Author Topic: Rebuilding my Stash, An Exercise in Advanced Mustachianism  (Read 3630 times)

HildaCorners

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Rebuilding my Stash, An Exercise in Advanced Mustachianism
« on: August 19, 2017, 03:51:32 PM »
Finally! Got my numbers together for my case study. Apologies in advance for length.

Life Situation:
Iím the divorced mom of a 21 year old (independent) and a 16 year old (dependent). Iím also over 59 1/2. USA taxpayer, Head of Household.

Before the divorce, my ex and I (married over 20 years) had built a hefty stash, and I was ďretiredĒ ó but we had one of those mythical high conflict divorces that wiped almost everything out. Not only did I have to find paid employment after close to 20 years out of the job market, but I have to re-build my stash from almost nothing.

Fortunately I was able to self-train in web design/development, and after a few very lean years and a couple minimum wage jobs, Iím now earning a good income. Iím saving a lot, but need to do better.

I no longer talk about FIRE. For me, itís FIROT ó Financial Independence, Right On Time.

Income/Expenses
Items marked with * have notes below

                         Month   Year       % Gross Expenses
Gross Wages             $5,833   $70,000   100.0%
Govít Deductions        $1,118   $13,418   19.2%
Health Insurance*       $1,033   $12,392   17.7%
         
Net Wages               $3,596   $43,152   61.6%
Alimony/Support         $1,151   $13,624   19.5%
Passives*               $  180   $ 2,160   3.1%
         
Total Net Income        $4,927   $58,936   84.2%
         
Rent*                   $1,800   $21,600   30.9%
Groceries               $  300   $3,600     5.1%
Transit pass            $   84   $1,008     1.4%
Car Insurance           $  108   $1,300     1.9%
Car Expenses*           $  204   $2,444     3.5%
Heating Oil*            $  180   $2,160     3.1%
Other Utilities*        $  121   $1,452     2.1%
Medical*                $  215   $2,580     3.7%
Kid Activities          $  157   $1,884     2.7%
Clothing/Personal       $  118   $1,416     2.0%
Dining Out              $   87   $1,044     1.5%
Vacation*               $  103   $1,236     1.8%
Storage*                $  170   $2,040     2.9%
Legal*                  $  541   $6,492     9.3%
Other                   $  128   $1,536     2.2%
         
Total Expenses          $4,316   $51,792    74.0%
         
Stash Increase          $  611   $ 7,144    10.2%


Numbers are averages for the last 12 months from YNAB.

* Income & Expenses Notes:
Deductions:  Health insurance. Iím a contract employee with a choice of two plans: expensive high deductible and very expensive moderate deductible. Iím in the second with my son. There is no 401k or other retirement, and I really donít like the FSA offered.

Passive Income: self published books, graphic design sales at Zazzle, a tiny bit of freelance web design. This will go up when Iím no longer a wage slave.

Rent: Ridiculously high, I know. Iím under a legal judgment to keep living in my expensive Boston suburb until my youngest graduates high school, and this is the best deal I could find. [2 bedroom 1 bath, no roommate potential.] Iíll be moving someplace much cheaper summer 2019, see Goals below.

Car: I own a 2007 Honda CRV, and drive about 3,000 miles a year. [I commute on public transit.] I had an unexpected drive shaft replacement last spring. I buy about a tank of gas a month. Insurance is about $100 a month ... Iíll be raising my deductible soon but will have to add a teen driver.

Other Utilities: Electricity, 2 cell phones, internet. Heating oil for a badly-insulated apartment in New England. I keep my thermostat 62F daytime, 58F at night.

Medical: Dental work my plan didnít cover. I might have some more early 2018, hopefully not.

Vacation: trip to the other coast to see family I havenít seen in person in 10 years, and a couple of 3 day weekend road trips (camping or couch surfing).

Storage: Stuff from my old house. I know I should deal with this; I probably need a face punch.

