Author Topic: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited  (Read 2523 times)

DanTheYogi

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EDIT:  I did not know my 401k contributions when I first made this post.  They have now been edited into the post.

DanTheYogi Case Study

Life Situation: Hi everyone!  I am brand new to MMM and FIRE.  I have a lot of student debt, and little savings, but truth be told I am feeling excited about my future.  I know it won't be easy, but to me that is part of the fun of it (the challenge).  I am single, male, 24.  I live in the Dallas, TX area (though this will change relatively soon - I will detail on this later).  As with most people my age, I have made a lot of mistakes.  While I have always been debt averse (I have never owned a credit card, for example), for some reason I did not apply that same line of thinking to taking on student debt when I was in college, and I currently have about $100k in student loans.  I have a good degree, but I do not like the field I am in.  Just to give you an idea, if I could right now, I would trade my degree to be debt free without a second thought.  Alas, no reason to ponder past mistakes!  Let's move on.

I have crunched my income/expenses in the past, but up to this date I still do not even have a budget.  I just got finished crunching some basic numbers to provide for this post (and to give myself a needed reality check).

Gross Salary/Wages: $66,000/year

Individual amounts of each Pre-tax deductions 401k, HSA, FSA, IRA, insurance:  401k is the only one I have.  I do not know exactly how much I am contributing, but I know that it is maxed to what my employer will match.  EDIT:  I just checked.  I contribute $257.05 per month.

Other Ordinary Income: none

Qualified Dividends & Long Term Capital Gains: N/A

Rental Income, Actual Expenses, and Depreciation: N/A

Adjusted Gross Income: Not sure what exactly this would come out to minus the 401k.

Taxes: I know nothing about taxes, however I do have my 2017 W2.  Here is what it says.

Federal Income:  11,843
Social Security:  4310
Medicare:  1008

Current expenses:

So, to tidy things up somewhat, I will start off by saying my take home pay per month is $3,563.

Now, for the expenses.

Bills

Rent: $1000 (approx.  This includes water and a few other things.  I rounded up a bit to be safe)
Electric: $90
Student loans: $723 min payment (I have consolidated most of them.  Currently on a 25 year forgiveness plan.  Ha)
Internet:  $58
Cell Phone:  $30
Auto/Renters Insurance:  $126
Savings:  $300

Essentials

Groceries:  $330 (This was much higher than I was expecting.  I eat very healthy, do not buy processed foods, yet don't care about buying organic/top-notch produce either.  I also only eat out 3-4 times a month, at most.  Having said that, I am very very active, so I eat a lot.  I also do splurge on a few things.  I buy frozen blueberries at nearly 4 dollars a pound and eat 1-2 cups a day.  I also buy oat groats at 3.60 dollars a pound, and eat these every morning as well.  Then I will often make random purchases like dates and other expensive produce.  I otherwise have bulk bags of 15lbs+ of rice, quinoa, potatoes, and oats that I eat daily.  So I know my work here is to cut out the more expensive items and stick to the cheap bulk).
Gas:  $200 (I know this is terrible.  There are 2 factors at play here.  One, my car guzzles gas.  I own a 2001 chevy tahoe.  Not great for a single guy in his 20's, but it's the only car I have owned for almost a decade now.  My parents essentially gave it to me.  The other factor is that I drive a lot.  Not to work either, which is a 3 mile commute.  Pretty much every night I am driving - Tue/Th I drive an hour round trip to rock climb.  Wed/Fri/Sat I drive an hour round trip to go dancing.  On the weekends I drive 90 minutes round trip to play basketball with my brother.  Semi-frequent trips to Austin to see my parents/family, 6 hours round trip.  Obviously these things add up quite quickly).

