Author Topic: First Case Study & New MMM Reader  (Read 5221 times)

kwarden13

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First Case Study & New MMM Reader
« on: June 23, 2017, 01:11:29 PM »
Hi Everyone! I recently found this site and thought I would post a case study. I am selling a property and will gain about $58,000 after all realtor fees, but before taxes. According to my accountant, I will owe about $5,000 in taxes since it was rented out partially. So $53,000 Net! I am trying to figure out where to best spend my money to get out of debt. Also, I tried to list my expenses, however, it is hard because my dad had recently been very ill and I have been traveling a lot in the past 3 months and also helping out my family money-wise. Think like $5,000 in traveling expenses alone due to last minute flights. So my expenses below are my last month expenses not including those extra travel expenses.

I am 28 years old and live with my fiancé. It is hard to break out expenses since we do not keep track who pays for what, however, it's mostly 50/50. We have not combined bank accounts. Below is just what I see on my bank statements/credit cards. However, I pay for most restaurants and entertainment as I make more money.

My bi-weekly pay stub:
Gross pay = 4750
Medical= 27
Dental = 5
401k = 618
Fed tax = 812
City tax = 119
State tax = 185
Medicare = 68
Social Security = 283
Monthly income total = $5230

My salary will increase yearly by about 3% and I get a bonus of about 3-8%. I also have a pension, however, I am not vested for another year so do not know how much that will be. It is a private company.

Expenses

Mortgage = 1205 – I pay half of our mortgage
Alarm - 50
Utilities (varies on seasonal use) = $150 (inc gas, electric, water, trash)
Car payment = 475
Car insurance = 120
Car fuel = 100
Cell phones = 10 – my employer pays for 90%
Internet/Cable = 87
Groceries = 350
Student loans = 750 average – min payment is 472 however I usually pay more
Crossfit membership = 135, I really enjoy this and do not want to cut it.
Pet supplies = 40
Home supplies = 100
Restaurant/Alcohol = 500 (we have cut back, this month so far it is 250, however, going to happy hour today :/)
Bowling/Movies = 75
Amazon = 100 – this is household items (laundry detergent, sponges, etc.)
Massage = 54
Haircut = 35
Home Improvement = 100 (plants, shelves, etc.)

Total approximate expenses = 4436
Total money left over = 794 ---- I have not been able to save this really though because of family emergencies and helping them out over the past 3 months. This has now ended, however, I did not include those expenses in the above.

Assets and Debts:

Assets:
Emergency Savings = $1,000
401k = $60,000 – plan to max out this year.

Debts:
2015 Subaru Outback loan = $25,700 @ 2.24%.  Valued at $24,000 currently and has only 28k miles. Tried to sell it privately and not much luck. So dealer would probably only give $22,000.
Student loans = 46,000 @ 4.0% variable rate. Min payment of $472, but often pay more. Financed with SOFI and could refinance to lower variable rate or slightly higher fixed rate.
Credit card = $8200 @ 0% until Nov 2018
Credit card = $1500 @ 0% until Dec 2017
Credit card = $1600 @ 0% until Dec 2019
Mortgage = $352,000 @ 3.5% for 20 years. Just purchased in Jan 2017. We pay $200 PMI a month, however, could refinance to get out of it. House value around $400,000

I know I will get some face punches so bring it on!

Heinz

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Re: First Case Study & New MMM Reader
« Reply #1 on: June 23, 2017, 03:58:23 PM »
A few thoughts:

1). Do you have a pension or a defined contribution plan like a 401k?  If the former, companies provide a pension calculator to estimate your benefits as a protection against the ERISA laws.  Ask your HR department for the calculator. 

2). I would pay off your student loans and then start on the credit card debt. 

3). I would also max out your 401k. 

ixtap

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Re: First Case Study & New MMM Reader
« Reply #2 on: June 23, 2017, 04:06:46 PM »
If you are getting TP, etc. from Amazon, what is in the house supplies and home improvement categories? ie, you are actually spending $300 on house supplies, you have just split it into three separate categories.

You state that Cross Fit is a priority. Show it. Where are you willing to give up $135 in the rest of your budget?

Try freezing your eating out budget for the rest of the month. Then, next month, work on making it even lower.


marty998

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Re: First Case Study & New MMM Reader
« Reply #3 on: June 23, 2017, 04:33:20 PM »
How are you planing to pay for your wedding / honeymoon?

Appreciate you have a lot of debt but I'd be tempted to put the $50k into an index fund and just pay off your debt under its normal schedules.

Whenever I had a bit of cash I always put it against the home loan, but my interest rate was 5-7% for most of the time.

Kwill

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Re: First Case Study & New MMM Reader
« Reply #4 on: June 23, 2017, 05:10:29 PM »
I think I'd pay off the student loan and the credit card with the 0% deal ending in 2017. I'd add enough to the emergency fund to have a month's net income available. With the student loan gone, you'd have about an extra $500 in your monthly budget, and you could use this to pay down the credit card due 2018. I would not pay anything extra on the mortgage since it is only half in your name, but I might think more about selling the car.

I don't think it's reasonable for you to pay most of the restaurants and entertainment. If you tried to pick simpler, more frugal entertainments, would your fiancee be able to pay his share?

Feiread1

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Re: First Case Study & New MMM Reader
« Reply #5 on: June 24, 2017, 07:20:59 AM »
I think you should try to increase your cash flow so you can start bumping up your index investing asap. You should map out a 1-year plan (or less) for paying off all your debt except the mortgage and a 1-2 year plan after that for what you'll do with all the extra money you'll have after your debt is gone.

Let's not sugar coat it. You have over $80k in debt, not counting the mortgage... You should treat this $80k debt as a 5-alarm emergency! It's killing your cash flow and preventing you from investing over $1k extra per month.

First order of business for the $53k is getting rid that car.  Negotiate a deal with a dealer, see your best price, then before pulling the trigger add $1500 to their price and try to sell it again privately. That's the minimum profit the dealer would expect to make off you. If you can't sell it privately, go back to the dealer (I'm assuming they also sell used cars, if not go to one that does) and work out a better deal on a trade for something that costs 5k ish. So let's say you only get $22k for your car, take the $3k loss and chalk it up to a dumb mistake. Pay Off the loan and the $5k car in cash. No car financing ever again, lesson learned. Now you've lost 8k from your 53k, but now have an extra $475 per month.

After that's situated I'd pay off your student loan. Your $45k that's left after the car will take out all but 1k of your loan. Apply your extra $475 that you would have put to the car to your normal $750 you'd put to the loan and student loans are payed off in month 1. Now you've saved an additional $750 a month. Add that to your $450 car payment you won't be paying and in month 1 of your debt reduction plan, you now have an extra $1200 a month.

