Author Topic: Advice on car and on if I should delay investing or not/life advice  (Read 2627 times)


  • 5 O'Clock Shadow
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I'm 24 years old and have lived a fairly frugal lifestyle to date, but have recently really buckled down on cutting every bit of unnecessary expenditures and getting myself to FI as soon as I can. Last year, I completed my masters degree and got my first "real" job paying 60k/yr.  I lose $1144.42/mo on taxes in pay. I spend under $1500 per month to live. I have zero debt except I owe $4700 interest free because of recent orthodontics (I was told by several dentists if I didn't get orthodontics, my horribly overcrowded teeth would eventually fall out and I'd be spending even more on future dental bills).  I currently have approximately $5000 in savings, which I know is very low, but I graduated with about $10,000 in student loans and I paid them off as quickly as I possibly could, leaving me with little left over. While I am not new to saving money aggressively, I came from a "cash hidden somewhere safe" family, so I'm still learning about investing.  I have some questions.

1. Would it be better to pay off my orthodontics completely in the next two months and then start investing, or should I go with their $212/mo for 22 months (at zero interest) plan and invest the rest? I have heard some support for the latter (going for returns sooner, paying back depreciating dollars over time rather than up front), but I'm not sure and would appreciate feedback from someone more savvy.

2. My current plan for my money is to open an account with Vanguard and get a traditional IRA and max it. I will then max my company's 401k plan (VFFVX) [currently putting in 4% which is my company match]. Whatever money is leftover (after living expenses per month), I will use to start buying VTSAX (I feel that the aggressive approach is a good idea given how young I am). Is there anything glaringly stupid about this? By my math, I should be able to put 4-6k in per year into VTSAX. Is this too little for this account? My concern is putting too much into retirement accounts and not enough into a taxable account to be able to retire early. I understand that money can be taken out of retirement accounts early and at little to no penalty, but I still feel nervous about this.

3. I'm probably going to be marrying next year (as cheaply as possible, of course). The problem is that the wonderful man I met is deep, deep in debt. Since I met him, I have shown him how to be frugal, and while he's not completely there yet (I still catch him making unnecessary purchases sometimes, but he's getting better every day), his eyes have been opened and he's trying very hard.  He's already cut a ton of his costs, which I'm very proud of. However, before knowing me, he bought (brace yourselves) 5-6 new cars (V6 or V8s, and he currently has a fancy sports car he loves but has finally accepted he needs to sell), trading them in one after another and ending up with more and more negative equity. On top of that, he has about five thousand in credit card debt and also monthly payments on furniture. He understands that this is an EMERGENCY and has a plan to pay it all off within four years. However, between that and the fact he currently works in a lower income field than me (50k/yr shelling out $500/mo on car payments alone), I find it probable I will be able to retire before him (while I plan on halving our monthly living expenses [rent, utilities, food] when we marry and move in together, we are keeping our financials otherwise separate). Has anyone dealt with a similar situation or have insight?  I have been thinking once he is debt free and also ready to invest that he could add his contributions to the funds I will have established by then (doubling the IRA and adding to the VTSAX) to make that even bigger rather than having separate investments, but otherwise am not sure how to help unless I work extra years just to pay off his debt/help him catch up. I love him very much, but I also hate my engineering work and am hoping to shave off every possible second. Is there any alternative? Or am I making too much of an issue of this? I know lots of couples have just one person working, but he also hates his job and I would feel guilty if I could retire while he remained miserable.

We don't want kids, so at least paying for them is not an issue.