Other

Gym memberships:  $67  (Climbing membership is $48.  This obviously has to go.  However, the other is a $19 membership to my local rec.  I am not convinced I should drop this - it is about .5% of my income, it is a 5 minute jog from my apartment, and I go at least 5 times per week.  Especially with how I am going to be cutting out other hobbies, I think the $19 is well worth keeping my sanity while going through this)
Dancing:  $60-200  (I love partner dancing.  It is a recently discovered passion of mine.  On Wednesday's, I get 2 hours of lessons + 2 hours of social dancing, all for 10 bucks.  This really fills up my social needs, so I am conflicted.  It is a decent drive away.  The up to $200 is if I'm including 1 or 2 private lessons a month.  I know these have to go).

This leaves around $400 or so extra, which doesn't have a specific place, because I don't have a budget.  This may have gone to increased gas during the holidays, medical expenses, random trips out of town.  Really depends on what month I look at.

Expected ER expenses: none.  Except maybe if I start riding my bike everywhere.  :)

Assets:

2001 Chevy Tahoe - 198,000 miles
Current Savings - $8300
Checking account - $670
EDIT:  401k - $11,354

Liabilities:

$100,000 in student debt.  One under my parents name, 3 under my name.  Rates range between 5-9%.

So, here is where things get somewhat interesting.  A lot of what I just posted will become irrelevant come July.  This is because my parents have graciously offered to allow me to move back in with them when my lease is up.  Since they live in the Austin, TX area, I will be looking for a new job.  This is advantageous to me for a number of reasons.  For one, I really do not like my current job or the industry I am in.  By drastically reducing my expenses, I could take a moderate pay cut and still come out ahead.  This way, I could land a job that perhaps doesn't pay quite as well, but that I am much more satisfied in.  I think this is important, as right now the things that keep me from going insane about my current job are the things I am spending money on, like dancing, climbing, etc.  If I have to cut this out, I would prefer to have some work that I can tolerate better than what I have now.

On top of that, I will definitely be looking for a 2nd (if not a 3rd) source of income.  My plan is to really start bulldozing this debt once I move back with my parents.  I want to get my expenses down to the point of essentially groceries, and whatever transportation I need for my streams of income.

Something else I have been thinking about, is my car situation.  I know I shouldn't be thinking about spending 6-8k on a new car, but would it be worth trading in my tahoe to get something MUCH more fuel efficient, and reliable?  And then not have to worry about getting a car for another decade or so?  The maintenance has really started to hinder me - Just last month I paid $900 to fix a few different issues, and I left off a few others the mechanic said weren't as critical.  This has started to become routine the last few years.  I can't help but think I would make up savings pretty quickly on gas and maintenance if I found an affordable 6 or 7 year old prius or something along those lines.  Of course, I suppose the real goal is to stop driving so much, so feel free to call me out on my terrible thought process here.

Overall, I know I have a pretty big challenge ahead of me, but I honestly feel good about it right now.  This is partly because this debt has been hanging over my head for years now, and for the first time I actually feel like it is something I could potentially be done with in a few years time if I play my cards right, and that excites me.  I am confident in my mindset and discipline, now I just need a good plan of action and to execute it.

I think that covers most everything.  Feel free to leave criticism/advice of any sort, no matter how harsh.  I am sure I need to hear it.
« Last Edit: January 26, 2018, 01:15:34 PM by DanTheYogi »

Freedomin5

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #1 on: January 26, 2018, 01:44:16 AM »
Welcome!

Start by tracking all your expenses using Mint or YNAB or a similar app/program. It looks like you're ballparking rent and utilities, so you really want to get a good handle on your expenses.

Find out exactly how much you are contributing to your 401K. I'm guessing your HR department can help with that? (not American, hence the guessing)

Yes to the car question. I would look for something more fuel-efficient, especially if you plan to drive so much five days per week. Are there really no dance clubs/studios closer to where you live?

Regarding groceries, can you get the expensive items for less if you bought them online?

Those are just the thoughts off the top of my head. I'll let the Americans here comment in more detail.





Linda_Norway

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #2 on: January 26, 2018, 02:32:59 AM »
I think you are doing very well so far. You are yourself questioning your expenses and thinking about cheaper alternatives. Continue doing that.

Yes, you need a more fuel efficient car and yes, a second hand car is always a financially smarter buy than a new car. Start doing this as soon as possible.

