Well, I’ve been MMM dedicated and lurking long enough that I thought I ought to finally post a case study and get some feedback. So, here goes nothing.
Life Situation:
Single engineer (non-SW), age 25, renting in northern Virginia. No dependents. Long term pre-fiancé GF living in northern DC. I moved permanently to VA just 3 months ago. Before that I was moving every 8 months for work to different states. Obviously, this made it hard to get a handle on my spending/saving rates since my housing costs, tax situation and relocation incentives kept fluctuating. Now that I’m stable and have a few months of VA expenses to look at I’m posting this case study to see if the brilliant minds on this forum can suggest anything else I can do to supercharge my saving and investing.
Income:
86K
Pre-tax deductions:
401K – Maxed at $18K
Other Ordinary Income:
None – I just began a side hustle teaching standardized test prep. However, I’m still in training so the income is negligible at the moment. I expect this to generate 2-5K in 2016.
Dividends and Capital Gains:
All dividends reinvested. Capital gains negligible.
Taxes:
$28.5K withheld by the end of 2015. This is severe over withholding relative to my ~62K of taxable income ($86 – 18K – 6.3K standard deduction) however, I also have relocation benefits and tax assistance effects which may be messing with my tax liability. I MAY get a huge return this year, or I might not. In 2016 I anticipate not moving so this calculation should be simpler.
After taxes and 401K deduction: $3600 monthly take home
Current Expenses:
Rent - $700
Groceries - $300
Restaurants - $150 (this includes alcohol and anything not bought inside a grocery store).
Gas - $50
Car Insurance - $35 (paid in a lump sum for 6 months)
Health Insurance - $0 (I have younger siblings so I’m still leeching off my parent’s family coverage).
Cell phone - $0 (again – cheaper to stay on my family plan to pay myself. I keep offering to pay my share and Dad keeps threatening to take me up on it but, so far he hasn’t. My share would only be $30-40/month).
Tolls/Transit - $60 (NoVA tolls and DC Metro fares)
Discretionary: $100-150 (This includes several “necessary” items that don’t recur often enough to merit their own category – a typical month might include a haircut, new headphones, batteries, maintenance supplies for my bike, the occasional video game and a few bottles of cheap wine to bring as gifts to social events.)
Total: ~$1.4K / month
$1.4K is typical for a “good” month with no large one-time expenses (dental work, snow tires, lump sum car insurance payment, etc.). Even with those pop-up expenses I’m on track to hit my goal of saving one of my two $1.8K paychecks each month (saving 50% net income + 401K deduction). With the large pop-up expenditures added in I’m probably averaging ~1.5-1.6K a month but, with my constant relocations the last 2 years, it’s hard to tell.
My saving is automated. Every pay period ~$400 is pulled into my savings account (aka real estate investment fund) and my taxable VTSAX account. In a month or two I’ll probably double this once I’m *sure* that my expenses are stable.
Assets:
401k: $48K
Roth IRA: ~$10K
Taxable Vanguard account: ~$10K
Cash savings account: $7300
Checking account: $3000
Net worth: ~$78K
Liabilities:
None – I have one credit card that I use often and pay off every month. I had $40K of student loan debt upon graduation but, paid off as of June 2015.
Other Info:
I live just 3-4 miles from work so I often bike. My company offers very good HSA plan which I’ll be joining with maximum contributions once my family coverage expires.
Specific Questions:
Is there anything else I can do? Or have I reached the “make more or grind it out” stage?
I’m living on less than $30K a year in a HCOL area and saving => 50%. I’ve been racking my brain thinking of other ways to optimize but, other than doing more CC hacking and using an HSA, I can’t think of anything *significant*. Sure, I could become way more ascetic and save $150 a month in booze, Shake Shack and books but, I feel my current spending is under control and already pretty lean. Open to differing opinions of course.
