Kick it up a notch! BAM!

[rhrgrt]

Life Situation: Divorced, 0 mini-humans, 0 dependents. Living in Seattle, WA. 27 years old. Full time Business Operations Lead and part time “my own CFO”. Physically active with 1000 activity minutes per week while I read, write, play video games, and socialize in the rest of my time. I live in a small apartment, walk to work, and cook cheap food in bulk from raw ingredients.

Generally, I am proud of how far I've come this year. However, I want some fresh eyes on my numbers, and outside opinion. Most of my friends are uncomfortable discussing this topic so I have very few people to discuss this with. Thus, internet forum friends, I ask for you to review my numbers and weigh in on my goals.

Gross Salary: $53,000 yearly (after 32.5% raise recently (I’ve been busting my ass at work)) $4,416.67 monthly.

Pre-tax deductions: 401k catch up: $1,757.16 per month, maxing to $18,000 on dec 30th.
(Will drop down to $1,541.67 per month jan 1, with new $18,500 max for 2018.)

Taxes: $337.88 for FICA, $380.57 predicted for income tax (assuming a 15% tax rate)

Resultant Monthly Pay: After FICA, 401k deductions, and income tax, I’m looking at:
$2156.56 a month

6 Month Average Expenses:                             
Total                 -$1,340.55     6 months of expenses averaged out
Rent                 -$655.00
Utilities             -$144.84        cell, internet, water, garbage, electricity, car insurance
Healthcare        -$142.45        therapy, torn plantar fascia, head trauma, wisdom teeth
Restaurants      -$105.59        1 weekly outing with co-workers, 1 weekly outing with friends
Hobbies            -$85.79          bouldering gym, bouldering shoes, running shoes, kettlebell, mat, writing supplies
Groceries          -$81.44
Automotive       -$48.40          bike wheel, brake pads, bus
Entertainment   -$21.71          metal shows, trick or treating
General Merch   -$18.33          washing machine, wallet
Travel               -$13.00          boltbus, woo
Other Expenses -$12.67          treehouse, parking that one time
Gifts                 -$11.33          whiskey gift, headlights for friend

Assets: 401k with Schwab S&P 500 and Total Market indices. 100% equity. $16,718.29 balance (I started this year).

Liabilities: I owe nothing (except to my upbringing and background and the amazing opportunities I’ve had that lead to living a life of insane luxury while still being able to save for the future)

The meat of it all: My goals for 2017 were to hit a 30% reduction in food, housing, and transportation each and to max my 401k. I got a 36% reduction in housing, a 34% reduction in food, and over 50% (at some point I stopped keeping track) in transportation. That’s the “big three”. Doing so helped me max my 401k. Now, I’m looking for what’s next.

My 2018 goal is to max out:
401k
2017 Roth IRA (deadline 4/17/2018)
2018 Roth IRA

With $2,000 left over to invest in a taxable account. According to the “investment order” advice, this is the order I should take (ish. I gambled earlier this year by funding 401k first, hoping to be able to do roth ira now. I understand that’s normally sub-optimal)

Please help me squeeze more savings out of my budget for 2018 so I can find the ~$3,200 I’ll need to make this happen

Predicted Audience Questions:
(Assuming you know anything about housing costs in Seattle) Is that a typo in the rent line? No. I have discovered that having excessive space does not increase my enjoyment of life. So, I live in the smallest, cheapest apartment I could find that includes all of the required features--shelter, place to cook, place to sleep. I live in a sub-200 square foot studio; it’s big enough and 47% the cost of a cheap 1 bedroom.
Where’s your clothing budget? Instead of buying clothing, I don’t buy clothing.
What about cleaning supplies? This is all rolled in to groceries. I spend a negligible amount on cleaning supplies because of how small my apartment is.
Why is your grocery bill so small? I get subsidy from my parents, so to speak. I estimate without my mom’s insistence that I take food on the regular, I’d spend $95 a month instead (=$81.44 * (7/6) assuming every other weekend is fully “fed” by my parents). In addition, I go to restaurants for 8.5% of my meals. So, without subsidy or restaurants, I’d be at $103.83 (=$95/(1-8.5%)) a month.
What about other hobbies? Some of my “hobbies” are actually in the entertainment category. Other than that, my hobbies are free-ish. I like biking, hiking, reading, playing video games, and cooking. I invested heavily in video games more last year and before, to the point where I have a 3-4 year backlog. Biking is in the “automotive” category, and is cheap if you do your own wrench-jockeying. Plus books from the library.
Why is biking in the automotive category? I find it fun to bike but almost exclusively use it as means of transportation.
Why don't you cut your restaurant tab? Perhaps I will. I'm getting over social anxiety, during which process it is incredibly important to go out with others regularly. I'm now dialing in on where my enjoyment caps out. I do, for example, eat out for $13 per incident on average. In Seattle, a typical sit down burger with beer is more like $25 all considered.
Boy that’s a lot of health care! Well, that’s not a question. But to address the concern, yes. I see a psychologist every other week with a $30 copay (used to be every week) and I’m, as best I can tell, a defective unit. In the last 6 months I’ve torn my plantar fascia, had my wisdom teeth out, and had a vasovagal syncope attack (I passed right out and concussed myself). Also, I've been to the urgent care clinic and ER for something as yet undiagnosed. So it goes.

