Author Topic: Bad decisions (Student loan) ruining any chance of early retirement  (Read 11864 times)

Bad_With_Money

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Hi all, been lurking a little but hear good things about you all.  Looking at many of the other case studies it seems like I am pretty clueless and terrible with money.  I would appreciate any thoughts anyone can share about my situation.  Thanks,

Life Situation:
Single male, 32, no spouse or children.  Live in the American midwest.

Gross Salary pre-tax:
$82,000

Individual amounts of each Pre-tax deductions 401k, HSA, FSA, IRA, insurance, etc.

I have not been adding to any retirement account as my company does not match.  My insurance is $80 per paycheck

Other Ordinary Income:
None

Qualified Dividends & Long Term Capital Gains:
None

Rental Income, Actual Expenses, and Depreciation:
None

Adjusted Gross Income:
$82,000 (~$2,250 per paycheck, $4,500 per month)

Taxes:
I'll end up taking home about $54,000 after taxes/insurance/other deductions

Assets:
$52,000 in in savings account (emergency fund)
Car - estimated trade-in value of $2,800 (but see liabilities where I owe $5,800 on it, so not really an asset here)

Liabilities:

Student Loans:
My undergrad and grad school loans are consolidated into one loan, $130,000 current balance outstanding, 7% interest, compounded daily.  Suggest monthly payment $750/month, I am paying $2,000/month to try and get it paid down but it is just a mountain of debt.

Car:
2012 Honda Civic.  29 payments at $275 per month remaining (total payoff amount $5,840).  This is a fixed payoff schedule, ie, there is no additional interest accruing so paying off early does not offer any savings. 

Car Insurance: $85/month

Gas/commute: $150/month

Medical bills: $50/month

Gym membership: $25/month

Rent: $700/month

Food: $700/month

Clothing: $100/month

Entertainment: $150/month

Total monthly expenses:
$4,235

Extra money to set aside/add to savings: ~$265/month


Specific Question(s): Providing a detailed breakdown is important, so is asking for specific information so we know what kind of help/advice you are looking for.

There are 5 questions I have, all somewhat tied to each other.  Thanks for any advice and please let me know if any more specific information would help.

1. What can I do to pay down my student loan faster?  This thing is like a darn albatross around my neck.  Plus, as I'm paying $24,000/year on this loan, its really like I am losing $24,000/year that could otherwise be put into a savings/retirement plan.  I really would like to buy a house, but cannot justify taking on another giant debt with this one still looming over me.  Am I correct to pay more than the monthly payment each month?  Unfortunately, the interest grew the debt quite a bit while I was in an income based 10 year plan where the rest would be forgiven after that time, so when I lost that job due to the firm closing I am now faced with this giant debt.

2. What should I be doing with my savings?  The $52,000 is a nice safety blanket to have as it is equal to roughly a year's worth of take home pay.  But, I will need some of that if I want to buy a house.  Should I actually just take the whole amount and put it towards my student loans?  Or, should I look to invest it into some sort of safe market?  It does not seem to make a ton of sense to invest at 4% when I have a debt accruing at 7% though. 

3. With no company matching, should I still contribute to a 401k retirement plan, and if so, how much?  I suppose this is kind of restating some previous questions, but with this student loan should I still be working on stashing some funds for retirement, or should I just be all-in on paying off the student loan?

4. Lets look at maybe a longer term gameplan.  Supposedly it will take 5-6 years to pay off my student loan.  So, its really 5 years until I can even start truly saving towards retirement.  Do any of you see an angle where I could still be in line for early retirement?  it would be nice to retire in 10 years, but if 5 are going to be paying off debts and not saving, it seems unrealistic. 

5.  Whether it happens now, or not until the loan is paid off, I will need to invest my money at some point.  What is the best option here?  I am absolutely clueless about investing. 
« Last Edit: December 27, 2017, 05:56:11 PM by Bad_With_Money »

Blonde Lawyer

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Re: Student loan ruining any chance of early retirement
« Reply #1 on: December 26, 2017, 07:42:45 PM »
Lots of questions here.  First, I'd recommend refinancing that student loan.  I went with SoFi, story linked in bio.  That will make your extra payments go a long way.  I think paying extra is really smart but not at the expense of all retirement savings.  You can't make up these years.  How much you put towards retirement, in my mind, will depend on how far down you can get that interest rate.  The buying versus renting equation is more complicated.  Like most things, it depends.  Do you see yourself there a long time? How are housing prices where you live? We decided to buy while I still had pretty big student loans.  We wanted to get locked in at the low interest rates.  We see ourselves staying here 10+ years and have stable jobs.  How much more will you pay towards insurance/taxes/mortgage vs. renting.  Try to avoid PMI.  We went with lender paid which usually leads to a higher interest rate but in our case, it didn't.  We got lender paid AND the best interest rate.

Here's the plan I took that is some MMM and some Dave Ramsey and some "I do what I want" lol. 

We each invested about 8% in our retirement plans while paying down my loans.  We kept an emergency fund of about $5000.  We have high credit limit credit cards with no balance that we could also use in an emergency.  We saved the minimum required to buy where we are.  Every other penny went on that student loan until it was gone. 

Now we are maxing our 401k's.  What you do next also has different approaches.  There are pros and cons to all of them and it also depends on your income.   We are putting our savings account up to $20k or so.  We expect some potential large expenses this year and want the money liquid.  Money beyond that (previously at $10k) goes into a vanguard index fund account. 

Many people would say use a back door roth (or roth if you are income eligible) first.  If you are income eligible, by all means, do that before a taxable account.  If you need to back door, I've read there is a multiyear waiting period before you can withdraw penalty free.  Since, as I said before, we need a good chunk semi liquid next year and maybe the year after, we are parking it in the index fund instead of the Roth.

For the "I do What I Want" part - we aren't full mustachian.  We live pretty frugal. Rarely eat out, don't spend much on consumer sucka crap.  Drive used cars.  But we eat well so have a decently high grocery bill and we still travel.  Not a ton but we took two expensive trips during the loan payoff time as well as yearly trips to see friends/family for milestone occasions.  If we didn't treat ourselves some, we wouldn't have stuck with paying it down and off.  But, you can't treat yo'self in all categories of spending or you will be screwed.

The MMM NOT Dave Ramsey approach we are also taking is to NOT pay down very low interest debt prior to investing.  We have extremely low interest rates on our used cars and a fence we put in.  We could have paid cash but with a 2% interest rate, it is allowing us to invest that money instead.  We may start making some extra mortgage payments in the future but that rate is so low, we would honestly be dumb for doing so.

Blackeagle

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Re: Student loan ruining any chance of early retirement
« Reply #2 on: December 26, 2017, 08:07:30 PM »
2. What should I be doing with my savings?  The $52,000 is a nice safety blanket to have as it is equal to roughly a year's worth of take home pay.

While a lot of the general financial advice you see out there recommends an emergency fund in terms of "X months of income", that can lead to some wierd results for folks who have high savings rates (or debt paydown rates).  It's probably better to think of your emergency fund in terms of your expenses, rather than income.  Specifically, your non-discretionary expenses (those that would be difficult to reduce in a situation where you needed to use your emergency fund). 

Based on the numbers you provided you're spending $2,985 per month (including $750/month on your student loan, but not the remainder of the $2000 that you're choosing to pay now).  That means your savings represents about 17.5 months of expenses, which is a bit high if you view it solely as an emergency fund.  If you view some of it as a house down payment, that's a different matter, but I don't know if a house is realistic with your debt level in the short term.

Peony

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Re: Student loan ruining any chance of early retirement
« Reply #3 on: December 26, 2017, 08:08:12 PM »
I suggest you find a good budgeting or expense tracking program (I use YNAB but there are others. Another that I like is Financier.io) to see what your true expenses are. Your listed monthly expenses don't seem complete to me. Phone? Internet? Car repairs (they will be needed, so plan for them)? Holidays/gifts? Heat/electricity?

I think your food spending is quite high for one person. I bet you can cut that in half. Same with clothing and entertainment.

I agree that Dave Ramsey's approach could be helpful to you, just for the mind shift of aggressively going after that debt. Go get "Total Money Makeover" from the library.

ShoulderThingThatGoesUp

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Re: Student loan ruining any chance of early retirement
« Reply #4 on: December 27, 2017, 07:28:26 AM »
You don't need $52,800 in cash savings. Maybe you need $10,000 -but that's high for a single person. Get that student loan under $100,000 today.

Dicey

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Re: Student loan ruining any chance of early retirement
« Reply #5 on: December 27, 2017, 08:06:39 AM »
I am pro-Real Estate. Most of my FIRE money came from property appreciation. In your case, there is absolutely no way I'd recommend buying a house yet. This has less to do with your SL's than your apparent lack of self-discipline. $700 a month on food? #getthefuckouttahere! And don't even get me started on your car expenses.

Get YNAB, Mint, or better still, 'cuz its free(-ish), an Excel spreadsheet and get your spending shit together first. Read every MMM blog post and dive deeper into the forum.

Then, and only then, hop on over to the RE Section for house buying advice.

Your future self will thank us both.

ETA: Check out jlcollinsnh's Stock Series for outstandingly frugal and simple investment advice.

Consider changing the title of this thread. You are blaming the SL's, but you are the one who made the monster. Owning your shit is an important facet of mustachianism.

And so this post isn't a total slap-down: Congratulations on the cash saving you have accumulated.  It gives me confidence that you can do all the things and get to your goals.
« Last Edit: December 27, 2017, 08:13:28 AM by Dicey »

former player

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Re: Student loan ruining any chance of early retirement
« Reply #6 on: December 27, 2017, 08:29:19 AM »
If you pay off a chunk of your student loan you will have a lot more flexibility over monthly payments on what remains, which means you would need less of an emergency fund, which means that you can use a big chunk of your emergency fund to pay off your student loans, right?

