Author Topic: How am I Doing? WWYD?  (Read 3503 times)

CrabboStache

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How am I Doing? WWYD?
« on: October 31, 2019, 07:18:24 PM »
Hi, all. I am a 24 YO single female. Living in a relatively low cost of living region. Working in local government for 2 years now. Gross annual income of approximately $31,500 (I say approximately because I volunteer for once per month on-call shifts that are hard to factor in). Associate's degree in General Studies, limited background - mostly customer service experience (ie service industry/retail).

Monthly expenses (based on 5.5 month averages):
Transportation (NOT including car insurance): $41.45
Car insurance: $59.71
Health: $47.17
Electric: $42.27
Pets: $96.02 (This is perhaps unusually high, includes my cats' annual exam and entire set-up of a hermit crab aquarium, but rolling with what the 5.5 month average produced)
Hygiene: $14.85
Clothes: $48.20
Others/Gifts: $28.91
Entertainment: $33.25
Eating/Drinks Out: $39.40
Groceries: $142.05
Household Items: $36.63
Gym Membership: $16.61
Rent: $355
Internet: $50

Total average monthly expenses: $1010.07

I max out my Roth IRA annually, contribute $118/month to a 457 plan, have opted in to maxing out my HSA in 2020, and fiddle around with some REITs in Robinhood. I am saving cash in a HY savings account, ideally for a house - but am not in a particular hurry to purchase as I am quite happy with my current living situation. If my current situation should randomly fall through, I have a strong familial relationship that is willing to have me live with them for $200/month rent. But having options is nice.

Current asset values:
Savings accounts: $9285.13
Roth IRA: $14,464.72
457: $1258.16
HSA: $2588.32
401h: $1076.99
Robinhood: $155.29

Total of assets: $28,828.61

Does anything in particular stand out to you as a ridiculous expense? Any area (expense or resource) that you would tighten up in? I am working with a relatively small income, but have several different goals including home ownership and retirement by 40. I find the two difficult to juggle with my current income stream. My car is fully paid for, no debts, and my employer does offer a defined benefit pension plan. For simplicity sake, I am not including that in my Case Study. But a mandatory 5% of my gross income does fund that pension.

(Edited to add total monthly expenses & total resource value)
« Last Edit: October 31, 2019, 07:23:51 PM by CrabboStache »

Imma

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Re: How am I Doing? WWYD?
« Reply #1 on: October 31, 2019, 07:23:15 PM »
Honestly @CrabboStache if I wanted to nitpick I could say that your entertainment budget could be cut or that your eating out budget is fairly high compared to your grocery budget, but honestly, you're doing pretty great already at a fairly low wage! You're 24, debt free, with a full annual income in savings/investments. That's absolutely amazing.

ender

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Re: How am I Doing? WWYD?
« Reply #2 on: October 31, 2019, 07:24:44 PM »
Hi and welcome!

A few thoughts:

  • Car insurance seems high per year, have you shopped around at all?
  • It looks like you're spending about $950/month which is great!
  • After taxes it looks like you are able to save around $1k/month? presumably a big chunk of this is the Roth IRA/457/HSA?

CrabboStache

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Re: How am I Doing? WWYD?
« Reply #3 on: October 31, 2019, 07:31:36 PM »
Hi and welcome!

A few thoughts:

  • Car insurance seems high per year, have you shopped around at all?
  • It looks like you're spending about $950/month which is great!
  • After taxes it looks like you are able to save around $1k/month? presumably a big chunk of this is the Roth IRA/457/HSA?

Hi, ender.

- Admittedly, when I took on the car insurance payment from my parents , I called the current insurer, asked what my coverage was, and asked for quotes from several other insurers for the same amount of coverage. My current insurer came out LEAGUES better, minimum of half the price of competitors. But I never did any leg work to see if the coverage my parents had on the vehicle was suitable for ME. My family is rather conservative, so chances are it was a fairly high level of coverage...perhaps something to look into.
- The 1K estimate per month of savings is probably fairly accurate, it obviously ebbs and flows depending on the given month. Most of that is funneled into the Roth IRA. On Jan 1 I transfer the max contribution out of my HY savings into the Roth IRA.