[Freedomin5]

So essentially you need to squeeze out another $267 per month out of an already pretty tight budget. It looks like you've already picked the low hanging fruit, so now it's about challenging how you think about certain things.

For example, re: social anxiety. Do you need to pay money to eat out to put yourself in social situations? What if you ate out every other week with coworkers/friends (alternating between the two groups), and then volunteered at a soup kitchen or other venue, or joined a social group (toastmasters comes to mind) that involves social interaction?  Savings: ~ $50

Hobbies - Maybe for this year stick to the cheaper hobbies and forego the more expensive ones. Or find some way to barter (I.e., work for free at the bouldering gym to get free membership/use of gym facilities). Savings: ~ $80

Car - If you're almost exclusively using bus and bike, can you get rid of the car?

Other than that, it seems hard to cut more out. Your "non-negotiable" expenses (rent, healthcare, utilities, groceries, transport) already add up to $1070. If you want to squeeze $267 out of your current budget, it means you can only spend $1070 per month, which means you will need to cut everything else out.

Your other option is to find some way to side hustle up some more money.

[wordnerd]

You're doing great. I honestly don't see much room to cut, though you could take $50 out of restaurants and maybe $50 out of activities now that you have supplies That's only $1200/yr of saving. Can you monetize one of your hobbies for a side gig (e.g., working at the bouldering gym or something)? Or take on a more lucrative side gig? Or get overtime or bonus? I don't see $3200 of fat to cut unless your healthcare expenses are significantly lower next year AND you cut everything optional, which doesn't seem like the road to happiness.

[MDM]

Life Situation: Divorced, 0 mini-humans, 0 dependents. Living in Seattle, WA. 27 years old.
Gross Salary: $53,000 yearly (after 32.5% raise recently (I’ve been busting my ass at work)) $4,416.67 monthly.

Pre-tax deductions: 401k catch up: $1,757.16 per month, maxing to $18,000 on dec 30th.
(Will drop down to $1,541.67 per month jan 1, with new $18,500 max for 2018.)

Taxes: $337.88 for FICA, $380.57 predicted for income tax (assuming a 15% tax rate)

Based on the 2017 tax calculation in the case study spreadsheet, the federal tax for a single filer making $53K and contributing $18K to a 401k (and no other income, subtractions, etc.) is $3224/yr or $269/mo.

($381 - $269) * 12 = $1344.  Not $3200, but it's a start....

[gaja]

I would also like to hear more about the car, and why a bicyclist needs to insure a motor vehicle. Other than this, and reducing the amount of bad luck that keeps the medical costs high, I agree with wordnerd that it would probably be more feasible to look at the income side.

[cchrissyy]

you're doing great!

small ideas

- get a minimal part-time job at the gym if that would grant you free membership
- get a raise next year
- move social stuff to walks or phone calls or cheaper places such as coffee shops ($5?) vs restaurants ($15?).  use meetup.com to find free social things like book club or hiking groups or foreign languages.

[rhrgrt]

So essentially you need to squeeze out another $267 per month out of an already pretty tight budget. It looks like you've already picked the low hanging fruit, so now it's about challenging how you think about certain things.

I think this is where most of the utility of the case study is for me--getting someone else to help me with a new angle to view this problem from. I very much appreciate you chiming in with so many suggestions!

For example, re: social anxiety. Do you need to pay money to eat out to put yourself in social situations? What if you ate out every other week with coworkers/friends (alternating between the two groups), and then volunteered at a soup kitchen or other venue, or joined a social group (toastmasters comes to mind) that involves social interaction?  Savings: ~ $50

It's a tradition at my workplace that we all go, split into groups, and eat food as team lunches. I've stopped getting a beer most times, and usually get an appetizer instead of an entree. I like the suggestion of alternating weeks. I've also been practicing other social outings (Like Mustachian meetups), and suggesting that social outings involve parks or someone’s place where food can be brought and cooked cheaply. But, since this is a clear area for improvement, I’ll be doubling down on this effort.

