Author Topic: Small stash hoping to be on the right tracks  (Read 1035 times)

savenowspendnever

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Small stash hoping to be on the right tracks
« on: October 12, 2017, 10:47:58 AM »
Hello!

I am a born and raised Mustachian who is finding this forum through a friend. I’ve read a significant amount of the blog posts in sequential order, and have been browsing the forum for a few days. I am eager to create this case study to help further my understanding of my own finances and create a reasonable budget to help me understand what I am “allowed” to spend.

First off, a little bit about me. I feel it’s necessary to state that my parents have worked tirelessly to provide for me – food, shelter, education, and raising me to be a kind and caring individual. They were both raised in less than ideal economic circumstances, and even after I was born we lived with my grandmother for a time to save money. I’m proud to say that their hard work paid off to create a wonderful life for all of us. Fortunately, learning from their frugal lifestyle paired with the people in my family who work in finance, has done me well.

I am currently in a unique job situation. After graduating from college I was able to find a job in my field in an industry that I did not foresee would need my help. That being said, it is a job with an end date. I have worked here for a year and two months, with at least 3.5 months ahead of me, possibly extending to 5 (but hopefully not!). The job has as many perks as it has downsides: free snacks/refreshments, free lunches, outstanding connections, long hours, physically impacting depending on the day (some days standing all day, some days sitting all day).

Currently, I live with my boyfriend. He is three months into a full time job paying $68k/year before taxes. His only outstanding debt is about $10k on his car, which due to our move to a new state needs to be paid off for an issue with the title (loan/car was cosigned), so he will owe an interest free loan to his parents. His investments are in Vanguard accounts and he has made contributions to his IRA.

Because I have been at work for so much longer and we have discussed our couple’s financial situation, I pay for the rent and he tends to pay for our recreation and supplies. When it comes to a Target trip, he’s the one footing the bill. When it comes to random things like ordering online or individual items we pay for ourselves.

Without further ado…

Gross Salary:
$62400, or $1200/week. However, my work fluctuates, as there have been/will be a few weeks of unpaid time off and there are few instances of us being busy enough that I pick up an extra day at 1.5x my daily rate.

After taxes my weekly income is $854.99, but the average to this is higher as I am reimbursed for mileage when outside of work trips are necessary. The frequency of these trip changes and is necessary, but I attempt to put as few miles as possible onto my car.

Assets:
Checking: $3000
Savings: $6000
Vanguard
Roth IRA: $22k
Investments in Prime Money Market, International, Admiral Shares: $41k
Education Savings: $3k – tax free if applied to more education, can withdraw at 30 with tax
No 401(k) through employer

Monthly Bills:
Cell phone: family plan, but my portion is reimbursed by employer
Car and health insurance: car insurance is still temporarily paid by my parents, more out of convenience due to the licensing on it, health insurance by parents also – eventually my boyfriend and I will utilize his work’s coverage but it is not necessary at this point

Rent: Floats right at $1250 as rent check includes water
Electric: Up to $100. Sadly, though we did get our initial summer bill down, we are still experiencing 90 degree days. The air is run at 72 from about 9pm – 5am, and set to 77 from about 5am – 6pm, set to 74 when the first person gets home.

Gas: $65-75 month, rough estimate. I get about 25mpg city, 40 highway… average 350 miles/fill up.

Total expenses: $1,425
Adjusted gross: $1900, ish… (subtracted $100 for various personal spending)


Look into my past 2 months of spending:
October: Haircut $12, gas $36, birthday gift for grandmother $15
September: gas $21, haunted house tickets (2) $40, Air bnb: (2) $30 gas $31, oil change with coupon $26, Goodwill clothing $18, concert (2) and parking: $98, ice cream $8, grocery $16, gas $48, zoo (2) $30. Extra gas and Air bnb was part of a trip to go to the haunted house, with price adjustments for the group splitting.

