Author Topic: Cruising for a Bruising  (Read 3350 times)

SteadyDoinIt

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Cruising for a Bruising
« on: July 20, 2017, 11:29:31 AM »
Come on in, the water's fine!

Life Situation:
Filing status: married with no dependents. Live with my wife in Houston. I'm 29, she's 26.

We currently live rent and utility free in the guest house of some friends. It's our plan to save for the next 12-15 months for a down payment on a house. We understand that in a year's time we may not buy a house, but having that liquidity in our back pocket, I believe, gives us the peace of mind to explore opportunities in other cities, continue to live rent free, rent a house in an area that we may want to eventually buy, etc, etc.

My wife is an elementary school teacher. She's been really fortunate in that she loves her job. Within the next three years, she will get a promotion and raise equaling $8-12k more/year. For the most part, my job is the only pain in our lives. I work in Project Controls for a commercial construction company. There is no structure in my organization, and I have no clear path forward in my career. My wife and I struggle with our plan for my career going forward. That said, I'm fully committed to staying where I am at least until we have another year's worth of savings in our pockets.

Like I mentioned above, our short term goal is to buy a house or at the very least have $65-75k in the bank to be used on a house purchase in the range of $250-300k, so our short-term questioning is two-parted. First, we don't want to be house poor, but we feel sure that a house to our liking (i.e. - has us content, is less than 2200 sq ft and less than 4 bedrooms, and in a good school system for when Jr's are running around) will cost us $250-300k. Assuming we make no increase in income over our lifetime (and thus spend no differently), is a house in the $250-300k range too much for us? Secondly, we feel like we do decently well with our budget, but I know there are always places to trim some fat. Can you well-versed mustachios please help us better identify some of those areas of concern?

Below is an outline of our current financial state to better help form some opinions.

Gross Salary:
Myself: biweekly $2,500 + monthly mileage reimbursement $348 (tax free) + monthly per diem $360 (tax free)
Wife: 2x/month $2,335.50

Pre-Tax Deductions/Pay Period:
Myself: 401k $175.00 (equals 6% match), med insurance $108.46, life insurance $5.54
Wife: med insurance $58, vision/dental $10.18, life insurance $6.16, HSA $10.00
*we don't contribute anymore to retirement accounts at this time because of our short term time horizon

Taxes:
Myself: federal $289.29 + ss $148.04 + medicare $34.62
Wife: federal $167.16 + trs $195.01 + medicare $32.64

Household Monthly AGI:
Total: $7,896.80

Monthly Expenses: - these are six month rolling averages
Phone: $75.70 (I have a work phone that I double as a personal phone, so we only pay for my wife's phone bill.)
Car payment: $371.64
Car insurance: $192.59
Dog insurance: $32.74
Storage: $139 (Currently filled with a dresser, entertainment center, washer/dryer, portable kitchen island, and wife's teaching supplies. We are moving the dresser and island into our new guest house and are selling the washer/dryer and entertainment center. My wife has 3 teacher friends that will also store their teaching junk in our storage, so we will be able to split the $139 in 4 ways starting around September.)
Fuel: $235 (for both of us)
EZ Tag: $100 (Non-negotiable since it would add 45 minutes/day to our commute if we did not use it)
Toiletries/Groceries/Dog Food: $582 ($82 for our two large-ish dogs, $500 is avg grocery/toiletry bill
Vehicle maintenance: $100
Supplements/makeup/hair/nails: $120 (We value pro and prebiotics, so we spend $80-100/month on those. My wife gets her nails done once every 4-6 weeks and gets her hair done every few months. She also has random makeup purchases that don't account for more than $20 at a time.)
Shopping: $113
Eating out: $145
Out for entertainment: $281
Vacation: $890 (This will undoubtedly be the highest point of contention. This year, we have been to visit friends in Nashville, Breckenridge for a 30th birthday celebration, Mexico for another 30th, and will be in Costa Rica for my 30th before the year is through. This is definitely an anomaly of a year. Since traveling before we have kids in the next 3 years is important to us, I'd guess more like $250-400/month is a normal year.)
Misc spending: $275

Monthly Total: $3,377.67

Total Net Remaining:
Monthly: $4,519.13

Assets:
Checking/savings: $15k
2012 Toyota Highlander: $8-10k
Wife's Fidelity IRA: $20k
Wife's 403k: 14k
My 401k: 10k

Liabilities:
2013 Toyota Camry - original loan amount: $12,093, 4% rate for 36 months (26 months remaining), $371.64 monthly payment. Current balance before July posting is $9,144.12.

Thank you all for a few minutes of thoughtful response!

YummyRaisins

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Re: Cruising for a Bruising
« Reply #1 on: July 20, 2017, 11:39:43 AM »
It sounds like you value freedom of mobility. If that is so, why do you want to buy a house? Renting is less hassle and gives you that freedom. Probably cheaper too.

Check out this calculator if you haven't already: https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

Also, is your ability to stay in your friends' guest house contingent on you saving for a home purchase?

As for where to save, groceries and eating out are easy targets. Could also consider selling a car if you live near work.

afuera

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Re: Cruising for a Bruising
« Reply #2 on: July 20, 2017, 12:58:23 PM »
Hello!  We are also in Houston and Hubs and I have similar ages to y'all.
We just bought a house last year in the city in about the same price range you guys are looking at (our sales price was 315K) and we even have almost the same cars (although ours are older ;)).  We spend a few hundred more than you each month but that includes our mortgage which is ~2K PITI.   Some differences in our monthly budget are pointed out below which I hope you find helpful seeing as we are living in the same place in similar situations.

Monthly Expenses: - these are six month rolling averages
Phone: $75.70 (I have a work phone that I double as a personal phone, so we only pay for my wife's phone bill.) We pay $60-75 for both of our phones w/ Project FI.  We haven't really had any service issues and I work in the middle of nowhere.
Car payment: $371.64 We don't have this, both our cars were bought with cash off craigslist.
Car insurance: $192.59 We pay around $60/month for a Toyota Corolla and a Toyota Highlander, USAA collision-only.
Dog insurance: $32.74We don't have this but we probably average $50/month in pet expenses for our cat and dog which includes vet, food, toys, etc.
Storage: $139 (Currently filled with a dresser, entertainment center, washer/dryer, portable kitchen island, and wife's teaching supplies. We are moving the dresser and island into our new guest house and are selling the washer/dryer and entertainment center. My wife has 3 teacher friends that will also store their teaching junk in our storage, so we will be able to split the $139 in 4 ways starting around September.)We don't have this.  Just sell whatever you are not using on CL then buy it back later when you need it.  This is what we did when we moved from renting a house to apts for 2 years then back to a house.  Craigslist *paid* us to store our things since we just went on a bought similar things to the ones we had sold 2 years earlier once we needed them again (think W/D, lawn equipment, furniture).  Houston Craigslist really has anything you could ever want.  Its a perk of living in the 4th biggest city in the U.S. :)
Fuel: $235 (for both of us) We average $150-$175. My commute is 1+ hr (but I vanpool) and Hubs is 30 min. We both have EZ tag but rarely use it.  Are there any carpool options for either of you?
EZ Tag: $100 (Non-negotiable since it would add 45 minutes/day to our commute if we did not use it)Seems high though depending on your location (anywhere along 45 or 59) it could definitely be worth it.
Toiletries/Groceries/Dog Food: $582 ($82 for our two large-ish dogs, $500 is avg grocery/toiletry billOur grocery average has been $250-300 lately.  There is a Rein in Your Grocery Spending 2017 thread that I joined at the beginning of this year which was really helpful on helping us bring down our grocery cost.
Vehicle maintenance: $100Similar to ours.
Supplements/makeup/hair/nails: $120 (We value pro and prebiotics, so we spend $80-100/month on those. My wife gets her nails done once every 4-6 weeks and gets her hair done every few months. She also has random makeup purchases that don't account for more than $20 at a time.) We don't really have this category.  I don't get manicures and only get a haircut once every 4-6 months and its only $20-$40 when I do.
Shopping: $113Ours is similar
Eating out: $145Ours is similar
Out for entertainment: $281This seems high for an average.  We have months where we spend this much but most months we spend <$50
Vacation: $890 (This will undoubtedly be the highest point of contention. This year, we have been to visit friends in Nashville, Breckenridge for a 30th birthday celebration, Mexico for another 30th, and will be in Costa Rica for my 30th before the year is through. This is definitely an anomaly of a year. Since traveling before we have kids in the next 3 years is important to us, I'd guess more like $250-400/month is a normal year.)Two words.  Travel hacking.  Paid for a 2 week trip to Taiwan completely free this year using points from a CC signup bonus.
Misc spending: $275You should really figure out what this is being spent on and cut it.  That's a lot of money every month to be just frittering away.

Monthly Total: $3,377.67

Hope my comments are helpful. There is definitely a lot you can cut in order to improve your situation so that you are prepared for a mortgage and all of the home expenses that come with it (We spent $1500 on a new AC unit this month...) if you decide on buying a house here.  I posted our Case Study about a year and a half ago and it was great to get some outside opinions and tips. It really helped us be on a much better track once I iced my newly punched face and actually listened to the advice.
« Last Edit: July 20, 2017, 01:04:14 PM by afuera »
"The price of anything is the amount of life you exchange for it" - Henry David Thoreau

6/2017: INV-3.4x, NW-5.0x
Projected FIRE date: 2025
Journal.

DarkandStormy

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Re: Cruising for a Bruising
« Reply #3 on: July 20, 2017, 01:23:20 PM »

*we don't contribute anymore to retirement accounts at this time because of our short term time horizon?? You're forgoing pre-tax dollars to save (after-tax) for an "investment" (house) that may or may not appreciate at the same rate as the market?  You're throwing away 15-20%?  I'd try to trim some fat from the budget to up the 401k while also saving a good chunk for a house.