Hobbies - Maybe for this year stick to the cheaper hobbies and forego the more expensive ones. Or find some way to barter (I.e., work for free at the bouldering gym to get free membership/use of gym facilities). Savings: ~ $80

There are some ancillary benefits to the climbing gym that I forgot to bring up in the original post. It has social anxiety and tiny apartment related benefits. I used to be uncomfortable in crowds and with the concept of trying or failing in public. Can't climb without failing in public =) It also also has a lounge area downstairs, which is a great spot for writing comfortably, olympic lifts, and my fallback in case I decide my apartment is super claustrophobic after all. Ultimately, I climb twice a week for 2 hours and since it's a combined gym, climbing, and lounge (and is only a 15 min walk from my apartment), the $70 is some of the best value I get in a given month's spending. Normally, I’d balk at such an expense because good grief it’s $70 a month, but the 10 months it adds to my FI journey is reasonable for what I’m getting out of it.

I also like the idea of bartering. Something like Mrs. Frugalwoods mentions about working the front desk at her yoga studio. I’d just have to contact them about it and see if it was easy enough to work into my schedule. I’d also have to make sure it works out to enough $/hr to make it more worth another potential side gig.

Car - If you're almost exclusively using bus and bike, can you get rid of the car?

I own the car outright. It is a 2002 Acura RSX. I'll probably sell or give it to my little brother when he gets his driver's license. It is worth very little, to the point that I forgot to include it in assets and driving it into the ground is probably better than selling it. It's also currently being parked for free on my parents' property in the country. The insurance is more than I want to pay, but most of what I drive is other peoples' vehicles: friends and family who want favors involving driving to the airport, etc. I've considered canceling the policy, come what may. It would save me about $50 a month.

Other than that, it seems hard to cut more out. Your "non-negotiable" expenses (rent, healthcare, utilities, groceries, transport) already add up to $1070. If you want to squeeze $267 out of your current budget, it means you can only spend $1070 per month, which means you will need to cut everything else out.

And that’s exactly why I’m here. It just seemed hard to get more out of the budget without dropping down into “I hate my life” territory.

Your other option is to find some way to side hustle up some more money.

Can you monetize one of your hobbies for a side gig (e.g., working at the bouldering gym or something)? Or take on a more lucrative side gig?

Now there’s an idea. I already write; maybe I could write for money. My full-time job takes a lot out of me, and my hobbies are not easy on me either, but I bet I could easily set aside time each day to make this happen. I suppose I’m just not confident enough in how to start monetizing my writing to have made it happen yet.

Based on the 2017 tax calculation in the case study spreadsheet, the federal tax for a single filer making $53K and contributing $18K to a 401k (and no other income, subtractions, etc.) is $3224/yr or $269/mo.

($381 - $269) * 12 = $1344.  Not $3200, but it's a start....

This is another reason I wanted to post this. It’s good of you to point out my error. My number is from just assuming a 15% income tax rate, which is haphazard of me. Thanks. This changes my monthly required cuts to about $155.
It’ll also be easier starting in January when my 401k contributions go back to normal and I see what my paycheck ends up being.

you're doing great!

small ideas

- get a minimal part-time job at the gym if that would grant you free membership
- get a raise next year
- move social stuff to walks or phone calls or cheaper places such as coffee shops ($5?) vs restaurants ($15?).  use meetup.com to find free social things like book club or hiking groups or foreign languages.

Thanks for saying so, I appreciate it. I do plan on getting a raise next year, probably around the first of December. I am going to double down on cheaper social engagements and see where that gets me. I’ve also tried meetup and I just didn’t care for any of the events I found. One thing I didn’t try is a book club, which is a great suggestion. I do still have the app on my phone.

Top suggestions, then, according to my internal filter:
Trim social outings
Get a side-gig
Find a book club
Calculate tax better (this almost counts as sandbagging)

Thanks y'all for helping with your suggestions. I appreciate the effort y'all have put into making my life better.

[Classical_Liberal]

I have nothing to add, other than to say; I F'en like you!  These are only small examples of why:

Where’s your clothing budget? Instead of buying clothing, I don’t buy clothing.

and

...and had a vasovagal syncope attack (I passed right out and concussed myself).

Where you pooping?  It's ok to tell me, I'm a nurse.

BAM!

[rhrgrt]

...and had a vasovagal syncope attack (I passed right out and concussed myself).