Legal: the last expenses from my divorce 6 years ago, last payment this past spring. Thereís no ongoing litigation; no bills from my law firm. Iím very happy about that!

Stash Increase:  For the last few months Iíve been saving a lot more, closer to $2,000 a month. I hope to continue at this rate, or higher if I can.

Balance Sheet as of <18 August, 2017, approx.>

Assets   
Credit Union Checking              $‎ 9,700
Credit Union Savings               $‎ 1,500
Business bank account              $   ‎165
ďHigh interestĒ savings (1.15%)    $‎39,750
Vanguard VFIAX                     $‎10,700
Wealthfront personal               $‎ 5,800
Wealthfront IRA (traditional)      $‎ 2,325
QDRO*                              $‎34,000
   
Total Assets                      $‎103,940
   
Liabilities                       zero, zip, nada
   
Net Worth                         $‎103,940


Notes:
All interest, dividends and other growth re-invested in same account.
Wealthfront is a bit of an experiment, to see how well it does. I go into periods of ignoring my finances, Iíd love something that earns well without active management by me.

QDRO: This is my share of ex-husbandís pension. 60% stocks, 40% bonds. [QDRO stands for Qualified Domestic Relations Order, the legal term for this account.] I donít know much about this money.

My Future Plans
Though I love the town I live in, I canít afford to stay here, or in the Boston area. Iíll be moving out summer 2019. Iíve already chosen my new city, I have friends there and have visited several times.

I want to buy a duplex in a high-end city neighborhood, live in one unit and turn the other into a luxury rental. Iíve run the numbers, if I buy wisely and put in sweat equity (I love working on houses, and Iíve managed remodeling projects before) Iíll cover the entire mortgage with extra. This will eliminate my housing expenses.

As an older person, I have to think about the days when I canít work full time. I want to delay getting Social Security as long as I can, to maximize benefits. Iím in pretty good health, but that wonít last forever either.

On the good side of being over 59 1/2, I can treat a traditional IRA as a tax-deferred account, pulling out money when my income taxes are lower.

Why the Case Study
I need to build my stash quickly, as Iíll be pulling out a lot to buy and fix that duplex. I donít know how long Iíll be able to work full time, or how much income Iíll be able to get after I stop f/t work.
There may be waste in my spending that I donít see. I welcome any/all ideas on improving my savings rate.

I also want suggestions on how to better allocate my stash. Remember, a good chunk of it will be turning into real estate in about 2 years. This is why Savings is high ... I donít know where else to put this money.

While Iím asking ...

I need some ideas on improving my credit score, if it matters for getting a mortgage. According to Credit Karma, Iím in the mid 700s (depending on my credit card balance that day; itís always paid in full).

I have 3 credit cards, Amex, an LLBean card, and a department store card. Total credit limit: $13k.

No recent black marks ... but in Spring 2014 I missed 3 payments on my Amex. I expect Iíll just have to wait this out.

Anyone know of legitimate things I can do to improve my score?
Been there, done that

marty998

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #1 on: August 19, 2017, 04:23:47 PM »
So assuming you either clean up the following or they naturally drop off this year:

Car expenses - $2,444
Dining out - $1,044
Storage - $2,040
Legals - $6,492

You'll have an additional $12,000 a year to invest.

I would also suggest simplifying your assets - one savings account only is necessary. What is the asset allocation of the Wealthfront investment? You could be doubling up with VFIAX.

HildaCorners

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #2 on: August 19, 2017, 04:36:54 PM »
Thanks, Marty!

The legal is gone as of last April, I'm hoping it never comes back.

The car is mostly an $1800 expense to replace the drive shaft. Again, it shouldn't repeat. And if it does, I'll look at selling the CRV and buying a cheaper, more efficient car. At 3,000 miles a year, it's not worth selling, but at 3,000 miles and lots of repairs, it would be.

Storage will go away as soon as I get my act in gear to empty it out.

