Author Topic: Case Study - Criticism/analysis of financial situation request?:)  (Read 2002 times)


  • 5 O'Clock Shadow
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Life Situation: Single (medium term girlfriend), no kids, 30 yrs old – work in construction and travel effectively full time for work from site to site. No home base as such, travel light and have some of my more bulky items with long term friends around the country..

Gross Salary/Wages: $100K salary, 20% bonus. Additional ‘profit share’ bonus of approximately $20K/yr, and a non-taxable per-diem (travel basically fulltime for work) of $35K. Company vehicle, but gas is currently not expensed (but should be deducted if I was tracking it properly?) I’m not super experienced with tax deductions so have probably been missing out here.

Individual amounts of each Pre-tax deductions: Contribute $18K to 401K each year, and my employer matches 50% (so additional $9K). No separate IRA. Existing 401K sitting at just over $42K.

Other Ordinary Income: Just started renting my unused personal car to a work colleague for $125/wk, uncertain if this will be for the entire yr, but optimistic that I can make $2500 out of this in 2018

Qualified Dividends & Long Term Capital Gains: ~$2500/yr from my Vanguard funds, also have some stock in my company which should provide ~$1500 in dividend returns in 2018.

Rental Income, Actual Expenses, and Depreciation: No rental property to date, but have considered it and oohed and ahhed about the wisdom of it for someone in my position and relative fluidity

Adjusted Gross Income: ~$180K all said and done (pre-tax - but remember that the $35K per diem is not-taxed)

Taxes: 28% federal, 5.75% state (home base is in NC)

Current expenses:
Accommodation: $250/wk = $13,000/yr (somewhat difficult to improve, as I travel a lot for work so have to rent short term airbnb’s etc.) If I can keep it to below $250 that would be a win. When we get longer term jobs and I nab a 2-3 person apartment with others then this can drop as low as $100/wk.
Food: Definitely a weakness that I aim to improve in 2018 – I enjoy cooking and prefer to eat in, but a fair amount of travel and general laziness means I eat out at least twice a wk = $75/wk groceries, $75/wk dining out = $150/wk = $7800
Work Truck Gas: $50/wk = $2600/yr (company truck – Construction work – and I have to travel a fair bit for work itself, to and from the job-site etc. Wouldn’t normally have such a low gas mileage vehicle, but the pro’s outweigh the cons as I don’t have to pay for maintenance, tires etc and it’s a newer vehicle than I’d personally have purchased)
Personal Vehicle Insurance: $75/month = $900/yr
Personal Vehicle Upkeep: $750/yr (budget estimate, I just put $1000 into new tires, new battery, oil change etc)
Shopping: Pretty low on consumer spending, but estimate of $2000/yr for various toys (in 2017 for example I purchased a $250 wetsuit, approximately $750 in clothes, no new electronics, $350 in various books
Amazon Prime: $12/month = $144/yr
Travel: Frequently go for various adventures during the weekends – normally hiking or camping, so relatively low expense once I get there, but the travel and other items eat up some cash – budgeting $5K for various adventures in 2018 (want to climb Mt Hood and check out a bit more of the PNW, get to New Orleans, hike another few 14ers in Colorado)
Miscellaneous: $2000 – gifts/flights to see my girlfriend, unexpected items etc
Phone Bill: paid by company


Expected ER expenses: (optional, if relevant): -

$136K in Vanguard funds
VGENX : $18K
VASGX : $78K
VGPMX : $30K
VBLTX : $10K

$8K in various stocks on Schwab, none of which are huge performers and I should probably consider dropping and picking up index funds instead
2005 Hatchback that I paid $8K for in 2014, probably worth $3500 now
~$20K invested overseas in term deposits paying about 3.5% p.a.

Liabilities: None I don’t think?

Specific Question(s): Although I’m enjoying my work (I work in the renewables industry as a Construction Manager/Quality Rep – and am moving up the ladder relatively quickly, I have a wide range of different activities that I want to do in my life (lots more climbing, as much hiking as possible – PCT/Appalachian etc, potentially do some time in Europe living low cost in a van, get back to SE Asia/Indonesia to surf – the list goes on). I’m pretty good at budgeting when I’m travelling (spent 6 months in India in 2013 and spent approximately $10k including flights).

In an ideal world I would achieve financial freedom well before 35, but even if this is unrealistic I suspect I’ll take time out around 32/33 and come back to things down the track in a consulting or advisory role rather than the 60hr wk lifestyle. Some potential of launching my own business but that’s a serious commitment!

Would be interested on feedback on whether my asset mix and general plans are in ok shape, if there would be any other easy wins for cost reductions, if I’m missing out on anything obvious like an IRA or some form of tax benefits – just a general gut-check to see if I’m on track.

Long term, would be interested in children, but subscribe to the idea that you can bring up a healthy and happy child on the road (campervan or even sailboat) and teach them how the world works in interesting and effective ways.