Where you pooping?  It's ok to tell me, I'm a nurse.

BAM!

Hahahaha, thank you. And no, I keep my diet balanced to avoid adversarial pooping. I had smoked a cigarette and walked up a hill. Felt light headed, sat down on a bench, woke up face down in the dirt. I am not a smoker, I just decided to have one with a friend cause how bad could that be, and boom.

[Classical_Liberal]

You could get a side gig as the model/poster child for the "smoking is not cool" movement!

Seriously though, you are doing great with that budget in Seattle!  You could pop over to ERE as there are many people with sub $1000/mo budgets over there.  I'm aspiring to be one of those.  They tend to think out of the box, but there tend to be a different (ie less optimistic maybe) vibe over there, so be aware.   Super good info though, I recommend the ERE book/blog if you are a systems thinker.

I wonder if there is any way you can maximize your income w/o giving up the sweet spot you have found in spending?  By no means give up a job you actually like, they are few and far between, in my experience.  However, there may be ways of maximizing income in your field. 

Risk taking career-wise gets much easier once you have a few years of expenses saved.   Following that line of thinking; it is most efficient to follow the investment order post... but... If you feel all of your funds are "tied up", you lose some of the emotional benefit of being rich (like career risk-taking).  I know it's almost sacrilege around here to take a less than perfectly efficient path. However, the emotional/psychological "X-factor" shouldn't be ignored.  If I didn't have a couple years of post tax savings, I wouldn't have taken some of the risks that have nearly doubled my income over the past two years... Just say'en; know thyself.

[EfficientEngineer]

Have you thought of using the gig economy at all?  I've used Postmates, Job Spotter, Field Agent and several others to make just under $1,000 this year.

[Freedomin5]

If you're a writer, you can TOTALLY monetize that, particularly if you live near a university, and particularly if you possess decent grammar and spelling skills. Just post on Craigslist and/or at the university's student center that you can tutor/edit papers, and charge whatever the going rate is. I charged $25 per hour about 10 years ago. Took on two students for 2-3 hours per week each. Netted an extra $400 per month.

You can also do editing work online, though I'm not as familiar with that, so I'm not sure how you would go about getting work.

Finally, there are a few threads about teaching English online. I think that pays around $20/hour.

[Freedomin5]

I’m, as best I can tell, a defective unit.

Thinking of yourself as a defective unit is distorted thinking. The obvious distortions are "all or nothing thinking" and "catastrophic thinking". You're knocking life out of the park at the moment, and your health concerns don't get to overrule that to define you. Give yourself a break and some credit. I'm not a psychologist (but would have my doctorate in sitting in the other chair, if that were a thing) so ask yours.

Yes, it is a cognitive distortion -- "labelling/mislabelling" or perhaps "emotional reasoning", depending on the underlying intermediate belief, to be specific.

[rhrgrt]

I’m, as best I can tell, a defective unit.

Thinking of yourself as a defective unit is distorted thinking. The obvious distortions are "all or nothing thinking" and "catastrophic thinking". You're knocking life out of the park at the moment, and your health concerns don't get to overrule that to define you. Give yourself a break and some credit. I'm not a psychologist (but would have my doctorate in sitting in the other chair, if that were a thing) so ask yours.

Yes, it is a cognitive distortion -- "labelling/mislabelling" or perhaps "emotional reasoning", depending on the underlying intermediate belief, to be specific.

You guys sound like my therapist; those words are right out of the thinking errors of CBT =)  Thankfully enough, this is just my brand of self-effacing humor, not indicative of my sense of self-worth. By 'defective unit', I was making a joke about my propensity toward physical ailment. I'm not actually concerned about myself as a lesser person. Also, I appreciate you saying I'm knocking it out of the park.

If you're a writer, you can TOTALLY monetize that, particularly if you live near a university, and particularly if you possess decent grammar and spelling skills. Just post on Craigslist and/or at the university's student center that you can tutor/edit papers, and charge whatever the going rate is. I charged $25 per hour about 10 years ago. Took on two students for 2-3 hours per week each. Netted an extra $400 per month.

You can also do editing work online, though I'm not as familiar with that, so I'm not sure how you would go about getting work.

Finally, there are a few threads about teaching English online. I think that pays around $20/hour.

It had never occurred to me to edit university papers. I've also never heard about teaching English online. Those both sound super doable as side gigs.

You could get a side gig as the model/poster child for the "smoking is not cool" movement!

You're on to something here. Only downside is I don't have, you know, permanent physical damage or pictures of the gruesome injuries it causes.

