Author Topic: Reader Case Study-- How to Adult?  (Read 8165 times)

LilithPaul

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Reader Case Study-- How to Adult?
« on: August 11, 2014, 09:51:00 PM »
Next month, my husband will turn 30, and my biological clock is beginning to kick in. Suddenly, it seems like a good idea to stop the party and set some financial goals.

Would you help us set a mustachian budget so that we can Adult in the next five years?

We have $1,000 in savings. My husband has substantial student loan debt. Together, our income (before taxes) is $72,000 a year.

The student loan debt is comprised of four private loans, totaling at about $60,000, each borrowed at 4%. The minimum monthly payments on all four loans is $469.

We own outright two vehicles: a 2002 Honda Civic Si two-door hatchback with 100,000 miles on it, and a very well loved (read: no market value) 2005 Suzuki Aerio four-door hatchback with over 200,000 miles. Our cars are garaged in a parking deck ($100/ mo.), as street parking is inadvisable due to the risk of theft and parking tickets downtown.

We rent a cheap and energy efficient apartment downtown ($680/ mo.rent; $75/ mo. utilities), and both walk to work. Almost everything we do, we do in our neighborhood, so we rarely drive.

We indulge in several luxuries which we are loath to give up, among them:

daily NYT newspaper delivery ($67/ mo.)
high-speed internet access ($74.44/ mo.)
season tickets to our local third-tier soccer club ($15/ mo.)
art classes ($50/ mo.)
membership at the YMCA ($89/ mo.)
indoor soccer team membership ($20/ mo.)
a very silly dog ($70/ mo.)
bi-weekly drinks at the neighborhood pub, where everyone knows our names and our drinks are usually discounted by friendly bar-backs ($200/ mo.)
weekend road trips ($200/ mo.)

Other monthly expenses:

Vision Insurance ($6.96/ mo.)
Dental Insurance ($22.28/ mo.)
Health Insurance ($202/ mo.)
Life Insurance ($16.50/ mo.)
Netflix ($8/ mo.)
Cell Phone ($70/ mo.)
Groceries ($200/ mo.)
Gas ($50/ mo.)
Car Insurance ($83/ mo.)
Car Maintenance ($66/ mo.)
401K deposits ($308/ mo.) 

Will we ever be able to afford to save a down payment on a house?

We made a budget document that includes our current budget and two different approaches to austerity cuts. E-mail me if you would like to look at them.

Follow-up question: We are having a debate about how we could best use our hypothetical austerity savings. What would be the most badassity, mustachian use of our savings?

1. Pay off husband's student loan debt ASAP (it was accrued before we started dating)
2. Put a down-payment on a home
3. Take out a business loan and purchase an investor property to rent out, while remaining renters ourselves

EDIT: Requested info

Income:
me: C-3/ C-4 National Nonprofit 37,000/ yr.
Husband: local government 35,000/ yr.

Current expenses:

Luxury:
daily NYT newspaper delivery ($67/ mo.)
high-speed internet access ($74.44/ mo.)
season tickets to our local third-tier soccer club ($15/ mo.)
art classes ($50/ mo.)
membership at the YMCA ($89/ mo.)
indoor soccer team membership ($20/ mo.)
a very silly dog ($70/ mo.)
bi-weekly drinks at the neighborhood pub, where everyone knows our names and our drinks are usually discounted by friendly bar-backs ($200/ mo.)
weekend road trips ($200/ mo.)

Necessary:
Rent ($680/ mo.)
Utilities ($75/ mo.)
Cars Garaged ($100/ mo.)
Vision Insurance ($6.96/ mo.)
Dental Insurance ($22.28/ mo.)
Health Insurance ($202/ mo.)
Life Insurance ($16.50/ mo.)
Netflix ($8/ mo.)
Cell Phone ($70/ mo.)
Groceries ($200/ mo.)
Gas ($50/ mo.)
Car Insurance ($83/ mo.)
Car Maintenance ($66/ mo.)
401K deposits ($308/ mo.) 

TOTAL: $4,487.74/ mo.
 