Dining out ... this is 1-2 dinners and 1-2 lunches out a month, and my son and my primary form of entertainment. Pre-divorce, the family went out a lot, in "the poverty years", we hardly went out at all. I'm content with this expense, though I would cut it entirely in a financial emergency.
Been there, done that

bestname

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #3 on: August 20, 2017, 03:51:56 PM »
I would make sorting out the storage situation my goal. Do you really need that stuff?

HildaCorners

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #4 on: August 20, 2017, 03:59:08 PM »
Some yes, such as my living and dining furniture and 3/4 of my kitchen gear.

The short story: though I gained ownership of my pre-divorce house, I was forced to sell it in post-divorce litigation. I had 2 months to empty a 2400 square foot house, including the things my ex hoarded. I ended up filling a full size commercial dumpster with junk, held a garage sale and a "free for all", and still loaded up an 8x8x16 foot shipping container. [My ex was not Mustachian.]

I know I have things in the container that I can get rid of, but also a lot of things I miss having in my life, like my good kitchen knives.

One problem is that old age is sneaking up on my, and my knees are too shot to carry heavy boxes up stairs. I need to organize a massive moving party, including someone to sit on me so I don't try to help :-0
Been there, done that

Tuskalusa

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #5 on: August 21, 2017, 09:16:20 AM »
I get you on the stuff. It's hard to go through everything, especially with aching body parts (of which I have many as well!). Can your kids help you with some of the sorting and lugging?  Can you pay them for their help? (Someone may face punch me for suggesting we pay our own kids, but I don't see an issue with sharing the savings, if it helps the whole family.)

Even if you just got to a smaller storage unit (and if you got those kitchen knives into your current kitchen) it would be a win.

I think you've rocked it in your reset!  Congrats on getting through what looks like a tough couple of years.

CU Tiger

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #6 on: August 21, 2017, 10:01:58 PM »
I am jumping on the Sort Through the Storage bandwagon. If there are things you need now, bring them home with you. If there is anything you can sell, sell it and invest the proceeds. At least make sure you are paying for the least amount of storage possible.

Find out about the QDRO money. Knowledge is power. Is it making you money? What are the fees? How can you use it or withdraw from it?

Does your young person pay for his phone? It is never too early to start teaching responsibility!
There are two ways to get enough: one is to continue to accumulate more and more. The other is to desire less. - G.K. Chesterton

Feivel2000

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #7 on: August 23, 2017, 05:07:32 AM »
I don't know what kind of high end furniture this is, but you spent $2,000 for it, for years, and for a few years to come.
I see two possibilities:
1) This stuff was so expensive that 2k per year is nothing compared to the sticker price.
2) You already spend as much money on storage as you had spent when buying the stuff new.

@1: You can furniture a lot of rooms for $2,000. The thing is, furniture really becomes kind of worthless as soon as it is used. Try to get some money for the stuff. If you have any emotional attachments, maybe some friends are getting some value from it. Maybe they can use/store it.
In our old house we had a lunch table which was way to big for my mom's new house. We gave it to friends and if we have room for it, we can get it back (will probably never happen).
Your kitchen stuff: You are cooking without it, why would you need it in a few years? Sell it and gift it to friends. You clearly have no use for it!

@2: see @1, but add a couple of face punches.


JoseS

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #8 on: August 23, 2017, 07:51:11 AM »
For the credit score, an important part of the score is credit utilization. Try paying off the credit cards before the due date. They report to the credit bureaus whatever is the balance on the due date. If you pay off all the credit cards a couple of days before the due date, then your utilization will be 0%. It might be better to have a low utilization, like 3%, but I'm not sure.

You can also get a new credit card to increase your total amount of credit available and lower your utilization. With a mid 700s score you should be able to get approved. Get a no fee only one that gives you rewards for the stuff that you use it for.