About the dancing lessons. Do you really need private lessons? Isn't there a dancing school where you can get lessons in a group, including the social interactions?

About your gym. You already do a lot of rock climbing. Is that in the open? You also dance a few nights a week and play basketball. Do you really need to go to a gym in addition to that?

About playing with your brother who lives far away. If he also lives far away from your parents, could you reconsider your weekly visits to him? Or maybe share the cost in some way. Just the fact that you have a car and can drive, does it mean you have to visit him every week and that you alone pay for this?

If you change to another job, still try to find something that pays as much as you can get. It is always smarter to have 1 good paying 1rst job than to have to work a 2nd job. Seen your busy schedule, I think having a second job could be difficult. Could you get a second job that combines with your hobby? Becoming a climbing instructor for example?

DanTheYogi

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #3 on: January 26, 2018, 06:24:25 AM »
Welcome!

Start by tracking all your expenses using Mint or YNAB or a similar app/program. It looks like you're ballparking rent and utilities, so you really want to get a good handle on your expenses.

Find out exactly how much you are contributing to your 401K. I'm guessing your HR department can help with that? (not American, hence the guessing)

Yes to the car question. I would look for something more fuel-efficient, especially if you plan to drive so much five days per week. Are there really no dance clubs/studios closer to where you live?

Regarding groceries, can you get the expensive items for less if you bought them online?

Those are just the thoughts off the top of my head. I'll let the Americans here comment in more detail.

Ballparking rent and utilities - I know the exact numbers, though things like electric and water are variable (especially electric where I live).  I was rounding up to cover my bases.  My father has mentioned YNAB to me before, I will look into it.

In regards to proximity of activities - this is another silly mistake I made when I was apartment hunting last summer.  I knew where all my favorite activities were.  In-fact, my favorite dance studio, yoga studio, climbing gym, and rec center are all within 10 minutes of each other.  Sadly I did not think any of this through, and went with a cheaper apartment (by only about 100 bucks a month or so) that is out in the suburbs, about 25+ minutes away from all of them.  On top of that, the apartment is old, so the utilities aren't as efficient, and I have been dealing with high electric bills despite extremely low usage of my AC/heater.  As a result of all this, I am most certainly losing money due to all the extra driving compared to if I had just lived closer (and I would have a nicer place to boot).

There really isn't much close to me.  All the activities I enjoy (and my friends) are closer to downtown.

Groceries - some of them yes.  I already buy a lot of bulk, but have been doing more research into it.  I don't think I will find blueberries any cheaper, sadly; looks like I will have to pay a premium price if I want to continue eating those (same with dates from what I have seen so far).  Otherwise, I do think I will be able to reduce my grocery bill significantly.  I really don't mind eliminating dining out completely - I prefer my own food anyways.

I think you are doing very well so far. You are yourself questioning your expenses and thinking about cheaper alternatives. Continue doing that.

Yes, you need a more fuel efficient car and yes, a second hand car is always a financially smarter buy than a new car. Start doing this as soon as possible.

About the dancing lessons. Do you really need private lessons? Isn't there a dancing school where you can get lessons in a group, including the social interactions?

About your gym. You already do a lot of rock climbing. Is that in the open? You also dance a few nights a week and play basketball. Do you really need to go to a gym in addition to that?

About playing with your brother who lives far away. If he also lives far away from your parents, could you reconsider your weekly visits to him? Or maybe share the cost in some way. Just the fact that you have a car and can drive, does it mean you have to visit him every week and that you alone pay for this?

If you change to another job, still try to find something that pays as much as you can get. It is always smarter to have 1 good paying 1rst job than to have to work a 2nd job. Seen your busy schedule, I think having a second job could be difficult. Could you get a second job that combines with your hobby? Becoming a climbing instructor for example?

Private lessons - obviously I don't need them, but I just recently started competing and these are easily the fastest way to advance one's dancing skills.  But, they are a luxury, of course.  In regards to group lessons, I already do this on Wednesday nights.