Also, in an emergency, you stop the entertainment, clothes and savings budgets and cut the food down to $200 a month, which saves you another $1k a month on your current expenses, for a basic monthly expense of $1.5k plus whatever is left on you student loan repayments.  At that level of expense an emergency fund of $12k would be fine, which means you can put $40k towards your student loans today, which gets them down to $90k.  That's still a lot, but more manageable, both financially and psychologically.  With your income you should also be able to refinance that smaller amount for a lower interest rate, which will help even more.

Now, at your income you are paying a fair bit in tax.  You should start contributing at least something to your 401k.  Even without the match, you are getting whatever your top percentage rate of tax is free from the government to put into your retirement fund.  So make a start, with the aim of ramping it up to the max as your payments towards the student loan make bigger inroads into that.

I reckon you could be putting close to $3k a month, $36k a year, into student loan payments and retirement funds if you put your mind to it.  Given your age, and hopefully future increases in salary, that could very quickly start to put you into good financial shape.  There are lots of stories here of people who started off worse: the power of mustachianism compounds pretty quickly once the big debts are behind you.  Good luck, and keep us posted.

batemama

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Re: Student loan ruining any chance of early retirement
« Reply #7 on: December 27, 2017, 09:17:48 AM »
Now, at your income you are paying a fair bit in tax.  You should start contributing at least something to your 401k.  Even without the match, you are getting whatever your top percentage rate of tax is free from the government to put into your retirement fund.  So make a start, with the aim of ramping it up to the max as your payments towards the student loan make bigger inroads into that.

I don't think this is emphasized enough.  You would be wise to read up on how income taxes and tax brackets work.  There are plenty of websites and blogs that will walk you through it and provide you a spreadsheet to help you figure your stuff out.  Judging form the information you provided, you could be paying 25% taxes on the top portion of your income (unless you have some hella big deductions).  So, putting some money towards retirement would save you 25% off the top plus whatever growth you would get.  I think it makes sense to throw some money toward retirement accounts as well (instead of 100% debt).  With your $52K cash, I'd open up a traditional IRA, and throw the 2017 limit into it ($5,500 and you can contribute through the first few months of 2018 for 2017 tax year).  Keep $10K for an emergency fund, and then throw the rest at the SL debt. 

As others have mentioned, you have a lot of wiggle room in your budget.  Food, car insurance, clothes, entertainment can all be cut significantly.  I'd look for ways to cut your gas budget as well.  For my own curiosity, how are you buying $100 worth of clothes each month?? What does your closet look like??  For food, I'd recommend the website budgetbytes.com.  She is very good at explaining how to make meals, and she is all about making delicious, tasty food for cheap and without special ingredients or appliances.  You should be able to live off 1/3 of your food budget, but I'd start out with the goal of trying to half it. 

As a note of encouragement, I am 32 as well, and I was in your situation a little over a year ago.  $115k in consumer and student loan debt, very little net worth, and making $90k between my husband and I.  I promise with a bit of effort, it is possible to dig yourself out of this hole.  A second job did wonders to help clear debt.  Once you start making headway, things will look better and you will feel tons better.  One good decision leads to another and soon enough you'll be rocking this whole financial thing. 

Frankies Girl

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Re: Student loan ruining any chance of early retirement
« Reply #8 on: December 27, 2017, 10:06:41 AM »
I'm feeling facepunchy so I'll take a swing at this one. :)
(said with tongue in cheek - I'm not meaning to sound like a bitch, just going to be blunt/matter of fact here and hope that you take it in the spirit in which it was intended - as helpful advice without any sugar coating)




You absolutely are not in a terrible position unless you insist on living above your means for the rest of your life. Big thing to realize was already mentioned by Dicey - you are responsible for taking out all those loans, and you're capable of paying them off pretty damned fast if you'd buckle down a few years and stop burning through your money on thoughtless/unnecessary expenses.


I have not been adding to any retirement account as my company does not match.  My insurance is $80 per paycheck.
Wrong move. As mentioned by former player and some of the others, REDUCING YOUR INCOME BY SHELTERING IT IN A TAX DEFERRED ACCOUNT IS MAGIC. Not only is it socking away money NOW to grow tax deferred for your future, it reduces your taxable income NOW as well, meaning that you could potentially get back even more money each year. Even if it has no match, even if you have shitty fund choices. If you reduced your income by 18K, it might be enough to drop you into a lower tax bracket even - I'm not doing the math myself, but there are others that could point you in the right direction.

Other Ordinary Income:
None

Qualified Dividends & Long Term Capital Gains:
None

Rental Income, Actual Expenses, and Depreciation:
None

Adjusted Gross Income:
$82,000 (~$2,250 per paycheck, $4,500 per month)

Taxes:
I'll end up taking home about $54,000 after taxes/insurance/other deductions

Assets:
$52,000 in in savings account (emergency fund)
Car - estimated trade-in value of $2,800 (but see liabilities where I owe $5,800 on it, so not really an asset here)


Liabilities:

Student Loans:
My undergrad and grad school loans are consolidated into one loan, $130,000 current balance outstanding, 7% interest, compounded daily.  Suggest monthly payment $750/month, I am paying $2,000/month to try and get it paid down but it is just a mountain of debt.
If your job situation is secure, then there is no need for $50K in an emergency fund. That is money sitting there doing nothing for you while you pay 7% interest on this loan. Agree with others to use the majority to pay it down. I'd likely use around $40K and drop that loan to $90K right this minute, still leaving a healthy $12K for emergencies.

Car:
2012 Honda Civic.  29 payments at $275 per month remaining (total payoff amount $5,840).  This is a fixed payoff schedule, ie, there is no additional interest accruing so paying off early does not offer any savings.
Great that there's no interest, but as long as you have a loan, you are likely required to carry full coverage on the car. So keep in mind the second it's paid off, drop your insurance down to liability/state mandated coverages for significant savings.

Car Insurance: $85/month
This is really high. Shop around maybe?

Gas/commute: $150/month
That's a ton of driving? How far away do you live from work? Any chance of carpooling or mass transit or even working from home a few days a week?

Medical bills: $50/month
What is this for? Is there interest rates involved or is this technically your health insurance?

Gym membership: $25/month
I'm not going to ding you for this as much as some, but honestly if you aren't working out several times a week using specialized gym equipment for some really deep and meaningful reason, you likely could drop this and learn how to do bodyweight routines at home and find other free ways to exercise.

Rent: $700/month
Reasonable.

Food: $700/month
Holy shit. Seriously. Do you literally buy food to just create food sculptures in your home as a hobby? Or is it Whole Foods organic baby unicorn kissed bullshit? Because this is something you should be seriously embarrassed about. No one should be spending this much money on food each month unless they are a family of 5. Learn to cook using real foods, buy things that are not brand name or come prepackaged/prepared. Stop eating out so much, and if you're a big "go to the bar for a few drinks several times a week" type of person, that should probably be cut waaaaaaay back too. Check out the sales, find low cost food, learn to batch cook, pack your lunch for work.  BudgetBytes.com is amazing. Your food bill should be below $200/month and still able to eat like a king if you were being more mindful of your spending and cooked more.

Clothing: $100/month
Do you set your clothing on fire each month? Is that why you need to spend so much replacing it? Because otherwise, you shouldn't be spending $100 a year on new clothes. If you're that desperate, build a capsule wardrobe (look it up, here's a good example of how to create a minimalist wardrobe for guys). Even if you have a type of job where you need to wear a full suit every day, it can be done. There is no reason whatsoever to be spending that much money unless you are literally destroying your clothes each month.

Entertainment: $150/month
I'm going to assume this includes things like movies/concerts/hanging out at the bar. It's not unreasonable for a single person to want to go do fun things, but you should be very mindful of your spending and start curating your entertainment. If you do it ALL THE TIME, it becomes boring and you start needing more exciting things to feel "entertained." It's called hedonistic adaptation, and it is dangerous. Might try thinking about fun, free or low cost things you can do too - hang out with friends at home for a game night or potluck, go to the park to play some outdoor sport, go hiking/biking (if you enjoy that and already have equipment), there likely are several decent free activities in your city if you just go look for them...



I see no expenses for utilities (if things like water and electric are included in your rent, then that is a great deal but I kind of doubt it), renter's insurance (which may not be necessary if you don't have anything you can't afford to replace but still), haircuts, home supplies like soap and toilet paper and cleaning supplies, cable/netflix/hulu, cell phone... it seems like there is so much money that is not accounted for.

You really, really should start tracking every single penny that comes and goes using something like Mint (it's free) or something.

But just based off what you posted, you have the potential to pay off those loans within 5 years easy if you just started paying more attention to how you spend and cutting some of the VERY fatty areas like your food and clothing.


So for your questions:

1. What can I do to pay down my student loan faster?  This thing is like a darn albatross around my neck.  Plus, as I'm paying $24,000/year on this loan, its really like I am losing $24,000/year that could otherwise be put into a savings/retirement plan.  I really would like to buy a house, but cannot justify taking on another giant debt with this one still looming over me.  Am I correct to pay more than the monthly payment each month?  Unfortunately, the interest grew the debt quite a bit while I was in an income based 10 year plan where the rest would be forgiven after that time, so when I lost that job due to the firm closing I am now faced with this giant debt.
NO house. Seriously you wanted a house, then maybe considered not deferring the loans, living like a monk and paying off the loan while saving up for a decent downpayment. You're in no position to buy a house right now, and honestly it would be a poor move in your case since you don't have a good handle on spending. Use the bulk of your savings to pay down a chunk of the loan debt and then hit it hard as you can, by cutting the other stuff.


2. What should I be doing with my savings?  The $52,000 is a nice safety blanket to have as it is equal to roughly a year's worth of take home pay.  But, I will need some of that if I want to buy a house.  Should I actually just take the whole amount and put it towards my student loans?  Or, should I look to invest it into some sort of safe market?  It does not seem to make a ton of sense to invest at 4% when I have a debt accruing at 7% though.
No, it doesn't make sense sitting on a pile of cash when you have a huge debt at 7% interest. Pay it down as I suggested above and hit it hard going forward.