Very interested to hear back from you fine folk who have managed to make it to the promised land!:)
« Last Edit: January 06, 2018, 04:09:31 AM by greenalpaca1 »


  • 5 O'Clock Shadow
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Re: Case Study - Criticism/analysis of financial situation request?:)
« Reply #1 on: January 06, 2018, 01:52:39 PM »
Politely bumping this due to no response - would love some feedback!

former player

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Re: Case Study - Criticism/analysis of financial situation request?:)
« Reply #2 on: January 06, 2018, 02:34:49 PM »
Hello and welcome to the forums.

Your case study may not have got replies because it's unique with its high earnings and peripatetic lifestyle.  Given that almost completely in the opposite situation (in the UK, FIREd and pretty static these days) I'm not sure how much help I can be, but I did have these thoughts -

1.  Given your high income it is probably worth your while spending some effort on investigating your tax position and in particular what the recent changes will mean for you.  Could you save tax by being paid as a company/independent contractor?  Could you move your home base to a state that doesn't have income tax?

2.  Your expenses look not unreasonable to me in your circumstances, although there is scope for optimising as you have noted.

3.  You have various bulky items stashed around the country and there could be some scope for rationalising them.  The usual suggestion here is to sell (MMM calls it "storing on Craigslist") if you don't need it now.

4.  Yes, sell the individual stocks and put them into index funds.

5.  Rental property: I think it's probably not for you.  I have a couple of rentals myself, but they are both within 5 minutes of where I live, for which I have been enormously grateful recently (one plumbing leak 3 days before Christmas, one the day before New Year's, one yesterday - just what happens with houses every now and then).  Given your current and intended peripatetic lifestyle I'm not seeing the advantage in either tying yourself to one location or having to deal with rental property problems such as these, or tenant issues, from a distance.  Though if you do ever settle down in one place your professional expertise would be a significant advantage in managing rentals.

6.  You haven't suggested what your FIRE expenses might be, so it's not possible to work out when you might get to FIRE.  The 4% rule means that you are looking at 25 times whatever your annual FIRE expenses are expected to be.  At a 4% withdrawal your current total financial assets of $206k would give you a passive income of $8,240, but your high income and pretty reasonable expenses mean that you should be ramping that up pretty quickly.  Good luck!


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Re: Case Study - Criticism/analysis of financial situation request?:)
« Reply #3 on: January 07, 2018, 08:42:46 AM »
I’d second the notion of not tying yourself down with property, like rental homes and cars.  You have a work-provided truck, so why do you need a personal vehicle - couldn’t you just rent something cheaper for the times you don’t have the work truck?  Added bonus that the less you tie yourself down with “stuff,” the easier it will be to jump ship from this job whenever you feel like it.

So I’d generally say double down on what you are doing for now — focus on socking away as much as you can while you are in the sweet spot, while keeping your fixed expenses as low as possible.  If your investments hit 25x your needs, you are FI and can never work for pay again if you don’t want to.  But even short of that, keeping your lifestyle costs minimal and saving the rest means that then when you’re really tired of it, you will be in a great spot to just walk away, even if you don’t necessarily know what’s next.

One specific suggestion: does your work provide disability insurance?  The biggest risk to your plan right now is you being unable to work that lucrative job for as long as you want to.  It’s expensive, but worth it.
« Last Edit: January 08, 2018, 07:05:36 AM by Laura33 »


  • 5 O'Clock Shadow
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Re: Case Study - Criticism/analysis of financial situation request?:)
« Reply #4 on: January 08, 2018, 02:44:38 AM »
Great - thank you for the input! Much appreciated.

I think there are definitely some tax deductions I can take better advantage of - I'm looking into the backdoor Roth IRA option to try and maximize those savings. Have any readers ever had experience with deducting personal gas expenses on a company vehicle? Would I be better to sell the shares all at once and reinvest across in index, or try and leverage some tax savings there on the losses?

Agree in regards to the rental properties - the hassle and stress aren't really for me, so I think I'll skip past that and just continue squirrelling away into good old Vanguard.

The second car has been a liability in the past, but I set up a deal with a work colleague where he pays me $125/wk to rent it, so that's a nice secondary drip of income right now. Whether it'll last long term is another matter, but if he backs out of it then I can reassess. The key reason I was hanging onto it was just having the flexibility of being able to get off the road if I decided I was sick of it - although there are a lot of benefits, it's a strange lifestyle and doesn't give much chance to have anything close to a normal life!

Any other readers out there who have been on the road in oil/gas or mining or otherwise with similar experiences?


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Re: Case Study - Criticism/analysis of financial situation request?:)
« Reply #5 on: January 08, 2018, 04:47:31 PM »
Sounds like you are in an awesome position - super income, low life costs. I did similar (but with some company ownership), and 8 years of ~200k income and low costs set me up by mid 30's. A  awesome opportunity.

Some questions for you though:
Tax optimisation / deferral. I'm in the Australian tax system, so different tax rules. But for me, deferring tax during high income accumulation years to low income drawdown years made a big difference. I found trusts and an investment company helpful. I suggest you put some research into what works in your tax situation.

How much do you keep? 180k income and 35k expenses is awesome. However, your assets are 200k ish, so a year and a bit of this savings rate. Have you only recently reached this income (and if so how sustainable do you think it is), or are you saving less than you think? Maybe track actual expenses for a while. I found when I did this that I was spending a lot more than I estimated.

Either way, awesome position to be in!