Expected ER expenses: n/a

Assets: $1,000 savings

Liabilities:

The student loan debt is comprised of four private loans, totaling at about $60,000, each borrowed at 4%. The minimum monthly payments on all four loans is $469.
 
Specific Question(s):

How long should it take to save a down payment on a house? How can we do it faster?

Follow-up question: We are having a debate about how we could best use our hypothetical savings. What would be the most badassity, mustachian use of our savings?

1. Pay off husband's student loan debt ASAP (it was accrued before we started dating)
2. Put a down-payment on a home
3. Take out a business loan and purchase an investor property to rent out, while remaining renters ourselves
« Last Edit: August 11, 2014, 10:10:46 PM by LilithPaul »

viper155

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Re: How to Adult?
« Reply #1 on: August 11, 2014, 10:04:11 PM »
daily NYT newspaper delivery ($67/ mo.)
high-speed internet access ($74.44/ mo.)
season tickets to our local third-tier soccer club ($15/ mo.)
art classes ($50/ mo.)
membership at the YMCA ($89/ mo.)
indoor soccer team membership ($20/ mo.)
a very silly dog ($70/ mo.)
bi-weekly drinks at the neighborhood pub, where everyone knows our names and our drinks are usually discounted by friendly bar-backs ($200/ mo.)
weekend road trips ($200/ mo.)


All of these except the dog and the internet have to go. Suspend the $308 monthly investment. There is over 800 a month you can paydown the debt with. Both of you need a second job. Theres another 1000 a month. Easy

viper155

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Re: How to Adult?
« Reply #2 on: August 11, 2014, 10:08:41 PM »
    1. Pay off husband's student loan debt ASAP (it was accrued before we started dating)
    2. Put a down-payment on a home
    3. Take out a business loan and purchase an investor property to rent out, while remaining renters ourselves [/li]

Number 3 is a very bad idea

dragoncar

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Re: How to Adult?
« Reply #3 on: August 11, 2014, 10:09:08 PM »
We will need more info... Check that "how to case study" sticky thread.  Do you need the cars for work?  How much is in the 401k? Where are you located?

If it were me, I'd proclaim a debt emergency and dump the NYT, YMCA, art classes, at LEAST one car, road trips, and most of the drinking until you are out of debt.  But you do have to adjust for your personal values there.  I think you can get cheaper internet too.

But otherwise things don't look that bad-- especially since housing is low and you have no car payments.  But paying to garage them both seems like a large waste.

I'd probably pay down the debt, unless a home/apartment  will save you significant money over renting.

peppermint

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Re: How to Adult?
« Reply #4 on: August 11, 2014, 10:12:01 PM »
Well, not sure exactly what advice you want, but plenty of people manage to buy a house on your kind of salary. But you are carrying a lot of debt and, as you openly admit, have a lot of habits that siphon away money.

I can't tell here what your monthly income vs. spending is, but a few thoughts:

1. If you both rarely drive, can you ditch one of the cars?

2. You are spending a LOT on optional leisure activities. Here are some suggestions for easing back (others may suggest this more abruptly)
2a. Do you have to take art classes every month? Would you consider doing every other month?
2b. Reading the paper is a pleasure of mine, so I understand, but I pay for a NYT digital subscription, which is much cheaper than the print paper. Is that an option?
2c. $100 every 2 weeks at the pub? Why is the bar tab so high?
2d. Weekend road trips -- again, could you do a trip every other month instead of spending this every month.
2e. Don't give up the dog or the internet at this juncture.
2f. Can you guys start exploring more creative free activities that would lower your costs in these areas?

3. FWIW I quit Netflix. I live 1/2 mile from a library that lets me request all the DVDs I want though, so that factored into the decision. But seriously, I don't notice it gone at all except for the "instant gratification" aspect. It just takes a little more planning.

4. You might be able to get your car insurance knocked down. My car is younger than yours and has a cheaper rate (unless that's counting for both cars together).

Others will probably have stronger wording than I do, but that's some stuff to get you started. Good luck :)

LilithPaul

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Re: Reader Case Study-- How to Adult?
« Reply #5 on: August 11, 2014, 10:16:38 PM »
I've attached a budget document that includes three tabs: one for our current spending habits, and two with increasingly strict budgets. How do these strike you?