I wouldn't worry about emergency fund now that you have an extra $1200 a month. You should also cut $100 per month from your restaurant fund in the first month and maybe another hundred in after that. That's being generous. You might want to really clamp down your budget for 3-6 months to see how much you really miss all that spending. Let's just say for planning purposes you ease into things and only cut $200 from your monthly restaurants. Adding that to your total, you would have $1400 per month extra compared to today.  If you have an emergency one month, you can use that $1400 on that and find another 0% credit card for the rest if it's a big emergency. Most likely you won't have an emergency in the next 6-12 months, so what I would do with the $1400 a month is pay off all these credit card balances.  Your 2017 credit card debit gets wiped out in the 2nd month, your 2018 balances wiped out 6 months later, and your 2019 a month or two after that. So 9-10 months later you are debt free with $1400 per month to invest for ever! 

Noticed you don't have an IRA or Roth IRA. You say you are maxing out your 401k already, so you should read up on the back door Roth strategy. Basically, u can open up a traditional IRA and Roth IRA from anyone (including likely your 401k provider, but I use fidelity). Then start applying that $1400 per month to your traditional IRA until you hit the $5500 max yearly limit. This can be added through the first quarter of the following year too.. So, assuming you follow the plan I outlined above you'd have 2-3 months to contribute to your IRA this year, and 3 months next year (towards 2017), so in addition to paying off all your debt, and maxing out your 401k, you can max out your IRA too. When you hit $5500 roll it over into the Roth IRA, invest in VTI or similar, and you have tax-free growth indefinitely.  Then in Q1 2018 after you maxed out the 2017 IRA, move that $1400 a month to the 2018 IRA and roll it into the Roth when full, sometime next summer. After that's done, I'd open a taxable account. For the 2nd half of next year you can dump your $1400 a month into that. Then 2019 you can do the same--max out IRA, roll it into Roth and then go to taxable. You could also just put $460 per month into the IRA and $940 into taxable at the start of 2019 and keep steady all year.

Whew! Now that would be a 2 year plan to be proud of! ;-)

Feiread1

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Re: First Case Study & New MMM Reader
« Reply #6 on: June 24, 2017, 08:29:30 AM »
Also just saw you say u will have an extra $800 a month going forward. Plus you should eliminate massage from your budget. That's your fiancé's job! :-) additionally your haircut budget is too high (if you are male). Go to a barber for $20 every 6 weeks. So let's just round to $850 extra added to that $1400 I came up with in my last post. I'd suggest same plan but now with $2250 extra you can pay everything off even more aggressively. Should be able to pay all your debt, max out your 401k, and fully fund your new IRA this calendar year, and beginning 2018 (not mid) add the taxable account.

U also say you can refinance to eliminate the PMI. Not sure how that works... if your house is worth 400k and your loan is 352, you need another 32k in equity to get to 20% equity,  no? That $200 a month for PMI would bother me, but since it's split with your fiancé, maybe not as much. Still, with your 3% raises and your ~5% bonus each year, you might want to take some of that to flesh out your emergency fund a little, allocate some to pay down the mortgage to get you under the PMI threshold (especially if you can get the fiancé to match you), and the rest into your taxable account.

thedayisbrave

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Re: First Case Study & New MMM Reader
« Reply #7 on: June 24, 2017, 09:32:55 AM »
I would keep the car, and by that I mean I keep it for a long time.  What's the point in selling and taking a loss? Yes, the car payment is significant but I wouldn't worry about that just yet.

A few facepunches...
  • $75/month on movies and bowling? My net worth is in the high six figures and I spend $0 monthly on movies and bowling.  Get Netflix and cut that expense. 
  • $300/month on household expenses is ridiculous.  What are you spending that on?
  • $500/month on restaurants/alcohol when you already spend $350 on groceries is also excessive.  If you have to drink, drink at home.. allow yourselves one happy hour a month or something like that.  You can easily cut that in half without sacrificing much.

That is just the low hanging fruit... things you can cut easily without much of an effort.  You sound pretty athletic so the crossfit/massage expense I think are the least of your worries... especially if it's something you enjoy.

I would use the proceeds from your house sale to completely eliminate your student loans, then pay off the December 2017 credit card balance.  Then use the savings from the student loans each month to pay down your car loan, meanwhile paying off the credit card balances as they come due.  I honestly think that is your best plan of action.  You should be debt-free except your mortgage in very little time and then all that savings each month can go toward investment goals.

Good luck! Don't sweat the smaller expenses...

“It is good to have an end to journey toward; but it is the journey that matters, in the end.” -Ernest Hemingway

Dee18

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Re: First Case Study & New MMM Reader
« Reply #8 on: June 24, 2017, 04:16:55 PM »
You have a hair on fire emergency!  Until you pay off all your credit cards (and your car if you keep it), do not go to a bar, eat out, go bowling, get your hair professionally cut, buy household supplies through Amazon, go to crossfit..etc.  Cut out ALL nonessential expenses.  You do not have money: you have debt. A lot of debt. You are broke.  Keep track of every dollar until all your debt is gone, including those student loans. 

rdaneel0

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Re: First Case Study & New MMM Reader
« Reply #9 on: June 24, 2017, 06:54:04 PM »
Your earning is ok and many of your basic expenses (rent, etc. ) are competitive, but your general spending is out of control. I live in a big city where I don't need a car, a more expensive city than you live in, however, if I add your car costs to your rent costs we have almost the exact same cost of living. When it comes to other categories though, we're very different.

Expenses

Mortgage = 1205 – I pay half of our mortgage -- fine
Alarm - 50 --- ok
Utilities (varies on seasonal use) = $150 (inc gas, electric, water, trash) - higher than mine
Car payment = 475 --- fine
Car insurance = 120--- fine
Car fuel = 100 --- fine
Cell phones = 10 – my employer pays for 90%---great
Internet/Cable = 87---really? why cable too? cut the cable and you'll reduce the cost by about 50%
Groceries = 350 --- good, I spend closer to $400, but I don't have your insane restaurant bills. Might be worthwhile to up your grocery bills by $50 to eliminate your other food/alcohol bills.
Student loans = 750 average – min payment is 472 however I usually pay more--- ours is zero. pay this down ASAP.
Crossfit membership = 135, I really enjoy this and do not want to cut it. ---you're inflexible in this area, but we are both extremely fit and pay nothing. we work out in the park.
Pet supplies = 40 --- ok, i would check out buying food and litter (if applicable) at a costco type store, that's what we do and we pay less
Home supplies = 100 --- what is this? is this toilet paper and cleaning supplies or random decor? we don't have this category.
Restaurant/Alcohol = 500 (we have cut back, this month so far it is 250, however, going to happy hour today :/)---this is totally insane. we make similar incomes. our date night and going out budget is $100 a month. we pack breakfast and lunch for work, as well as coffee, and only buy food out as an outing type thing, no takeout or convenience food.
Bowling/Movies = 75 --- in addition to $500 for restaurant and alcohol you have this? cut the movies, you don't need to see movies on a giant screen for an insane price. cut the bowling too unless it's a serious passion and you're part of a league.
Amazon = 100 – this is household items (laundry detergent, sponges, etc.)--- you have home supplies as a diffrent category, and you have a household items category...what gives? we don't have this category.
Massage = 54 ---nope, we don't have this category
Haircut = 35 --- nope, not monthly, bimonthly
Home Improvement = 100 (plants, shelves, etc.) --- this is your third housewares category. gotta get this under control. we don't have this category.