Rock climbing vs gym - I think I would prefer eliminating rock climbing as oppose to my rec center membership.  The climbing is more expensive, including a much further drive (vs none at all for rec).  I have only started climbing in the past month or so, and would have already ditched it if it weren't for the fact that my best friend started doing it with me.  He would completely understand if I dropped it though (he is also on board with FIRE).

My brother is in college.  So he is both very busy and very broke.  Either I drive to him or we don't really see each other at all.  Simply how it is at the moment.

I will certainly look for the best paying job available, but I do want to find something that I tolerate better than my current position.  Especially if I am going to be living with my parents and practicing extreme frugality come July.

Funny you mention having a job that combines with a hobby.  I am actually a certified yoga instructor.  I was teaching classes early last year before I had to drop them due to a few different injuries.  I am fully healed now though so I have been strongly considering jumping back into it.  Teaching yoga is very mentally taxing so it's hard to make good money off of it.  Even 3 classes a week felt like a lot when I was doing it.  The real money would be in private lessons, if I could build some kind of clientele.

Thank you guys for the thoughts/comments.  Glad to hear I am not crazy thinking about switching to a new (to me) car despite being in debt.  I still think the end goal is driving less and not justifying all the driving with better fuel economy, especially if I am actually going to start treating my debt like a debt emergency.
« Last Edit: January 26, 2018, 06:27:16 AM by DanTheYogi »

freya

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #4 on: January 26, 2018, 06:48:48 AM »
Moving in with parents can certainly help reduce expenses - but realize that this comes at a cost!  The switch from living independently to being dependent on parents might be a hard blow and perhaps not worth it.

You definitely need to cut expenses and increase income if you want to get rid of that student loan in the next few years.  Some ideas:

1)  Get into a roommate situation (would wait until you have the job situation nailed down though).

2) Join Costco and buy your frozen berries and other bulk groceries there.  Consider cheaper alternatives - it's a good practice to buy things that are in season, as the prices are typically lowest then AND they are at their freshest and best-tasting.

3) Instead of stopping the climbing, dancing, and brotherly visits, try reducing the frequency.  Skype your brother on alternate weekends.  His lame-sounding excuse might suddenly evaporate.

4) Spend your free evenings developing a side gig to earn extra income.  Your situation absolutely calls for this. 

5) Look for rideshare opportunities especially the trips to Austin on weekends.   I did this sort of thing a lot in college - there was a bulletin board to advertise "I'm going to XX for the weekend does anyone need a ride", and I'd get a couple of people to help with gas costs.

Linda_Norway

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #5 on: January 26, 2018, 07:16:11 AM »

Private lessons - obviously I don't need them, but I just recently started competing and these are easily the fastest way to advance one's dancing skills.  But, they are a luxury, of course.  In regards to group lessons, I already do this on Wednesday nights.


I've been there myself. At the age of 15, I joined a dancing school. After some time I got a boyfriend there and we started fantasizing about a future in having a dance school together. Therefore we took private lessons to become good enough to pass the test to become dancing teacher.

The end of it was that half a year later or so, the relationship ended. Boyfriend was at a very different intellectual level than I was and had inherited different values from his family than I had. That also ended the dream and the private lessons. I kept dancing for many years with different dancing partners, but they would all eventually get a girlfriend who didn't want their boyfriend to dance with me, so there was little continuity.
In retrospect those lessons weren't very useful for me in the long run.

But I understand very well that dancing is your passion! It's great to do it and it can indeed be a very social event.
« Last Edit: February 08, 2018, 04:08:00 AM by Linda_Norway »

Phoenix_Fire

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #6 on: January 26, 2018, 07:41:56 AM »
Freya offers a good point on moving back in with the parents.  It might save some money, but it does come with the cost of losing some independence.  It could turn into a long term crutch without you realizing it is happening. 

You have identified that you chose the wrong part of town to live in.  If you were to move closer to your interests/hobbies/friends, could you also get a bike and ride to those?  I would still get rid of your current vehicle and look into the Prius option.  I think a roommate is a good suggestion. 

If you were back in the downtown area, it sounds like you might have more options teaching yoga again. 

