Author Topic: New to MMM and look for a review of how I'm doing  (Read 861 times)

NCNewbie

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New to MMM and look for a review of how I'm doing
« on: June 27, 2017, 10:44:59 AM »
Hello Mustachians! I recently started reading MMM and have become inspired to gain financial independence as soon as possible.  To give you a little background, I am 38 years old and am married with 2 kids, ages 5 and 2.  We live in the Raleigh NC area and plan on staying here for the foreseeable future.  We both work full time and I am completing an MBA degree in the evenings.  I know we can definitely tighten our belts in some areas and increase our savings so I am looking for any and all advice (facepunches are welcomed)!  Below is a breakdown of our income, expenses, and current investments.  Let me know what you think. I am sure I will leave out info that is needed to rate how we are doing so feel free to ask any questions.  Thank you!

Income
My monthly take home pay (family is on my company's insurance plan so that comes out of my pay)-$3,049
Wife's monthly take home pay-$3,832
Total Monthly Income-$6,881
*we each get bonuses a couple times a year which total somewhere between $8k-10k annually

Monthly Expenses
Mortgage-$1,400 (mortgage balance of $195,000 on a 30 year note at 4.5%.  Home valued at $270k)
Daycare-$955 (one kid starts kindergarten in the fall though so this should be cut in half soon)
Car Payment for Wife's Car (car paid off in 2 years)-$300
Car Payment for my Car (car paid off in 3 years)-$235
Dance Class for kid-$50
Gymnastic Class for kid-$32
Gas/Car Maintenance-$350 (we both commute almost 50 miles roundtrip each day)
Tolls-$200 (part of the commute)
Hulu/Netflix-$20
Groceries-$600 (i know we can cut back here but wife doesn't agree)
Electric/Gas-$150
My cell-$58 (company reimburses me though so this is a wash)
Wife's cell-$125 (this is a place were I really want to cut back but my wife resists)
Auto Insurance-$103
HOA Dues-$33
Pest Control-$30
Internet-$65
Gym Membership-$68
Water Bill-$70
Dog Food/Vet/Boarding-$100
Entertainment/Eating Out-$150

Total Expenses-$5,519

Total Leftover each month-$1362

Debt
No debt other than mortgage and auto payments.  Currently owe $195k on mortgage.  Owe $7k on wife's care and $10k on mine.

Investments/Savings
-$15k in emergency fund
-$95k in 401k plans combined (we each contribute 10% of our pretax earnings each paycheck)
-Just opened a Schwab account and have $1000 in an S&P 500 index fund (plan to use dollar cost averaging method and contribute money to this account each month)

So that is where I am at.  I know we can cut spending in several areas but would love to hear your thoughts.  I am thinking that we need to work to max out our 401k contributions which we should be able to do.

Bring on the face punches!

matchewed

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Re: New to MMM and look for a review of how I'm doing
« Reply #1 on: June 27, 2017, 10:55:04 AM »
You spend a total of $1200 per month on auto related expenses and you're concerned about the cellphone?

Swing at the large stuff first IMO. Do you really want to spend 500 hours a year in a car seat? That's literally 12 days of your life a year commuting. A week and a half of your time gone...

Outside of that the standard fair in regards to maxing 401k/IRA and optimizing your other spending.

NCNewbie

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Re: New to MMM and look for a review of how I'm doing
« Reply #2 on: June 27, 2017, 11:24:54 AM »
Do I want to spend that much time in car?  Definitely not.  We live in the suburbs of Raleigh though so not really much we can do about the commute.  We could move into Raleigh but the cost of a home comparable to what we currently have would be $300k-$400k, so that isn't really an option.  All of the jobs in the Triangle area are in Raleigh, Durham, and RTP so commutes are just a way of life for everyone around here.

My wife does have the option to work from home one day a week but I do not.

matchewed

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Re: New to MMM and look for a review of how I'm doing
« Reply #3 on: June 27, 2017, 12:02:03 PM »
Okay so if you choose to view that you can't do anything about it then you won't be able to do anything about it.

What are you willing to do?

Because in my view you're preparing for a standard comfortable retirement in your sixties. If that's the goal then great. You're fine, keep doing what you do. If the goal is different then you need to start doing different stuff.
« Last Edit: June 27, 2017, 12:08:30 PM by matchewed »

Laura33

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Re: New to MMM and look for a review of how I'm doing
« Reply #4 on: June 27, 2017, 12:04:20 PM »
We could move into Raleigh but the cost of a home comparable to what we currently have would be $300k-$400k, so that isn't really an option.

So you have a @$270K house with a $1400 mortgage and $1200/mo. in car-related expenses.  Putting $1K of that toward a larger mortgage (assuming the same 4.5% rate) would buy you $200K more house.  So you could clearly "afford" a $300-400K house without the giant commute if that was your choice. 