Seriously though, you are doing great with that budget in Seattle!  You could pop over to ERE as there are many people with sub $1000/mo budgets over there.  I'm aspiring to be one of those.  They tend to think out of the box, but there tend to be a different (ie less optimistic maybe) vibe over there, so be aware.   Super good info though, I recommend the ERE book/blog if you are a systems thinker.

I wonder if there is any way you can maximize your income w/o giving up the sweet spot you have found in spending?  By no means give up a job you actually like, they are few and far between, in my experience.  However, there may be ways of maximizing income in your field. 

Risk taking career-wise gets much easier once you have a few years of expenses saved.   Following that line of thinking; it is most efficient to follow the investment order post... but... If you feel all of your funds are "tied up", you lose some of the emotional benefit of being rich (like career risk-taking).  I know it's almost sacrilege around here to take a less than perfectly efficient path. However, the emotional/psychological "X-factor" shouldn't be ignored.  If I didn't have a couple years of post tax savings, I wouldn't have taken some of the risks that have nearly doubled my income over the past two years... Just say'en; know thyself.

Thanks for the suggestion about ERE! I've read most of that blog too, but I didn't know he has a forum.

I also could save enough to live for a year in a matter of 3 months if I stopped my 401k contributions and cut my spending to necessities. I'm not averse to taking risks, both because of this safety net I've built and my tendency toward assuming that everything will work out fine. However, I love my job so much that I couldn't possibly quit. The people, the actual work, the product; it's all amazing, which is why I went from entry level user support here to a business ops lead. This company and I have both invested in eachother. This is another one of those situations (like the climbing gym as a hobby) where my saving goals are less important because of how much I gain from "spending" this money. If I was financially independent, I'd still work here.

[Meesh]

+1 for MDM's tax calc...

53000-18000 (in 401k) -6350 (standard deduction) -4050 (personal exemption)= 24600
24600-9325 (10% tax)= 15275*0.15 (15% tax)= 2291.25+932.50 (10% tax)= 3223.75

so yes 3224 or 269/month

I'm not sure if you can but if you can save another 4000 in tax deferred accounts by 4/17/2018 (you need an AGI under 31000 and you're currently at 35000) then you get the 10% saver's, which is 10% off your taxes what you saved in retirement accounts...so 18000 (401k)+4000 (IRA)= 22000*0.1 (10% credit)= 2200 in tax credit

that means 3224 (what you should pay in taxes)- 2200 (credit)=

1024 in annual taxes, or 84 monthly.

Now if you choose a traditional IRA instead of a Roth IRA then it gets even better...

53000-18000-4000 (trad IRA)-6350-4050= 20600
20600-9325= 11275*0.15= 1691.25+932.50= 2623.75 or 2624
2624-2200 (saver's credit)=

424 annual taxes for 2017

This can also be further reduced if you max it out to 5500...

Sorry if this is really mathy but I love reducing ppls taxes lol

I'm not 100% sure if this is helpful because I don't know if you can save, your budget is pretty lean already, but my advice is try to max out that IRA (or at least so your AGI is under 31000 to get the saver's credit) and I'd say your income is high enough to warrant it being a trad instead of a roth.

someone feel free to check me...

EDIT: looking closer at your OP it looks like you have 2000 to invest and have an extra 816/month which will go up about another 215ish in Jan from the 401k change to 1030?... you can easily max your 2017 AND 2018 ira (roth or trad) without changing anything... you'll even have money left to invest

EDIT 2 (sorry last edit!): maxed trad IRA taxes are at $99 vs roth IRA $874

[MDM]

...the 10% saver's, which is 10% off your taxes what you saved in retirement accounts...so 18000 (401k)+4000 (IRA)= 22000*0.1 (10% credit)= 2200 in tax credit

Ah, if only....

Unfortunately, line 6 of Form 8880 limits the saver's credit (in the situation described above) to 10% of $2000, or $200.

See cell T53 and adjoining for Form 8880 calculations in the case study spreadsheet.

[Freedomin5]

Here's the link from other folks on the forum who are teaching English online:

https://forum.mrmoneymustache.com/entrepreneurship/potential-side-hustle-teach-english-online-for-$20-an-hour!/

I just realized, if you scroll up and look at wordnerd's signature line at the end of their post, they have a referral code for VIPKids, which is one of those online English-teaching portals. He/she may be able to give you more info if you're interesting in pursuing this side hustle.