I've done the indoor rock climbing when I was a bit younger than you, and absolutely loved it.  It was by far the best workout I've had and I enjoyed the physical and mental challenge of working through harder routes.  I would help out when the gym had large groups come in and didn't have to pay for a membership.  I originally got started because the community college I went to offered the class at the gym, and that was far cheaper than a membership.  You might want to look at local community colleges for something similar for the climbing and even possibly the dance lessons.  It could be cheaper than a normal membership.

What is your degree in and your current line of work?  People here seem to be pretty creative in ways to potentially use your degree.  They might also have ideas on how to improve your current work situation. 

The fact that you are 24 and are actively seeking advice bodes well for you.  Figure out which activities you value the most.  Will your quality of life go down if you move back home away from your current group of friends and activities? 

Moving back with your parents is a nice safety blanket to have, but I would personally want to consider all my other options before doing that.

Chippewa

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #7 on: January 26, 2018, 07:51:21 AM »
If you move back with parents, find a comparable income job (or more, of course), live on half and you can have the SLs paid off in approx 3 years.

DanTheYogi

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #8 on: January 26, 2018, 07:56:19 AM »
Moving in with parents can certainly help reduce expenses - but realize that this comes at a cost!  The switch from living independently to being dependent on parents might be a hard blow and perhaps not worth it.

You definitely need to cut expenses and increase income if you want to get rid of that student loan in the next few years.  Some ideas:

1)  Get into a roommate situation (would wait until you have the job situation nailed down though).

2) Join Costco and buy your frozen berries and other bulk groceries there.  Consider cheaper alternatives - it's a good practice to buy things that are in season, as the prices are typically lowest then AND they are at their freshest and best-tasting.

3) Instead of stopping the climbing, dancing, and brotherly visits, try reducing the frequency.  Skype your brother on alternate weekends.  His lame-sounding excuse might suddenly evaporate.

4) Spend your free evenings developing a side gig to earn extra income.  Your situation absolutely calls for this. 

5) Look for rideshare opportunities especially the trips to Austin on weekends.   I did this sort of thing a lot in college - there was a bulletin board to advertise "I'm going to XX for the weekend does anyone need a ride", and I'd get a couple of people to help with gas costs.

Moving in with my parents is something I have thought long and hard on for many months.  I am very aware of the cons, and there are many.  But, I also know that in some ways, my parents need me.  They are very unhealthy, and while I have tried to help them make changes in their lifestyles, it is hard when I am 4 hours away.  They have shown some willingness but are completely clueless when it comes to diet and other healthy lifestyle habits.  I know living with them, I could make a much bigger difference.  This would also give me something fulfilling to work on in my free time (cooking for/teaching them).

I have had roommates most of my adult life.  This has never worked out well for me, though maybe I just had the wrong roommates.  However, I am somewhat unique - I do not drink alcohol, eat animal products or processed foods, I wake up around 7 every morning (even weekends), and I rarely buy material things beyond necessities.  While I know that a roommate does not have to align perfectly with these values, there are some things I would rather not compromise on.  It is especially hard to find people my age who would be a good fit for me, though I have never considered potentially having older roommates.

I am already an avid member of Costco!  However, all of their bulk frozen fruit is organic, and still quite expensive (most of it ranges from 2-4 dollars a pound).  I have not found cheaper frozen blueberries than 3.50 a pound, and I have looked very hard.  I don't even buy a ton of fresh produce; I mainly stick to frozen fruit/veg beyond leafy greens and bananas.

My brother has a legitimate excuse, I think - like I said, he is a senior in college, in a difficult program (electrical engineering).  He has no income and not much free time.  We aren't really interested in skyping.  We want to hoop!

Agree about the side gig.  Thing is between climbing, dancing, yoga, etc, most of my evenings are pretty busy.  Of course I would kill 2 birds with one stone by reducing frequency of activities and freeing up time to develop a 2nd source of income.

