Author Topic: General Overview - Seeking Feedback and Advice  (Read 1407 times)

jpitts1989

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General Overview - Seeking Feedback and Advice
« on: June 13, 2018, 07:24:40 PM »
Hello All,

I have been researching ways to become financially independent and came across Mr. Money Mustache a few days ago. I wanted to get a better understanding of where we are and get some advice regarding our current situation. I will attach the excel I created to give you a breakdown of everything but here are the cliff notes.

Married with no children
Live in Denver, CO with plans to move back to Florida in ~2 years

I just received a promotion into a tech sales role and we are anticipating a jump in pay. My estimate would be between $20K – $100K more depending on my success. 

Annual household income before taxes: $89,000
Annual Expenses: $35,000
Annual Savings (401K and HSA): $9,300

Total Debt (Mostly Student Loans): $25,790
Total Savings - Retirement/Cash: $67,500

Question #1 – My student loans are broken down as follows and I am curious if refinancing them would be worth it? I am unsure what the “outstanding interest” is referring to? Is it strictly how much interest is left on the loans?

Student Loan 1 – $9702 is 5.96% interest rate “Outstanding Interest” is $14.25

Student Loan 2 – 13,688 is 5.59% interest rate “Outstanding Interest” is $18.86

Question #2 – Given the increase in income what should be a target savings rate?

Question #3 – Do any sales people have advice on how to manage commission peaks and valleys? Example: July Commissions = $15K and a drought for August, September, October

I appreciate you taking the time to read our situation and provide feedback in advance! 

MDM

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Re: General Overview - Seeking Feedback and Advice
« Reply #1 on: June 13, 2018, 08:08:03 PM »
Question #1 – My student loans are broken down as follows and I am curious if refinancing them would be worth it? I am unsure what the “outstanding interest” is referring to? Is it strictly how much interest is left on the loans?

Question #2 – Given the increase in income what should be a target savings rate?

Question #3 – Do any sales people have advice on how to manage commission peaks and valleys? Example: July Commissions = $15K and a drought for August, September, October
jpitts1989, welcome to the forum.

1) If you can refinance to a lower rate with no closing costs, it would be worth it.  The interest might be the amount that has accrued since your last payment but that is a guess.

2) As much as you reasonably can.  You get to define "reasonably".

3) N/A

Appears you are comfortable with spreadsheets.  You might put your numbers into the case study spreadsheet and see what that tells you.  Good luck!

ysette9

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Re: General Overview - Seeking Feedback and Advice
« Reply #2 on: June 13, 2018, 10:16:10 PM »
At those interest rates i would recommend getting rid of those loans as quickly as possible. Throw all of your extra money at the loans (make sure you contribute to your 401(k) at least to the match you may get) until they are gone. Then max out your savings. For varying income, if you can plan to live on your base minimum and then put the varying extra into savings then the swings won’t matter to your day-to-day budget.


CowboyAndIndian

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Re: General Overview - Seeking Feedback and Advice
« Reply #4 on: June 14, 2018, 07:17:46 AM »
Please put together a case study so that you can provide detailed information and we can help.

https://forum.mrmoneymustache.com/case-studies/how-to-write-a-'case-study'-topic/

jpitts1989

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Re: General Overview - Seeking Feedback and Advice
« Reply #5 on: June 14, 2018, 05:07:00 PM »
Thanks for your feedback everyone! We plan to tackle the student loans next as that seems like the most logical answer. I will have to take some time adding everything into the case study spreadsheet.

okits

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Re: General Overview - Seeking Feedback and Advice
« Reply #6 on: June 14, 2018, 08:45:37 PM »
Question #2 – Given the increase in income what should be a target savings rate?

It depends on your and your spouse's goals.  But if I were to give general advice, throw all of the increase at your debt until it's gone, then consider if you want to increase your spending a little.

Quote
Question #3 – Do any sales people have advice on how to manage commission peaks and valleys? Example: July Commissions = $15K and a drought for August, September, October

The rough numbers provided ($89k income, $35k expenses) suggest that you live sufficiently below your means that the peaks and valleys shouldn't matter.  The $15k month should cover five months of living expenses.  And that's before taking into account any base salary or partner's income.  If this is a specific concern of yours, could you elaborate more as to why?

jlcnuke

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Re: General Overview - Seeking Feedback and Advice
« Reply #7 on: June 25, 2018, 07:48:58 AM »


Annual household income before taxes: $89,000
Annual Expenses: $35,000
Annual Savings (401K and HSA): $9,300

Total Debt (Mostly Student Loans): $25,790
Total Savings - Retirement/Cash: $67,500

Question #1 – My student loans are broken down as follows and I am curious if refinancing them would be worth it? I am unsure what the “outstanding interest” is referring to? Is it strictly how much interest is left on the loans?

Student Loan 1 – $9702 is 5.96% interest rate “Outstanding Interest” is $14.25

Student Loan 2 – 13,688 is 5.59% interest rate “Outstanding Interest” is $18.86

Question #2 – Given the increase in income what should be a target savings rate?

Question #3 – Do any sales people have advice on how to manage commission peaks and valleys? Example: July Commissions = $15K and a drought for August, September, October

I appreciate you taking the time to read our situation and provide feedback in advance!

First off, you're expenses + savings doesn't seem to account for all of the after tax income you should have based on that income.

For your questions:
#1 - If you can save money by refinancing, do so. If it costs you too much to save money refinancing, then don't.

#2 - As a general rule, I advocate saving at least 50% of any increase in pay you receive (change in take-home that is). So if you get an additional $20k/year take home, save at least an additional $10k/year, more is always good too though. Doing that will allow you to increase your lifestyle some AND ensure that you're making up the difference in your savings to account for the increased spending level over time.

#3 - The simple answer would be to keep your budget at or below your base salary, so paying the bills does not depend on the commissions. Then the commission checks are bonuses that you can save/invest and use for discretionary expenses.