Author Topic: Case Study!  (Read 2417 times)

DCFrugal

  • 5 O'Clock Shadow
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Case Study!
« on: September 06, 2012, 07:23:45 AM »
Alright so I've been reading this blog and others like it for quite a while. First time on the forums. I'm a little stuck with where I'm at and looking for help improving. Situation is as follows; Wife and I are mid-20's. No plans on kids for a few years.

Income - 140k/yr for me (extremely variable, 46k is base rest are bonuses) pre-tax (I can usually count on at least 3500 every month after taxes/ins/401k)
  - Wife - 2250/mo after tax
Expenses - Live in the DC area - 1650/mo rent
  - Groceries - 400/mo (been aggressively looking at ways to bring this down)
  - Alcohol - 100/mo
  - Cars - 200/mo ins/gas/maintenance allowance
  - Utilities - 220/mo (elec/cell phones/internet, no cable)
  - Miscellaneous - 150/mo
  - Gifts - 100/mo avg
  - Vacations/travel - 500/mo
  - Wife's expenses - 900/mo (still working on converting her to become more frugal)

Assets - 155k FMV of rental property - Owe 144k - P/I/T/PMI 1045/mo - Rent 1325/mo
  - 401k's - 80k - Saving 7% of my income + 7% match + 10% profit sharing
  - Cash - 15k
  - Investments - 15k
  - HSA - 5k

No debt besides rental property mortgage

I've started to bike to work, goal I think would be to sell one of the cars. I wear a suit though and I'm having a hard time figuring out what to do on all the rainy days. End up biking 2-4 days/week when its not raining. I just starting making this much a year ago and we have paid off both cars since then. By my count we're spending over $4200/mo. We do plan to move within a couple years to a lower cost of living area. We're saving 40-60k/yr outside of retirement accounts, but want to do better. With our incomes I know if we can get our expenses down FI is not too far away. Thoughts?

galaxie

  • Bristles
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Re: Case Study!
« Reply #1 on: September 06, 2012, 07:36:43 AM »
  • As your wife buys into the early FI thing, get a breakdown of what those expenses are.  But first, just float the idea "you know, I did some math, and I think we might be able to retire early..."  Get her on board with how cool that would be first, before you ask her to take action.
  • Can you reduce your vacation spending?
  • My approach is to start at the biggest budget items and see if I can reduce those.  You're talking about moving to an area with a lower COL.  Would you buy a house there?  Do you need to start planning for a down payment?  Long-term, is the math better if you buy a place or if you continue to rent?

DCFrugal

  • 5 O'Clock Shadow
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  • Posts: 3
Re: Case Study!
« Reply #2 on: September 06, 2012, 07:58:53 AM »
The vacation/travel is what we've struggled the most with. We both really enjoy travelling and want to take advantage of pre-kids, but we also live at least 700 miles from any family members so about half gets spent of visiting family/friends and half on travel. Anyone else live far from family and tips as to how to make that more affordable?

We would definitely want to buy a house and be mortgage/rent free. The $1650/mo in rent kills me, but we've looked and looked and we can find a place within 4-5 miles of our workplaces that we would feel safe at for a lower amount. Big reason we plan to move to another part of the country. The goal would be to buy a place in the 150-200k range depending on location and I'd want to pay cash. The 15k in cash and 15k in investments (bond funds) are geared towards home purchase.

tooqk4u22

  • Handlebar Stache
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Re: Case Study!
« Reply #3 on: September 06, 2012, 02:49:49 PM »
Wife's expenses needs to be figured out first and foremost - who knows if she'll get on board but you don't even know what it is. Vacation is steep but I get it, but if you are staying in $400/night hotels not so much but two tickets to new zealand can eatup a good chunk of that and to me that is ok.