.

With the opportunity cost of not investing the excess cash you poured into the house into an investment vehicle which can pay more. That investment vehicle doesn't have to be a single stock. It can be index funds or ETFs.

huadpe

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Re: My full financial picture for all to see. (Needing advice)
« Reply #21 on: June 05, 2013, 12:08:07 PM »
A paid off house is a pre-paid expense that keeps on giving.

With the opportunity cost of not investing the excess cash you poured into the house into an investment vehicle which can pay more. That investment vehicle doesn't have to be a single stock. It can be index funds or ETFs.

This is why paying off the house is equivalent to a bond investment, not a stock investment.  Yes, over an extremely long time horizon, you'r better off leveraging your stock market investments for max return.  However, the OP has a medium term horizon, where some withdrawals are expected in about 15 years or so.  A 100% equity portfolio is inappropriate for that situation IMHO, and since the mortgage is effectively a bond investment (at better than market rates), as part of his asset allocation he should allocate some or all of what he would allocate into bonds into the mortgage.

If bond yields shoot up this would change.  So if the OP can take the mortgage money and invest it in T-bills with an APY above his mortgage's APR (after accounting for tax treatment and transaction costs), he should do that.  But unless you're taking the position that the OP should hold a 100% equity portfolio, then paying off the mortgage early should be part of the plan.

aj_yooper

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Re: My full financial picture for all to see. (Needing advice)
« Reply #22 on: June 05, 2013, 12:13:55 PM »
With the opportunity cost of not investing the excess cash you poured into the house into an investment vehicle which can pay more. That investment vehicle doesn't have to be a single stock. It can be index funds or ETFs.

Just a clarification.  Opportunity costs are always in the context of risk/reward curve.  Huadpe mentions OP's AA allocation with some questions about bond allocation; since he bought an arbitrage stock, I think he may have been trying to be less risk averse, but it turned out to be volatile.  Sounds like that stock does more than arbitrage.  I did mention REITs as a possible choice, but he might like something else.  That is fine.

Opportunity cost is not simply "is there a way to make more money" through another investment.  It is how much risk and reward is implicit with the choices and what level of risk the investor accepts.  It might be more rewarding for OP to borrow on his stock or take a loan from a HELOC and add more capital, but it sure is a lot riskier.  I could say then that your choice of index funds or ETFs then missed an opportunity, but, I would guess, in your risk/reward structure, you are good with the index or ETFs.  That is my point- risk levels.

huadpe

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Re: My full financial picture for all to see. (Needing advice)
« Reply #23 on: June 05, 2013, 12:18:30 PM »
AGNC is a company I invested in.... and it makes its money in a really interesting sort of way... By borrowing money at one rate and loaning it out to others at a higher rate. Their profit is the spread. By taking that $100 and putting it in investments instead of the mortgage, I'm essentially borrowing at 2.875% and lending it to the investment for greater returns, give me the spread as well.

The mortgage is safer, low risk, low reward. The Market is high risk, high reward.

This is not an interesting or unique way to make money.  This is how banks work.  AGNC is a mortgage REIT invested in Fannie and Freddy mortgages, basically they're acting as a mortgage bank.  This is a risky investment in that if interest rates climb, AGNC's costs of borrowing will rise, and the payments it gets on pre-existing mortgages will not rise, causing the spread to close or even disappear entirely.  From how you describe it I don't think you fully understand their structure or risks involved, and you should invest in something simpler like a stock index fund.

matchewed

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Re: My full financial picture for all to see. (Needing advice)
« Reply #24 on: June 05, 2013, 12:42:19 PM »
A paid off house is a pre-paid expense that keeps on giving.

With the opportunity cost of not investing the excess cash you poured into the house into an investment vehicle which can pay more. That investment vehicle doesn't have to be a single stock. It can be index funds or ETFs.

This is why paying off the house is equivalent to a bond investment, not a stock investment.  Yes, over an extremely long time horizon, you'r better off leveraging your stock market investments for max return.  However, the OP has a medium term horizon, where some withdrawals are expected in about 15 years or so.  A 100% equity portfolio is inappropriate for that situation IMHO, and since the mortgage is effectively a bond investment (at better than market rates), as part of his asset allocation he should allocate some or all of what he would allocate into bonds into the mortgage.

If bond yields shoot up this would change.  So if the OP can take the mortgage money and invest it in T-bills with an APY above his mortgage's APR (after accounting for tax treatment and transaction costs), he should do that.  But unless you're taking the position that the OP should hold a 100% equity portfolio, then paying off the mortgage early should be part of the plan.