4. When I bought my car a few years ago, I was absolutely clueless and made a horrible decision: $1800 on a 2000 Chevy Malibu. It's an automatic and a V6 and has horrible MPG. I do not know how to drive a manual, but my boyfriend does, and I know he is willing to teach me. However, I do relatively little driving. I live 2 miles from work and recently bought a bike, so I should be able to bike at least most of the year (still trying to work myself up mentally for the idea of biking in heavy city traffic on sheets of ice... I apologize for not being as hardcore as MMM, but thinking about it terrifies me), and otherwise I don't go out except for maybe one or two stops to the grocery store per month or a periodic orthodontic appointment. My question is: should I try to sell this car and replace it with a more fuel efficient vehicle in the near future (potentially delaying some of my investing depending on how much I can get for it and how much the replacement would be - I know a replacement is not very much, but since I don't have very much money at the moment, I would feel uncomfortable trying to buy a car and investing as much as I want to at the same time), or should I wait since I barely use it anyway, it's paid for, and my money would better serve me elsewhere?

Thank you very much!


  • Bristles
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Re: Advice on car and on if I should delay investing or not/life advice
« Reply #1 on: June 16, 2016, 04:21:49 PM »
A detailed Case Study might be perfect for your situation to really break down the costs and income and determine what needs to be paid off and when.

For the orthodontics, I see 0% interest, so there is no really hurry to pay it off right away. Paying it all off immediately is only needed if your job is unstable, although waiting for the very last month to pay it off might put a lot of strain on future you if other emergencies prop up. Best advice is either 212/mo and just auto pay it on cruise control, or pay off at a slow rate (100/mo) and then step up the repayment the last 3-6 months of the loan.

Regarding IRAs. they are tied to your SSN, so you actually have to keep these as separate accounts. Vanguard might have a way of displaying both and totaling together the values for display, but you can't actually combine the funds in each account in to one single holding.

The future husband has a lot of financial issues. Just reading it over I see credit card debt, financed furniture, and he has a Plan(!?) to pay it off in 4(!!!?) years. Rolling credit card debt is no joke. Controlled 0% interest credit card debt is passable if it's well-managed (like the ortho bill), so more details might be needed itemizing the amounts and the interest rates here.
On top of that, he doesn't even have the overly excess income to supplement ongoing impulsive purchases. You really need to help this person out, because if they are a slave to their impulse monkey, they need a lot of work to really overcome that lifestyle. I would make definitely sure that they get this behavior under control. Also be sure they aren't hiding anything more! Us males, after we find out we made a mistake (that is, if you can get us to admit it, hehe), the typical behavior going forward - if it happens again - is to hide it away and not bring it up (because then you'll just get mad about it all over again, obviously!) I would know, because I do that (it's hard-wired or something, not my fault! :) ).

At the same time, be sure to show him that there is nothing wrong with wanting and buying nice things, but only after you've built up the money for it. After you've saved for months and months of allowances should you be letting yourself get that one thing you really really wanted. This is also important, because if you just cut everything down to barebones, he can get resentful of the lifestyle adjustment, might feel deprived for the income he's getting, might try hiding further impulse expenses. Work hard, but also you still get to play hard, once you earn it.

Okay done, there's plenty more to say on that subject, but there's also item 4.
Ditching the car and going bike only is a Huge step, and a very difficult one. You have to completely change how you handle groceries, long distance travel, the daily commute, the weather. However, 2 miles is really not far, even to walk it. Also, heavy traffic + ice is unsafe conditions bike or car and dictates safe speeds. However, the car you have is not too too terrible. It costs a little bit more in gas sure, but so long as it isn't breaking down on you, it's not a Huge drag on your savings.

The most important thing to consider, at this stage, for any purchase, is whether you can cashflow the savings + the expenses + replenish the emergency fund. At your salary, the answer is probably a yes, but as I said at the start, a case study can really break it down to see what is costing you where and how much, and whether you will be able to meet the savings goal you want with your current expenses. Sorry it's not a simple answer, but the solution is usually a mixture of math and feelings to figure out where your comfort level is.


  • 5 O'Clock Shadow
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Re: Advice on car and on if I should delay investing or not/life advice
« Reply #2 on: June 16, 2016, 04:33:12 PM »
You have yourself in a great position and at a young age, so congratulations are in order.

1. No point paying down a debt faster if it is at zero % faster than the minimum requirements, just make sure it is done while still interest free. You could put the extra money in an interest savings account and earn a return on the capital before lump summing it at the end. I am guessing the $212/month is the minimum so I would just keep doing that.

