READY TO GET THIS STARTED! Would love your advice!

[Littlestache]

Want specific info related to your situation?

Please use the following guidelines/format as applicable to your situation to ensure we have ALL the information we need to help.

Topic: Our Case Study
,
Life Situation: Married Filing (single income), LittleStache 27, Wife 27, 3 kiddos (4,2,.08), We live in Vancouver, Wa and thankfully just accepted a new job in WA (used to commute 2 hrs a day to 15 miles).

Gross Salary/Wages: $75,000.00 plus up to 37K in bonuses.

Individual amounts of each Pre-tax deductions 401k, HSA, FSA, IRA, insurance, etc. - ZERO. We have no investments!

Taxes: I am not sure how much of a percentage we pay. We have 3 kids and own a home so I think we're doing pretty good on deductions.

Current expenses: Provide breakdown and relevant details. 
Mortgage $209,000 left
30 year mortgage at 3.5 (2 years old)
Taxes $3,300 a year 
Home value is around 280 to 300k
Total payment is a month is $1440 a month

Utilities $250
cell phone $145
Groceries $750 (at least)
Eating out $250
Auto loan $158.00
Car insurance $111.00
Internet $30
Credit card bills $100.00
Gas $250

Assets: Amount & description - include current asset allocation plan if you have one
Definition of assets: Any item of economic value owned by an individual or corporation, especially that which could be converted to cash. Examples are cash, securities, accounts receivable, inventory, office equipment, real estate, a car, and other property.

Liabilities:
Home
$209,000 3.5 percent, $1440 a month 28 years left 80k in equity
Credit Cards:
Wells Fargo: 2,200 on the balance at 18%
BofA Alaska Air: 1,100 (I try to pay this one off every month).
We have a cash reward card we use but pay off as well.

Car 2007 honda Oddyesy 8k on the note at 5% with 4 years left maybe 5 years has 120k on the speedo.


Specific Question(s): Just writing this information down has seriously help me. I have just stumbled up on MMM about a month ago and then last week read all of JL's series on investing. I am in! I would seriously love to retire at in 10 years and have the freedom to work how and when I want.  What would you guys change in order or do differently  (sorry my question mark on my computer doesn't work lol)

: Do you recommend investing all retirement into the VSTAX like JL recommends

 Last question: should I sell my house make 80k buy a 50k lot and spend 30k on making a sweet hippie home out of a Spartan Mansion or vintage trailer house (que in the question mark) would love your advice. Don't go easy on me!

I have also started biking to work (5.8 miles one way) thanks MMM!

[Bracken_Joy]

There seem to be massive gaps in your spending reported. Where are clothes, kids costs, health insurance, entertainment costs, baby sitters, any gym or hobby costs, and car maintenance, etc etc. Are you tracking actual spending, or guessing? Tracking spending is step number 1. I recommend an aggregate service like Mint or Personal Capital. It will also pull some back data, so you can go and categorize and figure out where your money has been going!

You also don't say if you have any savings?

Anyway, start here. Try to fill out the case study as fully as possible.

[mrsnamemustache]

Eating out expenses are high. Plus, eating out with 3 kids sounds like torture. Is this drive-through fast food, or sitting down at a restaurant? Try to figure out what is driving that expense (lack of meal planning? Desire to treat your selves?) and cut it way down. Grocery expenses also have tons of room to cut. There are a million threads here about doing that, so check them out.

Also, you just have the one car? Car insurance seems high. Have you checked around on rates?

Good luck and congrats on beginning down this path!

[SwordGuy]

First of all, congrats on setting out on this path.   If you stick with it, barring accidents or a severe illness, you'll end up in fine financial shape.

Your car payment is refreshingly low.   Haven't see a case study with one that low in ages!
Car insurance seems a bit high.   Time to shop around.

Your food and eating out bill has lots and lots of room for improvement.
Cellphone expense is way too high.   IP Daley has a thread on this forum covering how to lower this.

If you want to do this in 10 years, you need to increase income and slash expenses.

Can you get a roommate to cut down on the housing expense?

Can you find a way to make some money while being a stay-at-home spouse?   Even $500 a month adds up!  (Like $85,000 invested over 10 years!)

Plus, it looks like you've left out some of your spending...

[Viking Thor]

If you save 65% of take home pay, you can retire in 10.5 years (MMM has an article on this). However if you are at $0 in investments now, that implies close to 0% savings rate (unless you just finished paying off large student loans or something of that nature) which means you probably need to cut around 65% of your current spending to retire in 10 years which is a massive change.

I would agree with the others to start tracking your spending. Also if you want to get started on this path, find some immediate areas to cut back and start investing a significant proportion of take home pay each month.Good luck!

