Author Topic: Case study: just graduated, practically no savings  (Read 791 times)


  • 5 O'Clock Shadow
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Case study: just graduated, practically no savings
« on: September 21, 2017, 11:35:33 AM »
Life Situation: I'm a 23 year old single female, just finished grad school in May and joined the workforce. I have no debts thanks to scholarships/jobs/my parents.  I live in a college town/city in the Midwest with a pretty high COL for the region - mostly in the form of rent/housing.  I live about a mile from work and bike everyday/bus in really bad weather.  I have a horse that I keep <6 miles from me and take one lesson/week, this is pretty non-negotiable as I've had the horse for 10 years and this is my passion.  I also have a dog and a cat.

Gross Salary/Wages: $52,275

Individual amounts of each Pre-tax deductions: I put 5% into a 403(b) and after a year my employer will also put in 10%

Adjusted Gross Income: My take home is currently ~$3100/month

Current expenses:
Rent: 1075 (including pet fees, water/sewer/etc)
Electric: ~25
Internet: 20
Horse: 900 (including board, lessons @ 60 each, and vet/farrier)
Food: ~150 (including eating out)
Gas: ~40, depends how often I visit my parents (they live 40 miles away)
Car insurance: 100, will become 60
Rent insurance: 10
Misc: I budget 50 and typically don't spend anything

Additional yearly expenses: probably about 300 for the dog and cat (vet), 750 for horse insurance, and 500 for car (repairs/registation/etc)

Assets: 2002 Buick Lesabre worth about $1500, horse worth about $15-20000. I have $2500 in a savings account and $1500 so far in my 403(b)

Liabilities: None

Specific Question(s): Vet services are expensive and I want to have an emergency fund for that (the horse insurance covers anything horse-related up to $7500 but I would like to be able to self-insure as it requires mortality/loss-of-use and I'm only interested in major medical. And next year my horse will be in the "older" age group where premiums go up). 

Also, my car is a POC at 215,000 miles, only 22 mpg, no AC, and is starting to rust and I would like to replace it next year. It has died twice on me while driving, although I think we fixed the issue, but repairs are starting to add up.

My question is, I can save about 700/month right now, what should I prioritize? I would also like to achieve FI of course but I feel like I need to focus on other things right now, but as a statistician I know the power of compounding and saving more money now.  Is there anything I should be doing differently to try to save more money and achieve all of these goals?
« Last Edit: September 21, 2017, 12:04:59 PM by indiaink1 »


  • Magnum Stache
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Re: Case study: just graduated, practically no savings
« Reply #1 on: September 21, 2017, 03:29:16 PM »
I'm a 23 year old single female,

The random thought occurred to me whether the mechanics of FI should be different if you are male or female in this day and age.

You should appreciate that, should you want to be FI, you need almost $400,000 in capital to generate enough passive income to pay for your love of horses. In no way am I saying give it up, but $400k will be a starting point in terms of figuring out goals.

You might actually get some help from your horse if it is of good breeding stock :)

General advice is to put more effort in than your peers and increase your income - you seem to have landed a great job/career immediately on entering the workforce - ride it as far as you can, and take advice/mentoring from those above you.


  • Handlebar Stache
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Re: Case study: just graduated, practically no savings
« Reply #2 on: September 21, 2017, 06:42:08 PM »
So you are spending over 30% of your take-home pay on the horse, which really constricts what else you can do with your money.  Can you at least cut the lessons and just enjoy riding?  That would help.

Otherwise, it's pretty simple:  sounds like you are going to have significant cash needs for the next few years (new car, emergency fund, horse self-insurance fund).  So compile cash.  And when you do need that new car, buy another cheap POS that doesn't require a loan or deplete your EF -- you can't afford both a horse and a nice car, so given the cost of keeping the non-negotiable horse, everything else needs to stay as cheap as possible. 

