Author Topic: Seeking advice  (Read 2652 times)

Dwreck

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Seeking advice
« on: September 08, 2013, 10:16:09 AM »
Good morning my new mustachian friends!

I found this site a month ago and have not been able to stop reading. I find it and the people that contribute to it wonderfully inspiring. I just married the most wonderful person i know back on the 1st of September and we splurged on our honeymoon to get it out of our system for good. We are now prepared to begin our Mustachian lifestyle.

I wanted to sit MMM down and bounce questions off him all day long but i figured the forum the best place to start. I am seeking advice on how to best get our 'stache growing. Before it grows however, my new wife and i have some debts that require immediate attention.

Before taxes we make a bit over 100k a year. Here in San Diego, it doesnt feel as it goes as far but moving would entail a substantial pay cut. I bought our home in 2009 for 215k and have refinanced and owe 200k. The current value is 300k. My wife has 30k in student loans that are currently in deferment. I owe 3.1k on a CC @ 14%. I have a car loan on my prius of 8.9k @ 4.0%.

We are both on the same page when it comes to our new saving regimen. We have about 16k in savings, 10k of which is our emergency fund. I was thinking of paying off the CC and car first with the cash we have on hand so we can begin feeling better about our situation.

Also, we both work 17 miles from home. We could possibly rent an apartment closer to work for what we currently pay for our mortgage. We could then rent our house out for more than the mortgage payment by roughly $450/month. Does that seem worth it?

Our beginning savings goal is $2500/month and we will be working hard at getting that higher. Any help is greatly appreciated. Thank you!

FuckRx

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Re: Seeking advice
« Reply #1 on: September 08, 2013, 11:08:37 AM »

wish i could give you some advice but instead just wanted to say hello, i'm in san diego as well and i've gotten some great tips on here so far.

ender

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Re: Seeking advice
« Reply #2 on: September 08, 2013, 11:56:14 AM »
First, welcome, you will find a lot of people here eager to answer questions - as I have gone down towards the MMM style of life I know I personally LOVE to see people excited about living fulfilling lives and discarding the consumeristic attitude of society.

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We are both on the same page when it comes to our new saving regimen

This might just be the way you worded this, but I didn't see the "why" in your post - have you and the wife talked about this? Saving for the sake of saving is one thing, but most people here have very emotional reasons to live such a counter-cultural lifestyle (weird that living within your means is totally counter-cultural...).

For example, I am living a MMM type lifestyle because:

1. I like my job 10x more when I am very, very, very distinctly choosing to be there
2. I know buying more toys and nice stuff doesn't make me happy
3. Having wealth gives me such significant freedom
4. I dislike the idea of debt

For example, you and your wife might decide you want to be debt free to get rid of the $40kish debt - planning out a budget and predicted payoff date can be quite motivating. Some people moreso than others, you two will have to figure out why you want to live this lifestyle.

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We could then rent our house out for more than the mortgage payment by roughly $450/month.

I would be careful with such a simple calculation - there are a lot of costs and time involved with owning a home than just the mortgage payment. Maintenance, months with no renters, etc.


Regarding debt, this is a good article too - linky.


frugaldrummer

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Re: Seeking advice
« Reply #3 on: September 09, 2013, 09:13:16 AM »
Yeah, I would think twice before renting out your home.  Although you might come out even (remember, maintenance, property taxes, repairs, vacancies will probably eat up that 450/mo) there's also a risk of tenants damaging the property and you might need to redo carpets, baths etc before moving back in or selling your property.  If you like your home and neighborhood, I'd stay in it - you've got a low mortgage.  Rents are pretty high here in San Diego, will likely be more than your mortgage payment to get something nice.

On the other hand - if you're not attached to your home, if you prefer the neighborhood near your jobs, if you plan to stay at those jobs for a very long time - would it be possible to sell your home and buy one closer to your work?  (I know this is not always possible, as housing prices rise dramatically the closer you get to the city - one reason why I live in Vista even though I work in Encinitas).

I would definitely pay off the credit cards from savings, but might think twice about paying off the car - I'm conservative, I sleep better if I have 6 months of living expenses in an emergency fund.  If it were me, I'd pay off those high interest credit cards, build my emergency savings up to something more like 20k, then start throwing money at the car or student loans (when they become due) depending on which has the higher interest rate.

frugaldrummer

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Re: Seeking advice
« Reply #4 on: September 09, 2013, 09:16:52 AM »
Oh - and do you have room in your home to rent out a room?  Getting a room mate  may not be every couple's ideal scenario, but it can bring in a nice little side income that would easily offset your commuting costs.  If you are close to one of the universities, you may be able to rent to a grad student or medical student - they tend to be too busy to party or cause trouble.

SunshineGirl

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Re: Seeking advice
« Reply #5 on: September 09, 2013, 10:13:23 AM »
Welcome!

You should pay off that CC yesterday.

Also, I highly recommend using a budgeting software like YNAB and seeing exactly how much you spend on everything. It's quite eye-opening.

Not knowing you or your situation, I'll ask if you've considered selling the house, or do you love it? Because if you could sell it and clear 100K, that's a very nice chunk of change, and it does seem to be a good time to sell still with low inventory, based on what I've read about So. Cal. You could rent for a few years closer to work and go from there.