2. I am no expert on US accounts so can't comment there.

VTSAX is low cost and diverse so it is a great place to put your extra cash, that 4-6k a year will add up pretty quickly. The idea is get started and let compounding do its thing, you can increase contributions as you get wage increases.

3. My now fiancee had a credit card debt well over $5k and a new lease car. She will never be as interested in any investment stuff to the level I am, that's fine, it balances me out.  She did see the benefit of not living in debt etc and paid off the credit card debt really quickly.

I think him having his own accounts will be beneficial as it will give him ownership over his investments. He is much more likely to really get keen on the whole investment idea if he sees his own investments growing. He will probably always want to spend some of his money given he likes toys such as cars etc (some people change some don't) I don't think it is fair to deny him the enjoyment he gets from these things completely. What often works for non savers is automatic direct debit to a separate account at pay time. Once his debt is cleared agree on how much he can save each pay period (be realistic! Don't make it a bare minimum MMM budget) and have it automatically sent to an account he can't touch and this cash goes to VTSAX or whatever. The rest of his money can be safely blown on toys etc and you can know his retirement accounts are growing.

4. Given how little driving you do if the car is reliable I would be inclined to keep it. If it breaks down and you NEED to replace it that is when I would look at getting a car with better MPG.

You are doing really well, no need to apologise for not been hardcore MMM we each get places in our own way.

I certainly don't live the MMM lifestyle, I just take the parts I like and what works for me and that's what it's all about.


  • Pencil Stache
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Re: Advice on car and on if I should delay investing or not/life advice
« Reply #3 on: June 16, 2016, 04:45:25 PM »
you are 24, have a decent stable job and owe less than 5k interest free. You claim you live off of 18,000 a year right now. Let's say you need 25k a year to retire. You can apparently save 30k a year right now and if a 401k is like an RRSP you can save even more with sheltering savings from taxes.

Choose a simple boglehead 3 fund vanguard approach, your appropriate asset allocation and start socking it away.

It looks like you need to work 13 years or thereabouts to hit FI, make more money and spend less money and you can quit sooner.

Damn, there's a "Time to FI" spreadsheet somewhere on this forum that really helps calculate time to FI but I can't find the link.

At 24 and no debt you are laughing. I only started saving at 37, which is when you could potentially be FI.

I hate to say it, but the boyfriend might hold you back unless you both agree to separate expenses but saving together would really speed things up. If it were me, I'd insist that he sell that car and get rid of the credit card debt before jumping in. You may come off as controlling and he may insist it will be easier to pay off if you live together but who knows what will happen when you move in.

As for the malibu, how much per month is this thing actually costing you in gas? If you like to have a car handy, but aren't driving it much maybe the expense isn't to bad. Sure no car at all will save you money, but I love having a car to get around . . . If you don't use it much I would forget buying another car until the investments are rolling and the boyfriend thing is worked out or you DTMFA.

« Last Edit: June 16, 2016, 04:47:35 PM by human »


  • Magnum Stache
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Re: Advice on car and on if I should delay investing or not/life advice
« Reply #4 on: June 16, 2016, 05:20:51 PM »
You have the right mindset to FIRE early, and you're mostly on the right path by keeping debt low and living simply, which allows you to save/invest more while at the same time reducing the amount of passive income you need to generate post FIRE.

The zero percent debt is free money. Automate the minimum payment and forget about it. Invest the rest. I would max 401(k) and then max a Roth IRA. The 401(k) to maximize the match and the tax deferred growth, the Roth IRA because you are already in a low tax bracket (especially if you max the 401(k)) so it makes sense to invest after tax dollars into something that will grow tax *free* for the long term. The excess beyond these should go in a normal after tax account.

I would keep the malibu. It may have bad MPG, but it was cheap and is paid off and you don't drive it much.