lhamo

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Re: First Case Study & New MMM Reader
« Reply #10 on: June 24, 2017, 07:52:22 PM »
I strongly disagree about the groceries. I spend around $600 month for my family of four, and that includes toiletries, household staples/cleaning supplies, and plenty of splurges like wine and cheese, wild salmon, etc. $350 for one person is insane.
Wherever you go, there you are

PDXTabs

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Re: First Case Study & New MMM Reader
« Reply #11 on: June 24, 2017, 08:42:00 PM »
Mortgage = $352,000 @ 3.5% for 20 years. Just purchased in Jan 2017. We pay $200 PMI a month, however, could refinance to get out of it. House value around $400,000

If you can refinance out of your PMI to the tune of $2400/yr, do it.

Also, I would use 100% of your cash to pay down debt (CC and Student loan). That's an expensive car that you have, but you shouldn't worry about a 2.24% loan, IMHO.

Feiread1

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Re: First Case Study & New MMM Reader
« Reply #12 on: June 24, 2017, 09:07:32 PM »
I would keep the car, and by that I mean I keep it for a long time.  What's the point in selling and taking a loss? Yes, the car payment is significant but I wouldn't worry about that just yet.

A few facepunches...
  • $75/month on movies and bowling? My net worth is in the high six figures and I spend $0 monthly on movies and bowling.  Get Netflix and cut that expense. 
  • $300/month on household expenses is ridiculous.  What are you spending that on?
  • $500/month on restaurants/alcohol when you already spend $350 on groceries is also excessive.  If you have to drink, drink at home.. allow yourselves one happy hour a month or something like that.  You can easily cut that in half without sacrificing much.

That is just the low hanging fruit... things you can cut easily without much of an effort.  You sound pretty athletic so the crossfit/massage expense I think are the least of your worries... especially if it's something you enjoy.

I would use the proceeds from your house sale to completely eliminate your student loans, then pay off the December 2017 credit card balance.  Then use the savings from the student loans each month to pay down your car loan, meanwhile paying off the credit card balances as they come due.  I honestly think that is your best plan of action.  You should be debt-free except your mortgage in very little time and then all that savings each month can go toward investment goals.

Good luck! Don't sweat the smaller expenses...

What's the point of selling the car for a loss? He's already lost 3k due to depreciation in very little time. If he keeps the car, it will keep depreciating at a crazy rate, losing more and more on it each year. Not to mention assuming his loan is 5 years, even at a 'low' 2.25%, he's also lost $1500 in interest. IMHO this is just throwing good money after bad. It's already a loss, it's just a matter of how much and for how long. I suggest he stops the bleeding and gets out of it now, downgrades to a reliable used car for 5k-10k, pays cash, and eliminates that nasty pointless payment.

That payment btw is the same is the restaurant/alcohol budget. That latter needs to be reduced, but with his cash windfall, he could out of his new car, drive a used one, not change his lifestyle at all in the worst case and get to invest about 30k over the next 5 years instead of paying for that car. The car is the elephant in the room, toilet paper and haircuts, and even cutting back on going out drinking or to dinner a few times a month all add up, but all still seem like small potatoes compared to the car.

fuzzy math

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Re: First Case Study & New MMM Reader
« Reply #13 on: June 24, 2017, 09:32:54 PM »
I don't understand your budget.

You say you pay half the mortgage - your fiancé pays the other half, and you spend things 50/50.
Does that mean the amounts you listed are your finances only? It looks like you are paying for everything, unless your fiancé is paying the same in all those categories, which would bring your monthly spending up to $9k.  Please clarify.

OkieM

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Re: First Case Study & New MMM Reader
« Reply #14 on: June 24, 2017, 11:27:24 PM »
How do you spend $100/mo on gas if you work from home? That is a lot of driving.

Obviously the people here have already said what needs to be done: sell the car, cut the frivolous house/restaurant expenses, and then pay down the debt. You and your fiancé both have great incomes you could be stashing away huge sums in only a few months. Maybe enjoy that new deck you bought on credit instead of going out to eat.

And you should be biking to crossfit and the store instead of driving so much! Then you won't have to worry if your car is fancy and has crash detection because it will be sitting at home.

former player

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Re: First Case Study & New MMM Reader
« Reply #15 on: June 25, 2017, 01:50:13 AM »
Your big areas for change are household and eating out/alcohol/entertainment, and you are not going to change anything fundamental there unless your fiancé is on board.  So the first thing you need to do is read the sticky thread "How to convert your Spouse" in Ask a Mustachian and put it into practice.

I'd use that cash to pay off your student loans.

No more credit card debt for consumer spending, ever.  Save before you spend by putting a line in your monthly budget for future expenses and putting that money into a savings account that you use as a sinking fund.  This will cover annual expenses, recurring but irregular expenses (house maintenance, travel, etc) and contributions to future capital expenditure (replacement computer, appliances, car, etc.).
Be frugal and industrious, and you will be free (Ben Franklin)

kwarden13

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Re: First Case Study & New MMM Reader
« Reply #16 on: June 26, 2017, 10:56:20 AM »
A few thoughts:

1). Do you have a pension or a defined contribution plan like a 401k?  If the former, companies provide a pension calculator to estimate your benefits as a protection against the ERISA laws.  Ask your HR department for the calculator. 

2). I would pay off your student loans and then start on the credit card debt. 

3). I would also max out your 401k.

I have a pension and a 401k, however, have no clue how much the pension is since I am not vested.

kwarden13

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Re: First Case Study & New MMM Reader
« Reply #17 on: June 26, 2017, 10:57:00 AM »
How are you planing to pay for your wedding / honeymoon?

Appreciate you have a lot of debt but I'd be tempted to put the $50k into an index fund and just pay off your debt under its normal schedules.

Whenever I had a bit of cash I always put it against the home loan, but my interest rate was 5-7% for most of the time.

We will probably just do something very small. Neither one of us has big families (maybe 4 people total).

kwarden13

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Re: First Case Study & New MMM Reader
« Reply #18 on: June 26, 2017, 11:01:02 AM »
Also just saw you say u will have an extra $800 a month going forward. Plus you should eliminate massage from your budget. That's your fiancé's job! :-) additionally your haircut budget is too high (if you are male). Go to a barber for $20 every 6 weeks. So let's just round to $850 extra added to that $1400 I came up with in my last post. I'd suggest same plan but now with $2250 extra you can pay everything off even more aggressively. Should be able to pay all your debt, max out your 401k, and fully fund your new IRA this calendar year, and beginning 2018 (not mid) add the taxable account.