NoraLenderbee

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Re: Reader Case Study-- How to Adult?
« Reply #6 on: August 11, 2014, 10:26:48 PM »
Quote
What would be the most badassity, mustachian use of our savings?

It's good to have hopes and dreams, but in your post I saw no mention of an emergency fund of any kind. With $1K in savings, you are just one major car problem or hospital visit away from being broke and in even more debt. You need to build your emergency cushion, fast.

Your rent is great and the groceries seem good, too. Do you spend money eating out?

Don't forget to add the student loans to your Necessities list.
Biggest issue I see is the amount for drinks and trips. You live in a fantastic city--why do you leave it twice a month? And how do you spend $100 for one night at a bar?


Edit: Ah, your spreadsheet includes the student loans, and the pub visits are eating as well as drinking.

According to your spreadsheet, you already have $1500 per month surplus that could be applied to loans or saved. In one month you could more than double your savings without changing anything. Where is that 1500 going now? Are you sure you've accounted for all your expenses?
« Last Edit: August 11, 2014, 10:35:30 PM by NoraLenderbee »

boarder42

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Re: Reader Case Study-- How to Adult?
« Reply #7 on: August 11, 2014, 10:32:45 PM »
Wtf are you paying 67 a month for an outdated form of information. Seriously. High speed internet @ a gross 75 bucks a month AND you pay over 800 a year to have someone deliver you toilet paper you can't use unless you want your ass to bleed. 

LilithPaul

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Re: How to Adult?
« Reply #8 on: August 11, 2014, 10:33:12 PM »

1. If you both rarely drive, can you ditch one of the cars? Yes. The Suzuki is on it's last legs as-is. However, this will only save us $50/ mo. because the insurance and maintenance is paid for by a relative.

The Honda must stay put as I need it for work -- I frequently travel around the state (all expenses reimbursed at $0.56 a mile).


2. You are spending a LOT on optional leisure activities. Here are some suggestions for easing back (others may suggest this more abruptly)
2a. Do you have to take art classes every month? Would you consider doing every other month? Fair point. Classes are quarterly, at $150 a pop. I do love them, but they are optional.
2b. Reading the paper is a pleasure of mine, so I understand, but I pay for a NYT digital subscription, which is much cheaper than the print paper. Is that an option? I think you've got a point. We'll be downgrading soon, from $67/ mo. to $20/ mo.
2c. $100 every 2 weeks at the pub? Why is the bar tab so high? Well... It's the center of my husband's social universe.
2d. Weekend road trips -- again, could you do a trip every other month instead of spending this every month. Point well taken.
2e. Don't give up the dog or the internet at this juncture. Whew!
2f. Can you guys start exploring more creative free activities that would lower your costs in these areas? Where we live (Richmond, Virginia) there is a beautiful, clean river just walking distance from our apartment. Swimming, sunbathing and rock hopping with the dog are my all time favorite free things to do.

3. FWIW I quit Netflix. I live 1/2 mile from a library that lets me request all the DVDs I want though, so that factored into the decision. But seriously, I don't notice it gone at all except for the "instant gratification" aspect. It just takes a little more planning. Interesting! I had not realized the library would rent DVDs! There is a public library just four blocks from my front door. I will go check that out.

4. You might be able to get your car insurance knocked down. My car is younger than yours and has a cheaper rate (unless that's counting for both cars together). The insurance rate is for my car alone. You think I can beat it? This insurance rate also  includes our rental insurance.

Thanks for the advice! I will seriously think about these mods.

N

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Re: Reader Case Study-- How to Adult?
« Reply #9 on: August 11, 2014, 10:33:34 PM »
for Optimal Mustachian:

look at each line item on your budget and reduce it as much as you can.

For necessities:
eliminate it or find the absolute lowest price/cost for it.

For luxuries:
prioritize.
eliminate, reduce, delay,

For belongings:
Sell them. Give them away. Eliminate, reduce, optimize.


I look at your list and Id say:

Your housing is inexpensive. keep it that way.