Feivel2000

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #9 on: August 23, 2017, 03:25:30 PM »
Regarding credit (I am not American, can't really know how good the advice is): Money Girl talks a lot about credit scores: http://www.quickanddirtytips.com/money-girls-smart-moves-grow-rich-0


HildaCorners

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #10 on: August 23, 2017, 05:18:30 PM »
Thanks everyone. Please keep the ideas coming!

More on the storage: for a little over a year after moving out, the younger kid and I were living with roommates* in their fully furnished house. A lot of my stored stuff are things I didn't need in a roommate situation: basic furniture, 85% of my kitchen gear, almost all my books, all my art, shop and yard tools, etc.

I'm in a small apartment now, and while most of the stuff in storage will come in handy, I don't have room for everything. I do have some storage space for the rest. And I'll need it for when I move in 2 years**.

Saying that, I'm sure I have things in there that I don't need, and can sell off / give away / just trash.

* If roommates are difficult when you're a young adult, imagine two middle aged single moms and their teen kids. We ended up having such drastically different values that it didn't work ... but I do have a batch of anti-mustache stories!

** The original plan was for me and younger kid to move out of state 6-9 months after leaving our house. The divorce judge squashed that ... we have to stay until he's out of high school. [My older kid is fully independent and living over a thousand miles away.]
Been there, done that

Sun Hat

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #11 on: August 25, 2017, 09:28:04 AM »
You are doing great given your situation!

Given that you're planing on moving in two years to a place where you can use some of the things that you have stored, I don't think that your use of storage is as bad as those who store things for a nebulous date and future purpose. That said, 8x8x16 is a lot of space to pay for. Could you reduce the monthly cost by sorting through the contents and keeping only what you love and intend to use in the future place? Anything that reminds you of your ex should be sold, given away or consigned to a bonfire (not mustachian, but kind of fun).

On sorting day, you should sit in a lawn chair while the 16 year old does the lifting. If your kid participates in any sports teams or has robust friends, I normally find that teens will do all sorts of labour for cash (granted, I'm not a parent, but I do volunteer at a sports club where there are lots of weirdly strong kids around).

If that's not an option, I notice that your passive income is a bit more than your storage fees. Could you write another e-book or two to help defray the cost? I think that lots of people could benefit from an insider's view on 1) how to survive and rebuild after an epic divorce battle 2) lessons learned from / what not to do during an epic divorce battle.  Even a tale of mid-life resilience and badassity would make a good read that average people would be able to relate to (more so than tales of cycling around the world or climbing Everest).

Not that your kid seems to be costing you a lot, but if they don't already have a p/t job, I'll echo the comment that someone else made, to encourage your kid to get a job and learn the satisfaction of paying for their own luxuries. Seeing you lose a bundle and still use your brains to get out ahead is a wonderful opportunity for your kids to learn about the value of financial planning and the resilience that a life of badassity imparts.

HildaCorners

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #12 on: September 22, 2017, 09:10:34 PM »
The storage "unit" is actually a shipping container, buried in a warehouse. I can't get to it without having the company deliver the container. I chose this because it's no more expensive than a building, and when I thought I'd be moving quickly, I could have the container shipped out of state.

My son isn't working (except at being a good student, which he is). He actually does a fair bit of cooking and housework, and he's more frugal than I am! "Mom, we shouldn't go out to eat more than once a month." He tried dumpster diving last night (after the Boy Scout meeting, still in uniform!) and came home with a few donuts. We discuss budgeting and investing, and I'm steering him to early financial independence.
Been there, done that

Dictator_Mars

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #13 on: September 28, 2017, 08:44:24 AM »
I respect the decisions you've made, keep working at improvements. It's never to late to strive for financial independence. I would know!

dollabillz

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #14 on: September 28, 2017, 08:54:11 AM »
In terms of credit score, there is also the option of requesting an increase in your line of credit from your existing cards (they may or may not give it to you).  That way your utilization % will be smaller but you won't have to open up new cards.

robartsd

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #15 on: September 28, 2017, 09:33:24 AM »
More on the storage: for a little over a year after moving out, the younger kid and I were living with roommates* in their fully furnished house. A lot of my stored stuff are things I didn't need in a roommate situation: basic furniture, 85% of my kitchen gear, almost all my books, all my art, shop and yard tools, etc.