Monthly Expenses: - these are six month rolling averages
Phone: $75.70 (I have a work phone that I double as a personal phone, so we only pay for my wife's phone bill.) One cell phone bill should not cost $75+
 unless you're paying it off over a 24 month contract.  Look for Virgin mobile, Project Fi, Republic Wireless, etc. for under $30/month plans

Car payment: $371.64 You're already locked into the loan but this is a bit high.
Car insurance: $192.59 Could you shop around to see if you can find a better insurer?  This seems a tad high but nothing out of the ordinary.
Dog insurance: $32.74 Might have to explain this one.  What's covered under the policy?  That's a $400/year premium to insure your dog.
Storage: $139 (Currently filled with a dresser, entertainment center, washer/dryer, portable kitchen island, and wife's teaching supplies. We are moving the dresser and island into our new guest house and are selling the washer/dryer and entertainment center. My wife has 3 teacher friends that will also store their teaching junk in our storage, so we will be able to split the $139 in 4 ways starting around September.)You're paying to not use or see your shit?  I realize part of this may be due with the house planning coming up, but this will cost you nearly $1,700.
 Sell what you can and get out of that unit.

Fuel: $235 (for both of us) You two are driving (combined) over 31,000 miles per year??? That's insane.
EZ Tag: $100 (Non-negotiable since it would add 45 minutes/day to our commute if we did not use it)
Toiletries/Groceries/Dog Food: $582 ($82 for our two large-ish dogs, $500 is avg grocery/toiletry bill $500 seems a bit steep for two - any Costco's,
 Sam's Clubs, BJ's in your area?

Vehicle maintenance: $100 What?  You guys spend $1,200 on vehicle maintenance?  Isn't most routine maintenance like $50 per visit max?
Supplements/makeup/hair/nails: $120 (We value pro and prebiotics, so we spend $80-100/month on those. My wife gets her nails done once every 4-6 weeks and gets her hair done every few months. She also has random makeup purchases that don't account for more than $20 at a time.)
Shopping: $113 Shopping beyond groceries, makeup, entertainment,
 and miscellaneous?

Eating out: $145 You could cut this down to almost nothing or once-twice a month if you really want to save.  But nothing hugely out of proportion.
Out for entertainment: $281 Almost $3,400 per year on entertainment??
 Plenty of free entertainment out there.

Vacation: $890 (This will undoubtedly be the highest point of contention. This year, we have been to visit friends in Nashville, Breckenridge for a 30th birthday celebration, Mexico for another 30th, and will be in Costa Rica for my 30th before the year is through. This is definitely an anomaly of a year. Since traveling before we have kids in the next 3 years is important to us, I'd guess more like $250-400/month is a normal year.) If traveling without kids is important to you, is it more important than saving up for the house you want?
Misc spending: $275 $3,300 on things you can't categorize?

I don't know if any one specific category is outrageous - if you really buckle down you could see an additional few thousand dollars this year.

As for the house, you'll certainly have the income to pay for a house in that range.  It's a matter of how quickly do you want to pay it off, how much do you want to go to retirement, etc.  Keep in mind when you move out you'll have property tax, utilities, internet/cable(hopefully not)/Netflix, etc. So your budget today might not match your budget in 365 days.  Just food for thought, but you guys look to be in good shape.
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YoungGranny

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Re: Cruising for a Bruising
« Reply #4 on: July 20, 2017, 01:45:27 PM »
I'd say you guys are definitely on the right path - way to use a good situation to really get ahead in life.

I would add that it might make sense to make cuts where others have suggested to see if you can save in some areas - then I'd use that money to continue contributing something (even 6% or so) to wifes retirement accounts. I'd be nervous that this would just keep getting put off instead of contributing again sooner. Some of the cuts I'd suggest are groceries, dog insurance, car insurance, entertainment and looking into travel hacking. You guys are doing great it's really just fine-tuning to get expenses down a bit and optimize savings.


Feivel2000

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Re: Cruising for a Bruising
« Reply #5 on: July 20, 2017, 03:19:04 PM »
Sorry, I don't know what's happening here. If the OP had to pay rent or a mortgage around $1,000, his savings rate would be way below 50%. Stop being so friendly and give him the facepunches he is asking for!!!¡¡¡!!!

No particular order:
* NOT SURE ABOUT BUYING A HOUSE BUT STILL NOT CONTRIBUTING (or at least not maxing out, I think it's not clear from the post) TO 401K, ETC???
* A $12,000 commuter car which is financed?
* ONE phone plan for $75+?????
* Shopping+misc ~ $400?!?
* $500 for groceries? So you live rent free but for that you are paying the groceries for your friends, right???
* $280 for outside entertainment (not including eating out)! What do you do? Going to the casino every week? Clubbing with $15 COCKTAILS 4×per month?


From a mustachian point of view you are not in good shape. You are DINKs who don't have to pay for housing and didn't went crazy with the spending.

SO. MUCH. POTENTIAL!


GizmoTX

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Re: Cruising for a Bruising
« Reply #6 on: July 20, 2017, 08:28:46 PM »
OP, you shouldn't be buying a house until you are absolutely sure you will be staying there a minimum of 10 years. Since your job is in question, why would you lock yourselves into an area without solving this first?

With This Herring

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Re: Cruising for a Bruising
« Reply #7 on: July 20, 2017, 10:01:31 PM »
Current picture (roughly, I think I botched our dear MDM's spreadsheet a bit):
CategoryMonthly
Comments
Annual
Salary/Wages for earner #1$5,417$65,000
Salary/Wages for earner #2$4,671$56,052
Pretax Health Ins.$351$4,212
Pretax Vision/Dental Ins.$20$244
Pretax Commuter costs & per diem$708$8,496
FICA base salary/wages$9,008$108,100
401(k) / 403(b) / TSP / etc.$379Room to increase?$4,550
Personal HSA$20Room to increase?$240
Employer Match$379$4,550
Subtotal 1$8,609$103,310
Life/LTD Insurance$24$292
Subtotal 2$8,585$103,018
Federal Total Income (for IRS tax)$8,609$103,310
Federal tax$1,0092017 rates, MFJ, stand. ded., 2 exempt.$12,105
Soc. Sec. tax$559Assumes 2 earners paying$6,702
Medicare tax$131$1,567
Total income taxes$1,698$20,375
Add Commuter reimb.$708$8,496
Income before other expenses  $7,595$91,139
Monthly Average Expenses:
Car Insurance$193$2,311
Car Maintenance, Registration, etc.$100$1,200
Dining (Lunch/Dinner/Etc.)$145$1,740
Entertainment$281$3,372
Fuel/Public Transport – EZ Tag$100$1,200
Gas for car$235$2,820
Groceries, toiletries$500$6,000
Hair Care, supplements, makeup, nails$40$480
Health supplements...pro & prebiotics$80$960
Miscellaneous$275$3,300
Pets – food$82$984
Pets – insurance$33$393
Phone (cell)$76$908
Shopping$113$1,356
Storage$139$1,668
Travel/Vacation$890$10,680
Non-mortgage total$3,281$39,372
Loans:
Car Loan$372$4,460
Total Expense$3,653$43,832
Total to invest$3,942$47,307
Summary:
"Gross" income$10,088$121,052
Income taxes$1,698$20,375
After-tax income$8,390$100,677
IRA+401k/403b/TSP/457$379$4,550
HSA$20$240
Living expenses$3,677$44,121
Non-mortgage loans$372$4,460
After-tax investable$3,942$47,307
Filing Status21=S, 2=MFJ, 3=HOH
# Exemptions2
Adult #1Adult #2
Age2926
# of earners2
Total Income$103,310
Std. Deduct.$12,700
Act. Deduct.$12,700
Exemption$8,100
AGI$103,310
MAGI$103,310
Taxable$82,510
1040 Tax$12,105
Net Tax$12,105
Monthly$1,009
Item. Deduct.$0
VersionV9.1

Here is that same budget with maxing out two 401(k) accounts, two traditional IRAs, and cutting no spending:
CategoryMonthly
Comments
Annual
Salary/Wages for earner #1$5,417$65,000
Salary/Wages for earner #2$4,671$56,052
Pretax Health Ins.$351$4,212
Pretax Vision/Dental Ins.$20$244
Pretax Commuter costs & per diem$708$8,496
FICA base salary/wages$9,008$108,100
Traditional IRA$917At maximum$11,000
Your 401(k) / Wife's 403(b) / TSP / etc.$3,000At maximum$36,000
Personal HSA$283Assuming HSA is wife's and only she has qual health$3,400
Employer Match$379$4,550
Subtotal 1$4,808$57,700
Life/LTD Insurance$24$292
Subtotal 2$4,784$57,408
Federal Total Income (for IRS tax)$4,808$57,700
Federal tax$3502017 rates, MFJ, stand. ded., 2 exempt.$4,202
Soc. Sec. tax$559Assumes 2 earners paying$6,702
Medicare tax$131$1,567
Total income taxes$1,039$12,472
Add Commuter reimb.$708$8,496
Income before other expenses  $4,453$53,432
Monthly Average Expenses:
Car Insurance$193$2,311
Car Maintenance, Registration, etc.$100$1,200
Dining (Lunch/Dinner/Etc.)$145$1,740
Entertainment$281$3,372
Fuel/Public Transport – EZ Tag$100$1,200
Gas for car$235$2,820
Groceries, toiletries$500$6,000
Hair Care, supplements, makeup, nails$40$480
Health supplements...pro & prebiotics$80$960
Miscellaneous$275$3,300
Pets – food$82$984
Pets – insurance$33$393
Phone (cell)$76$908
Shopping$113$1,356
Storage$139$1,668
Travel/Vacation$890$10,680
Non-mortgage total$3,281$39,372
Loans:
Car Loan$372$4,460
Total Expense$3,653$43,832
Total to invest$800$9,600
Summary:
"Gross" income$10,088$121,052
Income taxes$1,039$12,472
After-tax income$9,048$108,580
IRA+401k/403b/TSP/457$3,917$47,000
HSA$283$3,400
Living expenses$3,677$44,121
Non-mortgage loans$372$4,460
After-tax investable$800$9,600
Filing Status21=S, 2=MFJ, 3=HOH
# Exemptions2
Adult #1Adult #2
Age2926
# of earners2
Total Income$57,700
Std. Deduct.$12,700
Act. Deduct.$12,700
Exemption$8,100
AGI$57,700
MAGI$68,700
Taxable$36,900
1040 Tax$4,602
Saver's credit$400
Net Tax$4,202
Monthly$350
Item. Deduct.$0
VersionV9.1