Sell your car(s). Get the insurance to the lowest you can if you keep one. but sounds like you dont need one. can you carshare?
Your cell phones are too high. You are wasting a lot of money on your "luxuries"

Cut back on most of your luxuries.

Develop new past times that are free.

Develop side gigs that earn you money.

Once you have Eliminated and Optimized all of your expenses, and you have established a new baseline of spending and have optimized your earnings, you will have a better picture of how much you can save from your income each month.

without knowing what housing prices are in your area, you wont know what kind of downpayment you need. or how much you can borrow based on your debts and income, if you want a mortgage. I personally would want to pay off those debts first.

during the months that it would take you to do this Elimination/Optimization, you will get a better feel for you priorities and learn more about yourself. you may also discover other expenses you didnt consider yet, etc. things will change. but get started on all those line items.

good luck!

LilithPaul

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Re: Reader Case Study-- How to Adult?
« Reply #10 on: August 11, 2014, 10:36:22 PM »
Wtf are you paying 67 a month for an outdated form of information. Seriously. High speed internet @ a gross 75 bucks a month AND you pay over 800 a year to have someone deliver you toilet paper you can't use unless you want your ass to bleed.

Sigh. Reading the paper and drinking coffee is the best part of my day. But, I have a tablet. I think it may be time to downgrade to the $20/ mo. digital subscription.

...I think we have FiOS?

LilithPaul

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Re: Reader Case Study-- How to Adult?
« Reply #11 on: August 11, 2014, 10:38:38 PM »
Is the general consensus that I should pay down the debt that my husband accrued before I met him? This has been a major sticking point.

LilithPaul

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Re: Reader Case Study-- How to Adult?
« Reply #12 on: August 11, 2014, 10:41:37 PM »
According to your spreadsheet, you already have $1500 per month surplus that could be applied to loans or saved. In one month you could more than double your savings without changing anything. Where is that 1500 going now? Are you sure you've accounted for all your expenses?

Over the last five months, I have been paying down a credit card. I had $4,500 on the credit card. It is now zero. So on the 21st of August, I'll get my first paycheck with ABSOLUTELY NO OBLIGATIONS! I'm not even sure what to do....


LilithPaul

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Re: How to Adult?
« Reply #13 on: August 11, 2014, 10:43:42 PM »
Number 3 is a very bad idea

This is what my husband wants to do. How do I talk him out of it?

N

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Re: Reader Case Study-- How to Adult?
« Reply #14 on: August 11, 2014, 10:50:24 PM »
Is the general consensus that I should pay down the debt that my husband accrued before I met him? This has been a major sticking point.

as opposed to what?
are you planning to make him pay it back out of his income?

yes.
in my marriage, its all communal. I cannot imagine it working any other way for me and my mate. Im staying home with our babies and kids and not working full time. His income is our income.

WRT to #3, getting more debt...put together a few links from MMM regarding debt and ask him to read them? communicate your concerns? Your goals? your vision? what is your timetable for having kids? you have a lot of discussion ahead about priorities, goals, desires, etc.

LilithPaul

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Re: Reader Case Study-- How to Adult?
« Reply #15 on: August 11, 2014, 10:56:59 PM »
Is the general consensus that I should pay down the debt that my husband accrued before I met him? This has been a major sticking point.

as opposed to what?
are you planning to make him pay it back out of his income?

I realize that this is well beside the point (of achieving our financial goals), but I keep getting stuck on a few things:

1. I got a similar liberal arts degree from the same university for half the price because I worked during college.
2. Some of that student loan debt paid for stereo systems, huge parties and even a car for an ex-girlfriend.

Is it time to swallow my pride/ irritation and pony up?

N

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Re: Reader Case Study-- How to Adult?
« Reply #16 on: August 11, 2014, 11:05:05 PM »
I get it.

But yeah. What does the alternative look like, really? if you penalize him by making him pay it back out of his salary, you are going to penalize yourself, and probably your relationship.

so what, he pays off his loans, bit by bit, over the next 20 years, and you squirrel away an equal amount and then, you go party by yourself? retire on your own and live it up and tell him he should have been smarter in college?

it doesnt play out. :)

LilithPaul

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Re: Reader Case Study-- How to Adult?
« Reply #17 on: August 11, 2014, 11:08:28 PM »
so what, he pays off his loans, bit by bit, over the next 20 years, and you squirrel away an equal amount and then, you go party by yourself? retire on your own and live it up and tell him he should have been smarter in college?