3. With no company matching, should I still contribute to a 401k retirement plan, and if so, how much?  I suppose this is kind of restating some previous questions, but with this student loan should I still be working on stashing some funds for retirement, or should I just be all-in on paying off the student loan?
See the advice at the beginning - you've been missing out and don't understand how to work the angles. Figuring that out now will save you in the long run along with starting a retirement account for future you.

4. Lets look at maybe a longer term gameplan.  Supposedly it will take 5-6 years to pay off my student loan.  So, its really 5 years until I can even start truly saving towards retirement.  Do any of you see an angle where I could still be in line for early retirement?  it would be nice to retire in 10 years, but if 5 are going to be paying off debts and not saving, it seems unrealistic.
No, it won't be waiting to fund retirement. You can do both. But unless and until you get a handle on your spending and have a serious mindset adjustment, you're not going to be able to retire early at all. So keep reading here and asking questions and figuring out what is most important to you - spending money as it comes in on things that don't really matter, or adjusting your spending down a bit and learning how to enjoy lower cost things or making things last so you can funnel your money into the things that DO matter for you.

5.  Whether it happens now, or not until the loan is paid off, I will need to invest my money at some point.  What is the best option here?  I am absolutely clueless about investing. 
Answer unclear at this time. Other than taking advantage of your 401k (and you'll need to examine the fund options and expense ratios and learn about investing in general), until you know what you want and how serious you're willing to get on your spending to get there, we can't tell you what to invest in and how. I would suggest you do some more reading, starting with Jim Collins' stock series to get a great primer on how the market/investing should work.
http://jlcollinsnh.com/stock-series/

And then figure out your investment policy statement - which is your blueprint for how and why and what for your future.
https://www.bogleheads.org/wiki/Investment_policy_statement
« Last Edit: December 27, 2017, 11:15:18 AM by Frankies Girl »

Metta

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Re: Student loan ruining any chance of early retirement
« Reply #9 on: December 27, 2017, 10:36:37 AM »

3. With no company matching, should I still contribute to a 401k retirement plan, and if so, how much?  I suppose this is kind of restating some previous questions, but with this student loan should I still be working on stashing some funds for retirement, or should I just be all-in on paying off the student loan?

Yes! This should really be a no-brainer. The main benefit from a standard 401K is the government's contribution of giving you a tax break and allowing it to grow without taxing the gains each year. People like to say, "If you don't invest up to the employer's match, you are leaving money on the table." However, the reality is that if you don't invest up to the maximum, you are still leaving money on the table.

If you feel too poor to begin investing $1000 a month, begin with 5% of your income. Then up the percentage each time you get a raise and at the beginning of the new year.

If you wait until you are out of debt to invest, it will be too late. You must begin now.

actonyourown

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Re: Student loan ruining any chance of early retirement
« Reply #10 on: December 27, 2017, 10:37:04 AM »
Assets:
$52,000 in in savings account (emergency fund)  $9,000 Ė 3 monthsí worth of expenses plus some extra (in an emergency, you will pay the minimum on your SL until you regain employment)
Car - estimated trade-in value of $2,800 (but see liabilities where I owe $5,800 on it, so not really an asset here)

Liabilities:

Student Loans:
My undergrad and grad school loans are consolidated into one loan, $130,000 current balance outstanding, 7% interest, compounded daily.  Suggest monthly payment $750/month, I am paying $2,000/month to try and get it paid down but it is just a mountain of debt.

Car:
2012 Honda Civic.  29 payments at $275 per month remaining (total payoff amount $5,840).  This is a fixed payoff schedule, ie, there is no additional interest accruing so paying off early does not offer any savings. 

Car Insurance: $85/month  $50/month  The savings are actually in reducing your car insurance and not in the car loan itself.  Remove collision from it.  If you get into an accident, you make enough that you can replace your car easily if it is totaled and is not worth the extra you are paying on it.

Gas/commute: $150/month

Medical bills: $50/month Ė Iím uncertain what medical bills you have as you donít list any debt but everybodyís situation is unique.  This is high if you are in good health but I wonít touch it.

Gym membership: $25/month Ė Not terrible if you actually use it.  There might be even cheaper options but this is pound foolish-pennywise to be a focus right now.  If you donít use it, look into buying weights for the home and getting rid of this expense.

Rent: $700/month

Food: $700/month  $500/month   Pack your lunch for work every day if you have to.  It can cost as little as $1-$2 per day to pack a lunch if done properly.  I only made it $200 in savings but expect you can take that further month by month to get well below that.

Clothing: $100/month  $30/month  As a fellow male, I find it hard to believe you spend $1200/year on clothing.  Cut this down to $30/month at most and re-evaluate if this is accurate.

Entertainment: $150/month Ė This is too general so Iím uncertain of what to cut here

Total monthly expenses:
$4,235 $3655

Extra money to set aside/add to savings: ~$265/month  ~$845/month
Steps:
Pay off the car allowing you to take off full coverage in your insurance
Reduce the car insurance to bi-annual payments (every 6 months) for some small savings.  If you are commuting to work without using the car and put few miles on it, let your insurance company know that for additional savings.  Shop for better insurance rates.  Remove collision coverage.
Remainder of savings ($37,200) goes to student loans on the highest rate loans
Shop for better SL rates on SoFi, your bank, if you are part of a credit union, etc.
Contribute to HSA and 401k for tax savings
$287.50/month to the HSA will get you to the max contribution for 2018
$457.50 month to the 401k/IRA.  Pre-tax savings will help you at your income level.
$100/month goes to your savings.  I think with other cuts to Entertainment, possibly Gym and Food, this could be increased for a safe margin of error

What can I do to pay down my student loan faster?  This thing is like a darn albatross around my neck.  Plus, as I'm paying $24,000/year on this loan, its really like I am losing $24,000/year that could otherwise be put into a savings/retirement plan.  I really would like to buy a house, but cannot justify taking on another giant debt with this one still looming over me.  Am I correct to pay more than the monthly payment each month?  Unfortunately, the interest grew the debt quite a bit while I was in an income based 10 year plan where the rest would be forgiven after that time, so when I lost that job due to the firm closing I am now faced with this giant debt.
Find better interest rates to reduce your required payment.  See my recommendations above.
What should I be doing with my savings?  The $52,000 is a nice safety blanket to have as it is equal to roughly a year's worth of take home pay.  But, I will need some of that if I want to buy a house.  Should I actually just take the whole amount and put it towards my student loans?  Or, should I look to invest it into some sort of safe market?  It does not seem to make a ton of sense to invest at 4% when I have a debt accruing at 7% though. 
Time is the best investor.  You need to tackle your debt well before you consider purchasing a house.  Small contributions in a tax-deferred account will help you a lot here.
With no company matching, should I still contribute to a 401k retirement plan, and if so, how much?  I suppose this is kind of restating some previous questions, but with this student loan should I still be working on stashing some funds for retirement, or should I just be all-in on paying off the student loan?

You should take advantage of putting money away without the government taking a cut right now.  Check out your 401k funds to make sure they are good (low cost and diversified)

Letís look at maybe a longer term gameplan.  Supposedly it will take 5-6 years to pay off my student loan.  So, itís really 5 years until I can even start truly saving towards retirement.  Do any of you see an angle where I could still be in line for early retirement?  it would be nice to retire in 10 years, but if 5 are going to be paying off debts and not saving, it seems unrealistic. 
Your income is significant enough; you would be able to make it a 10 year plan after those 5 years to pay off your debt.  With the plan above, your student loan payments alone are still more than 50% of your expenses.  With increases to your pay and how you reduce your expenses, I believe this is feasible.
Whether it happens now, or not until the loan is paid off, I will need to invest my money at some point.  What is the best option here?  I am absolutely clueless about investing.
Check out the investing forum for this stuff.  VTI and BND are low cost, but there might be better recommendations out there.

Metta

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Re: Student loan ruining any chance of early retirement
« Reply #11 on: December 27, 2017, 10:40:18 AM »

Food: $700/month
Holy shit. Seriously. Do you literally buy food to just create food sculptures in your home as a hobby? Or is it Whole Foods organic baby unicorn kissed bullshit? Because this is something you should be seriously embarrassed about. No one should be spending this much money on food each month unless they are a family of 5. Learn to cook using real foods, buy things that are not brand name or come prepackaged/prepared. Stop eating out so much, and if you're a big "go to the bar for a few drinks several times a week" type of person, that should probably be cut waaaaaaay back too. Check out the sales, find low cost food, learn to batch cook, pack your lunch for work.  BudgetBytes.com is amazing. Your food bill should be below $200/month and still able to eat like a king if you were being more mindful of your spending and cooked more.


I need to print this out and keep it where I can see it. Perhaps on my refrigerator. I'm bad with food spending also. I appreciate the face slap by proxy, Frankie's Girl!

SwordGuy

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Re: Student loan ruining any chance of early retirement
« Reply #12 on: December 27, 2017, 10:45:22 AM »
Follow the advice you've been given and you'll be in great shape in a few years.

Let's set a target of 3 years to kill off that student loan and see if it can be done:

$42,000 from emergency fund to the student loans.

Loans now down from $130,000 to $88,000 in one fell swoop.

Cutting food to $200 a month means $500 more to debt payment.   That's $6,000 a year, or $18,000 over three years.

Loans now down to $70,000.

Clothing to $300 per year instead of $1200 per year.   Loans now down to $67,300.

Car paid off in 29 months.   That's 7 payments of $275 that free up at the end, or $1,925.  Loans now down to $65,375.

$2000/month for 36 months.   That's $72,000.      Even with interest charges you're pretty close.

And if you can refinance the loan to a lower rate, you'll be even better off.

Three years is nothing at your age.   You'll blink and you'll be there.