You two have no housing costs and enormous incomes.  There is no reason you can't max all possible retirement accounts and still put away a large chunk of a house price.  Notice that maxing out all your retirement accounts STILL leaves you with almost $10K per year to put away for a house/cushion.  Now, if you start cutting those loads of discretionary expenses you have (Misc, Entertainment, Beauty, Various Biotics); start being more careful about groceries and eating out (is this your eating out on the road for work?); and use travel hacking to cut your vacation expenses, you could probably double that easily.

Additionally, this free housing and utilities that your friends are providing you is an enormous gift.  What would be the market value on rent for that guest house, and what are they paying for utilities for your usage?  Are you providing them something equally as valuable in return?  Unless you donated a kidney to one of them, you might consider hesitating before putting yourself so far in debt to them.
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MDM

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Re: Cruising for a Bruising
« Reply #8 on: July 23, 2017, 04:19:39 PM »
Current picture (roughly, I think I botched our dear MDM's spreadsheet a bit):
Looks well done to me. :)

dess1313

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Re: Cruising for a Bruising
« Reply #9 on: July 24, 2017, 01:53:17 AM »
If your job is not fulfilling and may be changing, do not buy a house.  There are a lot of costs associated with both owning a house, and selling a house.  What if you got a sweet opportunity in a new job, you're now locked down and can't consider big changes as easily or as quickly.  You need to be staying put for 5-10 years before you can recoup the costs of the buying.

Also, spending around $10k on vacations is a lot.  I get sometimes there can be a lot of events happen all togther, but is this going to go on every year?

Also with a savings rate of that much, you could knock off the car loan in as little as 2 months.  why are you keeping it around? 

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KungfuRabbit

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Re: Cruising for a Bruising
« Reply #10 on: July 24, 2017, 06:55:04 AM »
Animal health insurance is a scam. Did you read the contract before giving them money?

Please read the fine print, then you'll cancel it for sure. Most of them are nothing more than negative interest savings accounts with zero perks. They literally charge you to hold on to your money so when you have a vet bill they can charge you a service  charge to pay it.

It's one of those laughable industries that exists because the average American couldn't afford a $200 vet bill without running to payday loans.

goldensam

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Re: Cruising for a Bruising
« Reply #11 on: July 24, 2017, 07:34:37 AM »
Animal health insurance is a scam. Did you read the contract before giving them money?

Please read the fine print, then you'll cancel it for sure. Most of them are nothing more than negative interest savings accounts with zero perks. They literally charge you to hold on to your money so when you have a vet bill they can charge you a service  charge to pay it.

It's one of those laughable industries that exists because the average American couldn't afford a $200 vet bill without running to payday loans.

I have a senior golden retriever that has megaesophagus and had bone cancer two years ago requiring a toe amputation. I have pet insurance on her and they have paid out many thousands of dollars on her over the years, much more than I have paid in premiums. The peace of mind has been worth it.

I did not have it on my other golden that we just lost, and even though she required one very expensive surgery a couple years ago, the math would not have made it worthwhile to have insurance on her.

bhleigh

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Re: Cruising for a Bruising
« Reply #12 on: July 24, 2017, 09:09:56 AM »
Also with a savings rate of that much, you could knock off the car loan in as little as 2 months.  why are you keeping it around?

I agree with this. Save your money for two months and pay off that car loan. Then apply that car payment ($372) towards retirement.

You two have no housing costs and enormous incomes.  There is no reason you can't max all possible retirement accounts and still put away a large chunk of a house price.

Yup. Even if you maxed out one retirement account and used the rest for your down payment goal, you would be way better off in retirement. The biggest regret I have is not maxing out retirement sooner.

Now, if you start cutting those loads of discretionary expenses you have (Misc, Entertainment, Beauty, Various Biotics); start being more careful about groceries and eating out (is this your eating out on the road for work?); and use travel hacking to cut your vacation expenses, you could probably double that easily.

Start trimming where ever you can. Two people spending $500 on groceries is ludicrous. Get better at meal planning and stick to it. Entertain more at home so you go out less. whatever the miscellaneous items are that are costing you $275 a month, stop buying them.

finally, I second the "hold off on buying a house" idea. Search for a new job first, then buy the house. Closing costs, moving costs, and maintenance costs eat up thousands of dollars very quickly.

It seems to me with a very little buckling down and fat trimming, you could max out a retirement account, pay off your car loan, add almost $400/month towards your savings goal in addition to the $22,000/year you'd be saving already.

There are no problems. Only solutions we haven't found yet.

My Journal: B-Leigh's Mid-Life Crisis Avoidance

Rosy

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Re: Cruising for a Bruising
« Reply #13 on: July 24, 2017, 06:08:50 PM »
1. Max out both of your retirement accounts!!!

.....because you can never buy back time or get back that forever lost to you - compounding interest.

2. Saving up for a home - not house - is not a good reason to stop paying into your retirement accounts, in fact, nothing short of a dire emergency is. No reason you shouldn't save up for it, but unless you plan to live in this area and your potential new home for at least five to ten years, I wouldn't do it. Study the links for renting vs home ownership and see if this is as good of an idea as you thought it would be.

I've always been firmly in the camp of home ownership, but that is because my own space and a bit of land are important to me above all else.
$250K for a home is fine for your income, but you could for instance consider a small starter home to begin with, that could be rented out when you move. Just an idea - which would also diversify your investments-income streams, always a good thing.

3. If you keep better control of your expenses, you have a better chance of increasing your savings rate. Your free rent and utility situation is enviable, I assume there are good reasons for it, so do what you can, to truly take advantage of your good fortune while it lasts.

Suggestions: Max out your retirement accounts - as of first thing tomorrow:),
consider paying off your car, unless it is on zero percent interest like ours - do the math:),
consider switching to T-Mobile or Metro PCS for instance, both have unlimited plans for one person for $50 a month.

Consider dropping the vet insurance, unless you have an older dog/cat, or one with issues already.
Entertainment at an average of $281 a month is quite high - keep that one in check, because you are getting a free pass from me on the eating out.
Figure out what the shopping and misc are and either eliminate them or put them into the proper categories, perhaps clothing?

Storage - I like the idea of splitting it four ways, but generally speaking, storage is a very bad idea.
The makeup, nails, hair, vitamins - $40 a month - is reasonable in my book, given your income. Ueber mustachians cut their own hair and don't wear makeup, but I am not one of them:), we all have our own value systems.
Vitamins and probiotics - $85 - that is a value and expense you have to decide on yourself - but you might research for better prices.
I actually found that buying half my vitamins/supplements from my doctor's office and the other half from a small independent store which has really  knowledgeable owners - who buy in bulk and sell high quality at a low price, ten vitamins at a time if you want -  is saving me about $40 a month.

Good luck - you'll find it takes a bit of time to begin optimizing everything from the price of your daily vitamins to when or if to pay off your car. Regardless of what you do - start funding both of your retirement accounts right now and never stop doing that, ever again.
 
 

Laura33

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Re: Cruising for a Bruising
« Reply #14 on: July 25, 2017, 11:42:23 AM »
You have a lot of good suggestions already, so I am going to go big-picture:  you are young, you have relatively high incomes and low expenses now, but you also have a lot of major life changes coming up in the next few years.  You look like you are doing great, because you are saving more than half of your current income; but that view is a little unrealistically rosy, because your current expenses are artificially low, and it is not something you will be able to maintain once you start to realize those future goals.  Specifically:

1.  Job change:  you are unhappy and will want to change in another year or so.  OK.  Are there other good opportunities in your area?  What do they pay?  Will you need to consider moving?  And if you would consider moving, what would that do to your wife's income?  Right now, you are prioritizing the house savings over your job satisfaction.  This is backwards.  Trust me, you do not want to be locked into a house and then discover that all the local jobs come with a paycut that you can't afford to take, or that there are great options elsewhere that you can't move for.  You will be working for the next 10-20 years, so find a tolerable job first, and then build your lifestyle around what that job allows you to afford. 

2.  House:  your home price doesn't seem out of whack for your income.  But have you priced out PITI, maintenance costs, furniture, and all of the ongoing upkeep?  This home price may or may not be reasonable depending on what else you want to do with your money (see below).

3.  Kids: so you want kids in 3 years.  Will you both still work?  If so, where does the daycare/kid costs come from once you buy a house?  If not, where do you cut the budget to cover your significant drop in income?  And are you going to want to save for their college?  If you want kids, you need to structure your life now so you can afford them.