LOL. Yes.

I've been thinking about saving a down payment by matching every payment he makes to his debt. In that case, we would have contributed equal $$, but to our respective goals. Is that insane?


Cheddar Stacker

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Re: How to Adult?
« Reply #18 on: August 11, 2014, 11:13:21 PM »
 
daily NYT newspaper delivery ($67/ mo.)
high-speed internet access ($74.44/ mo.)
season tickets to our local third-tier soccer club ($15/ mo.)
art classes ($50/ mo.)
membership at the YMCA ($89/ mo.)
indoor soccer team membership ($20/ mo.)
a very silly dog ($70/ mo.)
bi-weekly drinks at the neighborhood pub, where everyone knows our names and our drinks are usually discounted by friendly bar-backs ($200/ mo.)
weekend road trips ($200/ mo.)


All of these except the dog and the internet have to go. Suspend the $308 monthly investment. There is over 800 a month you can paydown the debt with. Both of you need a second job. Theres another 1000 a month. Easy

+1 to all of this.

You said you want to "adult". I understand what you mean. I always wondered what it would be like to grow up. I've never felt like one until I found this site a year ago and started making responsible decisions. I've grown up a lot. Less spending, less drinking, less waste, more thought, more conciousness. It's great.

So if you want to adult, re-think every single one of the uneccessary expenses costing you $800/month, $9,600/year, 15% of your gross income, and likely 18-20% of your net income. While you pay 4% interest on debts. Your #1 priority should be expense reduction.

Read MMM's middle class to kickass post. And realize you can maybe keep some of this fluff, but most of it is crazy if you want to adult and/or be kickass/badass, buy a house, retire.

dragoncar

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Re: Reader Case Study-- How to Adult?
« Reply #19 on: August 12, 2014, 12:07:07 AM »
so what, he pays off his loans, bit by bit, over the next 20 years, and you squirrel away an equal amount and then, you go party by yourself? retire on your own and live it up and tell him he should have been smarter in college?

LOL. Yes.

I've been thinking about saving a down payment by matching every payment he makes to his debt. In that case, we would have contributed equal $$, but to our respective goals. Is that insane?

I think that's a great idea, but it's not functionally different from paying down his loan for him (unless you expect to take sole title to the house because the down payment is yours alone?).  Money is fungible (https://en.wikipedia.org/wiki/Fungibility). 

Of course, if it were me, yes  I would probably squirrel away money in my own account and retire before my spouse who racked up tons of debt.  But reasonable people do it both ways, and it really depends on the nature of your relationship and priorities.

viper155

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Re: How to Adult?
« Reply #20 on: August 12, 2014, 05:58:11 AM »
Number 3 is a very bad idea

This is what my husband wants to do. How do I talk him out of it?

More debt is the last thing you guys need....and as far as your husbands loan debt is concerned, guess what? Half of it is yours.

MrsPete

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Re: Reader Case Study-- How to Adult?
« Reply #21 on: August 12, 2014, 06:24:59 AM »
You've already received some good advice.  I think you know the things you need to do -- you just have to put them into place.

As for the student loan debt, yes, just pay it.  Realistically, you have two choices:  1) Pay it, and let it go emotionally.  Be done with it.  2) Pay it, but hold onto resentment that it wasn't "your debt".  Let it continue to eat at you and act as a wedge in your relationship.  Those really are your only two options.  The "Pay it" part is a given, but your response to it is a choice.

You say you love reading the newspaper, and you say that you have a library 4 blocks from your house.  Could you change your morning routine and take your coffee to the library to read their paper?  However, I have to say that -- even though we're heavy library users -- you shouldn't expect the library to replace Netflicks for your movie habit.  At my library you'd have the choice of a National Geographic special on Volcanos or a copy of Mrs. Doubtfire . . . on VHS.  You should investigate your own library, but mine clearly doesn't put money into movies.