[MrThatsDifferent]

Here's the link from other folks on the forum who are teaching English online:

https://forum.mrmoneymustache.com/entrepreneurship/potential-side-hustle-teach-english-online-for-$20-an-hour!/

I just realized, if you scroll up and look at wordnerd's signature line at the end of their post, they have a referral code for VIPKids, which is one of those online English-teaching portals. He/she may be able to give you more info if you're interesting in pursuing this side hustle.

This was going to be suggestion. Forget about trying to squeeze more from your already right budget, look at how you can increase your income. The ideas around lowering your taxes are great too. With your medical issues, look at a HSA and save all of your medical receipts forever.

[rhrgrt]

Now if you choose a traditional IRA instead of a Roth IRA then it gets even better...

53000-18000-4000 (trad IRA)-6350-4050= 20600
20600-9325= 11275*0.15= 1691.25+932.50= 2623.75 or 2624
2624-2200 (saver's credit)=

424 annual taxes for 2017

EDIT: looking closer at your OP it looks like you have 2000 to invest and have an extra 816/month which will go up about another 215ish in Jan from the 401k change to 1030?... you can easily max your 2017 AND 2018 ira (roth or trad) without changing anything... you'll even have money left to invest

EDIT 2 (sorry last edit!): maxed trad IRA taxes are at $99 vs roth IRA $874

Don't apologize for tax math, it's very important. My first step this year, learning-wise, was getting into budget cutting and investing. Now I'm starting to get into the tax minimizing strategies, so it's great seeing other peoples' takes on my situation. The personal context makes it way easier for me to learn.

Unfortunately, line 6 of Form 8880 limits the saver's credit (in the situation described above) to 10% of $2000, or $200.

See cell T53 and adjoining for Form 8880 calculations in the case study spreadsheet.

I'm still better off than I thought I was though =) Thanks for the extra info. That does mean for this year (11 months of the year at a 40k salary instead of 53k) I should be able to get

$41,083 - ($18,000 + $5,500) = $17,583 AGI if I max contributions for the 2017 tax year, meaning I can do .5x ($2,000) or $1,000 in credit for the 2017 tax year. Correct me if I'm wrong.

Since my taxes will be so low if my AGI is under $18,500, that means I should do a tIRA for 2017 and a tIRA for 2018 (since the saver credit is important enough to taxes (I really should have believed the Mad Fientist when he told me Roth IRAs were overrated)).

Here's the link from other folks on the forum who are teaching English online:

https://forum.mrmoneymustache.com/entrepreneurship/potential-side-hustle-teach-english-online-for-$20-an-hour!/

I just realized, if you scroll up and look at wordnerd's signature line at the end of their post, they have a referral code for VIPKids, which is one of those online English-teaching portals. He/she may be able to give you more info if you're interesting in pursuing this side hustle.

This was going to be suggestion. Forget about trying to squeeze more from your already right budget, look at how you can increase your income. The ideas around lowering your taxes are great too. With your medical issues, look at a HSA and save all of your medical receipts forever.

Sadly, the only way for me to get an HSA is to take a high deductible health plan. That... just doesn't make sense on the surface. My employer has recently swapped our benefits package so I have to work that out (and probably lay out numbers to confirm the assumption) but I suspect, especially cash-flow wise, that taking a HDHP will be expensiver than an HSA can offset.

Thanks for pointing out wordnerd's signature. I tune those out so I didn't even notice it. I definitely feel like teaching English online is probably the most straightforward side gig I can get. Part of me is concerned that my main job is demanding enough that I couldn't take a side gig seriously, but I also know I can give it my best shot and see where I get with it. It will probably be more profitable than squeezing more out of my current budget, but hey, why not both.

Thanks again, folks. I appreciate the effort put out here to help me with my goals.

[MDM]

Unfortunately, line 6 of Form 8880 limits the saver's credit (in the situation described above) to 10% of $2000, or $200.

See cell T53 and adjoining for Form 8880 calculations in the case study spreadsheet.

I'm still better off than I thought I was though =) Thanks for the extra info. That does mean for this year (11 months of the year at a 40k salary instead of 53k) I should be able to get

$41,083 - ($18,000 + $5,500) = $17,583 AGI if I max contributions for the 2017 tax year, meaning I can do .5x ($2,000) or $1,000 in credit for the 2017 tax year. Correct me if I'm wrong.

Since my taxes will be so low if my AGI is under $18,500, that means I should do a tIRA for 2017 and a tIRA for 2018 (since the saver credit is important enough to taxes (I really should have believed the Mad Fientist when he told me Roth IRAs were overrated)).

The saver's credit is "non-refundable", meaning it can reduce your tax to $0 but won't give your a refund - even if the calculated credit amount is more than the calculated tax before the credit.