4.  Travel:  you have fallen into the common error of assuming that you will turn into a different person once you have kids and lose all desire to travel and vacation and do fun things.  Trust me:  not the way it works.  Your friends/families will continue to have milestones; you will continue to want to be there for them; and when there are grandkids involved, the family will really want you there for family events even more than they do now (ask me how I know.  There are times I have called myself the "grandkid delivery device").

The thing that concerns me the most is that you guys are currently at the lowest-expense part of your lives that you are going to have for decades -- no mortgage/rent, no kids, etc. -- and yet you still don't think you can afford to save for retirement.  So if the retirement savings is the first thing to go when you're not strapped, what is going to go when you do add on all of those extra costs?  Yes, yes, I understand that you are saving that money, not blowing it at the casino -- but you are saving it for a short-term consumption reason (you want a house, and you want it now!  In a year!  Or less!!).  The problem is not the overall savings rate or the desire for a home, it is the mindset:  you are prioritizing what you want today over what you will need in 10 or 20 or 30 years.  And that's the kind of thinking that leaves you working until 65, because there's always going to be something out there that you need the money for.  If you can't afford something while saving adequately for retirement, you can't afford it.  Period.

So the first thing is to max out retirement accounts -- more specifically, figure out when you want to retire and what savings you need to get there, and sock that away first (see this: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/).  After that, I would look at what all of your goals/plans are for the next, say, 5-10 years:

-- House
-- Kids
-- Travel/vacation
-- Job change
-- Car(s) (they don't last forever -- what is your replacement plan?)
-- And don't forget the "oh shit" fund, a/k/a the "what do we do when my company goes under and we have a kid and a mortgage to pay" fund, a/k/a EF

Then prioritize those things.  As I and many others here have said, life is an "or," not an "and" -- you can have many things you want, but you cannot have all the things you want.  You guys are saving $4500/mo. now, which is great -- but you can't add $3K/mo. in retirement contributions + $2K/mo. in house expenses + $1K/mo in daycare expenses + EF savings + [etc.] and still travel + pay $400/mo in car payments + eat out + [etc.]. 

So set up your lifestyle, now, in a way that ensures you achieve your most important long-term priorities.  E.g.:  we want a house most of all, and that house will cost $1800 in PITI + assume another 10%/yr for maintenance; ok, so we'll start putting aside $2K/mo into a downpayment fund now.  E.g., we want kids, and daycare around here costs $800/mo, plus doctors and clothes and diapers and such, so assume we'll do Craigslist and hand-me downs and call that $200/mo, plus say $200/mo for college savings, so we'll start putting $1200/mo into a "kid" savings account now.  Cars:  hmm, ok, we are not really huge car people, would like to keep costs down, but we're going to need to replace them eventually, so once we pay off the loan, let's just put that money into a "next car" fund.  Etc. etc. etc.  Then your current "lifestyle" budget is whatever is left.  That way, you are saving up a significant chunk of cash so you are prepared for those future expenses when they happen (house downpayment, maternity leave, etc.), and at the same time you are making sure your budget and lifestyle are at a level you can afford even after you add those new expenses. 

And of course if that plan doesn't get you to your goals, you can always cut more out of your current lifestyle spending to get you there faster.  Or you can start over from scratch and re-think what's most important and when you really want it by -- almost no one gets this exactly right on the first try.  Maybe you decide that, ok, I'll work 20 years instead of 15 if it allows me to afford a house and two kids and travel; or maybe you'll decide that you want kids but it's not worth saving for their college if it requires postponing your retirement another 5 years.  The key is to recognize that it is all one big tradeoff, that every dollar you are spending now is a dollar you won't have to spend next year or in 10 years or in 50 years.
Laugh while you can, monkey-boy

SteadyDoinIt

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Re: Cruising for a Bruising
« Reply #15 on: July 27, 2017, 01:26:29 PM »
Man! So many awesome responses! Been nursing my black eyes and busted lips for a few days while I bring my wife up to speed, overhaul the budget, and decide on a new plan.

Since y'all were gracious enough to spend a few minutes of your time to help us get our peach fuzz growing into a handle bar, I'm going to attempt to respond to each of you individually. It may take some time, and because a lot of you have similar concerns, it may be redundant.

If you're able, please continue to respond where necessary!

SteadyDoinIt

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Re: Cruising for a Bruising
« Reply #16 on: July 27, 2017, 01:39:43 PM »
It sounds like you value freedom of mobility. If that is so, why do you want to buy a house? Renting is less hassle and gives you that freedom. Probably cheaper too.
We definitely do value mobility. It may not have been clear in the original post (partly because I paired it down so more of you would take the time to read), but we are only planning to save for a down payment so that we have it in our back pocket when the time comes. For clarity's sake, the plan was to save for the next year @ $4500-5000/month. When that year is up, we will have enough for a down payment, but we will likely not be ready to buy a house because of my job situation. At that time, we will likely get out of our friend's house and rent in an area that we feel inclined that we may buy in. We were under the impression that having that liquidity would be the best scenario since it's such a short term approach, but we are now considering that to be a fool-hearty outlook. Thoughts?

Check out this calculator if you haven't already: https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
Definitely seen this before. It's an eye opener and is one that I'll continue to use as a reference moving forward. Thank you!

Also, is your ability to stay in your friends' guest house contingent on you saving for a home purchase?
Our ability to stay in our friend's house is not contingent on anything. They do not have any mortgage or utilities costs since one of the two's father is extremely well off.* We are staying in their guest house which is completely separate from their own (and wholly unused). *Although they are subsidized quite heavily, they both continue to work in professional careers and have an 18 month old little girl. They are absolutely not an example of entitlement or excess.

As for where to save, groceries and eating out are easy targets. Could also consider selling a car if you live near work.
I think we could stand to trim about $75/month at most from our grocery bill. As of now, we eat super healthy by mainly shopping around the edges of the grocery store - meat, veggies, yogurt, cheese mainly. In addition, we rarely waste anything except maybe the last few leaves of a head of lettuce. As a few have mentioned, it's about deciding which expenses you'd like to bend - you can have some but you can't have all, right? This, I believe, is one expense that we would struggle to decrease.

SteadyDoinIt

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Re: Cruising for a Bruising
« Reply #17 on: July 27, 2017, 01:49:22 PM »
Hello!  We are also in Houston and Hubs and I have similar ages to y'all.
We just bought a house last year in the city in about the same price range you guys are looking at (our sales price was 315K) and we even have almost the same cars (although ours are older ;)).  We spend a few hundred more than you each month but that includes our mortgage which is ~2K PITI.   Some differences in our monthly budget are pointed out below which I hope you find helpful seeing as we are living in the same place in similar situations.

Monthly Expenses: - these are six month rolling averages
Phone: $75.70 (I have a work phone that I double as a personal phone, so we only pay for my wife's phone bill.) We pay $60-75 for both of our phones w/ Project FI.  We haven't really had any service issues and I work in the middle of nowhere.
Car payment: $371.64 We don't have this, both our cars were bought with cash off craigslist.After several comments similar to this, we have decided to pay the car off before October 31 which will free up $372 for retirement accounts going forward.
Car insurance: $192.59 We pay around $60/month for a Toyota Corolla and a Toyota Highlander, USAA collision-only.We will be shopping new car insurance within the next month.
Dog insurance: $32.74We don't have this but we probably average $50/month in pet expenses for our cat and dog which includes vet, food, toys, etc.We have eliminated this ongoing, wasteful cost.
Storage: $139 (Currently filled with a dresser, entertainment center, washer/dryer, portable kitchen island, and wife's teaching supplies. We are moving the dresser and island into our new guest house and are selling the washer/dryer and entertainment center. My wife has 3 teacher friends that will also store their teaching junk in our storage, so we will be able to split the $139 in 4 ways starting around September.)We don't have this.  Just sell whatever you are not using on CL then buy it back later when you need it.  This is what we did when we moved from renting a house to apts for 2 years then back to a house.  Craigslist *paid* us to store our things since we just went on a bought similar things to the ones we had sold 2 years earlier once we needed them again (think W/D, lawn equipment, furniture).  Houston Craigslist really has anything you could ever want.  Its a perk of living in the 4th biggest city in the U.S. :)
Fuel: $235 (for both of us) We average $150-$175. My commute is 1+ hr (but I vanpool) and Hubs is 30 min. We both have EZ tag but rarely use it.  Are there any carpool options for either of you?I don't envision this being an option unfortunately. When we eventually decide to plant roots, we will certainly take into consideration our commute beforehand so as to reduce these costs.
EZ Tag: $100 (Non-negotiable since it would add 45 minutes/day to our commute if we did not use it)Seems high though depending on your location (anywhere along 45 or 59) it could definitely be worth it.We live on the southwest side of town. My wife takes the beltway for 90% of her commute.
Toiletries/Groceries/Dog Food: $582 ($82 for our two large-ish dogs, $500 is avg grocery/toiletry billOur grocery average has been $250-300 lately.  There is a Rein in Your Grocery Spending 2017 thread that I joined at the beginning of this year which was really helpful on helping us bring down our grocery cost.I'll look into this thread, but this may be the toughest category to reduce.
Vehicle maintenance: $100Similar to ours.
Supplements/makeup/hair/nails: $120 (We value pro and prebiotics, so we spend $80-100/month on those. My wife gets her nails done once every 4-6 weeks and gets her hair done every few months. She also has random makeup purchases that don't account for more than $20 at a time.) We don't really have this category.  I don't get manicures and only get a haircut once every 4-6 months and its only $20-$40 when I do.
Shopping: $113Ours is similar
Eating out: $145Ours is similar
Out for entertainment: $281This seems high for an average.  We have months where we spend this much but most months we spend <$50
Vacation: $890 (This will undoubtedly be the highest point of contention. This year, we have been to visit friends in Nashville, Breckenridge for a 30th birthday celebration, Mexico for another 30th, and will be in Costa Rica for my 30th before the year is through. This is definitely an anomaly of a year. Since traveling before we have kids in the next 3 years is important to us, I'd guess more like $250-400/month is a normal year.)Two words.  Travel hacking.  Paid for a 2 week trip to Taiwan completely free this year using points from a CC signup bonus.We travel hack to some extent by using points. We could definitely be better.
 This is a place to improve.