Freedomin5

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #9 on: January 26, 2018, 06:40:08 PM »
Regarding roommates, I also do not drink, wake up early, and while I eat animal products, I don't mind if my roommates do not. I've been able to find good roommates in the past from age 19 to 29, but it's very important to make it clear in your Craigslist ad (or wherever you're advertising) the kind of person you are and the lifestyle you lead.

So for example, I stated in my ads that drinking, smoking, and other illegal substances were absolutely not allowed. I also made it clear that I went to sleep by 10 PM and woke up around 6:30 AM pretty much every morning. I put in the ad the kind of roommate I was looking for (quiet, grad student or single working professional, etc.) to weed out the incompatible roommates. The ones who like your lifestyle will be attracted to your place, while the ones who are wild party animals will probably think you're a stick in the mud, which is great because then they won't even bother with your ad.

It's too bad you can't break your lease or sublet your apartment and move closer to downtown. Though I guess there's not much point if you move back home with your parents. If you move back to Austin, will you still be able to do your dancing, gymming, and rock climbing?

DanTheYogi

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #10 on: January 26, 2018, 10:22:54 PM »
Regarding roommates, I also do not drink, wake up early, and while I eat animal products, I don't mind if my roommates do not. I've been able to find good roommates in the past from age 19 to 29, but it's very important to make it clear in your Craigslist ad (or wherever you're advertising) the kind of person you are and the lifestyle you lead.

So for example, I stated in my ads that drinking, smoking, and other illegal substances were absolutely not allowed. I also made it clear that I went to sleep by 10 PM and woke up around 6:30 AM pretty much every morning. I put in the ad the kind of roommate I was looking for (quiet, grad student or single working professional, etc.) to weed out the incompatible roommates. The ones who like your lifestyle will be attracted to your place, while the ones who are wild party animals will probably think you're a stick in the mud, which is great because then they won't even bother with your ad.

It's too bad you can't break your lease or sublet your apartment and move closer to downtown. Though I guess there's not much point if you move back home with your parents. If you move back to Austin, will you still be able to do your dancing, gymming, and rock climbing?

Funny you would say "I wouldn't mind if my roommates don't eat animal products."  Of course not.  Why would you care if I brought kale into the house?  :)

I am not saying that is an absolute deal breaker, but it does weigh on my mind.  This problem is more personal though and a conversation I'm not looking to venture into, so let's leave it at that.

There is someone that actually came to my mind earlier today that would fit the bill perfectly.  An old friend.  I don't know why I didn't think of him before, but I am going to reach out.

As for Austin:

Dancing definitely!  There is a strong dance community for my style in Austin.

Rock climbing, maybe, but tbh it is something I just started and I really would not care about giving it up.

Gym - I wouldn't be able to play basketball with my brother, but I could certainly get a cheap membership to a local rec or YMCA for my general workout needs.

To address Austin in general, as many people have brought this up:  will my quality of life go down somewhat?  Absolutely.  I have considered this.  Having said that, I have really reached a point in my life where much of my happiness is intrinsic.  Yes, the activities are a lot of fun, but I know that regardless of where I am living (or who with), as long as there are cool people near by, I will find them and make friends and develop new fun activities.  In short, I am not worried about my mental state - I believe that I have developed too many good habits (aside from financially, of course) in the forms of exercise, health, meditation, nutrition, etc. to let this kind of change mess with me.  Shit, despite the fact that I am in massive debt and hate my current job, I still wake up every day feeling absolutely lucky to be alive.  Life is too good.  I won't let money ruin it.  :)

Of course, I know it will only get better once I am on the other side of all this, which is what has me so giddy.  Thanks to everyone for all the questions and comments so far.  Despite what I just said, I am reconsidering the potential roommate idea due to all of you guys' comments.  I have some ideas.  I will definitely do some reflecting and critical thinking on all of this over the next month or so.  If anyone feels compelled to chime in, please do so!  I will certainly monitor this thread, and for anyone that cares, check in with updates on occasion.

freya

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #11 on: January 27, 2018, 10:53:26 AM »
No pun intended, but we've been "dancing" around the real issue here.  Is your debt a hair-on-fire emergency?  I guess only you can decide that, but...it kinda is.  At your current payment rate and assuming an average 7% interest rate (you said "ranging from 5 to 9%"), you are looking at >10 years to pay this off, assuming no big changes in your financial picture. That means that you'll be 34 years old and still renting with no savings outside of a small emergency fund and a minimal amount in a 401K.  Not a disaster, but certainly not ideal.  What do you think of that scenario?