How are equities inappropriate for a 15 year timeline? Even considering a conservative return over 15 years of 4% it still beats out 2.875%.

huadpe

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Re: My full financial picture for all to see. (Needing advice)
« Reply #25 on: June 05, 2013, 12:56:33 PM »
A paid off house is a pre-paid expense that keeps on giving.

With the opportunity cost of not investing the excess cash you poured into the house into an investment vehicle which can pay more. That investment vehicle doesn't have to be a single stock. It can be index funds or ETFs.

This is why paying off the house is equivalent to a bond investment, not a stock investment.  Yes, over an extremely long time horizon, you'r better off leveraging your stock market investments for max return.  However, the OP has a medium term horizon, where some withdrawals are expected in about 15 years or so.  A 100% equity portfolio is inappropriate for that situation IMHO, and since the mortgage is effectively a bond investment (at better than market rates), as part of his asset allocation he should allocate some or all of what he would allocate into bonds into the mortgage.

If bond yields shoot up this would change.  So if the OP can take the mortgage money and invest it in T-bills with an APY above his mortgage's APR (after accounting for tax treatment and transaction costs), he should do that.  But unless you're taking the position that the OP should hold a 100% equity portfolio, then paying off the mortgage early should be part of the plan.

How are equities inappropriate for a 15 year timeline? Even considering a conservative return over 15 years of 4% it still beats out 2.875%.

60-90% equities are appropriate to a 15 year timeline.  My objection was specifically to a 100% equity portfolio, or in this case really a 100+% equity portfolio (since it's leveraged by the house).  Since you'd want some non-equity in the mix over that timeline, mortgage payoff is probably the best way to do that investment.

matchewed

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Re: My full financial picture for all to see. (Needing advice)
« Reply #26 on: June 05, 2013, 01:29:51 PM »
A paid off house is a pre-paid expense that keeps on giving.

With the opportunity cost of not investing the excess cash you poured into the house into an investment vehicle which can pay more. That investment vehicle doesn't have to be a single stock. It can be index funds or ETFs.

This is why paying off the house is equivalent to a bond investment, not a stock investment.  Yes, over an extremely long time horizon, you'r better off leveraging your stock market investments for max return.  However, the OP has a medium term horizon, where some withdrawals are expected in about 15 years or so.  A 100% equity portfolio is inappropriate for that situation IMHO, and since the mortgage is effectively a bond investment (at better than market rates), as part of his asset allocation he should allocate some or all of what he would allocate into bonds into the mortgage.

If bond yields shoot up this would change.  So if the OP can take the mortgage money and invest it in T-bills with an APY above his mortgage's APR (after accounting for tax treatment and transaction costs), he should do that.  But unless you're taking the position that the OP should hold a 100% equity portfolio, then paying off the mortgage early should be part of the plan.

How are equities inappropriate for a 15 year timeline? Even considering a conservative return over 15 years of 4% it still beats out 2.875%.

60-90% equities are appropriate to a 15 year timeline.  My objection was specifically to a 100% equity portfolio, or in this case really a 100+% equity portfolio (since it's leveraged by the house).  Since you'd want some non-equity in the mix over that timeline, mortgage payoff is probably the best way to do that investment.

Fair enough. In your opinion does his current mortgage suffice in that regard without extra payments?

twinge

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Re: My full financial picture for all to see. (Needing advice)
« Reply #27 on: June 05, 2013, 01:54:35 PM »
Quote
Cooking for one can be just as expensive as cooking for two, sadly. Leftovers are one thing, but I'm not generally a fan of eating the same thing for a week

When people say "batch cooking" what that often means is you make a dish you like, make say 4 servings of it, eat one and freeze 3.  After you set up a system, you can alternate between cooking from scratch and eating from the freezer.  You can eat those other 3 dishes over the course of a month or longer so you don't get sick of it.  It helps a lone person get economies of scale (both in terms of time/energy and ingredients).  Another strategy is to make and freeze portions of a flexible component of a meal (e.g., cooked beans from dried, a larger piece of meat) that you then use in various ways as needed--in  a stir-fry, in a casserole etc.  Figuring out a method for doing this that works for you when you are young as you are could pay rewards for the next 70+ years.  It often helps if you start small--like with one dish you love that seems like it will freeze well.  A key to making this work is to wrap up the right size portions in the freezer--so it's really easy to select for a night.

Joet

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Re: My full financial picture for all to see. (Needing advice)
« Reply #28 on: June 05, 2013, 02:00:38 PM »
I think the biggest risk to your plan is the continued viability of casino employment. I'd work on education and a plan B. You have plenty of time.