U also say you can refinance to eliminate the PMI. Not sure how that works... if your house is worth 400k and your loan is 352, you need another 32k in equity to get to 20% equity,  no? That $200 a month for PMI would bother me, but since it's split with your fiancé, maybe not as much. Still, with your 3% raises and your ~5% bonus each year, you might want to take some of that to flesh out your emergency fund a little, allocate some to pay down the mortgage to get you under the PMI threshold (especially if you can get the fiancé to match you), and the rest into your taxable account.

Thank you the advice! However, we are both women so the haircut is very cheap and not every month but I added it. I also think the household expenses are probably not like that every month. Again, I was trying to figure it out and was having a hard time. We bought a house in January and then I had some extreme family emergencies the last 3 months so hard to really say how much would be spent on a regular basis. I should have a better idea by mid July.

kwarden13

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Re: First Case Study & New MMM Reader
« Reply #19 on: June 26, 2017, 11:03:28 AM »
Your earning is ok and many of your basic expenses (rent, etc. ) are competitive, but your general spending is out of control. I live in a big city where I don't need a car, a more expensive city than you live in, however, if I add your car costs to your rent costs we have almost the exact same cost of living. When it comes to other categories though, we're very different.

Expenses

Mortgage = 1205 – I pay half of our mortgage -- fine
Alarm - 50 --- ok
Utilities (varies on seasonal use) = $150 (inc gas, electric, water, trash) - higher than mine
Car payment = 475 --- fine
Car insurance = 120--- fine
Car fuel = 100 --- fine
Cell phones = 10 – my employer pays for 90%---great
Internet/Cable = 87---really? why cable too? cut the cable and you'll reduce the cost by about 50%
Groceries = 350 --- good, I spend closer to $400, but I don't have your insane restaurant bills. Might be worthwhile to up your grocery bills by $50 to eliminate your other food/alcohol bills.
Student loans = 750 average – min payment is 472 however I usually pay more--- ours is zero. pay this down ASAP.
Crossfit membership = 135, I really enjoy this and do not want to cut it. ---you're inflexible in this area, but we are both extremely fit and paTy nothing. we work out in the park.
Pet supplies = 40 --- ok, i would check out buying food and litter (if applicable) at a costco type store, that's what we do and we pay less
Home supplies = 100 --- what is this? is this toilet paper and cleaning supplies or random decor? we don't have this category.
Restaurant/Alcohol = 500 (we have cut back, this month so far it is 250, however, going to happy hour today :/)---this is totally insane. we make similar incomes. our date night and going out budget is $100 a month. we pack breakfast and lunch for work, as well as coffee, and only buy food out as an outing type thing, no takeout or convenience food.
Bowling/Movies = 75 --- in addition to $500 for restaurant and alcohol you have this? cut the movies, you don't need to see movies on a giant screen for an insane price. cut the bowling too unless it's a serious passion and you're part of a league.
Amazon = 100 – this is household items (laundry detergent, sponges, etc.)--- you have home supplies as a diffrent category, and you have a household items category...what gives? we don't have this category.
Massage = 54 ---nope, we don't have this category
Haircut = 35 --- nope, not monthly, bimonthly
Home Improvement = 100 (plants, shelves, etc.) --- this is your third housewares category. gotta get this under control. we don't have this category.

The internet/cable is the most basic package I could get. I needed the faster internet because I work at home. We just have basic channels with that internet. There is no downgrade.

kwarden13

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Re: First Case Study & New MMM Reader
« Reply #20 on: June 26, 2017, 11:04:22 AM »
I strongly disagree about the groceries. I spend around $600 month for my family of four, and that includes toiletries, household staples/cleaning supplies, and plenty of splurges like wine and cheese, wild salmon, etc. $350 for one person is insane.

The $350 is for 2 people. I guess some categories our merged with my fiance and others are not. I guess I should create a joint budget.

kwarden13

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Re: First Case Study & New MMM Reader
« Reply #21 on: June 26, 2017, 11:05:58 AM »
I would keep the car, and by that I mean I keep it for a long time.  What's the point in selling and taking a loss? Yes, the car payment is significant but I wouldn't worry about that just yet.

A few facepunches...
  • $75/month on movies and bowling? My net worth is in the high six figures and I spend $0 monthly on movies and bowling.  Get Netflix and cut that expense. 
  • $300/month on household expenses is ridiculous.  What are you spending that on?
  • $500/month on restaurants/alcohol when you already spend $350 on groceries is also excessive.  If you have to drink, drink at home.. allow yourselves one happy hour a month or something like that.  You can easily cut that in half without sacrificing much.

That is just the low hanging fruit... things you can cut easily without much of an effort.  You sound pretty athletic so the crossfit/massage expense I think are the least of your worries... especially if it's something you enjoy.

I would use the proceeds from your house sale to completely eliminate your student loans, then pay off the December 2017 credit card balance.  Then use the savings from the student loans each month to pay down your car loan, meanwhile paying off the credit card balances as they come due.  I honestly think that is your best plan of action.  You should be debt-free except your mortgage in very little time and then all that savings each month can go toward investment goals.

Good luck! Don't sweat the smaller expenses...

What's the point of selling the car for a loss? He's already lost 3k due to depreciation in very little time. If he keeps the car, it will keep depreciating at a crazy rate, losing more and more on it each year. Not to mention assuming his loan is 5 years, even at a 'low' 2.25%, he's also lost $1500 in interest. IMHO this is just throwing good money after bad. It's already a loss, it's just a matter of how much and for how long. I suggest he stops the bleeding and gets out of it now, downgrades to a reliable used car for 5k-10k, pays cash, and eliminates that nasty pointless payment.

That payment btw is the same is the restaurant/alcohol budget. That latter needs to be reduced, but with his cash windfall, he could out of his new car, drive a used one, not change his lifestyle at all in the worst case and get to invest about 30k over the next 5 years instead of paying for that car. The car is the elephant in the room, toilet paper and haircuts, and even cutting back on going out drinking or to dinner a few times a month all add up, but all still seem like small potatoes compared to the car.

I looked at getting another car and came to the conclusion I do not want to drive a beater car. So I will most likely keep my car or get a CPO, however, that is not much cheaper than what I owe.

PDXTabs

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Re: First Case Study & New MMM Reader
« Reply #22 on: June 26, 2017, 09:14:29 PM »
The $350 is for 2 people. I guess some categories our merged with my fiance and others are not. I guess I should create a joint budget.

Or at least a joint budget for some expenses. My ex-fiance and I had a joint checking account that we both paid into for shared expenses (insurance, groceries, utilities, etc). We funded it based on how much each of us took home after taxes. It worked very well and took stress out of our relationship.