Misc spending: $275You should really figure out what this is being spent on and cut it.  That's a lot of money every month to be just frittering away.After looking further into the budget, I've overhauled it to better categorize our spending.
Misc spending averages are actually ~$30/month while "fun" spending is actually ~$250 more per month on average. We have agreed to reduce our actual average fun spending (~$1150) to $900/month, thus adding roughly $250 of net disposable income.


Monthly Total: $3,377.67

Hope my comments are helpful. There is definitely a lot you can cut in order to improve your situation so that you are prepared for a mortgage and all of the home expenses that come with it (We spent $1500 on a new AC unit this month...) if you decide on buying a house here.  I posted our Case Study about a year and a half ago and it was great to get some outside opinions and tips. It really helped us be on a much better track once I iced my newly punched face and actually listened to the advice.Super grateful for you taking the time to post. It was awesome to read your post as one of the first being that y'all live in the same corner of the planet as us. Thank you!

afuera

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Re: Cruising for a Bruising
« Reply #18 on: July 27, 2017, 01:56:30 PM »
[quote
Hello!  We are also in Houston and Hubs and I have similar ages to y'all.
We just bought a house last year in the city in about the same price range you guys are looking at (our sales price was 315K) and we even have almost the same cars (although ours are older ;)).  We spend a few hundred more than you each month but that includes our mortgage which is ~2K PITI.   Some differences in our monthly budget are pointed out below which I hope you find helpful seeing as we are living in the same place in similar situations.

Monthly Expenses: - these are six month rolling averages
Phone: $75.70 (I have a work phone that I double as a personal phone, so we only pay for my wife's phone bill.) We pay $60-75 for both of our phones w/ Project FI.  We haven't really had any service issues and I work in the middle of nowhere.
Car payment: $371.64 We don't have this, both our cars were bought with cash off craigslist.After several comments similar to this, we have decided to pay the car off before October 31 which will free up $372 for retirement accounts going forward.
Car insurance: $192.59 We pay around $60/month for a Toyota Corolla and a Toyota Highlander, USAA collision-only.We will be shopping new car insurance within the next month.
Dog insurance: $32.74We don't have this but we probably average $50/month in pet expenses for our cat and dog which includes vet, food, toys, etc.We have eliminated this ongoing, wasteful cost.
Storage: $139 (Currently filled with a dresser, entertainment center, washer/dryer, portable kitchen island, and wife's teaching supplies. We are moving the dresser and island into our new guest house and are selling the washer/dryer and entertainment center. My wife has 3 teacher friends that will also store their teaching junk in our storage, so we will be able to split the $139 in 4 ways starting around September.)We don't have this.  Just sell whatever you are not using on CL then buy it back later when you need it.  This is what we did when we moved from renting a house to apts for 2 years then back to a house.  Craigslist *paid* us to store our things since we just went on a bought similar things to the ones we had sold 2 years earlier once we needed them again (think W/D, lawn equipment, furniture).  Houston Craigslist really has anything you could ever want.  Its a perk of living in the 4th biggest city in the U.S. :)
Fuel: $235 (for both of us) We average $150-$175. My commute is 1+ hr (but I vanpool) and Hubs is 30 min. We both have EZ tag but rarely use it.  Are there any carpool options for either of you?I don't envision this being an option unfortunately. When we eventually decide to plant roots, we will certainly take into consideration our commute beforehand so as to reduce these costs.
EZ Tag: $100 (Non-negotiable since it would add 45 minutes/day to our commute if we did not use it)Seems high though depending on your location (anywhere along 45 or 59) it could definitely be worth it.We live on the southwest side of town. My wife takes the beltway for 90% of her commute.
Toiletries/Groceries/Dog Food: $582 ($82 for our two large-ish dogs, $500 is avg grocery/toiletry billOur grocery average has been $250-300 lately.  There is a Rein in Your Grocery Spending 2017 thread that I joined at the beginning of this year which was really helpful on helping us bring down our grocery cost.I'll look into this thread, but this may be the toughest category to reduce.
Vehicle maintenance: $100Similar to ours.
Supplements/makeup/hair/nails: $120 (We value pro and prebiotics, so we spend $80-100/month on those. My wife gets her nails done once every 4-6 weeks and gets her hair done every few months. She also has random makeup purchases that don't account for more than $20 at a time.) We don't really have this category.  I don't get manicures and only get a haircut once every 4-6 months and its only $20-$40 when I do.
Shopping: $113Ours is similar
Eating out: $145Ours is similar
Out for entertainment: $281This seems high for an average.  We have months where we spend this much but most months we spend <$50
Vacation: $890 (This will undoubtedly be the highest point of contention. This year, we have been to visit friends in Nashville, Breckenridge for a 30th birthday celebration, Mexico for another 30th, and will be in Costa Rica for my 30th before the year is through. This is definitely an anomaly of a year. Since traveling before we have kids in the next 3 years is important to us, I'd guess more like $250-400/month is a normal year.)Two words.  Travel hacking.  Paid for a 2 week trip to Taiwan completely free this year using points from a CC signup bonus.We travel hack to some extent by using points. We could definitely be better.
 This is a place to improve.

Misc spending: $275You should really figure out what this is being spent on and cut it.  That's a lot of money every month to be just frittering away.After looking further into the budget, I've overhauled it to better categorize our spending.
Misc spending averages are actually ~$30/month while "fun" spending is actually ~$250 more per month on average. We have agreed to reduce our actual average fun spending (~$1150) to $900/month, thus adding roughly $250 of net disposable income.


Monthly Total: $3,377.67

Hope my comments are helpful. There is definitely a lot you can cut in order to improve your situation so that you are prepared for a mortgage and all of the home expenses that come with it (We spent $1500 on a new AC unit this month...) if you decide on buying a house here.  I posted our Case Study about a year and a half ago and it was great to get some outside opinions and tips. It really helped us be on a much better track once I iced my newly punched face and actually listened to the advice.Super grateful for you taking the time to post. It was awesome to read your post as one of the first being that y'all live in the same corner of the planet as us. Thank you!

We also live on the SW side of the city! Shoot me a PM if you ever want to grab coffee/drinks or something.  We could double date :)
Also, join our group if you are interested in meetups.
« Last Edit: July 27, 2017, 02:02:46 PM by afuera »
"The price of anything is the amount of life you exchange for it" - Henry David Thoreau

6/2017: INV-3.4x, NW-5.0x
Projected FIRE date: 2025
Journal.

SteadyDoinIt

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Re: Cruising for a Bruising
« Reply #19 on: July 27, 2017, 02:06:06 PM »

*we don't contribute anymore to retirement accounts at this time because of our short term time horizon?? You're forgoing pre-tax dollars to save (after-tax) for an "investment" (house) that may or may not appreciate at the same rate as the market?  You're throwing away 15-20%?  I'd try to trim some fat from the budget to up the 401k while also saving a good chunk for a house.We have decided to heed this advice, put more towards retirement, and buy a house when it's right personally and fiscally responsible.

Monthly Expenses: - these are six month rolling averages
Phone: $75.70 (I have a work phone that I double as a personal phone, so we only pay for my wife's phone bill.) One cell phone bill should not cost $75+
 unless you're paying it off over a 24 month contract.  Look for Virgin mobile, Project Fi, Republic Wireless, etc. for under $30/month plans

Car payment: $371.64 You're already locked into the loan but this is a bit high.We have decided to pay this off by October 31.
Car insurance: $192.59 Could you shop around to see if you can find a better insurer?  This seems a tad high but nothing out of the ordinary.We will be shopping insurance in the near future.
Dog insurance: $32.74 Might have to explain this one.  What's covered under the policy?  That's a $400/year premium to insure your dog.You're right, we've been throwing this money away. It's been cancelled.
Storage: $139 (Currently filled with a dresser, entertainment center, washer/dryer, portable kitchen island, and wife's teaching supplies. We are moving the dresser and island into our new guest house and are selling the washer/dryer and entertainment center. My wife has 3 teacher friends that will also store their teaching junk in our storage, so we will be able to split the $139 in 4 ways starting around September.)You're paying to not use or see your shit?  I realize part of this may be due with the house planning coming up, but this will cost you nearly $1,700.
 Sell what you can and get out of that unit.
We are getting rid of all the excess shit in there, likely downsizing, and splitting it four ways (hopefully) before September.
Fuel: $235 (for both of us) You two are driving (combined) over 31,000 miles per year??? That's insane.Tell me about it. In the last two years, it's been mostly me. Now that we've move, it'll be mostly my wife. Aside from a safe community, short commute is our #1 priority when we do eventually decide to plant some roots.
EZ Tag: $100 (Non-negotiable since it would add 45 minutes/day to our commute if we did not use it)
Toiletries/Groceries/Dog Food: $582 ($82 for our two large-ish dogs, $500 is avg grocery/toiletry bill $500 seems a bit steep for two - any Costco's,
 Sam's Clubs, BJ's in your area?
We've talked about utilizing bulk shopping more in the past but have never pulled the trigger 100%. We use Costco for bulk toiletries on occasion.
Vehicle maintenance: $100 What?  You guys spend $1,200 on vehicle maintenance?  Isn't most routine maintenance like $50 per visit max? At 31k miles/year, we have quite a bit of maintenance. Six oil changes and tire rotations/balance, new brakes every two years, new tires every two years, etc.
 

