Found and filled out most of the Case Study spreadsheet, which was awesome. Figured I'd post my numbers here. I think I'm on track, but I fear that I'm going to get impatient before anything else.
Life Situation: 33M, divorced 1 year ago. Moved to a larger midwest city, just finished paying off debts from the sale of the house (woo!), related to the divorce. No more debt in my life, aside from one loan that still needs to be transferred out of my name and the regular monthly expenses which go onto a reward card.
If I'm being completely honest, it was transferring a huge chunk of my net worth from the divorce proceedings which really kicked my ass back into gear. I pushed and pushed for higher savings rates while married and that was a big source of stress (I've always been a saver, she was always a spender). That, coupled with a large gap in our earnings, saddled me with a lower net worth and a relatively high alimony.
A side note about the alimony: Yes, I know it's high, but it was also tied to negotiations around some other things in the divorce proceedings. It's unfortunate, but it's life. So I'm effectively debt free, except for the alimony which ends in 2019. I am hoping for advice on how I can kick even more ass when that day comes. So let's take a look at expenses.
| Category | Monthly | Comments | Annual |
| Salary/Wages for earner #1 | $9,375 | | $112,500 |
|
| 401(k) / 403(b) / TSP / etc. | $1,125 | | $13,500 |
| Employer Match | $375 | | $4,500 |
| Income subject to IRS tax | $8,250 | | $99,000 |
|
|
| Alimony | -$2,560 | | -$30,720 |
|
|
|
| Federal Total Income | $5,690 | | $68,280 |
|
| Federal tax | $851 | 2017 rates, S, stand. ded., 1 exempt. | $10,209 |
| State/City tax | $307 | Guess, using 5.74% * (AGI - Exempt'n) | $3,690 |
| Soc. Sec. | $581 | Assumes 1 earner paying | $6,975 |
| Medicare | $136 | | $1,631 |
| Total income taxes | $1,875 | | $22,505 |
| Income before other expenses | $3,815 | | $45,775 |
|
| Monthly Average Expenses: | | | |
| Rent | $1,410 | | $16,920 |
| Home/Rent Insurance | $15 | | $180 |
| Beauty Shop | $20 | | $240 |
| Bicycle Maintenance | $8 | | $100 |
| Charitable contributions | $60 | Input to Itemized Deductions | $720 |
| Clothing/Shoes | $30 | | $360 |
| Dining (Lunch/Dinner/Etc.) | $200 | | $2,400 |
| Electricity | $30 | | $360 |
| Emergency Fund | $1,000 | | $12,000 |
| Entertainment | $100 | | $1,200 |
| Fuel/Public Transport | $150 | | $1,800 |
| Gas/Oil for heating | $60 | | $720 |
| Groceries | $400 | | $4,800 |
| Medical (Doctor, Hospital, etc.) | $20 | Input to Itemized Deductions | $240 |
| Pets | $100 | | $1,200 |
| Subscriptions (paper/magazines/etc.) | $25 | | $300 |
| Wine/Beer/Tobacco | $150 | | $1,800 |
| Non-mortgage total | $3,778 | | $45,340 |
| |
|
| |
| Total Expense | $3,778 | | $45,340 |
| Total to invest | $36 | | $435 |
|
| Summary: | | | |
| "Gross" income | $6,815 | | $81,780 |
| Income taxes | $1,875 | | $22,505 |
| After-tax income | $4,940 | | $59,275 |
| IRA+401k/403b/TSP/457 | $1,125 | | $13,500 |
| Living expenses | $3,778 | | $45,340 |
| After-tax investable | $36 | | $435 |
|
|
| Time to FI?: | | | |
| Time to FIRE | 20 | years | |
| Safe Withdrawal Rate | 4.00% | percent | |
| Real return on tax-deferred investments | 5.00% | percent | |
| Real, after tax, return on taxable investments | 4.25% | percent | |
| Current Savings | | | |
| Tax-deferred (e.g. trad. IRA/401k) | $100,000 | | |
| Projected Savings at Retirement | | | |
| Taxable | $13,301 | | |
| Tax-deferred (e.g. trad. IRA/401k) | $860,517 | | |
| Total projected stash | $873,818 | | |
| | | |
| Projected Expenses in Retirement | | | |
| Non-loan, non-work expenses | $45,340 | | |
#ERROR!
#ERROR!
| Total | $52,091 | | |
| | | |
| Stash needed for retirement @4.0% SWR | $1,302,264 | | |
| Need $428,446 more. | | |
| Filing Status | 1 | 1=S, 2=MFJ, 3=HOH | |
| # Exemptions | 1 | | |
| Adult #1 | | |
| Age | 33 | | |
| # of earners | 1 | | |
| Total Income | $68,280 | | |
| Std. Deduct. | $6,350 | | |
| Act. Deduct. | $6,350 | | |
| Exemption | $4,050 | | |
| AGI | $68,280 | | |
| MAGI | $68,280 | | |
| Taxable | $57,880 | | |
| 1040 Tax | $10,209 | | |
| Tax after n-r credit | $10,209 | | |
| Net Tax | $10,209 | | |
| Monthly | $851 | | |
|
| State tax | $3,690 | 5.74% | |
| Charity | $720 | | |
| Item. Deduct. | $4,410 | | |
| Version | V8.16 | | |
All of my healthcare is taken care of by my company, which is fantastic. No premium, $250 deductible which I already hit this year and generally I have low medical costs (got kind of sick earlier this year, which was unusual).
Assets: Some 401K mutual fund mishmash, but mostly VOO in my Rollover IRA. I am probably above a 90/10 split for my holdings, but regardless, I still have a high tolerance for risk. I sold a lot of my individual holdings in the divorce and have switched over to index ETFs for simplicity. I just don't pay attention to the market like I used to.
Another asset is an online business I have that I run part time. This is also partially why I have a higher alimony payment (it was a negotiation which left the business off the table during the split). It currently has about 3K revenue and 1K expenses per month, so I expect about 1K per month of savings rate (post tax, since I usually assume 50% tax rate on business cash).
Current Plans: Currently have about 12 months savings between personal and business accounts (post tax dollars for the business, could take as a distribution at any point). I would like to build that up to about 24 months cash while also upping my savings rate. I just went from a 6% 401K contribution to 12% (shown in the chart above, which is why I started using the spreadsheet). I'd also like to grow my online business to the point that the profit is covering my monthly expenses.
Specific Question(s): I suppose my main thing is that I'm getting antsy. I want to speed things up. I also want to know if there are things I could do better. I figure things like:
- Lowering food/entertainment costs (getting back into the dating world ain't cheap though)
- Lowering my housing costs (not sure I'm quite ready to get a roomie, but might consider it if the savings were high enough)
- Waiting out alimony payments (it's kind of nuts thinking how much more I'll be making when that time comes).
I also realized recently how much of a child of 2008 I am. I have 1 year of expenses saved, maybe it's time I start putting those dollars to work? I just want to have savings on hand for if things go down. Or if I want to fly free in 2019 quit my current job, go out on my own.
Any other thoughts, tips or acceleration factors appreciated!
~NerdStache