If your total gross income is exactly $41,083, including everything except 401k and IRA deductions, contributing $22,583 to traditional accounts between those, and $917 to Roth accounts, might be best.   That would give you ~19.2% savings on the $22,583.

If you end up with $18,501 AGI instead of $18,500, however, you would pay $410 to the IRS instead of $0.

Although the case study spreadsheet seems to be accurate for many situations, one shouldn't rely on it (or any other shortcut tax program) for precise answers.  Either do your own hand calculations or use a 2017 version of full, commercial, tax software.

[Freedomin5]

Thanks for pointing out wordnerd's signature. I tune those out so I didn't even notice it. I definitely feel like teaching English online is probably the most straightforward side gig I can get. Part of me is concerned that my main job is demanding enough that I couldn't take a side gig seriously, but I also know I can give it my best shot and see where I get with it. It will probably be more profitable than squeezing more out of my current budget, but hey, why not both.

I think you're teaching kids in China, which means that you have the option to work odd hours like 4:00 AM to 8:00 AM EST (which would be around 4:00 PM - 8:00 PM Beijing/China time). At the very least, you're right, it's worth exploring to see if it will fit with your current lifestyle or if you can tweak your lifestyle to incorporate a side gig.

[ShoulderThingThatGoesUp]

$50 a month for car insurance and registration is a lot! If you want to give it to your little brother soon, why not take the plates off until then and only drive it on your parents' property?

[Mariposa]

You can see if your employer offers a healthcare FSA and transportation fringe benefits, many of which cover bike costs. If your healthcare and automotive expenses are an ongoing thing, you can pay with pre-tax (including pre-FICA) dollars. That could potentially be a 22.65% savings in those categories (assuming 15% marginal rate going forward and 7.65% FICA). Or, around $500 a year.

[unpolloloco]

You're in Seattle and making $50k in a lead role.  Are you sure you can't make more money by moving to another company?  A quick google search says average for your role is $70k - and that's across the entire country.  I wouldn't be surprised if Seattle is more like $80-90k average. A new job do way more to help your savings rate than trying to squeeze your already tight budget more!

[swashbucklinstache]

As far as order of investments here one small thing you've probably already thought of. That is, you have three (or maybe 4) deadlines and if you miss them you never get another shot at it, so while the investment order sheet is good generally it may lead you astray in a given year.

So for me the order between 2017 IRA, 2018 401k, 2018 IRA, and taxable is:
0) If company matches on each paycheck, the 401k amount to maximize the match
1) Max 2017 IRA by the deadline (April 2018)
2) Max 401k by 12/31/2018
3) Max 2018 IRA by deadline in 2019 (April 2019)
4) Taxable

I didn't read super closely so maybe you're already set up to do this. I'd just hate to see you miss #1 because you've set things up to meet #2 and #3. This can also help if you get a raise in the latter 2/3rds of 2018. It'd be lame to end 2018 having made enough to fill #1-3 but instead end up with a half-filled bucket 1, full bucket 2 & 3, and enough in taxable investments to fill the rest of #1 just from a timing perspective that you could avoid. I don't know anything about incentives, saver's credit etc. so do consider that stuff, and remember when picking between traditional and Roth IRA that you can recharacterize if your situation changes.

tl;dr: maybe it makes sense to have maximum(0, enough to get all matching contributions if your company matches each paycheck) 401K contributions until you fill #1.

[stashing_it]

You're in Seattle and making $50k in a lead role.  Are you sure you can't make more money by moving to another company?  A quick google search says average for your role is $70k - and that's across the entire country.  I wouldn't be surprised if Seattle is more like $80-90k average. A new job do way more to help your savings rate than trying to squeeze your already tight budget more!

I agree with this.   Seattle is swimming in money.   50K isn't bad, but a similar job at the right company could easily be 90K + (heck, it could be 150K + in a year or two)   

Pushing the side hustle is good, but finding a way to get even 20% more for the current hours you are spending working will be the largest mover of the needle.  (And like I said, 20% is low end, 80-100% more would be possible)

You might look for jobs that have significant travel.  Being single and childless that could be attractive to you but less attractive to many other people.  Those jobs frequently let you offset some of your expenses also (i.e. you are traveling and eating on company money)

[wordnerd]

Thanks for pointing out wordnerd's signature. I tune those out so I didn't even notice it. I definitely feel like teaching English online is probably the most straightforward side gig I can get. Part of me is concerned that my main job is demanding enough that I couldn't take a side gig seriously, but I also know I can give it my best shot and see where I get with it. It will probably be more profitable than squeezing more out of my current budget, but hey, why not both.