[Littlestache]

There seem to be massive gaps in your spending reported. Where are clothes, kids costs, health insurance, entertainment costs, baby sitters, any gym or hobby costs, and car maintenance, etc etc. Are you tracking actual spending, or guessing? Tracking spending is step number 1. I recommend an aggregate service like Mint or Personal Capital. It will also pull some back data, so you can go and categorize and figure out where your money has been going!

You also don't say if you have any savings?

Anyway, start here. Try to fill out the case study as fully as possible.

Noted! I'll try to get in more detail on the numbers and repost ASAP. I am currently adding everything into Personal Capital as well. As of right now we do have $1500 in our saving and another $2,500 in our checking but i'll redo the case study to show numbers better. No more guessing!

If you save 65% of take home pay, you can retire in 10.5 years (MMM has an article on this). However if you are at $0 in investments now, that implies close to 0% savings rate (unless you just finished paying off large student loans or something of that nature) which means you probably need to cut around 65% of your current spending to retire in 10 years which is a massive change.

I would agree with the others to start tracking your spending. Also if you want to get started on this path, find some immediate areas to cut back and start investing a significant proportion of take home pay each month.Good luck!

10.5 years, I think if we get serious this really could be doable but I have to figure the out mortgage piece. It's just such a big part of our spend.

[Littlestache]

Eating out expenses are high. Plus, eating out with 3 kids sounds like torture. Is this drive-through fast food, or sitting down at a restaurant? Try to figure out what is driving that expense (lack of meal planning? Desire to treat your selves?) and cut it way down. Grocery expenses also have tons of room to cut. There are a million threads here about doing that, so check them out.

Also, you just have the one car? Car insurance seems high. Have you checked around on rates?

Good luck and congrats on beginning down this path!

Eating out has been our big splurge Portland is full of good food but we've got to change our habits. HAHA torture! Depends on how well behaved your kid are! but every parent has those days!

Only one car and we plan to keep it that way, I'll have to look around at insurance. Who do you guys use

[mountainfamily]

Exciting that your'e starting on this process!

#1, kill those credit card debts. That's low hanging fruit and will give you a lot of extra cash to start saving.

Selling the house sounds too drastic. House prices are going up, you need a roof over your head, I doubt you could get a nice apartment to fit your family for much less, and hopefully the house would appreciate by the time you're ready to retire.

I'd stop eating out until the credit card debt is killed, then make it a once a quarter treat. Instead of eating out, make freezer soups, lasagnas, and other things you can pull out quickly and have ready after a long day. I work late into the evening so I've adapted to having dinner ready to go each day. It took some work, but now I'm used to operating that way.

Get a CSA. Get a chest freezer. Grow tomatoes, berries, kale, lettuce, and other high-cost treats in your garden. Freeze and can stuff. Learn to cook a whole chicken and make soup with the bones. Ditch the breakfast cereal (it's terrible for you and has no nutritional value) and do oatmeal instead. Use meat in a dish rather than making it the main course.

Do haircuts at home, shop for clothes at consignment stores, sell your extra junk on craigslist, learn to go camping and hiking, snowshoe instead of skiing.

Find a side hustle: maybe the stay at home parent can watch another family's child a few hours a week, pet-sit, walk dogs, tutor high school kids with their math homework etc.

One thing we have done is rent out our house when we go away. We went on a two-month trip and had someone sublet from us. We live in Seattle, a very pricy area, so it wasn't hard to find someone. Also, in Seattle, some people have set up AirBnb yurts and "glamping" canvas tents in their back yard for $40 per night, using a compostable toilet.

Have fun!

[Laura33]

Congrats and welcome!  FYI, start with this -- my favorite post of all, because it shows just exactly how much is in your power:  http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

First, I echo the comments about tracking spending religiously.  Your numbers show about $3500 in expenses and about $6K in income every month, but if that were the real story, you'd have a lot more in assets.  Track so you know what you're working with. 

My suspicion is that once you start tracking, you will find that if you want to FIRE in 10 years, you are going to need to cut your spending pretty dramatically.  The good news is that that's not the only option; you can also choose to work a little longer and still get there with less dramatic spending cuts.  Don't worry about the house for now; your mortgage is reasonable given your income, and at least you will get your principle back when you sell.  Focus on the consumables and lifestyle thing -- groceries, eating out, utilities, etc.  Figure out what both of you are willing to live on; maybe you'll be able to ratchet it way back, maybe not.  But once you have been tracking everything religiously and know what is livable for you, then you can plan around that. 

In terms of what to do with that extra $, knock out the CC first thing.  Does your employer offer a 401(k) or comparable option?  Does it have a match?  If you are not investing up to the match every year, you are giving away free money, so that would be my first priority once the CC is gone.  In terms of investments, I'd just put that money in the cheapest broad market index fund you can find -- whatever is cheap in your 401(k), VSTMX outside your 401(k).

I think if you can cut expenses to the point where you can max out your 401(k) every year, and if you can then also sock away any bonus money, you should be in good shape long-term.