Author Topic: Aspiring mustachian and soon-to-be-married 24yo  (Read 3390 times)

pursuit_of_perfect

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Aspiring mustachian and soon-to-be-married 24yo
« on: March 25, 2013, 10:18:07 AM »
Greetings all,

I've been accused of displaying somewhat obsessive-compulsive attributes at times. So, for those who know me personally, it wouldn't be surprising to learn that I found Mr. Money Mustache's blog and read through all 40 pages of the archives in a single night. Needless to say, I thoroughly enjoyed the philosophy behind the blog as well as the storytelling within the blog.

Here's my current financial status, before I go into some background:
Age: 24
Job: Major Gifts Officer (Non-Profit)
Salary: $46,500/year
Debt: None
Vehicle: Gas-guzzling truck
Investments: $48,700 spread across index mutual funds (using a Bogleheadian approach)
Savings: $10,000 emergency fund
Current Savings Rate: 40%

I'm getting married in July. The good news is, she doesn't have any debt (although she doesn't have any savings either). But, I'm trying to decide what the "next steps" are for me financially, especially as I enter this new phase of my life (increased budget, somewhat increased earnings, etc.).

Right now, my plan is to sell the truck after we get married (she drives a Civic) to free up some money. Also, I'm hoping to either switch jobs or get a raise in the near future as my performance has been good.

With a decent amount in savings/my investment accounts, I've been advised by a few of my mentors to consider buying a house. I'm fascinated by real estate investing, but I'm also very wary of throwing my money at the altar of "equity" and becoming very cash poor very quickly.

Anyway, I would love some advice on if you all think I should just stay the course where I'm at or consider pivoting toward a different route.

Thanks for your time. I'm looking forward to becoming a part of this online community.

the fixer

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Re: Aspiring mustachian and soon-to-be-married 24yo
« Reply #1 on: March 25, 2013, 11:02:31 AM »
In general it sounds like you're on the right track! Despite being 5 years younger than me, you're about where I am in terms of # years of income accumulated so far.

I was your age right around the time of the real-estate boom in 2005 and 2006, and I had friends telling me I just had to buy because prices were only going to keep going up! Resist! Only buy if you feel comfortable doing so, and recognize that a personal residence is not a very good investment most of the time.

If you want to buy I recommend trying to approach it like a real estate investor: buy a property at a good, close-to-wholesale price in a good rental market, and basically pay yourself rent to live there. Then you can rent it out later if you want or need to make it cashflow. I second arebelspy's recommendation of "Building Wealth One House at a Time" by John Schaub; you can follow many of its principles to buy a personal residence that could become a rental later.

blueeyetea

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Re: Aspiring mustachian and soon-to-be-married 24yo
« Reply #2 on: March 25, 2013, 12:42:57 PM »
Pursuit_of_Perfect, are you and your fiance already sharing a household?

Owning a house isn't the end all-be all of financial security and for a young marriage, I'd suggest you go the apartment rental route first.  Contrary to popular belief, it's not necessarily cheaper to own your house.  On the contrary, because of the money involved, people have no qualsm upgrading to a 3 bedroom house when rending a one bedroom apartment would be enough. Buying a house right away could be overwhelming in a marriage when you're not used to each other's spending/saving style.  Learn how to manage and maintain a household first and buy a house later when you're more settled. 

To start and when moving in together, I'd suggest you open a joint account for household expenses and start build a budget for household expenses.   If you want to make sure she saves money, this could be incorporated into the budget.   Start by making sure that the money is in the account before the bills come due, then when the bill comes in, you don't have the stress of figuring out how to pay for it.  If there are yearly expenses, like home insurance, divide the amount by 12 and deposit the money every month in the account. 

Considering your age, and how well you're doing financially, have you two put any thoughts in trying to live on one salary?  You could build your equity a lot faster than buying a house if you did.

pursuit_of_perfect

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Re: Aspiring mustachian and soon-to-be-married 24yo
« Reply #3 on: March 25, 2013, 01:47:17 PM »
Thanks for the thoughts re: homeownership. I've been thinking along similar lines. I live in a very transient part of the country, so I'm not even sure we'll still be in the same place three years from now.

I've been talking to my fiancee about finances, living frugally, and setting goals. She comes from a fairly wealthy background -- whereas I was raised by a widowed mother working fulltime to make ends meet -- so it's going to be a huge adjustment for her. I'm trying to just slowly but surely implement frugal choices, and encourage her to think creatively.

I would like to be able to save 55-60% of our combined income, if possible. A lot will depend on our housing situation -- living in NoVA isn't cheap -- and my salary situation.

And no, we don't currently live together.

the fixer

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Re: Aspiring mustachian and soon-to-be-married 24yo
« Reply #4 on: March 25, 2013, 02:12:33 PM »
I live in a very transient part of the country, so I'm not even sure we'll still be in the same place three years from now.

That settles it. Don't buy. The fixed costs associated with buying and selling a house will destroy any appreciation you get or even savings from rent, especially because most of your mortgage payments will be interest (money down the drain just as much as rent is)

I'll let others comment on the relationship aspect; I'm way too lucky with an equally frugal Mustachian girlfriend to offer much useful advice there :)

blueeyetea

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Re: Aspiring mustachian and soon-to-be-married 24yo
« Reply #5 on: March 26, 2013, 12:45:47 PM »
She comes from a fairly wealthy background -- whereas I was raised by a widowed mother working fulltime to make ends meet -- so it's going to be a huge adjustment for her. I'm trying to just slowly but surely implement frugal choices, and encourage her to think creatively.

But being frugal also has to come from her or your up a creek without a paddle.   You both need to sit down and start talking about money, how to spend it, and who contributes to what.  You want to save 50%-60% of your combined income, but she might have a different idea.   Getting along with someone is hard enough, but the more common ground financially the better. 

You also have to be realistic in your expectations.  When my husband and I got married, we came up with what I described above.  We had "our" money in a joint account with related budget, he had "his", and I had "mine".  Spending from "his" and "mine" was completely discretionary and didn't need to be discussed with the other.  Any big purchase that wasn't calculated in the budget was discussed along with figuring out how it would get paid from our discretionary money.     

Having said all that, compared to my husband, I'm a spendrift (within reason) while he can be a complete miser.   If he decides to save money, it's easy for him to say no to social events and eat the dried up piece of crust in the bread basket.  I'm not a miser and I'll be damned if I'm going to be stopped from buying a magazine if I can afford it and I have the cash.  As long as he doesn't push his miserliness on me and I don't make him spend above what he wants,  it works for us.