I looked at getting another car and came to the conclusion I do not want to drive a beater car. So I will most likely keep my car or get a CPO, however, that is not much cheaper than what I owe.

My mom recently got a CPO Kia Soul with 7k miles on it for $12k. It's the most expensive car that she has ever owned, but it is also probably the last car that she will ever need.

EDIT - My 2014 Ford Focus SE Hatchback is not a beater, and KBB says that if you were to buy it off of me $7,500 would be a fair price. But it's not for sale ;).
« Last Edit: June 26, 2017, 09:18:20 PM by PDXTabs »

kwarden13

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Re: First Case Study & New MMM Reader
« Reply #23 on: June 27, 2017, 08:22:41 AM »
The $350 is for 2 people. I guess some categories our merged with my fiance and others are not. I guess I should create a joint budget.

Or at least a joint budget for some expenses. My ex-fiance and I had a joint checking account that we both paid into for shared expenses (insurance, groceries, utilities, etc). We funded it based on how much each of us took home after taxes. It worked very well and took stress out of our relationship.

I looked at getting another car and came to the conclusion I do not want to drive a beater car. So I will most likely keep my car or get a CPO, however, that is not much cheaper than what I owe.

My mom recently got a CPO Kia Soul with 7k miles on it for $12k. It's the most expensive car that she has ever owned, but it is also probably the last car that she will ever need.

EDIT - My 2014 Ford Focus SE Hatchback is not a beater, and KBB says that if you were to buy it off of me $7,500 would be a fair price. But it's not for sale ;).

I realize I could save money with either of those, however, I enjoy a nice car. Yes, I have debt, however, I will get out of it in about a year. And would rather drive a nicer car.

former player

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Re: First Case Study & New MMM Reader
« Reply #24 on: June 27, 2017, 09:30:59 AM »
I realize I could save money with either of those, however, I enjoy a nice car. Yes, I have debt, however, I will get out of it in about a year. And would rather drive a nicer car.
Your "nice car" is not just about the debt you hope to get rid of in about a year, it is about the lost opportunity to spend that money on something more productive.

On the other hand, if you are not confident about buying second hand and the car is worth less than the loan, be prepared to maintain it well (learning to do the simpler things yourself) and keep it for 20 years, in which case the capital cost looks a lot more reasonable.
Be frugal and industrious, and you will be free (Ben Franklin)

kwarden13

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Re: First Case Study & New MMM Reader
« Reply #25 on: June 27, 2017, 08:19:03 PM »
My other option is to lease which I know people on here think is horrible. However, I never keep my car more than 5 years so my fiance was thinking maybe leasing makes sense. Instead of being upside down. I realize this is a personal choice, but it would free up cash flow. I wish I could say I would keep a car for 15+ years but I know deep down that won't happen. I like driving nice cars with new technology.

YoungGranny

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Re: First Case Study & New MMM Reader
« Reply #26 on: July 05, 2017, 09:07:47 AM »
You really need to drive a car for more than 5 years if you truly want to correct your course. I have a 4.5year old car right now and it still feels brand new to me. I don't even desire a new car because I don't put myself in a position to be sold one. Figuring out the car piece has been a huge component to my financial independence goals. Without a car payment I freed up $350 a month to be reinvested. I paid that off 3.5 years ago so that equals $15k over the last 3.5 years. My husband has done the same thing which got us the $30k down payment for our new rental unit. We obviously save and invest in other areas but I will be able to retire before I'm 35 if I choose to and have ~$60k coming in annually from real estate so these decisions matter. You came here asking for help so I'm assuming you want to pay off your debt and start paving a path to financial independence, cars are a HUGE waste of resources in that regard so I urge you to look at the numbers again.

ixtap

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Re: First Case Study & New MMM Reader
« Reply #27 on: July 05, 2017, 10:07:54 AM »
My other option is to lease which I know people on here think is horrible. However, I never keep my car more than 5 years so my fiance was thinking maybe leasing makes sense. Instead of being upside down. I realize this is a personal choice, but it would free up cash flow. I wish I could say I would keep a car for 15+ years but I know deep down that won't happen. I like driving nice cars with new technology.

You think you like new technology now, try keeping you car for ten years. You will really appreciate the new features over the incremental changes of updating so often!

I kept my standard Cavalier for ten years and when I replaced it with a hybrid, why I am still telling people about how nice it was to pull up to the gate on the hill at work and have power windows and an automatic to swipe my card and get going again! That doesn't even get into the gas mileage and the training system to help you drive more efficiently.

Frugality is a mindset. Many of us here have an area that we won't compromise in, but the key is understanding how that spending affects your goals. We spend on our boat. Our long term goal is to go cruising on this boat. Obviously, our spending and our goals are inline with each other.

Laura33

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Re: First Case Study & New MMM Reader
« Reply #28 on: July 05, 2017, 10:21:46 AM »
I realize I could save money with either of those, however, I enjoy a nice car. Yes, I have debt, however, I will get out of it in about a year. And would rather drive a nicer car.

You will get out of debt in about a year because of a one-time windfall from selling a property.  Meanwhile, you have over $10K in credit card debt, which suggests that your overall lifestyle exceeds your income.

If you really want to break the cycle your are in, you need to prioritize what you can afford above what you prefer.  And, generally, if you have to take out a big loan to pay for it*, you can't afford it. 

Look, I get it -- I love cars, and in fact I currently own a totally stupid one.  But I'm also 51 and FI -- and I got there by *not* getting the car I really wanted for 25 years.  If you really want to be FI, you need to learn to delay gratification, to earn your "wants" after your "needs" and "shoulds" are covered.  That nice car can be a treat to look forward to once your debts are taken care of and your savings is on track.

*Mortgages and some student loans excepted.
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neo von retorch

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Re: First Case Study & New MMM Reader
« Reply #29 on: July 05, 2017, 10:22:37 AM »
So, to summarize, you have $60k in savings, $53k in annual expenses and can put $800 into savings each month. You need to add $1.27 million to your portfolio to become financially independent. Right now, that will take you 132 years. However, you like a fancy new car with cool electronic toys every 5 years (or less), so you don't feel that you should make any changes? Did I miss anything?