CrabboStache

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Re: How am I Doing? WWYD?
« Reply #4 on: October 31, 2019, 07:37:53 PM »
Honestly @CrabboStache if I wanted to nitpick I could say that your entertainment budget could be cut or that your eating out budget is fairly high compared to your grocery budget, but honestly, you're doing pretty great already at a fairly low wage! You're 24, debt free, with a full annual income in savings/investments. That's absolutely amazing.

Hi, Imma.

Thank you for your speedy input.

I do struggle with my eating out budget. My friend group eats out all the time (literally got an invite to lunch AND dinner on the same day by one person, LOL. I declined both). But find myself accepting more often than necessary, and once at the venue purchasing more than intended. Definitely an area I need to focus more on.

Entertainment is similar. It is nearly all comprised of a season ticket to a local low-level sports team. A luxury, for sure, but it is live entertainment for approximately 30 nights/year. Plus just the emotional/social investment of being in the grit of a local team. I have toyed with the idea of a half season ticket or just forgoing for a year and listening to the radio broadcasts...but am finding pulling that plug difficult. Will look into weighing the numbers/opportunity cost for the 2020 season purchase. Maybe I can even out some of the eating/drinking out with this expense.

Omy

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Re: How am I Doing? WWYD?
« Reply #5 on: October 31, 2019, 07:38:19 PM »
Increasing income will get you to your goals faster than decreasing spending since you are pretty optimized there. In my opinion, side gigs and/or getting a higher paying job are the keys to success.

terran

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Re: How am I Doing? WWYD?
« Reply #6 on: November 01, 2019, 07:52:20 AM »
First of all, you're doing great!

Spending almost 10% of your spending on pets wouldn't be my choice, but to each their own. Travel is 14% of my budget, so who am I to talk. We all have to choose our priorities.

Given the rent I'm guessing you have have roommate(s)? If so then electric and internet seem a little high to be just your portion. Those are about what we spend in total in a 2 bedroom. Climate could effect the electric through.

Clothes, hygiene, and household items are all about as much as we budget for 2, so those could probably be lower. Clothes depends on how fashionable and current you want to be though. I don't know when the last time I bought clothes was (and it was probably at a thrift store), and my wife buys expensive classic things that last, and is now in "replacement" mode when things wear out, so that's pretty infrequent. We combine household and hygiene, so I don't know how that breaks out for us, just that combined we budget about what you spend.

Other people have already brought this up, but eating out and entertainment (again, combined for us) is about what we budget for both of us, but we're boring "old" (over 30, so you know) people, so take that for what it's worth.

Have you checked with Geico for car insurance? I agree it's a little high, but you might be getting taxed for your age. I think turning 25 helps as long as you've got a clean record.

Like I said, you're doing great, and even though I nitpicked on some expenses you're still spending less than we do on a per person basis. Some people who post have a spending problem and others have an income problem. You're more the latter than the former. If you can just keep your expenses steady, spending your time increasing income will probably have more of an effect for you.

tamuaggie2011

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Re: How am I Doing? WWYD?
« Reply #7 on: November 01, 2019, 08:38:44 AM »
I would say that overall you are doing great. Even in areas where you may be overspending you have acknowledged it and have a reason for why you are currently spending money there.

This is a key behavioral part of personal finance. The ability to splurge on oneself for something that is truly important to you. That is key to happiness, the goal is just to not splurge on every item on the expense side.

As a few other posters have said, I would focus on ways to increase your income. If you can keep your lifestyle the same (approximately treat yourself every now and then) while your income goes up you will begin to see dramatic increases in your net worth.