If you find a side gig along the way, your progress will be much faster.


You could take 4 years to pay it off but contribute money to a 401K or IRA.   
   


Lady SA

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Re: Student loan ruining any chance of early retirement
« Reply #13 on: December 27, 2017, 12:09:36 PM »
with a balance of over $100k, refinancing to a lower interest rate with sofi or earnest (link in my sig) or other places would be worth it. I'd investigate refinancing first.

Then I'd start saving at least 5% into your 401k and commit to increasing this each year or quarter. Massive tax savings are worth it even if you don't get a match.

Then I'd get a handle on your budget and cut down that outrageous food bill. Seriously, that is an insane amount of money to be spending on food. See how much fat you can cut and then take that newly-created buffer and begin retirement savings and boost your monthly loan payment.

Then I'd take a significant chunk of your emergency fund and put it toward your refinanced loan. Get it under 6 figures for psychological well-being.

Then put $2.8-3k per month toward the loan and be done within 2 or 3 years!

I wouldn't focus on getting a house right now. Your rent is really great. Have you played around with any rent vs buy calculators? With your low rent I would guess that the calculator would strongly lean towards continuing to rent! Thats a really great deal. Also, have you read http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/ ? It's an interesting take on why owning a house may not be the best option for some people.


Those items above CAN be done. My DH and I had over $150k in SLs in 2014. We refinanced down to 4.5% interest and are throwing $3k per month at it, on top of prioritizing our retirement savings. Now, our loan balances are at $50k, we have over $120k combined in our 401ks, and in 2019, when our loans are gone, we will at that point have a net worth of just north of $300k. That leaves us in a much better spot than if we had solely focused on debt paydown before any savings. I'm glad we took the combination approach.

Heroes821

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Re: Student loan ruining any chance of early retirement
« Reply #14 on: December 27, 2017, 12:17:46 PM »

Food: $700/month
Holy shit. Seriously. Do you literally buy food to just create food sculptures in your home as a hobby? Or is it Whole Foods organic baby unicorn kissed bullshit? Because this is something you should be seriously embarrassed about. No one should be spending this much money on food each month unless they are a family of 5. Learn to cook using real foods, buy things that are not brand name or come prepackaged/prepared. Stop eating out so much, and if you're a big "go to the bar for a few drinks several times a week" type of person, that should probably be cut waaaaaaay back too. Check out the sales, find low cost food, learn to batch cook, pack your lunch for work.  BudgetBytes.com is amazing. Your food bill should be below $200/month and still able to eat like a king if you were being more mindful of your spending and cooked more.


I need to print this out and keep it where I can see it. Perhaps on my refrigerator. I'm bad with food spending also. I appreciate the face slap by proxy, Frankie's Girl!

Yeah my family of 5 (5 month old I guess doesn't count) spends $200 a month on food and we're upping it to $250 a month since the baby is starting solids. $700 maybe for a family of 5 with three teens imo.

Blonde Lawyer

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Re: Student loan ruining any chance of early retirement
« Reply #15 on: December 27, 2017, 12:22:11 PM »
For those of you discussing your food budget - do you mean literally just food or all things you get at the grocery store? Our kitty litter, some OTC medicines, some alcohol, some household cleaners, toilet paper, paper towels, etc. come from the grocery store too (or Jet online) and we factor that stuff in our "grocery budget" too.  Our "grocery budget" is not synonymous with "food budget."

ketchup

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Re: Student loan ruining any chance of early retirement
« Reply #16 on: December 27, 2017, 12:24:46 PM »

Food: $700/month
Holy shit. Seriously. Do you literally buy food to just create food sculptures in your home as a hobby? Or is it Whole Foods organic baby unicorn kissed bullshit? Because this is something you should be seriously embarrassed about. No one should be spending this much money on food each month unless they are a family of 5. Learn to cook using real foods, buy things that are not brand name or come prepackaged/prepared. Stop eating out so much, and if you're a big "go to the bar for a few drinks several times a week" type of person, that should probably be cut waaaaaaay back too. Check out the sales, find low cost food, learn to batch cook, pack your lunch for work.  BudgetBytes.com is amazing. Your food bill should be below $200/month and still able to eat like a king if you were being more mindful of your spending and cooked more.

Holy shit indeed.  Girlfriend and I did a Whole30 a couple years back (fancy meat/fish, LOTS of fresh produce, some fancy expensive "alternative" ingredients, essentially zero filler-ish cheap foods) and our total for the month was $642 FOR TWO PEOPLE.  And that felt ABSURD.  If I went back to my crappy eating/lazy eating days, that was less than $100/mo for food (peanut butter sandwiches and pasta and not much else).  Less than $200 is definitely a reasonable goal, as Frankies Girl said.  That's plenty to eat VERY well.

Bad_With_Money

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Re: Student loan ruining any chance of early retirement
« Reply #17 on: December 27, 2017, 06:22:54 PM »
Lots of questions here.  First, I'd recommend refinancing that student loan.  I went with SoFi, story linked in bio.  That will make your extra payments go a long way.  I think paying extra is really smart but not at the expense of all retirement savings.  You can't make up these years.  How much you put towards retirement, in my mind, will depend on how far down you can get that interest rate.  The buying versus renting equation is more complicated.  Like most things, it depends.  Do you see yourself there a long time? How are housing prices where you live? We decided to buy while I still had pretty big student loans.  We wanted to get locked in at the low interest rates.  We see ourselves staying here 10+ years and have stable jobs.  How much more will you pay towards insurance/taxes/mortgage vs. renting.  Try to avoid PMI.  We went with lender paid which usually leads to a higher interest rate but in our case, it didn't.  We got lender paid AND the best interest rate.

Here's the plan I took that is some MMM and some Dave Ramsey and some "I do what I want" lol. 

We each invested about 8% in our retirement plans while paying down my loans.  We kept an emergency fund of about $5000.  We have high credit limit credit cards with no balance that we could also use in an emergency.  We saved the minimum required to buy where we are.  Every other penny went on that student loan until it was gone. 

Now we are maxing our 401k's.  What you do next also has different approaches.  There are pros and cons to all of them and it also depends on your income.   We are putting our savings account up to $20k or so.  We expect some potential large expenses this year and want the money liquid.  Money beyond that (previously at $10k) goes into a vanguard index fund account. 

Many people would say use a back door roth (or roth if you are income eligible) first.  If you are income eligible, by all means, do that before a taxable account.  If you need to back door, I've read there is a multiyear waiting period before you can withdraw penalty free.  Since, as I said before, we need a good chunk semi liquid next year and maybe the year after, we are parking it in the index fund instead of the Roth.

For the "I do What I Want" part - we aren't full mustachian.  We live pretty frugal. Rarely eat out, don't spend much on consumer sucka crap.  Drive used cars.  But we eat well so have a decently high grocery bill and we still travel.  Not a ton but we took two expensive trips during the loan payoff time as well as yearly trips to see friends/family for milestone occasions.  If we didn't treat ourselves some, we wouldn't have stuck with paying it down and off.  But, you can't treat yo'self in all categories of spending or you will be screwed.

The MMM NOT Dave Ramsey approach we are also taking is to NOT pay down very low interest debt prior to investing.  We have extremely low interest rates on our used cars and a fence we put in.  We could have paid cash but with a 2% interest rate, it is allowing us to invest that money instead.  We may start making some extra mortgage payments in the future but that rate is so low, we would honestly be dumb for doing so.

Thanks for the reply.  Your approach sounds manageable for someone like me.  I suppose my biggest question is, the sofi stuff I checked out offers like 5, 7, 10, 15, 20 year plans.  Can I still pay off early and if so will that save me more money?  It looks like they will offer 4.155% which is a 2.8% drop which is huge- 36k saved over the life of the loan. 

Bad_With_Money

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #18 on: December 27, 2017, 06:50:12 PM »
Okay, decided to not quote each individual post and reply one by one, instead will address everything here.  Thanks to all who responded, both those with words of encouragement and those who told me what I needed to hear even if it was very blunt.

So just kind of meandering thoughts with some questions mixed in and a gameplan at the bottom:

1. The food budget.  $200/month is like, what, $7 a day?  To me that seems very low.  However, I do think I can cut back some here, by eating out less and meal planning/buying in bulk (as a single person sometimes buying in bulk is not the best I have found as stuff goes bad and needs thrown out before I eat it all).

2. Clothes budget.  I have bad feet and wear shoes out really quickly.  I try to buy them cheap but I need a new pair, not every month but maybe quarterly.  Beyond that I have to look presentable at work.  But agree here that this could be cut back. 

3. refinancing - it looks like sofi can get me down to 4.155% on a 5 year plan, so I will likely try to go with that (note that estimate was at the $130,000 figure and supposes a 2500/month payment; I will also try it with the 90k balance, assuming I put 40k toward the loan before applying).  So I'm pretty much onboard with this, only question is, can I save even more by paying it off before 5 years?

4. I'll start tracking EVERYTHING and will report back as I discover some holes in my spending

5. The 401k stuff/hsa stuff makes sense from a conceptual standpoint - 5500 to the HSA and ideally 18000 to the 401k.  I just don't think the full 18000 is feasible right now (basically 1500/month) with the loan.  It looks like I will have to be fairly close to that to drop a tax bracket.  However, I will still start adding something to it, maybe 10% to start with?  That would be around 500/month, 6k/year.

6.  I see some reference to second jobs - what is a good place to start for something like that?  Are you talking about like night or weekend shifts doing oddjobs for min. wage, or like work from home weekend stuff that is a little more lucrative?


Ultimately, I think this can work, so thanks again for all the help.  I know it was unanimous that a house was a bad idea.  What about marriage, kids?  Seems like more expenses, but I am not getting any younger. 

anyway thats it for now, this is information overload but is much appreciated!  I will check back in periodically and hope to hear more advice as it is warranted. 