OK, that was harsh, but what I've seen here are suggestions and rebuttals. You are here because you realize you need to make changes. The first change you'll need to make is to realize you can't rationalize away the problem. $87 / month for cable + internet is really high for a basic package. Double check that you only have one provider of internet. Double check that they don't offer any basic/economy internet packages (or even promotions. Maybe you have to cancel - or threaten to - but you can almost certainly negotiate a better deal.) And "working from home" is not a magic justification for "faster" internet. What exactly does "working from home" entail - do you live stream 4k video between you and several co-workers? Because a whole lot of "internet-y" things we do actually only require about 1Mbps... even Netflix can be watched at about 3-5 Mbps. Nearly $500/month is way too high for a car when you've got a lot of (consumer) debt and often are spending more than you make. Consider driving an 8 year old car for a while, and you'll start socking away money, avoiding debt, and then you can come back and buy a car you really want after you've got a stash of cash invested and working for you. Go back and re-read the suggestions... especially the ones where you replied "oh but I can't!" Because you need to open your mind to change, or there will be no change, and you will continue to spin your wheels in your current predicament.
« Last Edit: July 05, 2017, 10:34:33 AM by neo von retorch »

kwarden13

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Re: First Case Study & New MMM Reader
« Reply #30 on: July 05, 2017, 11:52:14 AM »
Ok, So my fiance and I are now starting to save $1500 a month in August. We redid our budget and agreed in August to start consolidating our finances and trying this new budget. Not trying to make excuses but prior I was moving around for work and just settled. The credit card debt is at 0% and was for the house we just bought. We added a deck and fence and can easily pay off by next year. So it is not due to us putting misc luxury items on. Also, regarding internet/cable, I have the highest speed internet with just 20 or so channels for free. I need the higher internet because I work from home. Also, $87 for both is a really good price where I live (zip is 21040 if you can find better at 100 mb internet).

And I did turn in my car to lease one, I know many will say it is stupid. However, I know I will not keep a car longer and this is cheaper. Maybe I will buy it in 3 years who knows. Everyone focuses on the car, however, if I am still saving $1500 a month plus maxing out 401ks not sure why a $300 car payment matters. My insurance did not go up and I will not have maintenance. I am guessing this blog is not really right for me. I am 28 years old and looking to retire for 20-25 years. I am maxing out a 401k and saving $1500 a month plus have a pension at work. My projected retirement money is between $2-4M. Also, my fiance is maxing out her 401k and has a state pension.

We are going down to a $600 budget for food and restaurants. We will aim to be below that, however, trying to be realistic at first. So our monthly expenses going forward TOGETHER come to $4963 including gas, food, etc. and we will save $1500 a month plus max out 401ks. Additional money will be split into our individual checking accounts. We will see where we are in a month and adjust as needed.

I close on my house July 14th so will get approximately $60k. I will be paying off my student loans and cc debt plus keeping $5k in case of taxes (rented out property for 2.5 or 4 years).
« Last Edit: July 05, 2017, 12:12:31 PM by kwarden13 »

ixtap

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Re: First Case Study & New MMM Reader
« Reply #31 on: July 05, 2017, 12:22:26 PM »
Why does $300 matter?

Because you said you wanted to save more.

Because your budget doesn't include any travel. Is all of your family either local or estranged?

Because your home improvement category seems a bit on the low side for actual home improvements, and because you list decorative items in that category, rather than actual home improvements.

Because you don't actually seem to have a solid concept of your budget, so it appears to be more aspirational than realistic.

Because $60k now, plus $1500/month with 5% interest will net you about $1.1m in 25 years, which will not support your current lifestyle if you withdraw 4%. Again, not bad, but not in line with your stated goals.

kwarden13

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Re: First Case Study & New MMM Reader
« Reply #32 on: July 05, 2017, 12:29:31 PM »
ixtap, the $1500 a month is in addition to maxing out both my fiance and my 401ks. So it is more like $3000 going into 401ks and $1500 into Vanguard. Also, we both have pensions. I will do another case study soon with what we actually spend this month. My father just passed away so expenses in the past 6 months have included family stuff and helping out my mom. So they are not normal which is why it is hard to say for sure. Constant travel and back and forth have made out restaurant bills, hotel, etc way higher. The above is my best guess. I have been flying back and forth for months every week to help out since he was in a nursing home and hospital. At the time, frugality was not the most important so yes there were tons of extra expenses. Even renting cars every week and that is not cheap.

The only family I have is my mother, and most travel is paid for with credit card hacking. Right now, I have 100k southwest miles and 7 days free at Marriott.
« Last Edit: July 05, 2017, 12:31:16 PM by kwarden13 »

neo von retorch

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Re: First Case Study & New MMM Reader
« Reply #33 on: July 05, 2017, 12:35:56 PM »
It sounds like you might be doing better than the initial set of numbers might indicate. As others have said, the biggest risk for you is to run up credit card debt again. If you continue to max retirement contributions and make healthy contributions to your brokerage account, the rest is "fine-tuning" optimization level stuff. Yes, it's not a bare bones budget, but it's not "hair on fire" (assuming you use the windfall wisely and continue to watch your expenses and prevent consumer debt.)

While me and other posters are happy to face punch and be critical, I can understand why you're comfortable with things as they are. You probably enjoy your career at this time. If you ever feel like the time you're spending at work is getting in the way of other things you value more, then you can start to take a closer look at your spending choices, and see if there are places you can cut that will make a meaningful difference.

ixtap

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Re: First Case Study & New MMM Reader
« Reply #34 on: July 05, 2017, 12:43:46 PM »
One point you are missing is that a budget is average monthly costs, not a snapshot. If you think you are happy with your current spending, track for a few months and set your budget from the averages, including the overspending of the last few months because shit happens and should be budgeted for.

Another crucial point is that for most forum participants, the question isn't your actual spending, but whether or not your spending aligns with your long term goals. For a vocal few, actual spending matters, as well, and they will always point out where cuts can be made. Either way, it can help to be more specific about your goals when posing a case study.

kwarden13

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Re: First Case Study & New MMM Reader
« Reply #35 on: July 05, 2017, 12:48:06 PM »
Thank you all for the responses. I am going to track over the next 3 months using personal capital and report back. Also, since I no longer have the family emergency stuff the budget should be more in line with what we spend. We are also merging accounts and what not so tracking will be easier. Again, thank you for the responses but for now I am going to try to follow a more strict budget and will report back. Who knows, maybe I will be able to save more.

Laura33

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Re: First Case Study & New MMM Reader
« Reply #36 on: July 05, 2017, 02:12:14 PM »
Why does $300 matter?

Because you said you wanted to save more.

Because your budget doesn't include any travel. Is all of your family either local or estranged?

Because your home improvement category seems a bit on the low side for actual home improvements, and because you list decorative items in that category, rather than actual home improvements.

Because you don't actually seem to have a solid concept of your budget, so it appears to be more aspirational than realistic.

Because $60k now, plus $1500/month with 5% interest will net you about $1.1m in 25 years, which will not support your current lifestyle if you withdraw 4%. Again, not bad, but not in line with your stated goals.

And because the underlying attitude continues to be "consume now, pay later."  The path to wealth reverses the order.

I do wish you well, though -- good luck with the new budget and combining finances and all of that, and let us all know how it goes.
Laugh while you can, monkey-boy

DarkandStormy

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Re: First Case Study & New MMM Reader
« Reply #37 on: July 06, 2017, 09:40:58 AM »
Also, regarding internet/cable, I have the highest speed internet with just 20 or so channels for free. I need the higher internet because I work from home. Also, $87 for both is a really good price where I live (zip is 21040 if you can find better at 100 mb internet).

