Author Topic: Case Study- 29, Married. How are we doing?  (Read 1816 times)

brandonw

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Case Study- 29, Married. How are we doing?
« on: May 19, 2019, 03:52:18 PM »
Hello Mustachians!

Married, no kids.  I'm 29 and the wife is 25.

Income:
Me:  W-2, Gross $85k, Net Monthly $6,030.16
Her:  Self-Employed, Gross $55k, Net Monthly $3,682.30
Total Income: Gross $140k, Net Monthly $9,712.46

Expenses: (Averages over the last 10 months)
Mortgage    $803.54
Auto Loan    $174.51
Gas/Electricity    $134.98
Water/Sewer    $78.13
Internet    $55.24
Cell Phone    $101.31
Dental Insurance    $19.53
Life Insurance    $12.94
Auto Insurance    $73.51
Gym Membership    $26.60
Gasoline    $218.12
Groceries    $593.95
Haircut    $22.50
Auto Repair/Mx    $101.98
Home Repair/Mx    $75.49
Medical    $124.84
Gifts    $85.46
Restaurants    $115.79
Entertainment    $66.45
Travel    $112.19
Other    $998.60 (yes.. we're working on this one)
Total Monthly Expenses:        $3,995.66

Assets:
Cash: $12k
TSP: $57k
Taxable Brokerage: $26k
IRAs: $10k
Total Assets: $105k

Liabilities:
Auto Loan: $5k
Mortgage: $120k
Total Liabilities: $125k

We just got rid of the student loan debt.  I think we're going to pay off the car next because it's only $5k and then we'll be debtless, minus the mortgage.  I wish we would have starting maxing out retirement accounts way sooner but I discovered this great community not even a year ago.  We are currently maxing out my TSP and will probably max out a self-401k for her after car pay off.  So I want to get yalls opinions because I truly value all of your advice, what would you do if you were in our position?  I've been thinking about taking extra money and putting it aside for real estate investing but I'm really not sure.  Hoping to hit FI NLT 10-15 years and I think that's fairly realistic if we were to just invest all extra money in VTSAX index funds.  I believe I can reduce that number to 5-10 if I pursue something with potentially better returns i.e. real estate.  Like I said, I think you all are absolutely brilliant, and would love to hear your opinions.  Thank you!

daverobev

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Re: Case Study- 29, Married. How are we doing?
« Reply #1 on: May 19, 2019, 04:24:29 PM »
You are able to save 60+% of your income.

Don't do anything crazy. Earn more. Don't risk it in housing unless you know what you're doing. Why threaten retirement in 10 years?

Presumably your incomes will go up. Presumably you are smart enough to not succumb to lifestyle inflation. Focus on making more money, and let a good stock/bond balance carry you.

I mean, do RE if you want, but just realise it is a job and it takes focus away from everything else. Buying index funds is... low hassle.

Freedomin5

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Re: Case Study- 29, Married. How are we doing?
« Reply #2 on: May 19, 2019, 04:44:55 PM »
You two are making good incomes and not spending lavishly. Congratulations on that! If you havenít already done so, check out the Investment Order sticky on the forum.

With regard to real estate, only do so if you know what you are doing or if you have someone who knows what they are doing (like a close family member) who can guide you through analyzing your first few purchases. Be aware that, depending on your location, real estate may not generate higher returns than simply investing. It just gives you an alternative income stream.

If youíre up to it, you may also want to look at your food spending (groceries plus restaurants). Itís quite high for two people.

Watchmaker

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Re: Case Study- 29, Married. How are we doing?
« Reply #3 on: May 20, 2019, 04:29:45 PM »
You are doing good. Resist the urge to invest in RE just because you want to "do more". RE could be a good move for you, but you need to figure that out through study.

Also, it's very arguable that RE returns are actually any better once you account for all of the costs (such as your time). Some people do certainly manage better returns, but some people manage better returns in the stock market. Until you are comfortable that you know more than most about RE, stay out of it (that's what I do).

There's more you could do right now with that budget though. $1000 of "Other" spending is way too high, you need to figure out where that is all going. And items from you budget I think you could painlessly trim or eliminate include:

Life Insurance (is this term or whole?)
Gym
Auto related costs
Groceries
Cell Phone

Between those categories and the "Other" spending, I bet you could cut $500 a month from your budget and not even really notice it.

tamuaggie2011

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Re: Case Study- 29, Married. How are we doing?
« Reply #4 on: May 21, 2019, 07:36:49 AM »
As some have already said you are definitely on the right track.

As someone who is almost in your exact situation (I'm 29 and the fiancee is 25. We will be married in August) I can definitely relate to your scenario.

Personally I would immediately get rid of the car loan. Your monthly savings amount in a single month is enough to wipe out the loan so this should take no time at all.

I also think that your 10-15 year retirement goal is more than reasonable from both a "life goal" and a "financial target" perspective.  If you really want to enter real estate then you can go that route but I would definitely recommend initially putting your extra money into the Vanguard index funds and using a year or two to research and learn all you can about real estate. You pay yourself double in that regard with increased knowledge and an increased savings cushion.

Hope that helps!

Finances_With_Purpose

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Re: Case Study- 29, Married. How are we doing?
« Reply #5 on: May 25, 2019, 05:07:51 PM »
Agree with the others on all fronts.

I write to mention this: your housing maintenance fund looks surprisingly low.  Rule of thumb is 1% of value per year, or more, which is why $100 seemed off.  (I didn't see your home value listed.) 