You seem very aware of the fact that choosing to enjoy the horse now means delaying retirement.  This article may help quantify that impact:  Your 5% retirement savings will have you retiring at 89; adding the employer 10% match once it vests brings that down to 66.   If you put the 30% that goes to the horse into retirement instead, you'd be looking at more like FIREing at 51.  So that's the true cost of the horse:  15 years of work.  Again, totally your choice -- just make it in full knowledge of the tradeoffs.

*Not at all precise -- the first two figures are % of gross, and the latter is net; you should do the actual math yourself.
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  • Stubble
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Re: Case study: just graduated, practically no savings
« Reply #3 on: September 22, 2017, 09:56:59 AM »
You might want to think about lowering your horse costs with some skill increasing. I had a roommate that was low on cash at one point and learned to shoe her own horse. It took some cash upfront and some time to learn, but learning the skill meant she didn't have to pay a farrier as much (I think she still bought the shoes from a professional, but fit them herself) and she was able to pick up a client or two. Also - trimming and braiding are skills worth having. I don't see that in your line-items, but if you show at all (which I'm guessing because of the lessons?) you might be able to pick up a client or two on a show weekend and save yourself the cash for that too.

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  • 5 O'Clock Shadow
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Re: Case study: just graduated, practically no savings
« Reply #4 on: September 22, 2017, 01:25:47 PM »
Hi indiaink1, based on the information given if it were me in this situation here’s what I would do:

Divide the $700 working capital into three portions and put them to work right away.

1.   $230-- increase your current 403b contribution by $230 a month that should bring you close to a 10% contribution on your part, with your employer joining you soon that will give you a total of ~20%.

2.   $230--open a vanguard or fidelity investment account and start saving $230 each month into this new emergency fund. Goal for account will be a minimum of four months expenses:
Expenses currently about ~$2410 so 2410*4=~$9640.

An unexpected car breakdown is an emergency so in the future if your current car can no longer be fixed use some of the funds you’ve saved in this account to buy another beater car and keep saving until the $9640 is hit again.

3.   $240-open a second vanguard or fidelity investment account for your FI fund. Once you’ve hit your emergency fund account goal (it will take about 3 ˝ years) move that $230 a month portion over to your FI fund. That will eventually have you saving  ~$470 each month towards FI.
I didn’t see any information about rent sharing, could you bring your rent down by having roommates?

I also had a friend who wanted a horse but could not afford the boarding so negotiated with the sables to work off her charge. She cleaned stalls, cleaned gear, etc. instead of paying full board price. I’d also as suggested above just ride for fun leaving off your lessons until you’ve saved a little more. Have you checked if your stable will work with you?

I can see you’re an animal lover have you considered a side hustle as a dog walker or pet sitter?
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  • 5 O'Clock Shadow
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Re: Case study: just graduated, practically no savings
« Reply #5 on: October 13, 2017, 10:39:00 AM »
In my opinion, you are actually doing very well – no debt, good starting salary, time, and lots of opportunity. 

I am also a passionate equestrienne, although I have never been able to afford my own horse.  Personally, until I get my debt emergency resolved I cut out all luxuries, including my riding lessons, but work at the barn for extra cash and get to ride for free or even get paid to ride other people’s horses (so I still get to pursue my passion)!  I have known people who work at the barn to pay off part or even all of their board, which would save you a bunch of money.  You didn’t mention your riding discipline, but would it be possible to find local shows that offer cash prizes?  Have you considered giving lessons to other people on your horse?  Or finding someone to part-lease your horse?  Can you ride other people’s horses for cash?  As others have mentioned, learning skills such as shoeing, braiding, grooming, even learning to become a trainer/instructor in the future could help you make horses lucrative, not just expensive! 

Your rent is high, have you considered getting a roommate or two to share the cost?  In a college town it should be quite easy.  If you could find an affordable house/apartment to rent, perhaps you can get down to a zero-net rent?  Do everything you can to earn extra money and learn skills on the side.  Also, I would recommend starting to put some money aside each month for an emergency fund (~$1,000) and another to purchase a used car, perhaps one under $5,000 when the time comes.