I'm in a small apartment now, and while most of the stuff in storage will come in handy, I don't have room for everything. I do have some storage space for the rest. And I'll need it for when I move in 2 years**.

It's time to store anything that doesn't have signficant sentimental value on craigslist. Everything you sell is something you don't have to 1) store unused for 2 years and 2) move to your new location later. You can buy the things you want again from others on craigslist after you move. If you do have things with signficiant sentimental value that you want to keep but not have in your small appartment, rent the smallest storage unit (usually 5x5x8) at a self storage facility.

We had friends store stuff in PODS when they prepared their house for sale before an out of state move. Having PODS move their stuff out of state turned out to not be cost effective, so we helped them unload everything from the PODS into their garage a couple of days before helping them load everything into a moving truck (they used ABF's U-Pack service). In my analisys PODS and similar storage solutions have not been as cost effective as local self storage buildings (mostly due to the transport fees, but also because there's a lot more size options at self storage buildings).

civil4life

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #16 on: October 06, 2017, 01:14:54 PM »
Overall, Awesome Job at recovering!!!

I definitely agree with your teen picking up his luxuries.   

No one mentioned it but the car insurance seems high.

Many of your expenses no longer exist or will be dropping off soon.  Everything else it  may be fun to figure out ways to challenge various categories each month.

If you son is a boy scout there is your moving/organizing crew.  Although money is awesome I am sure if you had a pizza party they would be just as willing to help. 

Keep us posted.

Vaulter

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Re: Rebuilding my Stash, An Exercise in Advanced Mustachianism
« Reply #17 on: October 06, 2017, 03:11:03 PM »
Wow, you're doing great! Like you said, a lot of expenses (legal, housing, etc.) will improve with time, and it sounds like you've already been able to capitalize on some of these changes with that increased savings rate in the last few months. I'm sorry you had to deal with such a huge setback. As far as ideas...

1) I agree with you and other posters in that decreasing the size of that storage fee needs to be high on your list. I know you had planned to furnish a future home with some of that stuff, but it is usually more cost-effective to "store" it on craigslist. Presuming that your younger child moves out after high school, you may be moving to a much smaller place when you get the chance to move. You may not want all that stuff anyway, and picking new-to-you items from craigslist and thrift stores after you find your new home will help you customize the new place with appropriate furnishings with no unwanted reminders of your pre-divorce home.

2) I agree that eating out with your son is a worthwhile expense. An average of one meal out per week is understandable. If you really want to squeeze every dollar, you could each pick one night per month to cook a special meal for the other and cut back the dining out to twice per month, but this may not be necessary.

3) I also agree that school/grades are your son's top job. That said, working a few hours on the weekends or after school 2 nights per week is definitely manageable and could help him pay for his phone and car insurance. Speaking of the car insurance, not every teen needs to drive starting on their 16th birthday. He can keep walking, taking transit, carpooling, cycling, etc. until he is ready to pay for the increased expense of his car insurance.

4) Lastly, health. If both of you are in good health, consider switching to the less expensive high deductible health plan. This allows you to save the money you would have spent on premiums and only spend it if you actually have health problems. Ideally, it would give you access to an HSA, which lets you save on taxes as well. Make sure you run the numbers on both/all your health insurance options each year before you sign up. All of these insurance plans have a sneaky habit of changing slightly over time, and you want to make sure it's still your best deal. Also, obviously not everything can be prevented, but eating right, exercising most days, flossing, and getting your annual free checkup can go a shockingly long way toward saving money on medical/dental visits.