Further, do not be discouraged or pressured from your friends spending habits. When I first started working, people wanted to eat out or go to expensive bars all the time (Houston has such an eating out culture) and you just have to keep up your personal resolve and know that you are practicing deferred gratification and will have much more later than the $10 Bud Light could buy you know.

Hope this helps and keep up the good work.

partialexponent

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Re: How am I Doing? WWYD?
« Reply #8 on: November 01, 2019, 09:05:18 AM »
Agreed with those who say that the income is the issue, not the expenses.

Your entertainment & eating out expenses are more than reasonable, and it sounds like you are already putting a lot of thought and getting a lot of enjoyment from where you do spend. This isn't a case of "oh i signed up for these subscriptions and barely even use them." I wouldn't even bother spending much time trying to cut down here. Your time & energy would be worth more looking for ways to increase your income.

The car insurance also does not seem high to me either given your age, although you don't specify what kind of car/insurance you have. If this is a 25-year old beater, then sure, maybe a bit high.

To reiterate, you're doing amazing with expenses. Focus your energy on increasing income, which is sufficient for your level of spending but fairly low overall

CrabboStache

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Re: How am I Doing? WWYD?
« Reply #9 on: November 02, 2019, 12:14:16 PM »
Increasing income will get you to your goals faster than decreasing spending since you are pretty optimized there. In my opinion, side gigs and/or getting a higher paying job are the keys to success.

Thanks for your input. The income portion is definitely a little trickier for me to navigate without having particularly marketable skills or a bachelors degree.

I did apply and accept a promotion about 6 months ago (the salary I quoted in my original post). Prior to that I was making around 27.5K annually. I don't see much more upward movement in my current field without a few years of experience/obtaining a degree. Will definitely start brainstorming some side hustle ideas.

CrabboStache

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Re: How am I Doing? WWYD?
« Reply #10 on: November 02, 2019, 12:22:40 PM »
First of all, you're doing great!

Spending almost 10% of your spending on pets wouldn't be my choice, but to each their own. Travel is 14% of my budget, so who am I to talk. We all have to choose our priorities.

Given the rent I'm guessing you have have roommate(s)? If so then electric and internet seem a little high to be just your portion. Those are about what we spend in total in a 2 bedroom. Climate could effect the electric through.

Clothes, hygiene, and household items are all about as much as we budget for 2, so those could probably be lower. Clothes depends on how fashionable and current you want to be though. I don't know when the last time I bought clothes was (and it was probably at a thrift store), and my wife buys expensive classic things that last, and is now in "replacement" mode when things wear out, so that's pretty infrequent. We combine household and hygiene, so I don't know how that breaks out for us, just that combined we budget about what you spend.

Other people have already brought this up, but eating out and entertainment (again, combined for us) is about what we budget for both of us, but we're boring "old" (over 30, so you know) people, so take that for what it's worth.

Have you checked with Geico for car insurance? I agree it's a little high, but you might be getting taxed for your age. I think turning 25 helps as long as you've got a clean record.

Like I said, you're doing great, and even though I nitpicked on some expenses you're still spending less than we do on a per person basis. Some people who post have a spending problem and others have an income problem. You're more the latter than the former. If you can just keep your expenses steady, spending your time increasing income will probably have more of an effect for you.

Thank you for your response!

You're correct, I do have a roommate. We split rent and utilities in a 2 bedroom apartment. My roommate is not particularly frugal/concious of electric expenses (ie runs the dryer for at least 15 mins/day to "freshen" whatever clothing they are intending the wear that day. When my roommate is out of the house for the weekend, I try to adjust the thermostat to more "extreme" ends than they would allow for. Often I will come home to the thermostat having been left at 72 degrees while at work all day...it is a battle I usually just let go. I imagine the bill would certainly be lower if I was 100% in charge of it - LOL.

Similar with the internet expense, it was something the roommate already had in place when I moved in. Am unsure of other deals in the area, but will encourage them to look. The bill is not in my name.