Also, you're not your family's keeper.  Your brother the engineering student can get a part time job and help out with the parents while he's at it - I was an engineering student too, and I had jobs to pay for incidentals like visits home.  So did most of my friends.  Your parents should be plugged into social services like visiting nurses and home health aides if they need that kind of help.  If you're going there figuring to fulfill those functions yourself, you'll definitely qualify for sainthood but you'll also be VERY unhappy at the sudden loss of an active social life - and your parents may not want that for you, either!  Does your company have a family leave policy?  You could consider taking a short leave to get your parents set up with social services, and sublet your apartment & stay with them for that time if you can.  That way it'll be a temporary arrangement, and you'll get a much better idea of how you would feel about making it permanent.


DanTheYogi

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #12 on: January 27, 2018, 10:34:00 PM »
No pun intended, but we've been "dancing" around the real issue here.  Is your debt a hair-on-fire emergency?  I guess only you can decide that, but...it kinda is.  At your current payment rate and assuming an average 7% interest rate (you said "ranging from 5 to 9%"), you are looking at >10 years to pay this off, assuming no big changes in your financial picture. That means that you'll be 34 years old and still renting with no savings outside of a small emergency fund and a minimal amount in a 401K.  Not a disaster, but certainly not ideal.  What do you think of that scenario?

Also, you're not your family's keeper.  Your brother the engineering student can get a part time job and help out with the parents while he's at it - I was an engineering student too, and I had jobs to pay for incidentals like visits home.  So did most of my friends.  Your parents should be plugged into social services like visiting nurses and home health aides if they need that kind of help.  If you're going there figuring to fulfill those functions yourself, you'll definitely qualify for sainthood but you'll also be VERY unhappy at the sudden loss of an active social life - and your parents may not want that for you, either!  Does your company have a family leave policy?  You could consider taking a short leave to get your parents set up with social services, and sublet your apartment & stay with them for that time if you can.  That way it'll be a temporary arrangement, and you'll get a much better idea of how you would feel about making it permanent.


Hmmm.  After reading this, I have realized that not only did I not properly explain my situation with my parents, but that I also overstepped my bounds in attempting to explain it at all.  While I certainly appreciate the concern and suggestions, like I said, I have already thought about this long and hard and I know my personal situation better than anyone (obviously).  I understand the consequences of potentially moving in with my parents, and because the primary reason would be financial, the personal issues are not relevant to this discussion.  I feel very well equipped to handle anything that comes at me mentally/emotionally while solving my debt crisis, so let's leave the personal issues aside and focus on what I came here for, the hard numbers and facts of my financial situation.

As for the your question "is my debt a hair on fire emergency?"  I am little confused by you asking this.  Is it because I did not state it explicitly?  I have already shown that I am considering pretty drastic measures to pay off my debt - moving in with my parents to eliminate rent, reducing groceries and gas, eliminating all non-essential expenses, as well as looking for a 2nd (or more) source of income.  Are these not things a person with a "hair on fire" emergency does?  :)

My goal is to have my debt eliminated within the next 2-3 years.  I do not know exactly how it is going to happen, yet, but I am determined to make it so.

ShoulderThingThatGoesUp

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #13 on: January 28, 2018, 04:06:20 AM »
I'm normally the guy sure everybody should prioritize vehicle efficiency, but you're driving a 2001 Chevrolet with 200,000 miles. It's got to be worth like $500, and by moving to Austin you're about to be putting way fewer miles on it. Maybe keep it until it'll cost $1500 to make it pass inspection.