Supplements/makeup/hair/nails: $120 (We value pro and prebiotics, so we spend $80-100/month on those. My wife gets her nails done once every 4-6 weeks and gets her hair done every few months. She also has random makeup purchases that don't account for more than $20 at a time.)
Shopping: $113 Shopping beyond groceries, makeup, entertainment,
 and miscellaneous?
Kind of, yes. This is books, random clothes, fitness material, etc., etc.
Eating out: $145 You could cut this down to almost nothing or once-twice a month if you really want to save.  But nothing hugely out of proportion.
Out for entertainment: $281 Almost $3,400 per year on entertainment??
 Plenty of free entertainment out there.
This one is a little weird to me since I feel like we entertain and host at home more often than not. I can't even remember the last time I was in a bar.
Vacation: $890 (This will undoubtedly be the highest point of contention. This year, we have been to visit friends in Nashville, Breckenridge for a 30th birthday celebration, Mexico for another 30th, and will be in Costa Rica for my 30th before the year is through. This is definitely an anomaly of a year. Since traveling before we have kids in the next 3 years is important to us, I'd guess more like $250-400/month is a normal year.) If traveling without kids is important to you, is it more important than saving up for the house you want?Feels like we could do both. Again, we aren't exactly saving up for a particular house at a particular time. We would just like that liquidity when the time comes.
Misc spending: $275 $3,300 on things you can't categorize?It turns out that I wasn't being 100% honest with our spending, and the majority of those expenses are actually "fun" expenses that we have agreed to cut out completely.

I don't know if any one specific category is outrageous - if you really buckle down you could see an additional few thousand dollars this year.

As for the house, you'll certainly have the income to pay for a house in that range.  It's a matter of how quickly do you want to pay it off, how much do you want to go to retirement, etc.  Keep in mind when you move out you'll have property tax, utilities, internet/cable(hopefully not)/Netflix, etc. So your budget today might not match your budget in 365 days.  Just food for thought, but you guys look to be in good shape.Thank you for the encouragement!

SteadyDoinIt

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Re: Cruising for a Bruising
« Reply #20 on: July 27, 2017, 02:08:48 PM »
I'd say you guys are definitely on the right path - way to use a good situation to really get ahead in life.

I would add that it might make sense to make cuts where others have suggested to see if you can save in some areas - then I'd use that money to continue contributing something (even 6% or so) to wifes retirement accounts. I'd be nervous that this would just keep getting put off instead of contributing again sooner. Some of the cuts I'd suggest are groceries, dog insurance, car insurance, entertainment and looking into travel hacking. You guys are doing great it's really just fine-tuning to get expenses down a bit and optimize savings.

Your comment about putting the wife's retirement contributions off really hits home. We cannot neglect this opportunity any longer. Thank you for your response!

DarkandStormy

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Re: Cruising for a Bruising
« Reply #21 on: July 27, 2017, 02:11:31 PM »
^Steady, I don't know if you need to cut "fun" expenses out completely.  At least, that's my view.  Just agree on what a "reasonable" amount is and stick to it.  But it sounds like you guys are doing a budget overhaul so I'll leave the details up to you.
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SteadyDoinIt

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Re: Cruising for a Bruising
« Reply #22 on: July 27, 2017, 02:16:28 PM »
Sorry, I don't know what's happening here. If the OP had to pay rent or a mortgage around $1,000, his savings rate would be way below 50%. Stop being so friendly and give him the facepunches he is asking for!!!‘‘‘!!! Hey, thanks, pal. While we're gracious that you took some time to respond, you could definitely use more tact.

No particular order:
* NOT SURE ABOUT BUYING A HOUSE BUT STILL NOT CONTRIBUTING (or at least not maxing out, I think it's not clear from the post) TO 401K, ETC??? This is part of the reason that I posted a case study, no? In other words, "Hey MMM forum, this is our set up. Are we doing the right things?" A simple "I'd reconsider that train of thought for xyz reason would probably be more well-received.
 To answer your question, our plan was to save for the short term while we have no rent, but based on the responses from this thread,
 we are no longer taking that route.

* A $12,000 commuter car which is financed? Paying off over the next 3 months based on responses in this thread.
* ONE phone plan for $75+????? Suggestions instead of badgering please.
* Shopping+misc ~ $400?!? We realize this is extremely high and will reduce it immediately.
* $500 for groceries? So you live rent free but for that you are paying the groceries for your friends, right??? We choose to eat healthy and rarely waste anything. We understand that eating ramen and frozen pizza would greatly reduce this line item. Save that option, what are your recommendations?
* $280 for outside entertainment (not including eating out)! What do you do? Going to the casino every week? Clubbing with $15 COCKTAILS 4Χper month?


From a mustachian point of view you are not in good shape. You are DINKs who don't have to pay for housing and didn't went crazy with the spending.

SO. MUCH. POTENTIAL!

SteadyDoinIt

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Re: Cruising for a Bruising
« Reply #23 on: July 27, 2017, 02:18:14 PM »
^Steady, I don't know if you need to cut "fun" expenses out completely.  At least, that's my view.  Just agree on what a "reasonable" amount is and stick to it.  But it sounds like you guys are doing a budget overhaul so I'll leave the details up to you.

Just the excess fun spending that came from misplacing fun into misc spending, Dark!

SteadyDoinIt

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Re: Cruising for a Bruising
« Reply #24 on: July 27, 2017, 02:19:39 PM »
OP, you shouldn't be buying a house until you are absolutely sure you will be staying there a minimum of 10 years. Since your job is in question, why would you lock yourselves into an area without solving this first?

100% agree. Our goal was to save short term so that when we find the area we like and are comfortable with our jobs/commutes, we will be able to pull the trigger immediately.

SteadyDoinIt

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Re: Cruising for a Bruising
« Reply #25 on: July 27, 2017, 02:33:59 PM »
Current picture (roughly, I think I botched our dear MDM's spreadsheet a bit):
CategoryMonthly
Comments
Annual
Salary/Wages for earner #1$5,417$65,000
Salary/Wages for earner #2$4,671$56,052
Pretax Health Ins.$351$4,212
Pretax Vision/Dental Ins.$20$244
Pretax Commuter costs & per diem$708$8,496
FICA base salary/wages$9,008$108,100
401(k) / 403(b) / TSP / etc.$379Room to increase?$4,550
Personal HSA$20Room to increase?$240
Employer Match$379$4,550
Subtotal 1$8,609$103,310
Life/LTD Insurance$24$292
Subtotal 2$8,585$103,018
Federal Total Income (for IRS tax)$8,609$103,310
Federal tax$1,0092017 rates, MFJ, stand. ded., 2 exempt.$12,105
Soc. Sec. tax$559Assumes 2 earners paying$6,702
Medicare tax$131$1,567
Total income taxes$1,698$20,375
Add Commuter reimb.$708$8,496
Income before other expenses  $7,595$91,139
Monthly Average Expenses:
Car Insurance$193$2,311
Car Maintenance, Registration, etc.$100$1,200
Dining (Lunch/Dinner/Etc.)$145$1,740
Entertainment$281$3,372
Fuel/Public Transport – EZ Tag$100$1,200
Gas for car$235$2,820
Groceries, toiletries$500$6,000
Hair Care, supplements, makeup, nails$40$480
Health supplements...pro & prebiotics$80$960
Miscellaneous$275$3,300
Pets – food$82$984
Pets – insurance$33$393
Phone (cell)$76$908
Shopping$113$1,356
Storage$139$1,668
Travel/Vacation$890$10,680
Non-mortgage total$3,281$39,372
Loans:
Car Loan$372$4,460
Total Expense$3,653$43,832
Total to invest$3,942$47,307
Summary:
"Gross" income$10,088$121,052
Income taxes$1,698$20,375
After-tax income$8,390$100,677
IRA+401k/403b/TSP/457$379$4,550
HSA$20$240
Living expenses$3,677$44,121
Non-mortgage loans$372$4,460
After-tax investable$3,942$47,307
Filing Status21=S, 2=MFJ, 3=HOH
# Exemptions2
Adult #1Adult #2
Age2926
# of earners2
Total Income$103,310
Std. Deduct.$12,700
Act. Deduct.$12,700
Exemption$8,100
AGI$103,310
MAGI$103,310
Taxable$82,510
1040 Tax$12,105
Net Tax$12,105
Monthly$1,009
Item. Deduct.$0
VersionV9.1