Your boyfriend is raising all kinds of red flags for me. Not saying you should or shouldn't marry him, just be very very careful. Perhaps give it more time to see if the new frugalness really sticks? I just watched a family member go through almost 20 years of marriage where one person was very frugal and the other was a spendthrift. They tried to keep the finances separate, but money was a constant fight and stressor. They had perpetual money problems and ended up going through bankruptcy before finally divorcing. You can try to keep finances separate, but invariably his financial problems will become yours: missed rent or mortgage payments, different expectations for vacations, etc.


  • Magnum Stache
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Re: Advice on car and on if I should delay investing or not/life advice
« Reply #5 on: June 17, 2016, 12:16:21 PM »
If nothing else I would wait until he has paid off most of his debt before marrying him and moving in together. If he's really that wonderful it will be worth it to wait 4 years and he needs to prove to you that he is changing his lifestyle.
I recently was proposed to and I told them they had to pay off their credit card debt to marry me. They changed their mind about the proposal.


  • 5 O'Clock Shadow
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Re: Advice on car and on if I should delay investing or not/life advice
« Reply #6 on: June 17, 2016, 01:16:43 PM »

I went through an filled out the spreadsheet recommended for case studies.  I do want to point out some values are low because I currently spend a ton of time at my boyfriend's place (so, for example, if I weren't with him so much, my electricity bill would be higher. I also canceled my internet because of the same reason, but it would usually be $40). 

Thank you for the advice on my orthodontics.  That is what I was thinking, so I'll go ahead and do that.

I didn't realize that about the IRAs, so thank you! I also liked someone else's suggestion about keeping investments separate, too.  It wouldn't compound quite as quickly, but letting him have his own account would almost certainly give him a greater sense of accomplishment, and I think that would be great for encouraging him as he works on his frugality.

Oh, I know it. :( He really managed to mess up his life financially, and he's just a few years older than me.  It boggles my mind how he ever thought some of these purchases/loans were a good idea.  I can't really provide many details on his plan since he has not run through it with me in great detail, although he may be willing to post a case study of his own.  I introduced him to the MMM blog and he has been reading it and been receptive.  There have been a couple times where he's told me he read something on the blog and then we were able to discuss it together, which I think is fantastic.  I've been trying really hard and I truly do believe he's doing significantly better.  What I've been struggling with is helping him without coming off as controlling or negative, and praising him when he does make good choices.  I thought I was balancing this properly, but just yesterday he told me he was angry I was telling him what to do, so now I'm backing off.  I read an MMM article today that mentioned criticizing every poor spending choice as it's made is not the way to do it, which I admit I've done a few times (one of these was critical since he had signed a contract without my knowledge that would have put him a few more thousand dollars in debt... I almost had a heart attack upon finding out, but thankfully this was around when he had just started realizing how bad his habits were and he was able to get out of the situation.  We have since mutually agreed that we will discuss any purchases over $10 together before we make them).  So like the article recommended, I'm going to try to focus more on emphasizing the why (getting free from his job is a prime motivator for him) and help him think more on how delaying instant gratification will get him what he really wants in the future.  He still has some concerns I'm asking him to live like a pauper for years, and I continue to struggle to communicate that that's not what I'm doing, I'm just asking him to live very conservatively while he battles immense amounts of high interest debt.  He's very smart and good at listening, and as mentioned he's been doing a lot better, so I have faith in him.  I just need to work on my own skills at communicating these things to him.

You're absolutely right about that guy thing as I mentioned about what he was trying to hide before. :) Can you tell me as a male who experiences this urge the best way I could be supportive and encouraging of self restraint, and how to react to bad financial decisions in a way that would not just make you want to hide it more?  I truly just want to help him in a loving way.

Your next paragraph is very helpful for that.  I completely understand that perspective.  I guess my hang up is that, as you noted, this should be done only once the money has been built up.  I'd be totally okay with some more purchases from him if he had the money for it, but right now he is in a ton of debt and will be for years.  I know if I tell him to have a rather Spartan lifestyle until he gets the high interest debt down, that would be a long time of what he thinks is deprivation.  I don't want to do that to him.  On the other hand, if I am more permissive, I'm worried he'll start being tempted to get into old habits.  One reward trip to Taco Bell for lunch on a week may grow into two, etc.  How can I let him play enough for him to be happy but not so much he doesn't keep hitting his debt hard?