Good luck on your journey!


  • 5 O'Clock Shadow
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Re: Case study: just graduated, practically no savings
« Reply #6 on: October 14, 2017, 10:34:37 AM »
ok so setting aside your horse (you are active but haven't been responding so I'm guessing that's why), you need to start budgeting the bigger expenses. You don't have 700 a month because you still have to pay 300 vet, 750 horse and 500 car annually. So set aside 25/month vet, 63/month horse and 42 car. You have 600 (3100-2370=730-130 annual=600) to save assuming that 50/month misc includes things like Christmas and clothes etc. Try a budgeting tool like mint or ynab.

Your expenses are high for your position so you'll be saving for an emergency fund for awhile. You mentioned you want to get rid of the horse insurance but didn't say how much you thought it would cost without it, footing it yourself. You need to research this but since you are worried about major medical which tends to cost a lot and you can't say for sure when this will happen to save up for it, I'd say you can't afford it since you'd have to double up for a few years in the mean time and you can't because: priority one is your emergency fund.

An e-fund's major job is to hold you until you can find a new job, that's why its calculated by living expenses..So how long would it take you to find another if you lost this one? Because right now you only have 1 month to get a new job. Some interviewing processes take months. After that one month you'd seriously have to consider selling your horse, which I know you don't want so start saving ASAP. Most say, you should have 6 months of expenses so you need 15,000 in cash. This will take you 21 months (15000-2500=12500/600=21) so I really hope you don't loose your job in the next 2 years.

This is not accounting for buying a new car. I'd get the cheapest you can find. In fact, I'd use it and keep fixing it until the repairs cost more than getting a new POS. Mine own dear POS is actually older than yours and that is my currant plan.

Quite frankly you are horse poor. So all your other expenses should be as low as possible. I'd seriously consider a roommate since you live in a HCOL college town. Why do you not have a roommate?

Once you have an e-fund to your satisfaction, next steps down FI would be 403b contribution up to match, HSA if you have one (you never mentioned health insurance?), and then an IRA. Keep in mind the more you put in these the less you pay in taxes.

Otherwise if you are really interested in FI early I'd consider a side hustle. You make a decent income but with your refusal to lower expenses the only other option is make more money.

You are in good shape, saving 20% net and 23yo. But this is MMM and a financial independence forum. For FI it's not enough. It might be fine for you though. You just need to crunch the numbers and decide if you are ok with your FI date. Check laura's link.


  • Magnum Stache
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Re: Case study: just graduated, practically no savings
« Reply #7 on: Today at 01:08:19 AM »
What strikes me as odd, is that you have no other hobbies other than the horse listed, with perhaps a touch of eating out.
Are you sure you don't do anything else?  Or desire to?  Own a cell phone?

Your pet (not horse) costs, other than the annual vet, don't seem to be listed -- how much do they eat? A dog, plus cat plus horse seems like a lot of pets for someone who just graduated.     Bus passes?

As others have said, your housing costs are 1/3 your total take home, then the horse is pretty much 1/3, then you have only 1/3 for food, medical, dog, cat, car, bus pass, eating out, entertainment, savings, clothing, christmas, travel, laundry, friend's weddings that you are invited to, no horse shows, etc.

The only reason you are above water right now is that you are single, no kids, not dating (or there are no dating costs shown), and not saving much of anything.... and just graduated, so not used to having much other expenses, ... or perhaps others in your life used to help out the low income student (you) in small but regular ways, but you will need to step up now that you are making good money.   Except that all of your money is tied up in horse + rent...

Some thoughts -- can you sell your car completely and give away your dog and cat, if they cost more than you listed and you want to keep the horse?   

Can you find another way to reduce horse and rent costs (by working at the horse stable, or moving to a cheaper property with acreage for the horse and you take on the daily chores for the horse?)

What do your relatives and friends say to you about your financial / money choices right now? 
How did you afford all of these animals last year?
« Last Edit: Today at 01:16:06 AM by Goldielocks »