Here is that same budget with maxing out two 401(k) accounts, two traditional IRAs, and cutting no spending:
CategoryMonthly
Comments
Annual
Salary/Wages for earner #1$5,417$65,000
Salary/Wages for earner #2$4,671$56,052
Pretax Health Ins.$351$4,212
Pretax Vision/Dental Ins.$20$244
Pretax Commuter costs & per diem$708$8,496
FICA base salary/wages$9,008$108,100
Traditional IRA$917At maximum$11,000
Your 401(k) / Wife's 403(b) / TSP / etc.$3,000At maximum$36,000
Personal HSA$283Assuming HSA is wife's and only she has qual health$3,400
Employer Match$379$4,550
Subtotal 1$4,808$57,700
Life/LTD Insurance$24$292
Subtotal 2$4,784$57,408
Federal Total Income (for IRS tax)$4,808$57,700
Federal tax$3502017 rates, MFJ, stand. ded., 2 exempt.$4,202
Soc. Sec. tax$559Assumes 2 earners paying$6,702
Medicare tax$131$1,567
Total income taxes$1,039$12,472
Add Commuter reimb.$708$8,496
Income before other expenses  $4,453$53,432
Monthly Average Expenses:
Car Insurance$193$2,311
Car Maintenance, Registration, etc.$100$1,200
Dining (Lunch/Dinner/Etc.)$145$1,740
Entertainment$281$3,372
Fuel/Public Transport – EZ Tag$100$1,200
Gas for car$235$2,820
Groceries, toiletries$500$6,000
Hair Care, supplements, makeup, nails$40$480
Health supplements...pro & prebiotics$80$960
Miscellaneous$275$3,300
Pets – food$82$984
Pets – insurance$33$393
Phone (cell)$76$908
Shopping$113$1,356
Storage$139$1,668
Travel/Vacation$890$10,680
Non-mortgage total$3,281$39,372
Loans:
Car Loan$372$4,460
Total Expense$3,653$43,832
Total to invest$800$9,600
Summary:
"Gross" income$10,088$121,052
Income taxes$1,039$12,472
After-tax income$9,048$108,580
IRA+401k/403b/TSP/457$3,917$47,000
HSA$283$3,400
Living expenses$3,677$44,121
Non-mortgage loans$372$4,460
After-tax investable$800$9,600
Filing Status21=S, 2=MFJ, 3=HOH
# Exemptions2
Adult #1Adult #2
Age2926
# of earners2
Total Income$57,700
Std. Deduct.$12,700
Act. Deduct.$12,700
Exemption$8,100
AGI$57,700
MAGI$68,700
Taxable$36,900
1040 Tax$4,602
Saver's credit$400
Net Tax$4,202
Monthly$350
Item. Deduct.$0
VersionV9.1

You two have no housing costs and enormous incomes.  There is no reason you can't max all possible retirement accounts and still put away a large chunk of a house price.  Notice that maxing out all your retirement accounts STILL leaves you with almost $10K per year to put away for a house/cushion.  Now, if you start cutting those loads of discretionary expenses you have (Misc, Entertainment, Beauty, Various Biotics); start being more careful about groceries and eating out (is this your eating out on the road for work?); and use travel hacking to cut your vacation expenses, you could probably double that easily.This post alone shows us that our train of thought had massive flaws. You're the best for taking the time to input those numbers. The results are staggering! We are putting this plan into motion!

Additionally, this free housing and utilities that your friends are providing you is an enormous gift.  What would be the market value on rent for that guest house, and what are they paying for utilities for your usage?  Are you providing them something equally as valuable in return?  Unless you donated a kidney to one of them, you might consider hesitating before putting yourself so far in debt to them.This is undoubtedly a massive gift. I spoke with my grandpa about our move as it was happening, and he said what I believe you to be what you're insinuating. These are our closest friends, and we would never want to drive a wedge between us solely for the sake of saving a few dollars. The relationship will be something that is closely monitored, and we all agree that communicating all positive and negative situations is a must. If anything start to go south, we will not hesitate to move out before the friendship is ruined. That said, the market value on the guest house is likely in the $1200 range. The utilities on the guest house are probably no more than $175/month. We offered to give them up to $700/month while we stay, but they flat out refused. Although they live in a brand new neighborhood in a wonderful house, they have no mortgage. And even though I've never pressed, I'm under the impression that they also do not have any utilities bills. The woman of the relationship comes from a super well off family - somewhere in the high 8 or low 9 figure range, and their living expenses are subsidized by her father. They both continue to work in professional careers and raise a family and are two of the most giving people that we know, but they are just extremely fortunate and giving people. In fact, we never even pressed the issue of moving into their guest house because we didn't want to impose on their new family, but they never stopped asking each week we saw them. Our previous living situation was wearing us out, so we eventually had a serious talk about it, and here we are today.

SteadyDoinIt

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Re: Cruising for a Bruising
« Reply #26 on: July 27, 2017, 02:45:13 PM »
If your job is not fulfilling and may be changing, do not buy a house.  There are a lot of costs associated with both owning a house, and selling a house.  What if you got a sweet opportunity in a new job, you're now locked down and can't consider big changes as easily or as quickly.  You need to be staying put for 5-10 years before you can recoup the costs of the buying.Duly noted. We are certainly not buying until we're ready to stay put for what I envision being 10-15 years at least, but we thought that having that liquidity in our back pocket would be the ideal situation. We have changed our whole outlook based on this thread.

Also, spending around $10k on vacations is a lot.  I get sometimes there can be a lot of events happen all togther, but is this going to go on every year?I have added a vacations/gifts line item of 10% of our annual net income to our budget. This year will obviously blow that number out of the water, but in years to come, we will have a better grasp of when enough is enough.

Also with a savings rate of that much, you could knock off the car loan in as little as 2 months.  why are you keeping it around? We have decided to pay the car off by October 31.

Thank you for the succinct, thoughtful post!

SteadyDoinIt

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Re: Cruising for a Bruising
« Reply #27 on: July 27, 2017, 02:47:32 PM »
Animal health insurance is a scam. Did you read the contract before giving them money?

Please read the fine print, then you'll cancel it for sure. Most of them are nothing more than negative interest savings accounts with zero perks. They literally charge you to hold on to your money so when you have a vet bill they can charge you a service  charge to pay it.

It's one of those laughable industries that exists because the average American couldn't afford a $200 vet bill without running to payday loans.

We started with the pet insurance at a time when we were in a lot worse place from a financial standpoint. In the eight months, we have paid off roughly $22k in debt and now find ourselves in a place where we can better afford to actually take care of our dogs. After it being brought to our attention multiple times in this thread, we have eliminated this cost.

SteadyDoinIt

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Re: Cruising for a Bruising
« Reply #28 on: July 27, 2017, 02:53:06 PM »
Also with a savings rate of that much, you could knock off the car loan in as little as 2 months.  why are you keeping it around?

I agree with this. Save your money for two months and pay off that car loan. Then apply that car payment ($372) towards retirement.We're going to take 3 months to pay it off starting August 1.

You two have no housing costs and enormous incomes.  There is no reason you can't max all possible retirement accounts and still put away a large chunk of a house price.

Yup. Even if you maxed out one retirement account and used the rest for your down payment goal, you would be way better off in retirement. The biggest regret I have is not maxing out retirement sooner.We are taking this advice starting now.

Now, if you start cutting those loads of discretionary expenses you have (Misc, Entertainment, Beauty, Various Biotics); start being more careful about groceries and eating out (is this your eating out on the road for work?); and use travel hacking to cut your vacation expenses, you could probably double that easily.

Start trimming where ever you can. Two people spending $500 on groceries is ludicrous. Get better at meal planning and stick to it. Entertain more at home so you go out less. whatever the miscellaneous items are that are costing you $275 a month, stop buying them.

finally, I second the "hold off on buying a house" idea. Search for a new job first, then buy the house. Closing costs, moving costs, and maintenance costs eat up thousands of dollars very quickly.

It seems to me with a very little buckling down and fat trimming, you could max out a retirement account, pay off your car loan, add almost $400/month towards your savings goal in addition to the $22,000/year you'd be saving already. Thank you for taking some time! We agree with your assessment!

SteadyDoinIt

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Re: Cruising for a Bruising
« Reply #29 on: July 27, 2017, 03:00:06 PM »
1. Max out both of your retirement accounts!!!

.....because you can never buy back time or get back that forever lost to you - compounding interest. We are taking this advice and running with it. Time is the most valuable commodity.

2. Saving up for a home - not house - is not a good reason to stop paying into your retirement accounts, in fact, nothing short of a dire emergency is. No reason you shouldn't save up for it, but unless you plan to live in this area and your potential new home for at least five to ten years, I wouldn't do it. Study the links for renting vs home ownership and see if this is as good of an idea as you thought it would be. We are on the same page. We did not stop contributions altogether, but that's no consolation for what we could be putting away.

I've always been firmly in the camp of home ownership, but that is because my own space and a bit of land are important to me above all else.
$250K for a home is fine for your income, but you could for instance consider a small starter home to begin with, that could be rented out when you move. Just an idea - which would also diversify your investments-income streams, always a good thing. Certainly a consideration, although probably not one for us at this juncture.

3. If you keep better control of your expenses, you have a better chance of increasing your savings rate. Your free rent and utility situation is enviable, I assume there are good reasons for it, so do what you can, to truly take advantage of your good fortune while it lasts.10-4!

Suggestions: Max out your retirement accounts - as of first thing tomorrow:),
consider paying off your car, unless it is on zero percent interest like ours - do the math:),
consider switching to T-Mobile or Metro PCS for instance, both have unlimited plans for one person for $50 a month.

Consider dropping the vet insurance, unless you have an older dog/cat, or one with issues already.
Entertainment at an average of $281 a month is quite high - keep that one in check, because you are getting a free pass from me on the eating out.
Figure out what the shopping and misc are and either eliminate them or put them into the proper categories, perhaps clothing?I wasn't being 100% honest with where I chose to place some spending. Based on your suggestion, I have overhauled and recategorized the last four months of our spending. The new results look worse in the fun spending category and better in the misc category. We have committed to saving about $250 from the misc category going forward.

Storage - I like the idea of splitting it four ways, but generally speaking, storage is a very bad idea.
The makeup, nails, hair, vitamins - $40 a month - is reasonable in my book, given your income. Ueber mustachians cut their own hair and don't wear makeup, but I am not one of them:), we all have our own value systems.
Vitamins and probiotics - $85 - that is a value and expense you have to decide on yourself - but you might research for better prices.
I actually found that buying half my vitamins/supplements from my doctor's office and the other half from a small independent store which has really  knowledgeable owners - who buy in bulk and sell high quality at a low price, ten vitamins at a time if you want -  is saving me about $40 a month.