I think you're teaching kids in China, which means that you have the option to work odd hours like 4:00 AM to 8:00 AM EST (which would be around 4:00 PM - 8:00 PM Beijing/China time). At the very least, you're right, it's worth exploring to see if it will fit with your current lifestyle or if you can tweak your lifestyle to incorporate a side gig.

Hi! Yes, thanks for pointing this out. Currently, times for Eastern are before 9am everyday and after 8pm on Fridays and Saturdays. It is straightforward and easy, and I really enjoy it. I will likely cut back for awhile, just because my day job and toddler are taking all my energy at this point, but I'd be happy to talk to you if interested. Feel free to post questions or PM me.

[Classical_Liberal]

You're in Seattle and making $50k in a lead role.  Are you sure you can't make more money by moving to another company?  A quick google search says average for your role is $70k - and that's across the entire country.  I wouldn't be surprised if Seattle is more like $80-90k average. A new job do way more to help your savings rate than trying to squeeze your already tight budget more!

I agree with this.   Seattle is swimming in money.   50K isn't bad, but a similar job at the right company could easily be 90K + (heck, it could be 150K + in a year or two)   

Pushing the side hustle is good, but finding a way to get even 20% more for the current hours you are spending working will be the largest mover of the needle.  (And like I said, 20% is low end, 80-100% more would be possible)

You might look for jobs that have significant travel.  Being single and childless that could be attractive to you but less attractive to many other people.  Those jobs frequently let you offset some of your expenses also (i.e. you are traveling and eating on company money)

OP has clearly stated s/he really likes the job.  One of the side effects of running life on a true Mustachian budget (like <1500/mo in Seattle) is that you get to do whatever you want for work.  Big decisions like job, career, etc do not have to be based on money anymore. 

Congrats OP!

Edit:  BTW, This is an effect seen almost immediately post-budget reduction.  One doesn't have to wait 5, 10, or 15 years to be FI before exploring this new found freedom.  It's more a YMOYL concept, but as long as you maintain a small positive savings rate, you can do whatever you want with your time.  Insta-freedom/happiness from budget reduction.

[FIstateofmind]

If you are interested in the VIPKID side hustle you can email me at biancamath@hotmail.com. If you use my referral link I will personally coach you :]

[rhrgrt]

You're in Seattle and making $50k in a lead role.  Are you sure you can't make more money by moving to another company?  A quick google search says average for your role is $70k - and that's across the entire country.  I wouldn't be surprised if Seattle is more like $80-90k average. A new job do way more to help your savings rate than trying to squeeze your already tight budget more!

I agree with this.   Seattle is swimming in money.   50K isn't bad, but a similar job at the right company could easily be 90K + (heck, it could be 150K + in a year or two)   

Pushing the side hustle is good, but finding a way to get even 20% more for the current hours you are spending working will be the largest mover of the needle.  (And like I said, 20% is low end, 80-100% more would be possible)

You might look for jobs that have significant travel.  Being single and childless that could be attractive to you but less attractive to many other people.  Those jobs frequently let you offset some of your expenses also (i.e. you are traveling and eating on company money)

OP has clearly stated s/he really likes the job.  One of the side effects of running life on a true Mustachian budget (like <1500/mo in Seattle) is that you get to do whatever you want for work.  Big decisions like job, career, etc do not have to be based on money anymore. 

Congrats OP!

Edit:  BTW, This is an effect seen almost immediately post-budget reduction.  One doesn't have to wait 5, 10, or 15 years to be FI before exploring this new found freedom.  It's more a YMOYL concept, but as long as you maintain a small positive savings rate, you can do whatever you want with your time.  Insta-freedom/happiness from budget reduction.

Yeah, while I could "shop around", it's also important for you to know that I've just been promoted (hence the 32.5% raise) to this new position. My salary being on the lower end of the spectrum makes sense.

Within the last 2.5 years, my salary has increased by almost 100% at this one company, and I've gone from "user support via email" agent to a business operations lead. I am betting that the next year will be similar for me, personal growth wise. Like I said, the company is investing in me. Add that to the fact that I very much love working here and I'd have a hard time moving to a different position just for salary. I have a chance here to make something of myself and the products I work with, and that's hard to put a dollar value on.

Plus, if I can monetize other skills at the same time with a side gig, I can bring in my FI date even further than it already has been. That'd be even better.

Edit: looks like vipkids requires a bachelor's degree, which I don't have. I guess I'm back to square one on the side gig plan.