ShoulderThingThatGoesUp

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #19 on: December 27, 2017, 07:43:32 PM »
Marriage and kids are good,and if handled responsibly your finances are fine for them.

marty998

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #20 on: December 28, 2017, 12:18:12 AM »
Marriage and kids are good,and if handled responsibly your finances are fine for them.

Marriage (or at the very least partnering up) should be good for your finances (economies of scale and all that).

On the topic of feet - it's not your feet causing your shoes to wear out. It's that you don't have the right shoes or insoles that are supportive of your feet. And seriously, shoes should last more than 3 months. I am really tough on mine and even I get a good 9 months out of them. Take care of them, change into an old pair of sneakers for your commute if you have to.

And see a podiatrist if you can. Bad feet will turn into expensive surgery down the road if there are serious problems.

former player

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #21 on: December 28, 2017, 01:46:55 AM »
Thank you for coming back: that was a lot of facepunches so congratulations for not just melting away.

I like your plan of action: it sounds both workable and sustainable and you've already started to put it into place with finding out about refinancing the student loan and putting new budget levels in place.

I think you may have to change your forum name: Bad With Money isn't going to be appropriate any more.

Villanelle

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #22 on: December 28, 2017, 03:40:42 AM »
Marriage can absolutely be a financial positive, not an expense.  Assuming your future spouse has a job, your income increases and your living expenses increase by less.  (She adds another $50k/yr, and you move into a larger place and eat slightly more food and use more water, so your expenses go up $5k or even $10k.  Huge win!)

For the shoe, consider having an old beater pair or two that you wear whenever you don't absolutely have to look professional.  Save the fancy shoes for work only.  Don't even drive in them.  You might even keep your nice shoes at your desk and change only when you get there, depending on how far you walk from your car, etc.

Also, shoes can be resoled.  Find a local shoe repair place and ask their rates to see if that would be cheaper than replacement. 

Yes, $200 for meals is about $7 per day.  It's pretty easy to find $2-3 breakfasts and lunches.  You can even find $1.50 or $1 meals, if you are really determined, but that's probably too big a step for now.  Given that you are at $700 right now, I'd start with a target of $350, but it isn't as hard as you might think.  Boil a bunch of eggs Sunday evening.  That's a dozen eggs for about $1.50.  (I think.  I no longer live in the US, but that's what google tells me!) And you boil them all on Sunday evening so during the week your prep time is minimal.   Egg salad with 2 eggs and a few additives would cost you less than $1.  (A loaf of bread looks to be about $2.50, so you can make an egg salad sandwich with 2 of those $.12 eggs, 2 slices of bread--about $.50, some mayo, some slices of cucumber when in season other other veggie, and perhaps a piece of cheese on the side, for under $2) An egg for breakfast with a piece of in-season fruit works for breakfast.  Put one egg on some fresh greens and a few other veggies for lunch. That dozen eggs will cover the bulk of breakfasts and lunches for a week.   Buy oatmeal in bulk, and sprinkle with a few nuts or dried berries.  I suggest you come up with a list of 5-10 breakfasts and lunches that cost $3 or less.  Rotate through those. 

Then when you have that down, work on dinners.  At first, set your target at $6.  If you have breakfast and lunch for $5, a $6 dinner will put you at about $330 for the month.  Again, make a list of stable-priced cheap dinners and choose from those.

Simpli-Fi

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #23 on: December 28, 2017, 04:22:14 AM »
What about marriage, kids?  Seems like more expenses, but I am not getting any younger. 
LOL if you have to ask a financial board, just marry for money.






kidding.






am I?



MrThatsDifferent

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #24 on: December 28, 2017, 05:14:28 AM »
Iíll go against the grain because I think people have lost their mind: youíre not ready for marriage or kids. Youíre just now getting your shit together. Get it together more. You donít get married to help your financial situation, thatís some irresponsible advice. Dating, weddings and living is expensive. What if your partner isnít frugal or on-board? And kids? Try and resist buying every cute thing for a new baby. Kids cost money. Focus on you. Get in control of your financial situation, educate yourself and walk the talk. As you get yourself together, youíll be better positioned for the right person and youíll know the right person for you because youíll find some aligned with your thinking. Youíre not there yet. Do well at your job, eat healthy, get rid of that school loan and build your investments. Thatís it. All good things to those who wait.

Peony

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #25 on: December 28, 2017, 09:09:56 AM »
I agree with @MrThatsDifferent ^^^ re: marriage & kids. Get your own (figurative) house in order. Learn about finances and figure out your own financial values so you can make a good choice of a partner when the time comes.

tinylittlemonkey

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Re: Student loan ruining any chance of early retirement
« Reply #26 on: December 28, 2017, 09:30:17 AM »
Holy shit indeed.  Girlfriend and I did a Whole30 a couple years back (fancy meat/fish, LOTS of fresh produce, some fancy expensive "alternative" ingredients, essentially zero filler-ish cheap foods) and our total for the month was $642 FOR TWO PEOPLE.  And that felt ABSURD.  If I went back to my crappy eating/lazy eating days, that was less than $100/mo for food (peanut butter sandwiches and pasta and not much else).  Less than $200 is definitely a reasonable goal, as Frankies Girl said.  That's plenty to eat VERY well.

Convo derailment: DAMN. What did you guys eat? I do Whole30 all the time and my monthly food only budget is around $200-$225 for 1. (I tried to find proof of this but I didn't log my expense, just my 4 meals a day for 30+ days. I'll log my expenses next time I do Whole 30 which is soon.)

ketchup

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Re: Student loan ruining any chance of early retirement
« Reply #27 on: December 28, 2017, 09:50:41 AM »
Holy shit indeed.  Girlfriend and I did a Whole30 a couple years back (fancy meat/fish, LOTS of fresh produce, some fancy expensive "alternative" ingredients, essentially zero filler-ish cheap foods) and our total for the month was $642 FOR TWO PEOPLE.  And that felt ABSURD.  If I went back to my crappy eating/lazy eating days, that was less than $100/mo for food (peanut butter sandwiches and pasta and not much else).  Less than $200 is definitely a reasonable goal, as Frankies Girl said.  That's plenty to eat VERY well.

Convo derailment: DAMN. What did you guys eat? I do Whole30 all the time and my monthly food only budget is around $200-$225 for 1. (I tried to find proof of this but I didn't log my expense, just my 4 meals a day for 30+ days. I'll log my expenses next time I do Whole 30 which is soon.)
It felt absurd because it was absurd.  I have a spreadsheet of that month's grocery spending (I deliberately didn't do much planning for the month financially, but I did at least track it). $125 in vegetables, $71 in fruit, $207 in meat/eggs, and $250 on "other" which included silly expensive not-particularly-nutritious things like cashew butter and coconut flour, but also real things like oils ($50 was Costco sized oils that we happened to run out of that month), spices, fresh herbs, lots of canned coconut milk, and fancy-ass W30 compliant ketchup for $6 (along with a few other replacement condiments for W30-friendly ones like fish sauce).  Also, some of the meat bought that month was frozen and not used that month.

Some of it too was a symptom of stick-to-the-plan-no-matter-what syndrome resulting in suboptimal choices ("we were going to have artichokes tonight, and the store that had them on sale for $0.75 is out, so let's go buy them from the fancy grocery store for $3 each like morons").

The way we usually eat is about 90% W30 friendly anyway, but with a lot more leeway (and planning) and we're at more like $400Ī100/mo these days for a couple.

tinylittlemonkey

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Re: Student loan ruining any chance of early retirement
« Reply #28 on: December 28, 2017, 10:31:16 AM »
Holy shit indeed.  Girlfriend and I did a Whole30 a couple years back (fancy meat/fish, LOTS of fresh produce, some fancy expensive "alternative" ingredients, essentially zero filler-ish cheap foods) and our total for the month was $642 FOR TWO PEOPLE.  And that felt ABSURD.  If I went back to my crappy eating/lazy eating days, that was less than $100/mo for food (peanut butter sandwiches and pasta and not much else).  Less than $200 is definitely a reasonable goal, as Frankies Girl said.  That's plenty to eat VERY well.

Convo derailment: DAMN. What did you guys eat? I do Whole30 all the time and my monthly food only budget is around $200-$225 for 1. (I tried to find proof of this but I didn't log my expense, just my 4 meals a day for 30+ days. I'll log my expenses next time I do Whole 30 which is soon.)
It felt absurd because it was absurd.  I have a spreadsheet of that month's grocery spending (I deliberately didn't do much planning for the month financially, but I did at least track it). $125 in vegetables, $71 in fruit, $207 in meat/eggs, and $250 on "other" which included silly expensive not-particularly-nutritious things like cashew butter and coconut flour, but also real things like oils ($50 was Costco sized oils that we happened to run out of that month), spices, fresh herbs, lots of canned coconut milk, and fancy-ass W30 compliant ketchup for $6 (along with a few other replacement condiments for W30-friendly ones like fish sauce).  Also, some of the meat bought that month was frozen and not used that month.

Some of it too was a symptom of stick-to-the-plan-no-matter-what syndrome resulting in suboptimal choices ("we were going to have artichokes tonight, and the store that had them on sale for $0.75 is out, so let's go buy them from the fancy grocery store for $3 each like morons").

The way we usually eat is about 90% W30 friendly anyway, but with a lot more leeway (and planning) and we're at more like $400Ī100/mo these days for a couple.

Ah, ok. When I shop (or do Whole 30) I perimeter shop and just buy meat, veggies, and fruit. I don't meal plan but I know it's eggs and bacon or fruit for breakfast, meat and veggies for lunch, fruit and nuts for a snack, and meat with veggies for dinner. I just mix and match. Sometimes it's great and sometimes it's a miss but I live alone so no one suffers but me. lol

FINate

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #29 on: December 28, 2017, 10:37:40 AM »
1. The food budget.  $200/month is like, what, $7 a day?  To me that seems very low.  However, I do think I can cut back some here, by eating out less and meal planning/buying in bulk (as a single person sometimes buying in bulk is not the best I have found as stuff goes bad and needs thrown out before I eat it all).