Thanks for your advice on the car and biking.  I know I won't be able to ditch the car completely, but I hope to lower those gas costs a lot by biking to work as much as I can.  I'll be posting the case study here for you.


Thank you very much for your encouraging comments! :) It makes me feel very happy that a fellow Mustachian thinks I'm doing all right.  It can be hard to judge these things on one's own.  I did address a few of these comments in my reply to the first gentleman, but will tackle the rest here.

Did you choose a savings account over a different type of investing account in the event of an emergency arising and me not being able to pay the entire debt in time?
I'm very relieved to hear that even such a low sum as 4-6k is enough to snowball and keep me going until I can supplement it by cracking into retirement accounts.

I'm really glad things have gone so well for your fiancee financially!  I know it can be really hard for some people to get out of the consumer haze.  You have a great idea in letting him have all of his separate things to manage and care for and see progress on all on his own.  I have thought about giving him an allowance before like you mentioned, but I'm worried it sounds like I'm trying to run his life.  After an, an allowance is traditionally something a parent gives a child.  I don't want him to feel insulted or belittled by me telling him how much of his money he can use per month.  I do, however, think it's an excellent idea if he would be okay with it.  Have you tried this yourself with your lady?  If so, how did you present it to her?

Thank you again. :D

I appreciate your advice.  I found the time to FI part of the spreadsheet, but I feel like it would be very inaccurate until I end up setting up all my investing, since that should provide me with significantly larger returns.
I was lucky in that I came from a family that taught me to live off of the least amount of money possible.  I hated it as a child, but it instilled a strong drive to save in me.  Most people don't get that, so I think it's great you started doing it when you did, especially since so many people never do and slave away until 65!

I get where you're coming from with my boyfriend.  I would be lying if I said this didn't concern me at all.  Right now I'm committed to working through it with him, helping and encouraging him where I can, and I really do believe he can do it.  He's an honest, hard-working person, and while he was really good at making debt in his past, he was (and is) also very good at paying it (in that he always used to make his minimum payments diligently - now he understands he wants to pay them off much faster).  He believes in honor and being straight laced - the sort of guy who can't tell a lie to save his life, and can't sleep at night if he thinks he did something wrong.  I know he is completely capable of holding himself accountable at this point, so long as he gets encouragement.

I calculated an average of $20/mo in fuel for the car.  I don't drive very much.  I'll go ahead and hang on to it until it dies and only then will I replace it, as someone else advised me to do.  Thank you!


Thank you very much for giving me the investing advice.  The reason I chose a traditional IRA in my theorycrafting is founded upon this analysis: Won't I still be in an even lower tax bracket when I retire?

I appreciate the cautionary tale.  I'll definitely keep an eye on him and if he remains vigilant.  I suppose this is youthful optimism and love talking, but I really think we can make it together.  I know we'll disagree on things like everyone does, but I don't doubt for a moment we'll be able to figure them out together.  Would I be thrilled if I had to start eating his expenses?  No, of course not.  We've already actually gone through the vacation thing, though, and although he was initially disappointed I was not willing to do the expensive trip he was hoping for, we ended up having a great vacation near home, and he later thanked me profusely for saving him money, so he's nowhere near stuck in his old habits.  I suspect I will end up paying more money than I would if I were single, but I also know I would rather do that and be a little bit poorer financially than have more money and be without him and much richer for his companionship.  We'll see how it goes. :)


We may well end up waiting that long.  It's hard to say. We haven't set a date or anything yet. But my love for him is not contingent on his finances, and even if he slips up some more, it won't change my desire to be with him.  This is not conditional for me, although I understand that it was for you since cooperative money management really is very important for a harmonious relationship and it definitely seems like in your case you dodged a bullet.
« Last Edit: June 17, 2016, 01:23:43 PM by Liffey »