Total: $429

I do keep at least $20 on me for anything you need cash for, but definitely don’t spend that much cash a month. Continuing to look back over statements reveals more shopping and groceries. Moving into our apartment together did hike up the bills in July as we bought furniture, my split was kitchen chairs, our sectional, and odds and ends supplies. My boyfriend had a $5k moving stipend which covered all of our expenses as he utilized Southwest’s bag check to bring clothes, snuck items in his car that was shipped, and was generally just smart about the travel out to my state.

Paid by boyfriend:
Grocery bill: $25-50/week. This one is very difficult to estimate because I have the privilege of snacks and lunch at work, and he gets at least one lunch a month for free. I eat vegetarian, him 99% vegetarian – occasional lunch meat. We are very good with the prices in our area, utilize bulk foods and our own containers, yada yada.
Eating out/entertainment: $20-25/bill, about $100-125/month. Lately, eating out has become our social time and entertainment. We eat out with friends more than we do anything like see a movie.
Odds and ends: $100. A bit of an overestimate, accounts for anything household related.

Total: $250 ish

Paid in full:
Gym membership: $215 for two years
Renter’s insurance: $250 for one year

My main focus with getting involved with M3 is to have a better understanding of finance and investments. I would like to come up with a reasonable budget for monthly spending outside of rent and utilities. I believe that my boyfriend and I try our hardest to avoid excessive and indulgent purchases, but the fact that I do not have a monthly budget for myself tends to make weighing purchases more difficult.

Another thing I would like to focus on in joining this forum and posting this case study is figuring out how much time I have before taking up another job when this one is over. Currently, my job takes up almost all my time, making me feel like I haven’t had true rest in a few months. Outside of work my free time is spent at the gym before the work, and weekends are generally social/catch up chore time. Of course social time is my choice, but it is limited to weekends only, making it hard to carve out that rest time. Ideally I would like to have a month’s break in between the jobs. Part of this would be dedicated to restarting a podcast I worked on college. My current dream would be to have a flexible schedule with desired employer #1 and make this podcast a downloaded reality. My current reality would be happy with getting a job with desired employer #1 and doing the podcast on the side, no profits expected, but community profits definitely expected. My current connections make me believe this new employer is an achievable goal, and the work I would do there more aligns with everything I love.

Long term future spending impacts/things to think about (talking out loud here):
When the lease is up, what is the most reasonable living situation considering both of our jobs? Will we renew our apartment lease or find another place to stay?

What will our future gym situation look like? Though this is anti-mustachian in terms of spending, When I am freed of my long work days, I would like to resume regular swimming workouts. For $420, my boyfriend and I can have a year membership to a gym closer to our apartment with everything I could hope for in a facility.

Miscellaneous travel: going home for Christmas, and I would like to visit my grandmother before she is the last family member to move out of Pennsylvania, as I won’t have much of a reason to go back without her.

I have started doing weekly group rides with a cycling group. Since I purchased my road bike off Craigslist I have wanted to upgrade the pedals, but wasn’t riding enough in the past year to justify it. If the group keeps up (which, it seems like we are all committed) I would like to get new pedals, shoes, cleats, and probably a new seat.

There is an engagement somewhere on the horizon – the only thing I can definitely say is we won’t be spending much money in terms of rings as I have a band I would like to use, and browsing for an engagement ring I’m finding them for less than $600. We’re rather simple in that there will be no wedding-zillas, but hey, we’re only doing this once, and definitely want a honeymoon out of it!

So, what do you do think, Mustaches? Can you steer me in the way of a reasonable monthly allowance, and advise me on getting a bit of a break at the end of winter?

CrispKale

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Re: Small stash hoping to be on the right tracks
« Reply #1 on: October 13, 2017, 01:01:54 PM »
hmm I'm confused: I seem to get from the post your job will be ending in a few months (3.5 to 5) and you are currently paying all of the rent and utilities. What have you discussed with your partner as far as your new expense split once you stop working? Of course your expense cost-sharing can be reconfigured once you have a new job but there's no way to estimate that until you have it.
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MrThatsDifferent

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Re: Small stash hoping to be on the right tracks
« Reply #2 on: October 13, 2017, 06:41:51 PM »
Confused as well, not sure why you working longer means you pay more when he makes more and your job is ending? Nope. Have separate finances and a joint account. Figure out what your joint expenses are and create a budget for that and then contribute equally to it. Keep building your own stash, anything can happen and shouldn’t make yourself vulnerable for love.