I totally agree with you on my clothing cost, I was a little dumbfounded at how it came out so high - I feel like I am generally pretty minimal in clothing purchases! I think a lot of it is due to a recent weight loss (about 20 pounds) which left me with very few properly fitting clothes. Am definitely going to keep an eye on that, challenging myself currently to 3 months of 0 spend on clothes as of Nov 1. Hopefully that will help put the purchases I am am making in a little more perspective for me. :)

Seems like increasing income is the main take away from my Case Study. Which is good! It has always been in my head to pick up a side hustle or PT job...but kept postponing because I rationalize it with "Well, look at all I am able to save! I am doing so good with so little!" But with such a small income...even just an extra 5k a year could really boost my savings rate.

CrabboStache

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Re: How am I Doing? WWYD?
« Reply #11 on: November 02, 2019, 12:26:52 PM »
I would say that overall you are doing great. Even in areas where you may be overspending you have acknowledged it and have a reason for why you are currently spending money there.

This is a key behavioral part of personal finance. The ability to splurge on oneself for something that is truly important to you. That is key to happiness, the goal is just to not splurge on every item on the expense side.

As a few other posters have said, I would focus on ways to increase your income. If you can keep your lifestyle the same (approximately treat yourself every now and then) while your income goes up you will begin to see dramatic increases in your net worth.

Further, do not be discouraged or pressured from your friends spending habits. When I first started working, people wanted to eat out or go to expensive bars all the time (Houston has such an eating out culture) and you just have to keep up your personal resolve and know that you are practicing deferred gratification and will have much more later than the $10 Bud Light could buy you know.

Hope this helps and keep up the good work.

Thank you for your input, especially the last bit on eating out/delayed gratification. It is definitely an area I can tighten up on. Even when I *do* go out, I can order a cheaper meal/side or only order a single PBR vs. 2-3. I have a tendency of getting more caught up in the moment once I am out & rationalize spending a few extra dollars on the meal I really *want* because it is a social outing/experience. Going to keep this mindset handy the next time I get an invite for going out!

Magnolia

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Re: How am I Doing? WWYD?
« Reply #12 on: November 02, 2019, 03:26:56 PM »
trying to brainstorm some side hustles: babysitting (especially with all the holidays coming up) umpiring a sport in the evening ( I used the play indoor beach volleyball in the evening and they alway needed umpires).
not sure how schools get cleaned in the US but my retired cousin does casual school cleaning after school closes for the day.
A friend did a foot care course (not a full podiatrist uni course)and goes around cutting elderly people toenails in their own homes.
There are a lot of exhausted carers out there dealing with loved ones with dementia who might be willing to pay for a couple of hours break in the evening.
lots of kids with autism who need help learning skills eg sports. A friend daughter does activities with a child with an intellectual disability once a week (does cooking, sports, craft etc)

These are just some ideas. none are glamorous but could provide a steady side hustle which no big expenses to set up.
DO not go to hard on cutting out you going out expenses. At your age you need to socialise and if you enjoy supporting your sporting team I would not give that up.


Freedomin5

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Re: How am I Doing? WWYD?
« Reply #13 on: November 02, 2019, 03:55:03 PM »
Increasing income will get you to your goals faster than decreasing spending since you are pretty optimized there. In my opinion, side gigs and/or getting a higher paying job are the keys to success.

I second this. Focus on increasing income rather than nitpicking your expenses to get to FIRE more quickly. And once your income increases, do not succumb to lifestyle inflation. Keep expenses at your current level and you’ll be FIRE in no time.

Omy

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Re: How am I Doing? WWYD?
« Reply #14 on: November 02, 2019, 04:02:50 PM »
Dogwalking, pet sitting, focus groups, tutoring, waitressing on weekends are some other side gigs to consider.

Cassie

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Re: How am I Doing? WWYD?
« Reply #15 on: November 02, 2019, 04:36:07 PM »
I don’t think anything is high in your budget. Maybe finishing your BA would help you make more money depending on the field.

 

Wow, a phone plan for fifteen bucks!