$7 a day is very doable if you're not eating out or buying lots of pre-made/frozen meals.

Eating out will always cost 3x as much as eating at home (eating out meal = 1/3 ingredients + 1/3 labor + 1/3 space...at home you're only paying for ingredients).

Generally speaking, avoid the center of the grocery store (frozen TV meals, canned meals, snack foods). Buy only staple ingredients, produce, fresh meats, eggs, and dairy. And learn to cook simple meals at home. Doubling a recipe means you have leftovers for the following day(s).

Learn to stretch your ingredients. For example, a whole roaster chicken runs about $8. It takes about 10 minutes of prep and 1.5 hours passive time in the oven to roast it into a delicious meal, with enough left over for sandwiches and/or chicken salad the following 1-2 days. But don't throw the carcass out! After you cut off the meat for leftovers (the day you roast it), make chicken soup - this requires nothing more than time, water, salt, a little pasta, and a few dollars worth of hardy vegetables (onion, potato, celery, carrot...or whatever you have on hand). Easily an additional 8 servings of delicious soup. So now you've stretched $10-$12 over 10 meals...or about $1 a meal.

The frozen/prepackaged meals are much more expensive, and unhealthy. And researchers have found that these convenience foods are not big time savers, saving only about 12 minutes per meal (https://www.youtube.com/watch?v=cyHS_-Umv4E).

No soda, juice, energy drinks. These are terrible for your health and expensive. Temporarily cut out beer/wine/alcohol until your hair-on-fire debt situation is under control. Drink water and coffee/tea that you make yourself. My daily coffee habit of 2 cups about $0.25 per day.

Most people are not taught how to cook and eat this way. It will feel foreign and difficult as you learn and form new habits, but eventually it will seem normal. A big part of MMM is personal agency, the idea that you can learn and change and choose how you live. It is doable, many many people on these forums do it, even including dual income parents with kids and super busy schedules.

EDIT: And bulk foods are a red herring unless you're feeding a large family (which you aren't). Don't get distracted by this...too many people get excited about getting a Costco card, shelves for storage at home, etc...but what they're really excited about is shopping and spending money that they justify as "saving money." Focus your energies on making healthy, simple meals at home.
« Last Edit: December 28, 2017, 10:41:59 AM by FINate »

tinylittlemonkey

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #30 on: December 28, 2017, 10:50:27 AM »
1. The food budget.  $200/month is like, what, $7 a day?  To me that seems very low.  However, I do think I can cut back some here, by eating out less and meal planning/buying in bulk (as a single person sometimes buying in bulk is not the best I have found as stuff goes bad and needs thrown out before I eat it all).

$7 a day is very doable if you're not eating out or buying lots of pre-made/frozen meals.

Eating out will always cost 3x as much as eating at home (eating out meal = 1/3 ingredients + 1/3 labor + 1/3 space...at home you're only paying for ingredients).

Generally speaking, avoid the center of the grocery store (frozen TV meals, canned meals, snack foods). Buy only staple ingredients, produce, fresh meats, eggs, and dairy. And learn to cook simple meals at home. Doubling a recipe means you have leftovers for the following day(s).

Learn to stretch your ingredients. For example, a whole roaster chicken runs about $8. It takes about 10 minutes of prep and 1.5 hours passive time in the oven to roast it into a delicious meal, with enough left over for sandwiches and/or chicken salad the following 1-2 days. But don't throw the carcass out! After you cut off the meat for leftovers (the day you roast it), make chicken soup - this requires nothing more than time, water, salt, a little pasta, and a few dollars worth of hardy vegetables (onion, potato, celery, carrot...or whatever you have on hand). Easily an additional 8 servings of delicious soup. So now you've stretched $10-$12 over 10 meals...or about $1 a meal.

The frozen/prepackaged meals are much more expensive, and unhealthy. And researchers have found that these convenience foods are not big time savers, saving only about 12 minutes per meal (https://www.youtube.com/watch?v=cyHS_-Umv4E).

No soda, juice, energy drinks. These are terrible for your health and expensive. Temporarily cut out beer/wine/alcohol until your hair-on-fire debt situation is under control. Drink water and coffee/tea that you make yourself. My daily coffee habit of 2 cups about $0.25 per day.

Most people are not taught how to cook and eat this way. It will feel foreign and difficult as you learn and form new habits, but eventually it will seem normal. A big part of MMM is personal agency, the idea that you can learn and change and choose how you live. It is doable, many many people on these forums do it, even including dual income parents with kids and super busy schedules.

EDIT: And bulk foods are a red herring unless you're feeding a large family (which you aren't). Don't get distracted by this...too many people get excited about getting a Costco card, shelves for storage at home, etc...but what they're really excited about is shopping and spending money that they justify as "saving money." Focus your energies on making healthy, simple meals at home.

Just to add to that... I buy "soft food" and "hard food" to get me through the week.

Example: Strawberries and apples. I'll eat the strawberries Monday-Wednesday (because they'll go bad first) and the apples later in the week. It keeps you from throwing stuff out. :)

Also, get a crock pot. You can cook meats, chili, soups, beans, and even desserts in it. You can cook meats and freeze extras for another week. I like to cook plain frozen chicken in mine, then divide it up into servings and freeze it. I'll add seasoning or sauces later when I actually use it.

MustachioedPistachio

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #31 on: December 28, 2017, 10:58:28 AM »
5. The 401k stuff/hsa stuff makes sense from a conceptual standpoint - 5500 to the HSA and ideally 18000 to the 401k.  I just don't think the full 18000 is feasible right now (basically 1500/month) with the loan.  It looks like I will have to be fairly close to that to drop a tax bracket.  However, I will still start adding something to it, maybe 10% to start with?  That would be around 500/month, 6k/year.

Looking ahead to 2018, every dollar you put into tax-advantaged accounts (tIRA, 401k, HSA, etc) will save you 22 cents in deferred taxes, based on your current situation. Contribute $6K, defer $1,200+ in taxes. Dropping into a lower tax bracket is nice for myriad reasons but not necessary for immediate savings in your case.

If you haven't yet funded your traditional IRA (tIRA) and/or HSA for 2017, I'd suggest doing so with some of your emergency fund. That'll cut your upcoming tax bill (at the 25% marginal rate), plus you can't "catch up" on missed contributions after April 2018. Do the same for 2018 contributions.

Set aside around $12K for an EF as others have suggested, and dump the remainder into the SL.

Good luck and hang in there!

Wayward

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #32 on: December 28, 2017, 11:26:26 AM »
The biggest thing that stands out to me is the $52,000 sitting around on a beach chair in Jamaica doing nothing for you.  As others have stated you need to put this money to work as efficiently as possible right now!

1. Start tracking your spending better (excel, Mint, Personal Capital, etc. whatever works for you), read Your Money or Your Life.  You are in a debt emergency so all necessary spending needs to be evaluated/optimized and luxuries cut (gym, entertainment, clothing, etc.)!  Cut food spending to ~$250 per month and make sure to track it separate from toiletries and other household products. 

2. Pay off the car (luckily you bought a great, reliable one that should give you many more years of service).  Once you own it, shop around for better rates and drop collision.  I use Progressive, they have good discounts for using snapshot (plug in device under dash and donít do too much hard braking for a term) and taking a defensive driver course.  Make sure to pay in full every 6 months for savings too.

3. Contribute something to a traditional 401k at work, even 3-6%.  Optional: Open a Vanguard or similar account and max out a ROTH IRA $5,500 for 2017, you can't get these years back!

4. Keep about $5,000 for your emergency fund.  This money can still generate something in an Ally account (1.25% APY currently) or, with some upfront work, 5% savings at https://financialpanther.com/insight-card-5-percent-interest-savings/

5. Use the remainder (about $35,500+) to pay down your student loans to get them under $100k! Then refinance them with SoFi, Earnest, or other provider for the lowest fixed interest rate.

Other suggestions:
*Can you move closer to work and get a roommate or two? 
*For the shoes, being frugal is not the same as being cheap.  Buy quality and they will last for years with care.  Get rx insoles, best investment ever!
*Get a side hustle Ė do you have any talents/skills that could earn you money on the side?  Especially if it pays cash.
*Can you sell some things you do not need/are not using (Craigslist, Ebay, etc.)?

Note: For the PSLF on the student loans Ė how many qualifying monthly payments do you have in?  This can be tricky, if you were really close to getting forgiven I would suggest looking into another qualifying job, but public service jobs typically pay less so you may be better off taking care of them yourself if you didnít have too long in.

Fiscal_Hawk

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #33 on: December 28, 2017, 11:38:49 AM »
Focus on you. Get in control of your financial situation, educate yourself and walk the talk.

This. This. And this.

You need to focus on getting control of your finances and once you do that, then you can open yourself up to marriage and kids and those responsibilities.

You have shown an ability to save, an ability be humbled, and an ability to learn from others. That is pretty awesome. Pat yourself on the back. But now, you need to go out and put those lessons into action.

Good luck and keep coming back here. Despite the face punches, this is a pretty good support team.

Bicycle_B

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #34 on: December 28, 2017, 12:12:28 PM »
Re "$1500 into tax deferred is not reasonable, i'll do $500" - good for you that you're doing something, and I appreciate the honesty.  But a quick question:  Is your main goal to be a debt free worker bee, or is it to be a financially free, living off your fat pile of investments?

Because you'll reach full freedom faster on the full 401k contribution.

Related question:  Are your total taxes so high because you pay state tax on your income?  If so, what is the rate that you pay, and is that state tax also reduced by making your federal tax-deferral contributions (401k, HSA)?  Example - if you're in the 22% federal tax bracket, but you also pay 8% state tax, your $18,000 401k contribution would save you $5,400.  That's like free money if you use it wisely.  Because later, when you retire, you can time the withdrawal to occur at a time when you pay little or no income tax.