Good luck - you'll find it takes a bit of time to begin optimizing everything from the price of your daily vitamins to when or if to pay off your car. Regardless of what you do - start funding both of your retirement accounts right now and never stop doing that, ever again.
 
 Thank you for your time and suggestions!

SteadyDoinIt

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Re: Cruising for a Bruising
« Reply #30 on: July 27, 2017, 03:16:13 PM »
You have a lot of good suggestions already, so I am going to go big-picture:  you are young, you have relatively high incomes and low expenses now, but you also have a lot of major life changes coming up in the next few years.  You look like you are doing great, because you are saving more than half of your current income; but that view is a little unrealistically rosy, because your current expenses are artificially low, and it is not something you will be able to maintain once you start to realize those future goals.  Well said. This was essentially the impetus for posting our finances. Specifically:

1.  Job change:  you are unhappy and will want to change in another year or so.  OK.  Are there other good opportunities in your area?Houston is booming.  What do they pay? In my field, pay is similar. The problem is that I may want something different for my career. Will you need to consider moving? Moving is certainly an option. And if you would consider moving, what would that do to your wife's income? The places we'd consider moving would be almost a 1:1 salary. Right now, you are prioritizing the house savings over your job satisfaction.  This is backwards.  Trust me, you do not want to be locked into a house and then discover that all the local jobs come with a paycut that you can't afford to take, or that there are great options elsewhere that you can't move for.  You will be working for the next 10-20 years, so find a tolerable job first, and then build your lifestyle around what that job allows you to afford.  Great advice. I need to fall out of love with the money that I'm making and refocus on finding a job that makes me feel fulfilled.

2.  House:  your home price doesn't seem out of whack for your income.  But have you priced out PITI, maintenance costs, furniture, and all of the ongoing upkeep?  This home price may or may not be reasonable depending on what else you want to do with your money (see below). Yes, to some extent I have. Assuming that my wife and I never make a penny more than we make now, I believe that with a mortgage on a 250-300k house, we'd still be able to save in the neighborhood of $24-30k/year.

3.  Kids: so you want kids in 3 years.  Will you both still work? Yes, we will. If so, where does the daycare/kid costs come from once you buy a house? Good point. I haven't priced that piece out yet. If not, where do you cut the budget to cover your significant drop in income?  And are you going to want to save for their college?  If you want kids, you need to structure your life now so you can afford them. Very intelligent way to approach it.

4.  Travel:  you have fallen into the common error of assuming that you will turn into a different person once you have kids and lose all desire to travel and vacation and do fun things.  Trust me:  not the way it works.  Your friends/families will continue to have milestones; you will continue to want to be there for them; and when there are grandkids involved, the family will really want you there for family events even more than they do now (ask me how I know.  There are times I have called myself the "grandkid delivery device").

The thing that concerns me the most is that you guys are currently at the lowest-expense part of your lives that you are going to have for decades -- no mortgage/rent, no kids, etc. -- and yet you still don't think you can afford to save for retirement. I definitely think we can afford to save for retirement, but our original plan was to save short term for a house. Whether or not we buy a house short term is a different story. We have decided now that saving for retirement is paramount and buying a house with the extra after maxing out retirement accounts is the path. We will buy a house when we buy a house.  So if the retirement savings is the first thing to go when you're not strapped, what is going to go when you do add on all of those extra costs?  Yes, yes, I understand that you are saving that money, not blowing it at the casino -- but you are saving it for a short-term consumption reason (you want a house, and you want it now!  In a year!  Or less!!).  The problem is not the overall savings rate or the desire for a home, it is the mindset:  you are prioritizing what you want today over what you will need in 10 or 20 or 30 years.  And that's the kind of thinking that leaves you working until 65, because there's always going to be something out there that you need the money for.  If you can't afford something while saving adequately for retirement, you can't afford it.  Period.

So the first thing is to max out retirement accounts -- more specifically, figure out when you want to retire and what savings you need to get there, and sock that away first (see this: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/).  On it!After that, I would look at what all of your goals/plans are for the next, say, 5-10 years:

-- House
-- Kids
-- Travel/vacation
-- Job change
-- Car(s) (they don't last forever -- what is your replacement plan?)
-- And don't forget the "oh shit" fund, a/k/a the "what do we do when my company goes under and we have a kid and a mortgage to pay" fund, a/k/a EF

Then prioritize those things.  As I and many others here have said, life is an "or," not an "and" -- you can have many things you want, but you cannot have all the things you want.  You guys are saving $4500/mo. now, which is great -- but you can't add $3K/mo. in retirement contributions + $2K/mo. in house expenses + $1K/mo in daycare expenses + EF savings + [etc.] and still travel + pay $400/mo in car payments + eat out + [etc.]. 

So set up your lifestyle, now, in a way that ensures you achieve your most important long-term priorities.  E.g.:  we want a house most of all, and that house will cost $1800 in PITI + assume another 10%/yr for maintenance; ok, so we'll start putting aside $2K/mo into a downpayment fund now.  E.g., we want kids, and daycare around here costs $800/mo, plus doctors and clothes and diapers and such, so assume we'll do Craigslist and hand-me downs and call that $200/mo, plus say $200/mo for college savings, so we'll start putting $1200/mo into a "kid" savings account now.  Cars:  hmm, ok, we are not really huge car people, would like to keep costs down, but we're going to need to replace them eventually, so once we pay off the loan, let's just put that money into a "next car" fund.  Etc. etc. etc.  Then your current "lifestyle" budget is whatever is left.  That way, you are saving up a significant chunk of cash so you are prepared for those future expenses when they happen (house downpayment, maternity leave, etc.), and at the same time you are making sure your budget and lifestyle are at a level you can afford even after you add those new expenses. We currently just throw all of our money into a blanket savings account. I agree tha it makes better sense to partition.

And of course if that plan doesn't get you to your goals, you can always cut more out of your current lifestyle spending to get you there faster.  Or you can start over from scratch and re-think what's most important and when you really want it by -- almost no one gets this exactly right on the first try.  Maybe you decide that, ok, I'll work 20 years instead of 15 if it allows me to afford a house and two kids and travel; or maybe you'll decide that you want kids but it's not worth saving for their college if it requires postponing your retirement another 5 years.  The key is to recognize that it is all one big tradeoff, that every dollar you are spending now is a dollar you won't have to spend next year or in 10 years or in 50 years. That it's all one big trade off is what my wife struggles most with at the moment because she truly enjoys her job. Even if we were FI today, she'd continue to work. Getting her to commit fully has  been a minor struggle that we are inching closer and closer to achieving.

Thank you again for taking the time!

OkieM

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Re: Cruising for a Bruising
« Reply #31 on: July 28, 2017, 05:28:59 AM »
You can eat healthy for much less money! You just have to plan and avoid the healthy branding. Vegetables are pretty inexpensive all the time. Buy the fruit that is on sale. Go to places like Aldi. Try more meatless recipes. Buy meat in bulk and freeze it. Chicken and pirk are both healthy and inexpensive compared to seafood and beef. My wife and I can easily do whole 30 for less than $80/wk. There are people on here that can probably do it for way less than that! It's all about research and planning to find recipes you like that are healthy and cheap and easy to make. They are only a google search away.

Laura33

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Re: Cruising for a Bruising
« Reply #32 on: July 28, 2017, 06:24:19 AM »
OP:  FYI, really great, thoughtful responses -- this can be a tough crowd, and you have taken everything in the positive way it was intended and used it to make positive changes.  Sounds like you guys are in a good situation and on the right track -- good luck!
Laugh while you can, monkey-boy

bhleigh

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Re: Cruising for a Bruising
« Reply #33 on: July 31, 2017, 05:10:07 AM »
@SteadyDoinIt Thank you for taking the time to respond to each person's comments and posts. Please keep us all updated on how the budget overhaul is going and how your new MMM life is treating you! Good luck!
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Feivel2000

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Re: Cruising for a Bruising
« Reply #34 on: July 31, 2017, 05:48:53 AM »
That it's all one big trade off is what my wife struggles most with at the moment because she truly enjoys her job. Even if we were FI today, she'd continue to work. Getting her to commit fully has  been a minor struggle that we are inching closer and closer to achieving.

I wouldn't worry to much about this. Your wife doesn't need to stop working when you are FI. But FI will give her the freedom to work only when and as much as she want to. As long as she is on board to reach FI and isn't working against it by spending rediculous money.

When you are FI, you could RE, take care of the kids and the house and she could continue to work, maybe part time.


With This Herring

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Re: Cruising for a Bruising
« Reply #35 on: July 31, 2017, 04:52:15 PM »
OP, I appreciate you replying to everyone individually.

Current housing - As you have explained it, your friends have their housing covered by her super-rich father.  I would ask that you see if there is anything you can do for this ultimate gift-giver.  The utility bills are increased because of your residence on the property, if nothing else, so you might ask your friends if there is anything you can do for him, perhaps when you move out?  Take him and your friends out to a fancy dinner?  Send a fruit basket or flowers?

Car loan - Our concern is not just that you are paying on the car loan, but that you have a needlessly valuable vehicle.  What is the current market value of the car?  For many case studies, the members of the forum have recommended selling vehicles worth >$10K and purchasing fuel-efficient, cheap to repair, cheap to insure vehicles worth closer to $5K.

Food - You can definitely eat healthy, non-cheap-ramen, edge-of-store food for less than you are currently spending.  :)
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