Also, you're just carrying liability insurance on that thing, right?
« Last Edit: January 28, 2018, 04:09:04 AM by ShoulderThingThatGoesUp »

DanTheYogi

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #14 on: January 28, 2018, 08:29:52 AM »
I'm normally the guy sure everybody should prioritize vehicle efficiency, but you're driving a 2001 Chevrolet with 200,000 miles. It's got to be worth like $500, and by moving to Austin you're about to be putting way fewer miles on it. Maybe keep it until it'll cost $1500 to make it pass inspection.

Also, you're just carrying liability insurance on that thing, right?

So, this is definitely the biggest question I had.  Thing is, it already has about 1000 dollars worth of repairs it needs that I have been putting off.  Should I hold off until I can't drive it any longer?  I don't know if it will last a few more years without having to get major repairs.  Considering it will be at least a couple years until this debt is paid off, at minimum, I'm not sure what to think. Part of me thinks I should bite the bullet now, use my savings to upgrade, then not have to worry about my car situation for at least another decade, so I can focus completely on my debt without having to worry about whether I will suddenly be in need of a new vehicle with no savings (assuming I dumped my savings into my debt instead).

Unless you are suggesting I keep what I currently have as an emergency fund for a situation like this, though that seems like it would defeat the purpose of not getting a newer car in the first place.

Wayward

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #15 on: February 07, 2018, 05:26:30 PM »
I'm normally the guy sure everybody should prioritize vehicle efficiency, but you're driving a 2001 Chevrolet with 200,000 miles. It's got to be worth like $500, and by moving to Austin you're about to be putting way fewer miles on it. Maybe keep it until it'll cost $1500 to make it pass inspection.

Also, you're just carrying liability insurance on that thing, right?

So, this is definitely the biggest question I had.  Thing is, it already has about 1000 dollars worth of repairs it needs that I have been putting off.  Should I hold off until I can't drive it any longer?  I don't know if it will last a few more years without having to get major repairs.  Considering it will be at least a couple years until this debt is paid off, at minimum, I'm not sure what to think. Part of me thinks I should bite the bullet now, use my savings to upgrade, then not have to worry about my car situation for at least another decade, so I can focus completely on my debt without having to worry about whether I will suddenly be in need of a new vehicle with no savings (assuming I dumped my savings into my debt instead).

Unless you are suggesting I keep what I currently have as an emergency fund for a situation like this, though that seems like it would defeat the purpose of not getting a newer car in the first place.
I would honestly replace the car ASAP with a more reliable, fuel-efficient one.  A great condition used Prius could be in the $4.5-8k range, depending on the year and mileage.  Look around at different sites, don't rush (make sure to get it inspected at a nearby mechanic), and pay it in full.  If you do purchase the car, build back up the emergency fund to 3-6 months worth of expenses.

It would seem you are on a good path, keep tracking your spending and optimizing purchases as much as possible.  Make sure you are getting as high an interest rate as possible for your savings (e.g. Ally Bank at 1.35%).  I would also look into refinancing the student loans, if possible, and make an attack plan to pay them off! 

moneytaichi

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #16 on: February 08, 2018, 07:21:06 PM »
If I were in your shoes, I would find roommates to reduce your rent. $1000 is too much when you still have so much student debt.

MrThatsDifferent

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Re: Case Study - new to FIRE/MMM. Lots of student debt, but feeling excited
« Reply #17 on: February 10, 2018, 02:35:23 PM »
The mere fact that youíve discovered this at 24 will put you miles ahead of anyone else. Iím almost twice your age and just discovering this. Youíre going to be fine. So I donít think you should give up a single hobby. Life is remarkably short and youíre a 24 yo man, enjoy your body and all the amazing things it can do, while it can (protect your knees though).  Stay active. Hang out with your brother as much as possible, donít sacrifice any of that. Youíll clear your debt, youíll build your stache. Keep reading and educating yourself.  Also, enjoy life and make mistakes and venture outside of bubbles.  Itís great to be FI, itís also great to just learn, absorb, be challenged, fall down and get back up. Thatís life, the messy bits make it interesting and as long as you donít dig holes too big, youíll be fine. Best of luck.