Meesh

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Re: Small stash hoping to be on the right tracks
« Reply #3 on: October 14, 2017, 01:06:46 AM »
It makes no sense to me why you spend 1350 a month for rent and utils and your BF pays 250 for food and fun. Especially since your job is ending and he makes more than you. I'm guessing you pay rent because he moved in with you and you had your job first? That doesn't sound like a good reason to have such an imbalanced financial picture. I think you and BF need to talk again and decide if you are OK with that division but also what's going to happen when you don't have a job in a few months. The average time it takes to find a job in the US is around 6 months I believe. So if you pay for full rent you can go about 6 months with 9,000 (are those assets solely yours or with the BF?), but you'd eat up your entire emergency fund. So I'd grow that in the last few months at your position (I'm assuming you make about 3,500 a month and investing the extra).

Is there a better reason why you pay so much more? For example is he maxing his 401k and saving more for your futures? I'm sorry, I'm just confused. When DH and I lived together as engaged we just had a joint account and dumped everything in together, once we knew marriage was in the future.

You also are in desperate need of a budget. Try mint or YNAB. One of the biggest problems people have is not accounting for the little random things within the month but more importantly the big ones that don't come as often, like the gym membership and renter's insurance. Take them and divide by the months left and save that much each month so that when it comes up you aren't worried about it. Same goes for travel, Christmas, and engagement etc. This is the heart of a budget. Figuring out what your true expenses are. Figure out how much you want to spend on each and how far away it is and save each month... My guess is you'll realize you don't have enough for 6 months of living.

I don't think there is anything wrong with having a gym membership if you use it (I pay ymca 50/month for my family but we are there everyday). But if it expires when you're jobless, don't renew it. Wait.

Your rent seems high but I don't know where you live. Is it HCOL? What are you renting? 2 ppl should be in a studio or a 1 bedroom. Ideally close to both of your jobs (or at least his since he'll have one?). At that price I'd at least look around to see if you find something more reasonable.

marty998

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Re: Small stash hoping to be on the right tracks
« Reply #4 on: October 15, 2017, 12:30:30 AM »

Your rent seems high but I don't know where you live. Is it HCOL? What are you renting? 2 ppl should be in a studio or a 1 bedroom. Ideally close to both of your jobs (or at least his since he'll have one?). At that price I'd at least look around to see if you find something more reasonable.

Yes... the "where"is so important in these questions. Housing is the biggest spend on most people's budgets. Forum can't really help you if we don't know where you are.

savenowspendnever

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Re: Small stash hoping to be on the right tracks
« Reply #5 on: October 16, 2017, 07:58:32 AM »
Hello, thank you for all of the replies!

I appreciate the feedback. Meesh is right in their thinking that the payments were split this way as he moved to me and I had been working for the better part of a year. However I realize that though we knew this would not be our longterm plan, we had yet to come up with any alternatives! As CrispKale said, this can be reconfigured - we talked about it this weekend and I believe we'll be coming up with a better way to split these costs considering my end date is only a few months away. I have no update to provide at this moment, but do believe there will be one soon.

In the past we have discussed a joint account. We have revisited this idea again this weekend but have not yet come to a decision. To us, there are no trust issues with the idea of the account, we simply do not have one out of convenience as it would be an additional account to track and create transfers. We have not written off the idea, though.