Let's say your lifestyle improvements (cooking at home, etc) add up to $8,000 per year.  Adding another $6,000 or so of tax savings will raise your total improvement to about $14,000 year - almost doubling the gains.  You were previously saving about $3k per year and paying about 15k principal, thus saving/investing 18k.  Drop the interest from 9k to 4k as you are planning, suddenly your savings rate jumps to about 37k.  Sure, if 21k goes to tax deferred investment, principal on the student loan is only 16k at first, rising on average to 18k as the principal drops.  But you'll still pay off the note in 5 years.  And by the end of it, you'll also have 105k of investments, plus maybe 10k of investment returns, yielding a net worth of 115k on the day you pay off the loan.

You'll get rich faster using Uncle Sam's tax breaks. 

By the way, I used to spend $350 on groceries.  It fell by half when I learned to cook some things.  The grocery instead of restaurants will drop you to $350.  Cooking food instead of buying food products will put you under $200.  Just treat it like a class for a semester, study the subject using that internet thingie, and do your practicum.  Anyone who can earn $82k can learn to cook tasty food. 

Blonde Lawyer

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #35 on: December 28, 2017, 12:39:47 PM »
To answer your question on SoFi, yes, you can pay it off early and that is exactly what I did.  I did a 5 year loan for the better interest rate but if you aren't sure the giant payments are sustainable, do what you are comfortable with and then continue paying like you did the shorter loan. 

On food, if you were someone eating out a ton, it's okay to take a few baby steps to get your bill down.  If you have to go from eating out to eating frozen meals for a bit, you are still going to see savings.  Once you are used to eating at home on the regular, then try some easy meals.  Frozen veggies to microwave with some grilled fish or chicken for example. Once you get that down, then you can start planning to optimize your spending, buying in season produce, maxing meals throughout the week. 

I also bought a house and got married before I ended up with my student loan debt and sold one house and bought another while I had the debt.  If you decide to go the house route, I don't think you will be precluded because of your debt but you will likely save a lot more in your rental for now.

Blonde Lawyer

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #36 on: December 28, 2017, 12:43:59 PM »
One more thing - make sure you are understanding the tax advice because some posters here might be mistaken.  Lowering your tax bracket only impacts the income earned in that bracket, not all your money. 

As an example, your first $10k is taxed at 10% then the money after that up to almost $40,000 is taxed at 12% then the money after that up to $82,500 (2018 proposed rates) would be at 22% then everything after that is at 29% up to another ceiling and so forth.

So, if you make $90,000 that doesn't change you from 12% to 22%.  Rather your first $80k or so is 12% and the next 10k is 22%.  Make sense?

MustachioedPistachio

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #37 on: December 28, 2017, 01:14:18 PM »
As an example, your first $10k is taxed at 10% then the money after that up to almost $40,000 is taxed at 12% then the money after that up to $82,500 (2018 proposed rates) would be at 22% then everything after that is at 29% up to another ceiling and so forth.
Yup.

So, if you make $90,000 that doesn't change you from 12% to 22%.  Rather your first $80k or so is 12% and the next 10k is 22%.  Make sense?
Quibble here...did you mean the first $40k or so is at 12%, and the next $40k or so is at 22%?

ketchup

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Re: Student loan ruining any chance of early retirement
« Reply #38 on: December 28, 2017, 01:18:58 PM »
Holy shit indeed.  Girlfriend and I did a Whole30 a couple years back (fancy meat/fish, LOTS of fresh produce, some fancy expensive "alternative" ingredients, essentially zero filler-ish cheap foods) and our total for the month was $642 FOR TWO PEOPLE.  And that felt ABSURD.  If I went back to my crappy eating/lazy eating days, that was less than $100/mo for food (peanut butter sandwiches and pasta and not much else).  Less than $200 is definitely a reasonable goal, as Frankies Girl said.  That's plenty to eat VERY well.

Convo derailment: DAMN. What did you guys eat? I do Whole30 all the time and my monthly food only budget is around $200-$225 for 1. (I tried to find proof of this but I didn't log my expense, just my 4 meals a day for 30+ days. I'll log my expenses next time I do Whole 30 which is soon.)
It felt absurd because it was absurd.  I have a spreadsheet of that month's grocery spending (I deliberately didn't do much planning for the month financially, but I did at least track it). $125 in vegetables, $71 in fruit, $207 in meat/eggs, and $250 on "other" which included silly expensive not-particularly-nutritious things like cashew butter and coconut flour, but also real things like oils ($50 was Costco sized oils that we happened to run out of that month), spices, fresh herbs, lots of canned coconut milk, and fancy-ass W30 compliant ketchup for $6 (along with a few other replacement condiments for W30-friendly ones like fish sauce).  Also, some of the meat bought that month was frozen and not used that month.

Some of it too was a symptom of stick-to-the-plan-no-matter-what syndrome resulting in suboptimal choices ("we were going to have artichokes tonight, and the store that had them on sale for $0.75 is out, so let's go buy them from the fancy grocery store for $3 each like morons").

The way we usually eat is about 90% W30 friendly anyway, but with a lot more leeway (and planning) and we're at more like $400Ī100/mo these days for a couple.

Ah, ok. When I shop (or do Whole 30) I perimeter shop and just buy meat, veggies, and fruit. I don't meal plan but I know it's eggs and bacon or fruit for breakfast, meat and veggies for lunch, fruit and nuts for a snack, and meat with veggies for dinner. I just mix and match. Sometimes it's great and sometimes it's a miss but I live alone so no one suffers but me. lol
That's more like what we usually do, especially when GF is out of town for work and it's just me (like you said it is easier when just feeding one).  I'm pretty regimented and boring with my breakfasts and lunches, so they are literally the exact same thing about 85% of the time (right now veggie scramble with baked bacon for breakfast, baked bone-in chicken thighs with broccoli for lunch).

EDIT: Bringing this back on topic: OP, those two meals I mentioned are great because due to repeated consumption, I can optimize the ingredients for quality and cost. I know the cost of four eggs ($1.25 for my fancy local farm eggs), 4tbsp butter ($0.66, Kerrygold from Costco), 3 slices of bacon ($0.75 Costco), 1.6lbs of bone-in thigh ($1.58 Costco), and 1lb frozen broccoli ($1.50 local grocery store).  This brings me to a total of a predictable $5.74/day for just breakfast and lunch (and 2600 calories of your daily calories, which might be enough for your whole day, but I still eat dinner).
« Last Edit: December 28, 2017, 01:30:53 PM by ketchup »

Bicycle_B

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #39 on: December 28, 2017, 01:37:54 PM »
One more thing - make sure you are understanding the tax advice because some posters here might be mistaken.  Lowering your tax bracket only impacts the income earned in that bracket, not all your money. 

As an example, your first $10k is taxed at 10% then the money after that up to almost $40,000 is taxed at 12% then the money after that up to $82,500 (2018 proposed rates) would be at 22% then everything after that is at 29% up to another ceiling and so forth.

So, if you make $90,000 that doesn't change you from 12% to 22%.  Rather your first $80k or so is 12% and the next 10k is 22%.  Make sense?

Haha, probably talking about me!   :)

For clarity, I expected that the OP's 401k contribution would all be at the marginal rate of 22% in the new tax brackets.  If I miscalculate, let me know.  For reference, here is a link to the brackets.
https://www.thebalance.com/trump-s-tax-plan-how-it-affects-you-4113968

If I understand correctly, the 22% tax rate begins with taxable income of $38,700.  The OP can use $12,700 in standard deduction, so he pays 22% on ordinary income above a gross amount of $51,400.  If his gross income is 82k, he pays 22% on $30,600 unless he shelters it. He can only invest $18,500 in a 401k.  So the 401k investment would produce shelter of 22% on the amount he chooses to invest, plus any state tax sheltered by the 401k investment.  Am I misunderstanding?
« Last Edit: December 28, 2017, 01:41:51 PM by Bicycle_B »

Blonde Lawyer

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #40 on: December 28, 2017, 01:40:17 PM »
As an example, your first $10k is taxed at 10% then the money after that up to almost $40,000 is taxed at 12% then the money after that up to $82,500 (2018 proposed rates) would be at 22% then everything after that is at 29% up to another ceiling and so forth.
Yup.

So, if you make $90,000 that doesn't change you from 12% to 22%.  Rather your first $80k or so is 12% and the next 10k is 22%.  Make sense?
Quibble here...did you mean the first $40k or so is at 12%, and the next $40k or so is at 22%?

You are correct. I'm at work so I was typing fast and not proof reading.  More accurately, here is the 2017 chart:

https://taxfoundation.org/2017-tax-brackets/

Blonde Lawyer

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #41 on: December 28, 2017, 01:43:00 PM »
One more thing - make sure you are understanding the tax advice because some posters here might be mistaken.  Lowering your tax bracket only impacts the income earned in that bracket, not all your money. 

As an example, your first $10k is taxed at 10% then the money after that up to almost $40,000 is taxed at 12% then the money after that up to $82,500 (2018 proposed rates) would be at 22% then everything after that is at 29% up to another ceiling and so forth.

So, if you make $90,000 that doesn't change you from 12% to 22%.  Rather your first $80k or so is 12% and the next 10k is 22%.  Make sense?

Haha, probably talking about me!   :)

For clarity, I expected that the OP's 401k contribution would all be at the marginal rate of 22% in the new tax brackets.  If I miscalculate, let me know.  For reference, here is a link to the brackets.
https://www.thebalance.com/trump-s-tax-plan-how-it-affects-you-4113968

If I understand correctly, the 22% tax rate begins with taxable income of $38,700.  The OP can use $12,700 in standard deduction, so he pays 22% on ordinary income above a gross amount of $51,400.  If his gross income is 82k, he pays 22% on $30,600 unless he shelters it.  Thus the full 401k deduction would produce shelter of 22%, plus any state tax sheltered.  Am I misunderstanding?

