The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Mr.stubbles on February 22, 2014, 04:24:21 PM
-
Income:3600.00 and month around 53-67k a year depending on how much overtime I put in. Comes out around 2500 after maxing out my 401k
Current expenses: I spend 300 dollars for my cell phone bill and car insurances. 240$ on gas... I have an s2000 paid off and commute to work and school and it only gets 17/25 mpg lol. I eat only every once and while and spend money on random entertainment roughly 500$ on a high end month. so total around 1040$ in expenses
Assets: I have my s2000 and about 36k though my companies 401k plan
Question: I just received a couple of large bonus's and expecting a large lump sum for a car accident. I just wanted some financial advice from you guys because I do still live with my parents so I can stay focused on my schooling and work (not a house payment or rent). I have around 6000 in my savings and my living space is roughly 1000 square feet. I have a whole downstairs unit at my parents house and have a living space ready to build a kitchen with the water and gas already to go. I am currently a split in decision of investing in a ROTH IRA or investing in a kitchen with my father who will throw in a extra 5000$ dollars for the project and if I do decide to move out will allow me to use to renters money for my next living space. I've just started reading on Mr.Money Mustache and it has inspired me to one day become FI or receive FIRE status one day and just wanted some clear cut advice from the forums on what is my best option and what to throw my money into if I do decide to invest in a Roth. Thank you for reading and I am looking forward to reading your responds
- Cheers
-
It sounds like you have a great opportunity at your parent's home to either live there or get the rent. I would do the kitchen nicely but frugally. Then I would put $ into an Roth.
-
No opinion on the Kitchen, although I suspect you could make a small kitchen for nearly 5K if you did all the work yourself and got used appliances off of craigslist
Regarding your expenses, they seem somewhat high to be me as listed.
300 for cell phone + insurance = 100 for cell phone, 200 for car ??? That seems high for both the phone, and the insurance. I pay ~100 per month for 2 cars.
240 / month for gas = $ 60 / week = more than 1 tank of gas per week. Presumably a lot of this is commuting to work. I recommend looking at buses, van pools, or carpooling to get to work. Boeing will subsidize $60 / month for a bus pass or van pool, and you can put more money in pre-tax, so that might save some commuting costs
$500 / month on entertainment = 125 / week = 3 bar or restaurant outings at $40 / time each week ? I suspect that there is opportunity to economize here
living with the parents is a great way to save money. You're probably saving $500-$800/month doing that, so good job!
-
It sounds like you are off to an awesome start! Just to put it in perspective, DH and I got started saving for retirement at your age and we'll retire very comfortably in our forties.
I'd recommend that you get in the habit right now of squirreling away a minimum of 15% of your salary for retirement. The percentage can (and should) climb as you get raises.
After you've got your base savings rate being automatically funneled into your retirement account, think about things like kitchens. :)
Just one more opinion.
-
I'd recommend that you get in the habit right now of squirreling away a minimum of 15% of your salary for retirement. The percentage can (and should) climb as you get raises.
Income:3600.00 and month around 53-67k a year depending on how much overtime I put in. Comes out around 2500 after maxing out my 401k
IMHO I think he's ahead of you there. ;) 17500/53000>15%
Current expenses: I spend 300 dollars for my cell phone bill and car insurances. 240$ on gas... I have an s2000 paid off and commute to work and school and it only gets 17/25 mpg lol. I eat only every once and while and spend money on random entertainment roughly 500$ on a high end month. so total around 1040$ in expenses
Assets: I have my s2000 and about 36k though my companies 401k plan
I am currently a split in decision of investing in a ROTH IRA or investing in a kitchen with my father who will throw in a extra 5000$ dollars for the project and if I do decide to move out will allow me to use to renters money for my next living space.
I agree that your cell and insurance payment seems really high.
In your shoes, I'd invest in a small kitchen alongside your dad. It will open a future stream of revenue if you decide to move out. Since you're already comfortably maxing out your 401k and have 36k at age 22, I think you're ok. You are on track. http://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/
EDIT:
If you earn 60k after tax, and you continue to spend money at the same rate that you have (1040/month), then you are on track to retire in less than 5 years.
http://networthify.com/calculator/earlyretirement?income=60000&initialBalance=36000&expenses=12480&annualPct=5&withdrawalRate=4
Realistically, you can expect to increase your salary as time goes on. That means that your time to retirement is even shorter.
-
Thank you guys for all your valuable opinions I honestly think I'm going to just get a designer in and get a blue print for a plan for the kitchen because the house that I'm currently in has many custom designed it wouldn't suit the home to do it on the cheap I know thats not very mustachian lol. But I will hold off on the project until I max out in 2.5 years at least 35.00$ and hour than plug away at the project. I'm going to open up a Roth IRA and my question now is what fund should I put it in? while I've been watching the market since around last year it does seem relativity high should I still plug it into the total money market index that I see most people put into or should I go into a foreign index fund such as a Index for Europe or a total foreign index fund that spreads all over. Again your opinions are very important because I'm still new and would like people with past experience for advice thanks agian!
-
Thank you guys for all your valuable opinions I honestly think I'm going to just get a designer in and get a blue print for a plan for the kitchen because the house that I'm currently in has many custom designed it wouldn't suit the home to do it on the cheap I know thats not very mustachian lol. But I will hold off on the project until I max out in 2.5 years at least 35.00$ and hour than plug away at the project.
As efficiently as possible would be a better way to say it than as cheaply as possible- Mr. Money Mustache has a beautiful house, but he is careful about the money that he spends to make it look that way.
http://www.huffingtonpost.com/2013/02/27/house-tour-mr-money-mustache_n_2761917.html
It wouldn't be terrible to get an estimate on what putting in a kitchen would cost, though.