The answer is yes, we could downsize to a studio apartment, but to me the $150 rent wise (+ of course lightened electricity cost) is not worth it - I appreciate the size of the kitchen and washer/dryer in unit. We live close to work (less than 10 miles for each commute) - both unfortunately not able to bike as we take necessary trips during work. We could be renting a cheaper apartment which would more than double his commute and take us away from immediate recreation: we live on a trail system connecting us to other neighborhoods, restaurants, parks, and lakes. We enjoy this lifestyle and are much happier paying a premium to utilize nature as entertainment vs. the cheaper alternative of living off the highway and being required to drive to enjoy any of the path systems in our area. Any time saved with the nature of my job is a bonus because we can walk to our bulk foods store or conveniently do errands in one loop.

Thank you for all of your replies! I am still getting my feet wet in terms of these forums and hope to post a bit more in the future.

Laura33

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Re: Small stash hoping to be on the right tracks
« Reply #6 on: October 16, 2017, 08:39:31 AM »
Given that your next job is in flux, there's no need to rush to figure out a final budget/split/joint account/etc.  Probably the most important thing you can do right now is religiously track everything that you both spend, so that when you do get the next job and are a little settled, you have a good baseline to figure out the joint budget.  The problem is usually all those little irregular things -- the occasional taxi/uber, this month it's the gym renewal, oh I forgot about my Amazon Prime renewal, etc.  By tracking your spending over time, you can catch all of those little things and fit them into your budget.

In terms of figuring out what that joint budget should be, and how much is "ok" to spend on this or that, that decision needs to be based on your plans and priorities.  How long do you want to work?  And what is the likelihood that you will be able to work in your field at comparable salaries that long?  Will you want kids?  If so, what are your thoughts on daycare vs. SAHP, paying for schools, etc.?  You need to first figure out what your long-term goals are and set aside the savings you will need to meet those goals, then structure your lifestyle around the rest.  Toward that end, take a look at this:  http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/.  As you can see from the chart, there's a huge difference in "leftover" income if you are ok working for 30 years than if you want to FIRE in 10.

Of course, what usually happens is that you find your income doesn't allow you to save at the rate you want and continue to live the lifestyle you want.  :-)  In that case, you need to decide whether, say, the happiness/efficiency you get from your spendy apartment is worth working a few extra months/years.  But in the end, that is in fact the point of the exercise:  you put in all the work planning and tracking so that you can be confident you are putting your money toward your highest priorities, and not frittering it away on stupid stuff.
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Meesh

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Re: Small stash hoping to be on the right tracks
« Reply #7 on: October 16, 2017, 11:55:21 AM »
You are making many changes in your life and it might not be the right time to move at the moment. That's just one more stressful thing to figure out. But it is something to think on once you get a bit settled again.

Don't forget you can just add someone to your existing bank accounts! That can make it a bit simpler maybe.

Otherwise, keep up the good savings while you can and work on understanding where your money is being spent better. Tracking and prioritizing are really steps 1 and 2 to all things personal finance.

Keep us posted!

savenowspendnever

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Re: Small stash hoping to be on the right tracks
« Reply #8 on: October 18, 2017, 08:36:19 AM »
Thank you for the additional replies!

As my boyfriend is more adjusted in his work and routine, we are taking more steps to track necessities, which aligns very well with creating the long term budget. We have started listing the monthly necessities and what stores to buy them from (grocery, Wal Mart, Target, Sprouts) so that when we are running low or out, we can get a few out of the way in one trip.

Will keep you updated as I move forward.

BajaRed

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Re: Small stash hoping to be on the right tracks
« Reply #9 on: October 18, 2017, 09:42:33 AM »
So great you got a foundation from your family!

What is reasonable for a budget and relationship is entirely dependent on you, your peer group, your intensity for your goals (FI, relationship).  Where you derive most pleasure from your life; where to spend, or use time.  There is always someone with higher or lower budget.  Being flexible helps a lot to optimize housing, transport, and food. 

And then of course choosing that emotionally works for you - no burn out, you feel it's fair with your bf, and you are enjoying the life process.  It's more fun and motivating I think if you have tangible short term savings goals, really beleive in the goal, and have buy in from partner. 

For an extreme version, consider earlyretirementextreme , living on 7k.