You want to build a sinking fund for expected expenses like a new A/C unit, roof, etc., not just for the smaller things that tend to go down once in a while, like a fridge. 

brandonw

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Re: Case Study- 29, Married. How are we doing?
« Reply #6 on: May 28, 2019, 09:17:47 AM »
You are doing good. Resist the urge to invest in RE just because you want to "do more". RE could be a good move for you, but you need to figure that out through study.

Also, it's very arguable that RE returns are actually any better once you account for all of the costs (such as your time). Some people do certainly manage better returns, but some people manage better returns in the stock market. Until you are comfortable that you know more than most about RE, stay out of it (that's what I do).

There's more you could do right now with that budget though. $1000 of "Other" spending is way too high, you need to figure out where that is all going. And items from you budget I think you could painlessly trim or eliminate include:

Life Insurance (is this term or whole?)
Gym
Auto related costs
Groceries
Cell Phone

Between those categories and the "Other" spending, I bet you could cut $500 a month from your budget and not even really notice it.

The life insurance is term for $150k to pay for house and funeral costs if I died.  Mortgage is $120k.  I've tried to cut groceries, we now get most of our groceries from Aldi, however we're still usually around the $600/mo mark.  We can't buy in bulk at the moment and that's the only thing I can think of to reduce groceries down more.  Cell phone is pretty good for $100 for both of us with Verizon I think?  That's unlimited everything.  Any other recommendations?

brandonw

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Re: Case Study- 29, Married. How are we doing?
« Reply #7 on: May 28, 2019, 09:20:47 AM »
Agree with the others on all fronts.

I write to mention this: your housing maintenance fund looks surprisingly low.  Rule of thumb is 1% of value per year, or more, which is why $100 seemed off.  (I didn't see your home value listed.) 

You want to build a sinking fund for expected expenses like a new A/C unit, roof, etc., not just for the smaller things that tend to go down once in a while, like a fridge.

We have $8k in savings for misc minor things like these.  I don't want to manage another separate account to cover misc housing expenses.  We usually keep $2500 in checking and if any unforeseen large expenses come up we'll dip into the savings emergency fund.  We can replenish this account pretty quickly if this happens.

brandonw

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Re: Case Study- 29, Married. How are we doing?
« Reply #8 on: May 28, 2019, 09:23:23 AM »
As far as real estate goes, I have started reading and educating myself on it and I enjoy it.  I'm not doing it for the $ alone or to fast track FI.  It gives me a side hobby to keep my mind occupied (til kids come along that is). 

Thanks everyone for the replies and advice!  If anyone else has any suggestions please feel free to comment!

Watchmaker

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Re: Case Study- 29, Married. How are we doing?
« Reply #9 on: May 28, 2019, 03:01:45 PM »
The life insurance is term for $150k to pay for house and funeral costs if I died.  Mortgage is $120k.  I've tried to cut groceries, we now get most of our groceries from Aldi, however we're still usually around the $600/mo mark.  We can't buy in bulk at the moment and that's the only thing I can think of to reduce groceries down more.  Cell phone is pretty good for $100 for both of us with Verizon I think?  That's unlimited everything.  Any other recommendations?

Okay, that size term sounds reasonable. $100 for cell phones isn't bad, but if you're interested, there may indeed be cheaper options (look up Tin or Republic). Or... do you need cell phones? They didn't exist a few years ago, so they can't be necessary. Or how about dropping down to a single cell phone between you? Or dropping the data (how often are you really away from WiFi)? To be clear, these are just questions, I have a cell phone with a data plan and think the value for the money is great.

Regarding groceries--the three areas I usually see people overspend on food are food waste, too much expensive protein, or buying prepared foods. Food waste has always been my biggest problem. What's yours?

I don't have any other suggestions until I know what other includes--most of the categories you have called out look pretty good.

brandonw

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Re: Case Study- 29, Married. How are we doing?
« Reply #10 on: May 28, 2019, 05:59:45 PM »
The life insurance is term for $150k to pay for house and funeral costs if I died.  Mortgage is $120k.  I've tried to cut groceries, we now get most of our groceries from Aldi, however we're still usually around the $600/mo mark.  We can't buy in bulk at the moment and that's the only thing I can think of to reduce groceries down more.  Cell phone is pretty good for $100 for both of us with Verizon I think?  That's unlimited everything.  Any other recommendations?

Okay, that size term sounds reasonable. $100 for cell phones isn't bad, but if you're interested, there may indeed be cheaper options (look up Tin or Republic). Or... do you need cell phones? They didn't exist a few years ago, so they can't be necessary. Or how about dropping down to a single cell phone between you? Or dropping the data (how often are you really away from WiFi)? To be clear, these are just questions, I have a cell phone with a data plan and think the value for the money is great.

Regarding groceries--the three areas I usually see people overspend on food are food waste, too much expensive protein, or buying prepared foods. Food waste has always been my biggest problem. What's yours?

I don't have any other suggestions until I know what other includes--most of the categories you have called out look pretty good.

We definitely both use our phones and I feel $100 for them with unlimited everything is fair.  I would be open to exploring other plans though. I will look into the 2 you mentioned.

I hate waisting food so we donít waist too much. We also donít buy prepared meals. Only things I can think of that add up are the non-food items. This consists of TP, detergents, soaps, feminine care, paper towels, swifter pads, etc. Iím amazed at just how much TP is alone. We usually donít buy brand name but it still ends up adding up.

As for the other: I gave wifey a $250/mo budget for her things: clothes, shoes, makeup, etc. I think this will help. I certainly donít think she is responsible for the total other but this will help I think. Additionally, the last 10 months we have been rehabbing the home so things like tools, paint, etc often got placed in other and inflated the total.

Thanks again for the help. Just talking about this helps me think through these things a little more clearly.