WARNING: Not only is my hair on fire, I think my whole person might be, as well. Unfortunately, I am not a person who has used preventative medicine, so to speak, in the past and am paying for it now.
Income:
I make 22.50/hr for $45,000 per year (before taxes and overtime come into play) as a entry level civil engineer in the Greater Boston area. I'm two years into the field and, from what I gather, at this point, I'm making under market value based on my education (Masters Degree) and experience.
Current expenses:
Currently, I commute approximately 55 miles in ONE-DIRECTION for approximately 1 hour and 25 minutes in one direction. Some days it's as "little" as 55 minutes, somedays as much as 2 hours. I live at home for free though - I don't pay for my expensive cell phone, nor my rent because I live in the second apartment of my parents house.
I purchased a brand new Honda Civic in 2012 and I have been paying that off monthly. I owe approx $16k at about 2 % interest rate on that car still.
I have student loans. I paid for everything starting freshman year all the way through my Masters using those student loans. I own approximately $68k to those loans still. These loans are broken into many parts, but all the interest rates are 6.9, 7.9 or 8.9%
Assets:
- ~$2800/month from work or $45000/yr
- ~$5600 in my savings and then nothing really else to speak of. I've been trying to sell all of my things that I've acquired that would be worth anything in the secondary market. It's hard to gauge true value and how long and how much I would be able to sell.
- Rent free because I live in the second apartment of my parents home.
Liabilities:
Student Loans:
~$68k which translates into approximately $1000/ month in student loans paid (minimum payments).
Car Loans:
~$16k which translates into approximately $400/month in car loans (min payments).
Food:
Unfortunately, I haven't been managing my food budget. Some months I'll spend $20 by eating leftovers and eating my parents food. Other months, I'll spend wildly and probably hit around $400 for one person. So, let's say that averaged out over the course of the year, I'm paying $200/month or $2400/year
Gas:
I get paid for mileage from the address of my office to the job-site and back which probably averages around 15 to 20 miles per day.
Doing some quick calculations by finding approximately how much I'm paid to drive and approximately I pay to commute, I came up with $2916.66/yr to commute, and $2450/yr paid back to me for driving. I fully realize that I may not be looking at these calculations the right way. The whole reason I'm doing this is to understand what I'm doing wrong.
Net gas expense is $466.66/year
Cable: $0/month
Gas/Heat/Elec./Rent: $0/month
Yearly spending is approximately $19666/year
And total standing debt is approximately $84000
Specific Question(s):
There are plenty of questions and directions I'd like to take with my Case Study. I have done some research about this website, and have a good friend who is a committed and successful Mustachian. I began to mentally resolve myself to do this months ago but I found that I was met with confusion from most of my loved ones. That is not to say that they didn't support me, but their support went more along the lines of: "WOW! Good for you! That's going to be so hard, though... You really should treat yourself SOMETIMES after you work and commute so much!" I reply with this being a lifestyle change and a commitment, etc. etc. They reply: "Oh Ok, I think I understand. So, do you want to go catch that movie and then grab a beer afterwards?" So, I've had very little positive reinforcement, I suppose. Or, I suppose, I'm just making excuses. I'm having trouble figuring out WHERE TO START. Is it most important that I find a job that pays better? Doesn't require me to commute, but rather is an office gig? That I live as close as possible to my workplace? That I reduce my food costs?! I know for sure that all of these things are possible and I've made efforts in all of these departments, please believe me on that.
My girlfriend is renting an apartment in the city with a roommate while she is at school. As often as is decent, I crash at their place and only pay for the parking garage (there's no free parking for non-tenants in Boston). So sometimes that's an option.
Sometimes, I spend a month or two being very frugal on smaller scale expenses like food, entertainment. But, that doesn't feel like where I should be starting my journey.
I've put a lot of energy into finding a better paying job, but that's proven to be more difficult that I would have thought. Perhaps, I need to broaden my search to different states/industries of work.
I've also considering buying property as a rental income but I read on this very website that while I have debt that's classified as an emergency, I shouldn't be allocating my resources to investments.
I've looked into selling my car, but I've put so many miles on it in a short period of time that I'm worried that it may be better to just keep it at this point.
As you can see, my Case Study has many of the typical bad situations that you see, but I feel so directionless as to where to start that I stagnate and month by month goes by.
I'm ready to make a change though. I appreciate any times and consideration you all put into my Case Study, thank you.
EDIT 3/13/14 at 11:40 AM
1) My 2012 Honda Civic has approximately 45000 miles on it from the ridiculous commuting. It could be the low-hanging fruit that creates the easient first step, but I wonder how much money I will lose in selling it compared to the approximate $16000 that I still owe on it. Is there a "point of no return" where it's no longer worth selling it?
2) My job has pros and cons like any other job. Even if were the best job in the world, I wouldn't be satisfied with the commute time long term. I have looked in Worcester for job (the commute from where I live is approximately 30 minutes one way and 22ish miles one way. A couple of the jobs I've seen would offer a pay increase between 20% to 75% depending on the position. One position offered a company vehicle for any days that I'd be working outside of the office. However, these jobs are fairly competitive, so I'm still waiting to see how that is going.
3) Loan consolidation: How does one do it? Is it easy? Is it worth doing? My loans are broken down between private and federal, I'm pretty sure, fairly evenly. All the interest rates, like I've mentioned are 6.9, 7.9, or 8.9.
Finally, I'd like to mention how thankful I am for everyone taking their time out to give me advice.
UPDATE:
3/13/14 at 8:30pm
I listed my 2012 Honda Civic with approx 45k miles online and got a message from a guy at a new/used car dealership (which is reputable enough to have radio ads and tv commercials). This gentleman seems to be willing to pay my requested $14000 (per kelley blue book recommendations) for my car. I owe approximately $15980. This loss I would take is approximately $1980 unless there's some other fees I don't know about???
Next, I'd need to nearly immediately have another car lined up so I could commute to work. I could perhaps borrow my mother's or my girlfriends car (neither use theirs, but neither would be willing to let me do more than borrow it) while I look for one of the cars mentioned in this thread in terms of efficiency.
I would figure that because the car loans are a low interest rate (2%?), that I could pay the remaining 2 grand back over 5 months of $400 payments. I could also just do it as one lump sum because I have enough to cover it in my saving. Next, I'd need to have enough to purchase a cheap vehicle out of pocket. I'll have about $3600 left to do it. I would hope to spend $1500, but I don't know if that's TOO cheap and I'd be falling into a money pit? My girlfriends mother has been considering buying a new car (and I might be able to snag her old one for free... but I by no means want to get too pushy on that front).
In conclusion, I'm already taking some of my first steps!!