And I did turn in my car to lease one, I know many will say it is stupid. However, I know I will not keep a car longer and this is cheaper. Maybe I will buy it in 3 years who knows. Everyone focuses on the car, however, if I am still saving $1500 a month plus maxing out 401ks not sure why a $300 car payment matters. My insurance did not go up and I will not have maintenance. I am guessing this blog is not really right for me. I am 28 years old and looking to retire for 20-25 years. I am maxing out a 401k and saving $1500 a month plus have a pension at work. My projected retirement money is between $2-4M. Also, my fiance is maxing out her 401k and has a state pension.

We are going down to a $600 budget for food and restaurants. We will aim to be below that, however, trying to be realistic at first. So our monthly expenses going forward TOGETHER come to $4963 including gas, food, etc. and we will save $1500 a month plus max out 401ks. Additional money will be split into our individual checking accounts. We will see where we are in a month and adjust as needed..

Without divulging too much, may I ask what you do?  I've worked from home here and there just fine on 15 Mbps and 10 Mbps internet speeds.  We pay $30/month right now - ditched cable and use Netflix and a ~$50 antennae for a few channels.  Anyway, point being...do you NEED 100 Mbps?

No need to get defensive about the blog/site.  You are in great shape and sounds like you've been doing some trimming (I'm the same age, with a fiance as well).  Do you have a goal in mind?  Be set up to retire FI ... at some point?  As soon as possible?  That's what these face punches are.  The lower your expenses are now, the more you can throw into your nest egg.  So that's why every little detail is looked at.  And no, leasing will not be cheaper.  You get no asset at the end!  Leasing is literally the most expensive way to "own" a vehicle.  If you think your anticipated interest in a car will be 36 months, just get a 36 month loan.  You're paying ~$11K over 3 years to "rent" this car and then have nothing to show for it.  And residual values are set up so that you have to pay more than it'll actually be worth (unless their actuaries suck).  So no, $300/month isn't going to make or break your potential FI, but it's the most expensive option to have a car.

So annual expenses of $60,000 for the two of you?  I'd have to go back and re-read some of your posts, but I'm guessing (hoping?) that includes student loans as well.  What are your non-mortgage, non-student loan expenses?

As I mentioned, I'm the same age, with a fiance and no shared checking account or CC.  We've been tracking our "shared" expenses on a Google Sheet.  It's pretty easy.  Any expense that we will both share in - groceries, household items, restaurants, etc. - that one of us pays for goes on the Google Sheet.  Then, we see how much we spent that month and if one of us is owed money - it's typically a small amount.  Depending on your incomes, you can do a 50/50 split or try to split it closer to your salaries - the idea being that you both have roughly the same amount to spend or save on your own (it's hard to get it perfect, but I guess you could track it down to the dollar).  It's up to you of course, but if you BOTH want to FIRE at roughly the same time, it's something to consider so you are investing the same amount to 401k's, IRA's, etc.
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DarkandStormy

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Re: First Case Study & New MMM Reader
« Reply #38 on: July 06, 2017, 10:01:07 AM »
ixtap, the $1500 a month is in addition to maxing out both my fiance and my 401ks. So it is more like $3000 going into 401ks and $1500 into Vanguard.

Would be interested to see/hear the break out of this between you and your fiancee.  Is the additional $1,500/month into Vanguard $1,500/person or $750/person or some other split?  I.e. $1,500 total or $1,500 per person.

$3,000 indicates you are both maxing out 401ks, which indicates on your original budget you will need to up your pay stub from $618 to $692. leaving you with $148 less take-home income per month.  This was on top of the $794 "take home" savings you had in that budget.  So you are down to $646.  Yet, somehow you're coming up with ~$750/month to contribute additionally into Vanguard (perhaps via the car sale -> loan reducing your car payment?).

If that's how that shook out, you are leaving yourself with no money to pay down your CC debt and/or student loans, unless you DRASTICALLY reduced your monthly expenses.  I think an updated August budget is needed.

Either way, you should be throwing all your extra money at that debt and not into a taxable Vanguard account just yet.  And when you do get to that point, I'd look at a Roth IRA instead of a taxable brokerage account.
The Chase Trifecta:
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https://www.referyourchasecard.com/6/2MOVOLZCEJ
Earn a $150 bonus with Chase Freedom Unlimited - only $500 spending needed in 3 months.
https://www.referyourchasecard.com/18/ENYF0FTS66
Earn a $150 bonus with Chase Freedom - only $500 spending needed in 3 months.
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kwarden13

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Re: First Case Study & New MMM Reader
« Reply #39 on: July 06, 2017, 02:24:29 PM »
So this is budget I just did with my fiance. And we have decided to contribute based on income. On top of the above, we will max out 401k and save an additional $1500 a month between the both of us. This is what we think is doable for now and then we will re-evaluate. We have never combined income so we will see how it goes and make additional cuts later on. The student loans will be paid off this month and so will $10k of credit card debt. We are opening a joint checking and will start depositing our share of expense money into that account and then deposit our savings into a separate account. All money left over will go into our regular checking accounts for now.

Expense   
Mortgage   $2,605.00
HOA   $70.00
Security System   $50.00
Cell Phones   $80.00
Car Payments   $648.00
Insurance   $285.00
Utilities   $200.00
Cable + Spotify + Netflix   $100.00
water + trash   $75.00
Food+Restaurants   $600.00
Gas   $250.00
Total   $4,963.00
« Last Edit: July 06, 2017, 02:28:28 PM by kwarden13 »

DarkandStormy

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Re: First Case Study & New MMM Reader
« Reply #40 on: July 06, 2017, 03:07:40 PM »
^Nice update.

A few things as an outsider here - why are car payments + insurance included in your "together" budget? I assume you're on different payoff plans, etc. so why would the expenses be shared?

Why is the "extra savings" going towards a taxable investment account and not a Roth?

This isn't entirely the "total picture" as you still have your own personal hair cuts, massages, CrossFit (if you kept it), etc.  I would have assumed some form of household supplies/pet supplies would have stuck as those are hard to make go away completely.

Multiple people have brought up why the need for 100 meg internet - most people do fine on 20 Mbps or less, even if they work from home.

Does your fiance work from home as well?  If not, how are you two spending $250/month on gas?  Conservatively, that's 120 gallons of gas per month.  At an average of 25 mpg that's 3,000 miles per month or 36,000 miles per year for two of you.  How are you each driving 18,000 miles a year?