LilithPaul

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Re: Reader Case Study-- How to Adult?
« Reply #22 on: August 12, 2014, 06:50:48 AM »
Thank you, MrsPete. You're right, the advice here has been good-- but it has raised some interesting questions about shared finances.

I started a new thread to try to parse out what that might look like: it's called "Reader Case Study-- Should I Pay my Husband's Student Debt?"

Thanks, all, for sharing your perspective!

Cpa Cat

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Re: Reader Case Study-- How to Adult?
« Reply #23 on: August 12, 2014, 06:53:44 AM »
1. I got a similar liberal arts degree from the same university for half the price because I worked during college.
2. Some of that student loan debt paid for stereo systems, huge parties and even a car for an ex-girlfriend.

Is it time to swallow my pride/ irritation and pony up?

Let it go. This is a partnership. Don't keep score of ancient history from before you were together.

You're planning on making babies with him, buying a house with him, growing old with him, taking care of him when he's sick. In the grand scheme of your lives together, the student loan debt (and the mistakes that went with it) are dust. Your aren't his mother, you don't need to punish him for being irresponsible with money when he was 20. You married him, ex-girlfriend's ill-gotten car and all. As long as he's not buying her any more cars (!!), just focus on what's in front of you, not behind you.

MrsPete

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Re: Reader Case Study-- How to Adult?
« Reply #24 on: August 12, 2014, 07:48:53 AM »
If you're genuinely planning to be together for the rest of your lives, you have to share everything.  It's just practical, and the other option is just plain silly.

Say he uses what is technically "his money" to pay down his debt, whereas you are able to save more.  Do you then buy a house and refuse to let him live in it with you because he couldn't afford his half?  Do you buy yourself a steak and let him munch on the hot dogs that're in his budget?  What if, in the future, his income increases and exceeds yours?  Do you then say goodbye as he runs off to Vegas for the weekend, leaving you behind because you couldn't afford your half of the hotel room?  And someone already asked the big questions:  What if one of you becomes sick or disabled, does the other say, "Too bad for you!"  These questions are no more silly than whose money should be used to pay off a debt -- once you're married, it's all yours together. 

The only option for spouses is to share resources and responsibilities.  If you don't, you're not fully committing to the relationship.  At some point you're going to run into difficulties (after 24 years of marriage, I promise you that's true), and if you're not both fully "in", you're going to fall apart. 

Gimesalot

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Re: Reader Case Study-- How to Adult?
« Reply #25 on: August 12, 2014, 08:23:29 AM »
As someone in a very similar position, I completely understand how difficult it is to try to be an adult.  I have come to accept the fact that I will never feel like an adult and that is beter than being an adult.  But, I do think you need to make some changes to pay that crazy debt. Here are some thoughts:

daily NYT newspaper delivery ($67/ mo.) Can you get on-line access free from your library?
high-speed internet access ($74.44/ mo.) Call your internet provider, threaten to leave, get a discount
season tickets to our local third-tier soccer club ($15/ mo.) Most of these clubs are looking to increase their fan base, so my friends and I get in for free by volunteering (Drinking free beer with our friends outside the stadium before the games).  Can you volunteer and get free tickets?
art classes ($50/ mo.) Is this a private studio?  Look in to community classes instead.  They are much cheaper.
membership at the YMCA ($89/ mo.) Can you get a discount through work or volunteering?
indoor soccer team membership ($20/ mo.) In addition to soccer club and the YMCA? Try joining a free pickup club instead. If we play outside in NOLA all summer, you can handle outside in Richmond.
a very silly dog ($70/ mo.) Have you tried lowering costs by ordering on-line? Food is cheap on amazon and medications are cheap on several websites
bi-weekly drinks at the neighborhood pub, where everyone knows our names and our drinks are usually discounted by friendly bar-backs ($200/ mo.) Try eating before you go.  Also, switch to cheaper beer and have a glass of water between drinks.  Blame the cheaper beer on being old and getting hung over, blame the water on having to be beter hydrated
weekend road trips ($200/ mo.)Pick places that are closer, camp instead of hotels, go less often

Also, you might want to consider some new free or cheap hobbies:
Free local's day at the museums
Volunteering at theaters for free concerts, comedy acts, dance performances and the like
Local festivals, concerts, and other free local happenings.