If you are calculating what he saves by deferring the money to the 401k and using OP's highest tax bracket to do that, that makes sense.  What I have seen people do in the past, however, is assume that ALL of their income is taxed at whatever percent bracket they end up in.  Those people will argue they wish they made less so they would be in the lower bracket not realizing only the income that exceeds that lower bracket is taxed at the higher rate.  It is a progressive tax schedule.

Bicycle_B

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #42 on: December 28, 2017, 01:44:46 PM »
As an example, your first $10k is taxed at 10% then the money after that up to almost $40,000 is taxed at 12% then the money after that up to $82,500 (2018 proposed rates) would be at 22% then everything after that is at 29% up to another ceiling and so forth.
Yup.

So, if you make $90,000 that doesn't change you from 12% to 22%.  Rather your first $80k or so is 12% and the next 10k is 22%.  Make sense?
Quibble here...did you mean the first $40k or so is at 12%, and the next $40k or so is at 22%?

You are correct. I'm at work so I was typing fast and not proof reading.  More accurately, here is the 2017 chart:

https://taxfoundation.org/2017-tax-brackets/

Oh, I see.  You're saying he should go ahead do this now.  Ah - well, you're quite right!!

I was thinking he was just going to start a 500/month contribution next year, applying it to next year's tax.  So my posts related to next year.  But sure enough, he would save more if he invested that money this year.

Bad_With_Money

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #43 on: December 28, 2017, 07:10:34 PM »
Lots of good additional thoughts, thanks for all the help.  Just a few questions that came to mind reading your responses and thinking through stuff:

1. In terms of lowering the grocery bill, are there any particular weight loss diets that are cheaper than others?  I am trying to lose some weight but ideally it would be done without buying fancy diet foods or anything.  Also to some extent weight loss will help in some small way with my feet/shoes issues which could be more savings in the long term.

2. Just a practical thing - how do you tell your friends about this?  Like, how do you maintain friends while not necessarily going to dinner/bars with them as often?  Also is there a good way to tell folks you are trying to save without coming off as preachy or judgmental?

3.  So it seems like kind of mixed messages maybe on 401k and HSA and such.  For this year, right now, does it make more sense to put say, 40k toward my loan and then SOFI refinance it, or, should i take 18k + 5500 and max my 401k and HSA for 2017?  Is there a middle ground, or is the extreme one way or the other the best option?

Thanks all


Smurfy

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #44 on: December 28, 2017, 07:21:53 PM »
Lots of good additional thoughts, thanks for all the help.  Just a few questions that came to mind reading your responses and thinking through stuff:

1. In terms of lowering the grocery bill, are there any particular weight loss diets that are cheaper than others?  I am trying to lose some weight but ideally it would be done without buying fancy diet foods or anything.  Also to some extent weight loss will help in some small way with my feet/shoes issues which could be more savings in the long term.

2. Just a practical thing - how do you tell your friends about this?  Like, how do you maintain friends while not necessarily going to dinner/bars with them as often?  Also is there a good way to tell folks you are trying to save without coming off as preachy or judgmental?

3.  So it seems like kind of mixed messages maybe on 401k and HSA and such.  For this year, right now, does it make more sense to put say, 40k toward my loan and then SOFI refinance it, or, should i take 18k + 5500 and max my 401k and HSA for 2017?  Is there a middle ground, or is the extreme one way or the other the best option?

Thanks all

Pay 40k toward that student loan and then shop refinance rates from Sofi, Earnest and citizens bank.  Sofi is usually a little bit more expensive than earnest and citizens.  Earnest has the best interface and flexibility in designing repayment. When shopping rates, do them all on the same 1-3 day period to minimize the impact on your credit. Looks better to lenders when shopping happens all at once rather than spread over weeks of research.

Going forward pump money into 401k and hsa (please make sure this is the real hsa and not a use or lose account)

FINate

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #45 on: December 28, 2017, 08:04:47 PM »
1. In terms of lowering the grocery bill, are there any particular weight loss diets that are cheaper than others?  I am trying to lose some weight but ideally it would be done without buying fancy diet foods or anything.  Also to some extent weight loss will help in some small way with my feet/shoes issues which could be more savings in the long term.

You can easily cut the grocery bill and lose weight simply by eating real food prepared at home. Read (or watch on Netflix) "In Defense of Food" - IMO it's the most sensible advice for eating, a lifestyle/mindset rather than a temporary diet (doesn't work). His approach is summarized as simply "eat food, not too much, mostly plants." It's a little more complicated that it may seem, since 'food' is specifically real food rather than processed food-like products. I gained muscle and still lost 40 lbs (still off 5 years later) while simultaneously cutting the grocery bill using this general approach (did most, not all recommendations).

In order of priority, I would:
  • Cut out all sugary drinks. Energy drinks, soda, juice, sugary coffee drinks, etc.
  • Cut out all fast food.
  • Stop buying packaged snack foods. Drink some water (often you're dehydrated, not hungry), then choose fruit, veggies, and plain (unflavored) nuts. If those aren't appetising then you probably aren't actually hungry :)
  • Cut out alcohol. Expensive, and unnecessary calories.
  • Start preparing more meals at home from real ingredients (not frozen meals/canned food) instead of eating out. Not only are restaurants more expensive, they also serve huge portions.

Do that for 6 months before considering specific diets. The important thing is to move in the right direction, lose weight slowly, consistently and sustainably.

Advertising, TV shows, and culture in general have conditioned you to seek pleasure through eating. I'm not saying you shouldn't enjoy your food, you should. But you shouldn't be thinking of food as a source of comfort or pleasure - it's fuel for the body first and foremost. Somewhat counterintuitively, I enjoy my food a lot more now. I think that's because I'm actually hungry at mealtime, and a special meal out (usually sushi every few months) is a real treat.
« Last Edit: December 29, 2017, 12:20:26 PM by FINate »

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #46 on: December 29, 2017, 03:10:46 AM »
Lots of good additional thoughts, thanks for all the help.  Just a few questions that came to mind reading your responses and thinking through stuff:

1. In terms of lowering the grocery bill, are there any particular weight loss diets that are cheaper than others?  I am trying to lose some weight but ideally it would be done without buying fancy diet foods or anything.  Also to some extent weight loss will help in some small way with my feet/shoes issues which could be more savings in the long term.

2. Just a practical thing - how do you tell your friends about this?  Like, how do you maintain friends while not necessarily going to dinner/bars with them as often?  Also is there a good way to tell folks you are trying to save without coming off as preachy or judgmental?

3.  So it seems like kind of mixed messages maybe on 401k and HSA and such.  For this year, right now, does it make more sense to put say, 40k toward my loan and then SOFI refinance it, or, should i take 18k + 5500 and max my 401k and HSA for 2017?  Is there a middle ground, or is the extreme one way or the other the best option?

Thanks all

Pay 40k toward that student loan and then shop refinance rates from Sofi, Earnest and citizens bank.  Sofi is usually a little bit more expensive than earnest and citizens.  Earnest has the best interface and flexibility in designing repayment. When shopping rates, do them all on the same 1-3 day period to minimize the impact on your credit. Looks better to lenders when shopping happens all at once rather than spread over weeks of research.

Going forward pump money into 401k and hsa (please make sure this is the real hsa and not a use or lose account)
I agree with Smurfy.  I don't think the "financial technicians" answer (max out your 401k, IRA and HSA in 2017 as far as possible) is right for you because your priority should be to get yourself "unstuck" about the student loan.  It's having that loan hanging over you which is causing you to call yourself "Bad With Money" and feeling as though your social life is stuck in bacheordom.  Once you've put your $40k in cash to taking a big lump off the top of the student loan, refinanced it, and sorted out your budget and debt repayments for the coming year, you will be in a strong position to ramp up your tax-advantaged savings in 2018.

If you wanted, and have time to research suitable options before the deadline, you could put a little seed money, maybe a thousand or so, into each of the tax-advantaged accounts that you think you will want to fund in 2018.  That would give you a concrete start on where you want to go in 2018, would show up on your 2017 taxes to your advantage and would give you the satisfaction of taking another step in the direction you want to go.  But your main priority is feeling as though the student loan is under control, so get that sorted first.

cheepiling

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #47 on: December 29, 2017, 03:51:10 AM »
I have no advice for you, just wanted to stand in solidarity. At 31 years old, your numbers are basically my numbers with the exceptions that I have 240k in student loan debt, am living in Los Angeles with a higher cost of living, and don't have a savings to pull from. It's good to read the comments for inspiration, and for your case study so that I don't feel like I'm so alone. =]

Bad_With_Money

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #48 on: December 31, 2017, 01:24:35 PM »
Thanks to everyone for all the advice and support.

One question I didn't follow up on yet but wanted to ask - many have suggested a second job.  What types of things do people do for this?  My full time job keeps me busy 7-6 most days, but I could spend a few hours at night or time on the weekends.  Are we talking like fast food, or something maybe a bit more lucrative?  Any suggestions?  Kind of an open question and depends on my location and skills I know, but where even to start?

Dicey

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Re: Bad decisions (Student loan) ruining any chance of early retirement
« Reply #49 on: December 31, 2017, 04:56:16 PM »
Thanks to everyone for all the advice and support.

One question I didn't follow up on yet but wanted to ask - many have suggested a second job.  What types of things do people do for this?  My full time job keeps me busy 7-6 most days, but I could spend a few hours at night or time on the weekends.  Are we talking like fast food, or something maybe a bit more lucrative?  Any suggestions?  Kind of an open question and depends on my location and skills I know, but where even to start?
This topic has been hashed about a number of times. Here are a couple of links:
https://forum.mrmoneymustache.com/post-fire/what-are-your-side-gigs/
https://forum.mrmoneymustache.com/entrepreneurship/talk-to-me-about-side-hustles/

BTW, nice update. I see you tweaked your title. Now you need a new name. I propose Better_With_Money because it implies progress and achievement of goals.