Anyway, some nitpicking in there, but without your own personal expenses taken into account, you don't have a clear picture of trying to get out of your debt.
The Chase Trifecta:
Earn 50,000 Ultimate Rewards points with Chase Sapphire Preferred - $4k spending in 3 months.
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Earn a $150 bonus with Chase Freedom Unlimited - only $500 spending needed in 3 months.
https://www.referyourchasecard.com/18/ENYF0FTS66
Earn a $150 bonus with Chase Freedom - only $500 spending needed in 3 months.
https://www.referyourchasecard.com/2/DBOP9XI9XT

Recommended Cell Servce - Google's Project FI: https://g.co/fi/r/THK0WX

kwarden13

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Re: First Case Study & New MMM Reader
« Reply #41 on: July 06, 2017, 03:22:53 PM »
The car payments and insurance are considered household expenses. She likes having one bigger car and her car is more economical so we share those expenses. Crossfit would come out of whatever is left over. Right now with the below budget, max out of 401ks, and $1500 savings, we will both have some extra money a month go into our checking accounts. This would pay for things like crossfit or other personal expenses. I am sure there will be more tweaks but this is where we are starting. Not sure we can open a roth, I need to find out more. I make $125k and my fiance makes $90k. If we get married, can we still have a roth?

I can look at cheaper internet but right now I think $80 for internet and cable is a good deal. I will look again though as i am not opposed to a lesser plan. We probably do less than $250 on gas however I was just trying to estimate. This next month we will track it and update.


DarkandStormy

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Re: First Case Study & New MMM Reader
« Reply #42 on: July 07, 2017, 08:59:39 AM »
The car payments and insurance are considered household expenses. She likes having one bigger car and her car is more economical so we share those expenses. Crossfit would come out of whatever is left over. Right now with the below budget, max out of 401ks, and $1500 savings, we will both have some extra money a month go into our checking accounts. This would pay for things like crossfit or other personal expenses. I am sure there will be more tweaks but this is where we are starting. Not sure we can open a roth, I need to find out more. I make $125k and my fiance makes $90k. If we get married, can we still have a roth?

I can look at cheaper internet but right now I think $80 for internet and cable is a good deal. I will look again though as i am not opposed to a lesser plan. We probably do less than $250 on gas however I was just trying to estimate. This next month we will track it and update.

You are ineligible to contribute to a Roth as a single filer if your MAGI is above $133K.  Phase-outs start at $118K.  If you get married, you are ineligible if your MAGI is above $196K with phase-outs starting at $186K.

You could look at a Traditional IRA (tax-deferred, like a 401(k)).

You could also look at a backdoor Roth IRA - http://www.rothira.com/what-is-a-backdoor-roth-ira

Ignoring any of these options means you'll be paying unnecessary taxes for several years so I think it's worth exploring those options.

Good luck to you and your fiance with these changes!  Hope you guys are on the same financial page now.

If ~$60K annual expenses is what you two are able to stick to - and that's without taking into account personal expenses so it could be higher - you'll need a $1.5m stash to FIRE.  If it's more like ~$70K (with things like CrossFit, hair cuts, etc. taking into account) it's $1.75m.  And that's only after clearing all of that debt - of course, your mortgage will eventually no longer be an expense down the line.

http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

Not sure if the additional $1,500 is per person or a total sum between the two of you.  I guessed the later.  So based on my admittedly very rough calculations, it sounds like you two will be saving ~35% of your after-tax income towards retirement.  If that is true, you're looking at 25 years until FIRE (assuming you are starting at zero and clear your debt - so a lot is subject to change).  Just FYI.
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kwarden13

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Re: First Case Study & New MMM Reader
« Reply #43 on: July 14, 2017, 11:33:25 AM »
Just now, I paid off $45k in student loans. $8k of cc debt, transferred $7k into savings for taxes and emergency fund! I will admit it was hard to hand over $45k for student loans but so glad it is done. One step closer to debt free!

Kwill

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Re: First Case Study & New MMM Reader
« Reply #44 on: July 15, 2017, 02:43:59 PM »
Just now, I paid off $45k in student loans. $8k of cc debt, transferred $7k into savings for taxes and emergency fund! I will admit it was hard to hand over $45k for student loans but so glad it is done. One step closer to debt free!

Congratulations!!

kwarden13

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Re: First Case Study & New MMM Reader
« Reply #45 on: July 17, 2017, 10:10:01 AM »
All my payments went through this morning! Only debt I have is mortgage, car payment, and $9k between my fiance and me! So close to getting rid of the rest of CC debt. I have a bonus of $3-5k coming in August so hopefully cc debt gone by November or so. Thank you everyone!

dycker1978

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Re: First Case Study & New MMM Reader
« Reply #46 on: July 17, 2017, 10:45:19 AM »
Congrats on the student loan pay off.

I do need to ask, you state that your combined yearly income is ~215,000.  With no deductions if my Google search was right that leaves ~ 150k.

your expenses are stated at $60k, leaving 90k.

At 1500 a month - $18000, or $36000(if you are investing $1500 each, I am not clear on this)

Plus $750 after payroll - $9000

so 90k- 36k - 9k = $45000.  There is not any account I can see for $45k a year

neo von retorch

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Re: First Case Study & New MMM Reader
« Reply #47 on: July 17, 2017, 10:53:09 AM »

At 1500 a month - $18000, or $36000(if you are investing $1500 each, I am not clear on this)


$36,000. She's said they both max 401(k)... multiple times in this thread ;)

dycker1978

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Re: First Case Study & New MMM Reader
« Reply #48 on: July 17, 2017, 10:55:10 AM »

At 1500 a month - $18000, or $36000(if you are investing $1500 each, I am not clear on this)


$36,000. She's said they both max 401(k)... multiple times in this thread ;)

That is what I used, still seems to be missing 45k...

kwarden13

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Re: First Case Study & New MMM Reader
« Reply #49 on: July 17, 2017, 11:02:12 AM »

At 1500 a month - $18000, or $36000(if you are investing $1500 each, I am not clear on this)


$36,000. She's said they both max 401(k)... multiple times in this thread ;)

That is what I used, still seems to be missing 45k...

After taxes, health insurance, and maxing out 401k we take home about $4300 every two weeks (roughly $8600 monthly). In addition, to the 401k and such, we will save $750 every 2 weeks combined (about $1500 a month). So we are saving $36k in 401k and another $18k personal. We live near Baltimore, MD so taxes are a little high (federal, state, and city here).

  $8600 monthly
- $1500 monthly
_________________
  $7100 monthly left for expenses

The above scenario is with us already maxing out 401ks. We have about $5600 budgeted for joint expenses and rest split between our individual checking accounts. We could probably save another $1000, however, right now we are just trying this budget starting in August.

Combined Expenses starting August

Expense   
Mortgage   $2,605.00
HOA   $70.00
Security System   $50.00
Cell Phones   $80.00
Car Payments   $648.00
Insurance   $285.00
Utilities   $200.00
Cable + Spotify + Netflix   $100.00
water + trash   $75.00
CC   $750.00
Food+Restaurants   $600.00
Gas   $150.00
Sub- Total   $5,613.00


« Last Edit: July 17, 2017, 11:17:29 AM by kwarden13 »