One last thought...  Have you thought about becoming a mystery shopper?  I did it for a while, and I didn't make a ton of money, it was a lot of work, but there were free movies, clothes, casinos, bars, and restaurants.

swick

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Re: Reader Case Study-- How to Adult?
« Reply #26 on: August 12, 2014, 08:44:47 AM »
Wtf are you paying 67 a month for an outdated form of information. Seriously. High speed internet @ a gross 75 bucks a month AND you pay over 800 a year to have someone deliver you toilet paper you can't use unless you want your ass to bleed.

Sigh. Reading the paper and drinking coffee is the best part of my day. But, I have a tablet. I think it may be time to downgrade to the $20/ mo. digital subscription.

...I think we have FiOS?

definitely take a visit to the library. I just discovered ours bought a subscription to a digital magazine library that I can use for free from home.

Gerard

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Re: Reader Case Study-- How to Adult?
« Reply #27 on: August 12, 2014, 12:19:59 PM »
I think I kinda understand the sense of peace and luxury that comes with reading the physical paper and sipping a bevvie. But I bet you could get that same feeling (or even a higher-end version) by reading smart/art/cool/alt magazines that you get free from your library. I'm amazed that reading art and design magazines gives me the same temporary sense of heightened visual awareness as visiting an art gallery.

Aside from that, I guess I echo most of what everyone else is telling you... you have a lot of full-on luxuries/indulgences for someone who wants to save money!

LilithPaul

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Re: Reader Case Study-- How to Adult?
« Reply #28 on: August 12, 2014, 07:50:51 PM »
Dear Mustachians,

Your thoughtful comments have informed a long conversation between my husband and I. We have arrived at the attached hypothetical budgets, and the following financial goals.

First, for those with questions that have been left unanswered: I am 27, and my husband is 29. We have each been employed full-time at salaried positions for just under 2 years. Before, we were under-employed, and this kind of financial planning (agency! choice! living in a stable environment!) still feels like a miracle. Our combined income is $72,000 a year. We have been married for just over 2 years.

Budget #1 includes a path to:
(1) Open joint checking and savings accounts (wow, I never thought I'd see the day).
(2) Pay off the $74,000 student debt in 5 years by contributing equally to the (accelerated) payments. We plan to use my contribution to "powerball" the highest interest loan first.
(3) Save $50,000 in joint savings in 5 years. At the mid-point, we will likely return to hear your thoughts on investing this savings.
(4) Continue to save 10% of my income in a private 401(k) retirement plan. This plan is not matched by my employer. Should I do something else with this $$?

Budget Option #2:
(1) Open joint checking and savings accounts
(2) Pay off the $74,000 student debt in 10 years by contributing equally to the payments.
(3) Save $50,000 in joint savings in 30 months. This would go toward buying a house and having children.
(4) Stop payment into my 401(k) retirement plan. Retirement plan would be revisited after 30 months of hard-core savings.

Both budgets would be accomplished by making the same lifestyle changes:
(1) Selling one car for scrap (she won't pass inspection, anyway).
(2) Eliminating much of our luxury spending, including: daily NYT delivery, gym membership, home internet access, Netflix.
(3) Shopping around for a cheaper cell phone plan, cheaper dog food and cheaper car/ rental insurance.
(4) Purchasing our luxuries (art classes, indoor soccer teams, bar and restaurant spending) out of individual allowances of $200/mo. each.

In your opinion, which budget is optimal?

My husbandís financial goals seem to be limited to getting out from under the debt. My goals are to buy a home and have children in the next 5 years.

N

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Re: Reader Case Study-- How to Adult?
« Reply #29 on: August 12, 2014, 09:21:28 PM »
#2 sounds great.

YoungInvestor

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Re: Reader Case Study-- How to Adult?
« Reply #30 on: August 12, 2014, 09:26:57 PM »
At that point, the decision is between you and your husband, as both options are somewhat valid.

I'd however advise against seeing your money as different buckets : instead, consider it as a single series of cash flows that you want to maximize. It usually simplifies the whole process.