Not that you should.  But the point is that you do, in fact, have options that do not involve $1200/mo. in car costs.
Laugh while you can, monkey-boy

NCNewbie

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Re: New to MMM and look for a review of how I'm doing
« Reply #5 on: June 27, 2017, 12:14:09 PM »
That is very true so i do appreciate your input.  We'll have the two car payments either way so moving closer to Raleigh would eliminate the $200 in tolls and probably save $200 in gas.  That is definitely money that we could put towards a larger mortgage so it is an option.  Convincing the wife to uproot the kids and move so that we save a few hundred dollars each month would be a tough sell though!

Cali Nonya

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Re: New to MMM and look for a review of how I'm doing
« Reply #6 on: June 27, 2017, 12:19:59 PM »
Might not be the general consensus answer, but I would not focus so much on frugal living, but on growing your investments and getting that army of little green dollars that brings you gains.  You have savings each month, I would focus avoiding life-style creep (and moderate frugality where acceptable between yourself and your wife and kids).  Your potential for gains is most likely more in maximizing your investments and working on your growth there.

NCNewbie

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Re: New to MMM and look for a review of how I'm doing
« Reply #7 on: June 27, 2017, 12:23:09 PM »
Great advice.  Thank you!

matchewed

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Re: New to MMM and look for a review of how I'm doing
« Reply #8 on: June 27, 2017, 12:38:08 PM »
Wholly and fully disagree with Cali Nonya. Growing your investments is a function of having more money to invest i.e. increasing your savings rate. You don't magically do that without changing your spending.

ETA: Or you could increase your income.
« Last Edit: June 27, 2017, 02:26:20 PM by matchewed »

TheFinanciallySavvy

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Re: New to MMM and look for a review of how I'm doing
« Reply #9 on: June 27, 2017, 01:09:08 PM »
Does your work offer any sort of commuter pass? Something that would reimburse for the tolls, perhaps? That'd be an instant savings right there.

There are a few options with the cars:
1. Carpool (with each other or coworkers).
2. Drive something more fuel efficient (@ $350/mo in gas, and average prices of gas in Raleigh about $2, you're buying 175 gallons of gas each month. Take your commute of 500 miles per wk + 50 on the weekend and you're at 2,200 miles each month. 2,200 miles / 175 gallons = 12.5mpg).
3. Sell one of your cars and buy something cheaper, in cash, removing that monthly payment from your budget.
4. Try to swing a work from home once a week, or at least make sure you're wife takes that option since she has it.
5. Inquire about commuter benefits at work. If nothing, perhaps speak to HR about implementing some, especially if a lot of people at work commute a long way.
6. Find jobs closer to home (lots of other considerations with this one, but it would reduce car usage each month)

Others:
1. Do you use that gym membership? If not, ditch it.
2. Wife cell phone ..... That could be cut in half for sure, without sacrificing much in terms of data (there is also wifi everywhere now)
3. Groceries - avoid impulse purchases at the grocery store, buy in bulk (Costco/Sams Club), avoid non-essentials like soda, candy, and other extras that just aren't healthy for you. Cut back on alcohol if you buy a bottle or three of wine a week.



spicykissa

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Re: New to MMM and look for a review of how I'm doing
« Reply #10 on: June 27, 2017, 01:42:36 PM »
It's kind of telling that the 2 places you've identified as "should be cut" are about your wife, not you. (Unless you do >50% of the cooking and grocery shopping, in which case, you can reduce that category yourself, yes?). She's not going to buy in unless you start with yourself. Perhaps a good place to start with that would be selling your car and buying something with better gas mileage in cash, as has already been suggested.

You should absolutely max out both your 401ks. Do that with your extra money before you start investing at Schwab.
 
 

a-scho

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Re: New to MMM and look for a review of how I'm doing
« Reply #11 on: June 27, 2017, 02:09:37 PM »
1. is your wife as interested in FIRE as much as you are?
2. if so, have you shown her a graph or spreadsheet showing that if you save X amount per year, you can retire in your sixties, versus saving Y per year gets you to FIRE in your fifties, versus Z per year gets you to FIRE in your forties.......
3. At what age would she like to retire? From that you can calculate how much needs to be saved per year. And then from that, how much spending needs to be reined in to get to that number.
4. There are lot of things you could do to shave off your spending.
 a. move closer to your jobs. It may created a bigger mortgage, but less in car commute costs.
 b. cheaper cell phone plan
 c. sell cars and buy older, less expensive ones in cash. Live close enough to jobs to use public transportation? Bikes?
 d. lower grocery costs
 e. with both parents working full time jobs and two kids under 5, you guys have time to go to the gym? free exercise options do exist.
5. if you or the wife will not budge on these tweeks, just highlight the age you will be retiring because of your choices.